Subject to Completion: Dated July 5, 1995
WEISS, PECK & GREER INVESTMENTS
TOMORROW FUNDS RETIREMENT TRUST
One New York Plaza
New York, New York 10004
TOMORROW LONG-TERM RETIREMENT FUND ("Long-Term Fund")
Seeks to satisfy the retirement goals of investors who are currently
between 22 and 35 years of age and with an average remaining life
expectancy of 50 years or more.
TOMORROW MID-TERM RETIREMENT FUND ("Mid-Term Fund")
Seeks to satisfy the retirement goals of investors who are currently
between 36 and 50 years of age and with an average remaining life
expectancy in the range of 35-50 years.
TOMORROW SHORT-TERM RETIREMENT FUND ("Short-Term Fund")
Seeks to satisfy the retirement goals of investors who are currently
between 51 and 65 years of age and with an average remaining life
expectancy in the range of 20-30 years.
TOMORROW POST-RETIREMENT FUND ("Post-Retirement Fund")
Seeks to satisfy the goals of investors who seek to maximize total return,
with an emphasis on current income, consistent with capital preservation
as appropriate for persons who have retired.
PROSPECTUS -- Adviser Class Shares
September __, 1995
This Prospectus describes Adviser Class shares of four mutual funds - the
Long-Term Fund, Mid-Term Fund, Short-Term Fund and Post-Retirement Fund
(together, the "Tomorrow Funds"). Adviser Class shares of the Tomorrow Funds
may be purchased only by "qualified" pension or retirement plans, including
trustees of such plans for individuals funding their individual retirement
accounts or other qualified plans. Each Tomorrow Fund is a diversified asset
allocation mutual fund advised by Weiss, Peck & Greer, L.L.C. (the "Adviser"
or "WPG").
Please read this Prospectus before investing, and keep it on file for
future reference. It contains important information, including how the
Tomorrow Funds invest and the services available to shareholders. To learn
more about the Tomorrow Funds, you can obtain a copy of the Statement of
Additional Information (the "SAI"), also dated September __, 1995. The SAI
has been filed with the Securities and Exchange Commission (the "SEC") and
is incorporated by reference into this Prospectus. A free copy of the SAI or
a copy of the Prospectus describing the Institutional Class shares of the
Tomorrow Funds is available upon request by calling Weiss, Peck & Greer,
L.L.C. at 1-800-223-3332 (toll free). Adviser Class shares of a Tomorrow
Fund may not be available in your state due to various insurance or other
regulations. Please check with your qualified plan fiduciary for Tomorrow
Funds that are available in your state. Inclusion of a Tomorrow Fund in this
Prospectus which is not available in your state is not to be considered a
solicitation.
ADVISER CLASS SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN ADVISER CLASS
SHARES OF THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>
The Tomorrow Funds seek to provide investors of all ages who
participate in qualified retirement plans with an asset allocation
strategy designed to address their retirement funding needs. Each
Tomorrow Fund invests its assets, in varying amounts, in equity and
fixed-income securities of all types. The Long-Term, Mid-Term and
Short-Term Funds seek to maximize total return while also increasingly
emphasizing current income and capital preservation as the average age
of the target class of investors in that particular Tomorrow Fund
increases. As the average age of the target class of investors in a
Tomorrow Fund increases over time, the particular Tomorrow Fund adjusts
the mix of its assets invested in equity and fixed-income securities to
reflect a level of risk that the Adviser considers appropriate for
investors in that target age class, in general, given their investment
time horizon. The Post-Retirement Fund seeks to provide investors with
an asset allocation strategy designed to maximize total return, with an
emphasis on current income, consistent with capital preservation.
You are encouraged to select a particular Tomorrow Fund based on
your current age and the length of the period during which you expect
to maintain your investment. You may select more than one Tomorrow Fund
in order to achieve a personalized investment program. For example, an
investor in the Long-Term, Mid-Term or Short-Term Funds may also select
the Post-Retirement Fund to seek additional current income.
Because the investment portfolio of each Tomorrow Fund will change
over time to reflect the investment needs of a target class of
investors with an increasing average age, it will normally not be
necessary for you to change your Tomorrow Fund selection as you grow
older. However, if your investment needs change other than by reason of
the passage of time, you should consider whether your particular
Tomorrow Fund remains an appropriate selection.
In addition to the Adviser Class shares offered through this
Prospectus, the Tomorrow Funds offer a class of shares known as the
Institutional Class through a separate prospectus. Institutional Class
shares of the Tomorrow Funds are available only to certain eligible
investors.
TABLE OF CONTENTS
Page
Expense Information................................
Investment Objectives and Policies.................
How to Buy Shares..................................
How to Sell Shares.................................
How to Exchange Shares.............................
How Each Tomorrow Fund's Share Price is Determined.
Management of the Tomorrow Funds...................
Distribution Plans.................................
Dividends and Taxes................................
Portfolio Brokerage................................
The Trust..........................................
Investment Performance.............................
Risk Considerations and Other
Practices and Policies............................
Additional Information.............................
<PAGE>
EXPENSE INFORMATION
Operating a mutual fund, such as each Tomorrow Fund, involves a
variety of expenses for portfolio management, shareholder statements,
tax reporting and other services. These costs are paid from a fund's
assets and their effect is factored into any quoted share price or
performance information.
Shareholder Transaction Expenses are charges you pay when you buy or
sell Adviser Class shares of a Tomorrow Fund.
<TABLE>
<S> <C> <C> <C> <C>
Post-
Long-Term Mid-Term Short-Term Retire-
Fund Fund Fund ment Fund
Maximum Sales Load Imposed on Purchases None None None None
Maximum Sales Load Imposed on
Reinvested Dividends None None None None
Deferred Sales Load None None None None
Redemption Fees None None None None
Exchange Fees None None None None
</TABLE>
Annual Fund Operating Expenses are paid out of the Tomorrow Funds'
assets. Each Tomorrow Fund's expenses are factored into its share price
or dividends and are not charged directly to shareholder accounts. The
following are estimates and are calculated as a percentage of average
net assets.
<TABLE>
<S> <C> <C> <C> <C>
Post-
Long-Term Mid-Term Short-Term Retire-
Fund Fund Fund ment Fund
Management Fee
(after expense limitation) 0.00%* 0.00%* 0.00%* 0.00%*
12-B1 Fee 1 0.50% 0.50% 0.50% 0.50%
Other Expenses
(after expense limitation) 1.25%* 1.25%* 1.25%* 1.15%*
Total Fund Operating Expenses
(after expense limitation) 1.75%* 1.75%* 1.75%* 1.65%*
</TABLE>
Example: Hypothetically assume that each Tomorrow Fund's annual return
is 5% and that its operating expenses are exactly as just described.
For every $1,000 you invested, you would have paid the following
expenses if you closed your account after the number or years
indicated:
<TABLE>
<S> <C> <C> <C> <C>
Post-
Long-Term Mid-Term Short-Term Retire-
Fund Fund Fund ment Fund
After 1 Year $18 $18 $18 $17
After 3 Years $56 $56 $56 $52
-3-
<PAGE>
The purpose of the above table and Example is to assist you in
understanding the various costs and expenses of the Adviser Class
shares of the Tomorrow Funds that an investor will bear directly or
indirectly. See page __. The Tomorrow Funds are newly organized and
have no operating history. The figures shown in the table under the
caption "Other Expenses" and in the hypothetical example are based on
estimates of the Tomorrow Funds' expenses for the fiscal year ending
December 31, 1995. The expenses set forth above do not reflect charges
and expenses that may be applicable to a participant in a qualified
plan. Please refer to your qualified plan documents.
---------------
<FN>
1 Rule 12b-1 Fees consist of a 0.25% distribution fee and a 0.25%
service fee.
* The Adviser has voluntarily agreed to limit temporarily the
operating expenses (excluding Rule 12b-1 fees applicable to Adviser
Class shares, service fees applicable to Institutional Class shares,
any other class-specific expenses, litigation, indemnification and
other extraordinary expenses) of the Long-Term, Mid-Term and Short-Term
Funds to 1.25% of their respective average daily net assets and such
operating expenses of the Post-Retirement Fund to 1.15% of its average
daily net assets. See page __. In the absence of this agreement,
Management Fees would be 0.75%, 0.75%, 0.75% and 0.65%, respectively,
Other Expenses are estimated to be approximately 2.87%, 1.77%, 1.59%
and 4.35%, respectively, and Total Fund Operating Expenses are
estimated to be approximately 4.12%, 3.02%, 2.84% and 5.50%,
respectively, of the average daily net assets attributable to the
Adviser Class shares of the Long-Term Fund, Mid-Term Fund, Short-Term
Fund and Post-Retirement Fund.
</FN>
</TABLE>
THE INFORMATION IN THE TABLE AND HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
-4-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
What are the Investment Objectives and Policies of the Tomorrow Funds?
The Tomorrow Funds seek to provide investors of all ages who
participate in qualified retirement plans with an asset allocation
strategy designed to address their retirement funding needs. Each
Tomorrow Fund other than the Post-Retirement Fund seeks to maximize
total return while also increasingly emphasizing current income and
capital preservation as the average age of the target class of
investors in that particular Tomorrow Fund increases. The
Post-Retirement Fund seeks to provide investors with an asset
allocation strategy designed to maximize current income, consistent
with capital preservation.
LONG-TERM FUND seeks to satisfy the retirement goals of
investors who are currently between 22 and 35 years of
age and with an average remaining life expectancy of
50 years or more.
MID-TERM FUND seeks to satisfy the retirement goals of
investors who are currently between 36 and 50 years of
age and with an average remaining life expectancy in
the range of 35-50 years.
SHORT-TERM FUND seeks to satisfy the retirement goals of
investors who are currently between 51 and 65 years of
age and with an average remaining life expectancy in
the range of 20-30 years.
POST-RETIREMENT seeks to satisfy the goals of investors who seek to
FUND maximize total return, with an emphasis on current
income, Consistent with capital preservation.
Each Tomorrow Fund invests its assets, in varying amounts, in
equity and fixed-income securities of all types (the "Categories"). The
amount of assets allocated to equity securities is currently invested,
in varying amounts, among large capitalization stocks, medium
capitalization stocks, small capitalization stocks and foreign stocks
(the "Subcategories"). From time to time, the Adviser may select
Subcategories for the fixed-income Category. Further Subcategories may
be selected in addition to or as a substitute for any of the current
Subcategories.
As the average age of the target class of investors in a Tomorrow
Fund increases over time, the particular Tomorrow Fund adjusts the mix
of its assets allocated between equity and fixed-income securities, and
among large, medium and small capitalization and foreign stocks, to
reflect a level of risk that the Adviser considers appropriate for
investors in that target age class, in general, given their investment
time horizon. The Post-Retirement Fund maintains a stable mix of its
assets invested (within defined ranges) in equity and fixed-income
securities based on the current outlook for such securities.
Typically, the longer the average life expectancy of the target
class of investors in a Tomorrow Fund, the greater the allocation of
assets of that Tomorrow Fund to securities with higher growth potential
and, correspondingly, more risk, such as small capitalization stocks.
Conversely, the shorter the average life expectancy of the target class
of investors in a Tomorrow Fund, the greater the emphasis on current
income and capital preservation of assets and, therefore, the greater
the allocation of assets of that Tomorrow Fund to fixed-income
securities. Each Tomorrow Fund will be managed more conservatively as
the average age of its target class of investors increases. For
example, assuming that current market conditions remain the same, at a
point fifteen years from now, the strategic asset composition of the
Long-Term Fund could be expected to look like the current strategic
asset composition of the Mid-Term Fund. On the date of this Prospectus,
the anticipated strategic asset allocation mix within the Tomorrow
Funds' portfolios would be approximately as follows:
-5-
<PAGE>
[Graphic Material Omitted: Four pie charts demonstrating the asset
allocations of each Tomorrow Fund. The pie chart applicable to the
Long-Term Fund reflects the following asset allocations: large
capitalization stocks - 30%, medium capitalization stocks - 20%, small
capitalization stocks - 25%, foreign equities - 5%, and fixed-income
securities - 20%. The pie chart applicable to the Mid-Term Fund
reflects the following asset allocations: large capitalization stocks -
35%, medium capitalization stocks - 15%, small capitalization stocks -
15%, foreign equities - 5%, and fixed-income securities - 30%. The pie
chart applicable to the Short-Term Fund reflects the following asset
allocations: large capitalization stocks - 40%, medium capitalization
stocks - 10%, small capitalization stocks - 10%, and fixed-income
securities - 40%. The pie chart applicable to the Post-Retirement Fund
reflects the following asset allocations: large capitalization stocks -
30%, and fixed-income securities - 70%.]
The strategic asset allocation mix represents the way that the
Tomorrow Funds' investments will generally be allocated in the
near-term. A Tomorrow Fund's actual asset allocation mix between equity
and fixed-income securities and among large, medium and small
capitalization and foreign stocks are expected to vary based on the
Adviser's evaluation of anticipated relative returns and risks between
and among such securities in the near-term future. The Adviser will
review strategic asset allocations at least semiannually and will
adjust the asset allocations, if necessary, at that time. Additionally,
the strategic asset allocation mix of each Tomorrow Fund (other than
the Post-Retirement Fund) will be adjusted as necessary to reflect a
level of risk that the Adviser considers appropriate for investors in
that target class, in general, given their investment time horizon.
As the average age of the target class of investors in a Tomorrow
Fund approaches that of the Post-Retirement Fund, it is anticipated
that each Tomorrow Fund's assets may begin to decrease as a result of
investor withdrawals. At such time, the Trustees of the Trust will
consider what action would be appropriate to protect the interests of
remaining shareholders, including a combination with the
Post-Retirement Fund.
-6-
<PAGE>
You are encouraged to select a particular Tomorrow Fund for
investment based on your current age and the length of the period
during which you expect to maintain your investment. You may invest in
more than one Tomorrow Fund in order to achieve a personalized
investment program. For example, an investor in the Long-Term, Mid-Term
or Short-Term Funds may also select the Post-Retirement Fund to seek
additional current income. Before investing in the Tomorrow Funds, you
should consider your personal tolerance for risk recognizing that each
Tomorrow Fund is designed and managed to satisfy the retirement goals
of investors in a target age group with a corresponding average life
expectancy who anticipate retiring at approximately age 65. Because the
Tomorrow Funds are managed to satisfy retirement goals based upon
average life expectancy, the Tomorrow Funds may invest their assets in
higher risk/higher reward securities than mutual funds designed for
investors based solely on retirement dates. For example, investors
seeking higher current income or planning to make substantial
withdrawals from their investments shortly after retirement should
consider allocating more of their investment to the Post-Retirement
Fund which seeks to maximize total return, with an emphasis on current
income, consistent with capital preservation. In addition, you should
recognize that each Tomorrow Fund is managed with the goal of achieving
a different risk/reward ratio, with the Long-Term Fund seeking the
highest risk/reward ratio and the Post-Retirement Fund seeking the
lowest risk/reward ratio among the Tomorrow Funds. Each Tomorrow Fund
(other than the Post-Retirement Fund) will be managed to achieve an
increasingly conservative risk/reward ratio as the average age of the
target class of investors in that particular Tomorrow Fund increases.
Risk/Reward Ratio
Higher Lower
----------------------------------------------------------------------
Long-Term Mid-Term Short-Term Post-Retirement
Fund Fund Fund Fund
In what types of securities do the Tomorrow Funds invest?
Each Tomorrow Fund allocates its assets between equity and
fixed-income securities. The equity Category includes equity securities
of all types. The fixed-income Category includes all varieties of
fixed-income instruments (including adjustable rate preferred stocks).
Some types of securities can be considered as both equity and
fixed-income securities. The Tomorrow Funds may also make other
investments that are not considered either an equity or fixed-income
security, such as options and futures.
While each Tomorrow Fund invests in substantially the same equity
and fixed-income securities, the amount of each Tomorrow Fund's assets
allocated to equity and fixed-income securities, and thus in particular
securities, differs. However, it is expected that the relative
percentage that a particular equity or fixed-income security represents
within the equity and fixed-income Categories and the large, medium and
small capitalization and foreign stock Subcategories ordinarily will
remain substantially the same.
Each Tomorrow Fund may, but is not required to, utilize various
investment strategies and techniques to hedge various market risks
(such as broad or specific equity or fixed-income market movements and
interest rate risk), to manage the effective maturity or duration of
fixed-income securities, or to enhance potential gain. Such strategies
and techniques are generally accepted as part of modern portfolio
management and are regularly utilized by many mutual funds. The
investment strategies and
-7-
<PAGE>
techniques used by the Tomorrow Funds and the instruments in which they
invest may change over time as new techniques, strategies and
instruments are developed or regulatory changes occur.
In the course of pursuing their investment objectives, the
Tomorrow Funds may: (i) purchase and write (sell) put and call options
on securities and indices; (ii) purchase and sell financial futures
contracts and options thereon; (iii) lend portfolio securities; (iv)
enter into repurchase agreements; (v) purchase securities on a forward
commitment, when issued or delayed delivery basis; (vi) invest in
restricted and illiquid securities; (vii) invest in other investment
companies; and (viii) invest in securities of unseasoned issuers. For
further information concerning the securities in which the Tomorrow
Funds may invest and the investment strategies and techniques they may
employ, see "Risk Considerations and Other Investment Practices and
Policies" below in this Prospectus.
Equity Securities
A Tomorrow Fund's assets allocated to equity securities is
currently invested, in varying amounts, among large capitalization
stocks, medium capitalization stocks, small capitalization stocks and
foreign stocks. Please refer to the charts on the previous page for the
current strategic allocation of a Tomorrow Fund's assets among these
securities.
Large, Medium and Small Capitalization Stocks.
With respect to the assets of each Tomorrow Fund allocated to
large, medium and small capitalization stocks, the Adviser seeks to
provide, using a quantitative methodology, investment results that
exceed the performance of an appropriate "Benchmark Index." To seek to
achieve this objective, the assets that are allocated separately to
large, medium and small capitalization stocks will, under normal market
conditions, be invested in a portfolio of securities that is considered
more "efficient" than the applicable Benchmark. An efficient portfolio
is one that has the maximum expected return for any level of risk. The
efficient mix of securities is established mathematically, taking into
account the expected return and volatility of returns for each security
in a given universe, as well as the historical price relationships
between different securities in the universe.
Subcategory Benchmark
Large Capitalization Stocks Standard & Poor's 500 Composite
Stock Price Index
Medium Capitalization Stocks Standard & Poor's 400 MidCap Index
Small Capitalization Stocks Russell 2000 Index
To implement this strategy with respect to a Subcategory, the
Adviser compiles the historical price data of all securities which
comprise the applicable Benchmark. The Adviser may eliminate a security
from consideration if it considers the security to have an inadequate
or misleading price history. Using historical price data, the Adviser
constructs and analyzes a complete matrix of all the possible price
relationships between the securities in the applicable Benchmark.
Using a sophisticated software program that incorporates risk
reduction techniques developed by investment professionals of the
Adviser, the Adviser constructs a number of portfolios separately with
respect to each Tomorrow Fund's assets that are allocated to large,
medium and small capitalization stocks, which portfolios are believed
to have optimized risk/reward ratios. From these alternative
portfolios, the Adviser selects the combination of securities, together
with their appropriate weightings, that the Adviser believes will
comprise the optimal portfolio for each Subcategory. The optimal
portfolio for each
-8-
<PAGE>
Subcategory is designed to have a return greater than, but highly
correlated with, the return of its Benchmark. Please see "Quantitative
Methodology" in the SAI for a further description of how the Adviser
constructs and maintains an optimal portfolio for the large, medium and
small capitalization Subcategories.
Foreign Stocks.
The Adviser intends to invest each Tomorrow Fund's assets
allocated to the foreign stocks in shares of other open-end and/or
closed-end investment companies. Such other investment companies will
invest their assets in securities of foreign issuers. The Adviser will
select for investment other investment companies whose underlying
securities, when aggregated, resemble the composition of the Morgan
Stanley Europe, Australia, Far East Index ("EAFE Index"). There can be
no assurance that the Adviser will be successful in selecting such
investment companies. See "Risk Considerations and Other Investment
Practices and Policies - Other Investment Companies" below.
Fixed-Income Securities
Each Tomorrow Fund will invest those assets which are allocated to
fixed-income securities in a broad range of fixed-income securities,
including bonds, notes, mortgaged-backed and asset-based securities,
preferred stock and convertible debt securities issued by U.S.
corporations or other entities or by the U.S. Government or its
agencies, authorities, instrumentalities or sponsored enterprises. The
Tomorrow Funds limit their investments in fixed-income securities to
those that are rated, at the time of purchase, investment grade or, if
not rated, determined by the Adviser to be of equivalent credit quality
to securities so rated. Fixed-income securities may pay interest on a
fixed, variable, floating (including inverse floating), contingent,
in-kind or deferred basis. In general, the value of fixed-income
securities rises when interest rates fall, and vice versa. Fixed-income
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term fixed-income
securities are generally more sensitive to interest changes than
shorter-term fixed-income securities. There is no limit on the average
dollar-weighted maturity of a Tomorrow Fund's portfolio or on the
maturity of any individual fixed-income security purchased by a
Tomorrow Fund. See "Risk Considerations and Other Investment Practices
and Policies - Fixed-Income Securities" below.
HOW TO BUY SHARES
Who is eligible to purchase Adviser Class shares of the Tomorrow Funds?
Adviser Class shares of the Tomorrow Funds may be purchased only
for the account of pension or retirement plans ("Qualified Plans") that
satisfy the qualification requirements of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"). Qualified Plans include: 401(k) plans, 403(b) plans, 457 plans,
governmental plans, tax-sheltered annuity plans and individual
retirement accounts (IRAs).
Should you have any questions as to whether you are an eligible
investor, please call WPG at 1-800-___________.
Through whom may Adviser Class shares of the Tomorrow Funds be
purchased?
Because you may not purchase Adviser Class shares of the Tomorrow
Funds directly, all orders to purchase Adviser Class shares must be
made through the trustee, custodian, plan administrator or other
fiduciary (each a "Plan Fiduciary") of your Qualified Plan. If the
monies you wish to invest in the Tomorrow
-9-
<PAGE>
Funds are maintained in a Qualified Plan sponsored by your employer,
please consult with your employer for information about how to purchase
shares of the Tomorrow Funds. If the monies you wish to invest in the
Tomorrow Funds are maintained by your Plan Fiduciary in an IRA or other
self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to purchase shares of the Tomorrow
Funds.
You may establish an IRA with the Trust's custodian, Boston Safe
Deposit and Trust Company ("Boston Safe"), through which you may invest
in the Tomorrow Funds. Additionally, you may invest in the Tomorrow
Funds by "rolling over" an existing IRA into an IRA maintained by
Boston Safe. Please call WPG at 1-800-_____ for information regarding
how to establish an IRA with Boston Safe.
Plan Fiduciaries may purchase shares of the Tomorrow Funds for a
Qualified Plan through any investment dealer or financial service firm
("Authorized Firm") approved by WPG. Authorized Firms include
broker-dealers, banks and financial planners.
What is the minimum investment in shares of the Tomorrow Funds?
Plan Fiduciaries may invest in the Tomorrow Funds with as little
as $2,000 ($250 for a spousal IRA). There is no minimum amount required
for subsequent investments.
How may Plan Fiduciaries invest in the Tomorrow Funds for the account
of their Qualified Plans?
In order to make an initial investment in a Tomorrow Fund for a
Qualified Plan, Plan Fiduciaries must open an account with the Tomorrow
Funds by furnishing to an Authorized Firm the information in the
Account Information Form attached to this Prospectus. Shares of the
Tomorrow Funds may be purchased on any day during which the New York
Stock Exchange is open for business (a "Business Day").
At what price are Adviser Class shares of the Tomorrow Funds offered?
Adviser Class shares of the Tomorrow Funds are sold at the net
asset value (NAV) of such shares next determined after the Transfer
Agent receives and accepts a purchase order. Purchase orders received
by Authorized Firms by the close of regular trading on the New York
Stock Exchange on any Business Day and transmitted to the Transfer
Agent by the close of its business day (normally [5]:00 p.m. New York
City time) will be effected as of the close of regular trading on the
New York Stock Exchange on that day. Otherwise, orders will be effected
at the NAV determined on the next Business Day. It is the
responsibility of Authorized Firms to transmit orders so that they will
be received by the Transfer Agent before the close of its business day.
Plan Fiduciaries: To Make an Initial Investment for a Qualified Plan
By Mail: 1. Make a check payable to the Tomorrow Fund in which you
wish to or are instructed to invest.
2. Deliver the completed Account Information Form and check
to an Authorized Firm or mail to the Transfer Agent at
the address indicated on the back cover of this
Prospectus.
-10-
<PAGE>
By Wire: 1. Call 1-800-________ to open an account and to arrange
for a wire transaction.
2. Instruct your bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
Bank Routing No. __________
Specify:
Name of Tomorrow Fund
Adviser Class shares
Account Number
Name(s) in which account is to be registered
3. Deliver the completed Account Information Form to an
Authorized Firm or mail to the Transfer Agent at the
address indicated on the back cover of this Prospectus.
Plan Fiduciaries: To Make Further Investments for a Qualified Plan
Automatically: 1. Use the Automatic Investment Plan. Sign up for this
service when opening an account, or call 1-800-_____
to add it. Plan Fiduciaries must designate the bank
or credit union account from which funds will be
drawn.
2. The amount to be invested will automatically be with-
drawn from the designated bank or credit union account
on or about the first Business Day of the month or
quarter selected.
By Telephone: 1. Sign up for this service when opening an account, or
call 1-800-_______ to add it. Plan Fiduciaries must
designate the bank or credit union account from which
funds will be drawn. Note that in order to invest by
phone, the account must be in a bank or credit union
that is a member of the Automated Clearing House
system (ACH).
2. Once this service has been selected, Plan Fiduciaries
may purchase additional shares for the account of
Qualified Plans by calling the Tomorrow Funds' Transfer
Agent, The Shareholder Services Group, Inc., toll-free
at 1-800-_________.
3. Give the Transfer Agent representative the name(s) in
which the account is registered, the Tomorrow Fund
name, Adviser Class shares, the account number, and the
amount of the investment.
-11-
<PAGE>
4. An investment will normally be credited to the Qualified
Plan account the Business Day following the phone
request.
During periods of extreme economic conditions or market
changes, requests by telephone may be difficult to make
due to heavy volume. During such times please consider
placing purchase orders by mail.
By Mail: 1. Include a note with the investment specifying:
Name of the Tomorrow Fund
Adviser Class shares
Account Number
Name(s) in which account is registered
2. Make the check payable to the Tomorrow Fund in which
you wish to or are instructed to invest. Indicate the
account number on the check.
3. Deliver the account information and check to an
Authorized Firm or mail to the Transfer Agent at the
address indicated on the back cover of this Prospectus.
By Wire: Instruct the bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
ABA Routing No. __________
For credit to:
Name of Tomorrow Fund
Adviser Class shares
Your Account Number
Name(s) in which account is registered
Other Purchase Information. Each Tomorrow Fund reserves the right
to reject any purchase for any reason and to cancel any purchase due to
nonpayment. As a condition of this offering, if your purchase is
cancelled due to nonpayment or because your check does not clear (and,
therefore, your account is required to be redeemed), you will be
responsible for any loss incurred by the Tomorrow Fund(s) affected. All
purchases must be made in U.S. dollars. Checks drawn on foreign banks
will delay purchases until U.S. funds are received and a collection
charge may be imposed. In such cases, Adviser Class shares of the
Tomorrow Funds are priced at the net asset value computed after the
Transfer Agent receives notification of the dollar equivalent from the
Tomorrow Funds' custodian bank. Wire purchases normally take two or
more hours to complete and, to be accepted the same day, must be
received by 4:00 p.m. New York City time. Your bank may charge a fee to
wire funds. Telephone transactions are recorded to verify information.
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Acquiring Shares of the Tomorrow Funds in Exchange for Securities.
Shares of the Tomorrow Funds may be purchased in whole or in part for
the account of Qualified Plans by delivering to the Tomorrow Funds'
custodian, Boston Safe, securities acceptable to WPG. Please see
"In-Kind Purchases" in the SAI for the terms and conditions of these
transactions.
HOW TO SELL SHARES
How may Adviser Class shares of the Tomorrow Funds be redeemed?
Subject to the restrictions (if any) imposed by your Qualified
Plan, you can arrange to sell or "redeem" some or all of your shares on
any Business Day. All orders to redeem Adviser Class shares must be
made through your Plan Fiduciary. If the Adviser Class shares you wish
to redeem are held for the account of a Qualified Plan sponsored by
your employer, please consult with your employer for information about
how to redeem shares of the Tomorrow Funds. If the Adviser Class shares
you wish to redeem are maintained by your Plan Fiduciary in an IRA or
other self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to redeem shares of the Tomorrow
Funds. Please note that shares may not be redeemed by telephone or
telegram, except for exchanges which can be requested by Plan
Fiduciaries by telephone or in writing.
At what price are Adviser Class shares of the Tomorrow Funds redeemed?
Adviser Class shares of the Tomorrow Funds will be redeemed at the
share price (NAV) of such shares next calculated after a redemption
order is received in good order by the Transfer Agent. Once shares are
redeemed, sale proceeds generally are available the next Business Day,
but may take up to three Business Days. For your protection, redemption
proceeds will not be released until a shareholder's account has been
opened and payment for the shares to be redeemed have been received by
the Tomorrow Fund, which may take up to fifteen days.
The net asset value per share received upon redemption or
repurchase may be more or less than the original cost of the shares,
depending on the market value of the portfolio at the time of
redemption or repurchase.
Plan Fiduciaries: To Redeem Shares for a Qualified Plan
By Mail: 1. In a written request specify:
Name of the Tomorrow Fund
Adviser Class shares
Account Number
Name(s) in which account is registered
The dollar amount or the number of shares to be
redeemed
2. Deliver the redemption request to an Authorized Firm
or mail to the Transfer Agent at the address
indicated on the back cover of this Prospectus.
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Automatically: 1. Use the Automatic Withdrawal Plan if the Qualified
Plan account has a total value of at least $[_____].
Sign up for this service when opening an account, or
call 1-800-_______ to add it.
2. The redemption proceeds of $[______] or more will
automatically be transferred from the Qualified Plan
account to the designated address or bank account on
or about the first Business Day of the month or
quarter selected.
General Redemption Information. Authorized Firms must receive
redemption requests before the close of business on the New York Stock
Exchange and transmit them to the Transfer Agent prior to the Transfer
Agent's close of business to receive that day's share price (NAV). A
written redemption request must be signed by all registered
shareholders for the account using the exact names in which the account
is registered or accompanied by executed power(s) of attorney. Unless
otherwise specified, redemption proceeds will be sent by check to the
record address. Plan Fiduciaries may elect to have redemption proceeds
wired to a checking or bank account if wire redemptions were authorized
when the account was opened or have subsequently been authorized.
Redemptions may be suspended or postponed during any period in
which any of the following conditions exist: the New York Stock
Exchange is closed or trading on the Exchange is restricted; an
emergency exists during which it is not reasonably practicable for a
Tomorrow Fund to dispose of its portfolio securities or to fairly
determine its net asset value; or the SEC, by order, so permits.
Certain requests must include a signature guarantee. A signature
guarantee is a widely accepted way to protect you and the Tomorrow
Funds from fraud by verifying the signature on your request. A
signature guarantee is required if the redemption proceeds are to be
sent to an address other than the address of record or to a person
other than the registered shareholder(s) for the account [or if the net
asset value of the shares redeemed is $100,000 or more].
The following institutions may provide a signature guarantee,
provided that the institution meets credit standards established by the
Transfer Agent: (i) a bank; (ii) a securities broker or dealer,
including a government or municipal securities broker or dealer, that
is a member of a clearing corporation or has net capital of at least
$100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association;
or (v) a national securities exchange, a registered securities exchange
or a clearing agency.
Signature guarantees may not be provided by a notary public.
Small Accounts. In order to reduce the expense of maintaining
numerous small accounts, the Trust reserves the right to redeem any
shareholder account (other than an IRA) if, as a result of redemptions,
the value of the account is less than $100. Plan Fiduciaries will be
allowed at least 60 days, after written notice by the Trust, to make an
additional investment to bring the account value up to at least $100
before the redemption is processed.
Change in Tax Status. Plan Fiduciaries are required to notify the
Trust through the Transfer Agent if the tax status of their Qualified
Plan is revoked or challenged by the Internal Revenue Service. The
Trust reserves the right to redeem any fund account of any shareholder
whose qualification as a
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qualified pension or retirement plan satisfying the requirements of
Treasury Regulation 1.817-5 is revoked or challenged.
HOW TO EXCHANGE SHARES
May Adviser Class shares be exchanged for shares of other mutual funds?
Subject to the terms of your Qualified Plan Adviser Class shares
of a Tomorrow Fund may be exchanged for Adviser Class shares of any
other Tomorrow Fund or for Adviser Class shares of Core Large-Cap Stock
Fund and Core Small-Cap Stock Fund. To obtain a current prospectus for
the Adviser Class shares of Core Large-Cap Stock Fund and Core
Small-Cap Stock Fund, please call 1-800-___-____. Please consider the
differences in investment objectives and expenses of a Tomorrow Fund as
described in its prospectus before making an exchange.
Do sales charges apply to exchanges?
As is the case with initial purchases of Adviser Class shares,
exchanges of Adviser Class shares are made without the imposition of a
sales charge.
How may I make an exchange?
Because shares of the Tomorrow Funds are held for the account of
Qualified Plans, all orders to exchange shares must be made through
your Plan Fiduciary. If the Adviser Class shares you wish to exchange
are held for the account of a Qualified Plan sponsored by your
employer, please consult with your employer for information about how
to exchange shares of the Tomorrow Funds. If the Adviser Class shares
you wish to exchange are maintained by your Plan Fiduciary in an IRA or
other self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to exchange shares of the Tomorrow
Funds.
Plan Fiduciaries: To Exchange Shares
By Phone: 1. Use the telephone exchange privilege. The telephone
exchange privilege is not available automatically. It
is necessary to sign up for this privilege on the
Account Application Form when opening an account, or
call 1-800-______ to add it.
2. Once this privilege has been selected, simply call the
Transfer Agent toll free at 1-800-223-3332 between
9:00 a.m. and 4:00 p.m. New York City time on any
Business Day.
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3. Give the following information to the Transfer Agent
representative:
Name of current Tomorrow Fund
Adviser Class shares
Name of the fund into which the current Tomorrow
Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
By Mail: 1. Deliver a written request to an Authorized Firm or mail
to the Transfer Agent at the address listed on the back
cover of this Prospectus specifying:
Name of current Tomorrow Fund
Adviser Class shares
Name of the fund into which the current
Tomorrow Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
2. The exchange request must be signed by all registered
holders for the account using the exact names in which
the account is registered or accompanied by executed
power(s) of attorney.
General Exchange Information. Shares exchanged are valued at their
respective net asset values next determined after the exchange request
is received by the Transfer Agent. All exchanges are subject to the
following exchange restrictions: (i) the fund into which shares are
being exchanged must be registered for sale in your state; (ii)
exchanges may be made only between funds that are registered in the
same name, address and taxpayer identification number; and (iii) the
minimum amount for exchanging from one fund into another fund is $100
or the total value of your fund account (if less than $100) and must
satisfy the minimum account size of the fund to be exchanged into.
To confirm that telephone exchange requests are genuine, the Trust
employs reasonable procedures, such as providing written confirmation
of telephone exchange transactions and tape recording of telephone
exchange requests. If the Trust does not employ such reasonable
procedures, it may be liable for any loss incurred by a shareholder due
to a fraudulent or unauthorized telephone exchange request. Otherwise,
neither the Trust nor its agents will be liable for any loss incurred
by a shareholder as the result of following instructions communicated
by telephone that they reasonably believed to be genuine. The Trust
reserves the right to refuse any request made by telephone and may
limit the dollar amount involved or the number of telephone requests
made by any shareholder. During periods of extreme economic conditions
or market changes, requests by telephone may be difficult to make due
to heavy volume. During such times please consider placing your order
by mail.
To prevent abuse of the exchange privilege to the detriment of
other shareholders, the Trust limits the number of exchanges and
purchase/redemption transactions by any one shareholder account (or
group
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of accounts under common management) to a total of six transactions per
year. This policy applies to exchanges into or out of any series of the
Trust and any pair of transactions involving a purchase of shares of
any series of the Trust followed by a redemption of an offsetting or
substantially equivalent dollar amount of shares of that same series.
If a Plan Fiduciary violates this policy, his/her future purchases of,
or exchanges into, the series of the Trust may be permanently refused.
This policy does not prohibit redemptions of shares of any series. This
policy may be waived by WPG in its discretion. Further, the exchange
privilege may be changed or discontinued and may be subject to
additional limitations upon sixty (60) days' notice to shareholders,
including certain restrictions on purchases by market-timer accounts.
HOW EACH TOMORROW FUND'S SHARE PRICE IS DETERMINED
The net asset value per share of a class of a Tomorrow Fund is
determined by dividing the value of its assets, less liabilities
attributable to that class, by the number of shares of that class
outstanding. The net asset value is normally calculated as of the close
of regular trading of the New York Stock Exchange (currently 4:00 p.m.
New York City time) on each Business Day. Different classes of shares
of the Tomorrow Funds may have different net asset values.
Portfolio securities (other than certain money market instruments)
are valued primarily based on market quotations or, if market
quotations are not available, at fair market value as determined in
good faith by a valuation committee appointed by the Trustees. In
accordance with procedures adopted by the Trustees, each Tomorrow Fund
may use pricing services to value fixed-income investments.
MANAGEMENT OF THE TOMORROW FUNDS
Trustees
Each Tomorrow Fund is a separate investment series of Tomorrow
Funds Retirement Trust, a Delaware business trust (the "Trust"). Under
the terms of the Agreement and Declaration of Trust establishing the
Trust, the Trustees of the Trust are ultimately responsible for the
management of its business and affairs.
Investment Adviser
Weiss, Peck & Greer, L.L.C., One New York Plaza, New York, New
York 10004 serves as the investment adviser to each Tomorrow Fund
pursuant to an investment advisory agreement. Subject to the
supervision and direction of the Trustees, the Adviser manages each
Tomorrow Fund's portfolio in accordance with its stated investment
objective and policies, recommends investment decisions for the
Tomorrow Fund and places orders to purchase and sell securities on
behalf of the Tomorrow Fund. For these services, Post-Retirement Fund
pays the Adviser a monthly fee equal on an annual basis to 0.65% of its
average daily net assets and the other Tomorrow Funds each pay the
Adviser a monthly fee equal on an annual basis to 0.75% of the Tomorrow
Fund's average daily net assets.
The Adviser supervises the portfolio management of the Tomorrow
Funds through the Adviser's Asset Allocation Committee, which meets on
a regular basis to evaluate, among other things, the strategic asset
allocation mix between equity and fixed-income securities and among
large, medium and small capitalization and foreign stocks. Joseph N.
Pappo has been primarily responsible since the Tomorrow
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Funds' inception for the day-to-day management of the assets of each
Tomorrow Fund allocated to large, medium and small capitalization
stocks. Mr. Pappo has been a principal of the Adviser since 1994. Prior
to joining WPG, Mr. Pappo was the founder and president of Eden
Financial Group which was acquired by WPG in 1991. Daniel S. Vandivort
has been primarily responsible since the Tomorrow Funds' inception for
the day-to-day management of the assets of each Tomorrow Fund allocated
to fixed-income securities. Mr. Vandivort has been a principal of the
Adviser since November, 1994. Prior thereto, Mr. Vandivort served in
various capacities with CS First Boston Investment Management,
including Managing Director and Head of U.S. Fixed Income and Senior
Portfolio Manager and Director, Global Product Development and
Marketing.
The Adviser has voluntarily agreed to limit temporarily the
operating expenses (excluding Rule 12b-1 fees applicable to the Adviser
Class shares, service fees applicable to the Institutional Class
shares, any other class-specific expenses, litigation, indemnification
and other extraordinary expenses) of the Long-Term, Mid-Term and
Short-Term Funds to 1.25% of their respective average daily net assets
and such operating expenses of the Post-Retirement Fund to 1.15% of its
average daily net assets. The Adviser may discontinue or modify such
limitation in the future at its discretion, although it has no current
intention to do so.
Administrator
Pursuant to an administration agreement with each Tomorrow Fund,
WPG provides personnel for supervisory, administrative, accounting,
shareholder services and clerical functions; oversees the performance
of administrative and professional services to the Tomorrow Funds by
others; provides office facilities, furnishings and office equipment;
and prepares, but does not pay for, reports to shareholders, the SEC
and other regulatory authorities. As compensation for the services
rendered to the Tomorrow Funds as Administrator, WPG is entitled to a
fee, computed daily and payable monthly, at an annual rate equal to
0.09% of each Tomorrow Fund's average daily net assets. The
administrative fee for each Tomorrow Fund is reviewed and approved
annually by the Trustees.
Expenses
Each Tomorrow Fund bears all expenses of its operation, subject to
the expense limitation agreement described above. In particular, each
Tomorrow Fund pays: investment advisory fees; administration fees;
service fees with respect to the Institutional Class shares;
distribution and service fees with respect to the Adviser Class shares;
custodian and transfer agent expenses; legal and accounting fees and
expenses; expenses of preparing, printing, and distributing
Prospectuses and SAIs to existing shareholders, and shareholder
communications and reports; expenses of computing its net asset value
per share; federal and state registration fees and expenses with
respect to its shares; proxy and shareholder meeting expenses; expenses
of issuing and redeeming its shares; independent trustee fees and
expenses; expenses of bond, liability, and other insurance coverage;
brokerage commissions; taxes; trade association fees; and certain
non-recurring and extraordinary expenses. In addition, the expense of
organizing the Tomorrow Funds and initially registering and qualifying
their shares under federal and state securities laws are being charged
to the Tomorrow Funds' operations, as an expense, over a period not to
exceed 60 months from the Tomorrow Funds' inception date.
Each Tomorrow Fund will reimburse the Adviser for fees foregone or
other expenses paid by the Adviser pursuant to this expense limitation
in later years in which operating expenses for that Tomorrow Fund are
less than the expense limitations set forth above for any such year. No
interest, carrying or finance charge will be paid by a Tomorrow Fund
with respect to the amounts representing fees foregone or
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other expenses paid. In addition, no Tomorrow Fund will pay any
unreimbursed amounts to the Adviser upon termination of its investment
advisory agreement.
DISTRIBUTION PLANS
The Trust, on behalf of each Tomorrow Fund, has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Investment Company
Act (the "Distribution Plans"). Under the Distribution Plans, each
Tomorrow Fund pays distribution and service fees at an aggregate annual
rate of up to 0.50% of a Tomorrow Fund's average daily net assets
attributable to Adviser Class shares. Up to 0.25% is for service fees
and the remaining amount is for distribution expenses. The distribution
fee is intended to compensate WPG for its services and expenses
associated with serving as principal underwriter of the Adviser Class
shares of the Tomorrow Funds, including the payment of commissions by
WPG to Authorized Firms. The service fee is intended to be compensation
for personal services and/or account maintenance services with respect
to the Adviser Class shares.
WPG makes monthly payments to Authorized Firms based on the
average net asset value of the Adviser Class shares which are
attributable to Qualified Plans for whom the Authorized Firms are
designated as the dealer of record. WPG makes such payments in amounts
up to the distribution fee it receives with respect to such Adviser
Class shares. WPG may suspend or modify such payments to Authorized
Firms. WPG and the Authorized Firms also share any sales charge imposed
on purchases of Adviser Class shares.
DIVIDENDS AND TAXES
Each Tomorrow Fund is treated as a separate entity for federal
income tax purposes and intends to elect to be treated as a "regulated
investment company" under the Code and to qualify for such treatment
for each taxable year. To qualify as such, each Tomorrow Fund must
satisfy certain requirements relating to the sources of its income,
diversification of its assets and distribution of its income to
shareholders. Each Tomorrow Fund also intends to satisfy certain
additional diversification requirements applicable under Section 817(h)
of the Internal Revenue Code in order to permit investments in
Institutional Class shares of the Tomorrow Funds by insurance company
segregated asset accounts that fund variable annuity or variable life
insurance products, which are subject to such requirements. It is
possible that in order to satisfy the applicable diversification
requirements, investment decisions may be made which would affect
either positively or negatively the investment performance of a
Tomorrow Fund. As a regulated investment company, each Tomorrow Fund
will not be subject to federal income tax on any net investment income
and net realized capital gains that are distributed to its shareholders
in accordance with certain timing requirements of the Code.
Participants in Qualified Plans may be eligible for tax deferral
on distributions a Qualified Plan receives from a Tomorrow Fund and
gains that arise from a Qualified Plan's dispositions of Fund shares.
This Prospectus does not describe in any respect such tax treatment.
Please consult your Plan Fiduciary or tax adviser. It is suggested that
participants in Qualified Plans keep all statements received from their
Qualified Plans to assist in personal recordkeeping.
Each Tomorrow Fund intends to distribute all of its net investment
income and net capital gains each year. Income dividends, if any, will
be declared and distributed monthly for Post-Retirement Fund. Income
dividends, if any, will be declared and distributed at least annually
by each other Tomorrow Fund. Net short-term and long-term capital gains
of each Tomorrow Fund, if any, realized during the taxable year
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will be distributed no less frequently then annually. Dividends derived
from each Tomorrow Fund's net investment income (including dividends,
interest and recognized market discount income), and net short-term
capital gains received by a Tomorrow Fund are treated as ordinary
income under the Code. Distributions from each Tomorrow Fund's net
long-term capital gains are treated as long-term capital gains under
the Code, regardless of how long shares of the Tomorrow Funds have been
held.
Reinvestment of Income Dividends and Capital Gains Distributions
Unless a Plan Fiduciary elects otherwise, as permitted in the
Account Information Form, income dividends and capital gains
distributions with respect to a Tomorrow Fund will be reinvested in
additional Adviser Class shares of that Tomorrow Fund and will be
credited to the Qualified Plan's account with that Tomorrow Fund at the
net asset value per share next determined as of the ex-dividend date.
Both income dividends and capital gains distributions are paid by the
Tomorrow Fund on a per share basis. As a result, at the time of such
payment, the net asset value per share of a Tomorrow Fund will be
reduced by the amount of such payment. Although income dividends and
capital gains distributions by the Tomorrow Funds may not give rise to
current tax liability for the categories of shareholders permitted to
invest in the Tomorrow Funds, participants in Qualified Plans may be
subject to tax on all or a portion of their distributions from such
Plans or upon the failure of such Plans to maintain their qualified
status under complex Code provisions concerning which a tax adviser
should be consulted. Participants in Qualified Plans who wish to change
the manner in which income dividends and capital gains distributions
are received by their Qualified Plans should contact their Plan
Fiduciaries. Written notification of such change must be received by
the Transfer Agent at least ten days before the next scheduled
distribution.
PORTFOLIO BROKERAGE
In effecting securities transactions, the Tomorrow Funds generally
seek to obtain the best price and execution of orders. Commission rates
are a component of price and are considered along with other factors,
including the ability of the broker to effect the transaction, and the
broker's facilities, reliability and financial responsibility. Subject
to the foregoing, the Tomorrow Funds intend to utilize WPG as their
primary broker in connection with the purchase and sale of
exchange-traded portfolio securities. As the Tomorrow Funds' primary
broker, WPG will receive brokerage commissions from the Tomorrow Funds,
limited to the "usual and customary broker's commission" specified by
the 1940 Act. The Tomorrow Funds intend to continue to use WPG as their
primary broker on exchange-traded securities, provided WPG is able to
provide execution at least as favorable as that provided by other
qualified brokers.
The Trustees of the Trust have developed procedures to limit the
commissions received by WPG to the "usual and customary broker's
commission" standard specified by the 1940 Act. On a quarterly basis,
the Trustees review the securities transactions of each Tomorrow Fund
effected by WPG to assure their compliance with such procedures.
The Tomorrow Funds will also execute their portfolio transactions
through qualified brokers other than WPG. In selecting such other
brokers, WPG considers the quality and reliability of brokerage
services, including execution capability and performance and financial
responsibility, and may consider the research and other investment
information provided by such brokers. Accordingly, the commissions paid
to any such broker may be greater than the amount another firm might
charge, provided WPG determines in good faith that the amount of such
commission is reasonable in relation to the value of the brokerage
services and research information provided by such broker. Such
information may be used by WPG (and its affiliates) in managing all of
its accounts and not all of such information may be used by WPG in
managing the Tomorrow Funds. In selecting other brokers for a Tomorrow
Fund, WPG may also consider
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the sale of shares of the Tomorrow Fund effected through such other
brokers as a factor in its selection, provided that Tomorrow Fund
obtains the best price and execution of orders.
Money market securities and other fixed-income securities, as well
as certain equity securities, in which the Tomorrow Funds invest are
traded primarily in the over-the-counter ("OTC") market. For
transactions effected in the OTC market, financial intermediaries
(i.e., dealers) act as principal rather than as agent and receive a
"spread" rather than a commission. The Tomorrow Funds intend to deal
with the primary market-makers with respect to OTC securities, unless a
more favorable result is obtainable elsewhere.
THE TRUST
Tomorrow Funds Retirement Trust is an open-end management
investment company (commonly referred to as a mutual fund) organized as
a Delaware business trust under an Agreement and Declaration of Trust
dated June 21, 1995 (the "Declaration"). The Trust has authorized an
unlimited number of shares of beneficial interest.
As of the date of this Prospectus, the shares of the Trust are
divided into six series: Tomorrow Long-Term Retirement Fund, Tomorrow
Mid-Term Retirement Fund, Tomorrow Short-Term Retirement Fund, Tomorrow
Post-Retirement Fund, Core Large-Cap Stock Fund and Core Small-Cap
Stock Fund. The Trust reserves the right to create and issue additional
series of shares. No series is entitled to share in the assets of any
other series or is liable for the expenses or liabilities of any other
series. Shares of a particular series vote separately on matters
affecting only that series, including the approval of an investment
advisory agreement and changes in fundamental policies or restrictions
of a particular series.
As of the date of this Prospectus, the Trustees have authorized
the issuance of two classes of shares for each series, designated
Adviser Class and Institutional Class. The shares of each Class
represent an interest in the same portfolio of investments of that
series. Each Class has equal rights as to voting, redemption, dividends
and liquidation, except that each Class bears different distribution
fees and may bear other expenses properly attributable to the
particular Class. Adviser Class shareholders of a Tomorrow Fund have
exclusive voting rights with respect to the Rule 12b-1 distribution
plan adopted by holders of Adviser Class shares of that Tomorrow Fund.
The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of a series of the Trust into
additional classes. In addition, subject to Trustee approval and
shareholder approval (if then required), each Tomorrow Fund may pursue
its investment objective by investing all of its investable assets in a
pooled fund. See "Risk Considerations and Other Investment Practices
and Policies" below.
When issued and paid for in accordance with the terms of the
Prospectus and Statement of Additional Information, shares of the Trust
are fully paid and non-assessable. The Trust is not required, and does
not intend, to hold annual shareholder meetings. Shareholders have
certain rights, as set forth in the Declaration, including the right to
call a meeting of shareholders for the purpose of voting on the removal
of one or more Trustees. Such removal can be effected upon the action
of two-thirds of the outstanding shares of the Trust.
In addition to the requirements under Delaware law, the
Declaration provides that a shareholder of the Trust may bring a
derivative action on behalf of the Trust only if the following
conditions are met: (a) shareholders eligible to bring such derivative
action under Delaware law who hold at least 10% of the outstanding
shares of the Trust, or 10% of the outstanding shares of the series or
class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded
a reasonable amount of time to consider such shareholder request and
investigate the
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basis of such claim. The Trustees shall be entitled to retain counsel
or other advisers in considering the merits of the request and shall
require an undertaking by the shareholders making such request to
reimburse the Trust for the expense of any such advisers in the event
that the Trustees determine not to bring such action
The Trustees of the Trust do not foresee any disadvantages to
investors arising out of the fact that each Tomorrow Fund may offer a
class of its shares to insurance company segregated asset accounts that
serve as investment medium for variable annuity and variable life
insurance products or that each Tomorrow Fund may offer its shares to
Qualified Plans. Nevertheless, the Trustees intend to monitor events in
order to identify any material irreconcilable conflicts which may
possibly arise, and to determine what action, if any, should be taken
in response to such conflicts. If such a conflict were to occur, one or
more separate accounts or Qualified Plans might be required to withdraw
their investments in one or more Tomorrow Funds and shares of another
series of the Trust may be substituted. This might force a Tomorrow
Fund to sell securities at disadvantageous prices.
In the interests of economy and convenience, the Trust does not
issue certificates representing the Tomorrow Funds' shares. Instead,
the Transfer Agent maintains a record of each shareholder's ownership.
Although each Tomorrow Fund is offering only its own shares, since the
Tomorrow Funds use this combined Prospectus, it is possible that one
Tomorrow Fund might become liable for a misstatement or omission in
this Prospectus regarding another Tomorrow Fund. The Trustees have
considered this factor in approving the use of this combined
Prospectus.
INVESTMENT PERFORMANCE
Each Tomorrow Fund may illustrate in advertisements and sales
literature the average annual total return of its Adviser Class shares,
which is the rate of growth of the Tomorrow Fund that would be
necessary to achieve the ending value of an assumed initial investment
of $1,000 kept in Adviser Class shares of the Tomorrow Fund for the
period specified and is based on the following assumptions: (1) all
dividends and distributions by the Tomorrow Fund are reinvested in
Adviser Class shares of the Tomorrow Fund at net asset value; and (2)
all recurring fees are included for applicable periods.
Each Tomorrow Fund may also illustrate in advertisements the
cumulative total return for several time periods throughout the
Tomorrow Fund's life based on an assumed initial investment of $1,000.
Any such cumulative total return for a Tomorrow Fund will assume the
reinvestment of all income dividends and capital gains distributions in
Adviser Class for the indicated periods and will include all recurring
fees.
Each Tomorrow Fund may also illustrate in advertisements and sales
literature the yield and effective yield of its Adviser Class shares.
Yield is based on income generated by an investment in Adviser Class
shares of the Tomorrow Fund during a 30-day (or one-month) period. To
calculate yield, this income is annualized, that is, the amount of
income generated during the 30-day (or one-month) period is assumed to
be generated each 30-day (or one-month) period over a one-year period,
and expressed as an annual percentage rate. Effective yield for Adviser
Class shares of the Tomorrow Funds is calculated in a similar manner
but, when annualized, the income earned from an investment is assumed
to be reinvested. Effective yield for each Tomorrow Fund will be
slightly higher than its current yield because of the compounding
effect of this assumed reinvestment.
Yields and total returns quoted for the Tomorrow Funds include the
effect of deducting each Tomorrow Fund's expenses but may not include
charges and expenses attributable to any particular Qualified Plan. You
should consult with your Plan Fiduciary for information on relevant
charges and
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expenses. Because these charges and expenses are excluded from a
Tomorrow Fund's quoted performance, the investment return received by a
participant in a Qualified Plan investing in the Tomorrow Fund may be
lower than the quoted performance of the Tomorrow Fund. You should bear
in mind the effect of these charges when comparing a Tomorrow Fund's
performance to that of other mutual funds.
The performance of the Adviser Class shares of the Tomorrow Funds
will vary from time to time and past results are not necessarily
representative of future results. Performance is a function of the type
and quality of a Tomorrow Fund's portfolio securities and is affected
by operating expenses. Performance information may not provide a basis
for comparison with other investments or other mutual funds using a
different method of calculating performance. An investment in any
Tomorrow Fund involves the risk of loss.
RISK CONSIDERATIONS AND OTHER INVESTMENT PRACTICES AND POLICIES
Because each Tomorrow Fund owns different types of investments,
its performance is affected by a variety of factors. The value of a
Tomorrow Fund's investments and the income they generate will vary from
day to day, and generally reflect interest rates, market conditions,
and other company, political and economic news. Performance also
depends of the Adviser's skill in allocating assets. When you sell your
shares, they may be worth more or less than what you paid for them.
Fixed-Income Securities. Each Tomorrow Fund may invest in a broad
range of fixed-income securities, including bonds, notes, mortgage-
backed and asset-backed securities, preferred stock and convertible
debt securities issued by U.S. corporations or other entities or by
the U.S. Government or its agencies,
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authorities, instrumentalities or sponsored enterprises. The interest
payable on so-called fixed-income securities purchased by a Tomorrow
Fund is not necessarily paid at a fixed rate and may be payable on a
variable, floating (including inverse floating), contingent, in-kind or
deferred basis.
Fixed-income securities are subject to the risk of the issuers'
inability to meet principal and interest payments on the obligations
(credit risk) and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the credit
worthiness of the issuer and general market liquidity (market risk).
Generally, when interest rates decline, the value of fixed-income
securities can be expected to rise. Conversely, when interest rates
rise the value of fixed-income securities can be expected to decline.
Corporate Debt Obligations. Each Tomorrow Fund may invest in corporate
debt obligations, including obligations of industrial, utility and
financial issuers. In addition to obligations of corporations,
corporate debt obligations include bank obligations and zero coupon
securities, issued by financial institutions and corporations.
The debt securities in which the Tomorrow Funds may invest will be
rated investment grade at the time of purchase. Investment grade
securities are securities rated within the four highest grades as
determined by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A
or Baa) or by Standard & Poor's Ratings Group ("Standard & Poor's")
(AAA, AA, A or BBB) or their respective equivalent ratings or, if not
rated, determined by the Adviser to be of equivalent credit quality to
securities so rated. A security will be deemed to have met a rating
requirement if it receives the minimum required rating from at least
one such rating organization even though it has been rated below the
minimum rating by one or more other rating organizations, or if unrated
by such rating organizations, determined by the Adviser to be of
comparable credit quality. Securities rated Baa by Moody's or BBB by
Standard & Poor's and unrated securities of equivalent credit quality
are considered medium grade obligations with speculative
characteristics. Adverse changes in economic conditions or other
circumstances are more likely to weaken the issuer's capacity to pay
interest and repay principal on these securities than is the case for
issuers of higher rated securities. In the event that the rating on a
security held in a Tomorrow Fund's portfolio is downgraded below
investment grade by a rating service, such action will be considered by
the Adviser in its evaluation of the overall investment merits of that
security, but will not necessarily result in the sale of the security.
Convertible Securities and Preferred Stocks. Each Tomorrow Fund may
invest in debt securities or preferred stocks that are convertible into
or exchangeable for common stock. Preferred stocks are securities that
represent an ownership interest in a company and provide their owner
with claims on the company's earnings and assets prior to the claims of
owners of common stock but after those of bond owners. Preferred stocks
in which the Tomorrow Funds may invest include sinking fund,
convertible, perpetual fixed and adjustable rate (including auction
rate) preferred stocks.
U.S. Government Securities. Each Tomorrow Fund may invest in all types
of U.S. Government securities, including obligations issued or
guaranteed by the U.S. Government or its agencies, authorities,
instrumentalities or sponsored enterprises. Some U.S. Government
securities, such as Treasury bills, notes and bonds, which differ only
in their interest rates, maturities and times of issuance, are
supported by the full faith and credit of the United States of America.
Others, such as obligations issued or guaranteed by U.S. Government
agencies, authorities, instrumentalities or sponsored enterprises are
supported either by (a) the full faith and credit of the U.S.
Government (such as securities of the Small Business Administration),
(b) the right of the issuer to borrow from the U.S. Treasury (such as
securities of the Federal Home Loan Banks), (c) the discretionary
authority of the U.S. Government to purchase the agency's obligations
(such as securities of the Federal National Mortgage Association), or
(d) only the credit of the issuer.
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Each Tomorrow Fund may also invest in separately traded principal
and interest components of securities guaranteed or issued by the U.S.
Government or its agencies, instrumentalities or sponsored enterprises
if such components are traded independently under the Separate Trading
of Registered Interest and Principal of Securities program ("STRIPS")
or any similar program sponsored by the U.S. Government. The Tomorrow
Funds may invest in U.S. Government securities which are zero coupon or
deferred interest securities.
Zero Coupon and Capital Appreciation Bonds. The Tomorrow Funds may
invest in zero coupon and capital appreciation bonds. Zero coupon and
capital appreciation bonds are debt securities issued or sold at a
discount from their face value that do not entitle the holder to any
payment of interest prior to maturity or a specified redemption date
(or cash payment date). The amount of the discount varies depending on
the time remaining until maturity or cash payment date, prevailing
interest rates, the liquidity of the security and the perceived credit
quality of the issuer. These securities also may take the form of debt
securities that have been stripped of their unmatured interest coupons,
the coupons themselves or receipts or certificates representing
interests in such stripped debt obligations or coupons. The market
prices of zero coupon and capital appreciation bonds generally are more
volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit
quality.
Mortgage-Backed Securities. Each Tomorrow Fund may invest in mortgage
pass-through certificates and multiple-class pass-through securities,
such as real estate mortgage investment conduits ("REMIC") pass-through
certificates and collateralized mortgage obligations ("CMOs").
Guaranteed Mortgage Pass-Through Securities. Guaranteed mortgage
pass-through securities represent participation interests in pools of
residential mortgage loans and are issued by U.S. Governmental or
private lenders and guaranteed by the U.S. Government National Mortgage
Association ("Ginnie Mae"), the Federal National Mortgage Association
("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie
Mac"). Ginnie Mae certificates are guaranteed by the full faith and
credit of the U.S. Government for timely payment of principal and
interest on the certificates. Fannie Mae certificates are guaranteed by
Fannie Mae, a federally chartered and privately owned corporation, for
full and timely payment of principal and interest on the certificates.
Freddie Mac certificates are guaranteed by Freddie Mac, a corporate
instrumentality of the U.S. Government, for timely payment of interest
and the ultimate collection of all principal of the related mortgage
loans.
Multiple-Class Pass-through Securities and Collateralized Mortgage
Obligations. CMOs and REMIC pass-through or participation certificates
may be issued by, among others, U.S. Government agencies and
instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several
classes of CMOs or REMIC certificates in various ways. Each class of
CMOs or REMIC certificates, often referred to as a "tranche," is issued
at a specific adjustable or fixed interest rate and must be fully
retired no later than its final distribution date. Generally, interest
is paid or accrues on all classes of CMOs or REMIC certificates on a
monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or
Freddie Mac certificates but also may be collateralized by other
mortgage assets such as whole loans or private mortgage pass-through
securities. Debt service on CMOs is provided from payments of principal
and interest on collateral of mortgaged assets and any reinvestment
income thereon.
A REMIC is a CMO that qualifies for special tax treatment under
the Code and invests in certain mortgages primarily secured by
interests in real property and other permitted investments. Investors
may
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purchase "regular" and "residual" interest shares of beneficial
interest in REMIC trusts although the Tomorrow Funds do not intend to
invest in residual interests.
Risk Factors Associated with Mortgage-Backed Securities. Investing in
Mortgage-Backed Securities involves certain risks, including the
failure of a counter-party to meet its commitments, adverse interest
rate changes and the effects of prepayments on mortgage cash flows.
Further, the yield characteristics of Mortgage-Backed Securities differ
from those of traditional fixed-income securities. The major
differences typically include more frequent interest and principal
payments (usually monthly), the adjustability of interest rates, and
the possibility that prepayments of principal may be made substantially
earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest
rates and a variety of economic, geographic, social and other factors
and cannot be predicted with certainty. Both adjustable rate mortgage
loans and fixed rate mortgage loans may be subject to a greater rate of
principal prepayments in a declining interest rate environment and to a
lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest rate and prepayment rate scenarios,
a Tomorrow Fund may fail to recoup fully its investment in
Mortgage-Backed Securities notwithstanding any direct or indirect
governmental or agency guarantee. When a Tomorrow Fund reinvests
amounts representing payments and unscheduled prepayments of principal,
it may receive a rate of interest that is lower than the rate on
existing adjustable rate mortgage pass-through securities. Thus,
Mortgage-Backed Securities, and adjustable rate mortgage pass-through
securities in particular, may be less effective than other types of
U.S. Government securities as a means of "locking in" interest rates.
Conversely, in a rising interest rate environment, a declining
prepayment rate will extend the average life of many Mortgage-Backed
Securities. This possibility is often referred to as extension risk.
Extending the average life of a Mortgage-Backed Security increases the
risk of depreciation due to future increases in market interest rates.
Risks Associated with Specific Types of Derivative Debt Securities.
Different types of derivative debt securities are subject to different
combinations of prepayment, extension and/or interest rate risk.
Conventional mortgage pass-through securities and sequential pay CMOs
are subject to all of these risks, but are typically not leveraged.
Thus, the magnitude of exposure may be less than for more leveraged
Mortgage-Backed Securities.
Planned amortization class ("PAC") and target amortization class
("TAC") CMO bonds involve less exposure to prepayment, extension and
interest rate risk than other Mortgage-Backed Securities, provided that
prepayment rates remain within expected prepayment ranges or "collars."
To the extent that prepayment rates remain within these prepayment
ranges, the residual or support tranches of PAC and TAC CMOs assume the
extra prepayment, extension and interest rate risk associated with the
underlying mortgage assets.
Asset-Backed Securities. Each Tomorrow Fund may invest in asset-backed
securities, which represent participations in, or are secured by and
payable from, pools of assets such as motor vehicle installment sale
contracts, installment loan contracts, leases of various types of real
and personal property, receivables from revolving credit (credit card)
agreements and other categories of receivables. Asset-backed securities
may also be collateralized by a portfolio of U.S. Government
securities, but are not direct obligations of the U.S. Government, its
agencies or instrumentalities. Such asset pools are securitized through
the use of privately-formed trusts or special purpose corporations.
Payments or distributions of principal and interest on asset-backed
securities may be guaranteed up to certain amounts and for a certain
time period by a letter of credit or a pool insurance policy issued by
a financial institution unaffiliated with the trust or
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corporation, or other credit enhancements may be present; however,
privately issued obligations collateralized by a portfolio of privately
issued asset-backed securities do not involve any government-related
guarantee or insurance. In addition to risks similar to those
associated with Mortgage-Backed Securities, asset-backed securities
present further risks that are not presented by Mortgage-Backed
Securities because asset-backed securities generally do not have the
benefit of a security interest in collateral that is comparable to
mortgage assets.
Real Estate Investment Trusts. Each Tomorrow Fund may invest in shares
of real estate investment trusts ("REITs"). REITs are pooled investment
vehicles which invest primarily in income producing real estate or real
estate related loans or interests. REITs are generally classified as
equity REITs, mortgage REITs or a combination of equity and mortgage
REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs invest the majority of their
assets in real estate mortgages and derive income from the collection
of interest payments. Like investment companies such as the Tomorrow
Funds, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Internal Revenue
Code. Any Tomorrow Fund that invests in REITs will indirectly bear its
proportionate share of any expenses paid by such REITs in addition to
the expenses paid by the Tomorrow Fund.
Investing in REITs involves certain risks: equity REITs may be
affected by changes in the value of the underlying property owned by
the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to the risks of financing projects. REITs
are subject to heavy cash flow dependency, default by borrowers,
self-liquidation, and the possibilities of failing to qualify for the
exemption from tax for distributed income under the Internal Revenue
Code and failing to maintain their exemptions from the 1940 Act. REITs
whose underlying assets include long-term health care properties, such
as nursing, retirement and assisted living homes, may be impacted by
federal regulations concerning the health care industry.
Investing in REITs may involve risks similar to those associated
with investing in small capitalization companies. REITs may have
limited financial resources, may trade less frequently and in a limited
volume and may be subject to more abrupt or erratic price movements
than larger company securities. Historically, small capitalization
stocks, such as REITs, have been more volatile in price than the larger
capitalization stocks included in the S&P 500 Index.
Investing in Small Capitalization Companies. Each Tomorrow Fund may
invest in varying degrees in smaller, lesser known companies which the
Adviser believes offer a greater growth potential than larger, more
mature, better known firms. Investing in the securities of such
companies, however, involves greater risk and a possibility of greater
portfolio price volatility. Historically, small capitalization stocks
and stocks of recently organized companies have been more volatile in
price than the larger capitalization stocks, such as those included in
the S&P 500. Among the reasons for the greater price volatility of
these small company and unseasoned stocks are the less certain growth
prospects of smaller firms and the lower degree of liquidity in the
markets for such stocks.
Other Investment Companies. Each Tomorrow Fund may invest up to 10% of
its total assets in the securities of other investment companies but
may not invest more than 5% of its total assets in the securities of
any one investment company or acquire more than 3% of the voting
securities of any other investment company. A Tomorrow Fund will
indirectly bear its proportionate share of any management fees and
other expenses paid by investment companies in which it invests in
addition to the advisory and administration fees paid by the Tomorrow
Fund. However, to the extent that a Tomorrow Fund invests in a
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registered open-end investment company, the Adviser will waive its
advisory fees on the portion of the Tomorrow Fund's assets so invested.
Each Tomorrow Fund is authorized to invest all of its assets in
the securities of a single open-end investment company (a "pooled
fund") having substantially identical investment objectives, policies
and restrictions as such Fund, notwithstanding any other investment
restriction or policy. Such a structure is commonly referred to as
"master/feeder." If authorized by the Trustees and subject to
shareholder approval (if then required by applicable law), a Tomorrow
Fund would seek to achieve its investment objective by investing in a
pooled fund which would invest in a portfolio of securities that
complies with the Tomorrow Fund's investment objective, policies and
restrictions. The Trustees currently do not intend to authorize
investing in a pooled fund in connection with a master/feeder
structure.
Short-Term Debt Securities. Each Tomorrow Fund may establish and
maintain cash balances for temporary purposes in order to maintain
liquidity to meet shareholder redemptions. Each Tomorrow Fund may also
establish and maintain cash balances for defensive purposes without
limitation to hedge against potential stock market declines. A Tomorrow
Fund's cash balances, including uncommitted cash balances, may be
invested in investment grade money market instruments and short-term
interest-bearing securities. These securities consist of U.S.
Government securities, instruments of U.S. banks (including negotiable
certificates of deposit, non-negotiable fixed-time deposits and
bankers' acceptances), repurchase agreements, prime commercial paper of
U.S. companies and debt securities that make periodic interest payments
at variable or floating rates.
Structured Securities. Each Tomorrow Fund may invest in "structured"
notes, bonds or debentures. The distinguishing feature of a structured
security is that the value of the principal of and/or interest payable
on the security is determined by reference to the value of a benchmark
or the relative change in two or more benchmarks. Examples of these
benchmarks include stock prices, currency exchange rates and physical
commodity prices. Structured securities may be positively or negatively
indexed, so that appreciation of the benchmark may produce an increase
or decrease in the interest rate or value of the structured security at
maturity. Certain structured securities may also be leveraged to the
extent that the magnitude of any change in the interest rate or
principal payable on the benchmark asset is a multiple of the change in
the reference price. Leverage enhances the price volatility of the
security and, therefore, the Fund's net asset value. Further, certain
structured or hybrid notes may be illiquid for purposes of the Fund's
limitation on investments in illiquid securities.
Mortgage Dollar Rolls. Each Tomorrow Fund may enter into mortgage
dollar roll transactions. In a mortgage dollar roll, a Tomorrow Fund
sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type,
coupon and maturity), but not identical securities on a specified
future date. During the roll period, the Tomorrow Fund will not receive
principal and interest paid on the securities sold. However, the
Tomorrow Fund would benefit to the extent of any difference between the
price received for the securities sold and the lower forward price for
the future purchase (often referred to as the "drop") or fee income
plus the interest on the cash proceeds of the securities sold until the
settlement date of the forward purchase. Unless such benefits exceed
the income, capital appreciation and gain or loss due to mortgage
prepayments that would have been realized on the securities sold as
part of the mortgage dollar roll, the use of this technique will
diminish the investment performance of a Tomorrow Fund compared with
what such performance would have been without the use of mortgage
dollar rolls. The Tomorrow Funds will hold and maintain in a segregated
account until the settlement date cash or liquid, high grade debt
securities in an amount equal to the forward purchase price. Any
benefits derived from the use of mortgage dollar rolls may depend upon
mortgage prepayment assumptions, which will be affected by changes in
interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed.
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Writing and Purchasing Put and Call Options on Securities and
Securities Indices. To seek additional income or to minimize
anticipated declines in the value of its securities, each Tomorrow Fund
may purchase and write (i.e., sell) call and put options on securities
and securities indices. Option transactions in which the Tomorrow Funds
may engage may be traded on securities exchanges or in the
over-the-counter market. Each Tomorrow Fund currently intends to limit
its option transactions during the current fiscal year so that no more
than 5% of the Tomorrow Fund's net assets will be at risk as a result
of such transactions. Please see the SAI for a further discussion of
option transactions and associated risks.
Futures Contracts and Options on Futures Contracts. Each Tomorrow Fund
may engage in futures transactions and related options. Future
contracts may be based on various securities (such as U.S. Government
securities), securities indices and other financial instruments and
indices. A Tomorrow Fund will engage in futures and related options
transactions only for bona fide hedging and non-hedging purposes to the
extent permitted by regulations of the Commodity Futures Trading
Commission. A Tomorrow Fund will not enter into futures contracts or
options thereon for non-hedging purposes if, immediately thereafter,
the aggregate initial margin and premiums required to establish
non-hedging positions in futures contracts and options on futures would
exceed 5% of the Tomorrow Fund's net assets, after taking into account
unrealized profits and losses on any such positions and excluding the
amount by which such options were in-the-money at the time of purchase.
Each Tomorrow Fund may also enter into closing purchase and sale
transactions with respect to any of futures contracts and related
options.
The use of futures contracts entails certain risks, including but
not limited to the following: no assurance that futures contracts
transactions can be offset at favorable prices; possible reduction of
the Tomorrow Fund's income due to the use of hedging; possible
reduction in value of the both the securities hedged and the hedging
instrument; possible lack of liquidity due to daily limits on price
fluctuations; imperfect correlation between the contract and the
securities being hedged; and potential losses in excess of the amount
initially invested in the futures contracts themselves. If the
expectations of the Adviser regarding movements in securities prices or
interest rates are incorrect, the Tomorrow Fund may have experienced
better investments results without hedging. The use of futures
contracts and options on futures contracts requires special skills in
addition to those needed to select portfolio securities. A further
discussion of futures contracts and their associated risks is contained
in the SAI.
Forward Commitments, Delayed Delivery and When-Issued Securities. Each
Tomorrow Fund may purchase securities on a when-issued, delayed
delivery, or forward commitment basis. When such transactions are
negotiated, the price of such securities is fixed at the time of the
commitment, but delivery and payment for the securities may take place
up to 90 days after the date of the commitment to purchase. The
securities so purchased are subject to market fluctuation, and no
interest accrues to the purchaser during this period. When-issued
securities or forward commitments involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date.
When a Tomorrow Fund purchases securities on a forward commitment or
when-issued basis, the Tomorrow Fund's custodian will maintain in a
segregated account cash or liquid, high grade debt securities having a
value (determined daily) at least equal to the amount of the Tomorrow
Fund's purchase commitment. A Tomorrow Fund may close out a position in
securities purchased on a when-issued, delayed delivery or forward
commitment basis prior to the settlement date.
Lending of Portfolio Securities. Each Tomorrow Fund may also seek to
increase its income by lending portfolio securities. Such loans may be
made to institutions, such as certain broker-dealers, and are required
to be secured continuously by collateral in cash, cash equivalents or
U.S. Government securities maintained on a current basis at an amount
at least equal to the market value of the securities loaned. If the
Adviser determines to make securities loans, the value of the
securities loaned would not exceed 33 1/ 3% of the value of the total
assets of the Tomorrow Fund. A Tomorrow Fund may experience a loss or
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delay in the recovery of its securities if the borrowing institution
breaches its agreement with the Tomorrow Fund.
Restricted and Illiquid Securities. Each Tomorrow Fund may invest up to
15% of its total assets in "restricted securities" (i.e., securities
that would be required to be registered under the Securities Act of
1933, as amended ("1933 Act"), prior to distribution to the general
public) including restricted securities eligible for resale to
"qualified institutional buyers" under Rule 144A under the 1933 Act.
Each Tomorrow Fund may also invest up to 15% of its net assets in
illiquid investments, which includes repurchase agreements maturing in
more than seven days, securities that are not readily marketable,
certain over-the-counter options and restricted securities, unless the
Trustees determine, based upon a continuing review of the trading
markets for the specific restricted security, that such restricted
securities are liquid. Each Tomorrow Fund may agree to adhere to more
restrictive limits on investments in restricted and illiquid
investments as a condition of the registration of its shares in various
states. The Trustees have adopted guidelines and delegated to the
Advisor the daily function of determining and monitoring the liquidity
of restricted securities. The Trustees, however, retain sufficient
oversight and are ultimately responsible for the determinations. Since
it is not possible to predict with assurance exactly how this market
for restricted securities sold and offered under Rule 144A will
develop, the Trustees carefully monitor each Tomorrow Fund's
investments in these securities, focusing on such important factors,
among others, as valuation, liquidity and availability of information.
This investment practice could have the effect of increasing the level
of illiquidity in a Tomorrow Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities.
Repurchase Agreements. Each Tomorrow Fund may enter into repurchase
agreements through which the Tomorrow Fund purchases a security (the
"underlying security") from a domestic securities dealer or bank that
is a member of the Federal Reserve System. Under the agreement, the
seller of the repurchase agreement (i.e., the securities dealer or
bank) agrees to repurchase the underlying security at a mutually agreed
upon time and price. In repurchase transactions, the underlying
security, which must be a high-quality debt security, is held by the
Tomorrow Fund's custodian through the federal book-entry system as
collateral and marked-to-market on a daily basis to ensure full
collateralization of the repurchase agreement. In the event of
bankruptcy or default of certain sellers of repurchase agreements, a
Tomorrow Fund could experience costs and delays in liquidating the
underlying security held as collateral and might incur a loss if such
collateral declines in value during this period.
Market Changes. The market value of the Tomorrow Fund's investments,
and thus each Tomorrow Fund's net asset value, will change in response
to market conditions affecting the value of its portfolio securities.
When interest rates decline, the value of fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
loans are reset periodically, yields on investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed
rate obligations.
Portfolio Turnover. Although no Tomorrow Fund purchases securities with
a view to rapid turnover, there are no limitations on the length of
time that securities must be held by a Tomorrow Fund and a Tomorrow
Fund's annual portfolio turnover rate may vary significantly from year
to year. A high rate of portfolio turnover (100% or more) involves
correspondingly greater transaction costs which must be borne by the
applicable Tomorrow Fund and its shareholders and may, under certain
circumstances, make it more difficult for such Tomorrow Fund to qualify
as a regulated investment company under the Code. The estimated
portfolio turnover rates of the Tomorrow Funds for the current fiscal
year are as follows: Long-Term Fund 57%; Mid-Term Fund 63%; Short-Term
Fund 65%; and Post-Retirement Fund 82%.
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Diversification. Each Tomorrow Fund is diversified, as defined in the
1940 Act. As such, each Tomorrow Fund has a fundamental policy that
limits its investments so that, with respect to 75% of its assets (i)
no more than 5% of the Tomorrow Fund's total assets will be invested in
the securities of a single issuer and (ii) each Tomorrow Fund will
purchase no more than 10% of the outstanding voting securities of a
single issuer. These limitations do not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities,
repurchase agreements collateralized by U.S. Government securities or
investments in other investment companies. In addition to the
diversification requirements under the 1940 Act, the Tomorrow Funds
must satisfy the diversification requirements under the Internal
Revenue Code applicable to regulated investment companies and the
additional diversification requirements applicable under Section 817(h)
of the Internal Revenue Code to the underlying assets of insurance
company segregated asset accounts that fund variable annuity or
variable life insurance products. These requirements place certain
limitations on the assets of a Tomorrow Fund that may be invested in
securities of a single issuer or interests in the same commodity. More
specific information on these diversification requirements is contained
in the SAI.
Investment Restrictions. Each Tomorrow Fund is subject to further
investment policies and restrictions that are described in the SAI. The
foregoing investment policies, including each Tomorrow Fund's
investment objective, are non-fundamental policies which may be changed
by the Trustees without the approval of shareholders. If there is a
change in a Tomorrow Fund's investment objective, shareholders should
consider whether that Tomorrow Fund remains an appropriate investment
in light of their then current financial positions and needs. Each
Tomorrow Fund has adopted certain fundamental policies which may not be
changed without the approval of the applicable Tomorrow Fund's
shareholders. See "Investment Restrictions" in the Statement of
Additional Information.
If any percentage restriction described above or in the SAI is
adhered to at the time of investment, a subsequent increase or decrease
in the percentage resulting from a change in the value of a Tomorrow
Fund's assets will not constitute a violation of the restriction.
ADDITIONAL INFORMATION
Reports to Shareholders
As shareholders in the Tomorrow Funds, Qualified Plans will
receive an annual report containing audited financial statements and
semi-annual and quarterly reports. Each Qualified Plan will also be
provided with a printed confirmation for each transaction in their
shareholder account. Participants in Qualified Plans may receive
additional reports from their Plan Fiduciary.
Principal Underwriter
WPG serves as the Tomorrow Funds' principal underwriter.
Transfer Agent and Dividend Disbursing Agent
The Shareholder Services Group, Inc. (the "Transfer Agent"), P.O.
Box 9037, Boston, MA 02205 serves as transfer agent and dividend
disbursing agent for the Tomorrow Funds. The Tomorrow Funds may also
enter into agreements with and compensate other transfer agents and
financial institutions who process shareholder transactions and
maintain shareholder accounts.
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<PAGE>
Independent Accountants
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154,
serves as the independent accountants for the Trust and will audit each
Tomorrow Fund's financial statements annually.
Legal Counsel
Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, is
legal counsel to the Trust.
----------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained
in this Prospectus and the SAI, and, if given or made, such other
information or representation must not be relied upon as having been
authorized by the Trust. This Prospectus does not constitute an
offering in any jurisdiction in which such offering may not be lawfully
made.
-32-
<PAGE>
SUBJECT TO COMPLETION: Dated July 5, 1995
WEISS, PECK & GREER INVESTMENTS
TOMORROW FUNDS RETIREMENT TRUST
One New York Plaza
New York, New York 10004
CORE LARGE-CAP STOCK FUND ("Large-Cap Fund")
Seeks to exceed the performance of publicly traded large
capitalization stocks in the aggregate, as represented by the
Standard & Poor's Index of 500 Common Stocks (the "S&P 500").
CORE SMALL-CAP STOCK FUND ("Small-Cap Fund")
Seeks to exceed the performance of publicly traded small
capitalization stocks in the aggregate, as represented by the
Russell 2000 Index (the "Russell 2000").
PROSPECTUS -- Adviser Class Shares
September __, 1995
This Prospectus describes Adviser Class shares of two mutual funds
- the Large-Cap Fund and the Small-Cap Fund (together, the "Funds").
Adviser Class shares of the Funds may be purchased only by "qualified"
pension or retirement plans, including trustees of such plans for
individuals funding their individual retirement accounts or other
qualified plans. Each Fund is a diversified mutual fund advised by
Weiss, Peck & Greer, L.L.C. (the "Adviser" or "WPG").
Please read this Prospectus before investing, and keep it on file
for future reference. It contains important information, including how
the Funds invest and the services available to shareholders. To learn
more about the Funds, you can obtain a copy of the Statement of
Additional Information (the "SAI"), also dated September __, 1995. The
SAI has been filed with the Securities and Exchange Commission (the
"SEC") and is incorporated by reference into this Prospectus. A free
copy of the SAI or a copy of the Prospectus describing the
Institutional Class shares of the Funds is available upon request by
calling Weiss, Peck & Greer, L.L.C. at 1-800-223-3332 (toll free).
Adviser Class shares of a Fund may not be available in your state due
to various insurance or other regulations. Please check with your
qualified plan fiduciary for Funds that are available in your state.
Inclusion of a Fund in this Prospectus which is not available in your
state is not to be considered a solicitation.
ADVISER CLASS SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, BANK OR OTHER INSURED DEPOSITORY
INSTITUTION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN ADVISER CLASS SHARES OF THE FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
Each Fund seeks, using quantitative methodology, to provide
investors who participate in qualified retirement plans with investment
results that exceed the performance of a "Benchmark Index." The
Benchmark for the Large-Cap Fund is the S&P 500 and the Benchmark for
the Small-Cap Fund is the Russell 2000. Each Fund primarily invests its
assets in equity securities of all types which comprise the applicable
Benchmark.
In addition to the Adviser Class shares offered through this
Prospectus, the Funds offer a class of shares known as the
Institutional Class through a separate prospectus. Institutional Class
shares of the Funds are available only to certain eligible investors.
TABLE OF CONTENTS
Page
Expense Information................................
Investment Objectives and Policies.................
How to Buy Shares..................................
How to Sell Shares.................................
How to Exchange Shares.............................
How Each Fund's Share Price is Determined..........
Management of the Funds............................
Distribution Plans.................................
Dividends and Taxes................................
Portfolio Brokerage................................
The Trust..........................................
Investment Performance.............................
Risk Considerations and Other
Practices and Policies............................
Additional Information.............................
<PAGE>
EXPENSE INFORMATION
Operating a mutual fund, such as each Fund, involves a variety of
expenses for portfolio management, shareholder statements, tax
reporting and other services. These costs are paid from a fund's assets
and their effect is factored into any quoted share price or performance
information.
Shareholder Transaction Expenses are charges you pay when you buy or
sell Adviser Class shares of a Fund.
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on
Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fees None None
</TABLE>
Annual Fund Operating Expenses are paid out of the Funds' assets. Each
Fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts. The following are
estimates and are calculated as a percentage of average net assets.
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
Management Fee (after expense limitation) 0.00%* 0.00%*
12b-1 Fee 1 0.50% 0.50%
Other Expenses (after expense limitation) 1.25%* 1.25%*
Total Fund Operating Expenses
(after expense limitation) 1.75%* 1.75%*
</TABLE>
Example: Hypothetically assume that each Fund's annual return is 5% and
that its operating expenses are exactly as just described. For every
$1,000 you invested, you would have paid the following expenses if you
closed your account after the number or years indicated:
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
After 1 Year $18 $18
After 3 Years $56 $56
The purpose of the above table and Example is to assist you in
understanding the various costs and expenses of the Adviser Class
shares of the Funds that an investor will bear directly or indirectly.
See page __. The Funds are newly organized and have no operating
history. The figures shown in the table
-3-
<PAGE>
under the caption "Other Expenses" and in the hypothetical example are
based on estimates of the Funds' expenses for the fiscal year ending
December 31, 1995. The expenses set forth above do not reflect charges
and expenses that may be applicable to a participant in a qualified
plan. Please refer to your qualified plan documents.
---------------
<FN>
1 Rule 12b-1 Fees consist of a 0.25% distribution fee and a
0.25% service fee.
* The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees applicable to
Adviser Class shares, service fees applicable to Institutional Class
shares, any other class-specific expenses, litigation, indemnification
and other extraordinary expenses) to 1.25% of its average daily net
assets. See page __. In the absence of this agreement, Management Fees
would be 0.75% of each Fund's average daily net assets and Other
Expenses and Total Fund Operating Expenses are estimated to be
approximately 3.75% and 5.00%, respectively, of the average daily net
assets attributable to the Adviser Class shares of the Large-Cap Fund
and 4.35% and 5.60%, respectively, of the average daily net assets
attributable to the Adviser Class shares of the Small-Cap Fund.
</FN>
</TABLE>
THE INFORMATION IN THE TABLE AND HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
-4-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
What are the Investment Objectives of the Funds?
Each Fund seeks to provide investors who participate in qualified
retirement plans with investment results that exceed the performance of
a "Benchmark Index." The Benchmark for the Large-Cap Fund is the S&P
500 and the Benchmark for the Small-Cap Fund is the Russell 2000.
LARGE-CAP FUND seeks to exceed the performance of publicly
traded large capitalization stocks in the aggregate,
as represented by the S&P 500. The S&P 500 is an
unmanaged index of 500 common stocks. The S&P 500
represents approximately 70% of the total domestic
U.S. equity market capitalization.
SMALL-CAP FUND seeks to exceed the performance of publicly
traded small capitalization stocks in the aggregate,
as represented by the Russell 2000. The Russell 2000
is an unmanaged index of 2000 common stocks of small
capitalization companies.
How will the Funds invest their assets?
To seek to achieve its objective, each Fund, under normal market
conditions, invests in a portfolio of securities that is considered
more "efficient" than the applicable Benchmark. An efficient portfolio
is one that has the maximum expected return for any level of risk. The
efficient mix of securities is established mathematically, taking into
account the expected return and volatility of returns for each security
in a given universe, as well as the historical price relationships
between the different securities in the universe.
To implement this strategy with respect to the Funds, the Adviser
compiles the historical price data of all securities which comprise the
S&P 500 in the case of the Large-Cap Fund and the Russell 2000 in the
case of the Small-Cap Fund. The Adviser may eliminate a security from
consideration if it considers the security to have an inadequate or
misleading price history. Using this historical price data, the Adviser
constructs and analyzes a complete matrix of all the possible price
relationships between the securities in the applicable Benchmark.
Using a sophisticated software program that incorporates risk
reduction techniques developed by investment professionals of the
Adviser, the Adviser constructs a number of portfolios with respect to
each Fund, which portfolios are believed to have optimized risk/reward
ratios. From these alternative portfolios, the Adviser selects the
combination of securities, together with their appropriate weightings,
that the Adviser believes will comprise the optimal portfolio for each
Fund. The optimal portfolio for a Fund is designed to have a return
greater than, but highly correlated with, the return of its Benchmark.
Please see "Quantitative Methodology" in the SAI for a further
description of how the Adviser constructs and maintains an optimal
portfolio for each Fund.
While each Fund will generally be substantially fully invested in
equity securities which comprise the applicable Benchmark, each Fund
may invest up to 35% of its total assets in fixed-income securities
that are rated at least AA by Standard & Poor's Ratings Group ("S&P")
or Aa by Moody's Investors Service, Inc. ("Moody's") or their
respective equivalents or, if not rated, determined to be of equivalent
credit quality to securities so rated.
Each Fund may, but is not required to, utilize various investment
strategies and techniques to hedge various market risks (such as broad
or specific equity or fixed-income market movements and interest rate
risk) or to enhance potential gain. Such strategies and techniques are
generally accepted as part of modern portfolio management and are
regularly utilized by many mutual funds. The investment
-5-
<PAGE>
strategies and techniques used by the Funds and the instruments in
which they invest may change over time as new techniques, strategies
and instruments are developed or regulatory changes occur.
In the course of pursuing their investment objectives, the Funds
may: (i) purchase and write (sell) put and call options on securities
and indices; (ii) purchase and sell financial futures contracts and
options thereon; (iii) lend portfolio securities; (iv) enter into
repurchase agreements; (v) purchase securities on a forward commitment,
when issued or delayed delivery basis; and (vi) invest in restricted
and illiquid securities. For further information concerning the
securities in which the Funds may invest and the investment strategies
and techniques they may employ, see "Risk Considerations and Other
Investment Practices and Policies" below in this Prospectus.
HOW TO BUY SHARES
Who is eligible to purchase Adviser Class shares of the Funds?
Adviser Class shares of the Funds may be purchased only for the
account of pension or retirement plans ("Qualified Plans") that satisfy
the qualification requirements of Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code").
Qualified Plans include: 401(k) plans, 403(b) plans, 457 plans,
governmental plans, tax-sheltered annuity plans and individual
retirement accounts (IRAs).
Should you have any questions as to whether you are an eligible
investor, please call WPG at 1-800-___________.
Through whom may Adviser Class shares of the Funds be purchased?
Because you may not purchase Adviser Class shares of the Funds
directly, all orders to purchase Adviser Class shares must be made
through the trustee, custodian, plan administrator or other fiduciary
(each a "Plan Fiduciary") of your Qualified Plan. If the monies you
wish to invest in the Funds are maintained in a Qualified Plan
sponsored by your employer, please consult with your employer for
information about how to purchase shares of the Funds. If the monies
you wish to invest in the Funds are maintained by your Plan Fiduciary
in an IRA or other self-administered Qualified Plan, please consult
with your Plan Fiduciary for information about how to purchase shares
of the Funds.
You may establish an IRA with the Trust's custodian, Boston Safe
Deposit and Trust Company ("Boston Safe"), through which you may invest
in the Funds. Additionally, you may invest in the Funds by "rolling
over" an existing IRA into an IRA maintained by Boston Safe. Please
call WPG at 1-800-_____ for information regarding how to establish an
IRA with Boston Safe.
Plan Fiduciaries may purchase shares of the Funds for a Qualified
Plan through any investment dealer or financial service firm
("Authorized Firm") approved by WPG. Authorized Firms include
broker-dealers, banks and financial planners.
What is the minimum investment in shares of the Funds?
Plan Fiduciaries may invest in the Funds with as little as $2,000
($250 for a spousal IRA). There is no minimum amount required for
subsequent investments.
-6-
<PAGE>
How may Plan Fiduciaries invest in the Funds for the account of their
Qualified Plans?
In order to make an initial investment in a Fund for a Qualified
Plan, Plan Fiduciaries must open an account with the Funds by
furnishing to an Authorized Firm the information in the Account
Information Form attached to this Prospectus. Shares of the Funds may
be purchased on any day during which the New York Stock Exchange is
open for business (a "Business Day").
At what price are Adviser Class shares of the Funds offered?
Adviser Class shares of the Funds are sold at the net asset value
(NAV) of such shares next determined after the Transfer Agent receives
and accepts a purchase order. Purchase orders received by Authorized
Firms by the close of regular trading on the New York Stock Exchange on
any Business Day and transmitted to the Transfer Agent by the close of
its business day (normally [5]:00 p.m. New York City time) will be
effected as of the close of regular trading on the New York Stock
Exchange on that day. Otherwise, orders will be effected at the NAV
determined on the next Business Day. It is the responsibility of
Authorized Firms to transmit orders so that they will be received by
the Transfer Agent before the close of its business day.
Plan Fiduciaries: To Make an Initial Investment for a Qualified Plan
By Mail: 1. Make a check payable to the Fund in which you wish to or
are instructed to invest.
2. Deliver the completed Account Information Form and
check to an Authorized Firm or mail to the Transfer
Agent at the address indicated on the back cover of
this Prospectus.
By Wire: 1. Call 1-800-________ to open an account and to arrange
for a wire transaction.
2. Instruct your bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
Bank Routing No. __________
Specify:
Name of Fund
Adviser Class shares
Account Number
Name(s) in which account is to be registered
3. Deliver the completed Account Information Form to an
Authorized Firm or mail to the Transfer Agent at the
address indicated on the back cover of this Prospectus.
-7-
<PAGE>
Plan Fiduciaries: To Make Further Investments for a Qualified Plan
Automatically: 1. Use the Automatic Investment Plan. Sign up for this
service when opening an account, or call 1-800-_____
to add it. Plan Fiduciaries must designate the bank
or credit union account from which funds will be
drawn.
2. The amount to be invested will automatically be with-
drawn from the designated bank or credit union account
on or about the first Business Day of the month or
quarter selected.
By Telephone: 1. Sign up for this service when opening an account, or
call 1-800-_______ to add it. Plan Fiduciaries must
designate the bank or credit union account from which
funds will be drawn. Note that in order to invest by
phone, the account must be in a bank or credit union
that is a member of the Automated Clearing House
system (ACH).
2. Once this service has been selected, Plan Fiduciaries
may purchase additional shares for the account of
Qualified Plans by calling the Funds' Transfer Agent,
The Shareholder Services Group, Inc., toll-free at
1-800-_________.
3. Give the Transfer Agent representative the name(s) in
which the account is registered, the Fund name, Adviser
Class shares, the account number, and the amount of the
investment.
4. An investment will normally be credited to the
Qualified Plan account the Business Day following
the phone request.
During periods of extreme economic conditions or market
changes, requests by telephone may be difficult to make
due to heavy volume. During such times please consider
placing purchase orders by mail.
By Mail: 1. Include a note with the investment specifying:
Name of the Fund
Adviser Class shares
Account Number
Name(s) in which account is registered
2. Make the check payable to the Fund in which you wish to
or are instructed to invest. Indicate the account
number on the check.
3. Deliver the account information and check to an
Authorized Firm or mail to the Transfer Agent at the
address indicated on the back cover of this Prospectus.
-8-
<PAGE>
By Wire: Instruct the bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
ABA Routing No. __________
For credit to:
Name of Fund
Adviser Class shares
Your Account Number
Name(s) in which account is registered
Other Purchase Information. Each Fund reserves the right to reject
any purchase for any reason and to cancel any purchase due to
nonpayment. As a condition of this offering, if your purchase is
cancelled due to nonpayment or because your check does not clear (and,
therefore, your account is required to be redeemed), you will be
responsible for any loss incurred by the Fund(s) affected. All
purchases must be made in U.S. dollars. Checks drawn on foreign banks
will delay purchases until U.S. funds are received and a collection
charge may be imposed. In such cases, Adviser Class shares of the Funds
are priced at the net asset value computed after the Transfer Agent
receives notification of the dollar equivalent from the Funds'
custodian bank. Wire purchases normally take two or more hours to
complete and, to be accepted the same day, must be received by 4:00
p.m. New York City time. Your bank may charge a fee to wire funds.
Telephone transactions are recorded to verify information.
Acquiring Shares of the Funds in Exchange for Securities. Shares
of the Funds may be purchased in whole or in part for the account of
Qualified Plans by delivering to the Funds' custodian, Boston Safe,
securities acceptable to WPG. Please see "In-Kind Purchases" in the SAI
for the terms and conditions of these transactions.
HOW TO SELL SHARES
How may Adviser Class shares of the Funds be redeemed?
Subject to the restrictions (if any) imposed by your Qualified
Plan, you can arrange to sell or "redeem" some or all of your shares on
any Business Day. All orders to redeem Adviser Class shares must be
made through your Plan Fiduciary. If the Adviser Class shares you wish
to redeem are held for the account of a Qualified Plan sponsored by
your employer, please consult with your employer for information about
how to redeem shares of the Funds. If the Adviser Class shares you wish
to redeem are maintained by your Plan Fiduciary in an IRA or other
self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to redeem shares of the Funds.
Please note that shares may not be redeemed by telephone or telegram,
except for exchanges which can be requested by Plan Fiduciaries by
telephone or in writing.
At what price are Adviser Class shares of the Funds redeemed?
Adviser Class shares of the Funds will be redeemed at the share
price (NAV) of such shares next calculated after a redemption order is
received in good order by the Transfer Agent. Once shares are redeemed,
sale proceeds generally are available the next Business Day, but may
take up to three Business Days. For your protection, redemption
proceeds will not be released until a shareholder's account has
-9-
<PAGE>
been opened and payment for the shares to be redeemed have been
received by the Fund, which may take up to fifteen days.
The net asset value per share received upon redemption or
repurchase may be more or less than the original cost of the shares,
depending on the market value of the portfolio at the time of
redemption or repurchase.
Plan Fiduciaries: To Redeem Shares for a Qualified Plan
By Mail: 1. In a written request specify:
Name of the Fund
Adviser Class shares
Account Number
Name(s) in which account is registered
The dollar amount or the number of shares to
be redeemed
2. Deliver the redemption request to an Authorized Firm
or mail to the Transfer Agent at the address
indicated on the back cover of this Prospectus.
Automatically: 1. Use the Automatic Withdrawal Plan if the Qualified
Plan account has a total value of at least $[______].
Sign up for this service when opening an account,
or call 1-800-_______ to add it.
2. The redemption proceeds of $[______] or more will
automatically be transferred from the Qualified Plan
account to the designated address or bank account on
or about the first Business Day of the month or
quarter selected.
General Redemption Information. Authorized Firms must receive
redemption requests before the close of business on the New York Stock
Exchange and transmit them to the Transfer Agent prior to the Transfer
Agent's close of business to receive that day's share price (NAV). A
written redemption request must be signed by all registered
shareholders for the account using the exact names in which the account
is registered or accompanied by executed power(s) of attorney. Unless
otherwise specified, redemption proceeds will be sent by check to the
record address. Plan Fiduciaries may elect to have redemption proceeds
wired to a checking or bank account if wire redemptions were authorized
when the account was opened or have subsequently been authorized.
Redemptions may be suspended or postponed during any period in
which any of the following conditions exist: the New York Stock
Exchange is closed or trading on the Exchange is restricted; an
emergency exists during which it is not reasonably practicable for a
Fund to dispose of its portfolio securities or to fairly determine its
net asset value; or the SEC, by order, so permits.
-10-
<PAGE>
Certain requests must include a signature guarantee. A signature
guarantee is a widely accepted way to protect you and the Funds from
fraud by verifying the signature on your request. A signature guarantee
is required if the redemption proceeds are to be sent to an address
other than the address of record or to a person other than the
registered shareholder(s) for the account [or if the net asset value of
the shares redeemed is $100,000 or more].
The following institutions may provide a signature guarantee,
provided that the institution meets credit standards established by the
Transfer Agent: (i) a bank; (ii) a securities broker or dealer,
including a government or municipal securities broker or dealer, that
is a member of a clearing corporation or has net capital of at least
$100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association;
or (v) a national securities exchange, a registered securities exchange
or a clearing agency.
Signature guarantees may not be provided by a notary public.
Small Accounts. In order to reduce the expense of maintaining
numerous small accounts, the Trust reserves the right to redeem any
shareholder account (other than an IRA) if, as a result of redemptions,
the value of the account is less than $100. Plan Fiduciaries will be
allowed at least 60 days, after written notice by the Trust, to make an
additional investment to bring the account value up to at least $100
before the redemption is processed.
Change in Tax Status. Plan Fiduciaries are required to notify the
Trust through the Transfer Agent if the tax status of their Qualified
Plan is revoked or challenged by the Internal Revenue Service. The
Trust reserves the right to redeem any fund account of any shareholder
whose qualification as a qualified pension or retirement plan
satisfying the requirements of Treasury Regulation 1.817-5 is revoked
or challenged.
HOW TO EXCHANGE SHARES
May Adviser Class shares be exchanged for shares of other mutual funds?
Subject to the terms of your Qualified Plan, Adviser Class shares
of a Fund may be exchanged for Adviser Class shares of the other Fund
or for Adviser Class shares of Tomorrow Long-Term Retirement Fund,
Tomorrow Mid-Term Retirement Fund, Tomorrow Short-Term Retirement Fund
and Tomorrow Post-Retirement Fund (collectively, the Tomorrow Funds").
To obtain a current prospectus for the Adviser Class shares of the
other Tomorrow Funds, please call 1-800-___-____. Please consider the
differences in investment objectives and expenses of a Tomorrow Fund as
described in its prospectus before making an exchange.
Do sales charges apply to exchanges?
As is the case with initial purchases of Adviser Class shares,
exchanges of Adviser Class shares are made without the imposition of a
sales charge.
How may I make an exchange?
Because shares of the Funds are held for the account of Qualified
Plans, all orders to exchange shares must be made through your Plan
Fiduciary. If the Adviser Class shares you wish to exchange are held
for the account of a Qualified Plan sponsored by your employer, please
consult with your employer for information about how to exchange shares
of the Funds. If the Adviser Class shares you wish to exchange are
maintained by your Plan Fiduciary in an IRA or other self-administered
Qualified Plan, please consult with your Plan Fiduciary for information
about how to exchange shares of the Funds.
-11-
<PAGE>
Plan Fiduciaries: To Exchange Shares
By Phone: 1. Use the telephone exchange privilege. The telephone
exchange privilege is not available automatically. It
is necessary to sign up for this privilege on the
Account Application Form when opening an account, or
call 1-800-______ to add it.
2. Once this privilege has been selected, simply call the
Transfer Agent toll free at 1-800-223-3332 between
9:00 a.m. and 4:00 p.m. New York City time on any
Business Day.
3. Give the following information to the Transfer Agent
representative:
Name of current Fund
Adviser Class shares
Name of the Tomorrow Fund into which the current
Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
By Mail: 1. Deliver a written request to an Authorized Firm or mail
to the Transfer Agent at the address listed on the back
cover of this Prospectus specifying:
Name of current Fund
Adviser Class shares
Name of the Tomorrow Fund into which the current
Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
2. The exchange request must be signed by all registered
holders for the account using the exact names in which
the account is registered or accompanied by executed
power(s) of attorney.
General Exchange Information. Shares exchanged are valued at their
respective net asset values next determined after the exchange request
is received by the Transfer Agent. All exchanges are subject to the
following exchange restrictions: (i) the fund into which shares are
being exchanged must be registered for sale in your state; (ii)
exchanges may be made only between funds that are registered in the
same name, address and taxpayer identification number; and (iii) the
minimum amount for exchanging from one fund into another fund is $100
or the total value of your fund account (if less than $100) and must
satisfy the minimum account size of the fund to be exchanged into.
To confirm that telephone exchange requests are genuine, the Trust
employs reasonable procedures, such as providing written confirmation
of telephone exchange transactions and tape recording
-12-
<PAGE>
of telephone exchange requests. If the Trust does not employ such
reasonable procedures, it may be liable for any loss incurred by a
shareholder due to a fraudulent or unauthorized telephone exchange
request. Otherwise, neither the Trust nor its agents will be liable for
any loss incurred by a shareholder as the result of following
instructions communicated by telephone that they reasonably believed to
be genuine. The Trust reserves the right to refuse any request made by
telephone and may limit the dollar amount involved or the number of
telephone requests made by any shareholder. During periods of extreme
economic conditions or market changes, requests by telephone may be
difficult to make due to heavy volume. During such times please
consider placing your order by mail.
To prevent abuse of the exchange privilege to the detriment of
other shareholders, the Trust limits the number of exchanges and
purchase/redemption transactions by any one shareholder account (or
group of accounts under common management) to a total of six
transactions per year. This policy applies to exchanges into or out of
any Tomorrow Fund and any pair of transactions involving a purchase of
shares of any Tomorrow Fund followed by a redemption of an offsetting
or substantially equivalent dollar amount of shares of that same
Tomorrow Fund. If a Plan Fiduciary violates this policy, his/her future
purchases of, or exchanges into, the Tomorrow Funds may be permanently
refused. This policy does not prohibit redemptions of shares of any
series. This policy may be waived by WPG in its discretion. Further,
the exchange privilege may be changed or discontinued and may be
subject to additional limitations upon sixty (60) days' notice to
shareholders, including certain restrictions on purchases by
market-timer accounts.
HOW EACH FUND'S SHARE PRICE IS DETERMINED
The net asset value per share of a class of a Fund is determined
by dividing the value of its assets, less liabilities attributable to
that class, by the number of shares of that class outstanding. The net
asset value is normally calculated as of the close of regular trading
of the New York Stock Exchange (currently 4:00 p.m. New York City time)
on each Business Day. Different classes of shares of the Funds may have
different net asset values.
Portfolio securities (other than certain money market instruments)
are valued primarily based on market quotations or, if market
quotations are not available, at fair market value as determined in
good faith by a valuation committee appointed by the Trustees. In
accordance with procedures adopted by the Trustees, each Fund may use
pricing services to value fixed-income investments. Money market
instruments with a remaining maturity of 60 days or less at the time of
purchase are generally valued at amortized cost when the Trustees
believe that amortized cost approximates market value.
MANAGEMENT OF THE FUNDS
Trustees
Each Fund is a separate investment series of Tomorrow Funds
Retirement Trust, a Delaware business trust (the "Trust"). Under the
terms of the Agreement and Declaration of Trust establishing the Trust,
the Trustees of the Trust are ultimately responsible for the management
of its business and affairs.
Investment Adviser
Weiss, Peck & Greer, L.L.C., One New York Plaza, New York, New
York 10004 serves as the investment adviser to each Fund pursuant to an
investment advisory agreement. Subject to the supervision and direction
of the Trustees, the Adviser manages each Fund's portfolio in
accordance with its stated investment objective and policies,
recommends investment decisions for the Fund and places orders
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to purchase and sell securities on behalf of the Fund. For these
services, each Fund pays the Adviser a monthly fee equal on an annual
basis to 0.75% of its average daily net assets.
Joseph N. Pappo has been primarily responsible for the day-to-day
management of each Fund's portfolio since the Funds' inception. Mr.
Pappo has been a principal of the Adviser since 1994. Prior to joining
WPG, Mr. Pappo was the founder and president of Eden Financial Group
which was acquired by WPG in 1991.
The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees applicable to the
Adviser Class shares, service fees applicable to the Institutional
Class shares, any other class-specific expenses, litigation,
indemnification and other extraordinary expenses) to 1.25% of its
average daily net assets. The Adviser may discontinue or modify such
limitation in the future at its discretion, although it has no current
intention to do so.
Administrator
Pursuant to an administration agreement with each Fund, WPG
provides personnel for supervisory, administrative, accounting,
shareholder services and clerical functions; oversees the performance
of administrative and professional services to the Funds by others;
provides office facilities, furnishings and office equipment; and
prepares, but does not pay for, reports to shareholders, the SEC and
other regulatory authorities. As compensation for the services rendered
to the Funds as Administrator, WPG is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to 0.09% of each Fund's
average daily net assets. The administrative fee for each Fund is
reviewed and approved annually by the Trustees.
Expenses
Each Fund bears all expenses of its operation, subject to the
expense limitation agreement described above. In particular, each Fund
pays: investment advisory fees; administration fees; service fees with
respect to the Institutional Class shares; distribution and service
fees with respect to the Adviser Class shares; custodian and transfer
agent expenses; legal and accounting fees and expenses; expenses of
preparing, printing, and distributing Prospectuses and SAIs to existing
shareholders, and shareholder communications and reports; expenses of
computing its net asset value per share; federal and state registration
fees and expenses with respect to its shares; proxy and shareholder
meeting expenses; expenses of issuing and redeeming its shares;
independent trustee fees and expenses; expenses of bond, liability, and
other insurance coverage; brokerage commissions; taxes; trade
association fees; and certain non-recurring and extraordinary expenses.
In addition, the expense of organizing the Funds and initially
registering and qualifying their shares under federal and state
securities laws are being charged to the Funds' operations, as an
expense, over a period not to exceed 60 months from the Funds'
inception date.
Each Fund will reimburse the Adviser for fees foregone or other
expenses paid by the Adviser pursuant to this expense limitation in
later years in which operating expenses for that Fund are less than the
expense limitations set forth above for any such year. No interest,
carrying or finance charge will be paid by a Fund with respect to the
amounts representing fees foregone or other expenses paid. In addition,
no Fund will pay any unreimbursed amounts to the Adviser upon
termination of its investment advisory agreement.
DISTRIBUTION PLANS
The Trust, on behalf of each Fund, has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act (the
"Distribution Plans"). Under the Distribution Plans, each Fund pays
distribution and service fees at an aggregate annual rate of up to
0.50% of a Fund's average daily net
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assets attributable to Adviser Class shares. Up to 0.25% is for service
fees and the remaining amount is for distribution expenses. The
distribution fee is intended to compensate WPG for its services and
expenses associated with serving as principal underwriter of the
Adviser Class shares of the Funds, including the payment of commissions
by WPG to Authorized Firms. The service fee is intended to be
compensation for personal services and/or account maintenance services
with respect to the Adviser Class shares.
WPG makes monthly payments to Authorized Firms based on the
average net asset value of the Adviser Class shares which are
attributable to Qualified Plans for whom the Authorized Firms are
designated as the dealer of record. WPG makes such payments in amounts
up to the distribution fee it receives with respect to such Adviser
Class shares. WPG may suspend or modify such payments to Authorized
Firms. WPG and the Authorized Firms also share any sales charge imposed
on purchases of Adviser Class shares.
DIVIDENDS AND TAXES
Each Fund is treated as a separate entity for federal income tax
purposes and intends to elect to be treated as a "regulated investment
company" under the Code and to qualify for such treatment for each
taxable year. To qualify as such, each Fund must satisfy certain
requirements relating to the sources of its income, diversification of
its assets and distribution of its income to shareholders. Each Fund
also intends to satisfy certain additional diversification requirements
applicable under Section 817(h) of the Internal Revenue Code in order
to permit investments in Institutional Class shares of the Funds by
insurance company segregated asset accounts that fund variable annuity
or variable life insurance products, which are subject to such
requirements. It is possible that in order to satisfy the applicable
diversification requirements, investment decisions may be made which
would affect either positively or negatively the investment performance
of a Fund. As a regulated investment company, each Fund will not be
subject to federal income tax on any net investment income and net
realized capital gains that are distributed to its shareholders in
accordance with certain timing requirements of the Code.
Participants in Qualified Plans may be eligible for tax deferral
on distributions a Qualified Plan receives from a Fund and gains that
arise from a Qualified Plan's dispositions of Fund shares. This
Prospectus does not describe in any respect such tax treatment. Please
consult your Plan Fiduciary or tax adviser. It is suggested that
participants in Qualified Plans keep all statements received from their
Qualified Plans to assist in personal recordkeeping.
Each Fund intends to distribute all of its net investment income
and net capital gains each year. Income dividends, if any, will be
declared and distributed at least annually by each Fund. Net short-term
and long-term capital gains of each Fund, if any, realized during the
taxable year will be distributed no less frequently then annually.
Dividends derived from each Fund's net investment income (including
dividends, interest and recognized market discount income), and net
short-term capital gains received by a Fund are treated as ordinary
income under the Code. Distributions from each Fund's net long-term
capital gains are treated as long-term capital gains under the Code,
regardless of how long shares of the Funds have been held.
Reinvestment of Income Dividends and Capital Gains Distributions
Unless a Plan Fiduciary elects otherwise, as permitted in the
Account Information Form, income dividends and capital gains
distributions with respect to a Fund will be reinvested in additional
Adviser Class shares of that Fund and will be credited to the Qualified
Plan's account with that Fund at the net asset value per share next
determined as of the ex-dividend date. Both income dividends and
capital gains distributions are paid by the Fund on a per share basis.
As a result, at the time of such payment, the net
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asset value per share of a Fund will be reduced by the amount of such
payment. Although income dividends and capital gains distributions by
the Funds may not give rise to current tax liability for the categories
of shareholders permitted to invest in the Funds, participants in
Qualified Plans may be subject to tax on all or a portion of their
distributions from such Plans or upon the failure of such Plans to
maintain their qualified status under complex Code provisions
concerning which a tax adviser should be consulted. Participants in
Qualified Plans who wish to change the manner in which income dividends
and capital gains distributions are received by their Qualified Plans
should contact their Plan Fiduciaries. Written notification of such
change must be received by the Transfer Agent at least ten days before
the next scheduled distribution.
PORTFOLIO BROKERAGE
In effecting securities transactions, the Funds generally seek to
obtain the best price and execution of orders. Commission rates are a
component of price and are considered along with other factors,
including the ability of the broker to effect the transaction, and the
broker's facilities, reliability and financial responsibility. Subject
to the foregoing, the Funds intend to utilize WPG as their primary
broker in connection with the purchase and sale of exchange-traded
portfolio securities. As the Funds' primary broker, WPG will receive
brokerage commissions from the Funds, limited to the "usual and
customary broker's commission" specified by the 1940 Act. The Funds
intend to continue to use WPG as their primary broker on
exchange-traded securities, provided WPG is able to provide execution
at least as favorable as that provided by other qualified brokers.
The Trustees of the Trust have developed procedures to limit the
commissions received by WPG to the "usual and customary broker's
commission" standard specified by the 1940 Act. On a quarterly basis,
the Trustees review the securities transactions of each Fund effected
by WPG to assure their compliance with such procedures.
The Funds will also execute their portfolio transactions through
qualified brokers other than WPG. In selecting such other brokers, WPG
considers the quality and reliability of brokerage services, including
execution capability and performance and financial responsibility, and
may consider the research and other investment information provided by
such brokers. Accordingly, the commissions paid to any such broker may
be greater than the amount another firm might charge, provided WPG
determines in good faith that the amount of such commission is
reasonable in relation to the value of the brokerage services and
research information provided by such broker. Such information may be
used by WPG (and its affiliates) in managing all of its accounts and
not all of such information may be used by WPG in managing the Funds.
In selecting other brokers for a Fund, WPG may also consider the sale
of shares of the Fund effected through such other brokers as a factor
in its selection, provided that Fund obtains the best price and
execution of orders.
Money market securities and other fixed-income securities, as well
as certain equity securities, in which the Funds invest are traded
primarily in the over-the-counter ("OTC") market. For transactions
effected in the OTC market, financial intermediaries (i.e., dealers)
act as principal rather than as agent and receive a "spread" rather
than a commission. The Funds intend to deal with the primary
market-makers with respect to OTC securities, unless a more favorable
result is obtainable elsewhere.
THE TRUST
Tomorrow Funds Retirement Trust is an open-end management
investment company (commonly referred to as a mutual fund) organized as
a Delaware business trust under an Agreement and Declaration of Trust
dated June 21, 1995 (the "Declaration"). The Trust has authorized an
unlimited number of shares of beneficial interest.
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As of the date of this Prospectus, the shares of the Trust are
divided into six series: Tomorrow Long-Term Retirement Fund, Tomorrow
Mid-Term Retirement Fund, Tomorrow Short-Term Retirement Fund, Tomorrow
Post-Retirement Fund, Core Large-Cap Stock Fund and Core Small-Cap
Stock Fund. The Trust reserves the right to create and issue additional
series of shares. No series is entitled to share in the assets of any
other series or is liable for the expenses or liabilities of any other
series. Shares of a particular series vote separately on matters
affecting only that series, including the approval of an investment
advisory agreement and changes in fundamental policies or restrictions
of a particular series.
As of the date of this Prospectus, the Trustees have authorized
the issuance of two classes of shares for each series, designated
Adviser Class and Institutional Class. The shares of each Class
represent an interest in the same portfolio of investments of that
series. Each Class has equal rights as to voting, redemption, dividends
and liquidation, except that each Class bears different distribution
fees and may bear other expenses properly attributable to the
particular Class. Adviser Class shareholders of a Fund have exclusive
voting rights with respect to the Rule 12b-1 distribution plan adopted
by holders of Adviser Class shares of that Fund. The Trustees have the
authority, without further shareholder approval, to classify and
reclassify the shares of a series of the Trust into additional classes.
In addition, subject to Trustee approval and shareholder approval (if
then required), each Fund may pursue its investment objective by
investing all of its investable assets in a pooled fund. See "Risk
Considerations and Other Investment Practices and Policies" below.
When issued and paid for in accordance with the terms of the
Prospectus and Statement of Additional Information, shares of the Trust
are fully paid and non-assessable. The Trust is not required, and does
not intend, to hold annual shareholder meetings. Shareholders have
certain rights, as set forth in the Declaration, including the right to
call a meeting of shareholders for the purpose of voting on the removal
of one or more Trustees. Such removal can be effected upon the action
of two-thirds of the outstanding shares of the Trust.
In addition to the requirements under Delaware law, the
Declaration provides that a shareholder of the Trust may bring a
derivative action on behalf of the Trust only if the following
conditions are met: (a) shareholders eligible to bring such derivative
action under Delaware law who hold at least 10% of the outstanding
shares of the Trust, or 10% of the outstanding shares of the series or
class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded
a reasonable amount of time to consider such shareholder request and
investigate the basis of such claim. The Trustees shall be entitled to
retain counsel or other advisers in considering the merits of the
request and shall require an undertaking by the shareholders making
such request to reimburse the Trust for the expense of any such
advisers in the event that the Trustees determine not to bring such
action.
The Trustees of the Trust do not foresee any disadvantages to
investors arising out of the fact that each Fund may offer a class of
its shares to insurance company segregated asset accounts that serve as
investment medium for variable annuity and variable life insurance
products or that each Fund may offer its shares to Qualified Plans.
Nevertheless, the Trustees intend to monitor events in order to
identify any material irreconcilable conflicts which may possibly
arise, and to determine what action, if any, should be taken in
response to such conflicts. If such a conflict were to occur, one or
more separate accounts or Qualified Plans might be required to withdraw
their investments in either or both Funds and shares of another series
of the Trust may be substituted. This might force a Fund to sell
securities at disadvantageous prices.
In the interests of economy and convenience, the Trust does not
issue certificates representing the Funds' shares. Instead, the
Transfer Agent maintains a record of each shareholder's ownership.
Although each Fund is offering only its own shares, since the Funds use
this combined Prospectus, it is possible that
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one Fund might become liable for a misstatement or omission in this
Prospectus regarding the other Fund. The Trustees have considered this
factor in approving the use of this combined Prospectus.
INVESTMENT PERFORMANCE
Each Fund may illustrate in advertisements and sales literature
the average annual total return of its Adviser Class shares, which is
the rate of growth of the Fund that would be necessary to achieve the
ending value of an assumed initial investment of $1,000 kept in Adviser
Class shares of the Fund for the period specified and is based on the
following assumptions: (1) all dividends and distributions by the Fund
are reinvested in Adviser Class shares of the Fund at net asset value;
and (2) all recurring fees are included for applicable periods.
Each Fund may also illustrate in advertisements the cumulative
total return for several time periods throughout the Fund's life based
on an assumed initial investment of $1,000. Any such cumulative total
return for a Fund will assume the reinvestment of all income dividends
and capital gains distributions in Adviser Class for the indicated
periods and will include all recurring fees.
Total returns quoted for the Funds include the effect of deducting
each Fund's expenses but may not include charges and expenses
attributable to any particular Qualified Plan. You should consult with
your Plan Fiduciary for information on relevant charges and expenses.
Because these charges and expenses are excluded from a Fund's quoted
performance, the investment return received by a participant in a
Qualified Plan investing in the Fund may be lower than the quoted
performance of the Fund. You should bear in mind the effect of these
charges when comparing a Fund's performance to that of other mutual
funds.
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The performance of the Adviser Class shares of the Funds will vary
from time to time and past results are not necessarily representative
of future results. Performance is a function of the type and quality of
a Fund's portfolio securities and is affected by operating expenses.
Performance information may not provide a basis for comparison with
other investments or other mutual funds using a different method of
calculating performance. An investment in any Fund involves the risk
of loss.
RISK CONSIDERATIONS AND OTHER INVESTMENT PRACTICES AND POLICIES
Because each Fund owns different types of investments, its
performance is affected by a variety of factors. The value of a Fund's
investments and the income they generate will vary from day to day, and
generally reflect interest rates, market conditions, and other company,
political and economic news. When you sell your shares, they may be
worth more or less than what you paid for them.
Investing in Small Capitalization Companies. The Small-Cap Fund will
invest in equity securities of small capitalization companies included
within the Russell 2000 and the Large-Cap Fund may invest in such
securities to the extent that they are included in the S&P 500. Small
capitalization companies may offer a greater growth potential than
larger, more mature, better known firms. Investing in the securities of
such companies, however, involves greater risk and a possibility of
greater portfolio price volatility. Historically, small capitalization
stocks and stocks of recently organized companies have been more
volatile in price than the larger capitalization stocks, such as those
included in the S&P 500. Among the reasons for the greater price
volatility of these small company and unseasoned stocks are the less
certain growth prospects of smaller firms and the lower degree of
liquidity in the markets for such stocks.
Fixed-Income Securities. Each Fund may invest up to 10% of its assets
in a broad range of fixed-income securities, including bonds, notes,
mortgage-backed and asset-backed securities, preferred stock and
convertible debt securities issued by U.S. corporations or other
entities or by the U.S. Government or its agencies, authorities,
instrumentalities or sponsored enterprises. The interest payable on
so-called fixed-income securities purchased by a Fund is not
necessarily paid at a fixed rate and may be payable on a variable,
floating (including inverse floating), contingent, in-kind or deferred
basis.
Fixed-income securities are subject to the risk of the issuers'
inability to meet principal and interest payments on the obligations
(credit risk) and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the credit
worthiness of the issuer and general market liquidity (market risk).
Generally, when interest rates decline, the value of fixed-income
securities can be expected to rise. Conversely, when interest rates
rise the value of fixed-income securities can be expected to decline.
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Corporate Debt Obligations. Each Fund may invest in corporate debt
obligations, including obligations of industrial, utility and financial
issuers. In addition to obligations of corporations, corporate debt
obligations include bank obligations and zero coupon securities, issued
by financial institutions and corporations.
The debt securities in which the Funds may invest will be rated,
at the time of purchase, within the top two categories of investment
grade securities or, if not rated, determined by the Adviser to be of
equivalent credit quality to securities so rated. The top two
categories of investment grade securities are Aaa and Aa for Moody's
and AAA and AA for S&P. A security will be deemed to have met a rating
requirement if it receives the minimum required rating from at least
one nationally recognized statistical rating organization even though
it has been rated below the minimum rating by one or more other rating
organizations, or if unrated by such rating organizations, determined
by the Adviser to be of comparable credit quality. In the event that
the rating on a security held in a Fund's portfolio is downgraded below
the minimum rating requirement by a rating service, such action will be
considered by the Adviser in its evaluation of the overall investment
merits of that security, but will not necessarily result in the sale of
the security.
Convertible Securities and Preferred Stocks. Each Fund may invest in
debt securities or preferred stocks that are convertible into or
exchangeable for common stock. Preferred stocks are securities that
represent an ownership interest in a company and provide their owner
with claims on the company's earnings and assets prior to the claims of
owners of common stock but after those of bond owners. Preferred stocks
in which the Funds may invest include sinking fund, convertible,
perpetual fixed and adjustable rate (including auction rate) preferred
stocks.
U.S. Government Securities. Each Fund may invest in all types of U.S.
Government securities, including obligations issued or guaranteed by
the U.S. Government or its agencies, authorities, instrumentalities or
sponsored enterprises. Some U.S. Government securities, such as
Treasury bills, notes and bonds, which differ only in their interest
rates, maturities and times of issuance, are supported by the full
faith and credit of the United States of America. Others, such as
obligations issued or guaranteed by U.S. Government agencies,
authorities, instrumentalities or sponsored enterprises are supported
either by (a) the full faith and credit of the U.S. Government (such as
securities of the Small Business Administration), (b) the right of the
issuer to borrow from the U.S. Treasury (such as securities of the
Federal Home Loan Banks), (c) the discretionary authority of the U.S.
Government to purchase the agency's obligations (such as securities of
the Federal National Mortgage Association), or (d) only the credit of
the issuer.
Each Fund may also invest in separately traded principal and
interest components of securities guaranteed or issued by the U.S.
Government or its agencies, instrumentalities or sponsored enterprises
if such components are traded independently under the Separate Trading
of Registered Interest and Principal of Securities program ("STRIPS")
or any similar program sponsored by the U.S. Government. The Funds may
invest in U.S. Government securities which are zero coupon or deferred
interest securities.
Real Estate Investment Trusts. Each Fund may invest in shares of real
estate investment trusts ("REITs"). REITs are pooled investment
vehicles which invest primarily in income producing real estate or real
estate related loans or interests. REITs are generally classified as
equity REITs, mortgage REITs or a combination of equity and mortgage
REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs invest the majority of their
assets in real estate mortgages and derive income from the collection
of interest payments. Like investment companies such as the Funds,
REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the Internal Revenue Code. Any Fund
that invests in REITs will indirectly bear its proportionate share of
any expenses paid by such REITs in addition to the expenses paid by the
Fund.
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Investing in REITs involves certain risks: equity REITs may be
affected by changes in the value of the underlying property owned by
the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to the risks of financing projects. REITs
are subject to heavy cash flow dependency, default by borrowers,
self-liquidation, and the possibilities of failing to qualify for the
exemption from tax for distributed income under the Internal Revenue
Code and failing to maintain their exemptions from the 1940 Act. REITs
whose underlying assets include long-term health care properties, such
as nursing, retirement and assisted living homes, may be impacted by
federal regulations concerning the health care industry.
Investing in REITs may involve risks similar to those associated
with investing in small capitalization companies. REITs may have
limited financial resources, may trade less frequently and in a limited
volume and may be subject to more abrupt or erratic price movements
than larger company securities. Historically, small capitalization
stocks, such as REITs, have been more volatile in price than the larger
capitalization stocks included in the S&P 500 Index.
Other Investment Companies. Each Fund is authorized to invest all of
its assets in the securities of a single open-end investment company (a
"pooled fund") having substantially identical investment objectives,
policies and restrictions as such Fund, notwithstanding any other
investment restriction or policy. Such a structure is commonly referred
to as "master/feeder." If authorized by the Trustees and subject to
shareholder approval (if then required by applicable law), a Fund would
seek to achieve its investment objective by investing in a pooled fund
which would invest in a portfolio of securities that complies with the
Fund's investment objective, policies and restrictions. The Trustees
currently do not intend to authorize investing in a pooled fund in
connection with a master/feeder structure.
Short-Term Debt Securities. Each Fund may establish and maintain cash
balances for temporary purposes in order to maintain liquidity to meet
shareholder redemptions. Each Fund may also establish and maintain cash
balances for defensive purposes without limitation to hedge against
potential stock market declines. A Fund's cash balances, including
uncommitted cash balances, may be invested in investment grade money
market instruments and short-term interest-bearing securities. These
securities consist of U.S. Government securities, instruments of U.S.
banks (including negotiable certificates of deposit, non-negotiable
fixed-time deposits and bankers' acceptances), repurchase agreements,
prime commercial paper of U.S. companies and debt securities that make
periodic interest payments at variable or floating rates.
Structured Securities. Each Fund may invest in "structured" notes,
bonds or debentures. The distinguishing feature of a structured
security is that the value of the principal of and/or interest payable
on the security is determined by reference to the value of a benchmark
or the relative change in two or more benchmarks. Examples of these
benchmarks include stock prices, currency exchange rates and physical
commodity prices. Structured securities may be positively or negatively
indexed, so that appreciation of the benchmark may produce an increase
or decrease in the interest rate or value of the structured security at
maturity. Certain structured securities may also be leveraged to the
extent that the magnitude of any change in the interest rate or
principal payable on the benchmark asset is a multiple of the change in
the reference price. Leverage enhances the price volatility of the
security and, therefore, the Fund's net asset value. Further, certain
structured or hybrid notes may be illiquid for purposes of the Fund's
limitation on investments in illiquid securities.
Writing and Purchasing Put and Call Options on Securities and
Securities Indices. To seek additional income or to minimize
anticipated declines in the value of its securities, each Fund may
purchase and write (i.e., sell) call and put options on securities and
securities indices. Option transactions in which the Funds may engage
may be traded on securities exchanges or in the over-the-counter
market. Each Fund currently intends to limit its option transactions
during the current fiscal year so that no more than 5%
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of the Fund's net assets will be at risk as a result of such
transactions. Please see the SAI for a further discussion of option
transactions and associated risks.
Futures Contracts and Options on Futures Contracts. Each Fund may
engage in futures transactions and related options. Future contracts
may be based on various securities (such as U.S. Government
securities), securities indices and other financial instruments and
indices. A Fund will engage in futures and related options transactions
only for bona fide hedging and non-hedging purposes to the extent
permitted by regulations of the Commodity Futures Trading Commission. A
Fund will not enter into futures contracts or options thereon for
non-hedging purposes if, immediately thereafter, the aggregate initial
margin and premiums required to establish non-hedging positions in
futures contracts and options on futures would exceed 5% of the Fund's
net assets, after taking into account unrealized profits and losses on
any such positions and excluding the amount by which such options were
in-the-money at the time of purchase. Each Fund may also enter into
closing purchase and sale transactions with respect to any of futures
contracts and related options.
The use of futures contracts entails certain risks, including but
not limited to the following: no assurance that futures contracts
transactions can be offset at favorable prices; possible reduction of
the Fund's income due to the use of hedging; possible reduction in
value of the both the securities hedged and the hedging instrument;
possible lack of liquidity due to daily limits on price fluctuations;
imperfect correlation between the contract and the securities being
hedged; and potential losses in excess of the amount initially invested
in the futures contracts themselves. If the expectations of the Adviser
regarding movements in securities prices or interest rates are
incorrect, the Fund may have experienced better investments results
without hedging. The use of futures contracts and options on futures
contracts requires special skills in addition to those needed to select
portfolio securities. A further discussion of futures contracts and
their associated risks is contained in the SAI.
Forward Commitments, Delayed Delivery and When-Issued Securities. Each
Fund may purchase securities on a when-issued, delayed delivery, or
forward commitment basis. When such transactions are negotiated, the
price of such securities is fixed at the time of the commitment, but
delivery and payment for the securities may take place up to 90 days
after the date of the commitment to purchase. The securities so
purchased are subject to market fluctuation, and no interest accrues to
the purchaser during this period. When-issued securities or forward
commitments involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date. When a Fund purchases
securities on a forward commitment or when-issued basis, the Fund's
custodian will maintain in a segregated account cash or liquid, high
grade debt securities having a value (determined daily) at least equal
to the amount of the Fund's purchase commitment. A Fund may close out a
position in securities purchased on a when-issued, delayed delivery or
forward commitment basis prior to the settlement date.
Lending of Portfolio Securities. Each Fund may also seek to increase
its income by lending portfolio securities. Such loans may be made to
institutions, such as certain broker-dealers, and are required to be
secured continuously by collateral in cash, cash equivalents or U.S.
Government securities maintained on a current basis at an amount at
least equal to the market value of the securities loaned. If the
Adviser determines to make securities loans, the value of the
securities loaned would not exceed 33 1/3% of the value of the total
assets of the Fund. A Fund may experience a loss or delay in the
recovery of its securities if the borrowing institution breaches its
agreement with the Fund.
Restricted and Illiquid Securities. Each Fund may invest up to 15% of
its total assets in "restricted securities" (i.e., securities that
would be required to be registered under the Securities Act of 1933, as
amended ("1933 Act"), prior to distribution to the general public)
including restricted securities eligible for resale to "qualified
institutional buyers" under Rule 144A under the 1933 Act. Each Fund may
also invest up to 15% of its net assets in illiquid investments, which
includes repurchase agreements maturing in more than seven days,
securities that are not readily marketable, certain over-the-counter
options and restricted
-22-
<PAGE>
securities, unless the Trustees determine, based upon a continuing
review of the trading markets for the specific restricted security,
that such restricted securities are liquid. Each Fund may agree to
adhere to more restrictive limits on investments in restricted and
illiquid investments as a condition of the registration of its shares
in various states. The Trustees have adopted guidelines and delegated
to the Advisor the daily function of determining and monitoring the
liquidity of restricted securities. The Trustees, however, retain
sufficient oversight and are ultimately responsible for the
determinations. Since it is not possible to predict with assurance
exactly how this market for restricted securities sold and offered
under Rule 144A will develop, the Trustees carefully monitor each
Fund's investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of
increasing the level of illiquidity in a Fund to the extent that
qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.
Repurchase Agreements. Each Fund may enter into repurchase agreements
through which the Fund purchases a security (the "underlying security")
from a domestic securities dealer or bank that is a member of the
Federal Reserve System. Under the agreement, the seller of the
repurchase agreement (i.e., the securities dealer or bank) agrees to
repurchase the underlying security at a mutually agreed upon time and
price. In repurchase transactions, the underlying security, which must
be a high-quality debt security, is held by the Fund's custodian
through the federal book-entry system as collateral and
marked-to-market on a daily basis to ensure full collateralization of
the repurchase agreement. In the event of bankruptcy or default of
certain sellers of repurchase agreements, a Fund could experience costs
and delays in liquidating the underlying security held as collateral
and might incur a loss if such collateral declines in value during this
period.
Market Changes. The market value of the Fund's investments, and thus
each Fund's net asset value, will change in response to market
conditions affecting the value of its portfolio securities. When
interest rates decline, the value of fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
loans are reset periodically, yields on investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed
rate obligations.
Portfolio Turnover. Although neither Fund purchases securities with a
view to rapid turnover, there are no limitations on the length of time
that securities must be held by a Fund and a Fund's annual portfolio
turnover rate may vary significantly from year to year. A high rate of
portfolio turnover (100% or more) involves correspondingly greater
transaction costs which must be borne by the applicable Fund and its
shareholders and may, under certain circumstances, make it more
difficult for such Fund to qualify as a regulated investment company
under the Code. The estimated portfolio turnover rates of the Funds for
the current fiscal year are as follows: Large-Cap Fund 40% and
Small-Cap Fund 45%.
Diversification. Each Fund is diversified, as defined in the 1940 Act.
As such, each Fund has a fundamental policy that limits its investments
so that, with respect to 75% of its assets (i) no more than 5% of the
Fund's total assets will be invested in the securities of a single
issuer and (ii) each Fund will purchase no more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, repurchase agreements collateralized
by U.S. Government securities or investments in other investment
companies. In addition to the diversification requirements under the
1940 Act, the Funds must satisfy the diversification requirements under
the Internal Revenue Code applicable to regulated investment companies
and the additional diversification requirements applicable under
Section 817(h) of the Internal Revenue Code to the underlying assets of
insurance company segregated asset accounts that fund variable annuity
or variable life insurance products. These requirements place certain
limitations on the assets of a Fund that may be invested in securities
of a single issuer or interests in the same commodity. More specific
information on these diversification requirements is contained in the
SAI.
-23-
<PAGE>
Investment Restrictions. Each Fund is subject to further investment
policies and restrictions that are described in the SAI. The foregoing
investment policies, including each Fund's investment objective, are
non-fundamental policies which may be changed by the Trustees without
the approval of shareholders. If there is a change in a Fund's
investment objective, shareholders should consider whether that Fund
remains an appropriate investment in light of their then current
financial positions and needs. Each Fund has adopted certain
fundamental policies which may not be changed without the approval of
the applicable Fund's shareholders. See "Investment Restrictions" in
the Statement of Additional Information.
If any percentage restriction described above or in the SAI is
adhered to at the time of investment, a subsequent increase or decrease
in the percentage resulting from a change in the value of a Fund's
assets will not constitute a violation of the restriction.
ADDITIONAL INFORMATION
Reports to Shareholders
As shareholders in the Funds, Qualified Plans will receive an
annual report containing audited financial statements and semi-annual
and quarterly reports. Each Qualified Plan will also be provided with a
printed confirmation for each transaction in their shareholder account.
Participants in Qualified Plans may receive additional reports from
their Plan Fiduciary.
Principal Underwriter
WPG serves as the Funds' principal underwriter.
Transfer Agent and Dividend Disbursing Agent
The Shareholder Services Group, Inc. (the "Transfer Agent"), P.O.
Box 9037, Boston, MA 02205 serves as transfer agent and dividend
disbursing agent for the Funds. The Funds may also enter into
agreements with and compensate other transfer agents and financial
institutions who process shareholder transactions and maintain
shareholder accounts.
Independent Accountants
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154,
serves as the independent accountants for the Trust and will audit each
Fund's financial statements annually.
Legal Counsel
Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, is
legal counsel to the Trust.
----------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained
in this Prospectus and the SAI, and, if given or made, such other
information or representation must not be relied upon as having been
authorized by the Trust. This Prospectus does not constitute an
offering in any jurisdiction in which such offering may not be lawfully
made.
-24-
<PAGE>
SUBJECT TO COMPLETION: Dated July 5, 1995
WEISS, PECK & GREER INVESTMENTS
TOMORROW FUNDS RETIREMENT TRUST
One New York Plaza
New York, New York 10004
CORE LARGE-CAP STOCK FUND ("Large-Cap Fund")
Seeks to exceed the performance of publicly traded large
capitalization stocks in the aggregate, as represented by the
Standard & Poor's Index of 500 Common Stocks (the "S&P 500").
CORE SMALL-CAP STOCK FUND ("Small-Cap Fund")
Seeks to exceed the performance of publicly traded small
capitalization stocks in the aggregate, as represented by the
Russell 2000 Index (the "Russell 2000").
PROSPECTUS -- Institutional Class Shares
September __, 1995
This Prospectus describes Institutional Class shares of two mutual
funds - the Large-Cap Fund and the Small-Cap Fund (together, the
"Funds"). Institutional Class shares of the Funds are designed to
provide investment vehicles for variable annuity and variable life
insurance contracts ("Variable Contracts") of various insurance
companies. Institutional Class shares of the Funds may also be
purchased by "qualified" pension or retirement plans, including
trustees of such plans for individuals funding their individual
retirement accounts or other qualified plans. Each Fund is a
diversified mutual fund advised by Weiss, Peck & Greer, L.L.C. (the
"Adviser" or "WPG").
Please read this Prospectus before investing, and keep it on file
for future reference. It contains important information, including how
the Funds invest and the services available to shareholders. If
applicable, this Prospectus should be read in conjunction with the
separate account prospectus of the specific insurance product which
accompanies this Prospectus. To learn more about the Funds, you can
obtain a copy of the Statement of Additional Information (the "SAI"),
also dated September __, 1995. The SAI has been filed with the
Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus. A free copy of the SAI or a copy of the
Prospectus describing the Adviser Class shares of the Funds is
available upon request by calling Weiss, Peck & Greer, L.L.C. at
1-800-223- 3332 (toll free). Institutional Class shares of a Fund may
not be available in your state due to various insurance or other
regulations. Please check with your insurance company or qualified plan
fiduciary for Funds that are available in your state. Inclusion of a
Fund in this Prospectus which is not available in your state is not to
be considered a solicitation.
INSTITUTIONAL SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, BANK OR OTHER INSURED DEPOSITORY
INSTITUTION, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN INSTITUTIONAL CLASS SHARES OF THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
<PAGE>
Each Fund seeks, using quantitative methodology, to provide
investors who participate in qualified retirement plans or who are
holders of Variable Contracts with investment results that exceed the
performance of a "Benchmark Index." The Benchmark for the Large-Cap
Fund is the S&P 500 and the Benchmark for the Small-Cap Fund is the
Russell 2000. Each Fund primarily invests its assets in equity
securities of all types which comprise the applicable Benchmark.
In addition to the Institutional Class shares offered through this
Prospectus, the Funds offer a class of shares known as the Adviser
Class through a separate prospectus. Adviser Class shares of the Funds
are available only to certain eligible investors.
TABLE OF CONTENTS
Page
Expense Information................................
Investment Objectives and Policies.................
Eligible Investors.................................
Insurance Company Separate Accounts................
Qualified Plans....................................
How to Buy Shares.............................
How to Sell Shares............................
How to Exchange Shares........................
How Each Fund's Share Price is Determined..........
Management of the Funds............................
Service Plans......................................
Dividends and Taxes................................
Portfolio Brokerage................................
The Trust..........................................
Investment Performance.............................
Risk Considerations and Other
Practices and Policies............................
Additional Information.............................
-2-
<PAGE>
EXPENSE INFORMATION
Operating a mutual fund, such as each Fund, involves a variety of
expenses for portfolio management, shareholder statements, tax
reporting and other services. These costs are paid from a fund's assets
and their effect is factored into any quoted share price or performance
information.
Shareholder Transaction Expenses are charges you pay when you buy or
sell Institutional Class shares of a Fund.
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
Maximum Sales Load Imposed on Purchases None None
Maximum Sales Load Imposed on
Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fees None None
</TABLE>
Annual Fund Operating Expenses are paid out of the Funds' assets. Each
Fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts. The following are
estimates and are calculated as a percentage of average net assets.
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
Management Fee
(after expense limitation) 0.00%* 0.00%*
Service Fee 1 0.25% 0.25%
Other Expenses
(after expense limitation) 1.25%* 1.25%*
Total Fund Operating Expenses
(after expense limitation) 1.50%* 1.50%*
</TABLE>
Example: Hypothetically assume that each Fund's annual return is 5% and
that its operating expenses are exactly as just described. For every
$1,000 you invested, you would have paid the following expenses if you
closed your account after the number or years indicated:
<TABLE>
<S> <C> <C>
Large-Cap Small-Cap
Fund Fund
After 1 Year $15 $15
After 3 Years $48 $48
The purpose of the above table and Example is to assist you in
understanding the various costs and expenses of the Institutional Class
shares of the Funds that an investor will bear directly or indirectly.
See page __. The Funds are newly organized and have no operating
history. The figures shown in the
-3-
<PAGE>
table under the caption "Other Expenses" and in the hypothetical
example are based on estimates of the Funds' expenses for the fiscal
year ending December 31, 1995. The expenses set forth above do not
reflect charges and expenses that may be applicable to a holder of a
Variable Contract or participant in a qualified plan. Please refer to
your separate account prospectus or qualified plan documents, as the
case may be.
---------------
<FN>
1 Service Fees are payable under a non-Rule 12b-1 service plan.
See "Service Plans."
* The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees applicable to
Adviser Class shares, service fees applicable to Institutional Class
shares, any other class-specific expenses, litigation, indemnification
and other extraordinary expenses) to 1.25% of its average daily net
assets. See page __. In the absence of this agreement, Management Fees
would be 0.75% of each Fund's average daily net assets and Other
Expenses and Total Fund Operating Expenses are estimated to be
approximately 3.65% and 4.65%, respectively, of the average daily net
assets attributable to the Institutional Class shares of the Large-Cap
Fund and 4.24% and 5.24%, respectively, of the average daily net assets
attributable to the Institutional Class shares of the Small-Cap Fund.
</FN>
</TABLE>
THE INFORMATION IN THE TABLE AND HYPOTHETICAL EXAMPLE ABOVE SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
-4-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
What are the Investment Objectives of the Funds?
Each Fund seeks to provide investors who participate in qualified
retirement plans with investment results that exceed the performance of
a "Benchmark Index." The Benchmark for the Large-Cap Fund is the S&P
500 and the Benchmark for the Small-Cap Fund is the Russell 2000.
LARGE-CAP FUND seeks to exceed the performance of publicly
traded large capitalization stocks in the aggregate,
as represented by the S&P 500. The S&P 500 is an
unmanaged index of 500 common stocks. The S&P 500
represents approximately 70% of the total domestic
U.S. equity market capitalization.
SMALL-CAP FUND seeks to exceed the performance of publicly
traded small capitalization stocks in the aggregate,
as represented by the Russell 2000. The Russell 2000
is an unmanaged index of 2000 common stocks of small
capitalization companies.
How will the Funds invest their assets?
To seek to achieve its objective, each Fund, under normal market
conditions, invests in a portfolio of securities that is considered
more "efficient" than the applicable Benchmark. An efficient portfolio
is one that has the maximum expected return for any level of risk. The
efficient mix of securities is established mathematically, taking into
account the expected return and volatility of returns for each security
in a given universe, as well as the historical price relationships
between the different securities in the universe.
To implement this strategy with respect to the Funds, the Adviser
compiles the historical price data of all securities which comprise the
S&P 500 in the case of the Large-Cap Fund and the Russell 2000 in the
case of the Small-Cap Fund. The Adviser may eliminate a security from
consideration if it considers the security to have an inadequate or
misleading price history. Using this historical price data, the Adviser
constructs and analyzes a complete matrix of all the possible price
relationships between the securities in the applicable Benchmark.
Using a sophisticated software program that incorporates risk
reduction techniques developed by investment professionals of the
Adviser, the Adviser constructs a number of portfolios with respect to
each Fund, which portfolios are believed to have optimized risk/reward
ratios. From these alternative portfolios, the Adviser selects the
combination of securities, together with their appropriate weightings,
that the Adviser believes will comprise the optimal portfolio for each
Fund. The optimal portfolio for a Fund is designed to have a return
greater than, but highly correlated with, the return of its Benchmark.
Please see "Quantitative Methodology" in the SAI for a further
description of how the Adviser constructs and maintains an optimal
portfolio for each Fund.
While each Fund will generally be substantially fully invested in
equity securities which comprise the applicable Benchmark, each Fund
may invest up to 35% of its total assets in fixed-income securities
that are rated at least AA by Standard & Poor's Ratings Group ("S&P")
or Aa by Moody's Investors Service, Inc. ("Moody's") or their
respective equivalents or, if not rated, determined to be of equivalent
credit quality to securities so rated.
Each Fund may, but is not required to, utilize various investment
strategies and techniques to hedge various market risks (such as broad
or specific equity or fixed-income market movements and interest rate
risk) or to enhance potential gain. Such strategies and techniques are
generally accepted as part of modern portfolio management and are
regularly utilized by many mutual funds. The investment
-5-
<PAGE>
strategies and techniques used by the Funds and the instruments in
which they invest may change over time as new techniques, strategies
and instruments are developed or regulatory changes occur.
In the course of pursuing their investment objectives, the Funds
may: (i) purchase and write (sell) put and call options on securities
and indices; (ii) purchase and sell financial futures contracts and
options thereon; (iii) lend portfolio securities; (iv) enter into
repurchase agreements; (v) purchase securities on a forward commitment,
when issued or delayed delivery basis; and (vi) invest in restricted
and illiquid securities. For further information concerning the
securities in which the Funds may invest and the investment strategies
and techniques they may employ, see "Risk Considerations and Other
Investment Practices and Policies" below in this Prospectus.
ELIGIBLE INVESTORS
Institutional Class shares of the Funds are designed to provide
investment vehicles for variable annuity and variable life insurance
contracts ("Variable Contracts") of various insurance companies'
separate accounts ("Separate Accounts"). Institutional Class shares of
the Funds may also be purchased for the account of pension or
retirement plans ("Qualified Plans") that satisfy the qualification
requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). Qualified Plans include: 401(k)
plans, 403(b) plans, 457 plans, governmental plans, tax-sheltered
annuity plans and individual retirement accounts (IRAs).
Should you have any questions as to whether you are an eligible
investor in Institutional Class shares of the Funds, please call WPG at
1-800-___________.
INSURANCE COMPANY SEPARATE ACCOUNTS
Because holders of Variable Contracts may not purchase or redeem
Institutional Class shares of the Funds directly, you should read the
prospectus of your insurance company Separate Account to obtain
instructions for purchasing a Variable Contract. Variable Contracts may
or may not make investments in both the Funds described in this
Prospectus.
Separate Accounts purchase and redeem Institutional Class shares
of the Funds at their respective net asset values. Redemptions will be
effected by Separate Accounts to meet obligations under Variable
Contracts. Insurance companies who wish to designate Institutional
Class shares of the Funds as investment vehicles for their Separate
Accounts should contact WPG at 1-800-___-____.
QUALIFIED PLANS
The following information describes how participants in Qualified
Plans may arrange to buy, sell (redeem) and exchange Institutional
Class shares of the Funds for the account of their Qualified Plans.
A. HOW TO BUY SHARES
Through whom may Institutional Class shares of the Funds be purchased
for Qualified Plans?
Because you may not purchase Institutional Class shares of the
Funds directly, all orders to purchase Institutional Class shares must
be made through the trustee, custodian, plan administrator or other
fiduciary (each a "Plan Fiduciary") of your Qualified Plan. If the
monies you wish to invest in the Funds are maintained in a Qualified
Plan sponsored by your employer, please consult with your employer
-6-
<PAGE>
for information about how to purchase shares of the Funds. If the
monies you wish to invest in the Funds are maintained by your Plan
Fiduciary in an IRA or other self-administered Qualified Plan, please
consult with your Plan Fiduciary for information about how to purchase
shares of the Funds.
You may establish an IRA with the Trust's custodian, Boston Safe
Deposit and Trust Company ("Boston Safe"), through which you may invest
in the Funds. Additionally, you may invest in the Funds by "rolling
over" an existing IRA into an IRA maintained by Boston Safe. Please
call WPG at 1-800-_____ for information regarding how to establish an
IRA with Boston Safe.
What is the minimum investment by Qualified Plans in Institutional
Class shares of the Funds?
Plan Fiduciaries may invest in the Funds for the account of
Qualified Plans with as little as $2,000 ($250 for a spousal IRA).
There is no minimum amount required for subsequent investments.
At what price are Institutional Class shares of the Funds offered?
Institutional Class shares of the Funds are sold at the net asset
value (NAV) of such shares next determined after the Transfer Agent
receives and accepts a purchase order. Purchase orders received and
accepted by the Transfer Agent by the close of regular trading on the
New York Stock Exchange on any Business Day (currently 4:00 p.m. New
York City time) will be effected as of the close of regular trading on
the New York Stock Exchange on that day. Otherwise, orders will be
effected at the NAV determined on the next Business Day.
How may Plan Fiduciaries invest in the Funds for the account of their
Qualified Plans?
In order to make an initial investment in a Fund for a Qualified
Plan, Plan Fiduciaries must open an account with the Funds by
furnishing to WPG the information in the Account Information Form
attached to this Prospectus. Shares of the Funds may be purchased by
Plan Fiduciaries for the account of Qualified Plans on any day during
which the New York Stock Exchange is open for business (a "Business
Day").
Plan Fiduciaries: To Make an Initial Investment for a Qualified Plan
By Mail: 1. Make a check payable to the Fund in which you wish to
or are instructed to invest.
2. Mail the completed Account Information Form and check
to the Transfer Agent at the address indicated on the
back cover of this Prospectus.
By Wire: 1. Call 1-800-________ to open an account and to arrange
for a wire transaction.
2. Instruct your bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
Bank Routing No. __________
Specify:
-7-
<PAGE>
Name of Fund
Institutional Class shares
Account Number
Name(s) in which account is to be registered
3. Mail the completed Account Information Form to the
Transfer Agent at the address indicated on the back
cover of this Prospectus.
Plan Fiduciaries: To Make Further Investments for a Qualified Plan
Automatically: 1. Use the Automatic Investment Plan. Sign up for this
service when opening an account, or call 1-800-_____
to add it. Designate the bank or credit union
account from which funds will be drawn.
2. The amount to be invested will automatically be with-
drawn from the designated bank or credit union account
on or about the first Business Day of the month or
quarter selected.
By Telephone: 1. Sign up for this service when opening an account, or
call 1-800-_______ to add it. Designate the bank or
credit union account from which funds will be drawn.
Note that in order to invest by phone, the account
must be in a bank or credit union that is a member of
the Automated Clearing House system (ACH).
2. Once this service has been selected, Plan Fiduciaries
may purchase additional shares for the account of their
Qualified Plans by calling the Funds' Transfer Agent,
The Shareholder Services Group, Inc., toll-free at
1-800-_________.
3. Give the Transfer Agent representative the name(s) in
which the account is registered, the Fund name,
Institutional Class shares, the account number, and the
amount of the investment.
4. An investment will normally be credited to the
Qualified Plan account the Business Day following the
phone request.
During periods of extreme economic conditions or market
changes, requests by telephone may be difficult to make
due to heavy volume. During such times please consider
placing purchase orders by mail.
-8-
<PAGE>
By Mail: 1. Include a note with the investment specifying:
Name of the Fund
Institutional Class shares
Account Number
Name(s) in which account is registered
2. Make the check payable to the Fund in which you wish to
or are instructed to invest. Indicate the account
number on the check.
3. Mail the account information and check to the Transfer
Agent at the address indicated on the back cover of
this Prospectus.
By Wire: Instruct the bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. _________
ABA Routing No. __________
For credit to:
Name of Fund
Institutional Class shares
Your Account Number
Name(s) in which account is registered
Other Purchase Information. Each Fund reserves the right to reject
any purchase for any reason and to cancel any purchase due to
nonpayment. As a condition of this offering, if your purchase is
cancelled due to nonpayment or because your check does not clear (and,
therefore, your account is required to be redeemed), you will be
responsible for any loss incurred by the Fund(s) affected. All
purchases must be made in U.S. dollars. Checks drawn on foreign banks
will delay purchases until U.S. funds are received and a collection
charge may be imposed. In such cases, Institutional Class shares of the
Funds are priced at the net asset value computed after the Transfer
Agent receives notification of the dollar equivalent from the Funds'
custodian bank. Wire purchases normally take two or more hours to
complete and, to be accepted the same day, must be received by 4:00
p.m. New York City time. Your bank may charge a fee to wire funds.
Telephone transactions are recorded to verify information.
Acquiring Shares of the Funds in Exchange for Securities. Shares
of the Funds may be purchased in whole or in part by delivering to the
Funds' custodian, Boston Safe, securities acceptable to WPG. Please see
"In-Kind Purchases" in the SAI for the terms and conditions of these
transactions.
B. HOW TO SELL SHARES
How may Institutional Class shares of the Funds be redeemed for
Qualified Plans?
Subject to the restrictions (if any) imposed by your Qualified
Plan, you can arrange to sell or "redeem" some or all of your shares on
any Business Day. All orders to redeem Institutional Class shares of
the Funds held for the account of Qualified Plans must be made through
your Plan Fiduciary. If the Institutional Class shares you wish to
redeem are held for the account of a Qualified Plan sponsored by
-9-
<PAGE>
your employer, please consult with your employer for information about
how to redeem shares of the Funds. If the Institutional Class shares
you wish to redeem are maintained by your Plan Fiduciary in an IRA or
other self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to redeem shares of the Funds.
Please note that shares may not be redeemed by telephone or telegram,
except for exchanges which can be requested by Plan Fiduciaries by
telephone or in writing.
At what price are Institutional Class shares of the Funds redeemed?
Institutional Class shares of the Funds will be redeemed at the
share price (NAV) of such shares next calculated after a redemption
order is received in good order by the Transfer Agent. Once shares are
redeemed, sale proceeds generally are available the next Business Day,
but may take up to three Business Days. For your protection, redemption
proceeds will not be released until a shareholder's account has been
opened and payment for the shares to be redeemed have been received by
the Fund, which may take up to fifteen days.
The net asset value per share received upon redemption or
repurchase may be more or less than the original cost of the shares,
depending on the market value of the portfolio at the time of
redemption or repurchase.
Plan Fiduciaries: To Redeem Shares for a Qualified Plan
By Mail: 1. In a written request specify:
Name of the Fund
Institutional Class shares
Account Number
Name(s) in which account is registered
The dollar amount or the number of shares to be
redeemed
2. Mail the redemption request to the Transfer Agent at
the address indicated on the back cover of this
Prospectus.
Automatically 1. Use the Automatic Withdrawal Plan if the Qualified
Plan account has a (Post-Retirement total value of
at least $[_______]. Sign up for this service when
opening Fund Only): an account, or call 1-800-____
to add it.
2. The redemption proceeds of $[______] or more will
automatically be transferred from the shareholder
account to the designated address or bank account on or
about the first Business Day of the month or quarter
selected.
General Redemption Information. Redemption requests must be
received by the Transfer Agent before the close of business on the New
York Stock Exchange to receive that day's share price (NAV). A
written redemption request must be signed by all registered share-
holders for the account using the exact names in which the account is
registered or accompanied by executed power(s) of attorney. Unless
otherwise specified, redemption proceeds will be sent by check to the
record address. Plan Fiduciaries
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may elect to have redemption proceeds wired to a checking or bank
account if wire redemptions were authorized when the account was opened
or have subsequently been authorized.
Redemptions may be suspended or postponed during any period in
which any of the following conditions exist: the New York Stock
Exchange is closed or trading on the Exchange is restricted; an
emergency exists during which it is not reasonably practicable for a
Fund to dispose of its portfolio securities or to fairly determine its
net asset value; or the SEC, by order, so permits.
Certain requests must include a signature guarantee. A signature
guarantee is a widely accepted way to protect you and the Funds from
fraud by verifying the signature on your request. A signature guarantee
is required if the redemption proceeds are to be sent to an address
other than the address of record or to a person other than the
registered shareholder(s) for the account [or if the net asset value of
the shares redeemed is $100,000 or more].
The following institutions may provide a signature guarantee,
provided that the institution meets credit standards established by the
Transfer Agent: (i) a bank; (ii) a securities broker or dealer,
including a government or municipal securities broker or dealer, that
is a member of a clearing corporation or has net capital of at least
$100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association;
or (v) a national securities exchange, a registered securities exchange
or a clearing agency.
Signature guarantees may not be provided by a notary public.
Small Accounts. In order to reduce the expense of maintaining
numerous small accounts, the Trust reserves the right to redeem any
shareholder account (other than an IRA) if, as a result of redemptions,
the value of the account is less than $100. Shareholders will be
allowed at least 60 days, after written notice by the Trust, to make an
additional investment to bring the account value up to at least $100
before the redemption is processed.
Change in Tax Status. Insurance companies and Plan Fiduciaries are
required to notify the Trust through the Transfer Agent if the tax
status of their Separate Account or Qualified Plan is revoked or
challenged by the Internal Revenue Service. The Trust reserves the
right to redeem any fund account of any shareholder whose qualification
as a diversified segregated asset account or a qualified pension or
retirement plan satisfying the requirements of Treasury Regulation
1.817-5 is revoked or challenged.
C. HOW TO EXCHANGE SHARES
May Institutional Class shares be exchanged for shares of other mutual
funds?
Subject to the terms of your Qualified Plan, Institutional Class
shares of a Fund may be exchanged for Institutional Class shares of the
other Fund or for Institutional Class shares of Tomorrow Long-Term
Retirement Fund, Tomorrow Mid-Term Retirement Fund, Tomorrow Short-Term
Retirement Fund and Tomorrow Post-Retirement Fund (collectively, the
Tomorrow Funds"). To obtain a current prospectus for the Institutional
Class shares of the other Tomorrow Funds, please call 1-800-___-____.
Please consider the differences in investment objectives and expenses
of a Tomorrow Fund as described in its prospectus before making an
exchange.
Do sales charges apply to exchanges?
As is the case with initial purchases of Institutional Class
shares of the Funds, exchanges of Institutional Class shares are made
without the imposition of a sales charge.
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How may I make an exchange for my Qualified Plan?
Because shares of the Funds are held for the account of Qualified
Plans, all orders to exchange shares must be made through your Plan
Fiduciary. If the Institutional Class shares you wish to exchange are
held for the account of a Qualified Plan sponsored by your employer,
please consult with your employer for information about how to exchange
shares of the Funds. If the Institutional Class shares you wish to
exchange are maintained by your Plan Fiduciary in an IRA or other
self-administered Qualified Plan, please consult with your Plan
Fiduciary for information about how to exchange shares of the Funds.
Plan Fiduciaries: To Exchange Shares
By Phone: 1. Use the telephone exchange privilege. The telephone
exchange privilege is not available automatically. It
is necessary to sign up for this privilege on the
Account Application Form when opening an account, or
call 1-800-______ to add it.
2. Once this privilege has been selected, simply call the
Transfer Agent toll free at 1-800-223-3332 between
9:00 a.m. and 4:00 p.m. New York City time on any
Business Day.
3. Give the following information to the Transfer Agent
representative:
Name of current Fund
Institutional Class shares
Name of the Tomorrow Fund into which the current
Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
By Mail: 1. Mail a written request to the Transfer Agent at the
address listed on the back cover of this Prospectus
specifying:
Name of current Fund
Institutional Class shares
Name of the Tomorrow Fund into which the current
Fund shares will be exchanged
Account Number
Name(s) in which your account is registered
The dollar amount or the number of shares to be
exchanged
2. The exchange request must be signed by all registered
holders for the account using the exact names in which
the account is registered or accompanied by executed
power(s) of attorney.
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General Exchange Information. Shares exchanged are valued at their
respective net asset values next determined after the exchange request
is received by the Transfer Agent. All exchanges are subject to the
following exchange restrictions: (i) the fund into which shares are
being exchanged must be registered for sale in your state; (ii)
exchanges may be made only between funds that are registered in the
same name, address and taxpayer identification number; and (iii) the
minimum amount for exchanging from one fund into another fund is $100
or the total value of your fund account (if less than $100) and must
satisfy the minimum account size of the fund to be exchanged into.
To confirm that telephone exchange requests are genuine, the Trust
employs reasonable procedures, such as providing written confirmation
of telephone exchange transactions and tape recording of telephone
exchange requests. If the Trust does not employ such reasonable
procedures, it may be liable for any loss incurred by a shareholder due
to a fraudulent or unauthorized telephone exchange request. Otherwise,
neither the Trust nor its agents will be liable for any loss incurred
by a shareholder as the result of following instructions communicated
by telephone that they reasonably believed to be genuine. The Trust
reserves the right to refuse any request made by telephone and may
limit the dollar amount involved or the number of telephone requests
made by any shareholder. During periods of extreme economic conditions
or market changes, requests by telephone may be difficult to make due
to heavy volume. During such times please consider placing your order
by mail.
To prevent abuse of the exchange privilege to the detriment of
other shareholders, the Trust limits the number of exchanges and
purchase/redemption transactions by any one shareholder account (or
group of accounts under common management) to a total of six
transactions per year. This policy applies to exchanges into or out of
any Tomorrow Fund and any pair of transactions involving a purchase of
shares of any Tomorrow Fund followed by a redemption of an offsetting
or substantially equivalent dollar amount of shares of that same
Tomorrow Fund. If a Plan Fiduciary violates this policy, his/her future
purchases of, or exchanges into, the Tomorrow Funds may be permanently
refused. This policy does not prohibit redemptions of shares of any
series. This policy may be waived by WPG in its discretion. Further,
the exchange privilege may be changed or discontinued and may be
subject to additional limitations upon sixty (60) days' notice to
shareholders, including certain restrictions on purchases by
market-timer accounts.
HOW EACH FUND'S SHARE PRICE IS DETERMINED
The net asset value per share of a class of a Fund is determined
by dividing the value of its assets, less liabilities attributable to
that class, by the number of shares of that class outstanding. The net
asset value is normally calculated as of the close of regular trading
of the New York Stock Exchange (currently 4:00 p.m. New York City time)
on each Business Day. Different classes of shares of the Funds may have
different net asset values.
Portfolio securities (other than certain money market instruments)
are valued primarily based on market quotations or, if market
quotations are not available, at fair market value as determined in
good faith by a valuation committee appointed by the Trustees. In
accordance with procedures adopted by the Trustees, each Fund may use
pricing services to value fixed-income investments. Money market
instruments with a remaining maturity of 60 days or less at the time of
purchase are generally valued at amortized cost when the Trustees
believe that amortized cost approximates market value.
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MANAGEMENT OF THE FUNDS
Trustees
Each Fund is a separate investment series of Tomorrow Funds
Retirement Trust, a Delaware business trust (the "Trust"). Under the
terms of the Agreement and Declaration of Trust establishing the Trust,
the Trustees of the Trust are ultimately responsible for the management
of its business and affairs.
Investment Adviser
Weiss, Peck & Greer, L.L.C., One New York Plaza, New York, New
York 10004 serves as the investment adviser to each Fund pursuant to an
investment advisory agreement. Subject to the supervision and direction
of the Trustees, the Adviser manages each Fund's portfolio in
accordance with its stated investment objective and policies,
recommends investment decisions for the Fund and places orders to
purchase and sell securities on behalf of the Fund. For these services,
each Fund pays the Adviser a monthly fee equal on an annual basis to
0.75% of its average daily net assets.
Joseph N. Pappo has been primarily responsible for the day-to-day
management of each Fund's portfolio since the Funds' inception. Mr.
Pappo has been a principal of the Adviser since 1994. Prior to joining
WPG, Mr. Pappo was the founder and president of Eden Financial Group
which was acquired by WPG in 1991.
The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees applicable to the
Adviser Class shares, service fees applicable to the Institutional
Class shares, any other class-specific expenses, litigation,
indemnification and other extraordinary expenses) to 1.25% of its
average daily net assets. The Adviser may discontinue or modify such
limitation in the future at its discretion, although it has no current
intention to do so.
Administrator
Pursuant to an administration agreement with each Fund, WPG
provides personnel for supervisory, administrative, accounting,
shareholder services and clerical functions; oversees the performance
of administrative and professional services to the Funds by others;
provides office facilities, furnishings and office equipment; and
prepares, but does not pay for, reports to shareholders, the SEC and
other regulatory authorities. As compensation for the services rendered
to the Funds as Administrator, WPG is entitled to a fee, computed daily
and payable monthly, at an annual rate equal to 0.09% of each Fund's
average daily net assets. The administrative fee for each Fund is
reviewed and approved annually by the Trustees.
Expenses
Each Fund bears all expenses of its operation, subject to the
expense limitation agreement described above. In particular, each Fund
pays: investment advisory fees; administration fees; service fees with
respect to the Institutional Class shares; distribution and service
fees with respect to the Adviser Class shares; custodian and transfer
agent expenses; legal and accounting fees and expenses; expenses of
preparing, printing, and distributing Prospectuses and SAIs to existing
shareholders, and shareholder communications and reports; expenses of
computing its net asset value per share; federal and state registration
fees and expenses with respect to its shares; proxy and shareholder
meeting expenses; expenses of issuing and redeeming its shares;
independent trustee fees and expenses; expenses of bond, liability, and
other insurance coverage; brokerage commissions; taxes; trade
association fees; and certain non-recurring and extraordinary expenses.
In addition, the expense of organizing the Funds and initially
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registering and qualifying their shares under federal and state
securities laws are being charged to the Funds' operations, as an
expense, over a period not to exceed 60 months from the Funds'
inception date.
Each Fund will reimburse the Adviser for fees foregone or other
expenses paid by the Adviser pursuant to this expense limitation in
later years in which operating expenses for that Fund are less than the
expense limitations set forth above for any such year. No interest,
carrying or finance charge will be paid by a Fund with respect to the
amounts representing fees foregone or other expenses paid. In addition,
no Fund will pay any unreimbursed amounts to the Adviser upon
termination of its investment advisory agreement.
SERVICE PLANS
The Trust, on behalf of each Fund, has adopted a service plan
pursuant to which each Fund pays service fees at an aggregate annual
rate of up to 0.25% of a Fund's average daily net assets attributable
to Institutional Class shares (the "Service Plans"). The service fee is
intended to be compensation to Plan Fiduciaries for providing personal
services and/or account maintenance services to the underlying
beneficial owners of the Institutional Class shares or to insurance
companies or their affiliates for providing similar services for which
they are not otherwise compensated by the Variable Contract holders.
The Trust, on behalf of the applicable Fund, will make monthly payments
to insurance companies and Plan Fiduciaries based on the average net
asset value of the Institutional Class shares which are attributable to
the Qualified Plan or Separate Account, as the case may be.
DIVIDENDS AND TAXES
Each Fund is treated as a separate entity for federal income tax
purposes and intends to elect to be treated as a "regulated investment
company" under the Code and to qualify for such treatment for each
taxable year. To qualify as such, each Fund must satisfy certain
requirements relating to the sources of its income, diversification of
its assets and distribution of its income to shareholders. Each Fund
also intends to satisfy certain additional diversification requirements
applicable under Section 817(h) of the Internal Revenue Code in order
to permit investments in Institutional Class shares of the Funds by
insurance company Separate Accounts that fund Variable Contracts, which
are subject to such requirements. It is possible that in order to
satisfy the applicable diversification requirements, investment
decisions may be made which would affect either positively or
negatively the investment performance of a Fund. As a regulated
investment company, each Fund will not be subject to federal income tax
on any net investment income and net realized capital gains that are
distributed to its shareholders in accordance with certain timing
requirements of the Code.
Participants in Qualified Plans may be eligible for tax deferral
on distributions a Qualified Plan receives from a Fund and gains that
arise from a Qualified Plan's dispositions of Fund shares. This
Prospectus does not describe in any respect such tax treatment. Please
consult your Plan Fiduciary or tax adviser.
Under current tax law, dividends or capital gain distributions
from a Fund are not currently taxable if properly allocable to reserves
for a Variable Contract. For a discussion of the tax status of a
Variable Contract, including the tax consequences of withdrawals or
other payments, refer to the prospectus of the insurance company
Separate Account.
It is suggested that holders of Variable Contracts and
participants in Qualified Plans keep all statements received from their
insurance company or Qualified Plan to assist in personal
recordkeeping.
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Each Fund intends to distribute all of its net investment income
and net capital gains each year. Income dividends, if any, will be
declared and distributed at least annually by each Fund. Net short-term
and long-term capital gains of each Fund, if any, realized during the
taxable year will be distributed no less frequently then annually.
Dividends derived from each Fund's net investment income (including
dividends, interest and recognized market discount income), and net
short-term capital gains received by a Fund are treated as ordinary
income under the Code. Distributions from each Fund's net long-term
capital gains are treated as long-term capital gains under the Code,
regardless of how long shares of the Funds have been held.
Reinvestment of Income Dividends and Capital Gains Distributions
Unless a Plan Fiduciary elects otherwise, as permitted in the
Account Information Form, income dividends and capital gains
distributions with respect to a Fund will be reinvested in additional
Institutional Class shares of that Fund and will be credited to the
Qualified Plan's account with that Fund at the net asset value per
share next determined as of the ex-dividend date. Both income dividends
and capital gains distributions are paid by the Fund on a per share
basis. As a result, at the time of such payment, the net asset value
per share of a Fund will be reduced by the amount of such payment.
Although income dividends and capital gains distributions by the Funds
may not give rise to current tax liability for the categories of
shareholders permitted to invest in the Funds, participants in
Qualified Plans may be subject to tax on all or a portion of their
distributions from such Plans or upon the failure of such Plans to
maintain their qualified status under complex Code provisions
concerning which a tax adviser should be consulted. Withdrawals or
other payments to Variable Contract holders from insurance company
Separate Accounts may also be taxable. Participants in Qualified Plans
who wish to change the manner in which income dividends and capital
gains distributions are received by their Qualified Plans should
contact their Plan Fiduciaries. Written notification of such change
must be received by the Transfer Agent at least ten days before the
next scheduled distribution.
PORTFOLIO BROKERAGE
In effecting securities transactions, the Funds generally seek to
obtain the best price and execution of orders. Commission rates are a
component of price and are considered along with other factors,
including the ability of the broker to effect the transaction, and the
broker's facilities, reliability and financial responsibility. Subject
to the foregoing, the Funds intend to utilize WPG as their primary
broker in connection with the purchase and sale of exchange-traded
portfolio securities. As the Funds' primary broker, WPG will receive
brokerage commissions from the Funds, limited to the "usual and
customary broker's commission" specified by the 1940 Act. The Funds
intend to continue to use WPG as their primary broker on
exchange-traded securities, provided WPG is able to provide execution
at least as favorable as that provided by other qualified brokers.
The Trustees of the Trust have developed procedures to limit the
commissions received by WPG to the "usual and customary broker's
commission" standard specified by the 1940 Act. On a quarterly basis,
the Trustees review the securities transactions of each Fund effected
by WPG to assure their compliance with such procedures.
The Funds will also execute their portfolio transactions through
qualified brokers other than WPG. In selecting such other brokers, WPG
considers the quality and reliability of brokerage services, including
execution capability and performance and financial responsibility, and
may consider the research and other investment information provided by
such brokers. Accordingly, the commissions paid to any such broker may
be greater than the amount another firm might charge, provided WPG
determines in good faith that the amount of such commission is
reasonable in relation to the value of the brokerage services and
research information provided by such broker. Such information may be
used by WPG (and its affiliates) in
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managing all of its accounts and not all of such information may be
used by WPG in managing the Funds. In selecting other brokers for a
Fund, WPG may also consider the sale of shares of the Fund effected
through such other brokers as a factor in its selection, provided that
Fund obtains the best price and execution of orders.
Money market securities and other fixed-income securities, as well
as certain equity securities, in which the Funds invest are traded
primarily in the over-the-counter ("OTC") market. For transactions
effected in the OTC market, financial intermediaries (i.e., dealers)
act as principal rather than as agent and receive a "spread" rather
than a commission. The Funds intend to deal with the primary
market-makers with respect to OTC securities, unless a more favorable
result is obtainable elsewhere.
THE TRUST
Tomorrow Funds Retirement Trust is an open-end management
investment company (commonly referred to as a mutual fund) organized as
a Delaware business trust under an Agreement and Declaration of Trust
dated June 21, 1995 (the "Declaration"). The Trust has authorized an
unlimited number of shares of beneficial interest.
As of the date of this Prospectus, the shares of the Trust are
divided into six series: Tomorrow Long-Term Retirement Fund, Tomorrow
Mid-Term Retirement Fund, Tomorrow Short-Term Retirement Fund, Tomorrow
Post-Retirement Fund, Core Large-Cap Stock Fund and Core Small-Cap
Stock Fund. The Trust reserves the right to create and issue additional
series of shares. No series is entitled to share in the assets of any
other series or is liable for the expenses or liabilities of any other
series. Shares of a particular series vote separately on matters
affecting only that series, including the approval of an investment
advisory agreement and changes in fundamental policies or restrictions
of a particular series.
As of the date of this Prospectus, the Trustees have authorized
the issuance of two classes of shares for each series, designated
Adviser Class and Institutional Class. The shares of each Class
represent an interest in the same portfolio of investments of that
series. Each Class has equal rights as to voting, redemption, dividends
and liquidation, except that each Class bears different distribution
fees and may bear other expenses properly attributable to the
particular Class. Adviser Class shareholders of a Fund have exclusive
voting rights with respect to the Rule 12b-1 distribution plan adopted
by holders of Adviser Class shares of that Fund. The Trustees have the
authority, without further shareholder approval, to classify and
reclassify the shares of a series of the Trust into additional classes.
In addition, subject to Trustee approval and shareholder approval (if
then required), each Fund may pursue its investment objective by
investing all of its investable assets in a pooled fund. See "Risk
Considerations and Other Investment Practices and Policies" below.
An insurance company issuing a Variable Contract that participates
in Institutional Class shares of a Fund will vote such shares held by
the insurance company Separate Accounts as required by law. In
accordance with current law and interpretations thereof, participating
insurance companies are required to request voting instructions from
policy owners and must vote shares of the Funds in proportion to the
voting instructions received. For a further discussion of voting
rights, please refer to your insurance company Separate Account
prospectus.
When issued and paid for in accordance with the terms of the
Prospectus and Statement of Additional Information, shares of the Trust
are fully paid and non-assessable. The Trust is not required, and does
not intend, to hold annual shareholder meetings. Shareholders have
certain rights, as set forth in the Declaration, including the right to
call a meeting of shareholders for the purpose of voting on the removal
of one or more Trustees. Such removal can be effected upon the action
of two-thirds of the outstanding shares of the Trust.
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In addition to the requirements under Delaware law, the
Declaration provides that a shareholder of the Trust may bring a
derivative action on behalf of the Trust only if the following
conditions are met: (a) shareholders eligible to bring such derivative
action under Delaware law who hold at least 10% of the outstanding
shares of the Trust, or 10% of the outstanding shares of the series or
class to which such action relates, shall join in the request for the
Trustees to commence such action; and (b) the Trustees must be afforded
a reasonable amount of time to consider such shareholder request and
investigate the basis of such claim. The Trustees shall be entitled to
retain counsel or other advisers in considering the merits of the
request and shall require an undertaking by the shareholders making
such request to reimburse the Trust for the expense of any such
advisers in the event that the Trustees determine not to bring such
action
The Trustees of the Trust do not foresee any disadvantages to
investors arising out of the fact that each Fund may offer a class of
its shares to Separate Accounts that serve as investment medium for
Variable Contracts or that each Fund may offer its shares to Qualified
Plans. Nevertheless, the Trustees intend to monitor events in order to
identify any material irreconcilable conflicts which may possibly
arise, and to determine what action, if any, should be taken in
response to such conflicts. If such a conflict were to occur, one or
more Separate Accounts or Qualified Plans might be required to withdraw
their investments in either or both Funds and shares of another series
of the Trust may be substituted. This might force a Fund to sell
securities at disadvantageous prices.
In the interests of economy and convenience, the Trust does not
issue certificates representing the Funds' shares. Instead, the
Transfer Agent maintains a record of each shareholder's ownership.
Although each Fund is offering only its own shares, since the Funds use
this combined Prospectus, it is possible that one Fund might become
liable for a misstatement or omission in this Prospectus regarding the
other Fund. The Trustees have considered this factor in approving the
use of this combined Prospectus.
INVESTMENT PERFORMANCE
Each Fund may illustrate in advertisements and sales literature
the average annual total return of its Institutional Class shares,
which is the rate of growth of the Fund that would be necessary to
achieve the ending value of an assumed initial investment of $1,000
kept in Institutional Class shares of the Fund for the period specified
and is based on the following assumptions: (1) all dividends and
distributions by the Fund are reinvested in Institutional Class shares
of the Fund at net asset value; and (2) all recurring fees are included
for applicable periods.
Each Fund may also illustrate in advertisements the cumulative
total return for several time periods throughout the Fund's life based
on an assumed initial investment of $1,000. Any such cumulative total
return for a Fund will assume the reinvestment of all income dividends
and capital gains distributions in Institutional Class for the
indicated periods and will include all recurring fees.
Total returns quoted for the Funds include the effect of deducting
each Fund's expenses, but may not include charges and expenses
attributable to any particular Qualified Plan or Variable Contract. You
should carefully review the prospectus of the insurance product you
have chosen or consult with your Plan Fiduciary for information on
relevant charges and expenses. Because these charges and expenses are
excluded from a Fund's quoted performance, the investment return
received by a participant in a Qualified Plan or a holder of a Variable
Contract investing in the Fund may be lower than the quoted performance
of the Fund. You should bear in mind the effect of these charges when
comparing a Fund's performance to that of other mutual funds.
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The performance of the Institutional Class shares of the Funds
will vary from time to time and past results are not necessarily
representative of future results. Performance is a function of the type
and quality of a Fund's portfolio securities and is affected by
operating expenses. Performance information may not provide a basis
for comparison with other investments or other mutual funds using a
different method of calculating performance. An investment in any Fund
involves the risk of loss.
RISK CONSIDERATIONS AND OTHER INVESTMENT PRACTICES AND POLICIES
Because each Fund owns different types of investments, its
performance is affected by a variety of factors. The value of a Fund's
investments and the income they generate will vary from day to day, and
generally reflect interest rates, market conditions, and other company,
political and economic news. When you sell your shares, they may be
worth more or less than what you paid for them.
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Investing in Small Capitalization Companies. The Small-Cap Fund will
invest in equity securities of small capitalization companies included
within the Russell 2000 and the Large-Cap Fund may invest in such
securities to the extent that they are included in the S&P 500. Small
capitalization companies may offer a greater growth potential than
larger, more mature, better known firms. Investing in the securities of
such companies, however, involves greater risk and a possibility of
greater portfolio price volatility. Historically, small capitalization
stocks and stocks of recently organized companies have been more
volatile in price than the larger capitalization stocks, such as those
included in the S&P 500. Among the reasons for the greater price
volatility of these small company and unseasoned stocks are the less
certain growth prospects of smaller firms and the lower degree of
liquidity in the markets for such stocks.
Fixed-Income Securities. Each Fund may invest up to 10% of its assets
in a broad range of fixed-income securities, including bonds, notes,
mortgage-backed and asset-backed securities, preferred stock and
convertible debt securities issued by U.S. corporations or other
entities or by the U.S. Government or its agencies, authorities,
instrumentalities or sponsored enterprises. The interest payable on
so-called fixed-income securities purchased by a Fund is not
necessarily paid at a fixed rate and may be payable on a variable,
floating (including inverse floating), contingent, in-kind or deferred
basis.
Fixed-income securities are subject to the risk of the issuers'
inability to meet principal and interest payments on the obligations
(credit risk) and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the credit
worthiness of the issuer and general market liquidity (market risk).
Generally, when interest rates decline, the value of fixed-income
securities can be expected to rise. Conversely, when interest rates
rise the value of fixed-income securities can be expected to decline.
Corporate Debt Obligations. Each Fund may invest in corporate debt
obligations, including obligations of industrial, utility and financial
issuers. In addition to obligations of corporations, corporate debt
obligations include bank obligations and zero coupon securities, issued
by financial institutions and corporations.
The debt securities in which the Funds may invest will be rated,
at the time of purchase, within the top two categories of investment
grade securities or, if not rated, determined by the Adviser to be of
equivalent credit quality to securities so rated. The top two
categories of investment grade securities are Aaa and Aa for Moody's
and AAA and AA for S&P. A security will be deemed to have met a rating
requirement if it receives the minimum required rating from at least
one nationally recognized statistical rating organization even though
it has been rated below the minimum rating by one or more other rating
organizations, or if unrated by such rating organizations, determined
by the Adviser to be of comparable credit quality. In the event that
the rating on a security held in a Fund's portfolio is downgraded below
the minimum rating requirement by a rating service, such action will be
considered by the Adviser in its evaluation of the overall investment
merits of that security, but will not necessarily result in the sale of
the security.
Convertible Securities and Preferred Stocks. Each Fund may invest in
debt securities or preferred stocks that are convertible into or
exchangeable for common stock. Preferred stocks are securities that
represent an ownership interest in a company and provide their owner
with claims on the company's earnings and assets prior to the claims of
owners of common stock but after those of bond owners. Preferred stocks
in which the Funds may invest include sinking fund, convertible,
perpetual fixed and adjustable rate (including auction rate) preferred
stocks.
U.S. Government Securities. Each Fund may invest in all types of U.S.
Government securities, including obligations issued or guaranteed by
the U.S. Government or its agencies, authorities, instrumentalities or
sponsored enterprises. Some U.S. Government securities, such as
Treasury bills, notes and bonds, which differ only in their interest
rates, maturities and times of issuance, are supported by the full
faith and credit of the United States of America. Others, such as
obligations issued or guaranteed by U.S. Government
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agencies, authorities, instrumentalities or sponsored enterprises are
supported either by (a) the full faith and credit of the U.S.
Government (such as securities of the Small Business Administration),
(b) the right of the issuer to borrow from the U.S. Treasury (such as
securities of the Federal Home Loan Banks), (c) the discretionary
authority of the U.S. Government to purchase the agency's obligations
(such as securities of the Federal National Mortgage Association), or
(d) only the credit of the issuer.
Each Fund may also invest in separately traded principal and
interest components of securities guaranteed or issued by the U.S.
Government or its agencies, instrumentalities or sponsored enterprises
if such components are traded independently under the Separate Trading
of Registered Interest and Principal of Securities program ("STRIPS")
or any similar program sponsored by the U.S. Government. The Funds may
invest in U.S. Government securities which are zero coupon or deferred
interest securities.
Real Estate Investment Trusts. Each Fund may invest in shares of real
estate investment trusts ("REITs"). REITs are pooled investment
vehicles which invest primarily in income producing real estate or real
estate related loans or interests. REITs are generally classified as
equity REITs, mortgage REITs or a combination of equity and mortgage
REITs. Equity REITs invest the majority of their assets directly in
real property and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling properties that
have appreciated in value. Mortgage REITs invest the majority of their
assets in real estate mortgages and derive income from the collection
of interest payments. Like investment companies such as the Funds,
REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the Internal Revenue Code. Any Fund
that invests in REITs will indirectly bear its proportionate share of
any expenses paid by such REITs in addition to the expenses paid by the
Fund.
Investing in REITs involves certain risks: equity REITs may be
affected by changes in the value of the underlying property owned by
the REITs, while mortgage REITs may be affected by the quality of any
credit extended. REITs are dependent upon management skills, are not
diversified, and are subject to the risks of financing projects. REITs
are subject to heavy cash flow dependency, default by borrowers,
self-liquidation, and the possibilities of failing to qualify for the
exemption from tax for distributed income under the Internal Revenue
Code and failing to maintain their exemptions from the 1940 Act. REITs
whose underlying assets include long-term health care properties, such
as nursing, retirement and assisted living homes, may be impacted by
federal regulations concerning the health care industry.
Investing in REITs may involve risks similar to those associated
with investing in small capitalization companies. REITs may have
limited financial resources, may trade less frequently and in a limited
volume and may be subject to more abrupt or erratic price movements
than larger company securities. Historically, small capitalization
stocks, such as REITs, have been more volatile in price than the larger
capitalization stocks included in the S&P 500 Index.
Other Investment Companies. Each Fund is authorized to invest all of
its assets in the securities of a single open-end investment company (a
"pooled fund") having substantially identical investment objectives,
policies and restrictions as such Fund, notwithstanding any other
investment restriction or policy. Such a structure is commonly referred
to as "master/feeder." If authorized by the Trustees and subject to
shareholder approval (if then required by applicable law), a Fund would
seek to achieve its investment objective by investing in a pooled fund
which would invest in a portfolio of securities that complies with the
Fund's investment objective, policies and restrictions. The Trustees
currently do not intend to authorize investing in a pooled fund in
connection with a master/feeder structure.
Short-Term Debt Securities. Each Fund may establish and maintain cash
balances for temporary purposes in order to maintain liquidity to meet
shareholder redemptions. Each Fund may also establish and maintain cash
balances for defensive purposes without limitation to hedge against
potential stock market declines. A Fund's cash balances, including
uncommitted cash balances, may be invested in
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investment grade money market instruments and short-term
interest-bearing securities. These securities consist of U.S.
Government securities, instruments of U.S. banks (including negotiable
certificates of deposit, non-negotiable fixed-time deposits and
bankers' acceptances), repurchase agreements, prime commercial paper of
U.S. companies and debt securities that make periodic interest payments
at variable or floating rates.
Structured Securities. Each Fund may invest in "structured" notes,
bonds or debentures. The distinguishing feature of a structured
security is that the value of the principal of and/or interest payable
on the security is determined by reference to the value of a benchmark
or the relative change in two or more benchmarks. Examples of these
benchmarks include stock prices, currency exchange rates and physical
commodity prices. Structured securities may be positively or negatively
indexed, so that appreciation of the benchmark may produce an increase
or decrease in the interest rate or value of the structured security at
maturity. Certain structured securities may also be leveraged to the
extent that the magnitude of any change in the interest rate or
principal payable on the benchmark asset is a multiple of the change in
the reference price. Leverage enhances the price volatility of the
security and, therefore, the Fund's net asset value. Further, certain
structured or hybrid notes may be illiquid for purposes of the Fund's
limitation on investments in illiquid securities.
Writing and Purchasing Put and Call Options on Securities and
Securities Indices. To seek additional income or to minimize
anticipated declines in the value of its securities, each Fund may
purchase and write (i.e., sell) call and put options on securities and
securities indices. Option transactions in which the Funds may engage
may be traded on securities exchanges or in the over-the-counter
market. Each Fund currently intends to limit its option transactions
during the current fiscal year so that no more than 5% of the Fund's
net assets will be at risk as a result of such transactions. Please see
the SAI for a further discussion of option transactions and associated
risks.
Futures Contracts and Options on Futures Contracts. Each Fund may
engage in futures transactions and related options. Future contracts
may be based on various securities (such as U.S. Government
securities), securities indices and other financial instruments and
indices. A Fund will engage in futures and related options transactions
only for bona fide hedging and non-hedging purposes to the extent
permitted by regulations of the Commodity Futures Trading Commission. A
Fund will not enter into futures contracts or options thereon for
non-hedging purposes if, immediately thereafter, the aggregate initial
margin and premiums required to establish non-hedging positions in
futures contracts and options on futures would exceed 5% of the Fund's
net assets, after taking into account unrealized profits and losses on
any such positions and excluding the amount by which such options were
in-the-money at the time of purchase. Each Fund may also enter into
closing purchase and sale transactions with respect to any of futures
contracts and related options.
The use of futures contracts entails certain risks, including but
not limited to the following: no assurance that futures contracts
transactions can be offset at favorable prices; possible reduction of
the Fund's income due to the use of hedging; possible reduction in
value of the both the securities hedged and the hedging instrument;
possible lack of liquidity due to daily limits on price fluctuations;
imperfect correlation between the contract and the securities being
hedged; and potential losses in excess of the amount initially invested
in the futures contracts themselves. If the expectations of the Adviser
regarding movements in securities prices or interest rates are
incorrect, the Fund may have experienced better investments results
without hedging. The use of futures contracts and options on futures
contracts requires special skills in addition to those needed to select
portfolio securities. A further discussion of futures contracts and
their associated risks is contained in the SAI.
Forward Commitments, Delayed Delivery and When-Issued Securities.
Each Fund may purchase securities on a when-issued, delayed delivery,
or forward commitment basis. When such transactions are negotiated,
the price of such securities is fixed at the time of the commitment,
but delivery and payment for
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the securities may take place up to 90 days after the date of the
commitment to purchase. The securities so purchased are subject to
market fluctuation, and no interest accrues to the purchaser during
this period. When-issued securities or forward commitments involve a
risk of loss if the value of the security to be purchased declines
prior to the settlement date. When a Fund purchases securities on a
forward commitment or when-issued basis, the Fund's custodian will
maintain in a segregated account cash or liquid, high grade debt
securities having a value (determined daily) at least equal to the
amount of the Fund's purchase commitment. A Fund may close out a
position in securities purchased on a when-issued, delayed delivery or
forward commitment basis prior to the settlement date.
Lending of Portfolio Securities. Each Fund may also seek to increase
its income by lending portfolio securities. Such loans may be made to
institutions, such as certain broker-dealers, and are required to be
secured continuously by collateral in cash, cash equivalents or U.S.
Government securities maintained on a current basis at an amount at
least equal to the market value of the securities loaned. If the
Adviser determines to make securities loans, the value of the
securities loaned would not exceed 33 1/3% of the value of the total
assets of the Fund. A Fund may experience a loss or delay in the
recovery of its securities if the borrowing institution breaches its
agreement with the Fund.
Restricted and Illiquid Securities. Each Fund may invest up to 15% of
its total assets in "restricted securities" (i.e., securities that
would be required to be registered under the Securities Act of 1933, as
amended ("1933 Act"), prior to distribution to the general public)
including restricted securities eligible for resale to "qualified
institutional buyers" under Rule 144A under the 1933 Act. Each Fund may
also invest up to 15% of its net assets in illiquid investments, which
includes repurchase agreements maturing in more than seven days,
securities that are not readily marketable, certain over-the-counter
options and restricted securities, unless the Trustees determine, based
upon a continuing review of the trading markets for the specific
restricted security, that such restricted securities are liquid. Each
Fund may agree to adhere to more restrictive limits on investments in
restricted and illiquid investments as a condition of the registration
of its shares in various states. The Trustees have adopted guidelines
and delegated to the Advisor the daily function of determining and
monitoring the liquidity of restricted securities. The Trustees,
however, retain sufficient oversight and are ultimately responsible for
the determinations. Since it is not possible to predict with assurance
exactly how this market for restricted securities sold and offered
under Rule 144A will develop, the Trustees carefully monitor each
Fund's investments in these securities, focusing on such important
factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of
increasing the level of illiquidity in a Fund to the extent that
qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.
Repurchase Agreements. Each Fund may enter into repurchase agreements
through which the Fund purchases a security (the "underlying security")
from a domestic securities dealer or bank that is a member of the
Federal Reserve System. Under the agreement, the seller of the
repurchase agreement (i.e., the securities dealer or bank) agrees to
repurchase the underlying security at a mutually agreed upon time and
price. In repurchase transactions, the underlying security, which must
be a high-quality debt security, is held by the Fund's custodian
through the federal book-entry system as collateral and
marked-to-market on a daily basis to ensure full collateralization of
the repurchase agreement. In the event of bankruptcy or default of
certain sellers of repurchase agreements, a Fund could experience costs
and delays in liquidating the underlying security held as collateral
and might incur a loss if such collateral declines in value during this
period.
Market Changes. The market value of the Fund's investments, and thus
each Fund's net asset value, will change in response to market
conditions affecting the value of its portfolio securities. When
interest rates decline, the value of fixed rate obligations can be
expected to decline. In contrast, as interest rates on adjustable rate
loans are reset periodically, yields on investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed
rate obligations.
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Portfolio Turnover. Although neither Fund purchases securities with a
view to rapid turnover, there are no limitations on the length of time
that securities must be held by a Fund and a Fund's annual portfolio
turnover rate may vary significantly from year to year. A high rate of
portfolio turnover (100% or more) involves correspondingly greater
transaction costs which must be borne by the applicable Fund and its
shareholders and may, under certain circumstances, make it more
difficult for such Fund to qualify as a regulated investment company
under the Code. The estimated portfolio turnover rates of the Funds for
the current fiscal year are as follows: Large-Cap Fund 40% and
Small-Cap Fund 45%.
Diversification. Each Fund is diversified, as defined in the 1940 Act.
As such, each Fund has a fundamental policy that limits its investments
so that, with respect to 75% of its assets (i) no more than 5% of the
Fund's total assets will be invested in the securities of a single
issuer and (ii) each Fund will purchase no more than 10% of the
outstanding voting securities of a single issuer. These limitations do
not apply to obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, repurchase agreements collateralized
by U.S. Government securities or investments in other investment
companies. In addition to the diversification requirements under the
1940 Act, the Funds must satisfy the diversification requirements under
the Internal Revenue Code applicable to regulated investment companies
and the additional diversification requirements applicable under
Section 817(h) of the Internal Revenue Code to Separate Accounts that
fund Variable Contracts. These requirements place certain limitations
on the assets of a Fund that may be invested in securities of a single
issuer or interests in the same commodity. More specific information on
these diversification requirements is contained in the SAI.
Investment Restrictions. Each Fund is subject to further investment
policies and restrictions that are described in the SAI. The foregoing
investment policies, including each Fund's investment objective, are
non-fundamental policies which may be changed by the Trustees without
the approval of shareholders. If there is a change in a Fund's
investment objective, shareholders should consider whether that Fund
remains an appropriate investment in light of their then current
financial positions and needs. Each Fund has adopted certain
fundamental policies which may not be changed without the approval of
the applicable Fund's shareholders. See "Investment Restrictions" in
the Statement of Additional Information.
If any percentage restriction described above or in the SAI is
adhered to at the time of investment, a subsequent increase or decrease
in the percentage resulting from a change in the value of a Fund's
assets will not constitute a violation of the restriction.
ADDITIONAL INFORMATION
Reports to Shareholders
As shareholders in the Funds, Separate Accounts and Qualified
Plans will receive an annual report containing audited financial
statements and semi-annual and quarterly reports. Each Separate Account
and Qualified Plan will also be provided with a printed confirmation
for each transaction in their shareholder account. Holders of Variable
Contracts and participants in Qualified Plans may receive additional
reports from their insurance company or Plan Fiduciary, as the case may
be.
Principal Underwriter
WPG serves as the Funds' principal underwriter.
Transfer Agent and Dividend Disbursing Agent
The Shareholder Services Group, Inc. (the "Transfer Agent"), P.O.
Box 9037, Boston, MA 02205 serves as transfer agent and dividend
disbursing agent for the Funds. The Funds may also enter into
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agreements with and compensate other transfer agents and financial
institutions who process shareholder transactions and maintain
shareholder accounts.
Independent Accountants
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154,
serves as the independent accountants for the Trust and will audit each
Fund's financial statements annually.
Legal Counsel
Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, is
legal counsel to the Trust.
----------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained
in this Prospectus and the SAI, and, if given or made, such other
information or representation must not be relied upon as having been
authorized by the Trust. This Prospectus does not constitute an
offering in any jurisdiction in which such offering may not be lawfully
made.
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