As filed with the Securities and Exchange Commission on April 30, 1997.
File No. 33-60841
File No. 811-07315
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
----
Pre-Effective Amendment No.___ / /
----
Post-Effective Amendment No. 2 / X /
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
----
Amendment No. 4 / X /
----
TOMORROW FUNDS RETIREMENT TRUST
(Exact name of Registrant as Specified in Charter)
ONE NEW YORK PLAZA, NEW YORK, NEW YORK 10004
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 800-223-3332
JAY C. NADEL, WEISS, PECK & GREER, L.L.C.
ONE NEW YORK PLAZA, NEW YORK, NEW YORK 10004
(Name and Address of Agent for Service)
Copies to:
Ernest V. Klein, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b) of Rule 485
___ on ___________ pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on ___________ pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on ___________ pursuant to paragraph (a)(2) of Rule 485
-------------------------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
Registrant has registered an indefinite number of securities under the
Securities Act of 1933. The Registrant filed the notice required by Rule 24f-2
for its most recent fiscal year on or about February 28, 1997.
<PAGE>
ADVISER CLASS SHARES OF
TOMORROW FUNDS RETIREMENT TRUST
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
Tomorrow Post-Retirement Fund
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Cross-Reference Sheet Showing Location in Prospectuses
and Statements of Additional Information of
Information Required by Items of the Registration Form
N-1A Item No. and Caption Location:
- ------------------------- --------
Part A Prospectus
- ------ ----------
1. Cover Page................................ Cover Page
2. Synopsis.................................. Expense Information
3. Condensed Financial Information........... Financial Highlights
4. General Description of Registrant......... Investment Objectives and
Policies; Risk Considerations and
Other Practices and Policies;
Management of the Tomorrow
Funds; How Each Tomorrow
Fund's Share Price is Determined;
How to Buy Shares; How to Sell
Shares; How to Exchange Shares;
The Trust
5. Management of the Fund.................... Management of the Tomorrow
Funds; Additional Information
6. Capital Stock and Other Securities........ Investment Objectives and
Policies; How Each Tomorrow
Fund's Share Price is Determined;
How to Buy Shares; How to Sell
Shares; How to Exchange Shares;
The Trust
-1-
<PAGE>
7. Purchase of Securities Being
Offered................................. How Each Tomorrow Fund's
Share Price is Determined; How to
Sell Shares; How to Exchange
Shares; The Trust; Distribution
Plans
8. Redemption or Repurchase.................. How Each Tomorrow Fund's
Share Price is Determined; How to
Buy Shares; How to Sell Shares;
How to Exchange Shares; The
Trust
9. Pending Legal Proceedings................. Not Applicable
Statement of
Part B Additional Information
10. Cover Page................................ Cover Page
11. Table of Contents......................... Table of Contents
12. General Information
and History............................. Organization
13. Investment Objectives and
Policies............................... The Funds' Investment Objectives
and Policies; Investment
Techniques; Investment
Restrictions
14. Management of the Fund................... Advisory and Administrative
Services; Trustees and Officers;
Custodian; Transfer Agent;
Independent Auditors
15. Control Persons and Principal
Holders of Securities.................. Trustees and Officers
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<PAGE>
16. Investment Advisory and Other
Services................................. Advisory and Administrative
Services; Distribution Plans;
Investor Services
17. Brokerage Allocation and
Other Practices......................... Portfolio Brokerage; Portfolio
Turnover
18. Capital Stock and Other
Securities.............................. Organization
19. Purchase, Redemption and
Pricing of Securities
Being Offered........................... How to Purchase Shares: Investor
Services; Redemption of Shares;
Net Asset Value; Calculation of
the Funds' Returns
20. Tax Status................................ Dividends, Distributions and Tax
Status
21. Underwriters.............................. Advisory and Administrative
Services
22. Calculation of Performance Data........... Calculation of the Funds' Return
23. Financial Statements...................... Independent Auditors and
Financial Statements
-3-
<PAGE>
INSTITUTIONAL CLASS SHARES OF
TOMORROW FUNDS RETIREMENT TRUST
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
Tomorrow Post-Retirement Fund
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Cross-Reference Sheet Showing Location in Prospectuses
and Statements of Additional Information of
Information Required by Items of the Registration Form
N-1A Item No. and Caption Location:
- ------------------------- --------
Part A Prospectus
----------
1. Cover Page...................................... Cover Page
2. Synopsis........................................ Expense Information
3. Condensed Financial Information................. Financial Highlights
4. General Description of Registrant.............. Investment Objectives and
Policies; Risk
Considerations and
Other Practices and
Policies; Management of the
Tomorrow Funds; How Each
Tomorrow Fund's Share Price
is Determined; How to Buy
Shares; How to Sell Shares;
How to Exchange Shares;
The Trust
5. Management of the Fund......................... Management of the Tomorrow
Funds; Additional
Information
6. Capital Stock and Other Securities............. Investment Objectives and
Policies; How Each Tomorrow
Fund's Share Price is
Determined; How to Buy
Shares; How to Sell
-1-
<PAGE>
Shares; How to Exchange
Shares; The Trust
7. Purchase of Securities Being
Offered.................................... How Each Tomorrow Fund's
Share Price is Determined; How
to Sell Shares; How to
Exchange Shares; The Trust;
Service Plans
8. Redemption or Repurchase......................How Each Tomorrow Fund's
Share Price is Determined; How
to Buy Shares; How to Sell
Shares; How to Exchange
Shares; The Trust
9. Pending Legal Proceedings.................... Not Applicable
Statement of
Part B Additional Information
- ------ ----------------------
10. Cover Page................................... Cover Page
11. Table of Contents........................... Table of Contents
12. General Information
and History............................... Organization
13. Investment Objectives and
Policies................................... The Funds' Investment
Objectives and Policies;
Investment Techniques;
Investment Restrictions
14. Management of the Fund...................... Advisory and Administrative
Services; Trustees and
Officers; Custodian; Transfer
Agent; Independent Auditors
15. Control Persons and Principal
Holders of Securities..................... Trustees and Officers
-2-
<PAGE>
16. Investment Advisory and Other
Services..................................... Advisory and Administrative
Services; Service Plans;
Investor Services
17. Brokerage Allocation and
Other Practices............................. Portfolio Brokerage;
Portfolio Turnover
18. Capital Stock and Other
Securities.................................. Organization
19. Purchase, Redemption and
Pricing of Securities
Being Offered............................... How to Purchase Shares:
Investor Services; Redemption
of Shares; Net Asset Value;
Calculation of the Funds'
Returns
20. Tax Status.................................... Dividends, Distributions and
Tax Status
21. Underwriters.................................. Advisory and Administrative
Services
22. Calculation of Performance Data............... Calculation of the Funds'
Return
23. Financial Statements.......................... Independent Auditors and
Financial Statements
-3-
<PAGE>
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 MEDIUM-TERM RETIREMENT FUND ("Medium-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.
PROSPECTUS -- Adviser Class and Institutional Class Shares
May 1, 1997
This Prospectus describes Adviser Class and Institutional Class shares
of four mutual funds - the Long-Term Fund, Medium-Term Fund, Short-Term Fund and
Post-Retirement Fund (together, the "Tomorrow Funds"). Institutional Class
shares of the Tomorrow Funds are designed to provide investment vehicles for
variable annuity and variable life insurance contracts ("Variable Contracts") of
various insurance companies. Adviser Class shares, as well as Institutional
Class shares of the Tomorrow Funds, may be purchased by "qualified" pension or
retirement plans, including trustees of such plans for certain individuals
funding their individual retirement accounts or other qualified plans. Each
Tomorrow Fund, a series of Tomorrow Funds Retirement Trust (the "Trust"), 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. 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 Tomorrow Funds, you can obtain a copy of the Statement of Additional
Information (the "SAI"), also dated May 1, 1997. 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 is available upon request by
calling Weiss, Peck & Greer, L.L.C. at 1-800- 223-3332 (toll free). Shares of a
Tomorrow Fund may not be available for sale in your state due to various
insurance or other regulations. Please check with your insurance company or
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. Shareholder inquiries regarding
the Tomorrow Funds may be made in writing to the Trust at the address set forth
above.
* As of the date of this Prospectus, the Post-Retirement Fund is not available
for purchase. Contact WPG for the latest information.
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 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.
-1-
<PAGE>
The Tomorrow Funds seek to provide investors of all ages who
participate in qualified retirement plans or who are holders of Variable
Contracts 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, Medium-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.
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. Just as your age increases over time,
the average age of the target class of investors of each of the Long-Term,
Medium- Term and Short-Term Funds will increase over time. 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.
TABLE OF CONTENTS
Page
----
Expense Information.......................................... 3
Financial Highlights......................................... 7
Investment Objectives and Policies........................... 8
Eligible Investors........................................... 13
Insurance Company Separate Accounts.......................... 13
Qualified Plans.............................................. 14
Alternative Purchase Arrangements......................... 14
How to Buy Shares......................................... 14
How to Sell Shares........................................ 17
How to Exchange Shares.................................... 19
How Each Tomorrow Fund's Share Price is Determined........... 20
Management of the Tomorrow Funds............................. 21
Distribution Plans........................................... 22
Service Plans................................................ 22
Dividends and Taxes.......................................... 23
Portfolio Brokerage.......................................... 24
The Trust.................................................... 24
Investment Performance....................................... 26
Risk Considerations and Other Investment Practices
and Policies.............................................. 27
Additional Information....................................... 34
-2-
<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 shares
of either class of a Tomorrow Fund.
<TABLE>
<S> <C> <C> <C> <C>
Adviser and Institutional Class Shares
Post-
Long-Term Medium-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
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
expenses, expressed as a percentage of average net assets, are based on expenses
incurred during the fiscal year ended December 31, 1996.
Institutional Class Shares
Post-
Long-Term Medium-Term Short-Term Retire-
Fund Fund Fund ment Fund +
---- ---- ---- ---------
Management Fee (after voluntary waiver) 0.00%* 0.00%* 0.00%* 0.00%*
12b-1 Fee 0.00% 0.00% 0.00% 0.00%
Other Expenses (after expense limitation)1 1.50%* 1.50%* 1.50%* 1.40%*
-------- -------- -------- -------
Total Fund Operating Expenses
(after expense limitation) 1.50%* 1.50%* 1.50%* 1.40%*
====== ====== ====== ======
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Adviser Class Shares
Post-
Retire-
Long-Term Medium-Term Short-Term ment
Fund Fund Fund Fund+
---- ---- ---- ----
Management Fee (after voluntary waiver) 0.00%* 0.00%* 0.00%* 0.00%*
12b-1 Fee2 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 1.75%* 1.75%* 1.75%* 1.65%*
(after expense limitation) ====== ====== ====== ======
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:
After After After After
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Long-Term Fund
Institutional Class $18 $56 $82 $180
Adviser Class $15 $48 $96 $208
Medium-Term Fund
Institutional Class $18 $56 $82 $180
Adviser Class $15 $48 $96 $208
Short-Term Fund
Institutional Class $18 $56 $82 $180
Adviser Class $15 $48 $96 $208
Post-Retirement Fund+
Institutional Class $17 $52 N/A N/A
Adviser Class $14 $45 N/A N/A
-4-
<PAGE>
The purpose of the above table and Example is to assist you in
understanding the various costs and expenses of the Tomorrow Funds that an
investor will bear directly or indirectly. See page 22. The figures shown in the
table under the caption "Other Expenses" and in the hypothetical example are
based on the Tomorrow Funds' expenses for the fiscal year ended December 31,
1996. 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>
+ As of the date of this Prospectus, the Post-Retirement Fund is not
available for purchase. Contact WPG for the latest information.
1 Other expenses of Institutional Class shares include service fees payable
under a non-Rule 12b-1 service plan for the benefit of qualified pension or
retirement plans. See "Service Plans" on page 22.
2 Rule 12b-1 Fees consist of a 0.25% distribution fee and a 0.25%
service fee. See "Distribution Plans" on page 22.
* 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, Medium-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. 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.
See page 22.
</FN>
</TABLE>
In addition, for the fiscal year ended December 31, 1996, in the absence of
the expense limitation, Management Fees, Other Expenses and Total Fund Operating
Expenses (expressed as a percentage of average daily net assets) of the Tomorrow
Funds would have been as set forth below. Management Fees, Other Expenses and
Total Fund Operating Expenses of the Post-Retirement Fund are estimates.
<TABLE>
<S> <C> <C> <C>
Management Other Total Fund
Fees Expenses Operating Expenses
---------- -------- ------------------
Long-Term Fund
Institutional Class 0.75% 39.74% 40.49%
Adviser Class 0.75% 44.61% 45.36%
Medium-Term Fund
Institutional Class 0.75% 20.11% 20.86%
Adviser Class 0.75% 15.13% 15.88%
Short-Term Fund
Institutional Class 0.75% 18.35% 19.10%
Adviser Class 0.75% 14.93% 15.68%
Post-Retirement Fund
Institutional Class 0.65% 4.60% 5.25%
Adviser Class 0.65% 4.35% 5.50%
</TABLE>
The Tomorrow Funds' imposition of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the maximum
front-end sales charge permitted under the
-5-
<PAGE>
Conduct Rules of the National Association of Securities Dealers, Inc.
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.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables represent a condensed financial history for each
Tomorrow Fund since inception. The condensed financial information for each
Fund, which is set forth in the tables, has been derived from the financial
statements of each Fund, which financial statements have been audited by the
Funds' independent auditors, KPMG Peat Marwick, LLP, independent certified
public accountants, whose unqualified reports thereon are incorporated by
reference into each Fund's Statement of Additional Information. The tables
express the information for each Tomorrow Fund in terms of a single share for
the Tomorrow Fund outstanding throughout the period. The Tomorrow Funds' Annual
Report includes more information about the Tomorrow Funds' performance and is
available free of charge by writing to the Trust at the address shown on the
cover of this Prospectus.
<TABLE>
$ per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Net Total Dividends Distri- Net
Asset Realized Income From butions Asset
Value at Net and From Net from Total Value at
Beginning Investment Unrealized Investment Investment Capital Distri- End of
of Period Income Gains Operations Income Gains butions Period
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 6.50 0.04 0.55 0.59 (0.06) (0.05) (0.11) 6.98
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 6.51 0.04 0.55 0.59 0.00 (0.05) (0.05) 7.05
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 7.50 0.04 0.63 0.67 (0.03) (0.07) (0.10) 8.07
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 7.53 0.10 0.55 0.65 (0.25) (0.07) (0.32) 7.86
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.50 0.06 0.72 0.78 (0.06) (0.06) (0.12) 9.16
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.51 0.00 0.70 0.70 0.00 0.00 0.00 9.21
</TABLE>
<TABLE>
ratios
<S> <C> <C> <C> <C> <C> <C> <C> <C>
assuming no fee waivers,
reimbursements or
Ratio of custody fee
Ratio of Net earnings credit receive
Expenses Income to Ratio of Ratio of
Net To Average Average Portfolio Average Expenses Net Income
Total Assets Net Net Turnover Commissions To Average To Average
Return++ (000's) Assets+ Assets+ Rate Per Share Net Assets+ Net Assets+
Ratio information
assuming no fee waivers,
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 9.08% 978 1.75% 1.63% 25.09% 0.035 45.36% -41.98%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 9.03% 282 1.50% 1.97% 25.09% 0.035 40.49% -37.02%
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.89% 3,416 1.75% 1.73% 22.56% 0.035 15.88% -12.40%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 8.54% 265 1.50% 1.96% 22.56% 0.035 20.86% -17.40%
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.54% 4,459 1.75% 2.08% 14.16% 0.035 15.68% -11.85%
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.23% 304 1.50% 2.31% 14.16% 0.035 19.10% -15.29%
<FN>
+ Annualized.
++ Not annualized.
* Commencement of operations.
</FN>
</TABLE>
-7-
<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 total return, with an emphasis on 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.
MEDIUM-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
FUND seeks to satisfy the goals of investors who seek to 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, indirectly through other investment companies, foreign securities
(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 allocated, directly or
indirectly, among large and small capitalization stocks and foreign 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 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
-8-
<PAGE>
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 Medium-Term
Fund. On the date of this Prospectus, the anticipated strategic asset allocation
mix within the Tomorrow Funds' portfolios would be approximately as follows:
[ PIE CHARTS APPEAR HERE ]
These charts visually depict the composition of each Fund as follows:
LONG-TERM FUND
Large Capitalization....... 60.0%
Fixed Income............... 20.0%
Small Capitalization....... 10.0%
Foreign.................... 10.0%
MEDIUM-TERM FUND
Large Capitalization....... 50.0%
Fixed Income............... 40.0%
Small Capitalization....... 5.0%
Foreign.................... 5.0%
SHORT-TERM FUND
Fixed Income............... 65.0%
Large Capitalization....... 35.0%
POST-RETIREMENT FUND
Fixed Income............... 70.0%
Large Capitalization....... 30.0%
- -------------
* The Long-Term Fund and the Medium-Term Fund will currently invest their assets
allocated to foreign securities in shares of other open-end and/or closed-end
investment companies that will invest primarily in equity securities of foreign
issuers. See "Foreign Securities" on page 12.
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 and small capitalization stocks and foreign securities, as
applicable, 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.
The Trustees of the Trust anticipate that it will be necessary to change,
from time to time, the names of each of the Long-Term, Medium-Term and
Short-Term Funds to reflect the decreasing time period to retirement of each
such Fund's target class of investors. As the average age of the target class of
investors in a Tomorrow Fund approaches that of the Post-Retirement Fund, it is
also anticipated that each Tomorrow Fund's assets may begin to decrease as a
result of investor withdrawals. At such time, the Trustees of the
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Trust will consider what action would be appropriate to protect the interests of
remaining shareholders, including a combination with the Post-Retirement Fund.
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. 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. You should also recognize that
the strategic asset allocation of each Tomorrow Fund and the particular
securities in which each Tomorrow Fund invests are determined based upon the
average age of the particular Tomorrow Fund's target class of investors. 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. 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 Medium-Term Short-Term Post-Retirement
Fund Fund Fund Fund
The investment policies, including each Tomorrow Fund's investment
objective, described in this Prospectus 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" on
page 33.
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. Some
types of securities can be considered as both equity and fixed-income
securities, such as shares of real estate investment trusts. The Tomorrow Funds
may also make other investments that are not considered either an equity or
fixed-income security, such as options and futures. For further information
concerning the equity and fixed-income securities in which the Tomorrow Funds
may invest, see "Risk Considerations and Other Investment Practices and
Policies" beginning on page 27 of this Prospectus.
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<PAGE>
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 and small capitalization stock and foreign securities
Subcategories ordinarily will remain substantially the same.
Each Tomorrow Fund may, but is not required to, utilize various
investment strategies and techniques to seek 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. The investment strategies and 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 and mortgage dollar roll transactions; (v) purchase securities on a
forward commitment, when-issued or delayed delivery basis; (vi) invest in
restricted, illiquid and structured securities; (vii) invest in other investment
companies and shares of real estate investment trusts ("REITs"); 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" beginning on page 27 of this Prospectus.
EQUITY SECURITIES
A Tomorrow Fund's assets allocated to equity securities are currently
invested, in varying amounts, among large capitalization stocks, medium
capitalization stocks, small capitalization stocks and, indirectly through other
investment companies, foreign securities. Please refer to the charts on page 6
of this Prospectus for the current strategic allocation of a Tomorrow Fund's
assets among these securities.
Large and Small Capitalization Stocks.
With respect to the assets of each Tomorrow Fund allocated to large 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
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
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combination of securities, together with their appropriate weightings, that the
Adviser believes will comprise the optimal portfolio for each Subcategory. It is
expected that the optimal portfolio for each Subcategory will not include all
the stocks in and will be weighted differently than the applicable Benchmark.
The optimal portfolio for each 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 SECURITIES
The Adviser intends to invest the Long-Term Fund's and the Medium-Term
Fund's assets allocated to foreign securities in shares of other open-end and/or
closed-end investment companies. Such other investment companies will invest
their assets primarily in equity securities of foreign issuers. It is
anticipated that none of the Tomorrow Funds, including the Long-Term Fund and
the Medium-Term Fund, will currently invest directly in foreign securities. The
Adviser will seek to 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" on page 27 of this Prospectus and "Foreign
Securities" in the SAI.
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,
convertible debt securities, zero coupon and capital appreciation bonds 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,
contingent, in-kind or deferred basis. There is no limit on the average
dollar-weighted maturity or duration of a Tomorrow Fund's portfolio or on the
maturity or duration of any individual fixed-income security purchased by a
Tomorrow Fund. Because each Tomorrow Fund will invest in substantially the same
fixed-income securities but in different amounts based on the particular
Tomorrow Fund's strategic asset allocation, the average dollar-weighted
effective maturity and duration of the Tomorrow Funds' fixed-income securities
will be substantially the same. Currently, it is expected that under normal
circumstances, the average duration of the Tomorrow Funds' assets allocated to
fixed-income securities will be in the intermediate range. For further
information concerning the fixed-income securities in which the Tomorrow Funds
may invest, see "Risk Considerations and Other Investment Practices and
Policies" beginning on page 27 of this Prospectus.
RISK FACTORS
There is no assurance that any Tomorrow Fund will achieve its investment
objective. 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 (and, therefore, its net asset value)
will vary from day to day, and generally reflect interest rates, market
conditions, and other company, political and economic news. The Tomorrow Funds'
performance also depends on 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.
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<PAGE>
In general, the value of the Tomorrow Funds' investments in fixed-income
securities rises when interest rates fall, and vice versa. Although 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.
Investing in REITs involves risks in addition to those associated with
fixed-income securities. REITs may be affected by changes in the value of the
underlying property and by the quality of any credit extended, are dependent
upon management skills, are not diversified, and are subject to heavy cash flow
dependency. The risks associated with the Tomorrow Funds' transactions in
options, futures and other types of derivative securities including
mortgage-backed, asset-backed and structured securities may include some or all
of the following: market risk, leverage and volatility risk, correlation risk,
credit risk and liquidity and valuation risk.
For a further discussion of the risks associated with an investment in
the Tomorrow Funds, please see "Risk Considerations and Other Investment
Practices and Policies" beginning on page 27 of this Prospectus.
ELIGIBLE INVESTORS
Institutional Class shares of the Tomorrow 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").
Adviser Class shares and Institutional Class shares of the Tomorrow Funds
may be purchased for the account of qualified pension or retirement plans
("Qualified Plans"). Qualified Plans include: Qualified plans and trusts under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), annuity plans under Code Section 403(a), Code Section 403(b)
annuities and custodial accounts, certain governmental plans, simplified
employee pension plans, deferred compensation arrangements under Code Section
457(b) and certain Individual Retirement Accounts ("IRAs"). IRAs that may invest
in shares of the Tomorrow Funds are limited to those established for the benefit
of: (a) current and former Trustees and officers of the Trust; (b) current and
former principals and employees of the Adviser; (c) directors, officers and
employees of companies and their affiliates that have an advisory relationship
with the Adviser; (d) directors, officers and employees of companies and their
affiliates serving in an advisory capacity to sponsors of Qualified Plans and
(e) members of the immediate families of any of the foregoing persons.
Should you have any questions as to whether you are an eligible investor
in shares of the Tomorrow Funds, please call WPG at 1-800-223-3332.
INSURANCE COMPANY SEPARATE ACCOUNTS
Insurance Company Separate Accounts may only invest in Institutional
Class shares of the Tomorrow Funds. Because holders of Variable Contracts may
not purchase or redeem Institutional Class shares of the Tomorrow 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 all the Tomorrow Funds described in
this Prospectus.
Separate Accounts purchase and redeem Institutional Class shares of the
Tomorrow 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
Tomorrow Funds as investment vehicles for their Separate Accounts should contact
WPG at 1-800-223-3332.
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<PAGE>
QUALIFIED PLANS
The following information describes how participants in Qualified Plans
may arrange to buy, sell (redeem) and exchange Adviser and Institutional Class
shares of the Tomorrow Funds for the account of their Qualified Plans.
A. ALTERNATIVE PURCHASE ARRANGEMENTS
Each Tomorrow Fund continuously offers through this Prospectus Adviser
and Institutional Class shares to Qualified Plans. If the trustee, custodian,
plan administrator or other fiduciary (each, a "Plan Fiduciary") responsible for
making investments on behalf of a Qualified Plan does not specify in the
instructions to the Tomorrow Funds which class of shares to purchase, the
Tomorrow Funds will assume that the instructions apply to Adviser Class shares.
Both Adviser Class and Institutional Class shares are sold without a
sales charge. Adviser Class shares are subject to distribution fees of up to
0.25% and service fees of up to 0.25% of each Tomorrow Fund's average daily net
assets attributable to Adviser Class Shares. Institutional Class shares are
subject to service fees of up to 0.25% of each Tomorrow Fund's average daily net
assets attributable to Institutional Class Shares. See "Distribution Plans" and
"Service Plans" below in this Prospectus.
B. HOW TO BUY SHARES
THROUGH WHOM MAY SHARES OF THE TOMORROW FUNDS BE PURCHASED FOR QUALIFIED PLANS?
Because you may not purchase shares of the Tomorrow Funds directly, all
orders to purchase shares must be made through the Plan Fiduciary of your
Qualified Plan. If the monies you wish to invest in the Tomorrow 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
1-800-223- 3332 for information regarding how to establish an IRA with Boston
Safe.
WHAT IS THE MINIMUM INVESTMENT BY QUALIFIED PLANS IN SHARES OF THE TOMORROW
FUNDS?
Plan Fiduciaries may invest in the Tomorrow Funds for the account of
Qualified Plans with as little as $250. There is no minimum amount required for
subsequent investments.
AT WHAT PRICE ARE SHARES OF THE TOMORROW FUNDS OFFERED?
Shares of each class of the Tomorrow Funds are sold at the net asset
value (NAV) of such class of shares next determined after First Data Investor
Services Group, Inc., the Tomorrow Funds' "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
(normally 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.
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<PAGE>
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 WPG the information in the applicable Account Information Form
included with this Prospectus. Please note that there is an Account Information
Form applicable to IRAs and an Account Information Form applicable to other
Qualified Plans and to insurance company Separate Accounts. Shares of the
Tomorrow 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 Tomorrow Fund in which you
wish to invest.
2. Mail the completed Account Information Form and check
to WPG.
By Wire: 1. Call 1-800-223-3332 to open an account and to receive
an application. Funds may be wired after the
application has been received.
2. Instruct your bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. 12-816-3
Bank Routing No. 011-00123-4
Specify:
Name of Tomorrow Fund
Class of shares
Account Number
Name(s) in which account is to be registered
3. Mail the completed Account Information Form to WPG.
- ------------------------------------------------------------------------------
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 1-800-223-3332
to receive a Services Form to add this privilege.
Designate the bank or credit union account from which
funds will be drawn.
2. The amount to be invested will automatically be
withdrawn 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- 223-3332 to receive a
Services Form to add this privilege. 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).
- -------------------------------------------------------------------------------
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<PAGE>
- -------------------------------------------------------------------------------
2. Once this service has been selected, Plan Fiduciaries
may purchase additional shares for the account of
their Qualified Plans by calling the Tomorrow Funds'
Transfer Agent, toll-free at 1-800-223-3332.
3. Give the Transfer Agent representative the name(s) in
which the account is registered, the Tomorrow Fund name,
Class of shares, number, and the amount of the
investment.
4. An investment will normally be credited to the
Qualified Plan account upon receipt of payment.
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
Class of 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. 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. 12-816-3
ABA Routing No. 011-00123-4
For credit to:
Name of Tomorrow Fund
Class of 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, Institutional 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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<PAGE>
ACQUIRING SHARES OF THE TOMORROW FUNDS IN EXCHANGE FOR SECURITIES.
Shares of the Tomorrow Funds may be purchased in whole or in part 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.
C. HOW TO SELL SHARES
HOW MAY SHARES OF THE TOMORROW 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 shares of the Tomorrow Funds held for the account of
Qualified Plans must be made through your Plan Fiduciary. If the 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 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 in the case of payments made by check.
AT WHAT PRICE ARE SHARES OF THE TOMORROW FUNDS REDEEMED?
Shares of each Class of the Tomorrow Funds will be redeemed at the
share price (NAV) of such Class of 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 in the case of payments made by check.
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
Class of 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
(Post-Retirement account has a total value of at least $10,000. Sign up
Fund Only): for this service when opening an account, or call
1-800-223-3332 to receive a Services Form to add
this privilege.
- -------------------------------------------------------------------------------
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<PAGE>
- -------------------------------------------------------------------------------
2. The redemption proceeds of $100 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 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 REDEMPTION 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 redemption request. A
signature guarantee is required if (a) 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, (b) the redemption request is made
for the account of an IRA or (c) the net asset value of the shares redeemed is
$100,000 or more (this requirement may be waived by the Adviser in its
discretion).
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 ss. 1.817-5 is revoked or challenged. The Trust will not
treat an investor as a qualified pension or retirement plan for this purpose
unless the investor is among the categories specifically enumerated in Revenue
Ruling 94-62, 1994-2 C.B. 164. An Insurance Company or Qualified Plan whose tax
status is revoked or challenged by the Internal Revenue Service may be liable to
the Trust for losses incurred by the Trust as a result of such action.
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<PAGE>
D. HOW TO EXCHANGE SHARES
MAY SHARES BE EXCHANGED FOR SHARES OF OTHER MUTUAL FUNDS?
Subject to the terms of your Qualified Plan, shares of a Tomorrow Fund
may be exchanged for shares of the same class of any other Tomorrow Fund or for
shares of the same class of Core Large Cap Stock Fund and Core Small Cap Stock
Fund. To obtain a current prospectus for the Core Large Cap Stock Fund and Core
Small Cap Stock Fund, please call 1-800-223-3332. Please consider the
differences in investment objectives and expenses of a fund as described in its
prospectus before making an exchange.
DO SALES CHARGES APPLY TO EXCHANGES?
As is the case with initial purchases of shares of the Tomorrow Funds,
exchanges of shares are made without the imposition of a sales charge.
HOW MAY I MAKE AN EXCHANGE FOR MY QUALIFIED PLAN?
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 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 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 1-800-223-3332 to receive a Services Form to add
this privilege.
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 Tomorrow Fund
Class of 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. Mail a written request to the Transfer Agent at the
address listed on the back cover of this Prospectus
specifying:
Name of current Tomorrow Fund
Class of shares
- -------------------------------------------------------------------------------
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<PAGE>
- -------------------------------------------------------------------------------
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.
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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 available for sale in your state; (ii) exchanges may be made only between
funds that are registered in the same name, address and, if applicable, taxpayer
identification number; (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; and (iv) exchanges may only be made for the same class of shares.
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 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 calculated as of the close of regular trading of the New York Stock
Exchange (normally 4:00 p.m. New York City time) on each Business Day. Adviser
Class shares and Institutional Class shares of the Tomorrow Funds may have
different net asset values.
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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. The Adviser, a privately held limited liability
company with over 20 years' experience as an investment adviser to individual
and institutional clients, has, together with its affiliates, approximately $13
billion under management. 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. Daniel J. Cardell is primarily responsible
for the day-to-day management of the assets of each Tomorrow Fund allocated to
large, medium and small capitalization stocks. Mr. Cardell has been a principal
of WPG since May 1996. Prior to joining the Adviser, Mr. Cardell was Senior Vice
President and Director of Equities for the Bank of America. 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.
From time to time, the Adviser may compensate insurance companies or
their affiliates who hold Institutional Class shares of the Tomorrow Funds for
the account of their customers for providing a variety of record-keeping,
administrative, marketing and/or shareholder support services. This
compensation, which may be paid at a rate up to 0.25% of the net asset value of
Institutional Class shares held for the account of those customers depending on
the nature, extent and quality of the services provided, will be paid from the
Adviser's own resources and not from the assets of any Tomorrow Fund.
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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 expenses 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 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 the Adviser Class shares of each Tomorrow Fund,
has adopted a Distribution Plan (the "Distribution Plans") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act").
Under the Distribution Plans, each Tomorrow Fund pays distribution and service
fees at an aggregate annual rate of 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.
SERVICE PLANS
The Trust, on behalf of the Institutional Class shares of each Tomorrow
Fund, has adopted a service plan pursuant to which each Tomorrow Fund pays
service fees at an aggregate annual rate of up to 0.25% of a
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<PAGE>
Tomorrow Fund's average daily net assets attributable to Institutional Class
shares (the "Service Plans"). The service fee is payable for the benefit of
Qualified Plans and is intended to be compensation to Plan Fiduciaries for
providing personal services and/or account maintenance services to participants
in Qualified Plans who beneficially own Institutional Class shares of the
Tomorrow Funds. The Trust, on behalf of the applicable Tomorrow Fund, will make
monthly payments to Plan Fiduciaries, for the benefit of their Qualified Plans,
based on the average net asset value of the Institutional Class shares which are
attributable to the Qualified Plans.
DIVIDENDS AND TAXES
Each Tomorrow Fund is treated as a separate entity for federal income
tax purposes and has elected and has qualified to be treated as a "regulated
investment company" under the Internal Revenue Code and intends 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 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
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 Internal Revenue Code.
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 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 Internal Revenue Code. Distributions from each Tomorrow Fund's
net long-term capital gains are treated as long-term capital gains under the
Internal Revenue Code, regardless of how long shares of the Tomorrow Funds have
been held.
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. 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.
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 shares of the same Class 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
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<PAGE>
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 Internal Revenue 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 Tomorrow Funds generally seek
to obtain the best price and execution of orders under the circumstances.
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 may 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 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 under the circumstances.
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.
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<PAGE>
As of the date of this Prospectus, the shares of the Trust are divided
into six series: Tomorrow Long-Term Retirement Fund, Tomorrow Medium-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 as Institutional
Class and Adviser 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 "Other Investment Companies" on page 31 of this Prospectus.
An insurance company issuing a Variable Contract that participates in
Institutional Class shares of a Tomorrow 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 Tomorrow 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.
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 expect any disadvantages to investors
arising out of the fact that each Tomorrow Fund may offer a class of its shares
to Separate Accounts that serve as investment medium for Variable Contracts 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
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<PAGE>
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.
As of March 31, 1997, AIG Life Insurance Company Separate Account I,
P.O. Box 667, Wilmington, DE 19899 beneficially owned in excess of 25% of the
outstanding Institutional Class shares of the Long-Term Fund, Medium-Term Fund
and Short-Term Fund and its affiliate, American International Life Assurance Co.
of New York Separate Account A beneficially owned in excess of 25% of the
outstanding Institutional Class shares of the Short- Term Fund. Accordingly,
each such entity is deemed to be a controlling person.
INVESTMENT PERFORMANCE
Each Tomorrow Fund may illustrate in advertisements and sales
literature its average annual total return, 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 shares of a Class 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 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 shares of the Tomorrow Fund for the indicated periods and
will include all recurring fees.
Each Tomorrow Fund may also illustrate in advertisements and sales
literature its yield and effective yield. Yield is based on income generated by
an investment in shares of a Class 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 shares of a Class 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 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 Tomorrow
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 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.
Each Tomorrow Fund's yield and total return will be calculated
separately for Adviser Class and Institutional Class shares. Because each Class
of shares is subject to different expenses, the yield and total return
calculations with respect to each Class of shares of a Tomorrow Fund will
differ. The investment performance of the Adviser Class and Institutional Class
shares will be affected by the payment of distribution and service fees.
The performance of the Tomorrow Funds will vary from time to time and
past results are not necessarily
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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
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, 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,
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 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
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<PAGE>
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.
The Tomorrow Funds may invest in U.S. Government securities which are
zero coupon or deferred interest securities. For example, each Tomorrow Fund may
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.
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. A Tomorrow Fund's investments in zero coupon
securities or other stripped securities may require the Tomorrow Fund to sell
certain of its portfolio securities to generate sufficient cash in order to
satisfy certain income distribution requirements. See "Dividends, Distributions
and Tax Status" in the SAI.
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").
MORTGAGE PASS-THROUGH SECURITIES. 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
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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
Internal Revenue Code and invests in certain mortgages primarily secured by
interests in real property and other permitted investments. Investors may
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 for
these securities may be less than for more leveraged Mortgage-Backed Securities,
such as inverse floating rate and Super Principal Only (PO) Mortgage-Backed
Securities. The Tomorrow Funds will not invest in inverse floating rate or Super
Principal Only (PO) 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. To the extent that
prepayment rates do not remain within these prepayment ranges, PAC and TAC CMO
bonds involve prepayment, extension and interest rate risk similar to those of
the residual or support tranches.
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.
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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 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.
STRUCTURED SECURITIES. Each Tomorrow Fund may invest in "structured" securities,
such as 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. These benchmarks include stock prices and
indices, 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. See "Restricted and Illiquid Securities" on page 32.
EURODOLLAR AND YANKEE DOLLAR INVESTMENTS. Each Tomorrow Fund may invest in
obligations of foreign branches of U.S. banks (Eurodollars) and U.S. branches of
foreign banks (Yankee dollars) as well as foreign branches of foreign banks.
These investments involve risks that are different from investments in
securities of U.S. banks, including potential unfavorable political and economic
developments, different tax provisions, seizure of foreign
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deposits, currency controls, interest limitations or other governmental
restrictions which might affect payment of principal or interest.
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.
For example, the Tomorrow Funds may invest in Standard & Poor's Depository
Receipts ("Spiders"), shares of a closed-end investment company, whose
performance is designed to replicate the performance of the S&P 500 Index. 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.
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.
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 counter
party 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 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 or to seek to hedge various market risks (such as
interest rates and broad or specific equity or fixed-income market movements),
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 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 investment 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 COMMITMENT, DELAYED DELIVERY AND WHEN-ISSUED TRANSACTIONS. Each Tomorrow
Fund may purchase securities on a when-issued, delayed delivery or forward
commitment basis (collectively, "when-issued securities"). 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 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 when-issued basis, the Tomorrow
Fund's custodian will maintain in a segregated account cash or liquid 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 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. Although the Tomorrow
Funds may loan portfolio securities on a short-term, medium-term and long-term
basis, any such loan may be called at any time for reacquisition by the
respective Tomorrow Fund within the normal settlement period for the security. A
Tomorrow Fund may experience a loss or 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 net assets in illiquid investments, which includes repurchase agreements
maturing in more than seven days, securities that are not
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readily marketable, certain over-the-counter options, certain structured
securities and "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, unless the Trustees determine, based upon a continuing review of
the trading markets for the specific restricted security, that such restricted
securities are liquid. The Trustees have adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity of
portfolio 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 increase.
Conversely, when interest rates increase, 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 Internal Revenue
Code. See "Financial Highlights" for the portfolio turnover rates of the
Tomorrow Funds.
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 Separate
Accounts that fund Variable Contracts. These requirements place certain
limitations on the assets of a Tomorrow Fund that may be invested in securities
of a single issuer or a small number of issuers 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
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described in the SAI. As previously described, 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.
Among other fundamental restrictions listed in the SAI, no Tomorrow Fund may (1)
with respect to 75% of its total assets, purchase securities of any one issuer
(other than U.S. Government securities and securities of other investment
companies) if more than 5% of its total assets would be invested in such issuer,
(2) act as an underwriter except in certain circumstances, (3) purchase or sell
real estate except in certain circumstances, (4) issue senior securities except
as permitted by the 1940 Act or (5) invest more than 25% of its total assets in
the securities of issuers (including any one foreign government, but excluding
the U.S. government) in any one industry.
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, Separate Accounts and Qualified
Plans will receive an annual report containing audited financial statements and
semi-annual 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 Tomorrow Funds' principal underwriter.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
First Data Investor Services Group, Inc., 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.
INDEPENDENT AUDITORS
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 LLP, 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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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 and Institutional Class Shares
May 1, 1997
This Prospectus describes Adviser Class and 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. Adviser Class shares as
well as Institutional Class shares of the Funds may be purchased by "qualified"
pension or retirement plans, including trustees of such plans for certain
individuals funding their individual retirement accounts or other qualified
plans. Each Fund, a series of Tomorrow Funds Retirement Trust (the "Trust"), 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 May 1, 1997. 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 is available upon request by
calling Weiss, Peck & Greer, L.L.C. at 1-800-223- 3332 (toll free). Shares of a
Fund may not be available for sale 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. Shareholder inquiries regarding the Funds may be made in writing
to the Trust at the address set forth above.
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 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.
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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.
TABLE OF CONTENTS
Page
----
Expense Information.......................................... 3
Financial Highlights......................................... 5
Investment Objectives and Policies........................... 6
Eligible Investors........................................... 8
Insurance Company Separate Accounts.......................... 8
Qualified Plans.............................................. 8
Alternative Purchase Arrangements......................... 9
How to Buy Shares......................................... 9
How to Sell Shares........................................ 12
How to Exchange Shares.................................... 13
How Each Fund's Share Price is Determined.................... 15
Management of the Funds...................................... 15
Distribution Plans........................................... 16
Service Plans................................................ 17
Dividends and Taxes.......................................... 17
Portfolio Brokerage.......................................... 18
The Trust.................................................... 18
Investment Performance....................................... 20
Risk Considerations and Other Investment Practices
and Policies............................................ 20
Additional Information....................................... 24
-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 shares
of either Class 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 expenses, expressed as a
percentage of average net assets, are based on expenses incurred during the
fiscal year ended December 31, 1996.
<TABLE>
<S> <C> <C> <C> <C>
Large-Cap Fund Small-Cap Fund
Institutional Adviser Institutional Adviser
Class Class Class Class
----- ----- ----- -----
Management Fee (after voluntary waiver) 0.00%* 0.00%* 0.00%* 0.00%*
12b-1 Fee 0.00% 0.50%2 0.00% 0.50%2
Other Expenses (after expense limitation)1 1.50%* 1.25%* 1.50%* 1.25%*
------ ------ ------ ------
Total Fund Operating Expenses
(after expense limitation) 1.50%* 1.75%* 1.50%* 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> <C> <C>
Large-Cap Fund Small-Cap Fund
Institutional Adviser Institutional Adviser
Class Class Class Class
----- ----- ----- -----
After 1 Year $15 $18 $15 $18
After 3 Years $48 $56 $48 $56
After 5 Years $82 $96 $82 $96
After 10 Years $180 $208 $180 $208
-3-
<PAGE>
The purpose of the above table and Example is to assist you in
understanding the various costs and expenses of the Funds that an investor will
bear directly or indirectly. See page 16. The figures shown in the table under
the caption "Other Expenses" and in the hypothetical example are based on the
Funds' expenses for the fiscal year ended December 31, 1996. 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 Other expenses of Institutional Class shares include service fees payable under a non-Rule
12b-1 service plan for the benefit of qualified pension or retirement plans. See "Service Plans"
on page 17.
</FN>
</TABLE>
* 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. 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. See page
16. In addition, for the fiscal year ended December 31, 1996, in the absence of
the expense limitation, Management Fees, Other Expenses and Total Fund Operating
Expenses (expressed as a percentage of average daily net assets) of the Funds
would have been as follows:
<TABLE>
<S> <C> <C> <C>
Management Other Total Fund
Fees Expenses Operating Expenses
---------- -------- ------------------
Large-Cap Fund
Institutional Class 0.75% 47.87% 48.62%
Adviser Class 0.75% 48.12% 48.87%
Small Cap Fund
Institutional Class 0.75% 10.71% 11.46%
Adviser Class 0.75% 10.96% 11.71%
</TABLE>
The Funds' imposition of a distribution fee may result in a long-term
shareholder indirectly paying more than the economic equivalent of the maximum
front-end sales charge permitted under the Conduct Rules of the National
Association of Securities Dealers, Inc.
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>
FINANCIAL HIGHLIGHTS
The following tables represent a condensed financial history for each
Fund since inception. The tables express the information for each Fund in terms
of a single share for the Fund outstanding throughout the period. The Funds'
Annual Report includes more information about the Funds' performance and is
available free of charge by writing to the Trust at the address shown on the
cover of this Prospectus.
<TABLE>
$ per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Net Total Dividends Distri- Net
Asset Realized Income From butions Asset
Value at Net and From Net from Total Value at
Beginning Investment Unrealized Investment Investment Capital Distri- End of
of Period Income Gains Operations Income Gains butions Period
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 10.00 0.10 1.24 1.34 (0.11) (0.02) (0.13) $11.21
Small-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 6.50 0.10 1.05 1.15 (0.09) (0.09) (0.18) 7.47
</TABLE>
<TABLE>
ratios
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio information
assuming no fee waivers,
reimbursements or
Ratio of custody fee
Ratio of Net earnings credit receive
Expenses Income to Ratio of Ratio of
Net To Average Average Portfolio Average Expenses Net Income
Total Assets Net Net Turnover Commissions To Average To Average
Return++ (000's) Assets+ Assets+ Rate Per Share Net Assets+ Net Assets+
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 15.35% $1,571 1.25% 1.67% 48.62% $0.035 18.89% -15.97%
Small-Cap - Institutional Shares 17.70% 1,967 1.25% 2.02% 11.46% 0.035 12.96% -9.69%
For the period February 6, 1996*
through December 31, 1996
<FN>
+ Annualized.
++ Not annualized.
* Commencement of operations. No Adviser Class shares of the Funds were
outstanding during the period ended December 31, 1996.
</FN>
</TABLE>
-5-
<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
market 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. It is expected that each Fund's optimal
portfolio will not include all the stocks in and will be weighted differently
than its Benchmark. 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. No
quantitative methodology or technical analysis, including the Adviser's, has
ever been objectively proven to provide enhanced investment return and reduced
investment risk in actual long-term portfolio results.
Under normal circumstances, at least 65% of Large-Cap Fund's and
Small-Cap Fund's total assets are invested in equity securities of large market
capitalization companies and small market capitalization companies,
respectively. For purposes of the Funds' investments, large market
capitalization companies are those ranked, according to market capitalization,
within the top 500 domestic companies that are listed on a U.S. securities
exchange or traded over-the-counter and small market capitalization companies
are those not ranked, according to market capitalization, within the top 1,000
domestic companies that are listed on a U.S. securities exchange or traded
over-the-counter, both determined at the time of the Funds' investments.
Companies whose capitalization falls outside these
-6-
<PAGE>
ranges after purchase continue to be considered large or small market
capitalized, as the case may be, for purposes of this policy.
While each Fund will generally be substantially fully invested in
equity securities that comprise the applicable Benchmark, each Fund may under
normal circumstances invest up to 10% of its total assets in securities, issued
or guaranteed by the U.S. Government or its agencies, authorities, instruments
or sponsored enterprises (collectively, "U.S. Government securities") and shares
of real estate investment trusts ("REITs"). In addition, each Fund may, but is
not required to, utilize various investment strategies and techniques to seek to
hedge various market risks (such as broad or specific equity market movements
and interest rate risk) or to enhance potential gain. The investment 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, illiquid and structured 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" beginning on page 20
of this Prospectus.
The investment policies, including each Fund's investment objective,
described in this Prospectus are non-fundamental policies which may be changed
by the Trustees without the approval of shareholders. If there is a change in
either 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" on page 23 of this Prospectus.
RISK FACTORS
There is no assurance that either Fund will achieve its investment
objective. 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 (and, therefore, its net asset value)
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.
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. Although investments in securities of small capitalization companies may
present greater opportunities for growth, they also involve greater risks than
are customarily associated with investments in larger, more mature, better known
companies. Small capitalization securities may be subject to more volatile
market movements than securities of larger capitalization securities, such as
those included in the S&P 500. Smaller companies may have limited product lines,
markets or financial resources, and they may depend upon a limited or less
experienced management group. Small capitalization securities may be traded only
on the over-the-counter market or on a regional securities exchange and may not
be traded daily or in the volume typical of trading on a national securities
exchange. As a result, the disposition by the Small-Cap Fund of portfolio
securities to meet redemptions or otherwise may require the Fund to sell
securities at a discount from market prices, over a longer period of time or
during periods when disposition is not desirable.
In general, the value of a Fund's investment in U.S. Government
securities rises when interest rates fall, and vice versa. Although U.S.
Government securities have varying levels of sensitivity to changes in interest
rates, longer-term U.S. Government securities are generally more sensitive to
interest changes than shorter-term U.S. Government securities. Investing in
REITs involves risks in addition to those associated with U.S. Government
securities. REITs may be affected by changes in the value of the underlying
property and by the quality of any credit extended, are dependent
-7-
<PAGE>
upon management skills, are not diversified, and are subject to heavy cash flow
dependency. The risks associated with the Funds' transactions in options,
futures and other types of derivative securities including structured securities
may include some or all of the following: market risk, leverage and volatility
risk, correlation risk, credit risk and liquidity and valuation risk.
For a further discussion of the risks associated with an investment in
the Funds, please see "Risk Considerations and Other Investment Practices and
Policies" beginning on page 20 of 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").
Adviser Class shares and Institutional Class shares of the Funds may
also be purchased for the account of qualified pension or retirement plans
("Qualified Plans"). Qualified plans include: qualified plans and trusts under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), annuity plans under Code Section 403(a), Code Section 403(b)
annuities and custodial accounts, certain governmental plans, simplified
employee pension plans, deferred compensation arrangements under Code Section
457(b) and certain Individual Retirement Accounts ("IRAs"). IRAs that may invest
in Institutional Class shares of the Funds are limited to those established for
the benefit of: (a) current and former Trustees and officers of the Trust; (b)
current and former principals and employees of the Adviser; (c) directors,
officers and employees of companies and their affiliates that have an advisory
relationship with the Adviser; (d) directors, officers and employees of
companies and their affiliates serving in an advisory capacity to sponsors of
Qualified Plans and (e) members of the immediate families of any of the
foregoing persons.
Should you have any questions as to whether you are an eligible
investor in shares of the Funds, please call WPG at 1-800-223-3332.
INSURANCE COMPANY SEPARATE ACCOUNTS
Insurance Company Separate Accounts may only invest in Institutional
Class shares of the Funds. 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
1-800-223-3332.
QUALIFIED PLANS
The following information describes how participants in Qualified Plans
may arrange to buy, sell (redeem) and exchange Adviser and Institutional Class
shares of the Funds for the account of their Qualified Plans.
-8-
<PAGE>
A. ALTERNATIVE PURCHASE ARRANGEMENTS
Each Fund continuously offers through this Prospectus Adviser and
Institutional Class shares to Qualified Plans. If the trustee, custodian, plan
administrator or other fiduciary (each, a "Plan Fiduciary") responsible for
making investments on behalf of a Qualified Plan does not specify in the
instructions to the Funds which class of shares to purchase, the Funds will
assume that the instructions apply to Adviser Class shares.
Both Adviser Class and Institutional Class shares are sold without a
sales charge. Adviser Class shares are subject to distribution fees of up to
0.25% and service fees of up to 0.25% of each Fund's average daily net assets
attributable to Adviser Class Shares. Institutional Class shares are subject to
service fees of up to 0.25% of each Fund's average daily net assets attributable
to Institutional Class Shares. See "Distribution Plans" and "Service Plans"
below in this Prospectus.
B. HOW TO BUY SHARES
THROUGH WHOM MAY SHARES OF THE FUNDS BE PURCHASED FOR QUALIFIED PLANS?
Because you may not purchase shares of the Funds directly, all orders
to purchase Institutional Class shares must be made through the 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 1-800-223-3332 for
information regarding how to establish an IRA with Boston Safe.
WHAT IS THE MINIMUM INVESTMENT BY QUALIFIED PLANS IN SHARES OF THE FUNDS?
Plan Fiduciaries may invest in the Funds for the account of Qualified
Plans with as little as $250. There is no minimum amount required for subsequent
investments.
AT WHAT PRICE ARE SHARES OF THE FUNDS OFFERED?
Shares of each Class of the Funds are sold at the net asset value (NAV)
of such Class of shares next determined after First Data Investor Services
Group, Inc., the Funds' "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 (normally
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 applicable Account Information Form included with this
Prospectus. Please note that there is an Account Information Form applicable to
IRAs and an Account Information Form applicable to other Qualified Plans and to
insurance company separate accounts. 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").
-9-
<PAGE>
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 invest.
2. Mail the completed Account Information Form and
check to WPG.
By Wire: 1. Call 1-800-223-3332 to open an account and to
receive an application. Funds may be wired after
the application has been received.
2. Instruct your bank to wire funds to:
Boston Safe Deposit and Trust Company
WPG Deposit Account No. 12-816-3
Bank Routing No. 011-00123-4
Specify:
Name of Fund
Class of shares
Account Number
Name(s) in which account is to be registered
3. Mail the completed Account Information Form to WPG.
- -------------------------------------------------------------------------------
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
1-800-223-3332 to receive a Servicing Form to add
this privilege. Designate the bank or credit union
account from which funds will be drawn.
2. The amount to be invested will automatically be
withdrawn 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 1-800-223-3332 to receive a Services Form
to add this privilege. 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).
- --------------------------------------------------------------------------------
-10-
<PAGE>
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 toll-free at
1-800-223-3332.
3. Give the Transfer Agent representative the
name(s) in which the account is registered, the
Fund name, Class of shares, the account number,
and the amount of the investment.
4. An investment will normally be credited to the
Qualified Plan account upon receipt of payment.
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
Class of 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. 12-816-3
ABA Routing No. 011-00123-4
For credit to:
Name of Fund
Class of 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.
-11-
<PAGE>
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.
C. HOW TO SELL SHARES
HOW MAY 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 shares of the Funds held for the account of Qualified
Plans must be made through your Plan Fiduciary. If the 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 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 SHARES OF THE FUNDS REDEEMED?
Shares of each Class of the Funds will be redeemed at the share price
(NAV) of such Class of 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 in
the case of payments made by check.
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
Class of 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.
- --------------------------------------------------------------------------------
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 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.
-12-
<PAGE>
CERTAIN REDEMPTION 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 redemption request. A signature
guarantee is required if (a) 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, (b) the redemption request is made
for the account of an IRA or (c) the net asset value of the shares redeemed is
$100,000 or more (this requirement may be waived by the Adviser in its
discretion).
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 ss. 1.817-5 is revoked or challenged. The Trust will not
treat an investor as a qualified pension or retirement plan for this purpose
unless the investor is among the categories specifically enumerated in Revenue
Ruling 94-62, 1994-2 C.B. 164. An Insurance Company or Qualified Plan whose tax
status is revoked or challenged by the Internal Revenue Service may be liable to
the Trust for losses incurred by the Trust as a result of such action.
D. HOW TO EXCHANGE SHARES
MAY SHARES BE EXCHANGED FOR SHARES OF OTHER MUTUAL FUNDS?
Subject to the terms of your Qualified Plan, shares of a Fund may be
exchanged for shares of the same Class of the other Fund or for shares of the
same Class of Tomorrow Long-Term Retirement Fund, Tomorrow Medium-Term
Retirement Fund, Tomorrow Short-Term Retirement Fund and Tomorrow
Post-Retirement Fund (collectively, the Tomorrow Funds"). To obtain a current
prospectus for the shares of the Tomorrow Funds, please call 1-800-223-3332.
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 shares of the Funds, exchanges
of shares are made without the imposition of a sales charge.
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 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 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.
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Plan Fiduciaries: To Exchange Shares
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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 1-800-223-3332 to receive a
Services Form to add this privilege.
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
Class of 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
Class of 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 available for sale in your state; (ii) exchanges may be made only between
funds that are registered in the same name, address and, if applicable, taxpayer
identification number; (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; and (iv) exchanges may only be made for the same class of shares.
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
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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
calculated as of the close of regular trading of the New York Stock Exchange
(normally 4:00 p.m. New York City time) on each Business Day. Adviser Class
shares and Institutional Class 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. The Adviser, a privately held limited liability company with
over 20 years' experience as an investment adviser to individual and
institutional clients, has, together with its affiliates, approximately $13
billion under management. 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.
Daniel J. Cardell is primarily responsible for the day-to-day
management of each Fund's portfolio. Mr. Cardell has been a principal of WPG
since May 1996. Prior to joining the Adviser, Mr. Cardell was Senior Vice
President and Director of Equities for the Bank of America.
The Adviser has voluntarily agreed to limit temporarily each Fund's
operating expenses (excluding Rule
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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.
From time to time, the Adviser may compensate insurance companies or
their affiliates who hold Institutional Class shares of the Tomorrow Funds for
the account of their customers for providing a variety of record-keeping,
administrative, marketing and/or shareholder support services. This
compensation, which may be paid at a rate up to 0.25% of the net asset value of
Institutional Class shares held for the account of those customers depending on
the nature, extent and quality of the services provided, will be paid from the
Adviser's own resources and not from the assets of any Tomorrow Fund.
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 expenses 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 the Adviser Class shares of each Fund, has
adopted a Distribution Plan (the "Distribution Plans") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"). Under the
Distribution Plans, each Fund pays distribution and service fees at an aggregate
annual rate of 0.50% of a 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 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
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<PAGE>
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.
SERVICE PLANS
The Trust, on behalf of the Institutional Class shares 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 payable for the benefit of the Qualified Plan and is intended to be
compensation to Plan Fiduciaries for providing personal services and/or account
maintenance services to participants in Qualified Plans who beneficially own
Institutional Class shares of the Funds. The Trust, on behalf of the applicable
Fund, will make monthly payments to Plan Fiduciaries, for the benefit of their
Qualified Plans, based on the average net asset value of the Institutional Class
shares which are attributable to the Qualified Plan
DIVIDENDS AND TAXES
Each Fund is treated as a separate entity for federal income tax
purposes and has elected and has qualified to be treated as a "regulated
investment company" under the Internal Revenue Code and intends 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 Internal
Revenue Code.
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 Internal Revenue Code. Distributions from each Fund's
net long-term capital gains are treated as long-term capital gains under the
Internal Revenue Code, regardless of how long shares of the Funds have been
held.
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. 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.
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 shares of the same Class 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
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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 Internal
Revenue 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 under the circumstances.
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 may 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 under the circumstances.
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 Medium-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.
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As of the date of this Prospectus, the Trustees have authorized the
issuance of two classes of shares for each series, designated as 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 "Other Investment Companies" on page 21 of this Prospectus.
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.
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 expect 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.
As of March 31, 1997, Providian Life and Health Insurance Company
Separate Account, P.O. Box 32830, Louisville, KY 40232 beneficially owned in
excess of 25% of the outstanding shares of each of Large-Cap Fund and Small-Cap
Fund. Accordingly, such entity is deemed to be a controlling person.
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INVESTMENT PERFORMANCE
Each Fund may illustrate in advertisements and sales literature its
average annual total return, 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 shares of a Class 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 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 shares of the Fund 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.
Each Fund's total return will be calculated separately for Adviser
Class and Institutional Class shares. Because each Class of shares is subject to
different expenses, the yield and total return calculations with respect to each
Class of shares of a Fund will differ. The investment performance of the Adviser
Class and Institutional Class shares will be affected by the payment of
distribution and service fees.
The performance 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
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.
The Funds may invest in U.S. Government securities which are zero
coupon or deferred interest securities. For example, each Fund may 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.
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
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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.
STRUCTURED SECURITIES. Each Fund may invest in "structured" securities, such as
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. These benchmarks include stock prices and indices,
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. See "Restricted and Illiquid Securities" on page 23.
OTHER INVESTMENT COMPANIES. Each 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. For
example, the Large-Cap Fund may invest in Standard & Poor's Depository Receipts
("Spiders"), shares of a closed-end investment company, whose performance is
designed to replicate the performance of the S&P 500 Index.
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 seek to hedge against potential stock
market declines. A Fund's cash balances, including uncommitted cash balances,
may be invested in investment grade money market
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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.
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 or to seek to hedge various market risks (such as
interest rates and broad or specific equity or fixed-income market movements),
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
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 COMMITMENT, DELAYED DELIVERY AND WHEN-ISSUED TRANSACTIONS. Each Fund may
purchase securities on a when-issued, delayed delivery, or forward commitment
basis (collectively, "when-issued securities"). 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 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 when-issued basis, the Fund's custodian will maintain
in a segregated account cash or liquid securities having a value (determined
daily) at least equal to the amount of the Fund's purchase commitment. A Fund
may close out a position in securities purchased on a when-issued 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. Although the Funds may loan portfolio securities on a
short-term, medium-term and long-term basis, any such loan may be called at any
time for reacquisition by the respective Fund within the normal settlement
period for the security. A Fund may experience a loss or delay in the recovery
of its securities if the borrowing institution breaches its agreement with the
Fund.
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RESTRICTED AND ILLIQUID SECURITIES. Each Fund may 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, certain structured securities and "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, unless the
Trustees determine, based upon a continuing review of the trading markets for
the specific restricted security, that such restricted securities are liquid.
The Trustees have adopted guidelines and delegated to the Adviser the daily
function of determining and monitoring the liquidity of portfolio 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 increase. Conversely, when interest
rates increase, 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 Internal Revenue Code. See "Financial Highlights" for the
Fund's portfolio turnover rates.
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
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in the SAI. As previously described, 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. Among other fundamental restrictions listed in the SAI, neither
Fund may (1) with respect to 75% of its total assets, purchase securities of any
one issuer (other than U.S. Government securities and securities of other
investment companies) if more than 5% of its total assets would be invested in
such issuer, (2) act as an underwriter except in certain circumstances, (3)
purchase or sell real estate except in certain circumstances, (4) issue senior
securities except as permitted by the 1940 Act or (5) invest more than 25% of
its total assets in the securities of issuers (including any one foreign
government, but excluding the U.S. Government) in any one industry provided;
however, that the Large-Cap Fund and the Small-Cap Fund may concentrate their
assets in securities of issuers in any industry to the extent that the S&P 500
or the Russell 2000, respectively, are so concentrated.
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 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
First Data Investor Services Group, Inc., 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 AUDITORS
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 LLP, 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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PART B
WEISS, PECK & GREER INVESTMENTS
TOMORROW FUNDS RETIREMENT TRUST
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
Tomorrow Post-Retirement Fund
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
(each a "Fund" and collectively, the "Funds")
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
ADVISER CLASS SHARES
May 1, 1997
- -------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectuses of the Funds, each
dated May 1, 1997, as amended and/or supplemented from time to time
(collectively, the "Prospectuses"), copies of which may be obtained
without charge by writing to Tomorrow Funds Retirement Trust (the
"Trust"), One New York Plaza, New York 10004 or by calling
1-800-223-3332.
THE STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED
OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
Page
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.......... 1
Quantitative Methodology.......................... 1
INVESTMENT TECHNIQUES.................................. 3
Repurchase Agreements............................. 3
Forward Commitment, Delayed Delivery and
When-Issued Transactions........................ 4
Loans of Portfolio Securities..................... 5
Options........................................... 6
Futures Transactions.............................. 9
Limitations on the Use of Futures Contracts
and Options on Futures.......................... 11
Special Considerations and Risks
Related to Options and Futures Transactions..... 12
Privately Issued Mortgage-Backed Securities....... 14
Risks Associated with Specific Types
of Derivative Securities........................ 15
Participation Interests........................... 16
Securities of Foreign Issuers..................... 16
Restricted and Illiquid Securities................ 17
Other Investment Companies........................ 18
CALCULATION OF THE FUNDS' RETURNS...................... 18
Total Return...................................... 18
Yield............................................. 19
Other Quotations, Comparisons and
General Information............................. 20
INVESTMENT RESTRICTIONS................................ 22
ADVISORY AND ADMINISTRATIVE SERVICES................... 28
Investment Adviser................................ 28
Administrator..................................... 31
Principal Underwriter............................. 33
DISTRIBUTION PLANS..................................... 33
TRUSTEES AND OFFICERS.................................. 35
HOW TO PURCHASE SHARES................................. 40
Acquiring Shares of the Funds in Exchange
for Shares...................................... 40
REDEMPTION OF SHARES................................... 41
Systematic Withdrawal Plan........................ 41
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NET ASSET VALUE........................................ 42
INVESTOR SERVICES...................................... 43
Automatic Investment Plan......................... 44
Prototype Retirement Plan for Employers
and Self-Employed Individuals................... 44
Individual Retirement Account..................... 46
Simplified Employee Pension Plans (SEP-IRA)....... 47
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS................ 49
PORTFOLIO BROKERAGE.................................... 55
PORTFOLIO TURNOVER..................................... 59
ORGANIZATION........................................... 59
CUSTODIAN.............................................. 62
TRANSFER AGENT......................................... 62
LEGAL COUNSEL.......................................... 62
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS.......... 62
APPENDIX............................................... 63
GLOSSARY............................................... 66
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THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
(See "Investment Objectives and Policies," and "Risk
Considerations and Other Investment Practices and Policies" in the
Prospectuses.)
All capitalized terms not defined herein shall have the meanings
set forth in the Prospectuses.
The securities in which each Fund may invest and certain other
investment policies are described in the Funds' Prospectuses. This
Statement of Additional Information should be read in conjunction with
the Prospectuses.
The Appendix to this Statement of Additional Information contains
a description of the quality categories of corporate bonds in which the
Funds may invest, and a Glossary describing some of the Funds'
investments.
Quantitative Methodology
To seek to achieve their respective investment objectives, each of
the Core Large-Cap Stock Fund ("Large-Cap Fund") and the Core Small-Cap
Stock Fund ("Small-Cap Fund") under normal market conditions invests in
a portfolio of securities that are considered more "efficient" than the
Standard & Poor's 500 Stock Index (the "S&P 500") in the case of the
Large-Cap Fund and the Russell 2000 Index (the "Russell 2000") in the
case of the Small-Cap Fund. The other Funds seek to achieve similar
results with respect to the amount of their assets allocated to
Large-Cap, Medium-Cap and Small-Cap securities (as described in the
Prospectus applicable to such Funds). The Benchmarks for the Large-Cap,
Medium-Cap and Small-Cap Subcategories are the S&P 500, the Standard &
Poor's 400 MidCap Index (the "S&P 400") and the Russell 2000,
respectively.
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 Large-Cap and
Small-Cap Funds and the Subcategories of the other Funds, Weiss, Peck &
Greer, L.L.C. (the "Adviser" or "WPG") 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 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
the Large-Cap and Small-Cap Funds and the Subcategories, 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 the Large-Cap
and Small-Cap Funds and the Subcategories. The respective optimal
portfolios for the Large-Cap and Small-Cap Funds and the Subcategories
are designed to have returns greater than, but highly correlated with,
the return of the applicable Benchmarks.
After each optimal portfolio is constructed, it may be rebalanced
to maintain the original optimal weights. The Adviser will sell a
security when the security's weight within an actual portfolio becomes
significantly greater than its optimal weight. The Adviser will buy a
security when the security's weight within an actual portfolio becomes
significantly less than its optimal weight. The Adviser repeats the
entire optimization process at least semi-annually, at which point a
new portfolio is constructed with respect to the Large-Cap and
Small-Cap Funds and the Subcategories adding the most recent historical
data, and deleting the oldest data. When a security is removed from a
Benchmark, it will not necessarily be removed from the Funds'
portfolios within a predetermined length of time.
The Adviser's research personnel will monitor and occasionally
make changes in the way the optimal portfolios are constructed or
traded. Such changes may include determining better ways to eliminate
issues from consideration in the matrix, improving the manner in which
the matrix is calculated, altering constraints in the optimization
process and effecting changes in trading procedure (to reduce
transaction costs or to enhance the effects of rebalancing). Any such
changes are intended to be consistent with the basic philosophy of
seeking higher returns with respect to each of the Large-Cap and
Small-Cap Funds and each Subcategory than those that could be obtained
by investing directly in all the stocks of each Benchmark. Investors
should be aware that no quantitative methodology or technical analysis,
including the Adviser's, has ever been proven to provide enhanced
investment return and reduced investment risk in actual long-term
portfolio results.
<PAGE>
INVESTMENT TECHNIQUES
The following description of the Funds' investment techniques
supplements the discussion contained in the Prospectuses. (See
"Risk Considerations and Other Investment Practices and Policies"
in the Prospectuses).
Repurchase Agreements
Each Fund may enter into repurchase agreements with banks,
broker-dealers or other financial institutions in order to generate
additional current income. A repurchase agreement is an agreement under
which a Fund acquires a security from a seller subject to resale to the
seller at an agreed upon price and date. The resale price reflects an
agreed upon interest rate effective for the time period the security is
held by a Fund. The repurchase price may be higher than the purchase
price, the difference being income to the Fund, or the purchase and
repurchase price may be the same, with interest at a stated rate due to
the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the
security. Typically, repurchase agreements are in effect for one week
or less, but may be in effect for longer periods of time. Repurchase
agreements of more than one week's duration are subject to each Fund's
limitation on investments in illiquid securities.
Repurchase agreements are considered by the Securities and
Exchange Commission (the "SEC") to be loans by the purchaser
collateralized by the underlying securities. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, the Funds will
generally enter into repurchase agreements only with domestic banks
with total assets in excess of one billion dollars, primary dealers in
U.S. Government securities reporting to the Federal Reserve Bank of New
York or broker-dealers approved by the Trust's Board of Trustees, with
respect to securities of the type in which the Funds may invest. The
Adviser will monitor the value of the underlying securities throughout
the term of the agreement to ensure that their market value always
equals or exceeds the agreed-upon repurchase price to be paid to a
Fund. Each Fund will maintain a segregated account with its custodian,
Boston Safe Deposit and Trust Company (the "Custodian"), or a
subcustodian for the securities and other collateral, if any, acquired
under a repurchase agreement for the term of the agreement.
In addition to the risk of the seller's default or a decline in
value of the underlying security (see "Risk Considerations and Other
Investment Practices and Policies -- Repurchase Agreements" in the
Prospectuses), a Fund also might incur disposition costs in connection
with liquidating the underlying securities. If the seller becomes
insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a Fund not within the
control of that Fund and therefore subject to sale by the seller's
trustee in bankruptcy. Finally, it is possible that a Fund may not be
able to perfect its interest in the underlying security and may be
deemed an unsecured creditor of the seller. While the Trust
acknowledges these risks, it is expected that they can be controlled
through careful monitoring procedures.
Forward Commitment, Delayed Delivery and When-Issued Transactions
Each Fund may purchase securities on a when-issued, delayed
delivery or forward commitment basis. Securities transactions settled
on when-issued or forward commitment basis are also know as delayed
delivery transactions. The phrase "delayed delivery" is not intended to
address transactions involving the purchase of securities where the
delay in delivery involves only the brief period usually required by
the selling party and its agent solely to locate appropriate
certificates and prepare them for submission for clearance and
settlement in the customary way. Forward commitment and when-issued
transactions involve a commitment by the Fund to purchase or sell
securities at a future date (ordinarily up to 90 days later). The price
of the underlying securities (usually expressed in terms of yield) and
the date when the securities will be delivered and paid for (the
settlement date) are fixed at the time the transaction is negotiated.
When-issued purchases and forward commitments are negotiated directly
with the other party, and such commitments are not traded on exchanges.
A Fund will not enter into such transactions for the purpose of
leverage.
When-issued purchases and forward commitments enable a Fund to
lock in what is believed to be an attractive price or yield on a
particular security for a period of time, regardless of future changes
in interest rates. For instance, in periods of rising interest rates
and falling prices, a Fund might sell securities it owns on a forward
commitment basis to limit its exposure to falling prices. In periods of
falling interest rates and rising prices, a Fund might sell securities
it owns and purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of currently
higher yields.
The value of securities purchased on a when-issued or forward
commitment basis and any subsequent fluctuations in their value are
reflected in the computation of the Fund's net asset value starting on
the date of the agreement to purchase the securities, and the Fund is
subject to the rights and risks of ownership of the securities on that
date. The Fund does not earn interest on the securities it has
committed to purchase until they are paid for and delivered on the
settlement date. When the Fund makes a forward commitment to sell
securities it owns, the proceeds to be received upon settlement are
included in the Fund's assets. Fluctuations in the market value of the
underlying securities are not reflected in the Fund's net asset value
as long as the commitment to sell remains in effect. Settlement of
when-issued purchases and forward commitment transactions generally
takes place up to 90 days after the date of the transaction, but a Fund
may agree to a longer settlement period.
A Fund will make commitments to purchase securities on a
when-issued basis or to purchase or sell securities on a forward
commitment basis only with the intention of completing the transaction
and actually purchasing or selling the securities. If deemed advisable
as a matter of investment strategy, however, a Fund may dispose of or
renegotiate a commitment after it is entered into. A Fund also may sell
securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. The Funds may realize a
capital gain or loss in connection with these transactions.
When a Fund purchases securities on a when-issued or forward
commitment basis, the Custodian will maintain in a segregated account
securities having a value (determined daily) at least equal to the
amount of the Fund's purchase commitments. In the case of a forward
commitment to sell portfolio securities, the Custodian will hold the
portfolio securities themselves in a segregated account while the
commitment is outstanding. These procedures are designed to ensure that
the Fund will maintain sufficient assets at all times to cover its
obligations under when-issued purchases and forward commitments.
Loans of Portfolio Securities
Each Fund may seek to increase its income by lending portfolio
securities. Under present regulatory policies, such loans may be made
to financial institutions, such as broker-dealers, and would be
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. See "Risk Considerations and Other Investment Practices and
Policies --Lending of Portfolio Securities" in the Prospectuses. The
rules of the New York Stock Exchange ("NYSE") give the Fund the right
to call a loan and obtain the securities loaned at any time on five
days' notice. For the duration of a loan, the Fund would receive the
equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive compensation from the
investment of the collateral. The Fund would not, however, have the
right to vote any securities having voting rights during the existence
of the loan, but the Fund would call the loan in anticipation of an
important vote to be taken among holders of the securities or of the
giving or withholding of their consent on a material matter affecting
the investment. As with other extensions of credit, there are risks of
delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. However, the loans would
be made only to firms deemed by the Adviser to be of good standing, and
when, in the judgment of the Adviser, the consideration which can be
earned currently from securities loans of this type justifies the
attendant risk. If the Adviser determines to make securities loans, it
is intended that the value of the securities loaned would not exceed 33
1/3% of the value of the total assets of the Fund.
At the present time the staff of the SEC does not object if an
investment company pays reasonable negotiated fees to its custodian in
connection with loaned securities as long as such fees are pursuant to
a contract approved by the investment company's trustees.
Options
Each Fund currently intends to limit its options 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.
Writing Covered Call Options on Securities. Each Fund may write
(sell) covered call options on securities ("calls") at such time or
times as the Adviser shall determine to be appropriate. When a Fund
writes a call, it receives a premium and sells to the purchaser the
right to buy the underlying security at any time during the call period
(usually between three and nine months) at a fixed exercise price
regardless of market price changes during the call period. If the call
is exercised, the Fund forgoes any gain but is not subject to any loss
on any change in the market price of the underlying security relative
to the exercise price. A Fund will write such options subject to any
applicable limitations or restrictions imposed by law.
Purchasing Call Options. Each Fund may purchase a call option when
the Adviser believes the value of the underlying security will rise or
to effect a "closing purchase transaction." A Fund will realize a
profit (or loss) from a closing purchase transaction if the amount paid
to purchase a call is less (or more) than the amount received from the
sale thereof.
Put Options. Each Fund may also write and purchase put options on
securities ("puts"). A put written by a Fund obligates it to purchase
the specified security at a specified price if the option is exercised
at any time before the expiration date. All put options written by a
Fund would be covered. A Fund may purchase a put option when the
Adviser believes the value of the underlying security will decline. A
Fund may purchase put options on securities in its portfolio in order
to hedge against a decline in the value of such securities ("protective
puts").
<PAGE>
The purpose of writing covered put and call options is to hedge
against fluctuations in the market value of a Fund's portfolio
securities. Each Fund may purchase or sell call and put options on
securities indices for a similar purpose. Such a hedge is limited to
the degree that the price change of the underlying security is in an
amount which is less than the difference between the option premium
received by the Fund and the option strike price. To the extent that
the underlying security's price change exceeds this amount, written put
and call options will not provide an effective hedge.
A written call option would be covered if the Fund owns the
security underlying the option. A written put option may be covered by
maintaining in a segregated account cash or liquid securities. While
this will ensure that the Fund will have sufficient assets to meet its
obligations under the option contract should it be exercised, it does
not reduce the potential loss to the Fund should the value of the
underlying security decrease and the option be exercised. A written
call option or put option may also be covered by purchasing an
offsetting option or any other option which, by virtue of its exercise
price or otherwise, reduces the Fund's net exposure on its written
option position. Further, instead of "covering" a written call option,
the Fund may simply maintain cash or liquid securities in a segregated
account in amounts sufficient to ensure that it is able to meet its
obligations under the written call should it be exercised. This method
does not reduce the potential loss to the Fund should the value of the
underlying security increase and the option be exercised.
Options on Securities Indices. Each Fund may purchase call and put
options on securities indices for the purpose of hedging against the
risk of unfavorable price movements adversely affecting the value of
the Fund's securities or securities the Fund intends to buy or to seek
to increase total return. Such Fund's net assets will be at risk as a
result of such transactions. Unlike a stock option, which gives the
holder the right to purchase or sell a specified stock at a specified
price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (i) the difference
between the exercise price of the option and the value of the
underlying securities index on the exercise date multiplied by (ii) a
fixed "index multiplier."
A securities index fluctuates with changes in the market values of
the stocks included in the index. For example, some securities index
options are based on a broad market index such as the S&P 500 or the
Value Line Composite Index, or a narrower market index such as the
Standard & Poor's 100 Stock Index ("S&P 100"). Indices may also be
based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on
securities indices are currently traded on the Chicago Board Options
Exchange, the NYSE and the American Stock Exchange.
The Funds may purchase put options to seek to hedge against an
anticipated decline in stock market prices that might adversely affect
the value of a Fund's portfolio securities. If a Fund purchases a put
option on a securities index, the amount of the payment it would
receive upon exercising the option would depend on the extent of any
decline in the level of the securities index below the exercise price.
Such payments would tend to offset a decline in the value of the Fund's
portfolio securities. However, if the level of the securities index
increases and remains above the exercise price while the put option is
outstanding, a Fund will not be able to profitably exercise the option
and will lose the amount of the premium and any transaction costs. Such
loss may be partially or wholly offset by an increase in the value of a
Fund's portfolio securities.
The Funds may purchase call options on securities indices in order
to participate in an anticipated increase in stock market prices or to
offset anticipated price increases on securities that it intends to buy
in the future. If a Fund purchases a call option on a securities index,
the amount of the payment it receives upon exercising the option
depends on the extent of any increase in the level of the securities
index above the exercise price. Such payments would in effect allow the
Fund to benefit from stock market appreciation even though it may not
have had sufficient cash to purchase the underlying stocks. Such
payments may also offset increases in the price of stocks that the Fund
intends to purchase. If, however, the level of the securities index
declines and remains below the exercise price while the call option is
outstanding, a Fund will not be able to exercise the option profitably
and will lose the amount of the premium and transaction costs. Such
loss may be partially or wholly offset by a reduction in the price a
Fund pays to buy additional securities for its portfolio.
The Funds may cover call options on a securities index by owning
securities whose price changes are expected to be similar to those of
the underlying index or by having an absolute and immediate right to
acquire such securities without additional cash consideration (or for
additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities in their
respective portfolio. The Funds may also cover call and put options on
a securities index by maintaining cash or liquid securities with a
value equal to the exercise price in a segregated account with its
custodian or by using the other methods described above. When
purchased, options on securities indices may not enable the Fund to
hedge effectively against interest rate or stock market risk if the
stocks comprising the index subject to the option are not highly
correlated with the composition of the Fund's portfolio. Moreover, the
ability to hedge effectively depends upon the ability to predict
movements in interest rates or the stock market. Some options on
securities indices may not have a broad and liquid secondary market, in
which case options purchased by the Fund may not be closed out and the
Fund could lose more than its option premium when the option expires.
The purchase and sale of option contracts is a highly specialized
activity which involves investment techniques and risks different from
those ordinarily associated with investment companies. It should be
noted that transaction costs relating to options transactions may tend
to be higher than the transaction costs with respect to transactions in
securities. In addition, if a Fund were to write a substantial number
of option contracts which are exercised, the portfolio turnover rate of
that Fund could increase.
Securities for each Fund's portfolio will continue to be bought
and sold solely on the basis of appropriateness to fulfill the
applicable Fund's investment objective. Option transactions can be
used, among other things, to increase the return on portfolio
positions.
Futures Transactions
Each Fund may purchase and sell futures contracts for hedging
purposes and to seek to increase total return. A futures contract is an
agreement between two parties to buy and sell a security for a set
price at a future time. Each Fund may also enter into index-based
futures contracts and interest rate futures contracts. Futures
contracts on indices provide for a final cash settlement on the
expiration date based on changes in the relevant index. All futures
contracts are traded on designated "contract markets" licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC")
which, through their clearing corporations, guarantee performance of
the contracts.
Generally, if market interest rates increase, the value of
outstanding debt securities declines (and vice versa). If a Fund holds
long-term U.S. Government securities and the Adviser anticipates a rise
in long-term interest rates, it could, in lieu of disposing of its
portfolio securities, enter into futures contracts for the sale of
similar long-term securities. If rates increased and the value of a
Fund's portfolio securities declined, the value of that Fund's futures
contract would increase, thereby protecting that Fund by preventing net
asset value from declining as much as it otherwise would have. If the
Adviser expects long-term interest rates to decline, a Fund might enter
into futures contracts for the purchase of long-term securities, so
that it could offset anticipated increases in the cost of such
securities it intends to purchase while continuing to hold
higher-yielding short-term securities or waiting for the long-term
market to stabilize. Similar techniques may be used by the Funds to
hedge stock market risk.
Each Fund also may purchase and sell listed put and call options
on futures contracts. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a
position in a futures contract (a long position if the option is a call
and a short position if the option is a put), at a specified exercise
price at any time during the option period. When an option on a futures
contract is exercised, settlement is effected by the payment of cash
representing the difference between the current market price of the
futures contract and the exercise price of the option. The risk of loss
to a Fund purchasing an option on a futures contract is limited to the
premium paid for the option. A Fund may purchase put options on
interest rate futures contracts in lieu of, and for the same purpose
as, its sale of a futures contract: to seek to hedge a long position in
the underlying futures contract.
The purchase of call options on interest rate futures contracts is
intended to serve the same purpose as the actual purchase of the
futures contract.
A Fund would write a call option on a futures contract to seek to
hedge against a decline in the prices of the securities underlying the
futures contracts. If the price of the futures contract at expiration
is below the exercise price, the applicable Fund would retain the
option premium, which would offset, in part, any decline in the value
of its portfolio securities.
The writing of a put option on a futures contract is similar to
the purchase of the futures contract, except that, if market price
declines, a Fund would pay more than the market price for the
underlying securities. The net cost to a Fund will be reduced, however,
by the premium received on the sale of the put, less any transaction
costs. See "Dividends, Distributions and Tax Status" below.
Each Fund may engage in "straddle" transactions, which involve the
purchase or sale of combinations of call and put options on the same
underlying securities or futures contracts. A Fund will not purchase
calls or puts, in connection with such straddle transactions, if the
aggregate premiums paid for such options will exceed 10% of its total
assets.
In purchasing and selling futures contracts and related options,
each Fund intends to comply with rules and interpretations of the CFTC
and of the SEC.
Limitations on the Use of Futures Contracts and Options on Futures.
Each Fund will engage in futures and related options transactions
only for hedging purposes in accordance with CFTC regulations or to
seek to increase total return to the extent permitted by such
regulations. The Fund will determine that the price fluctuations in the
futures contracts and options on futures contracts used for hedging
purposes are substantially related to price fluctuations in securities
held by the Fund or which it expects to purchase. Except as stated
below, a Fund's futures transactions will be entered into for
traditional hedging purposes - that is, futures contracts will be sold
to protect against a decline in the price of securities that the Fund
owns, or futures contracts will be purchased to protect the Fund
against an increase in the price of securities it intends to purchase.
As evidence of this hedging intent, the Fund expects that on 75% or
more of the occasions on which it takes a long futures (or option)
position (involving the purchase of futures contracts), a Fund will
have purchased, or will be in the process of purchasing, equivalent
amounts of related securities in the cash market at the time when the
futures (or option) position is closed out. However, in particular
cases, when it is economically advantageous for a Fund to do so, a long
futures position may be terminated (or an option may expire) without
the corresponding purchase of securities. As an alternative to
compliance with the bona fide hedging definition, a CFTC regulation
permits a Fund to elect to comply with a different test, under which
the sum of the amounts of initial margin deposits on its existing
futures positions and premiums paid for options on futures entered into
for the purpose of seeking to increase total return (net of the amount
the positions were "in the money" at the time of purchase) would not
exceed 5% of that Fund's net assets, after taking into account
unrealized gains and losses on such positions. A Fund will engage in
transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), for maintaining
its qualification as a regulated investment company for Federal income
tax purposes (see "Dividends, Distributions, and Tax Status").
A Fund will be required, in connection with transactions in
futures contracts and the writing of options on futures contracts, to
make margin deposits, which will be held by a Fund's custodian for the
benefit of the merchant through whom a Fund engages in such futures and
options transactions. In the case of futures contracts or options
thereon requiring the Fund to purchase securities, the Fund must
segregate cash or liquid securities in an account maintained by the
Custodian to cover such contracts and options. Cash or liquid
securities required to be in a segregated account will be marked to
market daily.
<PAGE>
Special Considerations and Risks Related to Options and Futures
Transactions
Exchange markets in options on certain securities are a relatively
new and untested concept. It is impossible to predict the amount of
trading interest that may exist in such options, and there can be no
assurance that viable exchange markets will develop or continue.
The exchanges will not continue indefinitely to introduce new
expirations to replace expiring options on particular issues because
trading interest in many issues of longer duration tends to center on
the most recently auctioned issues. The expirations introduced at the
commencement of options trading on a particular issue will be allowed
to run out, with the possible addition of a limited number of new
expirations as the original expirations expire. Options trading on each
issue of securities with longer durations will thus be phased out as
new options are listed on more recent issues, and a full range of
expirations will not ordinarily be available for every issue on which
options are traded.
In the event of a shortage of the underlying securities
deliverable on exercise of an option, the Options Clearing Corporation
has the authority to permit other, generally comparable, securities to
be delivered in fulfillment of option exercise obligations. If the
Options Clearing Corporation exercises its discretionary authority to
allow such other securities to be delivered, it may also adjust the
exercise prices of the affected options by setting different prices at
which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options
Clearing Corporation may impose special exercise settlement procedures.
The hours of trading for options on securities may not conform to
the hours during which the underlying securities are traded. To the
extent that the markets for underlying securities close before the
options markets, significant price and rate movements can take place in
the options markets that cannot be reflected in the underlying markets.
In addition, to the extent that the options markets close before the
markets for the underlying securities, price and rate movements can
take place in the underlying markets that cannot be reflected in the
options markets.
Prior to exercise or expiration, an option position can be
terminated only by entering into a closing purchase or sale
transaction. This requires a secondary market on an exchange for call
or put options of the same series. Similarly, positions in futures may
be closed out only on an exchange which provides a secondary market for
such futures. A Fund will enter into an option or futures position only
if there appears to be a liquid secondary market for such options or
futures. However, there can be no assurance that a liquid secondary
market will exist for any particular call or put option or futures
contract at any specific time. Thus, it may not be possible to close an
option or futures position. In the event of adverse price movements, a
Fund would continue to be required to make daily cash payments of
maintenance margin for futures contracts or options on futures
contracts position written by that Fund. A Fund may have to sell
portfolio securities at a time when it may be disadvantageous to do so
if it had insufficient cash to meet the daily maintenance margin
requirements. In addition, a Fund may be required to take or make
delivery of the instruments underlying interest rate futures contracts
it holds. The inability to close options and futures positions also
could have an adverse impact on a Fund's ability to effectively hedge
its portfolios.
Each of the exchanges has established limitations governing the
maximum number of call or put options on the same underlying security
(whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held
or written on one or more accounts or through one or more brokers). An
exchange may order the liquidation of positions found to be in
violation of applicable trading limits and it may impose other
sanctions or restrictions. The Trust and other clients advised by the
Adviser and its affiliates may be deemed to constitute a group for
these purposes. In light of these limits, the Trustees of the Trust
(the "Trustees") may determine at any time to restrict or to terminate
the Funds' transactions in options. The Adviser does not believe that
these trading and position limits will have any adverse impact on the
investment techniques for hedging the Trust's portfolios.
Over-the-counter ("OTC") options are purchased from or sold to
securities dealers, financial institutions or other parties
("Counterparties") through direct agreement with the Counterparty. In
contrast to exchange listed options, which generally have standardized
terms and performance mechanics, all the terms of an OTC option,
including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the
parties.
Unless the parties provide for it, there is no central clearing or
guaranty function in the OTC option market. As a result, if the
Counterparty fails to make delivery of the security or other instrument
underlying an OTC option it has entered into with the Fund or fails to
make a cash settlement payment due in accordance with the terms of that
option, the Fund will lose any premium it paid for the option as well
as any anticipated benefit of the transaction. Accordingly, the Adviser
must assess the creditworthiness of each such Counterparty or any
guarantor or credit enhancement of the Counterparty's credit to
determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with
U.S. Government securities dealers recognized by the Federal Reserve
Bank of New York as "primary dealers", or broker dealers, domestic or
foreign banks or other financial institutions which have received,
combined with any credit enhancements, a long-term debt rating of A
from Standard & Poor's Ratings Group ("Standard & Poor's") or Moody's
Investor Services Group, Inc. ("Moody's") or an equivalent rating from
any other nationally recognized statistical rating organization
("NRSRO") or that issue long-term debt determined to be of equivalent
credit quality by the Adviser. The Trust treats OTC options purchased
by a Fund, and portfolio securities "covering" the amount of a Fund's
obligation pursuant to an OTC option sold by it (the cost of the
sell-back plus the in-the-money amount, if any) as illiquid, and
subject to each Fund's limitation on investing no more than 15% of its
assets in illiquid securities. However, for options written with
"primary dealers" in U.S. Government securities pursuant to an
agreement requiring a closing transaction at a formula price, the
amount which is considered to be illiquid may be calculated by
reference to a formula price.
Utilization of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and
movements in the price of the securities which are the subject of the
hedge. If the price of the futures contract moves more or less than the
price of the security, a Fund will experience a gain or loss which will
not be completely offset by movements in the price of the securities
which are the subject of the hedge. There is also a risk of imperfect
correlation where the securities underlying futures contracts have
different maturities than the portfolio securities being hedged.
Transactions in options on futures contracts involve similar risks.
Privately Issued Mortgage-Backed Securities
Each of the Tomorrow Post-Retirement Fund (the "Post-Retirement
Fund"), Tomorrow Long-Term Retirement Fund (the "Long-Term Fund"),
Tomorrow Medium-Term Retirement Fund (the "Medium-Term Fund") and
Tomorrow Short-Term Retirement Fund (the "Short-Term Fund") (sometimes
collectively referred to herein as the "Tomorrow Funds") may invest in
mortgage-backed securities issued by trusts or other entities formed or
sponsored by private originators of and institutional investors in
mortgage loans and other non-governmental entities (or representing
custodial arrangements administered by such institutions). These
private originators and institutions include savings and loan
associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing.
Privately issued mortgage-backed securities are generally backed
by pools of conventional (i.e., non-government guaranteed or insured)
mortgage loans. Since such mortgage-backed securities normally are not
guaranteed by an entity having the credit standing of Ginnie Mae,
Fannie Mae or Freddie Mac, in order to receive a high quality rating
from the rating organizations (e.g., Standard & Poor's or Moody's),
they often are structured with one or more types of "credit
enhancement." Such credit enhancement falls into two categories: (1)
liquidity protection and (2) protection against losses resulting after
default by a borrower and liquidation of the collateral (e.g., sale of
a house after foreclosure). Liquidity protection refers to the payment
of cash advances to holders of mortgage-backed securities when a
borrower or an underlying mortgage fails to make its monthly payment on
time. Protection against losses resulting after default and liquidation
is designed to cover losses resulting when, for example, the proceeds
of a foreclosure sale are insufficient to cover the outstanding amount
on the mortgage. Such protection may be provided through guarantees,
insurance policies or letters of credit, through various means of
structuring the securities or through a combination of such approaches.
Examples of credit enhancement arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class
securities with one or more classes entitled to receive payment before
other classes, with the result that defaults on the underlying
mortgages are borne first by the holders of the subordinated class),
creation of "spread accounts" or "reserve funds" (where cash or
investments are held in reserve against future losses) and
"over-collateralization" (where the scheduled payments on the
underlying mortgages in a pool exceeds the amount required to be paid
on the mortgage-backed securities). The degree of credit enhancement
for a particular issue of mortgage-backed securities is based on the
level of credit risk associated with the particular mortgages in the
related pool. Losses on a pool in excess of anticipated levels could
nevertheless result in losses to security holders since credit
enhancement rarely covers every dollar owed on a pool. See the Funds'
Prospectuses for a further description of mortgage-backed securities.
Risks Associated with Specific Types of Derivative Securities
Each of the Post-Retirement Fund, Long-Term Fund, Mid-Term Fund
and Short-Term Fund may invest in floating rate securities based on the
Cost of Funds Index ("COFI floaters"), other "lagging rate" floating
rate securities, floating rate securities that are subject to a maximum
interest rate ("capped floaters"), and Mortgage-Backed Securities
purchased at a discount. The primary risks associated with these
derivative debt securities are the potential extension of average life
and/or depreciation due to rising interest rates.
The principal of and interest on the assets underlying a CMO or
REMIC Trust may be allocated among the several classes of CMOs or REMIC
Certificates in various ways. In certain structures (known as
"sequential pay" CMOs or REMIC Certificates), payments of principal,
including any principal prepayments, on the underlying mortgage assets
generally are applied to the classes of CMOs or REMIC Certificates in
the order of their respective final distribution dates. Thus, no
payment of principal will be made on any class of sequential pay CMOs
or REMIC Certificates until all other classes having an earlier final
distribution date have been paid in full. Each Tomorrow Fund will
limit its investments in sequential pay CMOs and REMIC Certificates to
5% of its net assets. Please see "Mortgage-Backed Securities" in the
Tomorrow Funds' prospectuses.
Participation Interests
Each Fund may purchase from banks participation interests in all
or part of specific holdings of debt obligations. Each participation
interest is backed by an irrevocable letter of credit or guarantee of
the selling bank that the Adviser has determined meets the prescribed
quality standards of each Fund. Thus, even if the credit of the issuer
of the debt obligation does not meet the quality standards of a Fund,
the credit of the selling bank will. Each Fund will have the right to
sell the participation interest back to the bank after seven days'
notice for the full principal amount of a Fund's interest in the debt
obligation plus accrued interest, but only (1) as required to provide
liquidity to that Fund, (2) to maintain the quality standards of each
Fund's investment portfolio or (3) upon a default under the terms of
the debt obligation. The selling bank may receive a fee from a Fund in
connection with the arrangement.
Securities of Foreign Issuers
To the extent included in the benchmark indices applicable to each
Fund, each Fund may invest in certain types of U.S. dollar-denominated
securities of foreign issuers, including American Depository Receipts
("ADRs"). ADRs are U.S. dollar-denominated certificates issued by a
U.S. bank or trust company and represent the right to receive
securities of a foreign issuer deposited in a domestic bank or foreign
branch of a U.S. bank. ADRs are traded on domestic exchanges or in the
U.S. over-the-counter market and, generally, are in registered form.
Investments in ADRs have certain advantages over direct investment in
the underlying non- U.S. securities because (i) ADRs are U.S.
dollar-denominated investments which are registered domestically,
easily transferable, and for which market quotations are readily
available, and (ii) issuers whose securities are represented by ADRs
are subject to the same auditing, accounting and financial reporting
standards as domestic issuers. To the extent a Fund acquires ADRs
through banks which do not have a contractual relationship with the
foreign issuer of the security underlying the ADR to issue and service
such ADRs, there may be an increased possibility that the Fund would
not become aware of and be able to respond to corporate actions such as
stock splits or rights offerings involving the foreign issuer in a
timely manner.
Although the Funds do not currently invest directly in foreign
denominated securities, the Long-Term Fund and the Medium-Term Fund
will each invest in other investment companies that will invest their
assets in securities of foreign issuers. The Long- Term and Medium-Term
Funds may, therefore, be subject to the risks associated with investing
in foreign securities.
Investing in foreign securities may involve advantages and
disadvantages not present in domestic investments. There may be less
publicly available information about securities not registered
domestically, or their issuers, than is available about domestic
issuers or their domestically registered securities. Stock markets
outside the U.S. may not be as developed as domestic markets, and there
may also be less government supervision of foreign exchanges and
brokers. Foreign denominated securities may be less liquid or more
volatile than U.S. securities. Trade settlements may be slower and
could possibly be subject to failure. In addition, brokerage
commissions and custodial costs with respect to foreign denominated
securities may be higher than those for domestic investments.
Accounting, auditing, financial reporting, and disclosure standards for
foreign issuers may be different than those applicable to domestic
issuers. Foreign denominated securities may be affected favorably or
unfavorably by changes in currency exchange rates and exchange control
regulations (including currency blockage) and a Fund investing in such
securities may incur costs in connection with conversions between
various currencies. Foreign securities may also involve risks due to
changes in the political or economic conditions of such foreign
countries, the possibility of expropriation of assets or
nationalization, and possible difficulty in obtaining and enforcing
judgments against foreign entities.
Restricted and Illiquid Securities
Each Fund may invest up to 15% of its net assets in illiquid
investments, which includes securities that are not readily marketable,
repurchase agreements maturing in more than seven days, privately
issued stripped mortgage-backed securities and "restricted securities"
(i.e., securities that would be required to be registered prior to
distribution to the public), including restricted securities eligible
for resale to certain institutional investors pursuant to Rule 144A of
the 1933 Act. The Trustees have adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity
of portfolio securities. The Trustees, however, retain sufficient
oversight and are ultimately responsible for the determinations. Please
see the non-fundamental investment restrictions for further limitations
regarding the Funds' investments in restricted and illiquid securities.
Since it is not possible to predict with assurance exactly how the
market for restricted securities sold and offered under Rule 144A will
develop, the Trustees will 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 the Funds to the extent that qualified institutional buyers become
for a time uninterested in purchasing these restricted securities.
Notwithstanding the foregoing investment restrictions and as further
described below, each Fund may invest all or part of its assets in an
open-end investment company with substantially the same investment
objective, policies and restrictions as each Fund.
Other Investment Companies
Each Fund, subject to authorization by the Trustees, may invest
all of its investable assets in the securities of a single open-end
investment company (a "Portfolio"). If authorized by the Trustees, a
Fund would seek to achieve its investment objective by investing in a
Portfolio, which Portfolio would invest in a portfolio of securities
that complies with the Fund's investment objectives, policies and
restrictions. The Trustees do not intend to authorize investing in this
manner at this time.
Each Fund may invest up to 10% of its total assets, calculated at
the time of purchase, in the securities of other investment companies
(other than those affiliated with WPG) 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 investment
company. Investments in investment companies will result in duplication
of certain expenses, since the Fund will indirectly bear its
proportionate share of any expenses paid by investment companies in
which it invests in addition to the expenses paid by the Fund. However,
to the extent that a Fund invests in an open-end registered investment
company, the Adviser will not impose its advisory fees on the portion
of the Fund's assets so invested.
CALCULATION OF THE FUNDS' RETURNS
Total Return
The average annual total return with respect to Adviser Class
shares of each Fund is determined for a particular period by
calculating the actual dollar amount of the investment return on a
$1,000 investment in Adviser Class shares of the Fund made at the net
asset value of such shares at the beginning of the period, and then
calculating the annual compounded rate of return which would produce
that amount. Total return for a period of one year is equal to the
actual return of the Fund during that period. The following formula
describes the calculation:
n
ERV = P(1+T)
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return with respect to Adviser
Shares.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the indicated
period.
This calculation assumes that (i) all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the
period and (ii) all recurring fees are included for applicable periods.
Each Fund may illustrate in advertisements and sales literature
the average annual total return and 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 shares for the indicated periods and
will include all recurring fees.
The average annual total return for the shares of each Class of
each Fund offering such shares during the periods indicated was as
follows:
<TABLE>
<CAPTION>
TOTAL RETURN
<S> <C> <C> <C> <C> <C>
ONE YEAR FIVE YEARS TEN YEARS
ENDED ENDED 12/31/96 ENDED 12/31/96
FUND 12/31/96 ANNUALIZED CUMULATIVE ANNUALIZED CUMULATIVE
---- -------- ---------- ---------- ---------- ----------
Long-Term Retirement Fund(1)
Institutional Class 9.03% N/A N/A N/A N/A
Adviser Class 9.08% N/A N/A N/A N/A
Medium-Term Retirement Fund(2)
Institutional Class 8.54% N/A N/A N/A N/A
Adviser Class 8.89% N/A N/A N/A N/A
Short-Term Retirement Fund(3)
Institutional Class 8.23% N/A N/A N/A N/A
Adviser Class 8.54% N/A N/A N/A N/A
Core Large-Cap Stock Fund(4)
Institutional Class 15.35% N/A N/A N/A N/A
Adviser Class N/A N/A N/A N/A N/A
Core Small-Cap Stock Fund(5)
Institutional Class 17.70% N/A N/A N/A N/A
Adviser Class N/A N/A N/A N/A N/A
<FN>
- --------------------------
(1) The Institutional Class and Adviser Class shares of the Long-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Long-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Long-Term Retirement Fund's total returns for the period
ended December 31, 1996 would have been lower.
(2) The Institutional Class and Adviser Class shares of the Medium-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Medium-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Medium-Term Retirement Fund's total returns for the
period ended December 31, 1996 would have been lower.
(3) The Institutional Class and Adviser Class shares of the Short-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Short-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Short-Term Retirement Fund's total returns for the
period ended December 31, 1996 would have been lower.
(4) The Institutional Class shares of the Core Large-Cap Stock Fund
commenced operations on February 6, 1996. The Core Large-Cap Stock Fund's
advisory fee was not impose and the Adviser reimbursed certain operating
expenses during various periods since inception of the Fund. Had the Adviser
imposed its entire fee and not limited operating expenses, the Core Large-Cap
Stock Fund's total returns for the period ended December 31, 1996 would have
been lower. Adviser Class shares of the Fund have not commenced operations.
(5) The Institutional Class shares of the Core Small-Cap Stock Fund
commenced operations on February 6, 1996. The Core Small-Cap Stock Fund's
advisory fee was not impose and the Adviser reimbursed certain operating
expenses during various periods since inception of the Fund. Had the Adviser
imposed its entire fee and not limited operating expenses, the Core Small-Cap
Stock Fund's total returns for the period ended December 31, 1996 would have
been lower. Adviser Class shares of the Fund have not commenced operations.
</FN>
</TABLE>
Yield
The 30 day yield quotation with respect to Adviser Class shares of
each of the Long-Term Fund, Mid-Term Fund, Short-Term Fund and
Post-Retirement Fund is computed by dividing the net investment income
for the period with respect to Adviser Class shares of that Fund by the
net asset value of each Adviser Class share on the last day of the
period, according to the following formula:
6
YIELD = 2[(a-b + 1)-1]
---
cd
<PAGE>
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of Adviser Class shares
outstanding during the period that were entitled to
receive dividends.
d = the offering price per Adviser Class share (net asset
value per share) on the last day of the period.
<TABLE>
<CAPTION>
Yield for
30-Day Period
Ended 12/31/96
<S> <C>
1. Long-Term Retirement Fund
Institutional Class 1.23%
Adviser Class 1.09%
2. Medium-Term Retirement Fund
Institutional Class 1.66%
Adviser Class 1.46%
3. Short-Term Retirement Fund
Institutional Class 2.05%
Adviser Class 1.92%
</TABLE>
Return for a Fund is not fixed or guaranteed and will fluctuate
from time to time, unlike bank deposits or other investments which pay
a fixed yield or return for a stated period of time, and a Fund's
performance does not provide a basis for determining future
performance. Return is a function of portfolio quality, composition,
maturity and market conditions as well as the expenses incurred by each
Fund. The return of a Fund may not be comparable to other investment
alternatives because of differences in the foregoing variables and
differences in the methods used to value portfolio securities, compute
expenses and calculate return.
Other Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of a Fund may be
illustrated and/or compared with that of other mutual funds with
similar investment objectives, and to stock or other relevant indices.
For example, total return of a Fund's classes may be compared to
averages or rankings prepared by Lipper Analytical Services, Inc., a
widely recognized independent service which monitors mutual fund
performance; the Morgan Stanley Europe, Australia, Far East Index
("EAFE"), an unmanaged index of international stock markets, the S&P
400, an unmanaged index of common stocks; the S&P 500, an unmanaged
index of common stocks; the Russell 2000, an unmanaged index of common
stocks; the Russell 3000 Index (the "Russell 3000"), an unmanaged index
of common stocks; or the Dow Jones Industrial Average, an unmanaged
index of common stocks of 30 industrial companies listed on the New
York Stock Exchange.
The S&P 500 is an unmanaged index of 500 common stocks which are
traded on the New York Stock Exchange, American Stock Exchange and the
Nasdaq National Market. The S&P 500 represents approximately 70% of the
total domestic U.S. equity market capitalization. The S&P 400 is an
unmanaged index of common stocks of 400 companies with mid-size market
capitalizations - $300 million to $5 billion. The S&P 500 and the S&P
400 are market value-weighted indices (shares outstanding times stock
price) in which each company's influence on the respective index is
directly proportional to its market value. The companies in the S&P 500
and the S&P 400 are selected from four major industry sectors:
industrials, utilities, financials and transportation. The 500
companies chosen for the S&P 500 are not the 500 largest companies in
terms of market value. Rather, the companies chosen by S&P for
inclusion in the S&P 500 tend to be leaders in important industries
within the U.S. economy. The Russell 2000 is an unmanaged index of 2000
common stocks of small capitalization companies. The Russell 2000 is
composed of the 2000 smallest companies with respect to capitalization
in the Russell 3000 and represents approximately 7% of the Russell 3000
total market capitalization. The Russell 3000 is an unmanaged index of
3000 common stocks of large United States companies with market
capitalizations ranging from approximately $60 million to $80 billion.
The Russell 3000 represents approximately 98% of the United States
equity market.
In addition, the performance of the classes of a Fund may be
compared to alternative investment or savings vehicles and/or to
indexes or indicators of economic activity, e.g., inflation or interest
rates. Performance rankings and listings reported in newspapers or
national business and financial publications, such as Barron's,
Business Week, Consumer's Digest, Consumer Reports, Financial World,
Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, the New York Times, Smart Money, USA Today,
U.S. News and World Report, The Wall Street Journal and Worth may also
be cited (if a Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from various
other sources including Bloomberg Financial Systems, CDA/Wiesenberger
Investment Companies Service, Donoghue's Mutual Fund Almanac,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre &
Co., Micropal, Inc., Morningstar, Inc., Schabacker Investment
Management and Towers Data Systems.
In addition, from time to time, quotations from articles from
financial publications, such as those listed above, may be used in
advertisements, in sales literature or in reports to shareholders of
the Funds.
The Funds may also present, from time to time, historical
information depicting the value of a hypothetical account in one or
more classes of a Fund since the Fund's inception.
In presenting investment results, the Funds may also include
references to certain financial planning concepts, including (a) an
investor's need to evaluate his financial assets and obligations to
determine how much to invest; (b) his need to analyze the objectives of
various investments to determine where and when to invest; and (c) his
need to analyze his time frame for future capital needs to determine
how long to invest. The investor controls these three factors, all of
which affect the use of investments in building assets. The Adviser's
agreement to limit each Fund's operating expenses will increase
investment performance.
In advertisements, sales literature or reports to shareholders,
the Funds may include references to asset allocation strategies.
According to information supplied by B.G.B. Brinceson, B.D. Singer and
G.L. Beebower, as of May/June 1991, 91% of investment performance is
derived from asset allocation, the proper mix of cash, bonds and
stocks. In general, the remaining performance is derived as follows:
stock selection--5%, market timing--2%, and other--2%.
According to Standard & Poor's Ratings Group and Crandell, Pierce
& Company, the best and worst stock market returns (as represented by
the Standard & Poor's Index of 500 Common Stocks) annualized over the
time periods from 1950 through June 1995 using monthly observations
were as follows:
<TABLE>
<S> <C> <C>
Time Best Worst
Periods Performance Performance
One Year 61.3 -36.9
Three Years 33.3 -10.6
Five Years 29.6 - 4.2
Seven Years 23.0 - 2.7
Ten Years 19.2 0.5
Fifteen Years 17.2 4.1
Twenty Years 15.1 6.4
Thirty Years 11.2 9.1
</TABLE>
INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment
restrictions which may not be changed without approval of a majority of
the applicable Fund's outstanding voting securities. Under the 1940
Act, and as used in the Prospectuses and this SAI, a "majority of the
outstanding voting securities" requires the approval of the lesser of
(1) the holders of 67% or more of the shares of a Fund represented at a
meeting of the holders if more than 50% of the outstanding shares of
the Fund are present in person or by proxy or (2) the holders of more
than 50% of the outstanding shares of the Fund.
A Fund may not:
1. Issue senior securities, except as permitted by paragraphs 2, 5,
and 6 below. For purposes of this restriction, the issuance of
shares of beneficial interest in multiple classes or series, the
purchase or sale of options, futures contracts, forward
commitments and repurchase agreements entered into in accordance
with the Fund's investment policies or within the meaning
of paragraph 5 below, are not deemed to be senior securities.
2. Borrow money, except (i) from banks for temporary or short-
term purposes or for the clearance of transactions in amounts
not to exceed 33 1/3% of the value of the Fund's total assets
(including the amount borrowed) taken at market value, (ii)
in connection with the redemption of Fund shares or to
finance failed settlements of portfolio trades without
immediately liquidating portfolio securities or other assets;
(iii) in order to fulfill commitments or plans to purchase
additional securities pending the anticipated sale of other
portfolio securities or assets and (iv) the Fund may enter
into reverse repurchase agreements and forward roll
transactions, but only if after each such borrowing there is
asset coverage of at least 300% as defined in the 1940 Act.
For purposes of this investment restriction, investments in short
sales, futures contracts, options on futures contracts, securities
or indices and forward commitments shall not constitute borrowing.
3. Act as an underwriter with respect to the securities of other
issuers, except to the extent that in connection with the
disposition of portfolio securities, the Fund may be deemed
to be an underwriter for purposes of the 1933 Act; provided,
however, that the Fund may invest all or part of its
investable assets in an open-end investment company with
substantially the same investment objective, policies and
restrictions as the Fund.
4. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities
of issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and
(v) hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
5. Invest in commodities, except the Fund may purchase and sell
options on securities, securities indices and currency, futures
contracts on securities, securities indices and currency and
options on such futures, forward foreign currency exchange
contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with
the Fund's investment policies.
6. Make loans, except that the Fund may (1) lend portfolio securities
in accordance with the Fund's investment policies up to 33 1/3% of
<PAGE>
the Fund's total assets taken at market value, (2) enter into
repurchase agreements, and (3) purchase all or a portion of an
issue of debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
7. Purchase the securities of issuers conducting their principal
activity in the same industry if, immediately after such
purchase, the value of its investments in such industry would
exceed 25% of its total assets taken at market value at the
time of such investment (except investments in obligations of
the U.S. Government or any of its agencies, instrumentalities
or authorities and except that the Large-Cap Fund and the
Small-Cap Fund may concentrate their assets in securities of
issuers in any industry to the extent that the S&P 500 Index
or the Russell 2000 Index, respectively, are so
concentrated); provided, however, that the Fund may invest
all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
8. For each Fund, with respect to 75% of its total assets, purchase
securities of an issuer (other than the U.S. Government, its
agencies, instrumentalities or authorities or repurchase
agreements collateralized by U.S. Government securities and other
investment companies), if:
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities
of such issuer; or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held
by the Fund;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with substantially
the same investment objective, policies and restrictions as the Fund.
For purposes of the above fundamental investment restrictions
regarding senior securities, the Adviser generally classifies issuers
by industry in accordance with classifications set forth in the
Standard & Poor's Stock Guide. In the absence of such classification or
if the Adviser determines in good faith based on its own information
that the economic characteristics affecting a particular issuer make it
more appropriately considered to be engaged in a different industry,
the Adviser may classify an issuer according to its own sources.
The following restrictions are designated as non-fundamental and
may be changed by the Trustees without the approval of shareholders.
A Fund may not:
a. Pledge, mortgage or hypothecate its assets, except to secure
permitted borrowings and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the
Fund's total assets taken at market value. Collateral
arrangements with respect to margin, option and other risk
management and when-issued and forward commitment
transactions are not deemed to be pledges or other
encumbrances for purposes of this restriction.
b. Invest in the securities of an issuer for the purpose of
exercising control or management, but it may do so where it is
deemed advisable to protect or enhance the value of an existing
investment.
c. Purchase securities of any other investment company except as
permitted by the 1940 Act.
d. Purchase securities on margin, except any short-term credits
which may be necessary for the clearance of transactions and the
initial or maintenance margin in connection with options and
futures contracts and related options.
e. Invest more than 15% of its net assets in securities which are
illiquid.
f. Purchase additional securities if the Fund's borrowings exceed
5% of its net assets.
Each Fund may, notwithstanding any other fundamental or
non-fundamental investment restriction or policy, invest all of its
assets in the securities of a single open-end investment company with
substantially the same fundamental investment objectives, restrictions
and policies as the Fund.
The Funds do not have any current intention to enter into reverse
repurchase agreements, sell securities short or engage in arbitrage
transactions.
Except with respect to the 300% asset coverage required by
fundamental restriction number 2, if a percentage restriction on
investment or utilization of assets as set forth above is adhered to at
the time an investment is made, a later change in percentage resulting
from changes in the values of a Fund's assets will not be considered a
violation of the restriction.
ADVISORY AND ADMINISTRATIVE SERVICES
Investment Adviser
As stated in the Prospectuses, WPG, One New York Plaza, New York,
New York 10004, serves as investment adviser and administrator to each
Fund. See "Management of the Tomorrow Funds -- Investment Adviser",
"Management of the Tomorrow Funds ---Administrator" and "Portfolio
Brokerage" in the Prospectuses for a description of the duties of WPG
as investment adviser and administrator to the Funds.
The Funds' investment advisory agreements with the Adviser (the
"Advisory Agreements") were initially approved by the Trustees of the
Trust, including a majority of the Trustees of the Trust who are not
parties to such agreements or "interested persons" (as such term is
defined in the 1940 Act) of any party thereto (the "Independent
Trustees"), on July 19, 1995 and became effective upon each Fund's
commencement of operations. The Advisory Agreements were approved by
the sole initial shareholder of each Fund immediately prior to that
Fund's commencement of operations.
Pursuant to the Advisory Agreements, the Adviser supervises and
assists in the management of the assets of each Fund and furnishes each
Fund with research, statistical and advisory services. In managing the
assets of the Funds, the Adviser furnishes continuously an investment
program for each Fund consistent with the investment objectives and
policies of that Fund. More specifically, the Adviser determines from
time to time what securities shall be purchased for the Fund, what
securities shall be held or sold by the Fund and what portion of the
Fund's assets shall be held uninvested as cash, subject always to the
provisions of the Trust's Agreement and Declaration of Trust, By-Laws
and its registration statement under the 1940 Act and under the 1933
Act covering the Trust's shares, as filed with the SEC, and to the
investment objectives, policies and restrictions of the Fund, as each
of the same shall be from time to time in effect, and subject, further,
to such policies and instructions as the Board of Trustees of the Trust
may from time to time establish. To carry out such determinations, the
Adviser places orders for the investment and reinvestment of each
Fund's assets (see "Portfolio Brokerage").
For its investment advisory services under the Advisory
Agreements, the Adviser receives an annual fee from each Fund, payable
monthly, equal to 0.75% (on an annual basis) of the Fund's average
daily net assets, except for the Post-Retirement Fund, which pays the
Adviser on a monthly basis a fee equal on an annual basis to 0.65% of
such Fund's average daily net assets. The advisory fees are accrued
daily and will be prorated with respect to any Fund if the Adviser
shall not have acted as that Fund's investment adviser during any
entire monthly period.
The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees with respect to
the Adviser Class shares, service fees with respect to the
Institutional Class shares, any other class-specfic expenses,
litigation, indemnification and other extraordinary expenses) to 1.25%
of its average daily net assets, except for the Post-Retirement Fund,
for which the Adviser has voluntarily agreed to temporarily limit
operating expenses (with the same exclusions as listed above) 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. 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 the
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 Advisory Agreement.
<TABLE>
<S> <C>
Advisory Fees Paid
Fund December 31, 1996 (1)
---- ---------------------
Long-Term Retirement Fund $0
Medium-Term Retirement Fund $0
Short-Term Retirement Fund $0
Post-Retirement Fund (2) N/A
Core Large-Cap Stock Fund $0
Core Small-Cap Stock Fund $0
<FN>
- ------------------
(1) The Adviser voluntarily agreed not to impose any of its
advisory fee for each Fund during the fiscal year ended December 31, 1996. In
the absence of this agreement, the Funds would have paid advisory fees as
follows:
Long-Term Retirement Fund $2,533
Medium-Term Retirement Fund $7,501
Short-Term Retirement Fund $7,488
Core Large-Cap Stock Fund $5,907
Core Small-Cap Stock Fund $9,076
(2) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
Each Advisory Agreement provides that the Adviser will not be
liable for any loss sustained by the Trust or any Fund by reason of the
adoption or implementation of any investment policy or the purchase,
sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research
of the Adviser, or upon investigation and research made by any other
individual, firm or corporation if such recommendation shall have been
made and such other individual, firm or corporation shall have been
selected with due care and in good faith, except for a loss resulting
from willful misfeasance, bad faith, or gross negligence in the
performance by the Adviser of its duties or by reason of the Adviser's
reckless disregard of its obligations and duties thereunder.
Each Advisory Agreement may be modified or amended only with the
approval of the holders of a majority of the applicable Fund's
outstanding shares and by a vote of the majority of the Independent
Trustees of the Trust. Unless terminated as provided below, each
Advisory Agreement continues in full force and effect for two years
after its date of execution and for successive periods of one year
thereafter, but only as long as each such continuance after the end of
the initial two year period is approved annually by a majority vote of
the Board or by a vote of the holders of a majority of the outstanding
shares of the applicable Fund, but in either event it also must be
approved by a vote of a majority of the Independent Trustees of the
Trust, cast in person at a meeting called for the purpose of voting on
such approval. Each Advisory Agreement may be terminated without
penalty, by either party upon 60 days' written notice and automatically
will terminate in the event of its assignment.
Officers and Trustees of the Trust who are also principals in and
employees of WPG may receive indirect compensation by reason of
investment advisory and administration fees paid by the Trust to WPG,
in its capacity as the Adviser and Administrator.
As of the date of this SAI, WPG had capital in excess of $48
million. WPG consists of 45 general principals, one of whom is a member
of the NYSE, and certain associate principals. WPG has approximately
245 full-time employees in addition to its principals. WPG acts as
investment adviser or manager for approximately $13 billion of
institutional and private investment accounts.
Roger J. Weiss is a Senior Managing Principal of WPG and
Chairman of the Board, President and Trustee of the Trust.
Stephen H. Weiss, brother of Roger J. Weiss, is also a Senior
Managing Principal of WPG. Francis H. Powers is a principal of
WPG, and Executive Vice President and Treasurer of the Trust.
Jay C. Nadel is a principal of WPG and an Executive Vice President
and Secretary of the Trust. The principals of WPG who serve on
WPG's executive committee are Stephen H. Weiss (Chairman),
Roger J. Weiss, Phillip Greer, Melville Straus, Ronald M. Hoffner,
Wesley W. Lang, Jr., Mitch Kantor and Gil Cogan.
In addition to the members of the Adviser's Asset Allocation
Committee and Messrs. Cardell and Vandivort, Messrs. Stephen H. Weiss
and Roger J. Weiss may participate in each Fund's investment decisions
and all of the principals in WPG consult on a regular basis among
themselves about general market conditions, as well as specific
securities and industries.
In the management of the Trust and their other accounts, WPG and
its subsidiaries allocate investment opportunities to all accounts for
which they are appropriate subject to the availability of cash in any
particular account and the final decision of the individual or
individuals in charge of such accounts. Where market supply is
inadequate for a distribution to all such accounts, securities are
allocated on a pro rata basis. In some cases this procedure may have an
adverse effect on the price or volume of the security as far as the
Funds are concerned. However, it is the judgment of the Trustees that
the desirability of continuing the Trust's advisory arrangements with
the Adviser outweighs any disadvantages that may result from
contemporaneous transactions. See "Portfolio Brokerage."
In an attempt to avoid any potential conflict with portfolio
transactions for the Funds, the Adviser and the Trust, on behalf of
each Fund, have adopted extensive restrictions on personal securities
trading by personnel of the Adviser and its affiliates. These
restrictions include: pre-clearance of all personal securities
transactions and a prohibition of purchasing initial public offerings
of securities. These restrictions are a continuation of the basic
principle that the interests of the Funds and their shareholders come
before those of the Adviser and its principals and employees.
In the event that neither the Adviser nor any of its affiliates
acts as investment adviser to the Trust, the name of the Trust will be
changed to one that does not contain the name "Weiss, Peck & Greer" or
the initials "WPG" or otherwise suggest an affiliation with the Adviser
or contain the name "Tomorrow" or any connotation or derivative of such
name.
Administrator
WPG, in its capacity as Administrator of each Fund, performs
administrative, certain transfer agency related and shareholder
relations services and certain clerical and accounting services for
each Fund under separate administration agreements (the "Administration
Agreements"). More specifically, these obligations pursuant to the
Administration Agreements include, subject to the general supervision
of the Trustees of the Trust, (a) providing supervision of all aspects
of the Funds' non-investment operations (the parties giving due
recognition to the fact that certain of such operations are performed
by others pursuant to agreements with the Funds), (b) providing the
Funds, to the extent not provided pursuant to their custodian and
transfer agency agreements or agreements with other institutions, with
personnel to perform such executive, administrative, accounting and
clerical services as are reasonably necessary to provide effective
administration of the Funds, (c) arranging, to the extent not provided
pursuant to such agreements, for the preparation, at the Funds'
expense, of its tax returns, reports to shareholders, periodic updating
of the prospectuses and reports filed with the SEC and other regulatory
authorities, (d) providing the Funds, to the extent not provided
pursuant to such agreements, with adequate office space and certain
related office equipment and services, (e) maintaining all of the
Funds' records other than those maintained pursuant to such agreements
or the Advisory Agreements, and (f) providing to the Funds transfer
agency-related and shareholder relations services and facilities and
the services of one or more of its employees or officers, or employees
or officers of its affiliates, relating to such functions (including
salaries and benefits, office space and supplies, equipment and
teaching).
For its services under the Administration Agreements, the
Administrator is entitled to receive a fee, computed daily and payable
monthly at an annual rate equal to 0.09% of each Fund's average daily
net assets. These fees may be changed by the Board of Trustees without
shareholder approval.
<TABLE>
<S> <C>
Administration Fees Paid
Fund December 31, 1996 (1)
---- --------------------
Long-Term Retirement Fund $0
Medium-Term Retirement Fund $0
Short-Term Retirement Fund $0
Post-Retirement Fund (2) N/A
Core Large-Cap Stock Fund $0
Core Small-Cap Stock Fund $0
<FN>
- ------------------
(1) The Adviser voluntarily agreed not to impose any of its
administration fee for each Fund during the fiscal year ended December 31, 1996.
In the absence of this agreement, the Funds would have paid administration fees
as follows:
Long-Term Retirement Fund $304
Medium-Term Retirement Fund $900
Short-Term Retirement Fund $899
Core Large-Cap Stock Fund $709
Core Small-Cap Stock Fund $1,089
(2) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
Each Fund bears all expenses of its own operation (subject to the
expense limitations described above), which expenses include: (i) fees
and expenses of any investment adviser or administrator of the Fund;
(ii) organization expenses of the Trust; (iii) fees and expenses
incurred by the Fund in connection with membership in investment
company organizations; (iv) brokers' commissions; (v) payment for
portfolio pricing services to a pricing agent, if any; (vi) legal,
accounting or auditing expenses (including an allocable portion of the
cost of its employees rendering legal services to the Funds); (vii)
interest, insurance premiums, taxes or governmental fees; (viii) the
fees and expenses of the transfer agent of the Funds; (ix) the cost of
preparing stock certificates or any other expenses, including, without
limitation, clerical expenses of issue, redemption or repurchase of
shares of the Funds; (x) the expenses of and fees for registering or
qualifying shares of the Funds for sale and of maintaining the
registration of the Funds; (xi) the fees and expenses of Trustees of
the Trust who are not affiliated with the Adviser; (xii) the cost of
preparing and distributing reports and notices to existing
shareholders, the SEC and other regulatory authorities; (xiii) the fees
or disbursements of custodians of the Funds' assets, including expenses
incurred in the performance of any obligations enumerated by the
Declaration of Trust or By-Laws of the Trust insofar as they govern
agreements with any such custodian; (xiv) costs in connection with
annual or special meetings of shareholders, including proxy material
preparation, printing and mailing; (xv) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary
course of the Funds' business; and (xvi) distribution fees and service
fees applicable to Adviser Class shares and service fees applicable to
Institutional Class shares.
The Funds' Advisory and Administration Agreements each provide
that WPG, in its capacities as investment adviser and administrator,
may render similar services to others so long as the services provided
thereunder are not impaired thereby.
Principal Underwriter
WPG serves as the principal underwriter in connection with the
continuous offering of the shares of the Trust pursuant to an
Underwriting Agreement, dated as of the effective date of the Trust's
registration statement. The Trustees, including the non-interested
Trustees, approved the Underwriting Agreement on July 19, 1995, which
will continue in effect from year to year, if annually approved by the
Trustees, including the non-interested Trustees, in conjunction with
the continuance of the Plans of Distribution. See "Distribution Plans"
below. The Underwriting Agreement provides that WPG will bear certain
distribution expenses not borne by the Funds.
WPG bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its
employees and representatives and to any investment dealers and
financial firms ("Authorized Firms") for distribution related services.
WPG also pays certain expenses in connection with the distribution of
the Funds' shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of
printing and distributing prospectuses and supplements to prospective
shareholders. WPG receives compensation under a Rule 12b-1 Plan for
providing such services with respect to Adviser Class shares. Each Fund
bears the cost of registering its shares under federal, state and
foreign securities law. See "Distribution Plans" below.
DISTRIBUTION PLANS
Each Fund, with respect to its Adviser class shares, has adopted a
plan of distribution pursuant to Rule 12b-1 promulgated by the
Commission under the 1940 Act (the "Plans").
Each Plan provides that a Fund shall pay WPG, as the Fund's
distributor for its Adviser Class shares, a distribution fee
equal on an annual basis to 0.25% of the Fund's average daily net
assets attributable to Adviser Class shares and will pay WPG a service
fee equal on an annual basis to 0.25% of the Fund's average daily net
assets attributable to Adviser Class shares (which WPG will in turn pay
to Authorized Firms which enter into a sales or services agreement with
WPG at a rate of up to 0.25% of the Fund's average daily net assets
attributable to Adviser Class shares owned by investors for whom that
Authorized Firm is the holder or dealer of record). This service fee is
intended to be consideration for personal services and/or account
maintenance services rendered by the Authorized Firm with respect to
Adviser Class shares. Personal and account maintenance services for
which WPG or any of its affiliates, banks or dealers may be compensated
pursuant to the Plans include, without limitation: payments made to or
on account of WPG or any of its affiliates, banks, other brokers and
dealers who are members of the NASD, or their officers, sales
representatives and employees, who respond to inquiries of, and furnish
assistance to, shareholders regarding their ownership of Adviser Class
shares or their accounts or who provide similar services not otherwise
provided by or on behalf of the Funds. Authorized Firms may from time
to time be required to meet certain other criteria in order to receive
service fees. WPG or its affiliates are entitled to retain all service
fees payable under the Plans for which there is no Authorized Firm of
record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance
services performed by WPG or its affiliates for shareholder accounts.
The purpose of distribution payments to WPG under the Plans is to
compensate WPG for its distribution services related to the Adviser
Class shares of the Funds. WPG pays commissions to Authorized Firms as
well as expenses of printing prospectuses and reports used for sales
purposes, expenses with respect to the preparation and printing of
sales literature and other distribution related expenses, including,
without limitation, the cost necessary to provide distribution-related
services or personnel, travel, office expenses and equipment. (See
"Distribution Plans" in the Prospectus.)
In accordance with the terms of the Plans, WPG provides to the
Trust for review by the Trustees a quarterly written report of the
amounts expended under the Plans and the purpose for which such
expenditures were made. In the Trustees' quarterly review of the Plans,
they will consider the continued appropriateness and the level of
compensation that the Plans provide.
No interested person of the Trust, nor any Trustee of the Trust
who is not an independent Trustee, has any direct or indirect financial
interest in the operation of the Plans except to the extent that WPG
and certain of its employees may be deemed to have such an interest as
a result of receiving a portion of the amounts expended under the Plans
by the Funds and except to the extent the principals of WPG may be
deemed to receive a benefit under the Advisory and Administration
Agreements under the Plans.
The Plans were adopted with respect to the Adviser Class shares of
each Fund by a majority vote of the Board of Trustees, including all of
the Independent Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. In approving the Plans, the Trustees
identified and considered a number of potential benefits which the
Plans may provide. The number of potential benefits which the Plans may
provide. The Trustees believe that there is a reasonable likelihood
that the Plans will benefit the Funds and their respective Adviser
Class shareholders. Under their terms, the Plans remain in effect from
year to year provided such continuance is approved annually by vote of
the Trustees in the manner described above. The Plans may not be
amended to increase materially the annual percentage limitation of
average net assets which may be spent for the services described
therein without approval of the shareholders of the Adviser Class
shares, and material amendments of the Plans must also be approved by
the Trustees in the manner described above. A Plan may be terminated at
any time, without payment of any penalty, by vote of the majority of
the Independent Trustees or by a vote of a majority of the outstanding
voting securities of the Adviser Class of the applicable Fund. A Plan
will automatically terminate in the event of its assignment (as defined
in the 1940 Act).
During the fiscal year ended December 31, 1996, the Funds paid to
Plan Fiduciaries the following amounts under the Plans:
<TABLE>
<S> <C>
Distribution Fees Paid
Fund December 31, 1996
---- ----------------------
Long-Term Retirement Fund $ 1,320
Medium-Term Retirement Fund $ 4,325
Short-Term Retirement Fund $ 4,574
Post-Retirement Fund(1) N/A
Core Large-Cap Stock Fund $ 0
Core Small-Cap Stock Fund $ 0
<FN>
- ------------------
(1) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
Each Plan will remain in effect from year to year provided that the
continuance of the Plan is approved annual by a majority vote of the Trustees,
including a majority of the Independent Trustees who have no direct or indirect
financial interest in the Plans. All material amendments of the Plans must also
be approved by the Trustees in the manner described above. The Plans may be
terminated at any time as to any Fund without payment of any penalty by a vote
of a majority of the Independent interested Trustees or by vote of a majority of
the outstanding voting securities of the affected Fund. The Trustees have
determined that in their judgement there is a reasonable likelihood that the
Plans will benefit the Funds and the Adviser Class shareholders.
TRUSTEES AND OFFICERS
The Trustees have responsibility for management of the business of
the Trust. The executive officers of the Trust are responsible for its
day to day operation. Set forth below is certain information concerning
the Trustees and officers.
Name, Address,
Age and Title Principal Occupations During Past Five Years
Roger J. Weiss* Senior Managing Principal, Weiss, Peck &
One New York Plaza Greer, L.L.C.
New York, NY 10004 Chairman of the Board of all WPG Funds
Age: 56 President, Weiss, Peck & Greer International
Fund
Chairman of the Executive Vice President and Director,
Board, President WPG Advisers, Inc.
and Trustee Former Executive Vice President and Director,
Tudor Management Company
<PAGE>
Raymond R.
Herrmann, Jr.** Chairman of the Board, Sunbelt Beverage
654 Madison Avenue Corporation (distributor of wines and
Suite 1400 liquors)
New York, NY 10017 Former Vice Chairman and Director, McKesson
Age: 75 Corporation (U.S. distributor of
drugs and health care products, wine and
Trustee spirits)
Life Member, Board of Overseers of Cornell
Medical College
Member of Board and Executive Committee, Sky
Ranch for Boys
Member, Evaluation Advisory Board,
Biotechnology Investments, Ltd.
Harvey E. Sampson** Chief Executive Officer and Chairman of Harvey
600 Secaucus Road Group, Inc. (retail sales of consumer
Secaucus, NJ 07094 electronics)
Age: 56 Trustee, Cornell University
Joint Board of The New York Hospital -
Trustee Cornell Medical Center
Trustee, North Shore University Hospital
Lawrence J. Israel** Private Investor
200 Broadway Director and Trustee of the Touro Infirmary
Suite 249 Member of the Intercollegiate Athletics
New Orleans, LA 70118 Committee of the Administrators of the
Age: 60 Tulane Educational Fund
Trustee
Francis H. Powers* Principal, Weiss, Peck & Greer, L.L.C.
One New York Plaza Vice President and Secretary, Weiss, Peck &
New York, NY 10004 Greer Advisers, Inc.
Age: 55 Executive Vice President and Treasurer of all
WPG Funds
Executive Former Vice President and Secretary, Tudor
Vice President Management Company
and Treasurer
<PAGE>
Jay C. Nadel* Principal, Weiss, Peck & Greer, L.L.C.
One New York Plaza Director of Operating Departments
New York, NY 10004 Executive Vice President and Secretary of all
Age: 37 WPG Funds
Executive
Vice President
and Secretary
Daniel S. Vandivort* Principal, Weiss, Peck & Greer,
One New York Plaza L.L.C. since 1994
30th Floor Previously Managing Director and
New York, NY 10004 Head of U.S. Fixed Income,
Age: 41 Senior Portfolio Manager and
Director, Global Product
Vice President Development and Marketing with
CS First Boston Investment
Management, 1989-1994
Arlen S. Oransky* Vice President, Mutual Fund
One New York Plaza Operations, Weiss, Peck & Greer, L.L.C.
New York, NY 10004 since December, 1991
Age: 39 Assistant Vice President of all
WPG Funds since April, 1991
Vice President Manager of Investment Services
Weiss, Peck & Greer, L.L.C. from July,
1990 to December, 1991
<PAGE>
Joseph J. Reardon* Senior Vice President, Mutual Fund
One New York Plaza Operations, Weiss, Peck & Greer, L.L.C.
New York, NY 10004 since December, 1993
Age: 35 Assistant Manager, Mutual Fund
Operations, Weiss, Peck & Greer, L.L.C.
Vice President from February, 1990 to December, 1993
Assistant Vice President of all
WPG Funds since April, 1991
Teresa Hogan Manager State Regulation,
First Data Investor First Data Investor
Services Group Services Group, Inc.
53 State Street Since June, 1994
Boston, MA 02109 Senior Legal Assistant,
Age: 33 Palmer & Dodge
from 1992-1994
Assistant Secretary Blue Sky Paralegal,
Robinson & Cole from
1984-1992
-----------------------
* "Interested Person" within the meaning of the 1940 Act.
** Each of the non-interested Trustees is a trustee of each of the
other WPG Funds and a Member of the Trust's Audit Committee and
Special Nominating Committee.
Compensation of Trustees and Officers
The Funds pay no compensation to the Trust's Trustees affiliated
with the Adviser or its officers. None of the Trust's Trustees or
officers have engaged in any financial transactions with any Fund or
the Adviser.
<PAGE>
The following table sets forth the amount of compensation paid to
the Trust's Trustees for the fiscal year ended December, 31, 1996. In
addition, each Trustee is reimbursed for out-of-pocket expenses
associated with attending Trustee meetings.
<TABLE>
<CAPTION>
Aggregate Compensation Paid to Trustees
for the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Pension or
Retirement Total
Benefits Compensation
Accrued as from the
Long-Term Medium-Term Short-Term Core Core Part of Funds and
Retirement Retirement Retirement Large-Cap Small-Cap Funds' Other Funds
Name of Trustee Fund Fund Fund Stock Fund Stock Fund Expenses in Complex*
--------------- ---- ---- ---- ---------- ---------- -------- ----------
Roger J. Weiss $0 $0 $0 $0 $0 $0 $0
Raymond R. Herrmann, Jr. 2,000 2,000 2,000 2,000 2,000 0 34,125
Lawrence J. Israel 2,000 2,000 2,000 2,000 2,000 2,000 34,125
Harvey E. Sampson 2,000 2,000 2,000 2,000 2,000 2,000 34,125
<FN>
- ---------------------
*As of December 31, 1996, there were 15 mutual funds in the Weiss, Peck & Greer
group of funds (including the Funds) that publicly offer their shares.
</FN>
</TABLE>
<PAGE>
Certain Shareholders
As of March 31, 1997, the Trustees and officers of the Trust as a
group beneficially owned (i.e., had voting or investing power) less
than 1% of the outstanding shares of each Fund.
As of March 31, 1997, no person within the knowledge of the
management of the Trust directly or indirectly owned, controlled or
held with power to vote 5% of more of the outstanding voting securities
(i.e., shares) of any Fund, except as set forth below:
<TABLE>
<S> <C>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
TOMORROW LONG-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co 64.55%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 19.23%
FBO Chicago Transit Authority
8515 B Orchard Road, Attn 2T2
Englewood, CO 80111
Weiss Peck & Greer TTEE 5.09%
for the Employees RIP Plan
One New York Plaza, 30th Floor
New York, NY 10004-1950
TOMORROW LONG-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First Union National Bank NC 96.60%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1511
Charlotte, NC 28280-1151
TOMORROW MEDIUM-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co. 44.52%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 25.52%
FBO Chicago Transit Authority
8515 East Orchard Road, Attn: 2T2
Englewood, CO 80111
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
American International Life Assurance 10.64%
Co. of New York Separate Account A
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Nationwide GPVA 6.42%
c/o Nationwide Life Insurance Co.
Attn: IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
TOMORROW MEDIUM-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First Union National Bank NC 97.37%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1151
Charlotte, NC 20288-1151
TOMORROW SHORT-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co. 44.30%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
American International Life Assurance 34.02%
Co. of New York Separate Account A
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 12.67%
FBO Chicago Transit Authority
8515 East Orchard Road, Attn: 2T2
Englewood, CO 80111
TOMORROW SHORT-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First National Bank NC 96.99%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1151
Charlotte, NC 28288-1151
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
CORE LARGE-CAP STOCK FUND
INSTITUTIONAL CLASS SHARES
Providian Life and Health Insurance 64.19%
Company Separate Account
Attn: Karen Fleming
P.O. Box 32830
Louisville, KY 40232
Weiss Peck and Greer LLC 35.71%
One New York Plaza
New York City, NY 10004
CORE SMALL-CAP STOCK FUND
INSTITUTIONAL CLASS SHARES
Weiss Peck and Greer LLC 59.65%
One New York Plaza
New York City, NY 10004
Providian Life and Health 32.00%
Insurance Company Separate Account
Attn: Karen Fleming
P.O. Box 32830
Louisville, KY 40232
</TABLE>
HOW TO PURCHASE SHARES
(See "How to Buy Shares" in the Prospectuses.)
The Trust continuously offers shares of each Fund. The Trust may
terminate the continuous offering of its shares with respect to any
Fund at any time at the discretion of the Trustees.
In the case of telephone subscriptions, if full payment for
telephone subscriptions is not received by the Trust within the
customary time period for settlement then in effect after the
acceptance of the order by the Trust, the order is subject to
cancellation and the purchaser will be liable to the affected Fund for
any loss suffered as a result of such cancellation. To recoup such loss
each Fund reserves the right to redeem shares owned by any shareholder
whose purchase order is cancelled for non-payment, and such purchaser
may be prohibited from placing further telephone orders.
If a subscription or redemption of Fund shares is arranged and
settlement made through a member of the NASD, then that member may, in
its discretion, charge a fee for this service.
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 securities acceptable to WPG. If the
securities are not suitable for a Fund's portfolio, the securities will
be sold by the Custodian as agent for the account of their owner on the
day of their receipt by the Custodian or as soon thereafter as
possible. The number of shares of a class of a Fund to be issued in
exchange for securities will be the aggregate proceeds from the sale of
such securities, divided by the net asset value per share of the
applicable class of the applicable Fund on the day such proceeds are
received. WPG will use reasonable efforts to obtain the current market
price for such securities but does not guarantee the best available
price. WPG will absorb any transaction costs, such as commissions, on
the sale of securities.
<PAGE>
Securities determined by WPG to be acceptable should be
transferred by book entry or physically delivered, in proper form for
transfer. Please contact WPG for transfer instructions.
Investors who are contemplating an exchange of securities for
shares of a Fund must contact WPG to determine whether the securities
are acceptable before forwarding such securities to the Custodian. WPG
reserves the right to reject any securities. Exchanging securities for
shares of the Funds may create a taxable gain or loss. Please consult
your tax adviser with respect to the particular Federal, state and
local tax consequences of exchanging securities for Fund shares.
Except as described above, the Trust will not generally issue
shares for consideration other than cash. The Trust may, however, issue
shares for consideration other than cash pursuant to a bona fide
purchase of assets, merger or other reorganization.
REDEMPTION OF SHARES
(See "How to Sell Shares" and "How to Exchange Shares" in the
Prospectuses.)
Systematic Withdrawal Plan
A Systematic Withdrawal Plan is available only for the
Post-Retirement Fund, without expense to any shareholder with a minimum
investment of $10,000 in value in such Fund's shares (at the then
current offering price). The Transfer Agent may be directed, as agent
of the purchaser, to redeem without a redemption charge shares of such
Funds held in his account as may be required so that the shareholder or
any person designated by him will receive a monthly or quarterly check
in a stated amount not to be less than $100 although such amount is not
necessarily a recommended amount. Dividends and capital gains
distributions will be reinvested in additional shares of the same class
of such Fund at net asset value as of the reinvestment date.
Redemption of shares of the Post-Retirement Fund under the
Systematic Withdrawal Plan may reduce or even liquidate the account,
particularly in a declining market. Such payments paid to a shareholder
cannot be considered a yield or income on the investment. Payments to a
shareholder in excess of distributions of investment income will
constitute a return of his invested principal, and the liquidation of
Fund shares pursuant to this Plan is a taxable transaction which may
result in gain or loss to the shareholder depending upon the cost of
the shares when acquired.
Withdrawals at the same time as regular purchases of Adviser Class
shares of the Post-Retirement Fund ordinarily will not be permitted
since purchases are intended to accumulate capital and the Systematic
Withdrawal Plan is designed for the regular withdrawal of monies,
except that a shareholder may make lump sum investments, of $5,000 or
more. The Systematic Withdrawal Plan may be terminated by the
shareholder, without penalty, at any time and the Trust may terminate
the Plan at will. There are no contractual rights on the part of either
party with respect to the Plan.
NET ASSET VALUE
(See "How Each Tomorrow Fund's Share Price is Determined" in the
Prospectuses)
Under the 1940 Act, the Trustees are responsible for determining
in good faith the fair value of securities of the Funds. The net asset
value per share of each class of each Fund is determined once daily,
Monday through Friday as of the close of regular trading on the NYSE
(normally 4:00 P.M. New York City time) on each Business Day (as
defined in the Prospectuses) in which there is a sufficient degree of
trading in that Fund's portfolio securities that the current net asset
value of that Fund's shares might be materially affected. A Fund may
not determine its net asset value on any day during which its shares
were not tendered for redemption and the Trust did not receive any
order to purchase or sell shares of that Fund. In accordance with
procedures approved by the Trustees, the net asset value per share of
each class of each Fund is calculated by determining the value of the
net assets attributable to each class of that Fund and dividing by the
number of outstanding shares of that class. The NYSE is not open for
trading on weekends or on New Year's Day (January 1), Presidents' Day
(the third Monday in February), Good Friday, Memorial Day (the last
Monday in May), Independence Day (July 4), Labor Day (the first Monday
in September), Thanksgiving Day (the fourth Thursday in November) and
Christmas Day (December 25).
The public offering price per share of a class of a Fund is the
net asset value per share of that class of that Fund next determined
after receipt of an order. Orders for shares which have been received
by the Trust or the Transfer Agent prior to the close of regular
trading of the NYSE are confirmed at the offering price effective at
the close of regular trading of the NYSE on that day, while orders
received subsequent to the close of regular trading of the NYSE will be
confirmed at the offering price effective at the close of regular
trading of the NYSE on the next day on which the net asset value is
calculated.
Bonds and other fixed-income securities (other than short-term
obligations but including listed issues) in a Fund's portfolio are
valued on the basis of valuations furnished by a pricing service which
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or
exchange or over-the-counter prices, when such valuations are believed
to reflect the fair value of such securities.
In determining the net asset value, unlisted securities for which
market quotations are available are valued at the mean between the most
recent bid and asked prices. Securities, options on securities, futures
contracts and options thereon which are listed or admitted to trading
on a national exchange, are valued at their last sale on such exchange
prior to the time of determining net asset value; or if no sales are
reported on such exchange on that day, at the mean between the most
recent bid and asked price. Securities listed on more than one exchange
shall be valued on the exchange the security is most extensively
traded. Other securities and assets for which market quotations are not
readily available are valued at their fair value as determined in good
faith by the Valuation Committee as authorized by the Trustees.
For purposes of determining the net asset value of the Funds'
shares, options transactions will be treated as follows: When a Fund
sells an option, an amount equal to the premium received by that Fund
will be included in that Fund's accounts as an asset and a deferred
liability will be created in the amount of the option. The amount of
the liability will be marked to the market to reflect the current
market value of the option. If the option expires or if that Fund
enters into a closing purchase transaction, that Fund will realize a
gain (or a loss if the cost of the closing purchase exceeds the premium
received), and the related liability will be extinguished. If a call
option contract sold by a Fund is exercised, that Fund will realize the
gain or loss from the sale of the underlying security and the sale
proceeds will be increased by the premium originally received.
INVESTOR SERVICES
(See "How to Buy Shares," "How to Sell Shares" and "How to
Exchange Shares" in the Prospectuses.)
<PAGE>
The Trust offers a variety of services, described in the sections
that follow, designed to meet the needs of its shareholders. The costs
of providing such services are borne by the Funds.
Automatic Investment Plan
The Automatic Investment Plan enables shareholders to make regular
(monthly or quarterly) investments in shares of any of the Funds
through an automatic withdrawal from a designated bank account by
simply completing the Automatic Investment Plan application. Please
call 1-800-223-3332 or write to WPG to receive this form. By completing
the form, the shareholder authorizes the Trust's Custodian to
periodically draw money from a designated bank or federal credit union
account, and to invest such amounts in account(s) of the Fund(s)
specified. The transaction will be automatically processed to the
mutual fund account on or about the first business day of the month or
quarter designated.
Please be aware that: (1) the Automatic Investment Plan privilege
may be revoked without prior notice if any check is not paid upon
presentation; (2) the Custodian is under no obligation to notify the
shareholder as to the non-payment of any check, and (3) this service
may be modified or discontinued by the Custodian upon thirty (30) days'
written notice prior to any payment date, or may be discontinued by you
by written notice to TSSG, at least ten (10) days before the next
payment date.
Prototype Retirement Plan for Employers and Self-Employed
Individuals
Prototype retirement plans (the "Retirement Plan") are available
for those entities or self-employed individuals who wish to purchase
shares of a Fund in connection with a money purchase plan or a profit
sharing plan maintained by their employer. The Retirement Plans were
designed to conform to the requirements of the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The
Retirement Plans received opinion letters from the Internal Revenue
Service (the "IRS") on March 29, 1990 that the form of the Retirement
Plans is acceptable under Section 401 of the Code.
Annual tax-deductible contributions to the Retirement Plan may be
made up to the lesser of $30,000 or 25% of the participant's earned
income (disregarding any compensation in excess of $160,000 (as
adjusted by the IRS for inflation). Under the terms of the Retirement
Plan, contributions by or on behalf of participants may be invested in
a Fund with the designated custodian under the Retirement Plan (the
"Retirement Plan's Custodian"). Investment in other mutual funds
advised by the Adviser or one of its affiliates may also be available.
Employers adopting the Retirement Plan may elect either that a
participant shall specify the investments to be made with contributions
by or on behalf of such participant or that the employer shall specify
the investments to be made with all such contributions. Since no Fund
is intended as a complete investment program it is important, in
connection with such election, that employers give careful
consideration to the fiduciary obligation requirements of ERISA.
All dividends and distributions received by the Retirement Plan's
Custodian on the Funds' shares held by the Plan's Custodian will be
reinvested in the applicable Fund's shares of the same class at net
asset value. Distributions of benefits to participants, when made, will
be paid first in cash, to the extent that any amount credited to a
participant's account is not invested in the applicable Fund's shares
and then in full Fund shares of the applicable class (and cash in lieu
of fractional shares).
Boston Safe Deposit and Trust Company serves as the Retirement
Plan's Custodian under a Custodial Agreement. Custodian fees which are
payable by the employer to the Retirement Plan's Custodian under such
Custodial Agreement are a $10 application fee for processing the
Retirement Plan application, an annual maintenance fee of $15 per
participant, and a distribution fee of $10 for each distribution from a
participant's account. Such fees may be altered from time to time by
agreement of the employer and the Retirement Plan's Custodian. For
further details see the terms of the Retirement Plan which are
available from the Trust.
Distributions must be made pursuant to the terms of the Retirement
Plan and generally may not commence before retirement, disability,
death, termination of employment, or termination of the Retirement Plan
and must commence no later than April 1 of the year following the year
in which the participant attains age 70 (the "required beginning
date"). Distributions are taxed as ordinary income when received,
except the portion, if any, considered a return of a participant's
nondeductible contributions. Certain distributions before age 59 may be
subject to a 10% nondeductible penalty on the taxable portion of the
distribution. Failure to make minimum required distributions by the
required beginning date may be subject to a 50% excise tax.
It should be noted that the Retirement Plan is a retirement
investment program involving commitments covering future years. In
deciding whether to utilize the Retirement Plan, it is important that
the employer consider his or her needs and those of the Retirement Plan
participants and whether the investment objectives of the Funds are
likely to fulfill such needs. Termination or curtailment of the
Retirement Plan for other than business reasons within a few years
after its adoption may result in adverse tax consequences.
<PAGE>
Employers who contemplate adoption of the Retirement Plan should
consult an attorney or financial adviser regarding all aspects of the
Retirement Plan as a retirement plan vehicle (including fiduciary
obligations under ERISA).
Individual Retirement Account
Persons with earned income, whether or not they are active
participants in a pension, profit-sharing or stock bonus plan described
in Code 401(a), Federal, state or local pension plan, an annuity plan
described in Code 403(a), an annuity contract or custodial account
described in Code 403(b), a simplified employee pension plan described
in Code 408(k), or a trust described in Code 501(c)(18) ("active
participant"), generally are eligible to establish an Individual
Retirement Account ("IRA"). An individual may make a deductible
contribution to an IRA only if (i) neither the individual nor his or
her spouse (unless living apart for the entire year and filing separate
returns) is an active participant, or (ii) the individual (and his or
her spouse, if applicable) has an adjusted gross income below a certain
level ($40,000 for married individuals filing a joint return, with a
phase-out for adjusted gross income between $40,000 and $50,000;
$25,000 for a single individual, with a phase-out for adjusted gross
income between $25,000 and $35,0000). However, an individual who is not
permitted to make a deductible contribution to an IRA for a taxable
year may nonetheless make annual nondeductible contributions to an IRA
up to the lesser of 100% of the individual's earned income or $2,000 to
an IRA (up to $4,000 to IRAs for an individual and his or her spouse)
for that year. There are special rules for determining how withdrawals
are to be taxed if an IRA contains both deductible and nondeductible
amounts. In general, a proportionate amount of each withdrawal will be
deemed to be made from nondeductible contributions; amounts treated as
a return of nondeductible contributions will not be taxable. Also,
annual contributions may be made to a spousal IRA even if the spouse
has earnings in a given year if the spouse elects to be treated as
having no earnings (for IRA contribution purposes) for the year.
Withdrawals from the IRA (other than the portion treated as a
return of nondeductible contributions) are taxed as ordinary income
when received, may be made without penalty after the participant
reaches age 59 and must commence no later than the required beginning
date (see discussion of "Prototype Retirement Plans" above).
Withdrawals before age 59 may involve the payment of a 10%
nondeductible penalty on the taxable portion of the amount withdrawn.
The time and rate of withdrawal must conform with Code requirements in
order to avoid adverse tax consequences. All dividends and
distributions on shares of a Fund held in IRA accounts are reinvested
in full and fractional shares of the same class of the same Fund and
are not subject to federal income tax until withdrawn from the IRA.
Investors should consult their tax advisers for further tax
information, including information with respect to the imposition of
state and local income taxes and the effects of tax law changes.
The Trust has arranged for Boston Safe Deposit and Trust Company
to furnish the required custodial services for IRAs using any of the
Fund's shares as the underlying investment. The Bank will charge an
acceptance fee of $10 for each new IRA and an annual maintenance fee of
$15 for each year that an IRA is in existence. There is a $10 fee for
processing a premature distribution. These fees will be deducted from
the IRA account and may be changed by the Plan's Custodian upon 30
days' prior notice.
To establish an IRA for investment in a Fund, an investor must
complete an application and a custodial agreement on IRS Form 5305-A
(which has been supplemented to provide certain additional custodial
provisions) and must make an initial cash contribution to the IRA,
subject to the limitation on contributions described above. Pursuant to
IRS regulations, an investor may for seven days following establishment
of an IRA revoke the IRA. Detailed information on IRAs, together with
the necessary form of application and custodial agreement, is available
from the Trust and should be studied carefully by persons interested in
utilizing a Fund for IRA investments. Such persons should also consult
their own advisers regarding all aspects of the Funds as an appropriate
IRA investment vehicle.
Simplified Employee Pension Plans (SEP-IRA)
A simplified employee pension (SEP) allows an employer to make
contributions toward his or her own (if a self-employed individual) and
his or her employees' retirement and, for certain SEPs established
prior to 1997, may permit the employees to make elective deferrals by
salary reduction. A SEP requires an Individual Retirement Account (a
SEP-IRA) to be established for each "qualifying employee," although the
employer may include additional employees if it wishes. A qualifying
employee is one who: (a) is at least age 21, (b) has worked for the
employer during at least 3 of 5 years immediately preceding the tax
year, and (c) has received at least $400 (as indexed for inflation) in
compensation in the tax year.
An employer is not required to make any contribution to the
SEP-IRA. However, if the employer does make a contribution, the
contribution must be based on a written allocation formula and must not
discriminate in favor of highly compensated employees, as defined in
Code Section 414(q). The employer may make annual contributions on
behalf of each qualifying employee, provided that the contributions,
when combined with the employee's elective deferrals, do not exceed 15%
of the employee's compensation or $30,000, whichever is less.
<PAGE>
A SEP-IRA that is part of a SEP established before 1997 may
include a salary reduction arrangement under which the employee can
choose to have the employer make contributions ("elective deferrals")
to his or her SEP-IRA out of his or her salary. However, employees may
make elective deferrals only if (i) at least 50% of the employer's
eligible employees choose elective deferrals; (ii) the employer did not
have more than 25 eligible employees at any time during the preceding
year; and (iii) the amount deferred each year by each eligible highly
compensated employee as a percentage of pay is no more than 125% of the
average deferral percentage of all other eligible employees. An
elective deferral arrangement is not available for a SEP maintained by
a state or local government, or any of their political subdivisions,
agencies, or instrumentalities, or to exempt organizations.
In general, the total income which an employee can defer under a
salary reduction arrangement included in a SEP and certain other
elective deferral arrangements is limited to $9,240 (indexed annually
for inflation). This dollar limit applies only to the elective
deferrals, not to any contributions from employer funds. The Code may
require that contributions be further limited to prevent discrimination
in favor of highly compensated employees. An employee may also make
regular IRA contributions to his or her SEP-IRA (see discussion of
IRAs, above).
Under the terms of the SEP-IRA, contributions by or on behalf of
participants may be invested in shares of the Funds (or shares of other
funds designated by the Adviser as eligible investments), as specified
by the participant. All dividends and distributions on shares held in
SEP-IRAs are reinvested in full and fractional shares of the same class
of the same Fund. Since no Fund is intended as a complete investment
program it is important, in connection with the adoption of a SEP-IRA,
that employers give careful consideration to the fiduciary obligation
requirements of ERISA, particularly those pertaining to diversification
of investments.
Withdrawals before age 59 may involve the payment of a 10%
nondeductible penalty on the amount withdrawn. Withdrawals must
commence no later than the required beginning date (see discussions of
"Prototype Retirement Plans" above). The time and rate of withdrawal
must conform with Code requirements in order to avoid adverse tax
consequences. Contributions to a SEP-IRA by an employer are excluded
from the employee's income rather than deducted from it. Elective
deferrals made to an employee's SEP-IRA generally are excluded from his
income in the year of deferral, but are included in wages for social
security (FICA) and unemployment (FUTA) tax purposes. However, if the
employee makes regular IRA contributions to his SEP-IRA (other than
elective deferrals), he can deduct them the same way as contributions
to a regular IRA, up to the amount of his deduction limit. Investors
should consult their tax advisers for further tax information including
information with respect to the imposition of state and local income
taxes and the effects of tax law changes.
The Fund has arranged for Boston Safe Deposit and Trust Company to
furnish the required custodial services for SEP-IRAs using the Funds as
the underlying investment. Boston Safe Deposit and Trust Company will
charge an acceptance fee of $10 for each new SEP-IRA and an annual
maintenance fee of $15 for each year that a SEP-IRA is in existence.
There is a $10 fee for each premature distribution. These fees will be
deducted from the SEP-IRA account and may be changed by the Custodian
upon 30 days' prior written notice.
To establish a SEP-IRA, an employer and employee should complete
the WPG IRA application materials, as well as IRS Form 5305-SEP.
Pursuant to IRS regulations, an investor may for seven days following
establishment of a SEP-IRA revoke the SEP-IRA. Detailed information on
SEP-IRAs, together with the necessary form of application and custodial
agreement, is available from the Fund and should be studied carefully
by persons interested in utilizing the Fund for SEP-IRA investments.
Such persons should also consult their own advisers regarding all
aspects of the Fund as an appropriate SEP-IRA investment vehicle.
Effective for plan years after 1996, an employer may establish a
SIMPLE retirement plan under new Section 408(p) of the Code. Under such
plan, the employer may make contributions to individual retirement
accounts established for each employee. Such individual retirement
accounts must, by their terms, be limited to contributions under a
SIMPLE retirement program. THE WEISS, PECK & GREER IRA IS NOT SO
LIMITED AND MAY NOT BE USED TO FUND A SIMPLE RETIREMENT PROGRAM.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each Fund within the Trust is separate for investment and
accounting purposes and is treated as a separate entity for federal
income tax purposes.
A regulated investment company qualifying under Subchapter M of
the Code is not subject to federal income tax on distributed amounts to
the extent that it distributes annually its taxable and, if any,
tax-exempt net investment income and net realized capital gains in
accordance with the timing requirements of the Code. Each Fund intends
to elect and to qualify to be treated as a regulated investment company
and intends to continue to so qualify for each taxable year.
Qualification of a Fund for treatment as a regulated investment
company under the Code requires, among other things, that (a) at least
90% of a Fund's annual gross income, without offset for losses from the
sale or other disposition of stock or securities or other transactions,
be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of stock or
securities or foreign currencies, or other income (including but not
limited to gains from options, futures, or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (b) the Fund derive less than 30% of its annual gross
income from gains (without deduction for losses) from the sale or other
disposition of any of the following held (for tax purposes) for less
than three months: (i) stock or securities; (ii) options, futures or
forward contracts (not on foreign currencies) or (iii) foreign
currencies (or options, futures or forward contracts on foreign
currencies) not directly related to the Fund's principal business of
investing in stock or securities and related options or futures; (c)
the Fund distribute at least annually to its shareholders as dividends
at least 90% of its taxable and tax-exempt net investment income, the
excess of net short-term capital gain over net long-term capital loss
earned in each year and any other net income (except for the excess, if
any, of net long-term capital gain over net short-term capital loss,
which need not be distributed in order for the Fund to qualify as a
regulated investment company but is taxed to the Fund if it is not
distributed); and (d) the Fund diversify its assets so that, at the
close of each quarter of its taxable year, (i) at least 50% of the fair
market value of its total (gross) assets is comprised of cash, cash
items, U.S. Government securities, securities of other regulated
investment companies and other securities limited in respect of any one
issuer to no more than 5% of the fair market value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer and
(ii) no more than 25% of the fair market value of its total assets is
invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment
companies) or of two or more issuers controlled by the Fund and engaged
in the same, similar, or related trades or businesses.
It is expected that separate accounts of insurance companies will
be purchasing Institutional Class shares of the Funds. As such, each
Fund must, and intends to, comply with the diversification requirements
imposed by Section 817(h) of the Code and the regulations thereunder.
These requirements, which are in addition to the diversification
requirements imposed on a Fund by the 1940 Act and Subchapter M of the
Code, place certain limitations on the assets of each separate account
and, because Section 817(h) and those regulations treat the assets of
the Fund as assets of the related separate account, the assets of a
Fund, that may be invested in securities of a single issuer.
Specifically, the regulations provide that, except as permitted by the
"safe harbor" described below, as of the end of each calendar quarter
or within 30 days thereafter no more than 55% of the total assets of a
Fund may be represented by any one investment, no more than 70% by any
two investments, no more than 80% by any three investments and no more
than 90% by any four investments. For this purpose, all securities of
the same issuer are considered a single investment, and each U.S.
Government agency and instrumentality is considered a separate issuer.
Section 817(h) provides, as a safe harbor, that a separate account will
be treated as being adequately diversified if the diversification
requirements under Subchapter M of the Code are satisfied and no more
than 55% of the value of the account's total assets are cash and cash
items (including receivables), U.S. Government securities and
securities of other regulated investment companies. Failure by a Fund
to both qualify as a regulated investment company and satisfy the
Section 817(h) requirements would generally result in treatment of the
variable contract holders other than as described in the Institutional
Class shares Prospectus, including inclusion in ordinary income of
income accrued under the contracts for the current and all prior
taxable years. Any such failure may also result in adverse tax
consequences for the insurance company issuing the contracts.
Unless its only shareholders are life insurance company segregated
asset accounts held in connection with variable contracts, trusts that
are described in section 401(a) of the Code and exempt from tax under
section 501(a) of the Code, and investors of "seed money" not in excess
of $250,000, each Fund is subject to a 4% nondeductible federal excise
tax on amounts required to be but not distributed under a prescribed
formula. The formula requires that a Fund distribute (or be deemed to
have distributed) to shareholders during a calendar year at least 98%
of the Fund's ordinary income (not including tax-exempt interest) for
the calendar year, at least 98% of the excess of its capital gains over
the capital losses realized during the one-year period ending October
31 during such year, as well as any income or gain (as so computed)
from the prior calendar year that was not distributed for such year and
on which the Fund paid no federal income tax. Each Fund has
distribution policies that should generally enable it to avoid
liability for this tax.
Net investment income for each Fund is the Fund's investment
income less its expenses. Dividends from taxable net investment income
and the excess, if any, of net short-term capital gain over net
long-term capital loss of a Fund will be treated under the Code as
ordinary income, and dividends from net long-term capital gain in
excess of net short-term capital loss ("capital gain dividends") will
be treated under the Code as long-term capital gain, for federal income
tax purposes. These dividends are paid after taking into account, and
reducing the distribution to the extent of, any available capital loss
carryforwards. Distributions from a Fund's current or accumulated
earnings and profits, as computed for Federal income tax purposes, will
be treated as described above whether taken in shares or in cash.
Certain distributions received in January may be treated as if paid by
a Fund and received by a shareholder on December 31 of the prior year.
Dividends, including capital gain dividends, paid by a Fund
shortly after a shareholder's purchase of shares have the effect of
reducing the net asset value per share of his shares by the amount per
share of the dividend distribution. Although such dividends are, in
effect, a partial return of the shareholder's purchase price to the
<PAGE>
shareholder, they may be characterized as ordinary income or capital
gain as described above.
Equity options (including options on stock and options on
narrow-based stock indices) and over-the-counter options on debt
securities written or purchased by a Fund will be subject to tax under
Section 1234 of the Code. In general, no loss is recognized by a Fund
upon payment of a premium in connection with the purchase of a put or
call option. The character of any gain or loss recognized (i.e.,
long-term or short-term) will generally depend, in the case of a lapse
or sale of the option, on the Fund's holding period for the option, and
in the case of an exercise of the option, on the Fund's holding period
for the underlying security. The purchase of a put option may
constitute a short sale for federal income tax purposes, causing an
adjustment in the holding period of the underlying stock or security or
a substantially identical stock or security in the Fund's portfolio. If
a Fund writes a put or call option, no gain is recognized upon its
receipt of a premium. If the option lapses or is closed out, any gain
or loss is treated as a short-term capital gain or loss. If a call
option is exercised, whether the gain or loss is long-term or
short-term depends on the holding period of the underlying stock or
security. The exercise of a put option written by a Fund is not a
taxable transaction for the Fund.
All futures contracts entered into by a Fund and all listed
nonequity options written or purchased by a Fund (including options on
debt securities, options on futures contracts, options on securities
indices and options on broad-based stock indices) will be governed by
Section 1256 of the Code. Absent a tax election to the contrary, gain
or loss attributable to the lapse, exercise or closing out of any such
position will be treated as 60% long-term and 40% short-term capital
gain or loss, and on the last trading day of a Fund's taxable year, all
outstanding Section 1256 positions will be marked to market (i.e.,
treated as if such positions were closed out at their closing price on
such day), and any resulting gain or loss will be recognized as 60%
long-term and 40% short-term capital gain or loss. Under certain
circumstances, entry into a futures contract to sell a security may
constitute a short sale for federal income tax purposes, causing an
adjustment in the holding period of the underlying security or a
substantially identical security in a Fund's portfolio.
Because options and futures activities of a Fund may increase the
amount of gains from the sale of securities or investments held or
treated as held for less than three months, the Funds may have to limit
their options and futures transactions in order to comply with the 30%
limitation described above.
<PAGE>
Positions of a Fund which consist of at least one stock and at
least one stock option or other position with respect to a related
security which substantially diminishes the Fund's risk of loss with
respect to such stock could be treated as a "straddle" which is
governed by Section 1092 of the Code, the operation of which may cause
deferral of losses, adjustments in the holding periods of stock or
securities and conversion of short-term capital losses into long-term
capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by a Fund.
Positions of a Fund which consist of at least one debt security
not governed by Section 1256 and at least one futures contract or
listed nonequity option governed by Section 1256 which substantially
diminishes the Fund's risk of loss with respect to such debt security
will be treated as a "mixed straddle." Although mixed straddles are
subject to the straddle rules of Section 1092 of the Code, certain tax
elections exist for them which reduce or eliminate the operation of
these rules. Each Fund will monitor its transactions in options and
futures and may make certain tax elections in order to mitigate the
operation of these rules and prevent disqualification of the Fund as a
regulated investment company for federal income tax purposes.
These special tax rules applicable to options and futures
transactions could affect the amount, timing and character of a Fund's
income or loss and hence of its distributions to shareholders by
causing holding period adjustments, converting short-term capital
losses into long-term capital losses, and accelerating a Fund's income
or deferring its losses.
A Fund's investment in zero coupon securities or other securities
having original issue discount (or market discount, if the Fund elects
to include market discount in income currently) will generally cause it
to realize income prior to the receipt of cash payments with respect to
these securities. The mark to market rules described above may also
require a Fund to recognize gains without a concurrent receipt of cash.
In such case, a Fund will not be able to purchase additional income
producing securities with the cash generated by the sale of such
securities but will be required to use such cash to make such required
distributions, and its current portfolio income may ultimately be
reduced accordingly. In order to distribute this income or gains,
maintain its qualification as a regulated investment company, and avoid
federal income or excise taxes, the Fund may be required to liquidate
portfolio securities that it might otherwise have continued to hold.
The Funds may be subject to foreign withholding or other foreign
taxes with respect to income (possibly including, in some cases,
capital gains) derived from foreign securities. These taxes may be
reduced or eliminated under the terms of an applicable U.S. income tax
treaty. However, the Funds will not be eligible to pass through to
shareholders any foreign tax credits or deductions for foreign taxes
paid by the Funds that are not thus reduced or eliminated. Certain
foreign exchange gains and losses realized by the Funds with respect to
such securities or related currency transactions will generally be
treated as ordinary income and losses. Certain uses of foreign currency
and investments by the Funds in certain "passive foreign investment
companies" may be limited in order to avoid adverse tax consequences
for the Funds (or an election, if available, may be made with respect
to such investments).
Different tax treatment, including a penalty on certain
distributions, excess contributions or other transactions is accorded
to accounts maintained as IRAs or other retirement plans. Investors
should consult their tax advisers for more information. See "Prototype
Retirement Plan For Employers and Self-Employed Individuals,"
"Simplified Employee Pension Plans (SEP-IRA)," and "Individual
Retirement Accounts."
Redemptions, including exchanges, of shares may give rise to
realized gains or losses, recognizable for tax purposes except for
investors subject to tax provisions that do not require them to
recognize such gains or losses. All or a portion of a loss realized
upon the redemption of shares may be disallowed under "wash sale" rules
to the extent shares are purchased (including shares acquired by means
of reinvested dividends) within a 61-day period beginning 30 days
before and ending 30 days after such redemption. Any loss realized upon
a shareholder's sale, redemption or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term
capital loss to the extent of any distribution of long-term capital
gains with respect to such shares. Exchanges and withdrawals under the
Systematic Withdrawal Plan are treated as redemptions for federal
income tax purposes.
The Trust is organized as a Delaware business trust, and neither
the Trust nor the Funds will be subject to any corporate excise or
franchise tax in the State of Delaware, nor will they be liable for
Delaware income taxes provided that each Fund qualifies as a regulated
investment company for federal income tax purposes and satisfies
certain income source requirements of Delaware law. If each Fund so
qualifies and distributes all of its income and capital gains, it will
also be exempt from the New York State franchise tax and the New York
City general corporation tax, except for small minimum taxes.
The foregoing discussion of U.S. federal income tax law does not
address the special tax rules applicable to certain classes of
investors, such as insurance companies. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the Funds, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30%
<PAGE>
(or at a lower rate under an applicable income tax treaty) on Fund
distributions treated as ordinary dividends.
This discussion of the federal income tax treatment of the Funds
and their distributions is based on the federal income tax law in
effect as of the date of this Statement of Additional Information.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this statement of additional
information and about the possible application of state, local and
foreign taxes in light of their particular tax situations.
PORTFOLIO BROKERAGE
(See "Portfolio Brokerage" in the Prospectuses.)
It is the general policy of the Trust not to employ any broker in
the purchase or sale of securities for a Fund's portfolio unless the
Trust believes that the broker will obtain the best results for the
Fund under the circumstances, taking into consideration such relevant
factors as price, the ability of the broker to effect the transaction
and the broker's facilities, reliability and financial responsibility.
Commission rates, being a component of price, are considered together
with such factors. Subject to the foregoing, where transactions are
effected on securities exchanges, the Trust intends to employ primarily
WPG as its broker. The Trust is not obligated to deal with any broker
or group of brokers in the execution of transactions in portfolio
securities.
WPG acts as broker for the Funds on exchange transactions,
subject, however, to the general policy of the Trust set forth above
and the procedures adopted by the Trustees. Commissions paid to WPG
must be at least as favorable as those believed to be contemporaneously
charged by other brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities
exchange. A transaction is not placed with WPG if a Fund would have to
pay a commission rate less favorable than WPG's contemporaneous charges
for comparable transactions for its other most favored, but
unaffiliated, customers except for accounts for which WPG acts as a
clearing broker for another brokerage firm, and any customers of WPG
determined by a majority of the Independent Trustees not to be
comparable to the Funds. With regard to comparable customers, in
isolated situations, subject to the approval of a majority of the
Independent Trustees, exceptions may be made. Since WPG has, as
investment adviser to the Funds, the obligation to provide management,
which includes elements of research and related skills, such research
and related skills will not be used by WPG as a basis for negotiating
commissions at a rate higher than that determined in accordance with
the above criteria.
The commission rate on all exchange orders is subject to
negotiation. Section 17(e) of the 1940 Act limits to "the usual and
customary broker's commission" the amount which can be paid by the
Trust to an affiliated person, such as WPG, acting as broker in
connection with transactions effected on a securities exchange. The
Trustees, including a majority of the Independent Trustees, have
adopted procedures designed to comply with the requirements of Section
17(e) of the 1940 Act and Rule 17e-1 thereunder to ensure a broker's
commission that is "reasonable and fair compared to the commission, fee
or other remuneration received by other brokers in connection with
comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time ...."
Rule 17e-1 also requires the Trustees, including a majority of the
Independent Trustees, to adopt procedures reasonably designed to
provide that the commission paid is consistent with the above standard,
review those procedures at least annually to determine that they
continue to be appropriate and determine at least quarterly that
transactions have been effected in compliance with those procedures.
The Trustees of the Trust, including a majority of the Independent
Trustees, have adopted procedures designed to comply with the
requirements of Rule 17e-1.
In selecting brokers other than WPG to effect transactions on
securities exchanges, the Trust considers the factors set forth in the
first paragraph under this heading and any investment products or
services provided by such brokers, subject to the criteria of Section
28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Section 28(e) specifies that a person with investment discretion
shall not be "deemed to have acted unlawfully or to have breached a
fiduciary duty" solely because such person has caused the account to
pay a higher commission than the lowest rate available. To obtain the
benefit of Section 28(e), the person so exercising investment
discretion must make a good faith determination that the commissions
paid are "reasonable in relation to the value of the brokerage and
research services provided viewed in terms of either that particular
transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion." Accordingly,
if the Trust determines in good faith that the amount of commissions
charged by a broker is reasonable in relation to the value of the
brokerage and research products and services provided by such broker,
the Trust may pay commissions to such broker in an amount greater than
the amount another firm might charge. Research products and services
provided to the Trust include research reports on particular industries
and companies, economic surveys and analyses, recommendations as to
specific securities and other products or services (e.g., quotation
equipment and computer related costs and expenses) providing lawful and
appropriate assistance to WPG (and its subsidiaries) in the performance
of their decision-making responsibilities.
<PAGE>
Each year, the Adviser considers the amount and nature of the
research products and services provided by other brokers as well as the
extent to which such products and services are relied upon, and
attempts to allocate a portion of the brokerage business of their
clients, such as the Trust, on the basis of that consideration. In
addition, brokers sometimes suggest a level of business they would like
to receive in return for the various services they provide. Actual
brokerage business received by any broker may be less than the
suggested allocations, but can (and often does) exceed the suggestions,
because total brokerage is allocated on the basis of all the
considerations described above. In no instance is a broker excluded
from receiving business because it has not been identified as providing
research services. As permitted by Section 28(e), the investment
information received from other brokers may be used by WPG (and its
subsidiaries) in servicing all its accounts and not all such
information may be used by WPG, in its capacity as the Adviser, in
connection with the Trust. Nonetheless, the Trust believes that such
investment information provides the Trust with benefits by
supplementing the research otherwise available to the Trust.
As set forth above, the Trust employs WPG, a member firm of the
NYSE, as its principal broker on U.S. exchange transactions. Section
11(a) of the Exchange Act provides that a member firm of a national
securities exchange (such as WPG) may not effect transactions on such
exchange for the account of an investment company (such as the Trust)
of which the member firm or its affiliate (such as the Adviser) is the
investment adviser unless certain conditions are met. These conditions
require that the investment company authorize the practice and that the
investment company receive from the member firm at least annually a
statement of all commissions paid in connection with such transactions.
WPG's transactions on behalf of the Funds are effected in compliance
with these conditions.
WPG furnishes to the Trust at least quarterly a statement setting
forth the total amount of all compensation retained by WPG or any
associated person of WPG in connection with effecting transactions for
the account of the Trust, and the Trustees of the Trust review and
approve all the Trust's portfolio transactions and the compensation
received by WPG in connection therewith.
WPG does not knowingly participate in commissions paid by the
Trust to other brokers or dealers and does not seek or knowingly
receive any reciprocal business as the result of the payment of such
commissions. In the event WPG at any time learns that it has knowingly
received reciprocal business, it will so inform the Trustees.
To the extent that WPG receives brokerage commissions on Trust
portfolio transactions, officers and Trustees of the Trust who are also
<PAGE>
principals in WPG may receive indirect compensation from the Trust
through their participation in such brokerage commissions.
In certain instances there may be securities which are suitable
for a Fund's portfolio as well as for that of another Fund or one or
more of the other clients of the Adviser. Investment decisions for a
Fund and for the Adviser's other clients are made with a view to
achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though
it might be held by, or bought or sold for, other clients. Likewise, a
particular security may be bought for one or more clients when one or
more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same
security is suitable for the investment objectives of more than one
client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated
among clients in a manner believed to be equitable to each. It is
recognized that in some cases this system could have a detrimental
effect on the price or volume of the security in a particular
transaction as far as a Fund is concerned. The Trust believes that over
time its ability to participate in volume transactions will produce
better executions for the Funds. When appropriate, orders for the
account of the Funds are combined with orders for other investment
companies or other clients advised by WPG in order to obtain a more
favorable commission rate. When the same security is purchased for a
Fund and one or more other funds or other clients on the same day, each
party pays the average price and commissions paid are allocated in
direct proportion to the number of shares purchased.
The U.S. Government and debt securities in which the Funds invest
are traded primarily in the over-the-counter market. Transactions in
the over-the-counter market are generally principal transactions with
dealers and the costs of such transactions involve dealer spreads
rather than brokerage commissions. With respect to over-the-counter
transactions, the Trust, where possible, deals directly with the
dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available
elsewhere. Under the 1940 Act, persons affiliated with the Trust are
prohibited from dealing with the Trust as a principal in the purchase
and sale of securities. Since transactions in the over-the-counter
market usually involve transactions with dealers acting as principal
for their own account, affiliated persons of the Trust, including WPG,
may not serve as the Trust's dealer in connection with such
transactions. However, affiliated persons of the Trust may serve as its
broker in transactions conducted on an exchange or over-the-counter
transactions conducted on an agency basis. On occasion, certain money
market instruments may be purchased directly from an issuer, in which
case no commissions or discounts are paid.
Subject to the supervision of the Trustees, all investment
decisions of the Trust are executed through WPG's trading department.
<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF
AGGREGATE DOLLAR
AMOUNT OF
TRANSACTIONS
INVOLVING THE
PERCENTAGE OF PAYMENT OF
AGGREGATE COMMISSIONS
AGGREGATE BROKERAGE COMMISSIONS EFFECTED THROUGH
COMMISSIONS PAID TO WPG WPG
------------------- ------------- ----------------
FUND 1994 1995 1996 DURING 1996 DURING 1996
- ---- ---- ---- ---- ----------- -----------
Long-Term Retirement Fund N/A N/A $846 97% 97%
Medium-Term Retirement Fund N/A N/A 2,094 99% 99%
Short-Term Retirement Fund N/A N/A 2,056 97% 99%
Core Large-Cap Stock Fund N/A N/A 1,651 99% 99%
Core Small-Cap Stock Fund N/A N/A 2,387 100% 100%
</TABLE>
The foregoing amounts do not include any profits of losses
realized by brokers or dealers on "net" transactions for the account of
any Fund (such as transactions in U.S. Government securities and
transactions executed through market makers and in the third market).
PORTFOLIO TURNOVER
See "Financial Highlights" and "Risk Considerations and Other
Investment Practices and Policies -- Portfolio Turnover" in the
Prospectus.
The annual portfolio turnover rate of a Fund is calculated by
dividing the lesser of the purchase or sales of a Fund's portfolio
securities for the year by the monthly average of the value of the
portfolio securities owned by that Fund during the year. The monthly
average is calculated by totalling the values of the portfolio
securities as of the beginning and end of the first month of the year
and as of the end of the succeeding 11 months and dividing the sum by
13. In determining portfolio turnover, securities (including options)
which have maturities at the time of acquisition of one year or less
("short-term securities"), are excluded. A turnover rate of 100% would
occur if all of a Fund's portfolio securities (other than short-term
securities) were replaced once in a period of one year. It should be
noted that if a Fund were to write a substantial number of options
which are exercised, the portfolio turnover rate of that Fund would
increase. Increased portfolio turnover results in increased brokerage
costs which the Trust must pay and the possibility of more short-term
gains which may increase the difficulty of qualifying as a regulated
investment company.
To the extent that their portfolios are traded for short-term
market considerations and exceeds 100%, the annual portfolio turnover
rate of the Funds could be higher than most mutual funds. None of the
Funds will engage in short-term trading to an extent which would
disqualify them as regulated investment companies under Subchapter M of
the Code.
ORGANIZATION
(See "Management of the Tomorrow Funds" and "The Trust" in the
Prospectuses.)
As a Delaware business trust, the Trust's operations are governed
by its Agreement and Declaration of Trust dated June 21, 1995 (the
"Declaration of Trust"). A copy of the Trust's Certificate of Trust,
also dated June 21, 1995, is on file with the Office of the Secretary
of State of the State of Delaware. Upon the initial purchase of shares,
the shareholder agrees to be bound by the Trust's Declaration of Trust,
as amended from time to time. Generally, Delaware business trust
shareholders are not personally liable for obligations of the Delaware
business trust under Delaware law. The Delaware Business Trust Act (the
"Delaware Act") provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit corporations. The Trust's
Declaration of Trust expressly provides that the Trust has been
organized under the Delaware Act and that the Declaration of Trust is
to be governed by Delaware law. It is nevertheless possible that a
Delaware business trust, such as the Trust, might become a party to an
action in another state whose courts refused to apply Delaware law, in
which case the Trust's shareholders could be subject to personal
liability.
To guard against this risk, the Declaration of Trust (i) contains
an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides that notice of such disclaimer may be given
in each agreement, obligation and instrument entered into or executed
by the Trust or its Trustees, (ii) provides for the indemnification out
of Trust property of any shareholders held personally liable for any
obligations of the Trust or any series of the Trust and (iii) provides
that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and
satisfy any judgment thereon. Thus, the risk of a Trust shareholder
incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refused to apply Delaware
law; (2) the liability arose under tort law or, if not, no contractual
limitation of lability was in effect; and (3) the Trust itself would be
unable to meet its obligations. In the light of Delaware law, the
nature of the Trust's business and the nature of its assets, the risk
of personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Trust shall
indemnify each of its Trustees and officers against liabilities and
expenses reasonably incurred by them, in connection with, or arising
out of, any action, suit or proceeding, threatened against or otherwise
involving such Trustee or officer, directly or indirectly, by reason of
being or having been a Trustee or officer of the Trust. The Declaration
of Trust does not authorize the Trust to indemnify any Trustee or
officer against any liability to which he or she would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
Under the Declaration of Trust, the Trust is not required to hold
annual meetings to elect Trustees or for other purposes. It is not
anticipated that the Trust will hold shareholders' meetings unless
required by law or the Declaration of Trust. The Trust will be required
to hold a meeting to elect Trustees to fill any existing vacancies on
the Board if, at any time, fewer than a majority of the Trustees have
been elected by the shareholders of the Trust. The Board is required to
call a meeting for the purpose of considering the removal of persons
<PAGE>
serving as Trustee if requested in writing to do so by the holders of
not less than 10% of the outstanding shares of the Trust.
Shares of the Trust do not entitle their holders to cumulative
voting rights, so that the holders of more than 50% of the outstanding
shares of the Trust may elect all of the Trustees, in which case the
holders of the remaining shares would not be able to elect any
Trustees. As determined by the Trustees, shareholders are entitled to
one vote for each full share held and fractional votes for fractional
shares held or one vote for each dollar of net asset value (number of
shares held times the net asset value of the applicable class of the
applicable Fund).
As it is expected that separate accounts of insurance companies
will be purchasing Institutional Class shares of each of the Funds, it
should be noted that the rights, if any, of variable contract holders
to vote the shares of a Fund beneficially owned by such variable
contract holders are governed by the relevant variable contract.
Pursuant to the Declaration of Trust, the Trustees may create
additional funds by establishing additional series of shares in the
Trust. The establishment of additional series would not affect the
interests of current shareholders in the existing six Funds. As of the
date of this Statement of Additional Information, the Board does not
have any plan to establish another series of shares in the Trust.
Pursuant to the Declaration of Trust, the Board may establish and
issue multiple classes of shares for each Fund. As of the date of this
Statement of Additional Information, the Trustees have authorized the
issuance of two classes of shares for each series, designated Adviser
Class and Institutional Class. See "The Trust" in the Prospectuses for
a detailed description of the respective rights of the two classes of
shares. The Trustees do not have any plan to establish additional
classes of shares for any Fund.
Each share of each class of a Fund is entitled to such dividends
and distributions out of the income earned on the assets belonging to
that Fund which are attributable to such class as are declared in the
discretion of the Board. In the event of the liquidation or dissolution
of the Trust, shares of each class of each Fund are entitled to receive
their proportionate share of the assets which are attributable to such
class of such Fund and which are available for distribution as the
Trustees in their sole discretion may determine. Shareholders are not
entitled to any preemptive, conversion or subscription rights. All
shares, when issued, will be fully paid and non-assessable by the
Trust.
Pursuant to the Declaration of Trust and subject to shareholder
approval (if then required), the Trustees may authorize each Fund to
invest all or part of its investable assets in a single open-end
investment company that has substantially the same investment
objectives, policies and restrictions as the Fund. As of the date of
this Statement of Additional Information, the Board does not have any
plan to authorize any Fund to so invest its assets.
"Tomorrow Funds Retirement Trust" is the designation of the Trust
for the time being under the Declaration of Trust, and all persons
dealing with a Fund must look solely to the property of that Fund for
the enforcement of any claims against that Fund as neither the
Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of a Fund or the
Trust. No Fund is liable for the obligations of any other Fund. Since
the Funds use combined prospectuses, however, it is possible that one
Fund might become liable for a misstatement or omission in its
prospectus regarding the other Fund with which its disclosure is
combined. The Trustees have considered this factor in approving the use
of the combined prospectuses.
CUSTODIAN
The Custodian for the Trust is Boston Safe Deposit and Trust
Company at One Exchange Place, Boston, Massachusetts 02109. In its
capacity as Custodian, Boston Safe Deposit and Trust Company performs
all accounting services, holds the assets of the Trust and is
responsible for calculating the net asset value per share.
TRANSFER AGENT
First Data Investor Services Group, Inc. acts as transfer agent
for the Trust and, in such capacity, processes purchases, transfers and
redemptions of shares, acts as dividend disbursing agent, and maintains
records and handles correspondence with respect to shareholder
accounts.
LEGAL COUNSEL
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
serves as legal counsel to the Trust.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("KPMG"), 345 Park Avenue, New York, New
York 10154, are the independent auditors for the Trust. Professional
services performed by KPMG include audits of the financial statements
of the Trust, consultation on financial, accounting and reporting
matters, review and consultation regarding various filings with the SEC
and attendance at the meetings of the Audit Committee and Board of
Trustees. KPMG also performs other professional services for the Trust
including preparation of income tax returns of the Funds. Each Fund's
audited financial statements and related report of KPMG, independent
auditors, included in the Annual Report to Shareholders of the Funds
for the year ended December 31, 1996, is attached hereto and hereby
incorporated by reference into this Statement of Additional
Information.
<PAGE>
APPENDIX
Description of Bond Ratings Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuations of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's also provides credit ratings for preferred stocks. It
should be borne in mind that preferred stock occupies a junior position
to bonds within a particular capital structure and that these
securities are rated within the universe of preferred stocks.
aaa: An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
aa: An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
a: An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater
than in the "aaa" and "aa" classifications, earnings and asset
protections are, nevertheless, expected to be maintained at adequate
levels.
baa: An issue which is rated "baa" is considered to be a medium grade
preferred stock, neither highly protected nor poorly secured. Earnings
and asset protection appear adequate at present but may be questionable
over any great length of time.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term and long-term credit
risk. Loans bearing the designation MIG 1 are of the best quality,
enjoying strong protection by establishing cash flows of funds for
their servicing or by established and broad-based access to the market
for refinancing, or both. Loans bearing the designation MIG 2 are of
high quality, with margins of protection ample although not so large as
in the preceding group. A short term issue having a demand feature
(i.e. payment relying on external liquidity and usually payable on
demand rather than fixed maturity dates) is differentiated by Moody's
with the use of the Symbol VMIG, instead of MIG.
Moody's also provides credit ratings for tax-exempt commercial
paper. These are promissory obligations (1) not having an original
maturity in excess of nine months, and (2) backed by commercial banks.
Notes bearing the designation P-1 have a superior capacity for
repayment. Notes bearing the designation P-2 have a strong capacity for
repayment.
Standard & Poor's Ratings Group
AAA: Bonds rated AAA have the higher rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small
degree.
A: Bonds rated A have a very strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
S&P's top ratings for municipal notes issued after July 29, 1984
are SP-1 and SP-2. The designation SP-1 indicates a very strong
capacity to pay principal and interest. A "+" is added for those issues
determined to possess overwhelming safety characteristics. An "SP-2"
designation indicates a satisfactory capacity to pay principal and
interest.
Commercial paper rated A-2 or better by S&P is described as having
a very strong degree of safety regarding timeliness and capacity to
repay. Additionally, as a precondition for receiving an S&P commercial
paper rating, a bank credit line and/or liquid assets must be present
to cover the amount of commercial paper outstanding at all times.
The Moody's Prime-2 rating and above indicates a strong capacity
for repayment of short-term promissory obligations.
<PAGE>
GLOSSARY
Commercial Paper: Short-term promissory notes of large
corporations with excellent credit ratings issued to finance their
current operations.
Certificates of Deposit: Negotiable certificates representing a
commercial bank's obligations to repay funds deposited with it, earning
specified rates of interest over given periods.
Bankers' Acceptances: Negotiable obligations of a bank to pay a
draft which has been drawn on it by a customer. These obligations
are backed by large banks and usually are backed by goods in
international trade.
Time Deposits: Non-negotiable deposits in a banking institution
earning a specified interest rate over a given period of time.
Corporate Obligations: Bonds and notes issued by corporations and
other business organizations in order to finance their long-term
credit needs.
<PAGE>
TOMORROW FUNDS
RETIREMENT TRUST
A Lifecycle Retirement Program
Annual Report
DECEMBER 31, 1996
TOMORROW LONG-TERM RETIREMENT FUND
TOMORROW MEDIUM-TERM RETIREMENT FUND
TOMORROW SHORT-TERM RETIREMENT FUND
CORE LARGE-CAP STOCK FUND
CORE SMALL-CAP STOCK FUND
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Table of Contents
Chairman's Letter ................................ 1
Average Annual Total Return ...................... 2
Ten Largest Holdings ............................ 5
Schedules of Investments
Core Large Cap Stock Fund................... 6
Core Small Cap Stock Fund................... 9
Tomorrow Long-Term Retirement Fund.......... 14
Tomorrow Medium-Term Retirement Fund ....... 23
Tomorrow Short-Term Retirement Fund ........ 31
Statements of Assets and Liabilities............ 38
Statements of Operations ....................... 39
Statements of Changes in Net Assets ............ 40
Notes to Financial Statements .................. 41
Financial Highlights ........................... 47
Independent Auditor's Report.................... 48
<PAGE>
DEAR SHAREHOLDER:
Continued low inflation, a cooling economy (3rd quarter growth of 2.0%),
declining interest rates, and healthy profit margins set the stage for yet
another strong increase in the market in the 4th quarter of 1996.
Record cash flows into equity mutual funds helped November's 7.6% rise in the
S&P 500 replace September's 5.6% gain as the strongest monthly performance since
December 1991. The market's fourth quarter return of 8.4% was the eighth
straight 3% or greater quarterly gain. Since January 1995, the S&P 500 has
returned an astonishing 68.9%.
In December cautionary comments on the current bull market by Fed Chairman
Greenspan tempered to some degree the prevailing market optimism, and resulted
in an increase in market volatility similar to what we saw in July.
Since their inception in March 1996 the Tomorrow Short Term, Medium Term and
Long Term Retirement Funds have performed slightly below their benchmark
allocations of fixed income, domestic and international equities. The Core Small
Cap Fund had a very strong 1996, outperforming its benchmark, the Russell 2000,
by over four percentage points. Since its inception in February 1996, the Core
Large Cap Fund slightly underperformed the S&P 500.
The Tomorrow Funds utilize a highly structured quantitative process in the
domestic equity allocations. The objective of the process is to maximize return
while minimizing investment risk as well as style and capitalization drift.
Historically, this risk-averse strategy has fared well relative to the markets
over a market cycle, and has underperformed when stock prices rise sharply.
Given the powerful up market of 1995-96, the slight underperformance of the
Funds is consistent with our long term goal of reducing risk.
Weiss, Peck & Greer is committed to helping you invest wisely prior to and
during your retirement. The Tomorrow Retirement Funds were created to simplify
investment decision making and help you enjoy today. We wish you and your family
a happy, healthy and prosperous 1997.
Sincerely,
/s/ Roger J. Weiss
Roger J. Weiss
Chairman of the Board
January 15, 1997
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
CORE LARGE-CAP
The Tomorrow Fund Large-Cap portfolio underperformed the S&P 500 in 1996 with a
return of 15.4% as compared to the index's return of 16.9% over the same period.
This year's extended and unusually powerful run in the market, coming at the end
of a long economic cycle, was an inhospitable environment for the Fund's risk
control strategy. The strongly defensive character of the strategy caused the
risk controlled portfolio to lag its benchmark during this extended run.
[Graph shown here]
Average Annual Total Return
(for the period February 6, 1996 (commencement of
operations) through December 31, 1996
<TABLE>
<S> <C>
CORE LARGE-CAP..................... 15.35
S&p 500............................ 16.39%
</TABLE>
CORE SMALL-CAP
The Tomorrow Fund Small-Cap portfolio outperformed the Russell 2000 in 1996 with
a 17.7% return vs. the benchmark's 13.6% return.
The Fund uses a highly quantitative strategy that focuses on minimizing the
total risk of the investment portfolio. In 1996 this focus resulted in a value
tilt to the portfolio as well as concentrations in the real property and
mortgage industries. The strong performance of the financial sector in
conjunction with small cap value stocks outperforming growth in 1996, were the
primary contributors to the Fund's strong performance relative to the Russell
2000.
[Graph shown here]
Average Annual Total Return
(for the period February 6, 1996 (commencement of
operations) through December 31, 1996
<TABLE>
<S> <C>
CORE SMALL-CAP..................... 17.70%
S&P 500............................ 13.63%
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
LONG, MEDIUM & SHORT TERM
TOMORROW FUNDS
In 1996 the Adviser class of each Tomorrow Life Cycle Fund, which consist of a
blended allocation of domestic and international equities and fixed income
instruments, underperformed their respective benchmarks by an average of 1.8%.
Performance for the Institutional class will vary from the Adviser class due to
differences in expenses charged to their class.
The domestic equity portfolios comprise the largest allocation in the Life
Cycle Tomorrow Funds. These portfolios utilize the same risk control strategy
employed in the Large and Small Cap Tomorrow Funds. This risk-averse strategy
has historically performed well relative to the markets over a market cycle and
have underperformed in sharply rising markets. Given the powerful up market of
1995-1996 the underperformance in the Funds is consistent with our long term
goal of reducing volatility.
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
<TABLE>
<S> <C>
TOMORROW LONG-TERM
(Adviser Class)............... 9.08+
(Institutional Class)......... 9.03%++
Tomorrow Long-Term Benchmark..... 11.00%
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
TOMORROW MEDIUM-TERM
(Adviser Class)............... 8.89+
(Institutional Class)......... 8.54%++
Tomorrow Long-Term Benchmark..... 10.53%
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
TOMORROW SHORT-TERM
(Adviser Class)............... 8.54+
(Institutional Class)......... 8.23%++
Tomorrow Long-Term Benchmark..... 10.39%
<FN>
+ Inception March 7, 1996.
++ Inception April 2, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
Performance represents historical data. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Each Fund's
results and their indices assume the reinvestment of all capital gain
distributions and income dividends. Each Fund's past performance is not
indicative of future performance and should be considered in light of each
Fund's investment policy and objectives, the characteristics and quality of its
portfolio securities and the periods selected. The S&P 500 Stock Index and the
S&P 400 MidCap Stock Index are each broad based measurement of changes in stock
market conditions based on the average performance of 500 and 400, respectively,
widely held common stocks. The Russell 2000 Growth Index is a measurement of
changes in stock market conditions based on the average performance of small
U.S. growth oriented securities with a median market capitalization of
approximately $200 million. The Lehman Government Corporate Index is a market
weighted blend of all U.S. Government securities and all U.S. Corporate
securities. The Morgan Stanley Capital International Europe, Australia, Far East
("EAFE") is an index of more than 800 companies in Europe, Australia and the Far
East.
The benchmarks used by the Long-Term Retirement Fund, Medium-Term Retirement
Fund and Short-Term Retirement Fund are each comprised of an allocated portion
of several of the above mentioned indices. The allocated portions are as
follows:
<TABLE>
<S> <C> <C> <C>
Long- Medium- Short
Term Term Term
S&P 500 30% 35% 40%
S&P 400 MidCap 20% 15% 10%
Russell 2000 Growth 25% 15% 10%
Lehman Government Corporate 20% 30% 40%
EAFE 5% 5% 0%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Ten Largest Holdings at December 31, 1996*
<S> <C> <C>
Market Percent
Core Large-Cap Value of Fund
Exxon Corp................................... $64,680 4.1%
Royal Dutch Petroleum Co ADR................. 47,298 3.0%
Standard & Poor's Depositary
Receipt.................................. 44,362 2.8%
Lilly Eli & Co.............................. 29,492 1.9%
Mobil Corp................................... 28,362 1.8%
GTE Corp..................................... 26,481 1.7%
Bristol-Myers Squibb Co...................... 26,426 1.7%
Eastman Kodak Co............................. 25,038 1.6%
International Business Machines
Corp.................................... 23,707 1.5%
Amoco Corp................................... 23,579 1.5%
$339,425 21.6%
Market Percent
Core Small-Cap Value of Fund
BRE Properties Inc........................... $10,568 0.5%
Home Beneficial Corp......................... 6,780 0.4%
Financial Trust Corp......................... 6,699 0.4%
IWC Resources Corp........................... 6,567 0.3%
Citizens Bancorp Maryland.................. 6,200 0.3%
Boole & Babbage Inc.......................... 6,025 0.3%
Ekco Group Inc............................... 5,998 0.3%
Liberty Bancorp Inc.......................... 5,920 0.3%
SPX Corp..................................... 5,890 0.3%
Interstate Bakeries Corp..................... 5,846 0.3%
$66,493 3.4%
Long-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $120,187 9.5%
US Treasury Note
6.500%, Due 8/15/05...................... 98,628 7.8%
Exxon Corp .................................. 91,140 7.2%
Standard & Poor's Depositary
Receipt................................... 57,302 4.6%
BT EAFE Equity Index Fund.................... 53,861 4.3%
US Treasury Bond
6.875%, Due 8/15/25...................... 35,689 2.8%
U.S. Robotics Corp .......................... 23,040 1.8%
Amgen Inc ................................... 18,542 1.5%
State Auto Financial Corp ................... 18,486 1.5%
Sprint Corp.................................. 18,343 1.5%
$535,218 42.5%
Medium-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $501,606 13.6%
US Treasury Note
6.500%, Due 8/15/05...................... 425,711 11.6%
Standard & Poor's Depositary
Receipt.................................. 177,450 4.8%
US Treasury Bond
6.875%, Due 8/15/25...................... 161,111 4.4%
BT EAFE Equity Index Fund.................... 144,849 3.9%
Exxon Corp................................... 53,214 1.4%
May Department Stores Co..................... 39,083 1.1%
Kimberly-Clark Corp ......................... 37,243 1.0%
Royal Dutch Petroleum Co ADR ................ 36,882 1.0%
Viacom Inc Cl B ............................. 35,433 1.0%
$1,612,582 43.8%
Short-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $880,046 18.5%
US Treasury Note
6.500%, Due 8/15/05...................... 743,737 15.6%
US Treasury Bond
6.875%, Due 8/15/25...................... 275,316 5.8%
Standard & Poor's Depositary
Receipt.................................. 221,813 4.7%
Royal Dutch Petroleum Co ADR ................ 126,013 2.6%
Exxon Corp................................... 91,140 1.9%
GTE Corp .................................... 84,766 1.8%
Pharmacia & Upjohn Inc ...................... 75,169 1.6%
Mobil Corp .................................. 73,350 1.5%
Chevron Corp ................................ 71,825 1.5%
$2,643,175 55.5%
<FN>
* The composition of the largest securities in each porfolio is subje
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
<C> <S> <C>
Number
of Shares Security Value
Core Large-Cap Stock Fund
COMMON STOCKS (96.6%)
Basic Materials (9.3%)
185 Dow Chemical Co ............................. $14,499
360 Barrick Gold Corp ........................... 10,305
235 Monsanto Co ................................. 9,136
117 PPG Industries Inc. ......................... 6,567
274 Placer Dome Inc ADR ......................... 5,960
88 Phelps Dodge Corp ........................... 5,940
82 Pioneer Hi Bred International ............... 5,740
117 Great Lakes Chemical Corp. .................. 5,470
105 W.R. Grace & Co.............................. 5,434
105 International Flavors &
Fragrances Inc ........................... 4,725
144 Inco Ltd .................................... 4,590
99 Newmont Mining Corp ......................... 4,430
48 Rohm & Haas Co .............................. 3,918
66 Reynolds Metals Co .......................... 3,720
194 Engelhard Corp .............................. 3,710
110 James River Corp of Virginia ................ 3,644
114 USX US Steel Group .......................... 3,577
61 Temple Inland Inc ........................... 3,302
64 Nucor Corp .................................. 3,264
79 International Paper Co. ..................... 3,190
133 Cyprus Amax Minerals Co. .................... 3,109
47 Sigma Aldrich Corp .......................... 2,935
188 Homestake Mining Co ......................... 2,679
80 Boise Cascade Corp .......................... 2,540
46 Union Camp Corp ............................. 2,197
224 +Bethlehem Steel Corp. ....................... 2,016
70 Westvaco Corp................................ 2,013
86 Allegheny Teledyne Inc ...................... 1,978
51 Bemis Inc ................................... 1,881
103 Worthington Industries....................... 1,867
92 Inland Steel Industries Inc ................. 1,840
25 +FMC Corp .................................... 1,753
231 Echo Bay Mines Ltd .......................... 1,530
37 BF Goodrich Co............................... 1,499
100 Stone Container Corp ........................ 1,487
36 Ecolab Inc .................................. 1,354
35 Nalco Chemical Co ........................... 1,264
159 +Armco Inc ................................... 656
13 Potlach Corp ................................ 559
--------
146,278
--------
Capital Goods (12.2%)
216 Boeing Co ................................... 22,977
222 Minnesota Mining &
Manufacturing Co ......................... 18,398
222 McDonnell Douglas Corp ...................... 14,208
204 +Rockwell International....................... 12,418
124 Emerson Electric Co. ........................ 11,997
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
204 Corning Inc ................................. $9,435
405 Westinghouse Electric Corp .................. 8,049
107 Honeywell Inc. .............................. 7,035
110 Fluor Corp .................................. 6,902
89 Eaton Corp .................................. 6,208
105 Crown Cork & Seal Inc ....................... 5,709
114 Cooper Industries ........................... 4,802
89 Tyco International Ltd ...................... 4,706
47 Textron Inc ................................. 4,430
76 Alco Standard Corp .......................... 3,924
91 Parker Hannifin Corp ........................ 3,526
42 Northrop Grumman Corp ....................... 3,476
62 Dover Corp .................................. 3,115
118 Pall Corp ................................... 3,009
120 PP & L Resources Inc ........................ 2,760
34 Raychem Corp................................. 2,724
55 Harnischfeger Industries Inc. ............... 2,647
36 General Dynamics ............................ 2,538
30 Grainger WW Inc ............................. 2,408
58 Millipore Corp .............................. 2,400
205 Laidlaw Inc Cl B............................. 2,358
46 Cummins Engine Inc .......................... 2,116
80 Moore Corp Ltd .............................. 1,630
44 Avery Dennison Corp ......................... 1,556
35 General Signal Corp ......................... 1,496
78 McDermott International Inc ................. 1,297
57 Cincinnati Milacron Inc ..................... 1,247
47 Ball Corp ................................... 1,222
27 Briggs & Stratton Corp ...................... 1,188
40 Crane Co .................................... 1,160
29 Trinova Corp ................................ 1,055
28 National Services Industries Inc ............ 1,046
23 Thomas & Betts Corp ......................... 1,021
43 Premark International........................ 957
98 +Navistar International Corp ................. 894
14 Timken Co. .................................. 642
42 Giddings & Lewis Inc. ....................... 541
6 NACCO Industries Inc Cl A ................... 321
--------
191,548
--------
Communication Services (3.1%)
582 GTE Corp..................................... 26,481
326 US West Inc ................................. 10,513
171 Sprint Corp ................................. 6,818
163 ALLTEL Corp ................................. 5,114
--------
48,926
--------
Consumer Cyclical (12.4%)
312 Eastman Kodak Co ............................ 25,038
237 May Department Stores Co .................... 11,080
378 Dun & Bradstreet Corp ....................... 8,978
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
382 The Limited Inc ............................. $7,019
225 Gap Inc. .................................... 6,778
89 Gannet Inc .................................. 6,664
240 Mattel Inc................................... 6,660
156 Dayton Hudson Corp .......................... 6,123
170 Masco Corp .................................. 6,120
153 Service Corp International .................. 4,284
96 Tandy Corp................................... 4,224
136 Dillard Department Stores ................... 4,199
106 New York Times Co Cl A ...................... 4,028
90 Genuine Parts Co ............................ 4,016
83 Interpublic Group of Cos Inc ................ 3,942
375 +K mart Stores ............................... 3,891
81 Harcourt General Inc......................... 3,736
109 Dow Jones & Co Inc .......................... 3,692
113 Black & Decker Corp.......................... 3,404
98 Cognizant Corp .............................. 3,234
70 McGraw-Hill Cos Inc ......................... 3,229
64 TRW Inc. .................................... 3,168
71 Owens Corning ............................... 3,026
94 Echlin Inc. ................................. 2,973
67 Polaroid Corp ............................... 2,914
42 VF Corp ..................................... 2,835
40 Armstrong World Industries Inc............... 2,780
139 Cooper Tire & Rubber ........................ 2,745
65 Reebok International Ltd .................... 2,730
135 Maytag Corp ................................. 2,666
69 Liz Claiborne Inc. .......................... 2,665
63 Hasbro Inc .................................. 2,449
31 Tribune Co. ................................. 2,445
80 Circuit City Store Inc ...................... 2,410
43 Sherwin-Williams Co. ........................ 2,408
61 Knight- Ridder Inc .......................... 2,333
106 +Woolworth Corp .............................. 2,319
77 American Greetings-Cl A ..................... 2,185
52 +Fruit of the Loom Inc ....................... 1,969
71 Stanley Works ............................... 1,917
37 Mercantile Stores ........................... 1,827
102 Viad Corp ................................... 1,683
35 TJX Cos Inc.................................. 1,658
71 Ogden Corp .................................. 1,331
60 Jostens Inc ................................. 1,268
34 Snap-On Inc ................................. 1,211
40 Russell Corp ................................ 1,190
28 +Payless ShoeSource Inc ...................... 1,050
20 Springs Industries Inc ...................... 860
16 Meredith Corp ............................... 844
54 Stride Rite Corp ............................ 540
32 +ACNielsen Corp .............................. 484
22 Outboard Marine Inc. ........................ 363
9 +Footstar Inc ................................ 224
--------
193,809
--------
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
Consumer Staples (13.1%)
101 Unilever NV ADR ............................. $17,700
212 Walt Disney Co .............................. 14,761
398 +Viacom Inc Cl B ............................ 13,880
205 Kellogg Co .................................. 13,453
309 Heinz H J Co ................................ 11,124
483 Archer Daniels Midland Co.................... 10,626
254 Anheuser- Busch Cos Inc. .................... 10,160
118 Ralston Purina Co ........................... 8,658
165 Conagra Inc ................................. 8,209
87 Colgate-Palmolive Co ........................ 8,026
102 CPC International Inc. ...................... 7,905
234 UST Inc. .................................... 7,576
109 General Mills Inc ........................... 6,908
158 Quaker Oats Co............................... 6,024
129 +Kroger Co ................................... 5,999
69 Avon Products Inc ........................... 3,942
96 American Stores Co........................... 3,924
115 Winn Dixie Stores ........................... 3,637
76 Hershey Foods Corp .......................... 3,325
79 Rite Aid Corp. .............................. 3,140
127 Whitman Corp ................................ 2,905
87 Sysco Corp .................................. 2,838
67 +CVS Corp .................................... 2,764
51 Tupperware Corp.............................. 2,735
26 Clorox Co. .................................. 2,610
74 Giant Food Inc Cl A ......................... 2,553
122 Wendy's International ....................... 2,501
57 +Ceridian Corp ............................... 2,308
67 Deluxe Corp ................................. 2,194
50 +King World Productions Inc .................. 1,844
123 Dial Corp ................................... 1,814
60 Supervalu Inc. .............................. 1,703
29 Brown-Forman Corp Class B .................. 1,327
74 Fleming Cos Inc ............................. 1,277
70 Safety Kleen Corp ........................... 1,146
28 Great Atlantic & Pacific Tea ................ 892
25 Hilton Hotels Corp .......................... 653
32 Coors (Adolph) Co Cl B ...................... 608
29 Luby's Cafeterias Inc. ...................... 576
77 +Shoney's Inc ................................ 539
8 Alberto Culver Co............................ 384
43 +Ryan's Family Steak Houses Inc .............. 296
6 Longs Drug Stores Corp....................... 295
7 Harland Co. ................................. 231
--------
205,970
--------
Energy (18.0%)
660 Exxon Corp .................................. 64,680
277 Royal Dutch Petroleum Co ADR ................ 47,298
232 Mobil Corp. ................................. 28,362
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
292 Amoco Corp .................................. $23,579
317 Chevron Corp................................. 20,605
137 Texaco Inc .................................. 13,443
134 Schlumberger Ltd ............................ 13,383
93 Atlantic Richfield .......................... 12,334
240 Phillips Petroleum Co. ...................... 10,620
331 Occidental Petroleum Corp ................... 7,737
117 Halliburton Co............................... 7,049
127 Burlington Resources Inc .................... 6,398
170 Dresser Industries Inc ...................... 5,270
78 Amerada Hess Corp. .......................... 4,514
105 Baker Hughes Inc ............................ 3,623
98 Sun Co ...................................... 2,389
30 Kerr McGee Corp ............................. 2,160
83 +Oryx Energy Co .............................. 2,054
28 Louisiana Land & Exploration Co ............. 1,502
33 Ashland Inc ................................. 1,448
21 Pennzoil Co. ................................ 1,187
71 +Santa Fe Energy Resources ................... 985
38 +Rowan Cos ................................... 860
11 Helmerich & Payne Inc........................ 573
--------
282,053
--------
Financial (3.8%)
79 Loews Corp .................................. 7,446
127 Lincoln National Corp Ltd. .................. 6,667
74 UNUM Corp ................................... 5,347
76 First Bank System Inc ....................... 5,254
43 Marsh & McLennan Cos ........................ 4,472
99 U.S. Bancorp ................................ 4,449
64 St Paul Cos. Inc Corp ....................... 3,752
55 Boatmen's Bancshares Inc .................... 3,548
44 Transamerica Corp ........................... 3,481
76 National City Corp .......................... 3,411
80 Safeco Corp ................................. 3,155
44 Jefferson- Pilot Corp ....................... 2,492
117 USF&G Corp .................................. 2,442
25 Republic NY Corp ............................ 2,041
18 Aetna Inc ................................... 1,440
21 USLife Corp ................................. 698
--------
60,095
--------
Health Care (11.9%)
404 Lilly Eli & Co .............................. 29,492
243 Bristol-Myers Squibb Co. .................... 26,426
341 Schering-Plough Corp. ....................... 22,080
543 Pharmacia & Upjohn Inc....................... 21,516
316 American Home Products Corp.................. 18,526
257 +Amgen Inc. .................................. 13,974
140 Warner Lambert Co ........................... 10,500
148 +Boston Scientific Corp ...................... 8,880
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
262 +Humana Inc .................................. $5,011
188 +Tenet Healthcare Corp ....................... 4,113
96 +St. Jude Medical Inc. ....................... 4,092
91 Becton Dickinson & Co. ...................... 3,947
84 Allergan Inc. ............................... 2,992
83 Bausch & Lomb Inc ........................... 2,946
63 Mallinckrodt Inc. ........................... 2,780
169 Biomet ...................................... 2,556
92 +ALZA Corp ................................... 2,381
83 +Fresenius Medical Care ADR .................. 2,334
43 United States Surgical Corp ................. 1,693
78 +Transitional Hospitals Corp ................. 751
--------
186,990
--------
Technology (4.6%)
157 International Business Machines
Corp..................................... 23,707
415 First Data Corp ............................. 15,147
143 Raytheon Co ................................. 6,882
593 +Novell Inc .................................. 5,615
233 +Apple Computer Inc .......................... 4,864
105 +Advanced Micro Devices Inc .................. 2,704
90 Autodesk Inc ................................ 2,520
33 Perkin Elmer Corp............................ 1,943
26 Harris Corp.................................. 1,784
126 +Amdahl Corp ................................. 1,528
75 EG&G Inc .................................... 1,509
190 +Unisys Corp ................................. 1,282
25 Shared Medical Systems Corp ................. 1,231
71 +Intergraph Corp ............................. 728
40 +Data General Corp ........................... 580
--------
72,024
--------
Transportation (0.7%)
136 +Federal Express Corp. ....................... 6,052
123 Caliber Systems Inc ......................... 2,368
60 Consolidated Freightways Inc ................ 1,335
43 +USAir Group Inc ............................. 1,005
23 +Yellow Corp ................................. 331
30 +Consolidated Freightways Corp ............... 266
--------
11,357
--------
Utilities (7.5%)
465 Southern Co ................................. 10,521
239 Enron Corp .................................. 10,307
139 FPL Group Inc. .............................. 6,394
137 Duke Power Co ............................... 6,371
153 Williams Cos Inc ............................ 5,738
142 Dominion Resources Inc....................... 5,467
251 Pacific Gas & Electric Co. .................. 5,271
107 Coastal Corp ................................ 5,230
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
117 American Electric Power Co .................. $4,812
117 Texas Utilities Co .......................... 4,768
164 Entergy Corp................................. 4,551
226 Edison International ........................ 4,492
185 Houston Industries .......................... 4,186
153 Central & South West Corp ................... 3,921
110 Cinergy Corp. ............................... 3,671
71 Sonat Inc. .................................. 3,656
59 Consolidated National Gas Co ................ 3,260
101 Pacific Enterprises ......................... 3,068
90 GPU Inc ..................................... 3,026
46 Columbia Gas System Inc ..................... 2,927
76 Union Electric Co............................ 2,925
95 Public Service Entreprise ................... 2,588
111 Ohio Edison Co .............................. 2,525
210 +Niagara Mohawk Power Corp.................... 2,074
42 Northern States Power........................ 1,927
67 ENSERCH Corp ................................ 1,541
82 Noram Energy Corp. .......................... 1,261
26 Nicor Inc. .................................. 929
26 Oneok Inc. .................................. 780
6 Eastern Enterprises ......................... 212
--------
118,399
--------
Total Common Stocks
(Cost $1,408,895)........................ 1,517,449
---------
Unit Investment Trust (2.8%)
(Cost $44,815)
600 Standard & Poor's
Depositary Receipt ...................... 44,362
--------
CONVERTIBLE PREFERRED
STOCK (0.0%)
(Cost $327)
Financial (0.0%)
5 Aetna Inc Class C 6.250% .................... 397
--------
Total Investments (99.4%)
(Cost $1,454,037)........................ 1,562,208
Other Assets in Excess
of Liabilities (0.6%).................... 8,924
--------
Total Net Assets (100.0%).................... $1,571,132
<FN>
=========
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Core Small-Cap Stock Fund
COMMON STOCKS (97.0%)
Basic Materials (4.8%)
213 Tuscarora Inc ............................... $5,831
112 Ameron International Inc .................... 5,782
114 Cleveland Cliffs Inc......................... 5,173
807 +Amax Gold Inc ............................... 5,145
157 Florida Rock Industries Inc.................. 5,142
136 Carpenter Technology Corp ................... 4,981
222 Lawter International Inc .................... 4,962
139 Mosinee Paper Corp .......................... 4,934
179 Fab Industries Inc .......................... 4,922
150 Cambrex Corp ................................ 4,913
149 Liqui-Box Corp .............................. 4,842
318 Coeur D'Alene Mines Corp..................... 4,810
291 Quaker Chemical Corp ........................ 4,765
145 Dexter Corp ................................. 4,622
244 Wausau Paper Mills Co ....................... 4,514
765 +Hecla Mining Co ............................. 4,207
109 +Getchell Gold Corp .......................... 4,183
302 Calgon Carbon Corp .......................... 3,699
61 Fuller H B Co ............................... 2,867
151 Lilly Industries Inc Cl A ................... 2,775
57 Penwest Ltd ................................. 998
--------
94,067
--------
Capital Goods (12.8%)
109 NACCO Industries Inc Cl A ................... 5,831
166 McClatchy Newspapers Inc Cl A ............... 5,810
139 Butler Manufacturing Co ..................... 5,630
274 Penn Engineering &
Manufacturing Corp....................... 5,617
133 Kimball International Inc Cl B............... 5,503
372 Daniel Industries Inc........................ 5,487
87 +SEACOR Holdings Inc ......................... 5,481
133 Manitowoc Inc ............................... 5,387
132 Tredegar Industries Inc ..................... 5,297
352 Oil-Dri Corp America ........................ 5,280
161 Kysor Industrial Corp ....................... 5,253
212 Amcast Industrial Corp ...................... 5,247
210 Brady W H Co ................................ 5,171
127 IDEX Corp ................................... 5,064
107 Fisher Scientific International Inc.......... 5,042
84 Barnes Group Inc ............................ 5,040
94 Mine Safety Appliances Co ................... 5,006
227 +Osmonics Inc ................................ 4,994
202 Baldor Electric Co .......................... 4,974
111 Thiokol Corp ................................ 4,967
117 American Filtrona Corp ...................... 4,958
214 Albany International Corp Cl A .............. 4,949
177 +Bearings Inc................................. 4,934
81 Carlisle Cos Inc ............................ 4,900
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
76 +SPS Technologies Inc ........................ $4,883
237 Varlen Corp ................................. 4,873
145 Donaldson Co................................. 4,858
100 +Littelfuse Inc. ............................. 4,850
149 +Avatar Holdings Inc ......................... 4,768
91 Teleflex Inc ................................ 4,743
185 International Aluminum Corp ................. 4,718
205 Learonal Inc ................................ 4,715
211 +Ladd Furniture Inc .......................... 4,680
155 Commercial Metals Co......................... 4,669
151 Standex International Corp .................. 4,662
631 +Insituform Technologies Inc Cl A ............ 4,654
145 +USA Waste Services Inc ...................... 4,622
188 Graco Inc ................................... 4,606
145 Stone & Webster Inc ......................... 4,604
204 +Lydall Inc .................................. 4,590
492 +Thermo Fibertek Inc ......................... 4,582
262 Raymond Corp ................................ 4,552
316 Woodhead Industries Inc ..................... 4,345
679 UNR Industries Inc .......................... 4,074
101 +Sequa Corp Cl A ............................. 3,964
109 +Dionex Corp ................................. 3,815
302 +Nashua Corp. ................................ 3,624
114 +Syratech Corp ............................... 3,591
326 Sealright Co ................................ 3,423
156 Granite Construction Inc .................... 2,964
100 Grief Bros Corp Cl A ........................ 2,850
167 +Cuno Inc .................................... 2,484
63 AAR Corp .................................... 1,905
19 Miller (Herman) Inc ......................... 1,076
35 Harmon Industries ........................... 652
22 +Devon Group Inc ............................. 605
42 +Durakon Industries Inc. ..................... 536
15 Gleason Corp ................................ 497
34 +Intermagnetics General Corp ................. 408
--------
251,264
--------
Consumer Cyclical (14.3%)
1,371 Ekco Group Inc .............................. 5,998
152 SPX Corp .................................... 5,890
124 Pultizer Publishing Co....................... 5,750
88 +Culbro Corp ................................. 5,709
417 +Johnson Worldwide
Association Inc Cl A..................... 5,525
284 Sturm Ruger & Co Inc ........................ 5,502
222 Donnelly Corp ............................... 5,439
96 Houghton Mifflin Co ......................... 5,436
386 ADVO Inc .................................... 5,404
214 American Business Products................... 5,377
195 K2 Inc ...................................... 5,362
210 Standard Products Co ........................ 5,355
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
527 Graphic Industries .......................... $5,336
449 +Lifetime Hoan Corp .......................... 5,276
120 Hughes Supply Inc ........................... 5,175
157 Wiley (John) & Sons Inc Cl A ................ 5,063
160 Wynns International Inc ..................... 5,060
505 Crown Crafts Inc ............................ 5,050
154 +Gelman Sciences Inc ......................... 5,005
202 Bassett Furniture Industries Inc............. 4,949
82 NCH Corp .................................... 4,940
172 Starrett LS Co Cl A ......................... 4,881
830 +American Media Inc........................... 4,876
164 Lawson Products Inc ......................... 4,856
177 Unitog Co.................................... 4,823
181 Guilford Mills Inc .......................... 4,819
315 +National Education Corp ..................... 4,804
565 +Handleman Co ................................ 4,803
253 Caseys General Stores Inc ................... 4,744
274 Wackenhut Corp Cl A ......................... 4,726
262 Russ Berrie & Co Inc ........................ 4,716
308 Osh Kosh B'Gosh Inc Cl A .................... 4,697
50 Dart Group Corp Cl A ........................ 4,650
697 +Uno Restaurant Corp ......................... 4,618
116 Apogee Enterprises Inc ...................... 4,611
297 Genovese Drugs Stores ....................... 4,603
87 Meredith Corp ............................... 4,589
318 Falcon Products Inc ......................... 4,532
169 Stanhome Inc ................................ 4,479
231 Delechamps Inc .............................. 4,476
243 Brown Group Inc ............................. 4,465
393 La-Z-Boy Chair Co ........................... 4,454
127 Plenum Publishing Corp ...................... 4,445
205 Smart & Final Inc ........................... 4,433
277 Strawbridge & Clothier ...................... 4,397
86 WD-40 Co .................................... 4,387
227 +Lands' End Inc .............................. 4,346
198 True North Communications Inc ............... 4,331
425 Stride Rite Corp ............................ 4,250
274 Cadmus Communications Corp .................. 4,247
49 United Television Inc ....................... 4,220
175 Waverly Inc ................................. 4,156
227 Walbro Corp. ................................ 4,143
211 Alico Inc ................................... 3,956
385 +Playboy Enterprises Inc Cl B ................ 3,754
207 Commercial Intertech Corp ................... 2,820
320 +GRC International Inc ....................... 2,600
127 +Pre-Paid Legal Services Inc ................. 2,318
530 +Topps Co Inc ................................ 2,120
84 Shopko Stores Inc ........................... 1,260
70 +AnnTaylor Stores Corp ....................... 1,225
70 +American Classic Voyages Co.................. 919
28 Thomas Nelson Inc............................ 417
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
20 +Galey & Lord Inc ............................ $297
15 Outboard Marine Inc. ........................ 247
--------
280,111
--------
Consumer Staples (6.7%)
119 Interstate Bakeries Corp .................... 5,846
172 Harland Co. ................................. 5,676
244 Nash Finch Corp ............................. 5,185
326 Rykoff-Sexton Inc ........................... 5,175
351 Dames & Moore Inc ........................... 5,133
224 Church & Dwight Co........................... 5,124
129 Tootsie Roll Industries...................... 5,112
365 Ruddick Corp ................................ 5,110
104 Longs Drug Stores ........................... 5,109
281 International Multifoods Corp ............... 5,093
261 Blair Corp .................................. 5,024
286 Arbor Drugs Inc ............................. 4,969
267 ABM Industries Inc .......................... 4,940
350 +Foodbrands America Inc ...................... 4,813
127 National Presto Industries .................. 4,747
181 +Carmike Cinemas Inc. Cl A ................... 4,593
278 Goodmark Foods Inc .......................... 4,587
241 Coors (Adolph) Co Cl B ...................... 4,579
30 Farmer Brothers Co .......................... 4,560
212 Flowers Industries Inc ...................... 4,558
227 +International Dairy Queen Inc
Cl A..................................... 4,540
348 WLR Foods Inc ............................... 4,307
216 Luby's Cafeterias Inc. ...................... 4,293
359 A.T. Cross Co Cl A .......................... 4,173
217 Angelica Corp ............................... 4,150
591 +Shoney's Inc ................................ 4,137
255 +AMC Entertainment Inc ....................... 3,666
76 Rival Co..................................... 1,891
37 +Valassis Communications Inc. ................ 782
30 +Bone Care International Inc.................. 218
--------
132,090
--------
Energy (4.1%)
320 Landauer Inc ................................ 5,562
265 Wiser Oil Co ................................ 5,234
188 Ashland Coal Inc ............................ 5,217
100 Helmerich & Payne Inc........................ 5,213
143 Vintage Petroleum Inc ....................... 4,933
343 Berry Petroleum Cl A ........................ 4,931
137 Apache Corp ................................. 4,846
519 +Allied Waste Industries Inc ................. 4,801
290 Getty Petroleum Corp ........................ 4,712
296 +Tuboscope Vetco International
Corp..................................... 4,588
275 +HS Resources Inc ............................ 4,537
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
105 +Barrett Resources Corp ...................... $4,476
293 Quaker State Corp ........................... 4,139
152 Holly Corp .................................. 4,066
212 +Plains Resources Inc ........................ 3,313
129 +Belden & Blake Corp ......................... 3,290
200 +Pool Energy Services Co ..................... 3,075
58 +Newpark Resources Inc ....................... 2,161
140 +Hondo Oil & Gas Co .......................... 1,523
69 +Box Energy Corp Cl B......................... 630
--------
81,247
--------
Financial Services (31.0%)
427 BRE Properties Inc .......................... 10,568
179 Home Beneficial Corp ........................ 6,780
168 Financial Trust Corp ........................ 6,699
100 Citizens Bancorp Maryland ................... 6,200
119 Liberty Bancorp Inc.......................... 5,920
95 Forest City Enterprises Inc Cl A ............ 5,748
319 State Auto Financial Corp ................... 5,742
385 Burham Pacific Properties Inc ............... 5,727
175 Wesbanco Inc ................................ 5,688
215 American Heritage Life Inc................... 5,644
139 Horace Mann Educator Corp.................... 5,612
198 Brenton Banks Inc ........................... 5,470
254 F & M National Corp ......................... 5,429
130 CNB Bancshares Inc .......................... 5,427
183 First Michigan Bank Corp .................... 5,421
146 One Valley Bancorp Inc ...................... 5,420
166 First Midwest Bancorp Inc ................... 5,416
155 Susquehanna Bancshares Inc................... 5,367
164 +UICI ........................................ 5,330
242 MGI Properties .............................. 5,324
430 First Union Real Estate Corp................. 5,321
335 Commercial Net Lease Realty
Inc...................................... 5,318
128 Banknorth Group Inc ......................... 5,312
142 Student Loan Corp ........................... 5,289
170 Deposit Guaranty Corp ....................... 5,270
132 Protective Life Corp ........................ 5,264
91 Westamerica Bancorp.......................... 5,255
212 Irwin Financial Corp ........................ 5,247
193 Federal Realty Investment Trust.............. 5,235
135 New York Bancorp Inc ........................ 5,231
309 South West Property Trust ................... 5,214
137 Fort Wayne National Corp .................... 5,206
153 Provident Bancorp ........................... 5,202
109 Pennsylvania Real Estate
Investment............................... 5,192
135 Suffolk Bancorp ............................. 5,164
136 National Health Investors Inc. .............. 5,151
65 +Alexander's Inc ............................. 5,143
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
154 RLI Corp .................................... $5,140
293 Washington Real Estate
Investment Trust......................... 5,127
155 United Bankshares Inc ....................... 5,115
405 ALFA Corp ................................... 5,113
239 Trustco Bank Corp ........................... 5,109
276 LTC Properties Inc .......................... 5,106
302 Kranzco Realty Trust......................... 5,096
152 Omega Healthcare Investors Inc .............. 5,054
439 IRT Property Co ............................. 5,049
246 Universal Health Realty Income .............. 5,043
155 First Financial Bancorp ..................... 5,037
207 Nationwide Health Properties
Inc...................................... 5,020
207 Wellsford Residential Property
Trust.................................... 5,020
210 American Health Properties .................. 5,014
135 First Commercial Corp ....................... 5,012
142 United Fire & Casualty Co.................... 5,005
118 US Bancorp Inc............................... 5,000
180 Bancorp South Inc ........................... 4,995
141 Whitney Holding Corp ........................ 4,988
505 Berkshire Realty Co ......................... 4,987
94 Park National Corp .......................... 4,982
147 +MAIC Holdings Inc ........................... 4,980
223 SEI Corp .................................... 4,962
181 Zenith National Insurance Corp............... 4,955
125 BT Financial Corp ........................... 4,953
157 Citizens Banking Corp........................ 4,945
384 CRIIMI MAE Inc. ............................. 4,944
216 Crawford & Co ............................... 4,941
129 National Communications
Bancorp.................................. 4,934
511 Gainsco Inc ................................. 4,918
168 National City Bancshares Inc ................ 4,914
125 Liberty Corp ................................ 4,906
381 Taubman Centers Inc ......................... 4,905
185 First Merchants Corp ........................ 4,903
272 NYMagic Inc ................................. 4,896
100 Mark Twain Bancshares Inc ................... 4,875
134 Capitol American Financial Corp ............. 4,874
177 Community First Bankshares .................. 4,868
140 Firstbank Co ................................ 4,865
119 American General Corp ....................... 4,864
128 Selective Insurance Group ................... 4,864
123 United Carolina Bancshares .................. 4,859
114 Associated Banc Corp ........................ 4,845
119 UMB Financial Corp .......................... 4,805
196 Hubco Inc ................................... 4,802
46 Zions Bancorp................................ 4,784
196 Health Care Real Estate
Investment Trust......................... 4,778
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
154 Gallagher (Arthur J.) & Co .................. $4,774
180 Poe & Brown Inc ............................. 4,770
155 Argonaut Group Inc .......................... 4,766
125 JSB Financial Inc ........................... 4,750
151 Albank Financial Corp ....................... 4,738
163 Acordia Inc ................................. 4,727
203 Allied Capital Commercial Corp .............. 4,720
93 Berkley W R Corp ............................ 4,720
250 American Federal Bank ....................... 4,719
356 Hilb, Rogal & Hamilton Co ................... 4,717
52 +Markel Corp ................................. 4,680
63 First Union Corp ............................ 4,662
358 Western Investment Real Estate
Trust.................................... 4,654
177 First Western Bancorp Inc ................... 4,646
216 Fulton Financial Corp ....................... 4,644
181 Valley National Bancorp ..................... 4,638
189 First Source Corp ........................... 4,630
248 First Commonwealth Financial
Corp..................................... 4,619
113 Farmers Capital Bank Corp ................... 4,605
178 McGrath Rent Corp ........................... 4,584
183 Keystone Financial Inc ...................... 4,575
269 Ramco-Gershenson Properties
Trust.................................... 4,539
290 Avemco Corp ................................. 4,531
172 National Penn Bancshares Inc ................ 4,494
145 S&T Bancorp Inc ............................. 4,459
137 Corus Bankshares Inc ........................ 4,418
257 Mid Am Inc .................................. 4,401
150 Bank of Granite Corp ........................ 4,350
92 Trenwick Group Inc .......................... 4,255
473 Cash America International Inc. ............. 4,021
112 MAF Bancorp ................................. 3,892
76 U.S. Bancorp ................................ 3,415
189 Bradley Real Estate Inc ..................... 3,402
89 Anchor Bancorp Inc .......................... 3,182
71 Value Line Inc .............................. 3,142
88 Southtrust Corp ............................. 3,069
93 Fremont General Corp ........................ 2,883
55 Homeland Bankshares Corp .................... 2,282
78 HCC Insurance Holdings Inc .................. 1,872
78 FNB Corp..................................... 1,794
113 Trust Company of New Jersey ................. 1,582
40 UST Corp .................................... 825
--------
610,243
--------
Health Care (2.9%)
349 +Tecnol Medical Products Inc. ................ 5,279
130 Seafield Capital Corp ....................... 5,037
102 +Synetic Inc ................................. 4,947
175 West Inc .................................... 4,944
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
466 +Medco Research Inc .......................... $4,893
305 +Advanced Magnetics Inc ...................... 4,728
134 +Lunar Corp .................................. 4,690
119 Chemed Corp ................................. 4,343
369 +Epitope Inc ................................. 4,243
130 Diagnostic Products Corp..................... 3,364
274 Kinetic Concepts Inc ........................ 3,356
1,710 +Foxmeyer Health Corp ........................ 2,993
71 +Vivra Inc ................................... 1,961
64 +Barr Laboratories Inc ....................... 1,624
25 +American Homepatient Inc .................... 681
100 + Faulding Inc ................................ 612
--------
57,695
--------
Technology (4.3%)
241 +Boole & Babbage Inc ......................... 6,025
123 +BRC Holdings Inc ............................ 5,504
233 Cubic Corp .................................. 5,388
164 +Keane Inc ................................... 5,207
119 CTS Corp .................................... 5,087
114 Fluke Corp .................................. 5,087
381 Kaman Corp Cl A.............................. 4,953
171 Analysts International Corp ................. 4,831
225 +Bell Industries Inc ......................... 4,809
183 +Esterline Technologies Corp ................. 4,781
227 MTS Systems Corp ............................ 4,540
247 X-Rite Inc .................................. 4,075
234 +Trident Microsystems Inc .................... 3,949
162 +DH Technology Inc ........................... 3,888
135 +Kent Electronics Corp ....................... 3,476
71 +Dynatech Corp ............................... 3,142
81 Logicon Inc ................................. 2,957
163 +Tekelec ..................................... 2,567
53 +Kronos Inc. ................................. 1,696
88 +Integrated Process Equipment
Corp..................................... 1,584
22 +Silicon Graphics Inc......................... 561
--------
84,107
--------
Transportation (1.9%)
276 International Shipholding Corp .............. 5,106
402 Rollins Truck Leasing Corp .................. 5,075
346 +Yellow Corp.................................. 4,974
192 +Swift Transportation Co Inc ................. 4,512
51 Florida East Coast Industries ............... 4,456
493 Frozen Foods Express
Industries Inc........................... 4,437
174 Expeditors International of
Washington Inc........................... 4,002
199 Hunt J B Transportation
Services Inc............................. 2,786
109 Harper Group Inc ............................ 2,589
--------
37,937
--------
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
Utilities (14.2%)
211 IWC Resources Corp .......................... $6,567
188 Oneok Inc. .................................. 5,640
132 California Water Services Co ................ 5,544
116 +Tejas Gas Corp............................... 5,525
116 SJW Corp .................................... 5,438
193 Black Hills Corp ............................ 5,428
173 Energen Corp ................................ 5,233
185 Aquarion Co ................................. 5,157
302 Cascade Natural Gas Corp .................... 5,134
151 Laclede Gas Co .............................. 5,090
129 KN Energy Inc ............................... 5,063
197 Connecticut Natural Gas Corp ................ 5,023
210 Atmos Energy Corp ........................... 5,014
243 Washington Energy Co ........................ 5,012
183 TNP Enterprise Inc .......................... 5,010
447 +Citizens Utilities Co Cl B .................. 4,976
249 Philadelphia Suburban Corp .................. 4,949
203 South Jersey Industries Inc.................. 4,948
156 E'Town Corp ................................. 4,933
214 MDU Resources Group Inc ..................... 4,922
320 St Joseph Light & Power Co................... 4,920
137 Wicor Inc ................................... 4,915
282 Eastern Utilities Association................ 4,900
249 Public Service Co of New
Mexico................................... 4,867
540 +TPC Corp .................................... 4,860
199 Indiana Energy Inc .......................... 4,851
228 Connecticut Energy Corp ..................... 4,845
258 Empire District Electric Co.................. 4,838
202 Green Mountain Power Corp.................... 4,823
307 United Water Resources Inc .................. 4,797
213 Pennsylvania Enterprises Inc ................ 4,782
152 Central Hudson Gas & Electric
Corp..................................... 4,769
163 New Jersey Resources Corp ................... 4,768
168 Bay State Gas Co ............................ 4,746
246 Western Gas Resources Inc ................... 4,735
137 Northwestern Public Service Co............... 4,692
402 Central Maine Power Co. ..................... 4,673
218 Yankee Energy System Inc..................... 4,660
127 Cilcorp Inc ................................. 4,651
134 Sigcorp Inc ................................. 4,640
207 UGI Corp .................................... 4,632
155 IES Industries Inc .......................... 4,631
129 Orange & Rockland Utilities Inc.............. 4,628
198 Piedmont Natural Gas Inc .................... 4,628
204 United Cities Gas Co......................... 4,590
161 WPS Resources Corp .......................... 4,589
248 Public Service Co of North
Carolina................................. 4,544
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
194 Commonwealth Energy System .................. $4,535
157 North Carolina Natural Gas Corp ............. 4,533
222 Madison Gas & Electric Co.................... 4,495
185 Northwest Natural Gas Co .................... 4,440
203 Southern California Water Co ................ 4,415
137 Otter Tail Power Co ......................... 4,401
203 Colonial Gas Co ............................. 4,314
121 Eastern Enterprises Inc...................... 4,280
132 United Illuminating Co....................... 4,141
299 Central Vermont Public Services
Corp..................................... 3,588
137 Consumers Water Co .......................... 2,466
74 +Southern Union Co............................ 1,628
--------
279,816
--------
Total Investments (97.0%)
(Cost $1,707,952)........................ 1,908,577
Other Assets in Excess
of Liabilities (3.0%).................... 58,814
--------
Total Net Assets (100.0%)................... $1,967,391
==========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund
COMMON STOCKS (75.2%)
Basic Materials (3.3%)
59 IMC Global Inc .............................. $2,308
34 Vulcan Materials Co ......................... 2,070
24 Dow Chemical Co ............................. 1,881
37 Consolidated Papers Inc ..................... 1,818
57 Barrick Gold Corp ........................... 1,632
130 Ethyl Corp .................................. 1,251
48 Allegheny Teledyne Inc ...................... 1,104
59 Wausau Paper Mills Co ....................... 1,092
27 Bowater Inc ................................. 1,016
42 Placer Dome Inc ADR ......................... 914
70 Lawter International Inc .................... 884
35 Schulman Inc ................................ 858
22 Olin Corp .................................. 828
11 Pioneer Hi Bred International ............... 770
11 Phelps Dodge Corp ........................... 742
11 Aluminum Co. of America ..................... 701
101 Battle Mountain Gold Co ..................... 694
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
54 Calgon Carbon Corp .......................... $661
12 Ameron International Inc ................... 619
12 Nucor Corp .................................. 612
19 Dexter Corp ................................. 606
10 Betzdearborn Inc. ........................... 585
30 Crompton & Knowles Corp ..................... 577
10 Reynolds Metals Co .......................... 564
17 Florida Rock Industries Inc.................. 557
12 Newmont Mining Corp ......................... 537
17 Chesapeake Corp ............................. 533
12 Champion International Corp. ................ 519
25 Stepan Chemical Co .......................... 509
14 +Tremont Corp ................................ 506
16 USX-U.S. Steel Group ........................ 502
18 Fab Industries Inc .......................... 495
11 International Flavors &
Fragrances Inc ........................... 495
29 RPM Inc .................................... 493
12 Minerals Technologies Inc.................... 492
17 Ferro Corp .................................. 482
10 Petrolite Corp .............................. 480
13 Carpenter Technologies Corp ................. 476
14 Cambrex Corp ................................ 458
10 Cleveland-Cliffs Inc......................... 454
25 Glatefelter (PH) Co ......................... 450
80 +Hecla Mining Co ............................. 440
16 Tuscarora Inc ............................... 438
14 Puerto Rican Chemical Inc ................... 437
13 Liqui-Box Corp .............................. 422
27 Coeur D'Alene Mines Corp ................... 408
64 +Amax Gold Inc ............................... 408
21 Engelhard Corp .............................. 402
12 James River Corp of Virginia................. 398
11 Mosinee Paper Corp .......................... 390
12 South Down Inc .............................. 374
15 Cyprus Amax Minerals Co. .................... 351
11 Inco Ltd .................................... 351
12 Westvaco Corp ............................... 345
24 Homestake Mining Co ......................... 342
12 MacDermid Inc ............................... 330
12 Sonoco Products Co .......................... 311
15 Worthington Industries Inc................... 272
37 Echo Bay Mines Ltd .......................... 245
10 +ChemFirst Inc ............................... 231
25 +Bethlehem Steel Corp. ....................... 225
229 +Sunshine Mining & Refining .................. 215
12 Oregon Steel Mills .......................... 201
10 Inland Steel Industries Inc ................. 200
10 Lilly Industries Inc Cl A ................... 184
24 +Armco Inc ................................... 99
3 Mississippi Chemical Corp ................... 80
--------
41,324
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Capital Goods (7.8%)
320 U.S. Robotics Corp .......................... $23,040
525 Raymond Corp ................................ 9,122
326 +Vallen Corp ................................. 5,420
327 Tejon Ranch Co. ............................. 4,701
40 Boeing Co.................................... 4,255
28 Minnesota Mining &
Manufacturing Co ......................... 2,320
33 McDonnell Douglas Corp ...................... 2,112
42 Hubbell Inc Cl B ............................ 1,816
46 WMX Technologies Inc. ....................... 1,501
70 Westinghouse Electric Corp .................. 1,391
83 Sensormatic Electronics Corp ................ 1,390
12 Emerson Electric Co. ........................ 1,161
32 Wallace Computer Services Inc. .............. 1,104
19 Miller (Herman) Inc ......................... 1,076
22 Corning Inc ................................. 1,017
30 +Analog Devices Inc. ......................... 1,016
30 +Atmel Corp .................................. 994
30 +ADC Telecommunications Inc .................. 934
20 Molex Inc ................................... 782
12 Fluor Corp .................................. 753
20 Trinity Industries Inc ...................... 750
11 Honeywell Inc. .............................. 723
14 Alco Standard Corp .......................... 723
13 Crown Cork & Seal Inc ....................... 707
10 Eaton Corp .................................. 697
26 Amcast Industrial Corp ...................... 643
27 +Jacobs Engineering Group Inc ................ 638
10 Nordson Corp ................................ 637
19 Standard Register Co ........................ 617
19 Pentair Inc ................................. 613
15 Deere & Co .................................. 609
10 Carlisle Cos Inc ............................ 605
18 Donaldson Co Inc ............................ 603
27 Premark International Inc.................... 601
13 Thiokol Corp ................................ 582
11 Teleflex Inc ................................ 573
14 Tredegar Industrials Inc .................... 562
17 HON Industries .............................. 561
16 McClatchy Newspapers Inc Cl A ............... 560
27 Penn Engineering &
Manufacturing Corp ....................... 553
10 NACCO Industries Inc Cl A ................... 535
24 Ametek Inc .................................. 534
10 Tyco International Ltd ...................... 529
11 Fisher Scientific International ............. 518
13 IDEX Corp ................................... 518
21 Baldor Electric Co .......................... 517
23 +Osmonics Inc ................................ 506
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 Dover Corp .................................. $503
12 Butler Manufacturing Co ..................... 486
10 +Littelfuse Inc. ............................. 485
10 Kaydon Corp ................................. 471
19 Brady W H Co ................................ 468
14 Gleason Corp ................................ 464
17 Duriron Co Inc .............................. 461
20 Learonal Inc ................................ 460
18 International Aluminum Corp ................. 459
16 +Bearings Inc ................................ 446
14 Stone & Webster Inc ......................... 445
46 +Thermo Fibertek Inc ......................... 428
29 Daniel Industries Inc........................ 428
11 Parker Hannifin Corp ........................ 426
14 Commercial Metals Co......................... 422
28 Oil-Dri Corp America ........................ 420
22 Armor All Products Corp ..................... 418
23 Gencorp Inc ................................. 417
13 +Avatar Holdings Inc ......................... 416
56 +Insituform Technologies Cl A ................ 413
34 +Nashua Corp. ................................ 408
18 +Lydall Inc .................................. 405
14 Grief Brothers Corp Cl A .................... 399
10 +Sequa Corp Cl A ............................. 393
20 Granite Construction Inc .................... 380
33 Laidlaw Inc Cl B ........................... 380
18 Varlen Corp ................................. 370
16 Goulds Pumps Inc ............................ 367
18 Keystone International Inc .................. 362
11 Kysor Industrial Corp ....................... 359
14 Graco Inc ................................... 343
14 +Rohr Inc .................................... 317
13 Watts Industries Inc Cl A ................... 310
10 Standex International Corp .................. 309
11 Pall Corp ................................... 281
12 Albany International Corp Cl A .............. 278
11 Robbins & Myers Inc. ........................ 275
45 UNR Industries Inc .......................... 270
18 +Cuno Inc .................................... 268
17 +Ladd Furniture Inc .......................... 249
15 Brush Wellman Inc. .......................... 246
10 McDermott International Inc ................. 166
28 +Air & Water Technology Corp.................. 161
11 +MagneTek Inc ................................ 142
235 +Radius Inc .................................. 125
63 +Rollins Environmental Services
Inc...................................... 110
10 Sealright Co ................................ 105
11 +Navistar International Corp ................. 100
--------
98,933
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Communication Services (2.7%)
460 Sprint Corp ................................. $18,343
216 GTE Corp .................................... 9,828
44 US West Inc ................................. 1,419
39 Century Telephone Enterprises
Inc...................................... 1,204
35 ALLTEL Corp ................................. 1,098
14 SBC Communications .......................... 724
31 Aliant Communications Co..................... 527
17 Frontier Corp ............................... 385
--------
33,528
--------
Consumer Cyclical (10.6%)
821 Wackenhut Corp .............................. 14,162
725 Caseys General Stores Inc ................... 13,594
124 Eastman Kodak Co ............................ 9,951
527 Russ Berrie & Co ............................ 9,486
224 True North Communications Inc................ 4,900
668 +Uno Restaurant Corp ......................... 4,425
318 Commercial Intertech Corp ................... 4,333
222 Walbro Corp. ................................ 4,051
349 Stride Rite Corp ............................ 3,490
54 Omnicom Group Inc ........................... 2,470
37 May Department Stores Co .................... 1,730
40 PHH Corp .................................... 1,720
47 +Fred Meyer Inc .............................. 1,668
33 Penney (J.C.) Co Inc. ....................... 1,609
28 +Nine West Group Inc ......................... 1,298
40 Gap Inc. .................................... 1,205
30 +Fruit of the Loom Inc ....................... 1,136
30 +Jones Apparel Group ......................... 1,121
40 Mattel Inc .................................. 1,110
40 +Lands' End Inc .............................. 1,060
27 Dayton Hudson Corp .......................... 1,060
56 The Limited Inc ............................. 1,029
22 Lancaster Colony Corp ....................... 1,012
40 Dun & Bradstreet Corp ....................... 950
20 TJX Cos Inc ................................. 947
33 Service Corp International .................. 924
36 +HSN Inc ..................................... 855
11 Gannet Inc .................................. 824
95 +Handleman Co ................................ 807
21 Tiffany & Co ................................ 769
20 Masco Corp .................................. 720
39 Wellman Inc ................................. 668
43 Genovese Drugs Stores ....................... 665
60 +Burlington Industries Inc ................... 660
17 SPX Corp .................................... 659
19 Hannaford Brothers Co ....................... 646
24 Stanhome Inc ................................ 636
11 Houghton Mifflin Co ......................... 623
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 NCH Corp .................................... $602
11 Meredith Corp ............................... 580
13 Hughes Supply Inc ........................... 561
16 Belo (AH) Corp .............................. 558
21 +CSS Industries Inc .......................... 546
123 Ekco Group Inc .............................. 538
35 +National Education Corp ..................... 534
12 +Volt Information Sciences Inc ............... 525
16 Wiley (John) & Sons ......................... 516
21 Donnelly Corp ............................... 514
48 +Best Buy Co Inc ............................. 510
19 Modine Manufacturing ........................ 508
29 +AnnTaylor Stores Corp ....................... 507
26 Sturm Ruger & Co Inc ........................ 504
54 Blessings Corp .............................. 503
50 Crown Crafts Inc ............................ 500
35 Falcon Products Inc ......................... 499
48 +K mart Stores ............................... 498
10 TRW Inc. .................................... 495
11 Genuine Parts Co ............................ 491
37 +Johnson Worldwide Association
Inc Cl A ................................. 490
35 ADVO Inc .................................... 490
16 American List Corp. ......................... 486
26 Sotheby's Holdings Inc Cl A ................. 481
47 Graphic Industries Inc....................... 476
16 La-Z Boy Inc ................................ 472
10 Whirlpool Corp .............................. 466
38 Fingerhut Cos Inc. .......................... 465
10 Harcourt General Corp. ...................... 461
10 McGraw-Hill Cos Inc ......................... 461
39 +Lifetime Hoan Corp .......................... 458
29 Osh Kosh B'Gosh Cl A ........................ 442
18 Bassett Furniture Industries Inc............. 441
24 Brown Group Inc ............................. 441
10 Tandy Co .................................... 440
16 Tennant Co .................................. 440
17 +Christiana Cos............................... 438
20 Lawson Products Inc ......................... 437
16 Unitog Co ................................... 436
74 +American Media Inc........................... 435
31 +Information Resources Inc ................... 434
11 Hasbro Inc .................................. 428
18 Waverly Inc ................................. 427
14 Circuit City Store Inc ...................... 422
12 Plenum Publishing Corp ...................... 420
67 PT Tri Polyta Indonesia ADR ................. 419
11 New York Times Co Cl A ...................... 418
49 +Syms Corp ................................... 416
21 Delechamps Inc .............................. 407
10 Apogee Enterprises Inc ...................... 398
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
15 +MacFrugals Bargains Closeouts ............... $392
20 Alico Inc ................................... 375
11 Dow Jones & Co Inc .......................... 373
23 Strawbridge & Clothier ...................... 365
91 +Topps Co Inc ................................ 364
11 +Gelman Sciences Inc ......................... 358
18 Cooper Tire & Rubber ........................ 356
18 Maytag Corp ................................. 356
36 +Playboy Enterprises Inc Cl B ................ 351
11 Echlin Inc. ................................. 348
13 Guilford Mills Inc .......................... 346
12 Starrett (L.S) Co Cl A ...................... 341
10 Cognizant Corp .............................. 330
13 American Business Products .................. 327
14 Lee Enterprises Inc.......................... 326
22 Duty Free International Inc ................ 319
75 +Service Merchandise Inc ..................... 319
10 Dillard Department Stores ................... 309
12 Standard Products Co ........................ 306
10 Black & Decker Corp ......................... 301
12 Arvin Industries Inc ........................ 297
11 Stanley Works ............................... 297
10 American Greetings Cl A ..................... 284
13 Smart & Final Inc ........................... 281
31 +GRC International Inc ....................... 252
11 +Woolworth Corp .............................. 241
11 +Gibson Greetings Inc ........................ 216
13 Cadmus Communications Corp .................. 202
24 +Intelligent Electronics Inc. ................ 192
18 Hancock Fabrics Inc ......................... 187
10 CPI Corp .................................... 168
10 Viad Corp ................................... 165
13 Ennis Business Forms ........................ 146
38 CML Group Inc ............................... 128
3 +Payless Shoesource Inc ...................... 113
3 +ACNielsen Corp .............................. 45
--------
132,883
--------
Consumer Staples (4.9%)
334 WLR Foods Inc ............................... 4,133
96 =Revco D.S. Inc .............................. 3,552
40 Cardinal Health Inc ......................... 2,330
93 IBP Inc ..................................... 2,255
11 Unilever NV ADR ............................. 1,928
86 Archer Daniels Midland Co ................... 1,892
27 Kellogg Co .................................. 1,772
44 Anheuser- Busch Cos Inc. .................... 1,760
51 Tyson Foods Inc Cl A ........................ 1,747
50 +Viacom Inc Cl B ............................. 1,744
45 Albertsons Inc .............................. 1,603
16 Kimberly-Clark Corp ......................... 1,524
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
28 Conagra Inc ................................ $1,393
37 Heinz H J Co ................................ 1,332
35 UST Inc. .................................... 1,133
12 Colgate- Palmolive Co ....................... 1,107
32 Sysco Corp .................................. 1,044
33 Bergen Brunswig Corp ........................ 941
103 +Perrigo Co .................................. 940
34 Kelly Services Inc Cl A ..................... 918
42 Flowers Industries Inc ...................... 903
64 Ruddick Corp ................................ 896
23 Quaker Oats Co .............................. 877
11 CPC International Inc. ...................... 852
13 General Mills Inc ........................... 824
11 Ralston Purina Co ........................... 807
43 International Multifoods Corp ............... 779
19 Tambrands Inc. .............................. 777
33 Church & Dwight Co Inc ...................... 755
13 Paychex Inc ................................. 669
21 TCA Cable TV Inc ............................ 633
11 Avon Products Inc ........................... 628
39 Carter Wallace Inc .......................... 609
18 Dean Foods Co................................ 580
29 +International Dairy Queen Inc
Cl A..................................... 580
12 +Kroger Co ................................... 558
12 McDonald's Corp. ............................ 543
15 Universal Foods Corp ........................ 529
12 Hershey Foods Corp .......................... 525
13 Rite Aid Corp. .............................. 517
13 Tootsie Roll Industries ..................... 515
27 Coors (Adolph) Co Cl B....................... 513
22 Banta Corp. ................................. 503
27 +Ruby Tuesday Inc ............................ 499
10 Longs Drug Stores Inc........................ 491
13 National Presto Industries .................. 486
26 ABM Industries Inc .......................... 481
56 Bridgford Foods Corp ........................ 476
14 +Canandaigua Wine Co Cl B .................... 469
14 Harland Co. ................................. 462
11 +Chris Craft Industries Inc .................. 461
23 Luby's Cafeterias Inc. ...................... 457
11 American Stores Co .......................... 450
21 Nash Finch Corp ............................. 446
62 +Shoney's Inc ................................ 434
10 +CVS Corp .................................... 412
30 +Foodbrands America Inc ...................... 412
25 Goodmark Foods Inc .......................... 412
14 Dreyers Grand Ice Cream Inc ................. 406
10 +Ceridian Corp ............................... 405
14 First Brands Corp ........................... 397
17 Whitman Corp ................................ 389
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
20 Blair Corp .................................. $385
26 Dames & Moore Inc ........................... 380
21 Lance Inc ................................... 378
10 Giant Food Inc Cl A ......................... 345
10 Deluxe Corp ................................. 327
22 +AMC Entertainment Inc ....................... 316
32 +Buffets Inc ................................. 292
11 +Carmike Cinemas Inc. Cl A ................... 279
16 Arbor Drugs Inc ............................. 278
17 Savannah Foods & Industries ................. 230
14 Michael Foods Inc ........................... 179
10 Rykoff-Sexton Inc ........................... 159
10 Dial Corp ................................... 148
12 A.T. Cross Co Cl A .......................... 140
--------
62,701
--------
Energy (14.1%)
930 Exxon Corp .................................. 91,140
105 Royal Dutch Petroleum Co ADR ................ 17,929
79 Mobil Corp. ................................. 9,658
128 Chevron Corp ................................ 8,320
323 +Tuboscope Vetco International
Corp ..................................... 5,006
46 Amoco Corp .................................. 3,714
50 Anadarko Petroleum Co ....................... 3,237
141 +Global Marine Inc ........................... 2,908
43 +ENSCO International Inc ..................... 2,085
25 Tosco Corp .................................. 1,978
17 Schlumberger Ltd ............................ 1,698
52 +Weatherford Enterra Inc ..................... 1,560
35 Phillips Petroleum Co. ...................... 1,549
11 Atlantic Richfield .......................... 1,459
13 Texaco Inc .................................. 1,276
49 Occidental Petroleum Corp ................... 1,145
58 +Nabors Industries Inc ....................... 1,116
40 Georgia Gulf Corp ........................... 1,075
23 +Smith International Inc ..................... 1,032
20 +Triton Energy Ltd ........................... 970
18 +BJ Services Co............................... 918
24 Parker & Parsley Petroleum Co ............... 882
28 Dresser Industries Inc ...................... 868
36 USX-Marathon Group .......................... 859
24 Mapco Inc ................................... 816
53 Quaker State Corp ........................... 749
14 Helmerich & Payne Inc ....................... 730
23 Valero Energy Corp .......................... 658
11 Amerada Hess Corp. .......................... 637
64 Ranger Oil Ltd............................... 632
31 Wiser Oil Co ................................ 612
11 Murphy Oil Corp ............................. 612
10 Halliburton Co .............................. 602
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
17 Apache Corp ................................. $601
23 Landauer Inc ................................ 564
34 +HS Resources Inc ............................ 561
39 Berry Petroleum Cl A ........................ 561
11 Burlington Resources Inc .................... 554
17 Ultra Diamond Shamrock Corp.................. 538
32 Getty Petroleum Corp ........................ 520
14 Vintage Petroleum Inc ....................... 483
25 Sevenson Environmental
Services Inc.............................. 456
148 +Harken Energy Corp .......................... 444
47 +Allied Waste Industrials Inc ................ 435
16 Holly Corp .................................. 428
10 +Barrett Resources Corp ...................... 426
12 Baker Hughes Inc ............................ 414
16 Sun Co ...................................... 390
30 +Crown Central Petroleum Cl A ................ 371
12 Ashland Coal Inc ............................ 333
12 +Varco International Inc ..................... 278
27 +Parker Drilling Co .......................... 260
10 +Oryx Energy Co .............................. 248
15 +Pool Energy Services Co ..................... 231
13 +Plains Resources Inc ........................ 203
10 +Santa Fe Energy Resources ................... 139
11 +Hondo Oil & Gas Co .......................... 120
--------
177,988
--------
Financial (11.1%)
1,027 State Auto Financial Corp ................... 18,486
1,021 South West Property Trust ................... 17,229
220 Progressive Corp ............................ 14,823
230 Commerce Bancshares Inc ..................... 10,638
221 Universal Health Real Estate
Investment Trust......................... 4,530
336 Western Investment Real Estate
Investment Trust......................... 4,368
30 Summit Bancorp .............................. 1,312
40 Equifax Inc. ................................ 1,225
86 Hibernia Corp Cl A .......................... 1,139
40 Paine Webber Group Inc ...................... 1,125
21 Lincoln National Corp Ltd. .................. 1,102
20 Comerica Inc ................................ 1,047
30 Southtrust Corp ............................. 1,046
22 +Policy Management Systems
Corp Technologies......................... 1,015
30 Mercantile Bankshares Corp .................. 960
10 Loews Corp .................................. 942
11 Transatlantic Holdings Inc .................. 885
20 AFLAC Inc ................................... 855
67 First Union Real Estate Equity .............. 829
18 U.S. Bancorp ................................ 809
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
14 Chubb Corp .................................. $752
10 UNUM Corp ................................... 722
17 Bancorp Hawaii Inc. ......................... 714
33 City National Corp .......................... 714
18 Wilmington Trust Co ......................... 711
18 Capitol American Financial Corp ............. 655
16 Home Beneficial Corp ........................ 606
10 Forest City Enterprises Inc Cl A ............ 605
23 American Heritage Life Investors ............ 604
18 RLI Corp .................................... 601
15 Financial Trust Corp ........................ 598
26 F & M National Corp ......................... 556
22 BRE Properties Inc .......................... 544
14 New York Bancorp Inc ........................ 542
47 IRT Property Co ............................. 540
12 National City Corp .......................... 538
22 Pennsylvania Real Estate
Investment Trust......................... 536
16 Dauphin Deposit Corp ........................ 528
24 MGI Properties .............................. 528
41 CRIIMI MAE Inc. ............................. 528
28 LTC Properties Inc .......................... 518
19 Federal Realty Investment Trust.............. 515
27 Mid America Bancorp ......................... 513
13 Liberty Corp ................................ 510
21 Wellsford Residential Property
Trust .................................... 509
15 +MAIC Holdings Inc ........................... 508
22 Crawford & Co ............................... 503
12 CNB Bancshares Inc .......................... 501
15 Omega Healthcare Investors Inc .............. 499
10 Liberty Bancorp Inc ........................ 497
18 Zenith National Insurance ................... 493
13 National Health Investors Inc. .............. 492
31 Commercial Net Lease Realty ................. 492
33 Burham Pacific Properties Inc ............... 491
29 Kranzco Realty Trust ........................ 489
20 Health Care Real Estate
Investment Trust Inc ..................... 487
15 +UICI ........................................ 487
20 Nationwide Health Properties Inc............. 485
13 Student Loan Corp ........................... 484
12 Protective Life Corp ........................ 478
20 American Health Properties Inc............... 477
17 CBT Corp .................................... 467
10 Trenwick Group Inc .......................... 463
14 United Bankshares Inc ....................... 462
12 JSB Financial Inc ........................... 456
14 First Financial Bancorp ..................... 455
14 Wesbanco Inc ................................ 455
13 Firstbank Illinois Co ....................... 452
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
34 Hilb, Rogal & Hamilton Co ................... $451
13 Susquehanna Bancshares Inc .................. 450
11 Farmers Capital Bank Corp ................... 448
11 UMB Financial Corp .......................... 446
15 First Michigan Bank Corp .................... 444
12 First Financial Corp ........................ 444
24 Baldwin & Lyons Inc ......................... 441
18 Hubco Inc ................................... 441
17 McGrath Rent Corp ........................... 438
11 BT Financial Corp ........................... 436
11 United Carolina Bancshares .................. 435
14 Deposit Guaranty Corp ....................... 434
14 Gallagher (Arthur J.) & Co .................. 434
36 EMC Insurance Group Inc ..................... 432
18 F & M Bancorp ............................... 432
14 Argonaut Group Inc .......................... 431
14 S&T Bancorp Inc ............................. 431
23 First Commonwealth Financial
Corp ..................................... 428
16 BSB Bancorp Inc ............................. 428
10 Associated Banc Corp ........................ 425
20 Heritage Financial Service Inc .............. 425
12 Whitney Holding Corp ........................ 425
13 First Midwest Bancorp Inc ................... 424
16 First Merchants Corp ........................ 424
10 US Bancorp Inc............................... 424
11 Midland Co .................................. 424
19 SEI Corp .................................... 423
13 Merchants New York Bancorp .................. 423
27 Avemco Corp ................................. 422
11 Frontier Insurance Group Inc ................ 421
11 National Communications
Bancorp.................................. 421
15 American Financial Enterprise
Inc...................................... 420
13 Corus Bankshares Inc ........................ 419
13 First United Bancshares Inc ................. 419
18 Allied Capital Commerical Corp .............. 419
11 Fort Wayne National Corp .................... 418
11 Selective Insurance Group ................... 418
17 First Source Corp ........................... 417
22 American Federal Bank ....................... 415
10 Banknorth Group Inc ......................... 415
42 Berkshire Realty Co ......................... 415
15 Brenton Banks Inc ........................... 414
15 Community First Bankshares .................. 413
24 Mid Am Inc .................................. 411
13 Citizens Banking Corp ...................... 410
14 National City Bancshares Inc ................ 410
11 First Commercial Corp ....................... 408
11 One Valley Bancorp Inc ...................... 408
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
13 Albank Financial Corp ....................... $408
233 CRI Liquidating Real Estate
Investment Trust Inc ..................... 408
14 Acordia Inc ................................. 406
14 Bank of Granite Corp ........................ 406
10 Hancock Holding Co........................... 405
10 Horace Mann Educator Corp.................... 404
23 Magna Bancorp Inc ........................... 403
22 NYMagic Inc ................................. 396
10 Safeco Corp ................................. 394
15 First Western Bancorp Inc ................... 394
18 Fulton Financial Corp ....................... 387
40 Gainsco Inc ................................. 385
18 Trustco Bank Corp ........................... 385
45 Cash America International Inc. ............. 383
10 Suffolk Bancorp ............................. 383
15 Keystone Financial Inc ...................... 375
14 Poe & Brown Inc ............................. 371
14 National Penn Bancshares Inc ................ 366
13 Bancorp South Inc ........................... 361
10 Tompkins County Trustco Inc ................. 334
13 HCC Insurance Holdings Inc .................. 312
11 Valley National Bancorp ..................... 282
13 USF&G Corp .................................. 271
10 First Commerce Bancshares ................... 265
20 Citizens Inc Cl A ........................... 170
12 Taubman Centers Inc ......................... 155
12 ALFA Corp ................................... 152
3 +Echelon International Corp .................. 47
--------
139,987
--------
Health Care (7.0%)
341 +Amgen Inc. .................................. 18,542
242 Columbia Healthcare Corp .................... 9,862
86 Bristol-Myers Squibb Co. .................... 9,353
226 Pharmacia & Upjohn Inc ...................... 8,955
331 +Tecnol Medical Products Inc. ................ 5,006
42 American Home Products Corp.................. 2,462
33 Schering-Plough Corp. ....................... 2,137
125 Mylan Laboratories Inc ...................... 2,094
53 +Centocor Inc ................................ 1,895
57 +Forest Laboratories Inc ..................... 1,867
24 Warner Lambert Co ........................... 1,800
81 +Nellcor Puritan Bennett Inc ................. 1,772
36 +HealthCare COMPARE Corp ..................... 1,525
72 +Value Health Inc. ........................... 1,404
15 +Pacificare Health Systems Inc ............... 1,279
30 Beckman Instruments Inc ..................... 1,151
30 +HEALTHSOUTH Corp ............................ 1,144
19 +Boston Scientific Corp ...................... 1,140
25 +Watson Pharmaceuticals Inc................... 1,123
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
77 +Horizon/CMS Healthcare Corp ................. $972
30 +Vencor Inc .................................. 949
18 DENTSPLY International Inc................... 855
38 +Tenet Healthcare Corp ....................... 831
24 +Foundation Health Corp ...................... 762
28 Diagnostic Products Corp..................... 724
37 +Humana Inc .................................. 708
47 +NovaCare Inc ................................ 517
18 West Inc .................................... 508
11 Mallinckrodt Inc. ........................... 485
12 Seafield Capital Corp ....................... 465
17 +ALZA Corp ................................... 440
12 Chemed Corp ................................. 438
12 Allergan Inc. ............................... 427
10 +St. Jude Medical Inc. ....................... 426
17 +Acuson Corp.................................. 414
11 Bausch & Lomb Inc ........................... 390
37 +Medco Research Inc .......................... 388
33 +Epitope Inc ................................. 380
11 +Advanced Technology
Laboratories............................. 341
12 Bard (CR) Inc ............................... 336
22 Biomet Inc. ................................. 333
16 +Datascope Corp .............................. 320
21 Kinetic Concepts Inc ........................ 257
15 +Advanced Magnetics Inc ...................... 233
14 +Beverly Enterprises Inc...................... 179
10 +Systemix Inc ................................ 153
--------
87,742
--------
Technology (2.8%)
823 X-Rite Inc .................................. 13,580
239 +Trident Microsystems Inc .................... 4,033
42 First Data Corp ............................. 1,533
24 Raytheon Co ................................. 1,155
31 +Fiserv Inc .................................. 1,139
21 +Compuware Corp .............................. 1,053
22 +Litton Industries Inc ....................... 1,048
18 +Dell Computer Corp .......................... 956
42 +Structural Dynamics Research
Corp..................................... 840
72 +Novell Inc .................................. 682
27 +Bell Industries Inc ......................... 577
21 +Esterline Technologies Corp ................. 549
20 +Stratus Computer Inc. ....................... 545
12 Fluke Corp .................................. 535
23 Cubic Corp .................................. 532
21 +Boole & Babbage Inc ......................... 525
11 +Storage Technology Corp ..................... 524
11 +BRC Holdings Inc ............................ 492
23 +Apple Computer Inc .......................... 480
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 Interpublic Group of Cos Inc ................ $475
11 CTS Corp .................................... 470
36 Kaman Corp Cl A.............................. 468
84 +Borland International Inc.................... 457
14 Analysts International Corp ................. 395
162 +Executone Information Systems
Inc...................................... 385
14 +Advanced Micro Devices Inc .................. 361
11 +Keane Inc ................................... 349
17 MTS Systems Corp ............................ 340
13 +Tekelec ..................................... 205
10 EG&G Inc .................................... 201
41 +AST Research Inc ............................ 172
12 +Amdahl Corp ................................. 146
21 +Unisys Corp ................................. 142
12 +Intergraph Corp ............................. 123
--------
35,467
--------
Transportation (1.7%)
524 International Shipholding Corp .............. 9,694
326 +Yellow Corp.................................. 4,686
24 Burlington Northern Santa Fe
Corp..................................... 2,073
26 Alexander & Baldwin Inc...................... 650
29 Atlantic Southeast Airlines Inc. ............ 634
41 Hunt (JB) Transport Services Inc ............ 574
12 +Federal Express Corp. ....................... 534
42 Rollins Truck Leasing Corp .................. 530
50 +USA Truck Inc ............................... 400
44 Frozen Foods Express
Industries............................... 396
21 Arnold Industries Inc ....................... 333
10 +Swift Transportation Co...................... 235
12 Caliber Systems Inc ......................... 231
--------
20,970
--------
Utilities (9.2%)
727 Eastern Utilities Association................ 12,632
352 GPU Inc ..................................... 11,836
525 Public Service Co of North
Carolina.................................. 9,581
327 +Tucson Electric Power Co .................... 5,436
329 United Water Resources Inc .................. 5,141
222 Washington Energy Co ........................ 4,579
153 Northeast Utilities ......................... 2,027
53 Florida Progress Corp ....................... 1,709
73 Southern Co ................................. 1,652
32 El Paso Natural Gas ......................... 1,616
46 CMS Energy Corp ............................. 1,547
57 Scana Corp .................................. 1,525
67 Ohio Edison Co .............................. 1,524
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
35 Enron Corp .................................. $1,509
58 Potomac Electric Power Co.................... 1,493
45 Central Hudson Gas & Electric
Corp ..................................... 1,412
63 Montana Power Co ............................ 1,347
50 Boston Edison Co. ........................... 1,344
31 Nipsco Industries Inc........................ 1,228
30 Public Service Co of Colorado................ 1,166
32 +CalEnergy Inc ............................... 1,076
30 New England Electric ........................ 1,046
22 Duke Power Co ............................... 1,023
47 Pacific Gas & Electric Co. .................. 987
61 Midamerican Energy Holdings ................. 968
38 Puget Sound Power & Light ................... 912
34 Indiana Energy Inc .......................... 829
29 IPALCO Enterprises Inc....................... 790
40 Public Service Co of New
Mexico................................... 785
38 Edison International ........................ 755
20 Williams Cos Inc ............................ 731
25 MCN Corp Holding Co ......................... 722
29 LG & E Energy Corp .......................... 711
25 Black Hills Corp ............................ 703
32 New York State Electric & Gas
Corp...................................... 692
59 Central Maine Power Co. ..................... 686
13 Coastal Corp ................................ 635
21 Brooklyn Union Gas Co........................ 633
13 +Tejas Gas Corp............................... 619
30 American Water Works Inc..................... 619
27 Houston Industries Inc....................... 611
17 Southwestern Public Service ................. 601
14 National Fuel Gas Co ........................ 577
28 Pacificorp .................................. 574
18 IWC Resources Corp .......................... 560
13 California Water Services Co ................ 546
18 Energen Corp ................................ 544
21 Central & South West Corp ................... 538
27 Philadelphia Suburban Corp .................. 537
26 Nevada Power Co.............................. 533
19 TNP Entreprise Inc .......................... 520
10 Sonat Inc. .................................. 515
15 Northwestern Public Service Co............... 514
16 Idaho Power Co .............................. 498
12 Texas Utilities Co .......................... 489
20 South Jersey Industries Inc.................. 487
23 AGL Resources Inc ........................... 486
19 Connecticut Natural Gas Corp ................ 484
16 IES Industries Inc .......................... 478
20 Atmos Energy Corp ........................... 477
28 Cascade Natural Gas Corp .................... 476
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
15 E Town Corp ................................. $474
17 Aquarion Co ................................. 474
13 Hawaiian Electric Industries Inc............. 470
10 SJW Corp .................................... 469
16 New Jersey Resources Corp ................... 468
14 Cinergy Corp. ............................... 467
10 FPL Group Inc. .............................. 460
20 MDU Resources Group Inc ..................... 460
13 Eastern Enterprises Inc...................... 460
19 Laclede Gas Co .............................. 458
11 American Electric Power Co .................. 452
16 Bay State Gas Co............................. 452
13 Sig Corp Inc ................................ 450
24 Empire District Electric Co.................. 450
19 Commonwealth Energy System .................. 444
12 Cilcorp Inc ................................. 439
10 Pennsylvania Enterprises Inc ................ 439
20 Southern California Water Co ................ 435
39 +Citizens Utilities Co Cl B .................. 434
15 North Carolina Natural Gas Corp ............. 433
12 Orange & Rockland Utilities Inc.............. 430
12 Wicor Inc ................................... 430
18 Green Mountain Power Corp.................... 430
19 United Cities Gas Co......................... 428
15 WPS Resources Corp .......................... 428
19 UGI Corp .................................... 425
11 Dominion Resources Inc ...................... 424
18 Piedmont Natural Gas Inc .................... 421
13 Otter Tail Power Co ......................... 418
27 St Joseph Light & Power Co................... 415
17 Northwest Natural Gas Co .................... 408
20 Madison Gas & Electric Co.................... 405
17 PP & L Resources Inc ........................ 391
13 Oneok Inc. .................................. 390
10 Union Electric Co............................ 385
17 Washington Gas Light Co ..................... 385
18 Colonial Gas Co ............................. 383
12 United Illuminating Co....................... 377
12 Pacific Enterprises ......................... 365
13 Entergy Corp ................................ 361
40 +TPC Corp .................................... 360
104 +PhoneTel Technologies Inc ................... 332
15 Western Gas Resources Inc ................... 289
13 Yankee Energy System Inc..................... 278
11 Connecticut Energy Corp ..................... 234
11 Noram Energy Corp. .......................... 169
16 +Niagara Mohawk Power Corp.................... 158
--------
116,278
--------
Total Common Stocks
(Cost $914,983)........................... 947,801
--------
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Unit Investment Trust (4.5%)
(Cost $58,506)
775 Standard & Poor's
Depositary Receipts ................... $57,302
--------
Open End Investment Company (4.3%)
(Cost $53,052)
5,072 Bankers Trust EAFE Equity
Index Fund............................... 53,861
--------
Principal
Amount
U.S. Government
Obligations (20.2%)
U.S. Treasury Bond (2.8%)
$35,000 6.875% Due 8/15/25 .......................... 35,689
--------
U.S. Treasury Notes (17.4%)
121,000 5.500% Due 11/15/98 ......................... 120,187
98,000 6.500% Due 8/15/05 .......................... 98,628
--------
218,815
--------
Total U.S. Treasury Obligations
(Cost $254,302)........................... 254,504
--------
Total Investments (104.2%)
(Cost $1,280,843)......................... 1,313,468
Liabilities in Excess of
Other Assets (-4.2%)...................... (53,577)
--------
Total Net Assets (100.0%).................... $1,259,891
=========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund
COMMON STOCKS (59.8%)
Basic Materials (4.2%)
1,037 Barrick Gold Corp ........................... $29,684
306 Dow Chemical Co ............................. 23,983
500 Quaker Chemical Corp ........................ 8,188
382 Lawter International Inc .................... 4,823
229 Stepan Chemical Co .......................... 4,666
178 Placer Dome Inc ADR ......................... 3,872
235 Coeur D'Alene Mines Corp .................... 3,554
55 Aluminum Co of America ...................... 3,506
78 Newmont Mining Corp ......................... 3,490
63 Consolidated Papers Inc ..................... 3,095
69 Bowater Inc ................................. 2,596
35 Pioneer Hi Bred International ............... 2,450
251 Ethyl Corp .................................. 2,416
76 Georgia Gulf Corp ........................... 2,042
30 Phelps Dodge Corp ........................... 2,025
23 Rohm & Haas Co .............................. 1,877
44 Olin Corp ................................... 1,655
38 Champion International Corp. ................ 1,643
27 Reynolds Metals Co .......................... 1,522
26 BetzDearborn Inc. ........................... 1,521
78 Crompton & Knowles Corp ..................... 1,501
28 Nucor Corp .................................. 1,428
31 International Flavors &
Fragrances Inc............................ 1,395
44 Chesapeake Corp ............................. 1,380
44 USX-U.S. Steel Group ........................ 1,380
73 Wausau Paper Mills Co ....................... 1,350
41 Inco Ltd .................................... 1,307
20 Sigma Aldrich Corp .......................... 1,249
44 Ferro Corp .................................. 1,248
30 Minerals Technologies Inc ................... 1,230
69 RPM Inc ..................................... 1,173
63 Glatefelter (PH) Co ......................... 1,134
58 Engelhard Corp .............................. 1,109
47 Cyprus Amax Minerals Co. .................... 1,099
34 Dexter Corp ................................. 1,084
20 Temple Inland Inc ........................... 1,082
23 Cleveland Cliffs Inc ....................... 1,044
42 Schulman Inc ................................ 1,029
76 Calgon Carbon Corp .......................... 931
65 Homestake Mining Co ......................... 926
15 Mead Corp ................................... 872
126 Battle Mountain Gold Co ..................... 866
18 Petrolite Corp .............................. 864
18 Great Lakes Chemical Corp. .................. 841
24 James River Corp of Virginia ................ 795
16 Union Camp Corp ............................. 764
20 Mosinee Paper Corp .......................... 710
15 Fuller H B Co ............................... 705
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
24 Westvaco Corp ............................... $690
13 Ameron Inc .................................. 671
18 Bemis Inc ................................... 664
24 Tuscarora Inc ............................... 657
36 Worthington Industries ...................... 652
97 Echo Bay Mines Ltd .......................... 643
31 Inland Steel Industries Inc ................. 620
19 Liqui-Box Corp .............................. 618
17 +Tremont Corp ................................ 614
24 International Aluminum Corp ................. 612
22 FAB Industries Inc .......................... 605
16 Ecolab Inc .................................. 602
18 Florida Rock Industries Inc ................. 590
21 MacDermid Inc ............................... 578
17 South Down Inc .............................. 529
16 Cambrex Corp ................................ 524
20 Sonoco Products Co .......................... 518
36 Tejon Ranch Co. ............................. 518
89 +Hecla Mining Co ............................. 490
13 Nalco Chemical Co ........................... 470
15 Puerto Rican Cement Inc ..................... 469
71 +Amax Gold Inc ............................... 453
12 Carpenter Technology Corp ................... 440
9 +MAXXAM Inc .................................. 429
23 Oregon Steel Mills .......................... 385
40 +Bethlehem Steel Corp. ....................... 360
--------
153,505
--------
Capital Goods (6.1%)
532 McDonnell Douglas Corp ...................... 34,048
321 Minnesota Mining &
Manufacturing Co ......................... 26,603
1,033 Raymond Corp ................................ 17,948
122 Boeing Co ................................... 12,978
200 +Analog Devices Inc. ......................... 6,775
200 +ADC Telecommunications Inc .................. 6,225
62 Emerson Electric Co. ........................ 5,999
291 Westinghouse Electric Corp .................. 5,784
100 York International Corp ..................... 5,588
159 WMX Technologies Inc. ....................... 5,187
337 Oil-Dri Corp America ........................ 5,055
109 Corning Inc ................................. 5,041
228 Penn Engineering &
Manufacturing Corp ....................... 4,674
66 Honeywell Inc. .............................. 4,340
76 Crown Cork & Seal Inc ....................... 4,133
338 +Nashua Corp. ................................ 4,056
236 +Vallen Corp ................................. 3,924
51 Fluor Corp .................................. 3,200
52 Sundstrand Corp ............................. 2,210
40 Tyco International Ltd ...................... 2,115
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
20 Textron Inc ................................. $1,885
27 Eaton Corp .................................. 1,883
50 Trinity Industries Inc ...................... 1,875
80 Allegheny Teledyne Inc ...................... 1,840
30 Miller (Herman) Inc ......................... 1,699
74 Premark International Inc ................... 1,647
19 Raychem Corp ............................... 1,522
34 Hubbell Inc Cl B ............................ 1,471
29 Dover Corp .................................. 1,457
44 HON Industries .............................. 1,452
27 Alco Standard Corp .......................... 1,394
62 Ametek Inc .................................. 1,380
53 Pall Corp ................................... 1,352
27 Kaydon Corp ................................. 1,272
102 Laidlaw Inc Cl B ............................ 1,173
35 Donaldson Co Inc ............................ 1,173
30 Parker Hannifin Corp ........................ 1,162
23 Precision Castparts Corp .................... 1,141
32 Pentair Inc ................................. 1,032
12 Northrop Gruman Corp ........................ 993
30 Standard Register Co ........................ 975
41 +Jacobs Engineering Group Inc ................ 969
15 Nordson Corp ................................ 956
23 Millipore Corp .............................. 952
13 General Dynamics ............................ 916
45 Keystone International Inc .................. 906
11 Grainger WW Inc ............................. 883
17 Harnischfeger Industries Inc. ............... 818
18 General Signal Corp ......................... 769
28 Duriron Co Inc .............................. 759
16 Cummins Engine Inc .......................... 736
18 Butler Manufacturing Co ..................... 729
20 Avery Dennison Corp ......................... 707
38 Gencorp Inc ................................. 689
17 +Sequa Corp Cl A ............................. 667
11 Barnes Group Inc ............................ 660
51 +Magnetek Inc ................................ 657
44 Daniel Industries ........................... 649
16 IDEX Corp ................................... 638
85 +Insituform Technologies Cl A ................ 627
27 Learonal Inc ................................ 621
19 Kysor Industrial Corp ....................... 620
20 Standex International Corp .................. 617
25 Baldor Electric Co .......................... 616
25 Brady W H Co ................................ 616
10 Carlisle Cos Inc ............................ 605
19 Stone & Webster Inc ......................... 603
26 Goulds Pumps Inc ............................ 596
18 Gleason Corp ................................ 596
11 NACCO Industries Inc Cl A ................... 588
24 Watts Industries Inc Cl A ................... 573
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
19 Commercial Metals ........................... $572
26 +Osmonics Inc ................................ 572
22 Graco Inc ................................... 539
10 Mine Safety Appliances Co ................... 532
28 Armor All Products Corp ..................... 532
57 +Thermo Fibertek Inc ......................... 531
23 +Lydall Inc .................................. 517
24 Moore Corp Ltd .............................. 489
17 +Bearings Inc ................................ 474
21 Cincinnati Milacron Inc ..................... 459
22 Varlen Corp ................................. 452
25 McDermott International Inc ................. 416
21 Granite Construction Inc .................... 399
17 +Rohr Inc .................................... 385
60 UNR Industries Inc .......................... 360
7 Briggs & Stratton Corp ...................... 308
18 Brush Wellman Inc. .......................... 295
51 +Air and Water Technologies
Corp..................................... 293
10 Ball Corp ................................... 260
129 +Rollins Environmental Inc ................... 226
--------
225,610
--------
Communications Services (1.1%)
237 GTE Corp .................................... 10,784
256 Sprint Corp ................................. 10,208
189 US West Inc ................................. 6,095
135 ALLTEL Corp ................................. 4,236
77 NYNEX Corp .................................. 3,706
72 Century Telephone Enterprises
Inc...................................... 2,223
44 Frontier Corp ............................... 995
42 Aliant Communications ....................... 714
--------
38,961
--------
Consumer Cyclical (8.5%)
836 May Department Stores Co .................... 39,083
641 Penney (J.C.) Co Inc. ....................... 31,249
334 Eastman Kodak Co ............................ 26,804
1,033 Russ Berrie & Co Inc ........................ 18,594
725 Wackenhut Corp Ser A ........................ 12,506
243 +Fred Meyer Inc .............................. 8,627
200 +Atmel Corp .................................. 6,625
415 Ruddick Corp ................................ 5,810
342 +National Education Corp ..................... 5,216
163 Gap Inc. .................................... 4,910
120 +Fruit of the Loom Inc ....................... 4,545
233 Sturm Ruger & Co Inc ........................ 4,514
450 +Playboy Enterprises Inc Cl B ................ 4,388
157 Mattel Inc .................................. 4,357
221 Caseys General Stores Inc ................... 4,144
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
351 +Lifetime Hoan Corp .......................... $4,124
105 Dayton Hudson Corp .......................... 4,121
224 The Limited Inc ............................. 4,116
161 Dun & Bradstreet Corp ....................... 3,824
48 Gannet Inc .................................. 3,594
10 Washington Post Co .......................... 3,351
118 Service Corp International .................. 3,304
49 +Vons Cos Inc ................................ 2,934
74 +Jones Apparel Group ......................... 2,766
60 Omnicom Group Inc ........................... 2,745
67 Masco Corp .................................. 2,412
36 Vulcan Materials Co ......................... 2,192
39 +Nine West Group Inc ......................... 1,809
49 Hannaford Brothers Co ....................... 1,666
63 +HSN Inc ..................................... 1,496
30 TRW Inc. .................................... 1,485
143 +K mart Stores ............................... 1,484
38 New York Times Co Cl A ...................... 1,444
31 Lancaster Colony Corp ....................... 1,426
30 Interpublic Group of Cos Inc ................ 1,425
129 +Burlington Industries Inc ................... 1,419
53 +Lands' End Inc .............................. 1,405
40 Belo (AH) Corp - Ser A ...................... 1,395
45 Dillard Department Stores ................... 1,389
35 Hasbro Inc .................................. 1,361
24 Houghton Mifflin Co ......................... 1,359
36 Tiffany & Co ................................ 1,319
29 Genuine Parts Co ............................ 1,294
19 +Scholastic Corp ............................. 1,278
24 Meredith Corp ............................... 1,266
47 Modine Manufacturing ........................ 1,257
27 Harcourt General ............................ 1,245
67 Sotheby's Holdings Cl A ..................... 1,240
18 VF Corp ..................................... 1,215
26 McGraw-Hill Cos Inc ......................... 1,199
27 Tandy ....................................... 1,188
25 Whirlpool Corp .............................. 1,166
24 TJX Cos Inc ................................. 1,137
34 Cognizant Corp .............................. 1,122
29 Liz Claiborne Inc. .......................... 1,120
14 Tribune Co. ................................. 1,104
26 Reebok International Ltd .................... 1,092
26 +CVS Corp .................................... 1,073
61 Wellman Inc ................................. 1,045
36 First Brands Corp ........................... 1,022
33 Circuit City Store Inc ...................... 994
17 Sherwin-Williams Co. ........................ 952
89 +Best Buy Co Inc ............................. 946
93 Stride Rite Corp ............................ 930
34 Stanhome Inc ................................ 901
22 +Ceridian Corp ............................... 891
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
45 Cooper Tire & Rubber ........................ $889
26 Dow Jones & Co Inc .......................... 881
20 Polaroid Corp ............................... 870
14 NCH Corp .................................... 843
17 Mercantile Stores ........................... 839
12 Armstrong World Industries Inc .............. 834
192 +Service Merchandise Inc ..................... 816
27 Black & Decker Corp ......................... 813
41 Maytag Corp ................................. 810
62 Fingerhut Cos Inc. .......................... 759
24 Echlin Inc. ................................. 759
41 Brown Group Inc ............................. 753
26 American Greetings Cl A ..................... 738
30 Donnelly Corp ............................... 735
21 McClatchy Newspapers Cl A ................... 735
11 + Culbro Corp ................................. 714
163 Ekco Group Inc .............................. 713
22 Wiley John & Sons ........................... 709
70 Graphic Industries Inc ...................... 709
27 +MacFrugals Bargains Closeouts ............... 705
50 ADVO Inc .................................... 700
113 +American Media Inc .......................... 664
15 +Volt Information Sciences Inc ............... 656
48 +Johnson Worldwide Associates
Inc Cl A................................. 636
22 Starrett LS Co Cl A ......................... 624
23 Stanley Works ............................... 621
24 +Christiana Cos .............................. 618
12 WD-40 Co .................................... 612
24 Standard Products Co ........................ 612
87 +Shoney's Inc ................................ 609
46 Kaman Corp Cl A ............................ 598
15 Apogee Enterprises Inc ...................... 596
30 Luby's Cafeterias Inc. ...................... 596
17 Plenum Publishing Corp ...................... 595
58 Crown Crafts Inc ............................ 580
21 Tennant Co .................................. 577
67 +Handleman Co ................................ 569
26 True North Communications ................... 569
26 +Woolworth Corp .............................. 569
37 Osh Kosh B'Gosh Cl A ....................... 564
23 Bassett Furniture Industries Inc ............ 563
21 Guilford Mills Inc .......................... 559
22 American Business Products .................. 553
12 OEA Systems Inc ............................. 549
21 +CSS Industries Inc .......................... 546
20 Unitog Co ................................... 545
25 Smart and Final Inc ......................... 541
86 PT Tri Polyta Indonesia ADR ................. 537
23 Lee Enterprises Inc ......................... 535
132 +Topps Co Inc ................................ 528
62 +Syms Corp ................................... 527
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
19 K2 Inc ...................................... $522
28 Walbro Corp. ................................ 511
26 Delechamps Inc .............................. 504
21 Waverly Inc ................................. 499
26 Alico Inc ................................... 487
16 American List Corp. ......................... 486
30 Strawbridge & Clothier ...................... 476
12 Knight- Ridder Inc .......................... 459
31 Duty Free International Inc ................. 449
15 Russell Corp ................................ 446
47 Blessings Corp .............................. 438
39 Hancock Fabrics Inc ......................... 405
8 Home Depot Inc .............................. 401
49 +Intelligent Electronics Inc. ................ 392
15 Arvin Industries Inc ........................ 371
22 CPI Corp .................................... 368
26 +Information Resources Inc ................... 364
32 Ennis Business Forms ........................ 360
19 Ogden Corp .................................. 356
18 +Gibson Greetings Inc ........................ 353
95 CML Group Inc ............................... 321
39 +GRC International Inc ....................... 317
18 +AnnTaylor Stores Corp ....................... 315
14 Lawson Products Inc ......................... 306
21 Falcon Products Inc ......................... 299
25 A.T. Cross Co Cl A .......................... 291
11 +ACNielsen Corp .............................. 166
6 +Echelon International Corp .................. 93
--------
313,941
--------
Consumer Staples (9.5%)
391 Kimberly-Clark Corp ......................... 37,243
1,016 +Viacom Inc. Cl B ............................ 35,433
517 Kellogg Co .................................. 33,928
1,453 Archer Daniels Midland Co.................... 31,966
762 Anheuser-Busch Cos Inc. ..................... 30,480
152 Unilever NV ADR ............................ 26,638
416 +Revco D.S. Inc .............................. 15,392
731 Goodmark Foods Inc .......................... 12,062
734 Genovese Drugs Stores ....................... 11,379
543 Dames & Moore Inc ........................... 7,941
174 Albertsons Inc .............................. 6,199
105 Cardinal Health Inc ......................... 6,116
201 IBP Inc ..................................... 4,874
51 Colgate-Palmolive Co. ....................... 4,705
129 Heinz H J Co ................................ 4,644
93 Conagra Inc ................................. 4,627
62 Ralston Purina Co............................ 4,549
230 ABM Industries Inc .......................... 4,255
105 IMC Global Inc .............................. 4,108
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
123 UST Inc. .................................... $3,982
50 CPC International Inc. ...................... 3,875
106 Sysco Corp .................................. 3,458
51 General Mills Inc ........................... 3,232
82 Tyson Foods Inc Cl A ........................ 2,809
49 Tambrands Inc. .............................. 2,003
42 +Kroger Co ................................... 1,953
48 Quaker Oats Co .............................. 1,830
82 Flowers Industries Inc ...................... 1,763
59 Bergen Brunswig Corp ........................ 1,682
26 Avon Products Inc ........................... 1,485
46 Dean Foods Co ............................... 1,484
32 McDonald's Corp. ............................ 1,448
36 Rite Aid Corp. .............................. 1,431
52 Kelly Services Inc Cl A ..................... 1,404
32 Hershey Foods Corp .......................... 1,400
45 TCA Cable TV Inc ............................ 1,356
143 +Perrigo Co .................................. 1,305
31 American Stores Co .......................... 1,267
24 Paychex Inc ................................. 1,235
12 Clorox Co. .................................. 1,205
74 Dial Corp ................................... 1,091
59 International Multifoods Corp ............... 1,069
49 +International Dairy Queen Inc
Cl A..................................... 980
18 Longs Drug Stores Inc ....................... 884
24 Universal Foods Corp ........................ 846
44 +Ruby Tuesday Inc ............................ 814
35 Whitman Corp ................................ 801
42 Coors (Adolph) Co Cl B....................... 798
24 Harland Co. ................................. 792
24 Deluxe Corp ................................. 786
22 Giant Food Inc Cl A ......................... 759
28 Amcast Industrial Corp ...................... 693
18 +King World Productions Inc .................. 664
36 Lance Inc ................................... 648
28 Banta Corp. ................................. 640
17 National Presto Industries .................. 635
72 Bridgford Foods Corp ........................ 612
28 Nash Finch Corp ............................. 595
13 Brown-Forman Corp Cl B ...................... 595
21 West Co ..................................... 593
14 +Chris Craft Industries Inc .................. 586
18 Winn Dixie Stores ........................... 569
43 WLR Foods Inc ............................... 532
80 +Uno Restaurant Corp ......................... 530
18 Supervalu Inc. .............................. 511
36 Savannah Foods & Industries ................. 486
14 Dreyers Grand Ice Cream Inc ................. 406
17 +Carmike Cinemas Inc. Cl A ................... 431
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
29 +Foodbrands America Inc ...................... $399
42 +Buffets Inc ................................. 383
19 Blair Corp .................................. 366
6 Tecumseh Products Co Cl B ................... 341
9 National Services Industries Inc ............ 336
20 +AMC Entertainment Inc ....................... 287
7 +Footstar Inc ................................ 174
--------
349,778
--------
Energy (9.9%)
543 Exxon Corp .................................. 53,214
216 Royal Dutch Petroleum Co ADR ............... 36,882
249 Atlantic Richfield .......................... 33,024
194 Mobil Corp. ................................. 23,716
1,236 Sevenson Environmental
Services Inc ............................. 22,557
195 Schlumberger Ltd ............................ 19,476
225 Amoco Corp .................................. 18,169
181 Texaco Inc .................................. 17,761
1,066 Quaker State Corp ........................... 15,057
732 +HS Resources Inc ............................ 12,078
730 +Tuboscope Vetco International
Corp ..................................... 11,315
160 Chevron Corp ............................... 10,400
534 Getty Petroleum Corp ........................ 8,677
101 Anadarko Petroleum Co ....................... 6,540
130 Phillips Petroleum Co. ...................... 5,752
259 Global Marine Inc ........................... 5,342
216 Occidental Petroleum Corp ................... 5,049
60 Halliburton Co .............................. 3,615
79 Tidewater Inc ............................... 3,575
135 USX-Marathon Group .......................... 3,223
103 +Dresser Industries Inc ...................... 3,193
39 Tosco Co .................................... 3,086
58 +Ensco International Inc ..................... 2,813
58 +Smith International Inc ..................... 2,603
45 +BJ Services Co .............................. 2,295
76 +Weatherford Enterra Inc ..................... 2,280
62 Parker & Parsley Petroleum Co ............... 2,278
115 +Nabors Industries Inc ....................... 2,214
43 Burlington Resources Inc .................... 2,166
60 Mapco Inc ................................... 2,040
60 Valero Energy Corp .......................... 1,717
164 Ranger Oil Ltd .............................. 1,619
43 Apache Corp ................................. 1,521
44 Baker Hughes Inc ............................ 1,518
27 Murphy Oil Corp ............................. 1,502
27 Helmerich & Payne Inc ....................... 1,407
44 Ultramar Diamond Shamrock
Corp..................................... 1,391
22 Amerada Hess Corp. .......................... 1,273
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
39 Sun Co Inc .................................. $951
31 Black Hills Corp ............................ 872
33 +Oryx Energy Co .............................. 817
11 Kerr Mcgee Corp ............................. 792
37 Wiser Oil Co ................................ 731
29 +Varco International Inc ..................... 671
19 Vintage Petroleum Inc ....................... 655
45 Berry Petroleum Cl A ........................ 647
26 Landauer Inc ................................ 637
14 +Barrett Resources Corp ...................... 597
11 Louisiana Land & Exploration Co ............. 590
21 Ashland Coal Inc ............................ 583
187 +Harken Energy Corp .......................... 561
60 +Allied Waste Industries Inc ................. 555
57 +Parker Drilling Co .......................... 549
20 Holly Corp .................................. 535
12 Ashland Inc ................................. 526
42 +Crown Central Petroleum Cl A ................ 520
--------
364,127
--------
Financial (6.0%)
1,029 Mid Am Inc .................................. 17,622
1,039 Kranzco Realty Trust ....................... 17,533
1,037 Commercial Net Lease Realty ................. 16,462
533 Avemco Corp ................................. 8,328
200 Southtrust Corp ............................. 6,975
100 Progressive Corp ............................ 6,738
181 First Data Corp ............................. 6,607
132 PHH Corp .................................... 5,676
100 Comerica Inc ................................ 5,238
227 Universal Health Realty Income .............. 4,654
100 Commerce Bancshares Inc ..................... 4,625
230 Mid America Bancorp ......................... 4,370
230 LTC Properties Inc .......................... 4,255
234 State Auto Financial Corp ................... 4,212
232 Magna Bancorp Inc ........................... 4,060
225 NYMAGIC Inc ................................. 4,050
233 South West Property Trust ................... 3,932
73 Lincoln National Corp Ltd. .................. 3,833
69 Chubb Corp .................................. 3,709
36 Loews Corp .................................. 3,393
100 Paine Webber Group Inc ...................... 2,813
49 U.S. Bancorp ................................ 2,202
19 Marsh & McLennan Cos ........................ 1,976
45 Bancorp Hawaii Inc. ......................... 1,890
142 Hibernia Corp Cl A .......................... 1,882
26 UNUM Corp ................................... 1,879
23 Transatlantic Holdings Inc .................. 1,852
84 City National Corp .......................... 1,817
46 Northern Trust Corp ......................... 1,668
18 TransAmerica Corp ........................... 1,424
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
22 St Paul Cos. Inc. Corp ...................... $1,290
28 National City Corp .......................... 1,257
29 Wilmington Trust Co ......................... 1,146
31 Dauphin Deposit Corp ........................ 1,023
18 Jefferson- Pilot Corp ....................... 1,019
16 Citizens Bancorp ............................ 992
24 Safeco Corp ................................. 947
41 Church & Dwight Co Inc ...................... 938
24 Home Beneficial Corp ........................ 909
21 Financial Trust Corp ........................ 837
10 Republic NY Corp ............................ 816
21 New York Bancorp Inc ........................ 814
20 Capitol American Financial Corp ............. 727
17 CNB Bancshares Inc .......................... 710
28 BRE Properties Inc .......................... 693
18 Midland Co .................................. 693
33 USF&G Corp .................................. 689
30 Crawford & Co ............................... 686
31 MGI Properties .............................. 682
17 BT Financial Corp ........................... 674
45 Burham Pacific Properties Inc ............... 669
17 Liberty Corp ................................ 667
20 United Bankshares Inc ....................... 660
20 First Midwest Bancorp Inc ................... 652
22 First Michigan Bank Corp .................... 652
17 JSB Financial Inc ........................... 646
17 Selective Insurance Group ................... 646
21 Argonaut Group Inc .......................... 646
25 McGrath Rent Corp ........................... 644
16 Tredegar Industries Inc ..................... 642
16 UMB Financial Corp .......................... 638
18 Whitney Holding Corp ........................ 637
12 Park National Corp .......................... 636
15 USBancorp Inc ............................... 636
26 Penn Real Estate Investment
Trust.................................... 634
16 United Carolina Bancshares .................. 632
17 First Commercial Corp ....................... 631
17 First Financial Corp ........................ 629
18 Firstbank Illinois Co ....................... 625
19 First Financial Bancorp ..................... 617
45 Commercial Intertech Corp ................... 613
19 Corus Bankshares Inc ........................ 613
19 First United Bancshares Inc ................. 613
15 Farmers Capital Bank Corp ................... 611
21 Bank of Granite Corp ........................ 609
12 Berkley W R Corp ............................ 609
33 Baldwin & Lyons Inc ......................... 606
22 CBT Corp .................................... 605
22 Community First Bankshares .................. 605
23 American Heritage Life Investors ............ 604
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
22 Zenith National Insurance ................... $602
28 Fulton Financial Corp ....................... 602
13 Trenwick Group Inc .......................... 601
25 F & M Bancorp Frederick ..................... 600
28 Heritage Financial Service Inc .............. 595
48 First Union Real Estate ..................... 594
19 S&T Bancorp Inc ............................. 584
21 Bancorp South Inc ........................... 583
24 Nationwide Health ........................... 582
331 CRI Liquidating REIT Inc..................... 579
68 Cash America International Inc. ............. 578
22 First Western Bancorp Inc ................... 577
27 F & M National Corp ......................... 577
50 IRT Property Co ............................. 575
15 Frontier Insurance Group Inc ................ 574
44 Western Investment Real Estate .............. 572
15 National Health Investors, Inc. ............. 568
17 Tompkins County Trustco Inc ................. 567
17 Omega Healthcare Investors Inc .............. 565
23 Hubco Inc ................................... 563
20 American Financial Enterprise
Inc...................................... 560
21 First Merchants Corp ........................ 556
21 Poe & Brown Inc ............................. 556
25 SEI Corp .................................... 556
26 Trustco Bank Corp ........................... 556
7 +Alexander's Inc ............................. 554
20 Brenton Banks Inc ........................... 552
20 Federal Realty Investment Trust ............. 542
29 First Commonwealth Financial
Corp ..................................... 540
45 EMC Insurance Group Inc ..................... 540
6 +Markel Corp ................................. 540
22 First Source Corp ........................... 539
21 Valley National Bancorp ..................... 538
22 Health Care REIT Inc ........................ 536
11 Mark Twain Bancshares Inc ................... 536
20 BSB Bancorp Inc ............................. 535
23 Allied Capital Commercial Corp .............. 535
22 Wellsford Residential Property
Trust..................................... 533
17 Albank Financial Corp ....................... 533
40 Hilb, Rogal & Hamilton Co ................... 530
28 American Federal Bank ....................... 528
41 CRIIMI MAE Inc. ............................. 528
22 American Health Properties .................. 525
20 National Pennsylvania
Bancshares Inc ........................... 522
16 Merchants New York Bancorp .................. 520
15 +MAIC Holdings Inc ........................... 508
16 Citizens Banking Corp ...................... 504
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
20 Keystone Financial Inc ...................... $500
50 Berkshire Realty Co ......................... 494
51 Gainsco Inc ................................. 491
21 Albany International Corp Cl A ............. 486
16 Acordia Inc ................................. 464
14 Gallagher (Arthur J.) & Co .................. 434
16 HCC Insurance Holdings Inc .................. 384
--------
221,537
--------
Health Care (4.4%)
373 Schering-Plough Corp. ....................... 24,152
591 Columbia Healthcare Corp .................... 24,083
118 Bristol-Myers Squibb Co. .................... 12,833
199 American Home Products Corp. ................ 11,666
187 +Amgen Inc. .................................. 10,168
232 Pharmacia & Upjohn Inc ...................... 9,193
94 Warner Lambert Co ........................... 7,050
89 +Boston Scientific Corp ...................... 5,340
100 +HEALTHSOUTH Corp ............................ 3,813
300 Kinetic Concepts Inc ........................ 3,675
347 +Medco Research Inc .......................... 3,644
204 Mylan Laboratories Inc ...................... 3,417
96 +Forest Laboratories Inc ..................... 3,144
142 +Nellcor Inc ................................. 3,106
84 +Centocor Inc ................................ 3,003
35 +Pacificare Health Systems Inc ............... 2,984
65 +Watson Pharmaceuticals ...................... 2,921
70 +Biogen Inc. ................................. 2,713
52 +HealthCare COMPARE Corp ..................... 2,203
98 +Tenet Healthcare Corp ....................... 2,144
101 +Value Health Inc. ........................... 1,969
61 +Foundation Health Corp ...................... 1,937
100 +Humana Inc .................................. 1,912
135 +Horizon/CMS Healthcare Corp ................. 1,704
33 Mallinckrodt Inc. ........................... 1,456
29 DENTSPLY International Inc. ................. 1,377
25 +St. Jude Medical Inc. ....................... 1,066
34 Diagnostic Products Corp .................... 880
31 +ALZA Corp ................................... 802
22 Allergan Inc. ............................... 784
50 Biomet Inc .................................. 756
21 Bausch & Lomb Inc ........................... 745
18 United States Surgical Corp ................. 709
62 +Novacare Inc ................................ 682
45 +Tecnol Medical Products Inc. ................ 681
24 +Acuson ...................................... 585
12 +Synetic Inc ................................. 582
20 Bard (CR) Inc ............................... 560
31 Carter Wallace Inc .......................... 484
37 +Beverly Enterprises Inc ..................... 472
41 +Epitope Inc ................................. 471
20 +Datascope Corp .............................. 400
--------
162,266
--------
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
Technology (2.0%)
729 X-Rite Inc .................................. $12,029
309 Beckman Instruments Inc ..................... 11,858
282 +Loral Space Communications .................. 5,182
100 +Parametric Technology ....................... 5,138
91 Raytheon Co ................................. 4,379
82 Wallace Computer Services Inc. .............. 2,829
56 +Litton Industries Inc ....................... 2,667
44 +Compuware Corp .............................. 2,205
119 Sensormatic Electronics Corp ................ 1,993
47 +Fiserv Inc .................................. 1,727
181 Novell Inc .................................. 1,714
37 Thiokol Corp ................................ 1,656
30 +Dell Computer Corp .......................... 1,594
31 +Policy Management Systems
Corp..................................... 1,430
19 +3Com Corp ................................... 1,394
51 +Stratus Computer Inc. ....................... 1,390
25 Teleflex Inc ................................ 1,303
49 +Advanced Micro Devices Inc .................. 1,262
53 +Structural Dynamics Research
Corp ..................................... 1,060
46 +Apple Computer Inc .......................... 960
18 +Storage Technology Corp ..................... 857
11 Harris Corp ................................. 755
29 +Boole & Babbage Inc ......................... 725
16 +BRC Holdings Inc ............................ 716
24 Analysts International Corp ................. 678
27 Cubic Corp .................................. 624
19 +Gelman Sciences Inc ......................... 617
14 CTS Corp .................................... 598
28 EG&G Inc .................................... 563
101 +Borland International Inc .................. 549
21 +Esterline Technologies Corp ................. 549
24 +Bell Industries Inc ......................... 513
42 +Amdahl Corp ................................. 509
213 +Executone Information Systems
Inc ...................................... 506
68 +Unisys Corp ................................. 459
27 +Trident Microsystems Inc .................... 456
12 +Advanced Technology
Laboratories ............................. 372
18 MTS Systems Corp ............................ 360
84 +AST Research Inc ............................ 352
--------
74,528
--------
Transportation (1.9%)
389 Burlington Northern Santa Fe
Corp..................................... 33,600
1,033 International Shipholding Corp .............. 19,111
345 Rollins Truck Leasing Corp .................. 4,356
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
36 +Federal Express Corp. ....................... $1,602
52 Alexander & Baldwin Inc ..................... 1,300
47 Atlantic Southeast Airlines Inc. ............ 1,028
67 Hunt J B Transport Services Inc ............. 938
41 Caliber Systems Inc ......................... 789
11 Union Pacific Corp .......................... 661
69 Frozen Foods Express
Industries............................... 621
25 +USAir Group Inc ............................. 584
34 Arnold Industries Inc ....................... 540
37 +Yellow Corp ................................. 532
65 +USA Truck Inc ............................... 520
19 Consolidated Freightways Inc ................ 423
19 Overseas Shipholding Group .................. 323
3 Florida East Coast Industries ............... 262
9 +Consolidated Freightways Corp ............... 80
--------
67,270
--------
Utilities (6.2%)
1,029 Public Service Co ........................... 18,779
838 St Joseph Light & Power ..................... 12,884
737 Cascade Natural Gas Corp .................... 12,529
735 United Water Resources Inc .................. 11,484
400 Illinova Corp ............................... 11,000
200 New England Electric ........................ 6,975
276 Southern Co ................................. 6,245
133 Enron Corp .................................. 5,736
200 Boston Edison Co. ........................... 5,375
231 Ohio Edison Co .............................. 5,255
255 Public Service Co of New
Mexico................................... 5,004
228 Philadelphia Suburban Corp .................. 4,532
130 GPU Inc ..................................... 4,371
231 Eastern Utilities Association ............... 4,014
231 +Tucson Electric Power Co .................... 3,840
119 Allegheny Power System Inc .................. 3,615
72 Duke Power Co ............................... 3,348
246 Northeast Utilities ......................... 3,260
154 Pacific Gas & Electric Co. .................. 3,234
98 Florida Progress Corp ....................... 3,161
76 Texas Utilities Co .......................... 3,097
119 Potomac Electric Power Co ................... 3,064
80 Williams Cos Inc ............................ 2,981
108 Scana Corp .................................. 2,889
85 CMS Energy Corp ............................. 2,858
81 +CalEnergy Inc ............................... 2,724
118 Edison International ........................ 2,345
42 Coastal Corp ................................ 2,053
64 MCN Corp Holding Co ......................... 1,848
47 Public Service Co of Colorado ............... 1,827
39 FPL Group Inc. .............................. 1,794
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
82 New York State Electric &
Gas Corp ................................. $1,773
43 Nipsco Industries ........................... 1,704
44 Dominion Resources Inc ...................... 1,694
54 Brooklyn Union Gas Co ....................... 1,627
32 El Paso Natural Gas ......................... 1,616
58 Entergy Corp ................................ 1,610
97 MidAmerican Energy Holdings ................. 1,540
37 National Fuel Gas Co ........................ 1,526
37 American Electric Power Co .................. 1,522
42 Southwestern Public Service ................. 1,486
28 Sonat Inc. .................................. 1,442
60 Puget Sound Power & Light ................... 1,440
63 Houston Industries Inc ...................... 1,425
67 Pacificorp .................................. 1,374
30 Pennsylvania Enterprises Inc ................ 1,316
50 Central & South West Corp ................... 1,281
47 IPALCO Enterprises .......................... 1,281
38 Cinergy Corp. ............................... 1,268
51 LG & E Energy Corp .......................... 1,250
40 Idaho Power Co .............................. 1,245
58 Montana Power Co ............................ 1,240
58 AGL Resources Inc ........................... 1,225
32 Hawaiian Electric Industries ................ 1,156
19 Consolidated National Gas Co ................ 1,050
27 Union Electric .............................. 1,040
42 Indiana Energy Inc .......................... 1,024
43 Washington Gas Light Co ..................... 973
42 PP & L Resources Inc ........................ 966
15 Columbia Gas System Inc ..................... 954
82 Central Maine Power Co. ..................... 953
46 American Water Works Inc .................... 949
30 Pacific Enterprises ......................... 911
29 Oneok Inc. .................................. 870
23 Eastern Enterprises Inc ..................... 814
24 IWC Resources Corp .......................... 747
15 +Tejas Gas Corp .............................. 714
16 California Water Services Co ................ 672
32 Nevada Power ................................ 656
14 Northern States Power........................ 642
26 Laclede Gas Co .............................. 627
17 Cilcorp Inc ................................. 623
40 Noram Energy Corp. .......................... 615
25 South Jersey Industries Inc ................. 609
26 Commonwealth Energy System .................. 608
19 United Illuminating Co ...................... 596
53 +Citizens Utilities Co Cl B .................. 590
17 Northwestern Public Service ................. 582
18 Otter Tail Power Co ......................... 578
20 North Carolina Natural Gas Corp ............. 577
24 Northwest Natural Gas Co .................... 576
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
21 TNP Enterprise Inc .......................... $575
25 United Cities Gas Co ........................ 562
22 Connecticut Natural Gas Corp ................ 561
24 Piedmont Natural Gas Inc .................... 561
26 Yankee Energy System ........................ 556
24 MDU Resources Group Inc ..................... 552
61 +TPC Corp .................................... 549
29 Empire District Electric Co ................. 544
55 +Niagara Mohawk Power Corp ................... 543
15 Wicor Inc ................................... 538
24 UGI Corp .................................... 537
19 Aquarion Co ................................. 530
22 Atmos Energy Corp ........................... 525
22 Green Mountain Power Corp ................... 525
18 Bay State Gas Co ............................ 509
14 Orange & Rockland Utilities Inc ............. 502
23 Southern California Water Co ................ 500
17 New Jersey Resources Corp ................... 497
24 Washington Energy Co ........................ 495
24 Western Gas Resources Inc ................... 462
20 Enserch Corp ................................ 460
21 Colonial Gas Co ............................. 446
15 WPS Resources Corp .......................... 428
133 +PhoneTel Technologies Inc ................... 424
19 Madison Gas & Electric ...................... 385
--------
228,444
--------
Total Common Stocks
(Cost $2,127,837)......................... 2,199,967
---------
OPEN END INVESTMENT
COMPANY (3.9%)
(Cost $141,920)
13,639 Bankers Trust EAFE Equity
Index Fund .............................. 144,849
--------
UNIT INVESTMENT
TRUST (4.8%)
(Cost $180,814)
Standard & Poor's
2,400 Depositary Receipt ...................... 177,450
--------
Principal
Amount
U.S. GOVERNMENT
OBLIGATIONS (40.9%)
$425,000 U.S. Treasury Bill (11.4%)
Due 4/17/97 ................................. 418,868
--------
158,000 U.S. Treasury Bond (4.4%)
6.875% Due 8/15/25 .......................... 161,111
--------
Principal
Amount Security Value
Tomorrow Medium-Term Retirement Fund (continued)
U.S. Treasury Notes (25.1%)
$505,000 5.500% Due 11/15/98 ......................... $501,606
423,000 6.500% Due 8/15/05 .......................... 425,711
--------
927,317
--------
Total U.S. Treasury Obligations
(Cost $1,507,528)......................... 1,507,296
--------
Total Investments (109.4%)
(Cost $3,958,099)......................... 4,029,562
Liabilities in Excess of Other
Assets (-9.4%)............................ (348,377)
---------
Total Net Assets (100.0%).................... $3,681,185
=========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund
COMMON STOCKS (55.3%)
Basic Materials (3.0%)
377 Dow Chemical Co ............................. $29,547
1,500 Coeur D'Alene Mines Corp..................... 22,687
700 Quaker Chemical Corp ........................ 11,463
385 Barrick Gold Corp ........................... 11,021
60 Pioneer Hi Bred International ............... 4,200
335 Calgon Carbon Corp .......................... 4,104
700 +Hecla Mining Co ............................. 3,850
600 +Amax Gold Inc ............................... 3,825
68 Nucor Corp .................................. 3,468
46 Phelps Dodge Corp ........................... 3,105
137 Placer Dome Inc ADR ......................... 2,980
67 IMC Global Inc .............................. 2,621
36 Aluminum Co of America ...................... 2,295
51 Newmont Mining Corp ......................... 2,282
27 Rohm & Haas Co .............................. 2,204
40 Consolidated Papers Inc ..................... 1,965
60 Inco Ltd .................................... 1,913
41 International Flavors &
Fragrances Inc............................. 1,845
31 Reynolds Metals Co .......................... 1,748
44 Bowater Inc ................................. 1,655
160 Ethyl Corp .................................. 1,540
40 Olin Corp .................................. 1,505
30 Champion International Corp. ................ 1,298
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
40 Ferro Corp .................................. $1,135
21 Great Lakes Chemical Corp. .................. 982
35 Georgia Gulf Corp ........................... 941
30 Lubrizol Corp ............................... 930
22 Tambrands Inc. .............................. 899
44 Engelhard Corp .............................. 841
22 Ecolab Inc .................................. 828
20 BF Goodrich Co............................... 810
30 Schulman Inc ................................ 735
12 BetzDearborn Inc. ........................... 702
36 Crompton & Knowles Corp ..................... 693
22 Chesapeake Corp ............................. 690
10 Harso Corp .................................. 685
18 Bemis Inc ................................... 664
28 Cyprus Amax Minerals Co. .................... 655
20 Westvaco Corp ............................... 575
11 Precision Castparts Corp .................... 546
29 Glatefelter (PH) Co ......................... 522
28 Wausau Paper Mills Co ....................... 518
11 Fuller H B Co ............................... 517
37 Lawter International Inc .................... 467
9 +MAXXAM Inc .................................. 429
10 +Sealed Air Corp ............................. 416
60 Battle Mountain Gold Co ..................... 413
23 Oregon Steel Mills .......................... 385
12 Dexter Corp ................................. 383
41 +Bethlehem Steel Corp. ....................... 369
14 Sonoco Products Co .......................... 362
10 James River Corp of Virginia ................ 331
9 Carpenter Technology Corp ................... 330
7 Cleveland-Cliffs Inc ........................ 318
45 Echo Bay Mines Ltd .......................... 298
--------
142,490
--------
Capital Goods (5.7%)
605 Boeing Co.................................... 64,357
402 Minnesota Mining &
Manufacturing Co........................... 33,316
1,200 +Vallen Corp ................................. 19,950
319 York International Corp ..................... 17,824
320 +Parametric Technology Corp .................. 16,440
205 McDonnell Douglas Corp ...................... 13,120
268 Deere & Co .................................. 10,888
100 U.S. Robotics Corp .......................... 7,200
300 Daniel Industries Inc ....................... 4,425
44 Emerson Electric Co. ........................ 4,257
87 Corning Inc ................................. 4,024
117 WMX Technologies Inc. ....................... 3,817
192 Westinghouse Electric Corp .................. 3,816
58 Honeywell Inc. .............................. 3,813
200 Armor All Products Corp ..................... 3,800
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
66 Crown Cork & Seal Inc ....................... $3,589
200 Raymond Corp ................................ 3,475
100 +Analog Devices Inc. ......................... 3,387
100 +Atmel Corp .................................. 3,311
100 +ADC Telecommunications Inc .................. 3,113
47 Tyco International Ltd ...................... 2,485
48 Alco Standard Corp .......................... 2,478
23 Textron Inc ................................. 2,168
88 Premark International Inc.................... 1,958
29 Fluor Corp .................................. 1,820
78 Allegheny Teledyne Inc ...................... 1,794
21 Raychem Corp ............................... 1,683
62 Pall Corp ................................... 1,581
76 Sensormatic Electronics Corp ................ 1,273
22 Miller (Herman) Inc ......................... 1,246
23 Dover Corp .................................. 1,156
24 Hubbell Inc Cl B ............................ 1,038
22 Kaydon Corp ................................. 1,037
57 Gencorp Inc ................................. 1,033
31 HON Industries .............................. 1,023
24 Sundstrand Corp ............................. 1,020
100 +Novell Inc .................................. 947
23 Trinity Industries Inc ...................... 862
49 RPM Inc ..................................... 833
20 +BMC Software Inc ............................ 827
20 Thermo Electron Corp ........................ 825
20 +Cadence Design Systems Inc .................. 795
20 Kennametal Inc .............................. 778
20 Avery Dennison Corp ......................... 707
11 Nordson Corp ................................ 701
21 Standard Register Co ........................ 683
20 +USA Waste Services Inc ...................... 638
28 Ametek Inc .................................. 623
13 Cummins Engine Inc .......................... 598
10 Avnet Inc ................................... 582
20 Duriron Co Inc .............................. 542
10 +Gateway 2000 Inc ............................ 536
10 +Solectron Corp .............................. 534
20 Reynolds & Reynolds Cl A .................... 520
23 Cincinnati Milacron Inc ..................... 503
7 +FMC Corp .................................... 491
10 Harnischfeger Industries Inc. ............... 481
20 +360 Communications Co........................ 462
18 +Jacobs Engineering Group Inc ................ 425
7 Carlisle Cos Inc ............................ 424
21 Keystone International Inc .................. 423
8 Teleflex Inc ................................ 417
17 Watts Industries Inc Cl A ................... 406
9 Thiokol Corp ................................ 403
17 +Rohr Inc .................................... 385
11 Donaldson Co Inc ............................ 369
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
15 Albany International Corp Cl 'A' ............ $347
10 Leggett & Platt Inc ......................... 346
18 Brush Wellman Inc. .......................... 295
14 +Datascope Corp .............................. 280
--------
271,703
--------
Communication Services (3.3%)
1,863 GTE Corp .................................... 84,766
894 Sprint Corp ................................. 35,648
198 AT&T Corp ................................... 8,613
169 Bellsouth Corp. ............................. 6,823
91 Bell Atlantic Corp .......................... 5,892
99 NYNEX Corp .................................. 4,764
123 US West Inc ................................. 3,967
70 ALLTEL Corp ................................. 2,196
46 Century Telephone Enterprises
Inc...................................... 1,420
39 Frontier Corp ............................... 882
20 Southern New England
Telecommunications......................... 777
30 Aliant Communications Co .................... 510
--------
156,258
--------
Consumer Cyclical (5.6%)
853 Eastman Kodak Co ............................ 68,453
417 Vulcan Materials Co ......................... 25,385
800 Caseys General Stores Inc ................... 15,000
1,000 Dames & Moore Inc ........................... 14,625
300 +Fruit of the Loom Inc ....................... 11,362
229 May Department Stores Co .................... 10,706
194 Penney (J.C.) Co. Inc. ...................... 9,457
155 General Motors Corp ......................... 8,641
139 Albertsons Inc .............................. 4,952
300 +AMC Entertainment Inc ....................... 4,313
120 +Fred Meyer Inc .............................. 4,260
700 +American Media Inc .......................... 4,112
110 Masco Corp .................................. 3,960
200 Delechamps Inc .............................. 3,875
200 Blair Corp .................................. 3,850
200 Alico Inc ................................... 3,750
200 Russ Berrie & Co Inc ........................ 3,600
200 Wackenhut Corp Ser A ........................ 3,450
121 Mattel Inc................................... 3,358
46 Eaton Corp .................................. 3,208
104 Gap Inc. .................................... 3,133
40 Gannet Inc .................................. 2,995
60 Whirlpool Corp .............................. 2,798
69 Dayton Hudson Corp .......................... 2,708
83 Sysco Corp .................................. 2,708
94 Service Corp International .................. 2,632
141 The Limited Inc ............................. 2,591
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
6 Washington Post Co .......................... $2,011
42 Lancaster Colony Corp ....................... 1,932
168 +K mart Stores ............................... 1,743
35 Interpublic Group of Cos Inc ................ 1,662
41 Hasbro Inc .................................. 1,594
32 Harcourt General Inc......................... 1,476
38 Wallace Computer Services Inc. .............. 1,311
32 American Stores Co .......................... 1,308
28 Omnicom Group Inc ........................... 1,281
34 +Jones Apparel Group ......................... 1,271
15 Tribune Co. ................................. 1,183
35 Cognizant Corp .............................. 1,155
35 Dillard Department Stores Inc
Cl A..................................... 1,081
34 Circuit City Store Inc ...................... 1,024
40 +HSN Inc ..................................... 950
20 Harley Davidson Inc ......................... 940
83 Burlington Industries Inc ................... 913
33 Modine Manufacturing Co ..................... 883
13 +Scholastic Corp ............................. 874
27 South Down Inc .............................. 840
12 Armstrong World Industries Inc............... 834
35 Dun & Bradstreet Corp ....................... 831
27 Black & Decker Corp ......................... 813
20 Dow Jones & Co Inc .......................... 678
24 +Lands' End Inc .............................. 636
20 Echlin Inc. ................................. 633
18 Belo (AH) Corp............................... 628
57 +Best Buy Co ................................. 606
35 Viad Corp ................................... 578
30 Sotheby's Holdings Cl A ..................... 555
26 Cooper Tire & Rubber Co...................... 514
19 +MacFrugals Bargains Closeout ................ 496
10 Mercantile Stores Co ........................ 494
8 Houghton Mifflin Co ......................... 453
25 Lance Inc ................................... 450
10 +Chris Craft Industries Inc .................. 419
16 Lee Enterprises Inc ......................... 372
15 Arvin Industries Inc ........................ 371
22 CPI Corp .................................... 369
13 Stanley Works ............................... 351
81 +Service Merchandise Inc ..................... 344
100 CML Group Inc ............................... 338
22 Duty Free International Inc ................ 319
18 +AnnTaylor Stores Corp ....................... 315
6 Home Depot Inc .............................. 301
13 Caliber Systems Inc ......................... 250
11 +ACNielsen Corp .............................. 166
--------
268,428
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
Consumer Staples (5.3%)
1,500 ABM Industries Inc .......................... $27,750
141 Unilever NV ADR ............................. 24,710
177 Kimberly-Clark Corp ......................... 16,859
1,030 Genovese Drugs Stores ....................... 15,965
177 Gillette Co. ................................ 13,762
173 Kellogg Co .................................. 11,353
324 +Viacom Inc. Cl 'B' .......................... 11,300
486 Archer Daniels Midland Co.................... 10,692
500 Goodmark Foods Inc .......................... 8,250
204 Anheuser- Busch Cos Inc. .................... 8,160
150 Coca Cola Co ................................ 7,894
57 Philip Morris Cos Inc. ...................... 6,469
174 +Revco D.S. Inc .............................. 6,438
178 Pepsico Inc. ................................ 5,207
223 Flowers Industries Inc ...................... 4,794
300 ADVO Inc .................................... 4,200
52 Ralston Purina Co ........................... 3,816
100 Quaker Oats Co............................... 3,813
200 Brown Group Inc ............................. 3,675
78 +Kroger Co ................................... 3,627
200 International Multifoods Corp ............... 3,625
99 Heinz H J Co ................................ 3,564
64 Conagra Inc ................................. 3,184
128 IBP Inc ..................................... 3,104
47 General Mills Inc ........................... 2,979
89 UST Inc. .................................... 2,881
31 Colgate- Palmolive Co ....................... 2,860
35 Avon Products Inc ........................... 1,999
38 Hershey Foods Corp .......................... 1,663
51 Dean Foods Co................................ 1,645
48 Tyson Foods Inc Cl A ........................ 1,644
23 +Vons Cos Inc ................................ 1,377
29 McDonald's Corp. ............................ 1,312
46 Bergen Brunswig Corp ........................ 1,311
30 +CVS Corp..................................... 1,237
31 Universal Foods Corp ........................ 1,093
10 Clorox Co. .................................. 1,004
23 +Ceridian Corp ............................... 931
20 +Symbol Technologies Inc. .................... 885
30 Supervalu Inc. .............................. 851
23 Hannaford Brothers Co ....................... 782
20 +King World Productions Inc .................. 738
26 Kelly Services Inc Cl A ..................... 702
21 Deluxe Corp ................................. 688
50 +NEXTEL Communications Inc Cl A .............. 653
30 +Mirage Resorts Inc. ......................... 649
13 Brown-Forman Corp Cl 'B' .................... 595
31 Coors (Adolph) Cl B ......................... 588
20 Callaway Golf Co ............................ 575
62 +Perrigo Co .................................. 566
50 +OfficeMax Inc. .............................. 531
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
35 Dial Corp.................................... $516
17 TCA Cable TV Inc ............................ 512
20 Sbarro Inc .................................. 510
10 Longs Drug Stores Inc ....................... 491
10 Coca Cola Entrerprises Inc .................. 485
35 Savannah Foods & Industries ................. 472
33 Ruddick Corp ................................ 462
20 Banta Corp. ................................. 457
16 First Brands Corp ........................... 454
20 International Game Technology ............... 365
22 Carter Wallace Inc .......................... 344
14 Church & Dwight Co .......................... 320
44 +Shoney's Inc ................................ 308
10 Dreyers Grand Ice Cream Inc ................. 290
30 +Buffets Inc ................................. 274
8 +Footstar Inc ................................ 199
--------
251,409
--------
Energy (12.8%)
738 Royal Dutch Petroleum Co ADR ................ 126,013
930 Exxon Corp .................................. 91,140
600 Mobil Corp. ................................. 73,350
1,105 Chevron Corp ................................ 71,825
374 Schlumberger Ltd ............................ 37,353
459 Amoco Corp .................................. 37,064
368 Texaco Inc .................................. 36,110
1,000 +HS Resources Inc ............................ 16,500
1,000 Getty Petroleum Corp ........................ 16,250
144 duPont (EI) de Nemours & Co ................. 13,590
700 +Tuboscope Vetco International
Corp..................................... 10,850
724 Quaker State Corp ........................... 10,227
500 Sevenson Environmental
Services Inc............................... 9,125
42 Atlantic Richfield .......................... 5,570
74 Anadarko Petroleum Co........................ 4,792
101 Phillips Petroleum Co. ...................... 4,469
300 Berry Petroleum Class A ..................... 4,313
300 +Crown Central Petroleum Cl A ................ 3,712
166 +Global Marine Inc ........................... 3,424
64 Burlington Resources Inc .................... 3,224
51 Halliburton Co............................... 3,073
128 Occidental Petroleum Corp ................... 2,992
124 USX-Marathon Group........................... 2,961
61 Baker Hughes Inc ............................ 2,105
59 Dresser Industries Inc ...................... 1,829
36 +ENSCO International Inc ..................... 1,746
36 Tidewater Inc ............................... 1,629
49 +Weatherford Enterra Inc ..................... 1,470
18 Tosco Corp................................... 1,424
73 +Nabors Industries Inc ....................... 1,405
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
39 Apache Corp ................................. $1,380
22 Amerada Hess Corp. .......................... 1,273
26 +Smith International Inc ..................... 1,167
21 +BJ Services Co .............................. 1,071
28 Parker & Parsley Petroleum Co ............... 1,029
28 Mapco Inc ................................... 952
28 Valero Energy Corp .......................... 802
75 Ranger Oil Ltd .............................. 741
13 Murphy Oil Corp ............................. 723
31 +Varco International Inc ..................... 717
20 Ultra Diamond Shamrock Corp ................. 632
58 +Parker Drilling Co .......................... 558
10 Helmerich & Payne Inc........................ 521
--------
611,101
--------
Financial (4.9%)
400 Summit Bankcorp ............................. 17,500
300 Comerica Inc ................................ 15,712
1,000 Avemco Corp ................................. 15,625
900 Kranzco Realty Trust ........................ 15,188
246 American Express Co. ........................ 13,899
314 PHH Corp .................................... 13,502
700 Mid Am Inc .................................. 11,987
400 Paine Webber Group Inc ...................... 11,250
700 Commercial Net Lease Realty ................. 11,113
93 Bankamerica Corp ............................ 9,277
500 State Auto Financial Corp ................... 9,000
500 South West Property Trust ................... 8,437
100 Progressive Corp ............................ 6,738
100 Commerce Bancshares Inc ..................... 4,625
300 Burham Pacific Properties Inc ............... 4,462
200 F & M National Corp ......................... 4,275
300 Hilb, Rogal & Hamilton Co ................... 3,975
300 CRIIMI Mae Inc. ............................. 3,863
200 American Federal Bank ....................... 3,775
200 First Commonwealth Financial
Corp..................................... 3,725
300 First Union Real Estate Trust ............... 3,712
2,100 CRI Liquidating REIT Inc .................... 3,675
300 EMC Insurance Group Inc ..................... 3,600
100 Southtrust Corp ............................. 3,488
300 IRT Property Co ............................. 3,450
65 Lincoln National Corp Ltd. .................. 3,413
45 UNUM Corp ................................... 3,251
32 Loews Corp .................................. 3,016
25 Marsh & McLennan Cos ........................ 2,600
36 Chubb Corp .................................. 1,935
40 National City Corp .......................... 1,795
33 +HealthCare COMPARE Corp ..................... 1,398
29 Bancorp Hawaii Inc. ......................... 1,218
32 Northern Trust Corp ......................... 1,160
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
20 +Policy Management Systems
Corp..................................... $922
20 U.S. Bancorp ................................ 899
11 Transatlantic Holdings Inc .................. 885
21 Wilmington Trust Co.......................... 830
38 City National Corp .......................... 822
38 USF&G Corp .................................. 793
10 American National Insurance Co. ............. 737
22 Dauphin Deposit Corp ........................ 726
10 Franklin Resource Inc ....................... 684
20 USLife Corp ................................. 665
10 State Street Boston Corp .................... 645
20 Charles Schwab Corp ......................... 640
4 +Echelon International Corp .................. 62
--------
234,949
--------
Health Care (8.7%)
1,897 Pharmacia & Upjohn Inc....................... 75,169
626 Bristol-Myers Squibb Co. .................... 68,077
1,658 Columbia Healthcare Corp .................... 67,564
1,050 American Home Products Corp. ................ 61,556
740 +Amgen Inc. .................................. 40,237
558 Schering-Plough Corp. ....................... 36,131
300 +HEALTHSOUTH Corp ............................ 11,437
101 Pfizer Inc .................................. 8,370
79 Warner Lambert Co ........................... 5,925
77 Cardinal Health Inc ......................... 4,485
100 Beckman Instruments Inc ..................... 3,837
165 +Tenet Healthcare Corp ....................... 3,609
60 +Boston Scientific Corp ...................... 3,600
300 +Epitope Inc ................................. 3,450
167 +Humana Inc .................................. 3,194
70 +Biogen Inc. ................................. 2,713
29 CPC International Inc. ...................... 2,247
131 Mylan Laboratories Inc ...................... 2,194
39 Mallinckrodt Inc. ........................... 1,721
65 +Value Health Inc. ........................... 1,268
31 +Forest Laboratories Inc ..................... 1,015
28 +Foundation Health Corp ...................... 889
31 +ALZA Corp ................................... 802
22 Allergan Inc. ............................... 784
21 Bausch & Lomb Inc ........................... 746
40 +Chiron Corp.................................. 745
19 +Centocor Inc ................................ 679
30 +Genzyme Corp ................................ 652
24 +Acuson Corp ................................. 585
20 Bard (CR) Inc ............................... 560
44 +Novacare Inc ................................ 484
11 Diagnostic Products Corp .................... 285
--------
415,010
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
Technology (1.5%)
500 Equifax Inc. ................................ $15,312
192 +Dell Computer Corp .......................... 10,200
134 +Cisco Systems Inc ........................... 8,526
64 Intel Corp .................................. 8,380
200 +Bell Industries Inc ......................... 4,275
225 +Loral Space Communications .................. 4,134
106 First Data Corp ............................. 3,869
64 Lucent Technologies Inc ..................... 2,960
60 Raytheon Co ................................. 2,888
41 +Compuware Corp .............................. 2,055
35 +Litton Industries Inc ....................... 1,667
50 +Advanced Micro Devices Inc .................. 1,288
33 +Fiserv Inc .................................. 1,213
47 +Apple Computer Inc .......................... 981
23 +Stratus Computer Inc. ....................... 627
12 +Storage Technology Corp ..................... 571
16 +Structural Dynamics Research
Corp..................................... 320
60 +AST Research Inc ............................ 251
24 +Borland International Inc.................... 130
--------
69,647
--------
Transportation (0.5%)
169 Burlington Northern Santa Fe
Corp..................................... 14,597
200 International Shipholding Corp .............. 3,700
34 +Federal Express Corp. ....................... 1,513
37 Alexander & Baldwin Inc ..................... 925
20 Illinois Central Corp ....................... 640
20 +Consolidated Freightways Inc ................ 445
24 Arnold Industries Inc ....................... 381
26 Hunt J B Transportation
Services Inc............................. 364
19 Overseas Shipholding Group .................. 323
10 Consolidated Freightways Corp ............... 89
--------
22,977
--------
Utilities (4.0%)
1,200 +Tucson Electric Power Co .................... 19,950
1,000 Cascade Natural Gas Corp .................... 17,000
600 Boston Edison Co. ........................... 16,125
800 Eastern Utilities Association................ 13,900
600 Ohio Edison Co .............................. 13,650
700 United Water Resources Inc .................. 10,938
700 St Joseph Light & Power Co .................. 10,762
177 Southern Co ................................. 4,005
327 Central Maine Power Co. ..................... 3,801
88 Enron Corp .................................. 3,795
200 Empire District Electric .................... 3,750
200 Public Service Co of North
Carolina................................. 3,650
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
100 New England Electric ........................ $3,487
100 GPU Inc ..................................... 3,362
300 Citizens Utilities Co Cl B .................. 3,338
66 FPL Group Inc. .............................. 3,036
77 Williams Cos Inc ............................ 2,869
68 American Electric Power Co .................. 2,796
140 Edison International ........................ 2,783
100 Illinova Corp ............................... 2,750
119 +Pacific Gas & Electric Co. .................. 2,499
57 Texas Utilities Co .......................... 2,323
76 Allegheny Power System Inc .................. 2,308
63 Florida Progress Corp ....................... 2,032
76 Potomac Electric Power ...................... 1,957
40 Duke Power Co ............................... 1,860
69 Scana Corp .................................. 1,846
54 CMS Energy Corp ............................. 1,816
135 Northeast Utilities ......................... 1,789
52 +CalEnergy Inc ............................... 1,748
84 Pacificorp .................................. 1,722
34 Coastal Corp ................................ 1,662
73 Houston Industries Inc ...................... 1,652
37 Public Service Co of Colorado ............... 1,438
35 Dominion Resources Inc....................... 1,347
45 Entergy Corp................................. 1,249
52 New York State Electric &
Gas Corp................................... 1,124
32 Cinergy Corp. ............................... 1,068
19 Consolidated National Gas Co ................ 1,050
16 Columbia Gas System Inc ..................... 1,018
62 Midamerican Energy Holdings ................. 984
38 Central & South West Corp ................... 975
29 MCN Corp Holdings Co ........................ 837
15 El Paso Natural Gas Co ...................... 758
18 National Fuel Gas Co ........................ 742
24 Brooklyn Union Gas Co ....................... 723
20 Southwestern Public Service ................. 707
27 Puget Sound Power & Light ................... 648
14 Pennsylvania Enterprises Inc ................ 614
27 Montana Power Co ............................ 577
27 AGL Resources Inc ........................... 570
18 Idaho Power Co .............................. 560
15 Hawaiian Electric Industries Inc ............ 542
25 Public Service Co of New
Mexico................................... 491
20 Washington Gas Light Co ..................... 453
13 Indiana Energy Inc .......................... 317
--------
189,753
--------
Total Common Stocks
(Cost $2,551,213).......................... 2,633,725
---------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
UNIT INVESTMENT
TRUST (4.7%)
(Cost $223,347)
3,000 Standard & Poor's Depositary
Receipts................................... $221,813
--------
Principal
Amount
U.S. GOVERNMENT
OBLIGATIONS (56.4%)
U.S. Treasury Bill (16.5%)
$800,000 5.148% Due 4/17/97 .......................... 788,458
--------
U.S. Treasury Bond (5.8%)
270,000 6.875% Due 8/15/25 ......................... 275,316
--------
U.S. Treasury Notes (34.1%)
886,000 5.500% Due 11/15/98 ......................... 880,046
739,000 6.500% Due 8/15/05 .......................... 743,737
--------
1,623,783
---------
Total U.S. Government
Obligations ($2,688,637).................. 2,687,557
---------
Total Investments (116.4%)
(Cost $5,463,197).......................... 5,543,095
Liabilities in Excess of
Other Assets (-16.4%)...................... (780,425)
---------
Total Net Assets (100.0%).................... $4,762,670
=========
<FN>
+ Non-incoming producing security.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Assets and Liabilities at December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long- Medium- Short-
Large- Small- Term Term Term
Cap Cap Retirement Retirement Retirement
Assets ------- --------- --------- --------- ----------
Investments at value (+)..................................... $1,562,208 $1,908,577 $1,313,468 $4,029,562 $5,543,095
Cash........................................................... 29,185 82,628 98,368 0 10,204
Receivable for Fund shares sold................................ 0 0 89,094 438,193 962,406
Receivable for securities sold................................ 0 0 600 1,500 700
Receivable from Adviser........................................ 14,152 11,516 7,490 8,321 4,543
Dividends and interest receivable.............................. 2,519 4,150 5,835 21,104 33,446
Deferred organizational expenses and
prepaid expenses........................................... 41,717 41,762 38,625 38,632 38,635
--------- --------- --------- --------- ----------
1,649,781 2,048,633 1,553,480 4,537,312 6,593,029
--------- --------- --------- --------- ----------
Liabilities
Payable for investment securities purchased.................... 0 0 217,952 745,197 1,756,290
Payable for Fund shares redeemed.............................. 549 5,230 9 137 11
Payable to custodian bank...................................... 0 0 0 32,392 0
Accrued distribution fees payable
(Adviser Shares)........................................... 0 0 210 676 710
Accrued service fees payable
(Institutional Shares)..................................... 0 0 184 347 209
Organization costs payable..................................... 51,083 51,083 47,200 47,110 47,110
Other accrued expenses......................................... 27,017 24,929 28,034 30,268 26,029
--------- --------- --------- --------- ----------
78,649 81,242 293,589 856,127 1,830,359
--------- --------- --------- --------- ----------
Net Assets........$1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========= ========= ========= ========= =========
Net Assets Represented by:
Shares of beneficial interest (par $0.001)..................... $140 $264 $180 $457 $520
Paid-in surplus................................................ 1,464,282 1,762,989 1,229,337 3,612,663 4,686,086
Accumulated undistributed/(overdistributed)
net investment income...................................... (1,618) 1,401 (2,127) (1,936) (1,788)
Undistributed/(overdistributed) realized
gains on investments....................................... 157 2,112 (124) (1,462) (2,046)
Net unrealized appreciation on investments..................... 108,171 200,625 32,625 71,463 79,898
--------- --------- --------- --------- ----------
Net Assets ....................................................$1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========= ========= ========= ========= =========
Net Asset Value and Redemption Price
per Share:
Adviser Shares:
Net Assets..................................................... - - $977,702 $3,416,022 $4,458,598
Shares of beneficial interest issued and
outstanding................................................. - - 140,044 423,387 486,601
Net asset value per share...................................... - - $6.98 $8.07 $9.16
========= ========= ========= ========= =========
Institutional Shares:
Net Assets.....................................................$1,571,132 $1,967,391 $282,189 $265,163 $304,072
Shares of beneficial interest issued and
outstanding................................................ 140,123 263,461 40,014 33,733 33,016
Net asset value per share...................................... $11.21 $7.47 $7.05 $7.86 $9.21
========= ========= ========= ========= =========
(+) Investments at cost...................................... 1,454,037 1,707,952 1,280,843 3,958,099 5,463,197
Unrealized Appreciation/(Depreciation): *
Gross appreciation......................................... 127,114 251,739 49,958 115,060 113,965
Gross depreciation......................................... (18,943) (51,114) (17,333) (43,597) (34,067)
--------- --------- --------- --------- ----------
Net unrealized appreciation.................................... 108,171 200,625 32,625 71,463 79,898
========= ========= ========= ========= =========
<FN>
* Based on cost of securities for Federal Income tax purposes which does not
differ from book cost.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Operations for the Period Ended December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long Medium Short
Large Small Term Term Term
Cap* Cap* Retirement** Retirement** Retirement**
Investment Income:
Dividends.................................................... $20,123 $37,946 $6,931 $15,543 $14,285
Interest..................................................... 182 0 4,085 17,971 23,969
Other........................................................ 2,725 1,622 479 1,272 0
------- ------- ------ ------ ------
23,030 39,568 11,495 34,786 38,254
------- ------- ------ ------ ------
Expenses:
Investment advisory fees - Note 5............................ 5,907 9,076 2,533 7,501 7,488
Transfer agent fees and expenses
(Advisor Class)............................................. 0 0 10,042 10,042 10,042
Transfer agent fees and expenses
(Institutional Shares)...................................... 11,000 11,000 9,042 9,042 9,042
Custodian fees and expenses - Note 7......................... 11,028 13,201 8,958 10,132 6,187
Professional fees............................................ 29,000 30,000 28,420 31,576 31,050
Administration fees - Note 5................................. 709 1,089 304 900 899
Shareholders' reports........................................ 4,000 4,500 3,249 4,198 3,600
Fund accounting fees......................................... 25,000 25,000 24,750 24,750 24,750
Registration fees and expenses............................... 46,688 47,466 46,322 48,330 47,215
Trustees' fees and expenses.................................. 6,000 6,000 6,000 6,000 6,000
Amortization of organization costs........................... 9,453 9,453 8,612 8,597 8,597
Distribution fees (Adviser Shares) - Note 5.................. 0 0 1,320 4,325 4,574
Service fees (Institutional Shares) - Note 5................. 0 0 184 338 209
Other expenses............................................... 40 73 18 58 63
------- ------- ------ ------ ------
Total Expenses............................................... 148,825 156,858 149,754 165,789 159,716
Less fees waived by Adviser and
Administrator - Note 5...................................... (6,616) (10,165) (2,837) (8,401) (8,387)
Less expenses reimbursed
by Adviser - Note 5....................................... (130,419) (131,089) (140,534) (138,948) (132,675)
Less expenses paid indirectly - Note 7....................... (1,941) (468) (658) (1,269) (1,390)
------- ------- ------ ------ ------
Net Expenses................................................. 9,849 15,136 5,725 17,171 17,264
------- ------- ------ ------ ------
Net Investment Income........................................ 13,181 24,432 5,770 17,615 20,990
------- ------- ------ ------ ------
Realized and Unrealized Gain on
Investments
Net realized gain on investments............................ 29,755 25,143 7,802 24,377 232
Change in unrealized appreciation on
Investments.............................................. 108,171 200,625 32,625 71,463 79,898
------- ------- ------ ------ ------
Net Gain on Investments...................................... 137,926 225,768 40,427 95,840 80,130
------- ------- ------ ------ ------
Net Increase in Net Assets Resulting
from Operations............................................. $151,107 $250,200 $46,197 $113,455 $101,120
======= ======= ====== ======= =======
<FN>
* Commencement of operations February 6, 1996.
** Commencement of operations March 7, 1996.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Changes in Net Assets for the Period Ended December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long- Medium- Short-
Large- Small- Term Term Term
Cap* Cap* Retirement** Retirement** Retirement**
Operations:
Net investment income................................... $13,181 $24,432 $5,770 $17,615 $20,990
Net realized gain
on investments........................................ 29,755 25,143 7,802 24,377 232
Change in unrealized
appreciation on investments........................... 108,171 200,625 32,625 71,463 79,898
---------- ---------- ---------- --------- ----------
Net Increase in Net Assets
Resulting from Operations............................. 151,107 250,200 46,197 113,455 101,120
---------- ---------- ---------- --------- ----------
Dividends to shareholders from net investment income:
Adviser Shares 0 0 (7,897) (11,718) (22,778)
Institutional Shares (14,799) (23,031) 0 (7,833) 0
---------- ---------- ---------- --------- ----------
Total dividends to
shareholders from net
investment income (14,799) (23,031) (7,897) (19,551) (22,778)
---------- ---------- ---------- --------- ----------
Distributions to shareholders from net realized gains:
Adviser Shares 0 0 (6,017) (23,803) (2,278)
Institutional Shares (29,598) (23,031) (1,909) (2,036) 0
---------- ---------- ---------- --------- ----------
Total distributions from net
realized gains (29,598) (23,031) (7,926) (25,839) (2,278)
---------- ---------- ---------- --------- ----------
Transactions in Shares of
Beneficial Interest:
Received on issuance:
Shares sold........................................... 1,720,086 1,801,897 1,256,481 3,739,365 4,786,563
Shares issued in reinvestment
of dividends and distributions 44,396 46,062 15,823 45,391 25,055
Shares redeemed....................................... (400,060) (84,706) (42,787) (171,636) (125,012)
---------- ---------- ---------- --------- ----------
Net Increase from
Capital Share Transactions.......................... 1,364,422 1,763,253 1,229,517 3,613,120 4,686,606
---------- ---------- ---------- --------- ----------
Total Increase
in Net Assets......................................... 1,471,132 1,967,391 1,259,891 3,681,185 4,762,670
Net Assets:
Beginning of period..................................... 100,000 0 0 0 0
---------- ---------- ---------- --------- ----------
End of period+.......................................... $1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========== ========== ========== ========== ==========
+ Includes undistributed/
(overdistributed) net
investment income................................... ($1,618) $1,401 ($2,127) ($1,936) ($1,788)
========== ========== ========== ========== ==========
<FN>
* Commencement of operations February 6, 1996.
** Commencement of operations March 7, 1996.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements
1. General
The Tomorrow Long-Term Retirement Fund ("Long-Term Fund"), Tomorrow Medium-
Term Retirement Fund ("Medium-Term Fund"), Tomorrow Short-Term Retirement Fund
("Short-Term Fund"), Core Large-Cap Fund (Large-Cap Fund") and Core Small-Cap
Fund ("Small -Cap Fund") are separate funds (collectively the "Funds") of the
Tomorrow Funds Retirement Trust (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the
"Act"), as an open-end investment company. All of the funds are diversified.
The Trust offers two classes of shares: Adviser Class Shares and Institutional
Class Shares. Adviser Shares and Institutional Shares are substantially the same
except that Adviser Shares bear the fees payable under a plan adopted by the
Trust's Board of Trustees pursuant to Rule 12b-1 under the Act (the
"Distribution Plan") at an annual rate of up to 0.50% of the average daily net
assets attributable to the Adviser Shares; Institutional Shares bear the fees
that are payable under a Service Plan (the "Service Plan") at an annual rate of
up to 0.25% of the average daily net assets attributable to the Institutional
Shares. In addition to fees paid pursuant to the Distribution Plan and Service
Plan, each class also bears the expense associated with transfer agent fees.
Investment income, expenses (other than expenses incurred under the
Distribution Plan, the Service Plan and transfer agent fees and expenses), and
realized and unrealized gains and losses on investments of a Fund are allocated
to the separate classes of shares based upon their relative net asset value on
the date income is earned or expenses and realized and unrealized gains and
losses are incurred.
The Long-Term Fund, Medium-Term Fund and Short-Term Fund first
commenced offering Adviser Shares on March 7, 1996 and Institutional Shares on
April 2, 1996. The Large-Cap Fund and Small-Cap Fund first commenced offering
Institutional shares on February 6, 1996. There are currently no shares
outstanding for the Adviser Class of the Large-Cap Fund and Small-Cap Fund.
2. Significant Accounting Policies
Portfolio Valuation
Common Stock - Securities listed or admitted to trading on a national
securities exchange, including options, are valued at the last sale price on
such exchange as of the close of regular trading on the New York Stock Exchange
("NYSE") on each day that the Funds calculate their net asset values.
Unlisted securities and listed securities for which there are no sales reported
on the valuation date are valued at the mean between the most recent bid and
ask prices.
Bonds - Bonds and other fixed income securities (other than short-term
obligations but including listed issues) in the Funds' portfolios are valued by
a pricing service which utilizes both dealer-supplied valuations and electronic
data processing techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices, exchange or
over-the-counter prices, when such valuations are believed to reflect the market
value of such securities.
Money Market Securities - Investments in money market and other short-term
(60 days or less) securities are valued at amortized cost, which has been
determined by the Trust's Board of Trustees to represent the fair market value
of such securities.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
Foreign Securities - Securities listed or admitted to trading
on an international securities exchange, including options, are valued
at the last sale price, at the close of the primary international exchange
on the day that the Fund's calculate their net asset values. Unlisted foreign
securities and listed foreign securities for which there are no sales reported
on the valuation date are valued at the mean between the most recent bid and
asked prices.
Certain risks result from investing in foreign securities in addition to
the usual risk inherent in domestic investments. Such risks include
future political, economical and currency exchange developments
including restrictions and changes in foreign law.
Security Transactions and Investment Income
Security transactions are recorded on a trade date basis. Realized gains and
losses from security transactions are recorded utilizing the identification
method. Interest income is recognized on an accrual basis and dividend income is
recognized on ex-dividend date. Discounts on fixed income securities are
accreted to interest income over the life of the security or until an applicable
call date if sooner, with a corresponding increase in cost basis.
During the period from inception through December 31, 1996, none of the
Funds in the Trust entered into the following transactions: futures, options,
forward currency contracts or foreign currency transactions.
Federal Income Taxes
Each Fund's policy is to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Accordingly, no federal tax or excise
tax provisions are required. The federal income tax basis of investments
approximates cost.
Distributions to Shareholders
Dividends from Net Investment Income - Dividends from net investment income
are declared and paid annually when available for each Fund and are recorded on
ex-dividend date.
Distributions from Capital Gains - Distributions from capital
gains are declared by December 31 of the year in which they are earned and are
paid by January 31 of the following year. However, to the extent that the net
realized gains of a Fund can be offset by capital loss carryovers of that Fund,
such gains will not be distributed.
The amounts of dividends from net investment income and distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or net
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ from these amounts.
3. Organizational Expenses
Weiss, Peck & Greer. L.L.C. ("WPG"), the Funds' investment Adviser, paid the
organizational expenses of the Funds in the amount of approximately $243,000
($51,000 each for the Large-Cap and Small-Cap Funds and $47,000 each for the
Long-Term, Medium-Term and Short-Term Funds). The Funds will reimburse WPG for
these expenses which have been deferred and are being amortized by the Funds on
a straight line method over a period of five years from the commencement of
operations.
4. Expenses
The Trust accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund while general
Trust expenses are allocated among the Trust's respective Funds.
5. Investment Advisory Fee and Other Transactions with Affiliates
The Trust, with respect to each Fund, has entered into an Investment Advisory
Agreement with WPG which entitles WPG to receive a fee, which is accrued daily
and paid monthly, at an annual rate of 0.75% of each Fund's average daily net
assets. WPG voluntarily agreed not to impose its advisory fee applicable to the
Funds for the period ended December 31, 1996.
WPG has agreed to voluntarily limit each Fund's total operating
expenses, (excluding taxes, brokerage commissions, interest, dividends paid on
securities sold short and extraordinary legal fees and expenses) to 1.75% of
the average daily net assets for the Adviser Class Shares and 1.50% of the
average daily net assets for the Institutional class shares. WPG will reduce
its advisory fee (but not below $0) when the total operating expenses exceed
these limits.
The Trust has entered into an Administration Agreement with WPG. For its
administrative services, WPG is entitled to receive a fee, which is accrued
daily and paid monthly, at an annual rate of 0.09% of each Fund's average
daily net assets. WPG voluntarily agreed not to impose its administration
services fee applicable to the funds for the period ended December 31, 1996.
The Trust with respect to the Adviser Class of each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Act. Under the Distribution
Plan, each Fund pays distribution and service fees at an aggregate annual rate
of up to 0.50% of the daily average net assets attributable to the Adviser
Class Shares. Up to 0.25% of this fee is for service fees and is intended to be
compensation for personnel services and/or account maintenance services. The
remaining amount is for distribution fees and is intended to compensate WPG for
its services and expenses associated with serving as principal underwriter of
the Adviser Class. These payments are borne solely by the Adviser Class Shares.
For the period April 2, 1996 through December 31,
1996 payments pursuant to the Distribution Plan from the Long-Term Fund,
Medium-Term Fund and Short-Term Fund amounted to $1,320, $4,325 and $4,574,
respectively. Of these amounts, WPG earned $670, $2,203 and $2,307,
respectively.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
The Trust with respect to the Institutional Class of each Fund has
also adopted a Service Plan (the "Institutional Service Plan") pursuant to which
each Fund has agreed to pay fiduciaries of retirement plans investing in the
Funds a fee for various services and/or account maintenance services relating to
the Institutional Class Shares. The Institutional Service Plan fee is accrued
daily and paid quarterly at an annual rate of up to 0.25% of the average daily
net asset value attributable to the Institutional Class Shares of each Fund, and
is borne solely by the Institutional Class Shares. For the period through
December 31, 1996 payments made pursuant to the Institutional Service Plan from
the Long-Term Fund, Medium-Term Fund and Short-Term Fund amounted to $184, $338
and $209, respectively. No such payments were made for the Large-Cap Fund and
Small-Cap Fund.
6. Securities Transactions
Sale proceeds, cost of securities purchased, (excluding short term
investments), total commissions and commissions received by WPG on such
transactions were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Proceeds Cost of Commissions
of Securities Securities Total Received
Sold Purchased Commissions by WPG
Large-Cap* $427,821 $1,854,942 $1,651 $1,645
Small-Cap* 154,436 1,837,244 2,387 2,387
Long-Term** 115,061 1,388,034 846 821
Medium-Term** 296,128 3,810,468 2,094 2,070
Short-Term** 200,718 4,874,544 2,056 2,004
<FN>
* For the period February 6, 1996 (commencement of operations ) through December 31, 1996.
** For the period March 7, 1996 (commencement of operations) through December 31, 1996.
</FN>
</TABLE>
7. Custodian Fees
Each Fund has entered into an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever there
are uninvested cash balances. The Funds' custodian fee and related offset were
as follows:
<TABLE>
<S> <C> <C>
Custodian Fee Offset Credit
Large-Cap* $11,028 $1,941
Small-Cap* 13,201 468
Long-Term** 8,958 658
Medium-Term** 10,132 1,269
Short-Term** 6,187 1,390
The Funds could have invested its cash balances elsewhere if it had not agreed
to a reduction in fees under the expense offset agreement with its custodian.
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
** For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
8. Capital Share Transactions
Transactions in shares of the Funds were as follows:
<TABLE>
<S> <C> <C>
Core Large-Cap
Shares Amount
Institutional Class Shares*
Sold 161,419 $1,720,086
Reinvested from dividends
and distributions 3,905 44,396
Redeemed (35,201) (400,060)
Net increase 130,123 $1,364,422
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Core Small-Cap
Shares Amount
Institutional Class Shares*
Sold 268,942 $1,801,897
Reinvested from dividends
and distributions 6,191 46,062
Redeemed (11,672) (84,706)
Net increase 263,461 $1,763,253
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Long-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 143,309 $977,964
Reinvested from dividends
and distributions 1,985 13,914
Redeemed (5,250) (35,184)
Net increase - Adviser Class 140,044 956,694
Institutional Class Shares**
Shares Amount
Sold 40,904 278,517
Reinvested from dividends
and distributions 270 1,909
Redeemed (1,160) (7,603)
Net increase - Institutional Class 40,014 272,823
Net increase in Fund 180,058 $1,229,517
<FN>
* For the period March 7, 1996 (commencement of operations) through December
31, 1996.
** For the period April 2, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
<TABLE>
<S> <C> <C>
Medium-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 434,251 $3,434,858
Reinvested from dividends
and distributions 4,374 35,521
Redeemed (15,238) (118,433)
Net increase - Adviser Class 423,387 3,351,946
Institutional Class Shares**
Sold 39,564 304,507
Reinvested from dividends
and distributions 1,248 9,870
Redeemed (7,079) (53,203)
Net increase - Institutional Class 33,733 261,174
Net increase in Fund 457,120 $3,613,120
<FN>
* For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
** For the period April 2, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Short-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 498,279 $4,497,333
Reinvested from dividends
and distributions 2,714 25,055
Redeemed (14,392) (123,915)
Net increase - Adviser Class 486,601 4,398,473
Institutional Class Shares**
Sold 33,138 289,230
Redeemed (122) 1,097)
Net increase - Institutional Class 33,016 288,133
Net increase in Fund 519,617 $4,686,606
<FN>
* For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
** For the period April 2, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
FINANCIAL HIGHLIGHTS
$ per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Net Total Dividends Distri- Net
Asset Realized Income From butions Asset
Value at Net and From Net from Total Value at
Beginning Investment Unrealized Investment Investment Capital Distri- End of
of Period Income Gains Operations Income Gains butions Period
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 10.00 0.10 1.24 1.34 (0.11) (0.02) (0.13) $11.21
Small-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 6.50 0.10 1.05 1.15 (0.09) (0.09) (0.18) 7.47
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 6.50 0.04 0.55 0.59 (0.06) (0.05) (0.11) 6.98
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 6.51 0.04 0.55 0.59 0.00 (0.05) (0.05) 7.05
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 7.50 0.04 0.63 0.67 (0.03) (0.07) (0.10) 8.07
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 7.53 0.10 0.55 0.65 (0.25) (0.07) (0.32) 7.86
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.50 0.06 0.72 0.78 (0.06) (0.06) (0.12) 9.16
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.51 0.00 0.70 0.70 0.00 0.00 0.00 9.21
</TABLE>
<TABLE>
ratios
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio information
assuming no fee waivers,
reimbursements or
Ratio of custody fee
Ratio of Net earnings credit receive
Expenses Income to Ratio of Ratio of
Net To Average Average Portfolio Average Expenses Net Income
Total Assets Net Net Turnover Commissions To Average To Average
Return++ (000's) Assets+ Assets+ Rate Per Share Net Assets+ Net Assets+
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 15.35% $1,571 1.25% 1.67% 48.62% $0.035 18.89% -15.97%
Small-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 9.08% 978 1.75% 1.63% 25.09% 0.035 45.36% -41.98%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 9.03% 282 1.50% 1.97% 25.09% 0.035 40.49% -37.02%
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.89% 3,416 1.75% 1.73% 22.56% 0.035 15.88% -12.40%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 8.54% 265 1.50% 1.96% 22.56% 0.035 20.86% -17.40%
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.54% 4,459 1.75% 2.08% 14.16% 0.035 15.68% -11.85%
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.23% 304 1.50% 2.31% 14.16% 0.035 19.10% -15.29%
<FN>
+ Annualized.
++ Not annualized.
* Commencement of operations.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Independent Auditors' Report
To the Shareholders and Board of Trustees of:
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Core Large-Cap Stock Fund, Core Small-Cap Stock
Fund, Tomorrow Long-Term Retirement Fund, Tomorrow Medium-Term Retirement Fund
and Tomorrow Short-Term Retirement Fund as of December 31, 1996, and the related
statements of operations, changes in net assets and financial highlights for the
period February 6, 1996 (commencement of operations) to December 31, 1996 for
the Core Large-Cap Stock Fund and Core Small-Cap Stock Fund and for the period
March 7, 1996 (commencement of operations) to December 31, 1996 for the Tomorrow
Long-Term Retirement Fund, Tomorrow Medium-Term Retirement Fund and Tomorrow
Short-Term Retirement Fund. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Core
Large-Cap Stock Fund, Core Small-Cap Stock Fund, Tomorrow Long-Term Retirement
Fund, Tomorrow Medium-Term Retirement Fund and Tomorrow Short-Term Retirement
Fund as of December 31, 1996, the results of their operations, changes in net
assets and financial highlights for the period February 6, 1996 (commencement of
operations) to December 31, 1996 for the Core Large-Cap Stock Fund and Core
Small-Cap Stock Fund and for the period March 7, 1996 (commencement of
operations) to December 31, 1996 for the Tomorrow Long-Term Retirement Fund,
Tomorrow Medium-Term Retirement Fund and Tomorrow Short-Term Retirement Fund, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 15, 1997
<PAGE>
Tomorrow Funds
RETIREMENT TRUST
A Lifecycle Retirement Program
One New York Plaza, New York, NY 1004
(800) 223-3332
INDEPENDENT TRUSTEES AND MEMBERS INVESTMENT ADVISER
OF AUDIT COMMITTEE Weiss, Peck & Greer, L.L.C.
Raymond R. Herrmann, Jr. One New York Plaza
Lawrence J. Israel New York, NY 10004
CUSTODIAN
OFFICERS Boston Safe Deposit and Trust Company
Roger J. Weiss One Exchange Place
Chairman of the Board, President Boston, MA 02109
and Trustee
Jay C. Nadel DIVIDEND DISBURSING AND
Executive Vice President TRANSFER AGENT
and Treasurer First Data Investor Services Group, Inc.
440 Computer Drive
Francis H. Powers Westboro, MA 01581-5120
Executive Vice President
and Treasurer
LEGAL COUNSEL
Daniel Cardell Hale and Dorr
Vice President 60 State Street
Boston, MA 02109
Stephen Gresham
Vice President INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Arlen S. Oransky 345 Park Avenue
Vice President New York, NY 10154
Joseph J. Reardon
Vice President
Daniel S. Vandivort
Vice President
Joseph Parascondola
Assistant Vice President
This report is submitted for general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein is to be considered
an offer of sale or solicitation of an offer to buy shares of the Tomorrow
Funds Retirement Trust. Such offering is made only by prospectus, which
includes details as to offering and other material information.
<PAGE>
<PAGE>
PART B
WEISS, PECK & GREER INVESTMENTS
TOMORROW FUNDS RETIREMENT TRUST
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
Tomorrow Post-Retirement Fund
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
(each a "Fund" and collectively, the "Funds")
- ------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
INSTITUTIONAL CLASS SHARES
May 1, 1997
- ------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectuses of the Funds, each
dated May 1, 1997, as amended and/or supplemented from time to time
(collectively, the "Prospectuses"), copies of which may be obtained
without charge by writing to Tomorrow Funds Retirement Trust (the
"Trust"), One New York Plaza, New York 10004 or by calling
1-800-223-3332.
THE STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED
OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
Page
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.......... 1
Quantitative Methodology.......................... 2
INVESTMENT TECHNIQUES.................................. 3
Repurchase Agreements............................. 3
Forward Commitment, Delayed Delivery and
When-Issued Transactions........................ 4
Loans of Portfolio Securities..................... 6
Options........................................... 7
Futures Transactions.............................. 10
Limitations on the Use of Futures Contracts
and Options on Futures.......................... 11
Special Considerations and Risks
Related to Options and Futures Transactions..... 12
Privately Issued Mortgage-Backed Securities....... 15
Risks Associated with Specific Types
of Derivative Securities........................ 16
Participation Interests........................... 16
Securities of Foreign Issuers..................... 17
Restricted and Illiquid Securities................ 18
Other Investment Companies........................ 18
CALCULATION OF THE FUNDS' RETURNS...................... 19
Total Return...................................... 19
Yield............................................. 20
Other Quotations, Comparisons and
General Information............................. 20
INVESTMENT RESTRICTIONS................................ 22
ADVISORY AND ADMINISTRATIVE SERVICES................... 28
Investment Adviser................................ 28
Administrator..................................... 31
Principal Underwriter............................. 33
SERVICE PLANS.......................................... 33
TRUSTEES AND OFFICERS.................................. 35
HOW TO PURCHASE SHARES................................. 39
Acquiring Share of the Funds in
Exchange for Securities......................... 39
REDEMPTION OF SHARES................................... 40
Systematic Withdrawal Plan........................ 40
-i-
<PAGE>
NET ASSET VALUE........................................ 41
INVESTOR SERVICES...................................... 42
Automatic Investment Plan......................... 43
Prototype Retirement Plan for Employers
and Self-Employed Individuals................... 43
Individual Retirement Account..................... 45
Simplified Employee Pension Plans (SEP-IRA)....... 46
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS................ 48
PORTFOLIO BROKERAGE.................................... 54
PORTFOLIO TURNOVER..................................... 57
ORGANIZATION........................................... 58
CUSTODIAN.............................................. 61
TRANSFER AGENT......................................... 61
LEGAL COUNSEL.......................................... 61
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS.......... 61
APPENDIX............................................... 62
GLOSSARY............................................... 65
-ii-
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVE AND POLICIES
(See "Investment Objectives and Policies," and "Risk
Considerations and Other Investment Practices and Policies" in the
Prospectuses.)
All capitalized terms not defined herein shall have the meanings
set forth in the Prospectuses.
The Trust consists of separate Funds, the Institutional Class
shares of which are offered to separate accounts (the "Separate
Accounts" or Accounts") of various insurance companies ("Participating
Insurance Companies") to fund variable annuity and variable life
insurance contracts (the "Variable Contracts"). As described in the
Prospectuses, Institutional Class shares of the Funds also may be
offered to certain qualified pension and retirement plans (the
"Qualified Plans"). The terms and conditions of the Variable Contracts
and any limitations upon the Funds in which the Accounts may be
invested are set forth in a separate prospectus and statement of
additional information relating to the Variable Contracts. The terms
and conditions of a Qualified Plan and any limitations upon the Funds
in which such Qualified Plan may be invested are set forth in such
Qualified Plan's governing documents. The Trust reserves the right to
limit the types of Accounts and the types of Qualified Plans that may
invest in any Fund.
Qualified Plans and Participating Insurance Companies are the
record holders of shares of beneficial interest in each Fund. Subject
to the limitations set forth in their Variable Contracts and the
separate prospectus and statement of additional information relating to
the Variable Contracts, contract holders may direct through their
Participating Insurance Companies the allocation of amounts available
for investment among the Funds. Similarly, in accordance with any
limitations set forth in their Qualified Plans, Qualified Plan
participants may direct through their Qualified Plan fiduciaries the
allocation of amounts available for investment among the Funds.
Instructions for any such allocation, or for the purchase or redemption
of shares of a Fund, must be made by the investor's Participating
Insurance Company or Qualified Plan fiduciary, as the case may be, as
the record holder of the Fund's shares. The rights of Participating
Insurance Companies and Qualified Plans as record holders of shares of
a Fund are different from the rights of Variable Contract holders and
Qualified Plan participants. The term "shareholder" in this Statement
of Additional Information when used in the context of Institutional
Class shares refers only to Participating Insurance Companies and
Qualified Plans, and not to Variable Contract holders or Qualified Plan
participants.
<PAGE>
The securities in which each Fund may invest and certain other
investment policies are described in the Funds' Prospectuses. This
Statement of Additional Information should be read in conjunction with
the Prospectuses and, when applicable, with the separate prospectus and
statement of additional information related to the applicable Account.
The Appendix to this Statement of Additional Information contains
a description of the quality categories of corporate bonds in which the
Funds may invest, and a Glossary describing some of the Funds'
investments.
Quantitative Methodology
To seek to achieve their respective investment objectives, each of
the Core Large-Cap Stock Fund ("Large-Cap Fund") and the Core Small-Cap
Stock Fund ("Small-Cap Fund") under normal market conditions invests in
a portfolio of securities that are considered more "efficient" than the
Standard & Poor's 500 Stock Index (the "S&P 500") in the case of the
Large-Cap Fund and the Russell 2000 Index (the "Russell 2000") in the
case of the Small-Cap Fund. The other Funds seek to achieve similar
results with respect to the amount of their assets allocated to
Large-Cap, Medium-Cap and Small-Cap securities (as described in the
Prospectus applicable to such Funds). The Benchmarks for the Large-Cap,
Medium-Cap and Small-Cap Subcategories are the S&P 500, the Standard &
Poor's 400 MidCap Index (the "S&P 400") and the Russell 2000,
respectively.
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 Large-Cap and
Small-Cap Funds and the Subcategories of the other Funds, Weiss, Peck &
Greer, L.L.C. (the "Adviser" or "WPG") 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 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
the Large-Cap and Small-Cap Funds and the Subcategories, 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 the Large-Cap
and Small-Cap Funds and the Subcategories. The respective optimal
portfolios for the Large-Cap and Small-Cap Funds and the Subcategories
are designed to have returns greater than, but highly correlated with,
the return of the applicable Benchmarks.
After each optimal portfolio is constructed, it may be rebalanced
to maintain the original optimal weights. The Adviser will sell a
security when the security's weight within an actual portfolio becomes
significantly greater than its optimal weight. The Adviser will buy a
security when the security's weight within an actual portfolio becomes
significantly less than its optimal weight. The Adviser repeats the
entire optimization process at least semi-annually, at which point a
new portfolio is constructed with respect to the Large-Cap and
Small-Cap Funds and the Subcategories adding the most recent historical
data, and deleting the oldest data. When a security is removed from a
Benchmark, it will not necessarily be removed from the Funds'
portfolios within a predetermined length of time.
The Adviser's research personnel will monitor and occasionally
make changes in the way the optimal portfolios are constructed or
traded. Such changes may include determining better ways to eliminate
issues from consideration in the matrix, improving the manner in which
the matrix is calculated, altering constraints in the optimization
process and effecting changes in trading procedure (to reduce
transaction costs or to enhance the effects of rebalancing). Any such
changes are intended to be consistent with the basic philosophy of
seeking higher returns with respect to each of the Large-Cap and
Small-Cap Funds and each Subcategory than those that could be obtained
by investing directly in all the stocks of each Benchmark. Investors
should be aware that no quantitative methodology or technical analysis,
including the Adviser's, has ever been proven to provide enhanced
investment return and reduced investment risk in actual long-term
portfolio results.
INVESTMENT TECHNIQUES
The following description of the Funds' investment techniques
supplements the discussion contained in the Prospectuses. (See
"Risk Considerations and Other Investment Practices and Policies"
in the Prospectuses).
Repurchase Agreements
Each Fund may enter into repurchase agreements with banks,
broker-dealers or other financial institutions in order to generate
additional current income. A repurchase agreement is an agreement under
which a Fund acquires a security from a seller subject to resale to the
seller at an agreed upon price and date. The resale price reflects an
agreed upon interest rate effective for the time period the security is
held by a Fund. The repurchase price may be higher than the purchase
price, the difference being income to the Fund, or the purchase and
repurchase price may be the same, with interest at a stated rate due to
the Fund together with the repurchase price on repurchase. In either
case, the income to the Fund is unrelated to the interest rate on the
security. Typically, repurchase agreements are in effect for one week
or less, but may be in effect for longer periods of time. Repurchase
agreements of more than one week's duration are subject to each Fund's
limitation on investments in illiquid securities.
Repurchase agreements are considered by the Securities and
Exchange Commission (the "SEC") to be loans by the purchaser
collateralized by the underlying securities. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, the Funds will
generally enter into repurchase agreements only with domestic banks
with total assets in excess of one billion dollars, primary dealers in
U.S. Government securities reporting to the Federal Reserve Bank of New
York or broker-dealers approved by the Trust's Board of Trustees, with
respect to securities of the type in which the Funds may invest. The
Adviser will monitor the value of the underlying securities throughout
the term of the agreement to ensure that their market value always
equals or exceeds the agreed-upon repurchase price to be paid to a
Fund. Each Fund will maintain a segregated account with its custodian,
Boston Safe Deposit and Trust Company (the "Custodian"), or a
subcustodian for the securities and other collateral, if any, acquired
under a repurchase agreement for the term of the agreement.
In addition to the risk of the seller's default or a decline in
value of the underlying security (see "Risk Considerations and Other
Investment Practices and Policies -- Repurchase Agreements" in the
Prospectuses), a Fund also might incur disposition costs in connection
with liquidating the underlying securities. If the seller becomes
insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a Fund not within the
control of that Fund and therefore subject to sale by the seller's
trustee in bankruptcy. Finally, it is possible that a Fund may not be
able to perfect its interest in the underlying security and may be
deemed an unsecured creditor of the seller. While the Trust
acknowledges these risks, it is expected that they can be controlled
through careful monitoring procedures.
Forward Commitment, Delayed Delivery and When-Issued Transactions
Each Fund may purchase securities on a when-issued, delayed
delivery or forward commitment basis. Securities transactions settled
on when-issued or forward commitment basis are also know as delayed
delivery transactions. The phrase "delayed delivery" is not intended to
address transactions involving the purchase of securities where the
delay in delivery involves only the brief period usually required by
the selling party and its agent solely to locate appropriate
certificates and prepare them for submission for clearance and
settlement in the customary way. Forward commitment and when-issued
transactions involve a commitment by the Fund to purchase or sell
securities at a future date (ordinarily up to 90 days later). The price
of the underlying securities (usually expressed in terms of yield) and
the date when the securities will be delivered and paid for (the
settlement date) are fixed at the time the transaction is negotiated.
When-issued purchases and forward commitments are negotiated directly
with the other party, and such commitments are not traded on exchanges.
A Fund will not enter into such transactions for the purpose of
leverage.
When-issued purchases and forward commitments enable a Fund to
lock in what is believed to be an attractive price or yield on a
particular security for a period of time, regardless of future changes
in interest rates. For instance, in periods of rising interest rates
and falling prices, a Fund might sell securities it owns on a forward
commitment basis to limit its exposure to falling prices. In periods of
falling interest rates and rising prices, a Fund might sell securities
it owns and purchase the same or a similar security on a when-issued or
forward commitment basis, thereby obtaining the benefit of currently
higher yields.
The value of securities purchased on a when-issued or forward
commitment basis and any subsequent fluctuations in their value are
reflected in the computation of the Fund's net asset value starting on
the date of the agreement to purchase the securities, and the Fund is
subject to the rights and risks of ownership of the securities on that
date. The Fund does not earn interest on the securities it has
committed to purchase until they are paid for and delivered on the
settlement date. When the Fund makes a forward commitment to sell
securities it owns, the proceeds to be received upon settlement are
included in the Fund's assets. Fluctuations in the market value of the
underlying securities are not reflected in the Fund's net asset value
as long as the commitment to sell remains in effect. Settlement of
when-issued purchases and forward commitment transactions generally
takes place up to 90 days after the date of the transaction, but a Fund
may agree to a longer settlement period.
A Fund will make commitments to purchase securities on a
when-issued basis or to purchase or sell securities on a forward
commitment basis only with the intention of completing the transaction
and actually purchasing or selling the securities. If deemed advisable
as a matter of investment strategy, however, a Fund may dispose of or
renegotiate a commitment after it is entered into. A Fund also may sell
securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. The Funds
<PAGE>
may realize a capital gain or loss in connection with these
transactions.
When a Fund purchases securities on a when-issued or forward
commitment basis, the Custodian will maintain in a segregated account
securities having a value (determined daily) at least equal to the
amount of the Fund's purchase commitments. In the case of a forward
commitment to sell portfolio securities, the Custodian will hold the
portfolio securities themselves in a segregated account while the
commitment is outstanding. These procedures are designed to ensure that
the Fund will maintain sufficient assets at all times to cover its
obligations under when-issued purchases and forward commitments.
Loans of Portfolio Securities
Each Fund may seek to increase its income by lending portfolio
securities. Under present regulatory policies, such loans may be made
to financial institutions, such as broker-dealers, and would be
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. See "Risk Considerations and Other Investment Practices and
Policies --Lending of Portfolio Securities" in the Prospectuses. The
rules of the New York Stock Exchange ("NYSE") give the Fund the right
to call a loan and obtain the securities loaned at any time on five
days' notice. For the duration of a loan, the Fund would receive the
equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive compensation from the
investment of the collateral. The Fund would not, however, have the
right to vote any securities having voting rights during the existence
of the loan, but the Fund would call the loan in anticipation of an
important vote to be taken among holders of the securities or of the
giving or withholding of their consent on a material matter affecting
the investment. As with other extensions of credit, there are risks of
delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. However, the loans would
be made only to firms deemed by the Adviser to be of good standing, and
when, in the judgment of the Adviser, the consideration which can be
earned currently from securities loans of this type justifies the
attendant risk. If the Adviser determines to make securities loans, it
is intended that the value of the securities loan would not exceed 33
1/3% of the value of the total assets of the Fund.
At the present time the staff of the SEC does not object if an
investment company pays reasonable negotiated fees to its custodian in
connection with loaned securities as long as such fees are pursuant to
a contract approved by the investment company's trustees.
<PAGE>
Options
Each Fund currently intends to limit its options 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.
Writing Covered Call Options on Securities. Each Fund may write
(sell) covered call options on securities ("calls") at such time or
times as the Adviser shall determine to be appropriate. When a Fund
writes a call, it receives a premium and sells to the purchaser the
right to buy the underlying security at any time during the call period
(usually between three and nine months) at a fixed exercise price
regardless of market price changes during the call period. If the call
is exercised, the Fund forgoes any gain but is not subject to any loss
on any change in the market price of the underlying security relative
to the exercise price. A Fund will write such options subject to any
applicable limitations or restrictions imposed by law.
Purchasing Call Options. Each Fund may purchase a call option when
the Adviser believes the value of the underlying security will rise or
to effect a "closing purchase transaction." A Fund will realize a
profit (or loss) from a closing purchase transaction if the amount paid
to purchase a call is less (or more) than the amount received from the
sale thereof.
Put Options. Each Fund may also write and purchase put options on
securities ("puts"). A put written by a Fund obligates it to purchase
the specified security at a specified price if the option is exercised
at any time before the expiration date. All put options written by a
Fund would be covered. A Fund may purchase a put option when the
Adviser believes the value of the underlying security will decline. A
Fund may purchase put options on securities in its portfolio in order
to hedge against a decline in the value of such securities ("protective
puts").
The purpose of writing covered put and call options is to hedge
against fluctuations in the market value of a Fund's portfolio
securities. Each Fund may purchase or sell call and put options on
securities indices for a similar purpose. Such a hedge is limited to
the degree that the price change of the underlying security is in an
amount which is less than the difference between the option premium
received by the Fund and the option strike price. To the extent that
the underlying security's price change exceeds this amount, written put
and call options will not provide an effective hedge.
A written call option would be covered if the Fund owns the
security underlying the option. A written put option may be covered by
maintaining in a segregated account cash or liquid securities. While
this will ensure that the Fund will have sufficient assets to meet its
obligations under the option contract should it be exercised, it does
not reduce the potential loss to the Fund should the value of the
underlying security decrease and the option be exercised. A written
call option or put option may also be covered by purchasing an
offsetting option or any other option which, by virtue of its exercise
price or otherwise, reduces the Fund's net exposure on its written
option position. Further, instead of "covering" a written call option,
the Fund may simply maintain cash or liquid securities in a segregated
account in amounts sufficient to ensure that it is able to meet its
obligations under the written call should it be exercised. This method
does not reduce the potential loss to the Fund should the value of the
underlying security increase and the option be exercised.
Options on Securities Indices. Each Fund may purchase call and put
options on securities indices for the purpose of hedging against the
risk of unfavorable price movements adversely affecting the value of
the Fund's securities or securities the Fund intends to buy or to seek
to increase total return. Such Fund's net assets will be at risk as a
result of such transactions. Unlike a stock option, which gives the
holder the right to purchase or sell a specified stock at a specified
price, an option on a securities index gives the holder the right to
receive a cash "exercise settlement amount" equal to (i) the difference
between the exercise price of the option and the value of the
underlying securities index on the exercise date multiplied by (ii) a
fixed "index multiplier."
A securities index fluctuates with changes in the market values of
the stocks included in the index. For example, some securities index
options are based on a broad market index such as the S&P 500 or the
Value Line Composite Index, or a narrower market index such as the
Standard & Poor's 100 Stock Index ("S&P 100"). Indices may also be
based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on
securities indices are currently traded on the Chicago Board Options
Exchange, the NYSE and the American Stock Exchange.
The Funds may purchase put options to seek to hedge against an
anticipated decline in stock market prices that might adversely affect
the value of a Fund's portfolio securities. If a Fund purchases a put
option on a securities index, the amount of the payment it would
receive upon exercising the option would depend on the extent of any
decline in the level of the securities index below the exercise price.
Such payments would tend to offset a decline in the value of the Fund's
portfolio securities. However, if the level of the securities index
increases and remains above the exercise price while the put option is
outstanding, a Fund will not be able to profitably exercise the option
and will lose the amount of the premium and any transaction costs. Such
loss may be partially or wholly offset by an increase in the value of a
Fund's portfolio securities.
The Funds may purchase call options on securities indices in order
to participate in an anticipated increase in stock market prices or to
offset anticipated price increases on securities that it intends to buy
in the future. If a Fund purchases a call option on a securities index,
the amount of the payment it receives upon exercising the option
depends on the extent of any increase in the level of the securities
index above the exercise price. Such payments would in effect allow the
Fund to benefit from stock market appreciation even though it may not
have had sufficient cash to purchase the underlying stocks. Such
payments may also offset increases in the price of stocks that the Fund
intends to purchase. If, however, the level of the securities index
declines and remains below the exercise price while the call option is
outstanding, a Fund will not be able to exercise the option profitably
and will lose the amount of the premium and transaction costs. Such
loss may be partially or wholly offset by a reduction in the price a
Fund pays to buy additional securities for its portfolio.
The Funds may cover call options on a securities index by owning
securities whose price changes are expected to be similar to those of
the underlying index or by having an absolute and immediate right to
acquire such securities without additional cash consideration (or for
additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities in their
respective portfolio. The Funds may also cover call and put options on
a securities index by maintaining cash or liquid securities with a
value equal to the exercise price in a segregated account with its
custodian or by using the other methods described above. When
purchased, options on securities indices may not enable the Fund to
hedge effectively against interest rate or stock market risk if the
stocks comprising the index subject to the option are not highly
correlated with the composition of the Fund's portfolio. Moreover, the
ability to hedge effectively depends upon the ability to predict
movements in interest rates or the stock market. Some options on
securities indices may not have a broad and liquid secondary market, in
which case options purchased by the Fund may not be closed out and the
Fund could lose more than its option premium when the option expires.
The purchase and sale of option contracts is a highly specialized
activity which involves investment techniques and risks different from
those ordinarily associated with investment companies. It should be
noted that transaction costs relating to options transactions may tend
to be higher than the transaction costs with respect to transactions in
securities. In addition, if a Fund were to write a substantial number
of option contracts which are exercised, the portfolio turnover rate of
that Fund could increase.
<PAGE>
Securities for each Fund's portfolio will continue to be bought
and sold solely on the basis of appropriateness to fulfill the
applicable Fund's investment objective. Option transactions can be
used, among other things, to increase the return on portfolio
positions.
Futures Transactions
Each Fund may purchase and sell futures contracts for hedging
purposes and to seek to increase total return. A futures contract is an
agreement between two parties to buy and sell a security for a set
price at a future time. Each Fund may also enter into index-based
futures contracts and interest rate futures contracts. Futures
contracts on indices provide for a final cash settlement on the
expiration date based on changes in the relevant index. All futures
contracts are traded on designated "contract markets" licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC")
which, through their clearing corporations, guarantee performance of
the contracts.
Generally, if market interest rates increase, the value of
outstanding debt securities declines (and vice versa). If a Fund holds
long-term U.S. Government securities and the Adviser anticipates a rise
in long-term interest rates, it could, in lieu of disposing of its
portfolio securities, enter into futures contracts for the sale of
similar long-term securities. If rates increased and the value of a
Fund's portfolio securities declined, the value of that Fund's futures
contract would increase, thereby protecting that Fund by preventing net
asset value from declining as much as it otherwise would have. If the
Adviser expects long-term interest rates to decline, a Fund might enter
into futures contracts for the purchase of long-term securities, so
that it could offset anticipated increases in the cost of such
securities it intends to purchase while continuing to hold
higher-yielding short-term securities or waiting for the long-term
market to stabilize. Similar techniques may be used by the Funds to
hedge stock market risk.
Each Fund also may purchase and sell listed put and call options on
futures contracts. An option on a futures contract gives the purchaser
the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short
position if the option is a put), at a specified exercise price at any
time during the option period. When an option on a futures contract is
exercised, settlement is effected by the payment of cash representing
the difference between the current market price of the futures contract
and the exercise price of the option. The risk of loss to a Fund
purchasing an option on a futures contract is limited to the premium
paid for the option. A Fund may purchase put options on interest rate
futures contracts in lieu of, and for the same purpose as, its sale of
a futures contract: to seek to hedge a long position in the underlying
futures contract.
The purchase of call options on interest rate futures contracts is
intended to serve the same purpose as the actual purchase of the
futures contract.
A Fund would write a call option on a futures contract to seek to
hedge against a decline in the prices of the securities underlying the
futures contracts. If the price of the futures contract at expiration
is below the exercise price, the applicable Fund would retain the
option premium, which would offset, in part, any decline in the value
of its portfolio securities.
The writing of a put option on a futures contract is similar to
the purchase of the futures contract, except that, if market price
declines, a Fund would pay more than the market price for the
underlying securities. The net cost to a Fund will be reduced, however,
by the premium received on the sale of the put, less any transaction
costs. See "Dividends, Distributions and Tax Status" below.
Each Fund may engage in "straddle" transactions, which involve the
purchase or sale of combinations of call and put options on the same
underlying securities or futures contracts.
In purchasing and selling futures contracts and related options,
each Fund intends to comply with rules and interpretations of the CFTC
and of the SEC.
Limitations on the Use of Futures Contracts and Options on Futures.
Each Fund will engage in futures and related options transactions
only for hedging purposes in accordance with CFTC regulations or to
seek to increase total return to the extent permitted by such
regulations. The Fund will determine that the price fluctuations in the
futures contracts and options on futures contracts used for hedging
purposes are substantially related to price fluctuations in securities
held by the Fund or which it expects to purchase. Except as stated
below, a Fund's futures transactions will be entered into for
traditional hedging purposes - that is, futures contracts will be sold
to protect against a decline in the price of securities that the Fund
owns, or futures contracts will be purchased to protect the Fund
against an increase in the price of securities it intends to purchase.
As evidence of this hedging intent, the Fund expects that on 75% or
more of the occasions on which it takes a long futures (or option)
position (involving the purchase of futures contracts), a Fund will
have purchased, or will be in the process of purchasing, equivalent
amounts of related securities in the cash market at the time when the
futures (or option) position is closed out. However, in particular
cases, when it is economically advantageous for a Fund to do so, a long
futures position may be terminated (or an option may expire) without
the corresponding purchase of securities. As an alternative to
compliance with the bona fide hedging definition, a CFTC regulation
permits a Fund to elect to comply with a different test, under which
the sum of the amounts of initial margin deposits on its existing
futures positions and premiums paid for options on futures entered into
for the purpose of seeking to increase total return (net of the amount
the positions were "in the money" at the time of purchase) would not
exceed 5% of that Fund's net assets, after taking into account
unrealized gains and losses on such positions. A Fund will engage in
transactions in futures contracts and related options only to the
extent such transactions are consistent with the requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), for maintaining
its qualification as a regulated investment company for Federal income
tax purposes (see "Dividends, Distributions, and Tax Status").
A Fund will be required, in connection with transactions in futures
contracts and the writing of options on futures contracts, to make
margin deposits, which will be held by a Fund's custodian for the
benefit of the merchant through whom a Fund engages in such futures and
options transactions. In the case of futures contracts or options
thereon requiring the Fund to purchase securities, the Fund must
segregate cash or liquid securities in an account maintained by the
Custodian to cover such contracts and options. Cash or liquid
securities required to be in a segregated account will be marked to
market daily.
Special Considerations and Risks Related to Options and Futures
Transactions
Exchange markets in options on certain securities are a relatively
new and untested concept. It is impossible to predict the amount of
trading interest that may exist in such options, and there can be no
assurance that viable exchange markets will develop or continue.
The exchanges will not continue indefinitely to introduce new
expirations to replace expiring options on particular issues because
trading interest in many issues of longer duration tends to center on
the most recently auctioned issues. The expirations introduced at the
commencement of options trading on a particular issue will be allowed
to run out, with the possible addition of a limited number of new
expirations as the original expirations expire. Options trading on each
issue of securities with longer durations will thus be phased out as
new options are listed on more recent issues, and a full range of
expirations will not ordinarily be available for every issue on which
options are traded.
In the event of a shortage of the underlying securities
deliverable on exercise of an option, the Options Clearing Corporation
has the authority to permit other, generally comparable, securities to
be delivered in fulfillment of option exercise obligations. If the
Options Clearing Corporation exercises its discretionary authority to
allow such other securities to be delivered, it may also adjust the
exercise prices of the affected options by setting different prices at
which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options
Clearing Corporation may impose special exercise settlement procedures.
The hours of trading for options on securities may not conform to
the hours during which the underlying securities are traded. To the
extent that the markets for underlying securities close before the
options markets, significant price and rate movements can take place in
the options markets that cannot be reflected in the underlying markets.
In addition, to the extent that the options markets close before the
markets for the underlying securities, price and rate movements can
take place in the underlying markets that cannot be reflected in the
options markets.
Prior to exercise or expiration, an option position can be
terminated only by entering into a closing purchase or sale
transaction. This requires a secondary market on an exchange for call
or put options of the same series. Similarly, positions in futures may
be closed out only on an exchange which provides a secondary market for
such futures. A Fund will enter into an option or futures position only
if there appears to be a liquid secondary market for such options or
futures. However, there can be no assurance that a liquid secondary
market will exist for any particular call or put option or futures
contract at any specific time. Thus, it may not be possible to close an
option or futures position. In the event of adverse price movements, a
Fund would continue to be required to make daily cash payments of
maintenance margin for futures contracts or options on futures
contracts position written by that Fund. A Fund may have to sell
portfolio securities at a time when it may be disadvantageous to do so
if it had insufficient cash to meet the daily maintenance margin
requirements. In addition, a Fund may be required to take or make
delivery of the instruments underlying interest rate futures contracts
it holds. The inability to close options and futures positions also
could have an adverse impact on a Fund's ability to effectively hedge
its portfolios.
Each of the exchanges has established limitations governing the
maximum number of call or put options on the same underlying security
(whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether
such options are written on the same or different exchanges or are held
or written on one or more accounts or through one or more brokers). An
exchange may order the liquidation of positions found to be in
violation of applicable trading limits and it may impose other
sanctions or restrictions. The Trust and other clients advised by the
Adviser and its affiliates may be deemed to constitute a group for
these purposes. In light of these limits, the Trustees of the Trust
(the "Trustees") may determine at any time to restrict or to terminate
the Funds' transactions in options. The Adviser does not believe that
these trading and position limits will have any adverse impact on the
investment techniques for hedging the Trust's portfolios.
Over-the-counter ("OTC") options are purchased from or sold to
securities dealers, financial institutions or other parties
("Counterparties") through direct agreement with the Counterparty. In
contrast to exchange listed options, which generally have standardized
terms and performance mechanics, all the terms of an OTC option,
including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the
parties.
Unless the parties provide for it, there is no central clearing or
guaranty function in the OTC option market. As a result, if the
Counterparty fails to make delivery of the security or other instrument
underlying an OTC option it has entered into with the Fund or fails to
make a cash settlement payment due in accordance with the terms of that
option, the Fund will lose any premium it paid for the option as well
as any anticipated benefit of the transaction. Accordingly, the Adviser
must assess the creditworthiness of each such Counterparty or any
guarantor or credit enhancement of the Counterparty's credit to
determine the likelihood that the terms of the OTC option will be
satisfied. The Fund will engage in OTC option transactions only with
U.S. Government securities dealers recognized by the Federal Reserve
Bank of New York as "primary dealers", or broker dealers, domestic or
foreign banks or other financial institutions which have received,
combined with any credit enhancements, a long-term debt rating of A
from Standard & Poor's Ratings Group ("Standard & Poor's") or Moody's
Investor Services Group, Inc. ("Moody's") or an equivalent rating from
any other nationally recognized statistical rating organization
("NRSRO") or that issue long-term debt determined to be of equivalent
credit quality by the Adviser. The Trust treats OTC options purchased
by a Fund, and portfolio securities "covering" the amount of a Fund's
obligation pursuant to an OTC option sold by it (the cost of the
sell-back plus the in-the-money amount, if any) as illiquid, and
subject to each Fund's limitation on investing no more than 15% of its
assets in illiquid securities. However, for options written with
"primary dealers" in U.S. Government securities pursuant to an
agreement requiring a closing transaction at a formula price, the
amount which is considered to be illiquid may be calculated by
reference to a formula price.
Utilization of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and
movements in the price of the securities which are the subject of the
hedge. If the price of the futures contract moves more or less than the
price of the security, a Fund will experience a gain or loss which will
not be completely offset by movements in the price of the securities
which are the subject of the hedge. There is also a risk of imperfect
correlation where the securities underlying futures contracts have
different maturities than the portfolio securities being hedged.
Transactions in options on futures contracts involve similar risks.
Privately Issued Mortgage-Backed Securities
Each of the Tomorrow Post-Retirement Fund ("Post-Retirement
Fund"), Tomorrow Long-Term Retirement Fund ("Long-Term Fund"), Tomorrow
Medium-Term Retirement Fund ("Medium-Term Fund") and Tomorrow
Short-Term Retirement Fund ("Short-Term Fund") (sometimes collectively
referred to herein as the "Tomorrow Funds") may invest in
mortgage-backed securities issued by trusts or other entities formed or
sponsored by private originators of and institutional investors in
mortgage loans and other non-governmental entities (or representing
custodial arrangements administered by such institutions). These
private originators and institutions include savings and loan
associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing.
Privately issued mortgage-backed securities are generally backed
by pools of conventional (i.e., non-government guaranteed or insured)
mortgage loans. Since such mortgage-backed securities normally are not
guaranteed by an entity having the credit standing of Ginnie Mae,
Fannie Mae or Freddie Mac, in order to receive a high quality rating
from the rating organizations (e.g., Standard & Poor's or Moody's),
they often are structured with one or more types of "credit
enhancement." Such credit enhancement falls into two categories: (1)
liquidity protection and (2) protection against losses resulting after
default by a borrower and liquidation of the collateral (e.g., sale of
a house after foreclosure). Liquidity protection refers to the payment
of cash advances to holders of mortgage-backed securities when a
borrower or an underlying mortgage fails to make its monthly payment on
time. Protection against losses resulting after default and liquidation
is designed to cover losses resulting when, for example, the proceeds
of a foreclosure sale are insufficient to cover the outstanding amount
on the mortgage. Such protection may be provided through guarantees,
insurance policies or letters of credit, through various means of
structuring the securities or through a combination of such approaches.
Examples of credit enhancement arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class
securities with one or more classes entitled to receive payment before
other classes, with the result that defaults on the underlying
mortgages are borne first by the holders of the subordinated class),
creation of "spread accounts" or "reserve funds" (where cash or
investments are held in reserve against future losses) and
"over-collateralization" (where the scheduled payments on the
underlying mortgages in a pool exceeds the amount required to be paid
on the mortgage-backed securities). The degree of credit enhancement
for a particular issue of mortgage-backed securities is based on the
level of credit risk associated with the particular mortgages in the
related pool. Losses on a pool in excess of anticipated levels could
nevertheless result in losses to security holders since credit
enhancement rarely covers every dollar owed on a pool. See the Funds'
Prospectuses for a further description of mortgage-backed securities.
Risks Associated with Specific Types of Derivative Securities
Each of the Post-Retirement Fund, Long-Term Fund, Medium-Term Fund
and Short-Term Fund may invest in floating rate securities based on the
Cost of Funds Index ("COFI floaters"), other "lagging rate" floating
rate securities, floating rate securities that are subject to a maximum
interest rate ("capped floaters"), and Mortgage-Backed Securities
purchased at a discount. The primary risks associated with these
derivative debt securities are the potential extension of average life
and/or depreciation due to rising interest rates.
The principal of and interest on the assets underlying a CMO or
REMIC Trust may be allocated among the several classes of CMOs or REMIC
Certificates in various ways. In certain structures known as
"sequential pay" CMOs or REMIC Certificates), payments of principal,
including any principal prepayments, on the underlying mortgage assets
generally are applied to the classes of CMOs or REMIC Certificates in
the order of their respective final distribution dates. Thus, no
payment of principal will be made on any class of sequential pay CMOs
or REMIC Certificates until all other classes having an earlier final
distribution date have been paid in full. Each Tomorrow Fund will
limit its investments in sequential pay CMOs and REMIC Certificates to
5% of its net assets. Please see "Mortgage-Backed Securities" in the
Tomorrow Funds' prospectuses.
Participation Interests
Each Fund may purchase from banks participation interests in all
or part of specific holdings of debt obligations. Each participation
interest is backed by an irrevocable letter of credit or guarantee of
the selling bank that the Adviser has determined meets the prescribed
quality standards of each Fund. Thus, even if the credit of the issuer
of the debt obligation does not meet the quality standards of a Fund,
the credit of the selling bank will. Each Fund will have the right to
sell the participation interest back to the bank after seven days'
notice for the full principal amount of a Fund's interest in the debt
obligation plus accrued interest, but only (1) as required to provide
liquidity to that Fund, (2) to maintain the quality standards of each
Fund's investment portfolio or (3) upon a default under the terms of
the debt obligation. The selling bank may receive a fee from a Fund in
connection with the arrangement.
<PAGE>
Securities of Foreign Issuers
To the extent included in the benchmark indices applicable to each
Fund, each Fund may invest in certain types of U.S. dollar-denominated
securities of foreign issuers, including American Depository Receipts
("ADRs"). ADRs are U.S. dollar-denominated certificates issued by a
U.S. bank or trust company and represent the right to receive
securities of a foreign issuer deposited in a domestic bank or foreign
branch of a U.S. bank. ADRs are traded on domestic exchanges or in the
U.S. over-the-counter market and, generally, are in registered form.
Investments in ADRs have certain advantages over direct investment in
the underlying non-U.S. securities because (i) ADRs are U.S.
dollar-denominated investments which are registered domestically,
easily transferable, and for which market quotations are readily
available, and (ii) issuers whose securities are represented by ADRs
are subject to the same auditing, accounting and financial reporting
standards as domestic issuers. To the extent a Fund acquires ADRs
through banks which do not have a contractual relationship with the
foreign issuer of the security underlying the ADR to issue and service
such ADRs, there may be an increased possibility that the Fund would
not become aware of and be able to respond to corporate actions such as
stock splits or rights offerings involving the foreign issuer in a
timely manner.
Although the Funds do not currently invest directly in foreign
denominated securities, the Long-Term Fund and the Medium-Term Fund
will each invest in other investment companies that will invest their
assets in securities of foreign issuers. The Long-Term and Medium-Term
Funds may, therefore, be subject to the risks associated with investing
in foreign securities.
Investing in foreign securities may involve advantages and
disadvantages not present in domestic investments. There may be less
publicly available information about securities not registered
domestically, or their issuers, than is available about domestic
issuers or their domestically registered securities. Stock markets
outside the U.S. may not be as developed as domestic markets, and there
may also be less government supervision of foreign exchanges and
brokers. Foreign denominated securities may be less liquid or more
volatile than U.S. securities. Trade settlements may be slower and
could possibly be subject to failure. In addition, brokerage
commissions and custodial costs with respect to foreign denominated
securities may be higher than those for domestic investments.
Accounting, auditing, financial reporting, and disclosure standards for
foreign issuers may be different than those applicable to domestic
issuers. Foreign denominated securities may be affected favorably or
unfavorably by changes in currency exchange rates and exchange control
regulations (including currency blockage) and a Fund investing in such
securities may incur costs in connection with conversions between
various currencies. Foreign securities may also involve risks due to
changes in the political or economic conditions of such foreign
countries, the possibility of expropriation of assets or
nationalization, and possible difficulty in obtaining and enforcing
judgments against foreign entities.
Restricted and Illiquid Securities
Each Fund may invest up to 15% of its net assets in illiquid
investments, which includes securities that are not readily marketable,
repurchase agreements maturing in more than seven days, privately
issued stripped mortgage-backed securities and "restricted securities"
(i.e., securities that would be required to be registered prior to
distribution to the public), including restricted securities eligible
for resale to certain institutional investors pursuant to Rule 144A of
the 1933 Act. The Trustees have adopted guidelines and delegated to the
Adviser the daily function of determining and monitoring the liquidity
of portfolio securities. The Trustees, however, retain sufficient
oversight and are ultimately responsible for the determinations. Please
see the non-fundamental investment restrictions for further limitations
regarding the Funds' investments in restricted and illiquid securities.
Since it is not possible to predict with assurance exactly how the
market for restricted securities sold and offered under Rule 144A will
develop, the Trustees will 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 the Funds to the extent that qualified institutional buyers become
for a time uninterested in purchasing these restricted securities.
Notwithstanding the foregoing investment restrictions and as further
described below, each Fund may invest all or part of its assets in an
open-end investment company with substantially the same investment
objective, policies and restrictions as each Fund.
Other Investment Companies
Each Fund, subject to authorization by the Trustees, may invest
all of its investable assets in the securities of a single open-end
investment company (a "Portfolio"). If authorized by the Trustees, a
Fund would seek to achieve its investment objective by investing in a
Portfolio, which Portfolio would invest in a portfolio of securities
that complies with the Fund's investment objectives, policies and
restrictions. The Trustees do not intend to authorize investing in this
manner at this time.
Each Fund may invest up to 10% of its total assets, calculated at
the time of purchase, in the securities of other investment companies
(other than those affiliated with WPG) 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 investment
company. Investments in investment companies will result in duplication
of certain expenses, since the Fund will indirectly bear its
proportionate share of any expenses paid by investment companies in
which it invests in addition to the expenses paid by the Fund. However,
to the extent that a Fund invests in an open-end registered investment
company, the Adviser will not impose its advisory fees on the portion
of the Fund's assets so invested.
CALCULATION OF THE FUNDS' RETURNS
Total Return
The average annual total return with respect to Institutional
Class shares of each Fund is determined for a particular period by
calculating the actual dollar amount of the investment return on a
$1,000 investment in Institutional Class shares of the Fund made at the
net asset value of such shares at the beginning of the period, and then
calculating the annual compounded rate of return which would produce
that amount. Total return for a period of one year is equal to the
actual return of the Fund during that period. The following formula
describes the calculation:
n
ERV = P(1+T)
Where:
P = a hypothetical initial investment of $1,000.
T = average annual total return with respect to
Institutional Class shares.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the indicated
period.
This calculation assumes that (i) all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the
period and (ii) all recurring fees are included for applicable periods.
Each Fund may illustrate in advertisements and sales literature
the average annual total return and 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 shares for the indicated periods
and will include all recurring fees.
The average annual total return for the shares of each Class
of each Fund offering such shares during the periods indicated was as
follows:
<TABLE>
<CAPTION>
TOTAL RETURN
<S> <C> <C> <C> <C> <C>
ONE YEAR FIVE YEARS TEN YEARS
ENDED ENDED 12/31/96 ENDED 12/31/96
FUND 12/31/96 ANNUALIZED CUMULATIVE ANNUALIZED CUMULATIVE
---- -------- ---------- ---------- ---------- ----------
Long-Term Retirement Fund(1)
Institutional Class 9.03% N/A N/A N/A N/A
Adviser Class 9.08% N/A N/A N/A N/A
Medium-Term Retirement Fund(2)
Institutional Class 8.54% N/A N/A N/A N/A
Adviser Class 8.89% N/A N/A N/A N/A
Short-Term Retirement Fund(3)
Institutional Class 8.23% N/A N/A N/A N/A
Adviser Class 8.54% N/A N/A N/A N/A
Core Large-Cap Stock Fund(4)
Institutional Class 15.35% N/A N/A N/A N/A
Adviser Class N/A N/A N/A N/A N/A
Core Small-Cap Stock Fund(5)
Institutional Class 17.70% N/A N/A N/A N/A
Adviser Class N/A N/A N/A N/A N/A
<FN>
- --------------------------
(1) The Institutional Class and Adviser Class shares of the Long-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Long-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Long-Term Retirement Fund's total returns for the period
ended December 31, 1996 would have been lower.
(2) The Institutional Class and Adviser Class shares of the Medium-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Medium-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Medium-Term Retirement Fund's total returns for the
period ended December 31, 1996 would have been lower.
(3) The Institutional Class and Adviser Class shares of the Short-Term
Retirement Fund commenced operations on April 2, 1996 and March 7, 1996,
respectively. The Short-Term Retirement Fund's advisory fee was not impose and
the Adviser reimbursed certain operating expenses during various periods since
inception of the Fund. Had the Adviser imposed its entire fee and not limited
operating expenses, the Short-Term Retirement Fund's total returns for the
period ended December 31, 1996 would have been lower.
(4) The Institutional Class shares of the Core Large-Cap Stock Fund
commenced operations on February 6, 1996. The Core Large-Cap Stock Fund's
advisory fee was not impose and the Adviser reimbursed certain operating
expenses during various periods since inception of the Fund. Had the Adviser
imposed its entire fee and not limited operating expenses, the Core Large-Cap
Stock Fund's total returns for the period ended December 31, 1996 would have
been lower. Adviser Class shares of the Fund have not commenced operations.
(5) The Institutional Class shares of the Core Small-Cap Stock Fund
commenced operations on February 6, 1996. The Core Small-Cap Stock Fund's
advisory fee was not impose and the Adviser reimbursed certain operating
expenses during various periods since inception of the Fund. Had the Adviser
imposed its entire fee and not limited operating expenses, the Core Small-Cap
Stock Fund's total returns for the period ended December 31, 1996 would have
been lower. Adviser Class shares of the Fund have not commenced operations.
</FN>
</TABLE>
Yield
The 30 day yield quotation with respect to Institutional Class
shares of each of the Long-Term Fund, Medium-Term Fund, Short-Term Fund
and Post-Retirement Fund is computed by dividing the net investment
income for the period with respect to Institutional Class shares of
that Fund by the net asset value of each Institutional Class share on
the last day of the period, according to the following formula:
6
YIELD = 2[(a-b + 1)-1]
---
cd
Where:
a = dividends and interest earned during the period.
b = net expenses accrued for the period.
c = the average daily number of Institutional Class
shares outstanding during the period that were
entitled to receive dividends.
d = the offering price per Institutional Class share (net
asset value per share) on the last day of the period.
<TABLE>
<CAPTION>
<S> <C>
Yield for
30-Day Period
Ended 12/31/96
1. Long-Term Retirement Fund
Institutional Class 1.23%
Adviser Class 1.09%
2. Medium-Term Retirement Fund
Institutional Class 1.66%
Adviser Class 1.46%
3. Short-Term Retirement Fund
Institutional Class 2.05%
Adviser Class 1.92%
</TABLE>
Return for a Fund is not fixed or guaranteed and will fluctuate
from time to time, unlike bank deposits or other investments which pay
a fixed yield or return for a stated period of time, and a Fund's
performance does not provide a basis for determining future
performance. Return is a function of portfolio quality, composition,
maturity and market conditions as well as the expenses incurred by each
Fund. The return of a Fund may not be comparable to other investment
alternatives because of differences in the foregoing variables and
differences in the methods used to value portfolio securities, compute
expenses and calculate return.
Other Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in
reports to shareholders, the past performance of a Fund may be
illustrated and/or compared with that of other mutual funds with
similar investment objectives, and to stock or other relevant indices.
For example, total return of a Fund's classes may be compared to
averages or rankings prepared by Lipper Analytical Services, Inc., a
widely recognized independent service which monitors mutual fund
performance; the Morgan Stanley Europe, Australia, Far East Index
("EAFE"), an unmanaged index of international stock markets, the S&P
400, an unmanaged index of common stocks; the S&P 500, an unmanaged
index of common stocks; the Russell 2000, an unmanaged index of common
stocks; the Russell 3000 Index (the "Russell 3000"), an unmanaged index
of common stocks; or the Dow Jones Industrial Average, an unmanaged
index of common stocks of 30 industrial companies listed on the New
York Stock Exchange.
<PAGE>
The S&P 500 is an unmanaged index of 500 common stocks which are
traded on the New York Stock Exchange, American Stock Exchange and the
Nasdaq National Market. The S&P 500 represents approximately 70% of the
total domestic U.S. equity market capitalization. The S&P 400 is an
unmanaged index of common stocks of 400 companies with mid-size market
capitalizations - $300 million to $5 billion. The S&P 500 and the S&P
400 are market value-weighted indices (shares outstanding times stock
price) in which each company's influence on the respective index is
directly proportional to its market value. The companies in the S&P 500
and the S&P 400 are selected from four major industry sectors:
industrials, utilities, financials and transportation. The 500
companies chosen for the S&P 500 are not the 500 largest companies in
terms of market value. Rather, the companies chosen by S&P for
inclusion in the S&P 500 tend to be leaders in important industries
within the U.S. economy. The Russell 2000 is an unmanaged index of 2000
common stocks of small capitalization companies. The Russell 2000 is
composed of the 2000 smallest companies with respect to capitalization
in the Russell 3000 and represents approximately 7% of the Russell 3000
total market capitalization. The Russell 3000 is an unmanaged index of
3000 common stocks of large United States companies with market
capitalizations ranging from approximately $60 million to $80 billion.
The Russell 3000 represents approximately 98% of the United States
equity market.
In addition, the performance of the classes of a Fund may be
compared to alternative investment or savings vehicles and/or to
indexes or indicators of economic activity, e.g., inflation or interest
rates. Performance rankings and listings reported in newspapers or
national business and financial publications, such as Barron's,
Business Week, Consumer's Digest, Consumer Reports, Financial World,
Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Money Magazine, the New York Times, Smart Money, USA Today,
U.S. News and World Report, The Wall Street Journal and Worth may also
be cited (if a Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from various
other sources including Bloomberg Financial Systems, CDA/Wiesenberger
Investment Companies Service, Donoghue's Mutual Fund Almanac,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre &
Co., Micropal, Inc., Morningstar, Inc., Schabacker Investment
Management and Towers Data Systems.
In addition, from time to time, quotations from articles from
financial publications, such as those listed above, may be used in
advertisements, in sales literature or in reports to shareholders of
the Funds.
The Funds may also present, from time to time, historical
information depicting the value of a hypothetical account in one or
more classes of a Fund since the Fund's inception.
In presenting investment results, the Funds may also include
references to certain financial planning concepts, including (a) an
investor's need to evaluate his financial assets and obligations to
determine how much to invest; (b) his need to analyze the objectives of
various investments to determine where and when to invest; and (c) his
need to analyze his time frame for future capital needs to determine
how long to invest. The investor controls these three factors, all of
which affect the use of investments in building assets. The Adviser's
agreement to limit each Fund's operating expenses will increase
investment performance.
In advertisements, sales literature or reports to shareholders,
the Funds may include references to asset allocation strategies.
According to information supplied by B.G.B. Brinceson, B.D. Singer and
G.L. Beebower, as of May/June 1991, 91% of investment performance is
derived from asset allocation, the proper mix of cash, bonds and
stocks. In general, the remaining performance is derived as follows:
stock selection--5%, market timing--2%, and other--2%.
According to Standard & Poor's Ratings Group and Crandell, Pierce
& Company, the best and worst stock market returns (as represented by
the Standard & Poor's Index of 500 Common Stocks) annualized over the
time periods from 1950 through June 1995 using monthly observations
were as follows:
<TABLE>
<S> <C> <C>
Time Best Worst
Periods Performance Performance
One Year 61.3 -36.9
Three Years 33.3 -10.6
Five Years 29.6 - 4.2
Seven Years 23.0 - 2.7
Ten Years 19.2 0.5
Fifteen Years 17.2 4.1
Twenty Years 15.1 6.4
Thirty Years 11.2 9.1
</TABLE>
INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment
restrictions which may not be changed without approval of a majority of
the applicable Fund's outstanding voting securities. Under the 1940
Act, and as used in the Prospectuses and this SAI, a "majority of the
outstanding voting securities" requires the approval of the lesser of
(1) the holders of 67% or more of the shares of a Fund represented at a
meeting of the holders if more than 50% of the outstanding shares of
the Fund are present in person or by proxy or (2) the holders of more
than 50% of the outstanding shares of the Fund.
A Fund may not:
1. Issue senior securities, except as permitted by paragraphs 2, 5,
and 6 below. For purposes of this restriction, the issuance of
shares of beneficial interest in multiple classes or series, the
purchase or sale of options, futures contracts, forward
commitments and repurchase agreements entered into in accordance
with the Fund's investment policies or within the meaning of
paragraph 5 below, are not deemed to be senior securities.
2. Borrow money, except (i) from banks for temporary or short-
term purposes or for the clearance of transactions in amounts
not to exceed 33 1/3% of the value of the Fund's total assets
(including the amount borrowed) taken at market value, (ii) in
connection with the redemption of Fund shares or to finance failed
settlements of portfolio trades without immediately liquidating
portfolio securities or other assets; (iii) in order to fulfill
commitments or plans to purchase additional securities pending the
anticipated sale of other portfolio securities or assets and (iv)
the Fund may enter into reverse repurchase agreements and forward
roll transactions, but only if after each such borrowing there is
asset coverage of at least 300% as defined in the 1940 Act. For
purposes of this investment restriction, investments in short
sales, futures contracts, options on futures contracts, securities
or indices and forward commitments shall not constitute borrowing.
3. Act as an underwriter with respect to the securities of other
issuers, except to the extent that in connection with the
disposition of portfolio securities, the Fund may be deemed
to be an underwriter for purposes of the 1933 Act; provided,
however, that the Fund may invest all or part of its
investable assets in an open-end investment company with
substantially the same investment objective, policies and
restrictions as the Fund.
4. Purchase or sell real estate except that the Fund may (i) acquire
or lease office space for its own use, (ii) invest in securities
of issuers that invest in real estate or interests therein, (iii)
invest in securities that are secured by real estate or interests
therein, (iv) purchase and sell mortgage-related securities and
(v) hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
5. Invest in commodities, except the Fund may purchase and sell
options on securities, securities indices and currency, futures
contracts on securities, securities indices and currency and
options on such futures, forward foreign currency exchange
contracts, forward commitments, securities index put or call
<PAGE>
warrants and repurchase agreements entered into in accordance with
the Fund's investment policies.
6. Make loans, except that the Fund may (1) lend portfolio securities
in accordance with the Fund's investment policies up to 33 1/3% of
the Fund's total assets taken at market value, (2) enter into
repurchase agreements, and (3) purchase all or a portion of an
issue of debt securities, bank loan participation interests, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities.
7. Purchase the securities of issuers conducting their principal
activity in the same industry if, immediately after such
purchase, the value of its investments in such industry would
exceed 25% of its total assets taken at market value at the
time of such investment (except investments in obligations of
the U.S. Government or any of its agencies, instrumentalities
or authorities and except that the Large-Cap Fund and the
Small-Cap Fund may concentrate their assets in securities of
issuers in any industry to the extent that the S&P 500 Index
or the Russell 2,000 Index, respectively, are so
concentrated); provided, however, that the Fund may invest
all or part of its investable assets in an open-end
investment company with substantially the same investment
objective, policies and restrictions as the Fund.
8. For each Fund, with respect to 75% of its total assets, purchase
securities of an issuer (other than the U.S. Government, its
agencies, instrumentalities or authorities or repurchase
agreements collateralized by U.S. Government securities and other
investment companies), if:
(a) such purchase would cause more than 5% of the Fund's total
assets taken at market value to be invested in the securities
of such issuer; or
(b) such purchase would at the time result in more than 10% of
the outstanding voting securities of such issuer being held
by the Fund;
provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with substantially
the same investment objective, policies and restrictions as the Fund.
For purposes of the above fundamental investment restrictions
regarding senior securities, the Adviser generally classifies issuers
by industry in accordance with classifications set forth in the
Standard & Poor's Stock Guide. In the absence of such classification or
if the Adviser determines in good faith based on its own information
that the economic characteristics affecting a particular issuer make it
more appropriately considered to be engaged in a different industry,
the Adviser may classify an issuer according to its own sources.
The following restrictions are designated as non-fundamental and
may be changed by the Trustees without the approval of shareholders.
A Fund may not:
a. Pledge, mortgage or hypothecate its assets, except to secure
permitted borrowings and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the
Fund's total assets taken at market value. Collateral
arrangements with respect to margin, option and other risk
management and when-issued and forward commitment
transactions are not deemed to be pledges or other
encumbrances for purposes of this restriction.
b. Invest in the securities of an issuer for the purpose of
exercising control or management, but it may do so where it is
deemed advisable to protect or enhance the value of an existing
investment.
c. Purchase securities of any other investment company except as
permitted by the 1940 Act.
d. Purchase securities on margin, except any short-term credits
which may be necessary for the clearance of transactions and the
initial or maintenance margin in connection with options and
futures contracts and related options.
e. Invest more than 15% of its net assets in securities which are
illiquid.
f. Purchase additional securities if the Fund's borrowings exceed
5% of its net assets.
Each Fund may, notwithstanding any other fundamental or
non-fundamental investment restriction or policy, invest all of its
assets in the securities of a single open-end investment company with
substantially the same fundamental investment objectives, restrictions
and policies as the Fund.
The Funds do not have any current intention to enter into reverse
repurchase agreements, sell securities short or engage in arbitrage
transactions.
<PAGE>
Except with respect to the 300% asset coverage required by
fundamental restriction number 2, if a percentage restriction on
investment or utilization of assets as set forth above is adhered to at
the time an investment is made, a later change in percentage resulting
from changes in the values of a Fund's assets will not be considered a
violation of the restriction.
ADVISORY AND ADMINISTRATIVE SERVICES
Investment Adviser
As stated in the Prospectuses, WPG, One New York Plaza, New York,
New York 10004, serves as investment adviser and administrator to each
Fund. See "Management of the Funds --Investment Adviser", "Management
of the Funds --- Administrator" and "Portfolio Brokerage" in the
Prospectuses for a description of the duties of WPG as investment
adviser and administrator to the Funds.
The Funds' investment advisory agreements with the Adviser (the
"Advisory Agreements") were initially approved by the Trustees of the
Trust, including a majority of the Trustees of the Trust who are not
parties to such agreements or "interested persons" (as such term is
defined in the 1940 Act) of any party thereto (the "Independent
Trustees"), on July 19, 1995 and became effective upon each Fund's
commencement of operations. The Advisory Agreements were approved by
the sole initial shareholder of each Fund immediately prior to that
Fund's commencement of operations.
Pursuant to the Advisory Agreements, the Adviser supervises and
assists in the management of the assets of each Fund and furnishes each
Fund with research, statistical and advisory services. In managing the
assets of the Funds, the Adviser furnishes continuously an investment
program for each Fund consistent with the investment objectives and
policies of that Fund. More specifically, the Adviser determines from
time to time what securities shall be purchased for the Fund, what
securities shall be held or sold by the Fund and what portion of the
Fund's assets shall be held uninvested as cash, subject always to the
provisions of the Trust's Agreement and Declaration of Trust, By-Laws
and its registration statement under the 1940 Act and under the 1933
Act covering the Trust's shares, as filed with the SEC, and to the
investment objectives, policies and restrictions of the Fund, as each
of the same shall be from time to time in effect, and subject, further,
to such policies and instructions as the Board of Trustees of the Trust
may from time to time establish. To carry out such determinations, the
Adviser places orders for the investment and reinvestment of each
Fund's assets (see "Portfolio Brokerage").
For its investment advisory services under the Advisory Agreements,
the Adviser receives an annual fee from each Fund, payable monthly,
equal to 0.75% (on an annual basis) of the Fund's average daily net
assets, except for the Post-Retirement Fund, which pays the Adviser on
a monthly basis a fee equal on an annual basis to 0.65% of such Fund's
average daily net assets. The advisory fees are accrued daily and will
be prorated with respect to any Fund if the Adviser shall not have
acted as that Fund's investment adviser during any entire monthly
period.
The Adviser has voluntarily agreed to limit temporarily each
Fund's operating expenses (excluding Rule 12b-1 fees with respect to
the Adviser Class shares, service fees with respect 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, except for the Post-Retirement Fund,
for which the Adviser has voluntarily agreed to temporarily limit
operating expenses (with the same exclusions as listed above) 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. 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 the
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 Advisory Agreement.
<TABLE>
<S> <C>
Advisory Fees Paid
Fund December 31, 1996 (1)
---- ---------------------
Long-Term Retirement Fund $0
Medium-Term Retirement Fund $0
Short-Term Retirement Fund $0
Post-Retirement Fund (2) N/A
Core Large-Cap Stock Fund $0
Core Small-Cap Stock Fund $0
- ------------------
<FN>
(1) The Adviser voluntarily agreed not to impose any of its
advisory fee for each Fund during the fiscal year ended December 31, 1996. In
the absence of this agreement, the Funds would have paid advisory fees as
follows:
Long-Term Retirement Fund $2,533
Medium-Term Retirement Fund $7,501
Short-Term Retirement Fund $7,488
Core Large-Cap Stock Fund $5,907
Core Small-Cap Stock Fund $9,076
(2) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
<PAGE>
Each Advisory Agreement provides that the Adviser will not be
liable for any loss sustained by the Trust or any Fund by reason of the
adoption or implementation of any investment policy or the purchase,
sale or retention of any security, whether or not such purchase, sale
or retention shall have been based upon the investigation and research
of the Adviser, or upon investigation and research made by any other
individual, firm or corporation if such recommendation shall have been
made and such other individual, firm or corporation shall have been
selected with due care and in good faith, except for a loss resulting
from willful misfeasance, bad faith, or gross negligence in the
performance by the Adviser of its duties or by reason of the Adviser's
reckless disregard of its obligations and duties thereunder.
Each Advisory Agreement may be modified or amended only with the
approval of the holders of a majority of the applicable Fund's
outstanding shares and by a vote of the majority of the Independent
Trustees of the Trust. Unless terminated as provided below, each
Advisory Agreement continues in full force and effect for two years
after its date of execution, and for successive periods of one year
thereafter, but only as long as each such continuance after the end of
the initial two year period is approved annually by a majority vote of
the Board or by a vote of the holders of a majority of the outstanding
shares of the applicable Fund, but in either event it also must be
approved by a vote of a majority of the Independent Trustees of the
Trust, cast in person at a meeting called for the purpose of voting on
such approval. Each Advisory Agreement may be terminated without
penalty, by either party upon 60 days' written notice and automatically
will terminate in the event of its assignment.
Officers and Trustees of the Trust who are also principals in and
employees of WPG may receive indirect compensation by reason of
investment advisory and administration fees paid by the Trust to WPG,
in its capacity as the Adviser and Administrator.
As of the date of this SAI, WPG had capital in excess of $48
million. WPG consists of 45 general principals, one of whom is a member
of the NYSE, and certain associate principals. WPG has approximately
245 full-time employees in addition to its principals. WPG acts as
investment adviser or manager for approximately $13 billion of
institutional and private investment accounts.
Roger J. Weiss is a Senior Managing Principal of WPG and
Chairman of the Board, President and Trustee of the Trust.
Stephen H. Weiss, brother of Roger J. Weiss, is also a Senior
Managing Principal of WPG. Francis H. Powers is a principal of
WPG, and Executive Vice President and Treasurer of the Trust.
Jay C. Nadel is a principal of WPG and an Executive Vice President
and Secretary of the Trust. The principals of WPG who serve on
WPG's executive committee are Stephen H. Weiss (Chairman),
Roger J. Weiss, Phillip Greer, Melville Straus, Ronald M. Hoffner,
Wesley W. Lang, Jr., Mitch Kantor and Gil Cogan.
In addition to the members of the Adviser's Asset Allocation
Committee and Messrs. Cardell and Vandivort, Messrs. Stephen H. Weiss
and Roger J. Weiss may participate in each Fund's investment decisions
and all of the principals in WPG consult on a regular basis among
themselves about general market conditions, as well as specific
securities and industries.
In the management of the Trust and their other accounts, WPG and
its subsidiaries allocate investment opportunities to all accounts for
which they are appropriate subject to the availability of cash in any
particular account and the final decision of the individual or
individuals in charge of such accounts. Where market supply is
inadequate for a distribution to all such accounts, securities are
allocated on a pro rata basis. In some cases this procedure may have an
adverse effect on the price or volume of the security as far as the
Funds are concerned. However, it is the judgment of the Trustees that
the desirability of continuing the Trust's advisory arrangements with
the Adviser outweighs any disadvantages that may result from
contemporaneous transactions. See "Portfolio Brokerage."
In an attempt to avoid any potential conflict with portfolio
transactions for the Funds, the Adviser and the Trust, on behalf of
each Fund, have adopted extensive restrictions on personal securities
trading by personnel of the Adviser and its affiliates. These
restrictions include: pre-clearance of all personal securities
transactions and a prohibition of purchasing initial public offerings
of securities. These restrictions are a continuation of the basic
principle that the interests of the Funds and their shareholders come
before those of the Adviser and its principals and employees.
In the event that neither the Adviser nor any of its affiliates
acts as investment adviser to the Trust, the name of the Trust will be
changed to one that does not contain the name "Weiss, Peck & Greer" or
the initials "WPG" or otherwise suggest an affiliation with the Adviser
or contain the name "Tomorrow" or any connotation or derivative of such
name.
Administrator
WPG, in its capacity as Administrator of each Fund, performs
administrative, certain transfer agency related and shareholder
relations services and certain clerical and accounting services for
each Fund under separate administration agreements (the "Administration
Agreements"). More specifically, these obligations pursuant to the
Administration Agreements include, subject to the general supervision
of the Trustees of the Trust, (a) providing supervision of all aspects
of the Funds' non-investment operations (the parties giving due
recognition to the fact that certain of such operations are performed
by others pursuant to agreements with the Funds), (b) providing the
Funds, to the extent not provided pursuant to their custodian and
transfer agency agreements or agreements with other institutions, with
personnel to perform such executive, administrative, accounting and
clerical services as are reasonably necessary to provide effective
administration of the Funds, (c) arranging, to the extent not provided
pursuant to such agreements, for the preparation, at the Funds'
expense, of its tax returns, reports to shareholders, periodic updating
of the prospectuses and reports filed with the SEC and other regulatory
authorities, (d) providing the Funds, to the extent not provided
pursuant to such agreements, with adequate office space and certain
related office equipment and services, (e) maintaining all of the
Funds' records other than those maintained pursuant to such agreements
or the Advisory Agreements, and (f) providing to the Funds transfer
agency-related and shareholder relations services and facilities and
the services of one or more of its employees or officers, or employees
or officers of its affiliates, relating to such functions (including
salaries and benefits, office space and supplies, equipment and
teaching).
For its services under the Administration Agreements, the
Administrator is entitled to receive a fee, computed daily and payable
monthly at an annual rate equal to 0.09% of each Fund's average daily
net assets. These fees may be changed by the Board of Trustees without
shareholder approval.
<TABLE>
<S> <C>
Administration Fees Paid
Fund December 31, 1996 (1)
---- --------------------
Long-Term Retirement Fund $0
Medium-Term Retirement Fund $0
Short-Term Retirement Fund $0
Post-Retirement Fund (2) N/A
Core Large-Cap Stock Fund $0
Core Small-Cap Stock Fund $0
<FN>
- ------------------
(1) The Adviser voluntarily agreed not to impose any of its
administration fee for each Fund during the fiscal year ended December 31, 1996.
In the absence of this agreement, the Funds would have paid administration fees
as follows:
Long-Term Retirement Fund $304
Medium-Term Retirement Fund $900
Short-Term Retirement Fund $899
Core Large-Cap Stock Fund $709
Core Small-Cap Stock Fund $1,089
(2) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
Each Fund bears all expenses of its own operation (subject to the
expense limitations described above), which expenses include: (i) fees
and expenses of any investment adviser or administrator of the Fund;
(ii) organization expenses of the Trust; (iii) fees and expenses
incurred by the Fund in connection with membership in investment
company organizations; (iv) brokers' commissions; (v) payment for
portfolio pricing services to a pricing agent, if any; (vi) legal,
accounting or auditing expenses (including an allocable portion of the
cost of its employees rendering legal services to the Funds); (vii)
interest, insurance premiums, taxes or governmental fees; (viii) the
fees and expenses of the transfer agent of the Funds; (ix) the cost of
preparing stock certificates or any other expenses, including, without
limitation, clerical expenses of issue, redemption or repurchase of
shares of the Fund; (x) the expenses of and fees for registering or
qualifying shares of the Funds for sale and of maintaining the
registration of the Funds; (xi) the fees and expenses of Trustees of
the Trust who are not affiliated with the Adviser; (xii) the cost of
preparing and distributing reports and notices to existing
shareholders, the SEC and other regulatory authorities; (xiii) the fees
or disbursements of custodians of the Funds' assets, including expenses
incurred in the performance of any obligations enumerated by the
Declaration of Trust or By-Laws of the Trust insofar as they govern
agreements with any such custodian; (xiv) costs in connection with
annual or special meetings of shareholders, including proxy material
preparation, printing and mailing; (xv) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary
course of the Funds' business; and (xvi) distribution fees and service
fees applicable to Adviser Class shares and service fees applicable to
Institutional Class shares.
The Funds' Advisory and Administration Agreements each provide
that WPG, in its capacities as investment adviser and administrator,
may render similar services to others so long as the services provided
thereunder are not impaired thereby.
Principal Underwriter
WPG serves as the principal underwriter in connection with the
continuous offering of the shares of the Trust pursuant to an
Underwriting Agreement, dated as of the effective date of the Trust's
registration statement. The Trustees, including the non-interested
Trustees, approved the Underwriting Agreement on July 19, 1995, which
will continue in effect from year to year, if annually approved by the
Trustees, including the non-interested Trustees. The Underwriting
Agreement provides that WPG will bear certain distribution expenses not
borne by the Funds.
WPG bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its
employees and representatives and to any investment dealers and
financial firms ("Authorized Firms") for distribution related services.
WPG also pays certain expenses in connection with the distribution of
the Funds' shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of
printing and distributing prospectuses and supplements to prospective
shareholders. WPG receives compensation under a Rule 12b-1 Plan for
providing such services with respect to Adviser Class shares. Each Fund
bears the cost of registering its shares under federal, state and
foreign securities law.
SERVICE PLANS
Each Fund, with respect to its Institutional Class shares, has
adopted a service plan (collectively, the "Plans").
Each Plan provides that a Fund shall compensate plan fiduciaries
or other service providers to Qualified Plans for the benefit of the
Qualified Plans (for purposes of this section, collectively, "Plan
Fiduciaries") for providing certain personal, account administration
and/or shareholder liaison services to plan participants who are
beneficial owners of Institutional Class shares. Pursuant to the Plans,
the Funds may enter into agreements with Plan Fiduciaries which
purchase Institutional Class shares of the Fund ("Service Agreements").
Under such Service Agreements or otherwise, the Plan Fiduciaries may
perform some or all of the following services: (a) act as the sole
shareholder of record and nominee for all plan participants, (b)
maintain account records for each plan participants who beneficially
owns Institutional Class shares of the Funds, (c) answer questions and
handle correspondence from plan participant regarding their accounts,
(d) process plan participants orders to purchase, redeem and exchange
Institutional Class shares of the Funds, and handle the transmission of
funds representing the participants' purchase price or redemption
proceeds, (e) issue confirmations for transactions in shares by
participants, (f) provide facilities to answer questions from
participants and existing investors about Institutional Class shares of
the Funds, (g) receive and answer shareholder correspondence, including
requests for prospectuses and statements of additional information, (h)
assist participants in selecting dividend and other account options and
opening custody accounts with the Plan Fiduciaries and (i) act as
liaison between participants and the Funds, including obtaining
information from the Funds, working with the Funds to correct errors
and resolve problems and providing statistical and other information to
the Funds. As compensation for such services, the Funds may pay each
Plan Fiduciary a service fee in an amount up to 0.25% (on an annualized
basis) of the Fund's average daily net assets attributable to
Institutional Class shares of the Funds that are attributable to or
held in the name of such Plan Fiduciary. Plan Fiduciaries may from time
to time be required to meet certain other criteria in order to receive
service fees.
Conflict of interest restrictions (including the Employee
Retirement Income Security Act of 1974) may apply to a Plan Fiduciary's
receipt of compensation paid by the Funds in connection with the
investment of fiduciary assets in Institutional Class shares of the
Funds. Plan Fiduciaries and investment advisers and other money mangers
subject to the jurisdiction of the SEC, the Department of Labor or
state securities commissions, are urged to consult legal advisers
before investing fiduciary assets in Institutional Class shares of the
Funds.
In accordance with the terms of the Plans, WPG provides to the
Trust for review by the Trustees a quarterly written report of the
amounts expended under the Plans and the purpose for which such
expenditures were made. In the Trustees' quarterly review of the Plans,
they will consider the continued appropriateness and the level of
compensation that the Plans provide.
During the fiscal year ended December 31, 1996, the Funds paid to
Plan Fiduciaries the following amounts under the Plans:
<TABLE>
<S> <C>
Service Fees Paid
Fund December 31, 1996
---- -----------------
Long-Term Retirement Fund $184
Medium-Term Retirement Fund $338
Short-Term Retirement Fund $209
Post-Retirement Fund(1) N/A
Core Large-Cap Stock Fund $0
Core Small-Cap Stock Fund $0
<FN>
- ------------------
(1) The Post-Retirement Fund has not commenced operations.
</FN>
</TABLE>
Each Plan will remain in effect from year to year provided that the
continuance of the Plan is approved annual by a majority vote of the
Trustees, including a majority of the Independent Trustees who have no
direct or indirect financial interest in the Plans. All material
amendments of the Plans must also be approved by the Trustees in the
manner described above. The Plans may be terminated at any time as to
any Fund without payment of any penalty by a vote of a majority of the
Independent interested Trustees or by vote of a majority of the
outstanding voting securities of the affected Fund. The Trustees have
determined that in their judgement there is a reasonable likelihood
that the Plans will benefit the Funds and the Institutional Class
shareholders.
<PAGE>
TRUSTEES AND OFFICERS
The Trustees have responsibility for management of the business of
the Trust. The executive officers of the Trust are responsible for its
day to day operation. Set forth below is certain information concerning
the Trustees and officers.
Name, Address,
Age and Title Principal Occupations During Past Five Years
Roger J. Weiss* Senior Managing Principal, Weiss, Peck &
One New York Plaza Greer, L.L.C.
New York, NY 10004 Chairman of the Board of all WPG Funds
Age: 56 President, Weiss, Peck & Greer International
Fund
Chairman of the Executive Vice President and Director,
Board, President WPG Advisers, Inc.
and Trustee Former Executive Vice President and Director,
Tudor Management Company
Raymond R.
Herrmann, Jr.** Chairman of the Board, Sunbelt Beverage
654 Madison Avenue Corporation (distributor of wines and
Suite 1400 liquors)
New York, NY 10017 Former Vice Chairman and Director, McKesson
Age: 75 Corporation (U.S. distributor of
drugs and health care products, wine and
Trustee spirits)
Life Member, Board of Overseers of Cornell
Medical College
Member of Board and Executive Committee, Sky
Ranch for Boys
Member, Evaluation Advisory Board,
Biotechnology Investments, Ltd.
Harvey E. Sampson** Chief Executive Officer and Chairman of Harvey
600 Secaucus Road Group, Inc. (retail sales of consumer
Secaucus, NJ 07094 electronics)
Age: 56 Trustee, Cornell University
Joint Board of The New York Hospital -
Trustee Cornell Medical Center
Trustee, North Shore University Hospital
Lawrence J. Israel** Private Investor
200 Broadway Director and Trustee of the Touro Infirmary
Suite 249 Member of the Intercollegiate Athletics
New Orleans, LA 70118 Committee of the Administrators of the
Age: 60 Tulane Educational Fund
Trustee
Francis H. Powers* Principal, Weiss, Peck & Greer, L.L.C.
One New York Plaza Vice President and Secretary, Weiss, Peck &
New York, NY 10004 Greer Advisers, Inc.
Age: 55 Executive Vice President and Treasurer of all
WPG Funds
Executive Former Vice President and Secretary, Tudor
Vice President Management Company
and Treasurer
Jay C. Nadel* Principal, Weiss, Peck & Greer, L.L.C.
One New York Plaza Director of Operating Departments
New York, NY 10004 Executive Vice President and Secretary of all
Age: 37 WPG Funds
Executive
Vice President
and Secretary
Daniel S. Vandivort* Principal, Weiss, Peck & Greer,
One New York Plaza L.L.C. since 1994
30th Floor Previously Managing Director and
New York, NY 10004 Head of U.S. Fixed Income,
Age: 41 Senior Portfolio Manager and
Director, Global Product
Vice President Development and Marketing with
CS First Boston Investment
Management, 1989-1994
<PAGE>
Arlen S. Oransky* Vice President, Mutual Fund
One New York Plaza Operations, Weiss, Peck & Greer, L.L.C.
New York, NY 10004 since December, 1991
Age: 39 Assistant Vice President of all
WPG Funds since April, 1991
Assistant Manager of Investment Services
Vice President Weiss, Peck & Greer, L.L.C. from July,
1990 to December, 1991
Joseph J. Reardon* Senior Vice President, Mutual Fund
One New York Plaza Operations, Weiss, Peck & Greer, L.L.C.
New York, NY 10004 since December, 1993
Age: 35 Assistant Manager, Mutual Fund
Operations, Weiss, Peck & Greer, L.L.C.
from February, 1990 to December, 1993
Vice President Assistant Vice President of all
WPG Funds since April, 1991
Teresa Hogan Manager State Regulation,
First Data Investor First Data Investor
Services Group Services Group, Inc.
53 State Street Since June, 1994
Boston, MA 02109 Senior Legal Assistant,
Age: 33 Palmer & Dodge
from 1992-1994
Assistant Secretary Blue Sky Paralegal,
Robinson & Cole from
1984-1992
-----------------------
* "Interested Person" within the meaning of the 1940 Act.
** Each of the non-interested Trustees is a trustee of each of the
other WPG Funds and a Member of the Trust's Audit Committee and
Special Nominating Committee.
Compensation of Trustees and Officers
The Funds pay no compensation to the Trust's Trustees affiliated
with the Adviser or its officers. None of the Trust's Trustees or
officers have engaged in any financial transactions with any Fund or
the Adviser.
<PAGE>
The following table sets forth the amount of compensation paid to
the Trust's Trustees for the fiscal year ended December, 31, 1996. In
addition, each Trustee is reimbursed for out-of-pocket expenses
associated with attending Trustee meetings.
<TABLE>
<CAPTION>
Aggregate Compensation Paid to Trustees
for the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Pension or
Retirement Total
Benefits Compensation
Accrued as from the
Long-Term Medium-Term Short-Term Core Core Part of Funds and
Retirement Retirement Retirement Large-Cap Small-Cap Funds' Other Funds
Name of Trustee Fund Fund Fund Stock Fund Stock Fund Expenses in Complex*
--------------- ---- ---- ---- ---------- ---------- -------- ----------
Roger J. Weiss $0 $0 $0 $0 $0 $0 $0
Raymond R. Herrmann, Jr. 2,000 2,000 2,000 2,000 2,000 0 34,125
Lawrence J. Israel 2,000 2,000 2,000 2,000 2,000 2,000 34,125
Harvey E. Sampson 2,000 2,000 2,000 2,000 2,000 2,000 34,125
<FN>
- ---------------------
*As of December 31, 1996, there were 15 mutual funds in the Weiss, Peck & Greer
group of funds (including the Funds) that publicly offer their shares.
</FN>
</TABLE>
<PAGE>
Certain Shareholders
As of March 31, 1997, the Trustees and officers of the Trust as a
group beneficially owned (i.e., had voting or investing power) less
than 1% of the outstanding shares of each Fund.
As of March 31, 1997, no person within the knowledge of the
management of the Trust directly or indirectly owned, controlled or
held with power to vote 5% of more of the outstanding voting securities
(i.e., shares) of any Fund, except as set forth below:
<TABLE>
<S> <C>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
TOMORROW LONG-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co 64.55%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 19.23%
FBO Chicago Transit Authority
8515 B Orchard Road, Attn 2T2
Englewood, CO 80111
Weiss Peck & Greer TTEE 5.09%
for the Employees RIP Plan
One New York Plaza, 30th Floor
New York, NY 10004-1950
TOMORROW LONG-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First Union National Bank NC 96.60%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1511
Charlotte, NC 28280-1151
TOMORROW MEDIUM-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co. 44.52%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 25.52%
FBO Chicago Transit Authority
8515 East Orchard Road, Attn: 2T2
Englewood, CO 80111
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
American International Life Assurance 10.64%
Co. of New York Separate Account A
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Nationwide GPVA 6.42%
c/o Nationwide Life Insurance Co.
Attn: IPO Portfolio Accounting
P.O. Box 182029
Columbus, OH 43218-2029
TOMORROW MEDIUM-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First Union National Bank NC 97.37%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1151
Charlotte, NC 20288-1151
TOMORROW SHORT-TERM RETIREMENT FUND
INSTITUTIONAL CLASS SHARES
AIG Life Insurance Co. 44.30%
Separate Account I
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
American International Life Assurance 34.02%
Co. of New York Separate Account A
c/o Variable Accounting
P.O. Box 667
Wilmington, DE 19899-0667
Great Western Life & Annuity 12.67%
FBO Chicago Transit Authority
8515 East Orchard Road, Attn: 2T2
Englewood, CO 80111
TOMORROW SHORT-TERM RETIREMENT FUND
ADVISER CLASS SHARES
First National Bank NC 96.99%
Attn: Rich Sapienza
401 South Tryon Street
FRB 3rd Floor, CMG 1151
Charlotte, NC 28288-1151
<PAGE>
PERCENTAGE OF
NAME AND ADDRESS OUTSTANDING SHARES
---------------- ------------------
CORE LARGE-CAP STOCK FUND
INSTITUTIONAL CLASS SHARES
Providian Life and Health Insurance 64.19%
Company Separate Account
Attn: Karen Fleming
P.O. Box 32830
Louisville, KY 40232
Weiss Peck and Greer LLC 35.71%
One New York Plaza
New York City, NY 10004
CORE SMALL-CAP STOCK FUND
INSTITUTIONAL CLASS SHARES
Weiss Peck and Greer LLC 59.65%
One New York Plaza
New York City, NY 10004
Providian Life and Health 32.00%
Insurance Company Separate Account
Attn: Karen Fleming
P.O. Box 32830
Louisville, KY 40232
</TABLE>
HOW TO PURCHASE SHARES
(See "How to Buy Shares" in the Prospectuses.)
The Trust continuously offers shares of each Fund. The Trust may
terminate the continuous offering of its shares with respect to any
Fund at any time at the discretion of the Trustees.
In the case of telephone subscriptions, if full payment for
telephone subscriptions is not received by the Trust within the
customary time period for settlement then in effect after the
acceptance of the order by the Trust, the order is subject to
cancellation and the purchaser will be liable to the affected Fund for
any loss suffered as a result of such cancellation. To recoup such loss
each Fund reserves the right to redeem shares owned by any shareholder
whose purchase order is cancelled for non-payment, and such purchaser
may be prohibited from placing further telephone orders.
If a subscription or redemption of Fund shares is arranged and
settlement made through a member of the NASD, then that member may, in
its discretion, charge a fee for this service.
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 securities acceptable to WPG. If the
securities are not suitable for a Fund's portfolio, the securities will
be sold by the Custodian as agent for the account of their owner on the
day of their receipt by the Custodian or as soon thereafter as
possible. The number of shares of a class of a Fund to be issued in
exchange for securities will be the aggregate proceeds from the sale of
such securities, divided by the net asset value per share of the
applicable class of the applicable Fund on the day such proceeds are
received. WPG will use reasonable efforts to obtain the current market
price for such securities but does not guarantee the best available
price. WPG will absorb any transaction costs, such as commissions, on
the sale of securities.
<PAGE>
Securities determined by WPG to be acceptable should be
transferred by book entry or physically delivered, in proper form for
transfer. Please contact WPG for transfer instructions.
Investors who are contemplating an exchange of securities for
shares of a Fund must contact WPG to determine whether the securities
are acceptable before forwarding such securities to the Custodian. WPG
reserves the right to reject any securities. Exchanging securities for
shares of the Funds may create a taxable gain or loss. Please consult
your tax adviser with respect to the particular Federal, state and
local tax consequences of exchanging securities for Fund shares.
Except as described above, the Trust will not generally issue
shares for consideration other than cash. The Trust may, however, issue
shares for consideration other than cash pursuant to a bona fide
purchase of assets, merger or other reorganization.
REDEMPTION OF SHARES
(See "How to Sell Shares" and "How to Exchange Shares" in the
Prospectuses.)
Systematic Withdrawal Plan
A Systematic Withdrawal Plan is available only for the
Post-Retirement Fund without expense to any shareholder with a minimum
investment of $10,000 in value in such Fund's shares (at the then
current offering price). The Transfer Agent may be directed, as agent
of the purchaser, to redeem without a redemption charge shares of such
Fund held in his account as may be required so that the shareholder or
any person designated by him will receive a monthly or quarterly check
in a stated amount not to be less than $100 although such amount is not
necessarily a recommended amount. Dividends and capital gains
distributions will be reinvested in additional shares of the same class
of such Fund at net asset value as of the reinvestment date.
Redemption of shares of the Post-Retirement Fund under the
Systematic Withdrawal Plan may reduce or even liquidate the account,
particularly in a declining market. Such payments paid to a shareholder
cannot be considered a yield or income on the investment. Payments to a
shareholder in excess of distributions of investment income will
constitute a return of his invested principal, and the liquidation of
Fund shares pursuant to this Plan is a taxable transaction which may
result in gain or loss to the shareholder depending upon the cost of
the shares when acquired.
Withdrawals at the same time as regular purchases of Institutional
Class shares of the Post-Retirement Fund ordinarily will not be
permitted since purchases are intended to accumulate capital and the
Systematic Withdrawal Plan is designed for the regular withdrawal of
monies, except that a shareholder may make lump sum investments, of
$5,000 or more. The Systematic Withdrawal Plan may be terminated by the
shareholder, without penalty, at any time and the Trust may terminate
the Plan at will. There are no contractual rights on the part of either
party with respect to the Plan.
NET ASSET VALUE
(See "How Each Fund's Share Price is Determined" in the
Prospectuses)
Under the 1940 Act, the Trustees are responsible for determining
in good faith the fair value of securities of the Funds. The net asset
value per share of each class of each Fund is determined once daily,
Monday through Friday as of the close of regular trading on the NYSE
(normally 4:00 P.M. New York City time) on each Business Day (as
defined in the Prospectuses) in which there is a sufficient degree of
trading in that Fund's portfolio securities that the current net asset
value of that Fund's shares might be materially affected. A Fund may
not determine its net asset value on any day during which its shares
were not tendered for redemption and the Trust did not receive any
order to purchase or sell shares of that Fund. In accordance with
procedures approved by the Trustees, the net asset value per share of
each class of each Fund is calculated by determining the value of the
net assets attributable to each class of that Fund and dividing by the
number of outstanding shares of that class. The NYSE is not open for
trading on weekends or on New Year's Day (January 1), Presidents' Day
(the third Monday in February), Good Friday, Memorial Day (the last
Monday in May), Independence Day (July 4), Labor Day (the first Monday
in September), Thanksgiving Day (the fourth Thursday in November) and
Christmas Day (December 25).
The public offering price per share of a class of a Fund is the net
asset value per share of that class of that Fund next determined after
receipt of an order. Orders for shares which have been received by the
Trust or the Transfer Agent prior to the close of regular trading of
the NYSE are confirmed at the offering price effective at the close of
regular trading of the NYSE on that day, while orders received
subsequent to the close of regular trading of the NYSE will be
confirmed at the offering price effective at the close of regular
trading of the NYSE on the next day on which the net asset value is
calculated.
Bonds and other fixed-income securities (other than short-term
obligations but including listed issues) in a Fund's portfolio are
valued on the basis of valuations furnished by a pricing service which
utilizes both dealer-supplied valuations and electronic data processing
techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or
exchange or over-the-counter prices, when such valuations are believed
to reflect the fair value of such securities.
In determining the net asset value, unlisted securities for which
market quotations are available are valued at the mean between the most
recent bid and asked prices. Securities, options on securities, futures
contracts and options thereon which are listed or admitted to trading
on a national exchange, are valued at their last sale on such exchange
prior to the time of determining net asset value; or if no sales are
reported on such exchange on that day, at the mean between the most
recent bid and asked price. Securities listed on more than one exchange
shall be valued on the exchange the security is most extensively
traded. Other securities and assets for which market quotations are not
readily available are valued at their fair value as determined in good
faith by the Valuation Committee as authorized by the Trustees.
For purposes of determining the net asset value of the Funds'
shares, options transactions will be treated as follows: When a Fund
sells an option, an amount equal to the premium received by that Fund
will be included in that Fund's accounts as an asset and a deferred
liability will be created in the amount of the option. The amount of
the liability will be marked to the market to reflect the current
market value of the option. If the option expires or if that Fund
enters into a closing purchase transaction, that Fund will realize a
gain (or a loss if the cost of the closing purchase exceeds the premium
received), and the related liability will be extinguished. If a call
option contract sold by a Fund is exercised, that Fund will realize the
gain or loss from the sale of the underlying security and the sale
proceeds will be increased by the premium originally received.
INVESTOR SERVICES
(See "How to Buy Shares," "How to Sell Shares" and "How to
Exchange Shares" in the Prospectuses.)
<PAGE>
The Trust offers a variety of services, described in the sections
that follow, designed to meet the needs of its shareholders. The costs
of providing such services are borne by the Funds.
Automatic Investment Plan
The Automatic Investment Plan enables shareholders to make regular
(monthly or quarterly) investments of or more in shares of any of the
Funds through an automatic withdrawal from a designated bank account by
simply completing the Automatic Investment Plan application. Please
call 1-800-223-3332 or write to WPG to receive this form. By completing
the form, the shareholder authorizes the Trust's Custodian to
periodically draw money from a designated bank or federal credit union
account, and to invest such amounts in account(s) of the Fund(s)
specified. The transaction will be automatically processed to the
mutual fund account on or about the first business day of the month or
quarter designated.
Please be aware that: (1) the Automatic Investment Plan privilege
may be revoked without prior notice if any check is not paid upon
presentation; (2) the Custodian is under no obligation to notify the
shareholder as to the non-payment of any check, and (3) this service
may be modified or discontinued by the Custodian upon thirty (30) days'
written notice prior to any payment date, or may be discontinued by you
by written notice to TSSG, at least ten (10) days before the next
payment date.
Prototype Retirement Plan for Employers and Self-Employed
Individuals
Prototype retirement plans (the "Retirement Plan") are available
for those entities or self-employed individuals who wish to purchase
shares of a Fund in connection with a money purchase plan or a profit
sharing plan maintained by their employer. The Retirement Plans were
designed to conform to the requirements of the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The
Retirement Plans received opinion letters from the Internal Revenue
Service (the "IRS") on March 29, 1990 that the form of the Retirement
Plans is acceptable under Section 401 of the Code.
Annual tax-deductible contributions to the Retirement Plan may be
made up to the lesser of $30,000 or 25% of the participant's earned
income (disregarding any compensation in excess of $160,000 (as
adjusted by the IRS for inflation). Under the terms of the Retirement
Plan, contributions by or on behalf of participants may be invested in
a Fund with the designated custodian under the Retirement Plan (the
"Retirement Plan's Custodian"). Investment in other mutual funds
advised by the Adviser or one of its affiliates may also be available.
Employers adopting the Retirement Plan may elect either that a
participant shall specify the investments to be made with contributions
by or on behalf of such participant or that the employer shall specify
the investments to be made with all such contributions. Since no Fund
is intended as a complete investment program it is important, in
connection with such election, that employers give careful
consideration to the fiduciary obligation requirements of ERISA.
All dividends and distributions received by the Retirement Plan's
Custodian on the Funds' shares held by the Plan's Custodian will be
reinvested in the applicable Fund's shares of the same class at net
asset value. Distributions of benefits to participants, when made, will
be paid first in cash, to the extent that any amount credited to a
participant's account is not invested in the applicable Fund's shares
and then in full Fund shares of the applicable class (and cash in lieu
of fractional shares).
Boston Safe Deposit and Trust Company serves as the Retirement
Plan's Custodian under a Custodial Agreement. Custodian fees which are
payable by the employer to the Retirement Plan's Custodian under such
Custodial Agreement are a $10 application fee for processing the
Retirement Plan application, an annual maintenance fee of $15 per
participant, and a distribution fee of $10 for each distribution from a
participant's account. Such fees may be altered from time to time by
agreement of the employer and the Retirement Plan's Custodian. For
further details see the terms of the Retirement Plan which are
available from the Trust.
Distributions must be made pursuant to the terms of the Retirement
Plan and generally may not commence before retirement, disability,
death, termination of employment, or termination of the Retirement Plan
and must commence no later than April 1 of the year following the year
in which the participant attains age 70 (the "required beginning
date"). Distributions are taxed as ordinary income when received,
except the portion, if any, considered a return of a participant's
nondeductible contributions. Certain distributions before age 59 may be
subject to a 10% nondeductible penalty on the taxable portion of the
distribution. Failure to make minimum required distributions by the
required beginning date may be subject to a 50% excise tax.
It should be noted that the Retirement Plan is a retirement
investment program involving commitments covering future years. In
deciding whether to utilize the Retirement Plan, it is important that
the employer consider his or her needs and those of the Retirement Plan
participants and whether the investment objectives of the Funds are
likely to fulfill such needs. Termination or curtailment of the
Retirement Plan for other than business reasons within a few years
after its adoption may result in adverse tax consequences.
Employers who contemplate adoption of the Retirement Plan should
consult an attorney or financial adviser regarding all aspects of the
<PAGE>
Retirement Plan as a retirement plan vehicle (including fiduciary
obligations under ERISA).
Individual Retirement Account
Persons with earned income, whether or not they are active
participants in a pension, profit-sharing or stock bonus plan described
in Code 401(a), Federal, state or local pension plan, an annuity plan
described in Code 403(a), an annuity contract or custodial account
described in Code 403(b), a simplified employee pension plan described
in Code 408(k), or a trust described in Code 501(c)(18) ("active
participant"), generally are eligible to establish an Individual
Retirement Account ("IRA"). An individual may make a deductible
contribution to an IRA only if (i) neither the individual nor his or
her spouse (unless living apart for the entire year and filing separate
returns) is an active participant, or (ii) the individual (and his or
her spouse, if applicable) has an adjusted gross income below a certain
level ($40,000 for married individuals filing a joint return, with a
phase-out for adjusted gross income between $40,000 and $50,000;
$25,000 for a single individual, with a phase-out for adjusted gross
income between $25,000 and $35,0000). However, an individual who is not
permitted to make a deductible contribution to an IRA for a taxable
year may nonetheless make annual nondeductible contributions to an IRA
up to the lesser of 100% of the individual's earned income or $2,000 to
an IRA (up to $4,000 to IRAs for an individual and his or her spouse)
for that year. There are special rules for determining how withdrawals
are to be taxed if an IRA contains both deductible and nondeductible
amounts. In general, a proportionate amount of each withdrawal will be
deemed to be made from nondeductible contributions; amounts treated as
a return of nondeductible contributions will not be taxable. Also,
annual contributions may be made to a spousal IRA even if the spouse
has earnings in a given year if the spouse elects to be treated as
having no earnings (for IRA contribution purposes) for the year.
Withdrawals from the IRA (other than the portion treated as a
return of nondeductible contributions) are taxed as ordinary income
when received, may be made without penalty after the participant
reaches age 59 and must commence no later than the required beginning
date (see discussion of "Prototype Retirement Plans" above).
Withdrawals before age 59 may involve the payment of a 10%
nondeductible penalty on the taxable portion of the amount withdrawn.
The time and rate of withdrawal must conform with Code requirements in
order to avoid adverse tax consequences. All dividends and
distributions on shares of a Fund held in IRA accounts are reinvested
in full and fractional shares of the same class of the same Fund and
are not subject to federal income tax until withdrawn from the IRA.
Investors should consult their tax advisers for further tax
information, including information with respect to the imposition of
state and local income taxes and the effects of tax law changes.
The Trust has arranged for Boston Safe Deposit and Trust Company
to furnish the required custodial services for IRAs using any of the
Fund's shares as the underlying investment. The Bank will charge an
acceptance fee of $10 for each new IRA and an annual maintenance fee of
$15 for each year that an IRA is in existence. There is a $10 fee for
processing a premature distribution. These fees will be deducted from
the IRA account and may be changed by the Plan's Custodian upon 30
days' prior notice.
To establish an IRA for investment in a Fund, an investor must
complete an application and a custodial agreement on IRS Form 5305-A
(which has been supplemented to provide certain additional custodial
provisions) and must make an initial cash contribution to the IRA,
subject to the limitation on contributions described above. Pursuant to
IRS regulations, an investor may for seven days following establishment
of an IRA revoke the IRA. Detailed information on IRAs, together with
the necessary form of application and custodial agreement, is available
from the Trust and should be studied carefully by persons interested in
utilizing a Fund for IRA investments. Such persons should also consult
their own advisers regarding all aspects of the Funds as an appropriate
IRA investment vehicle.
Simplified Employee Pension Plans (SEP-IRA)
A simplified employee pension (SEP) allows an employer to make
contributions toward his or her own (if a self-employed individual) and
his or her employees' retirement and, for certain SEPs established
prior to 1997, may permit the employees to make elective deferrals by
salary reduction. A SEP requires an Individual Retirement Account (a
SEP-IRA) to be established for each "qualifying employee," although the
employer may include additional employees if it wishes. A qualifying
employee is one who: (a) is at least age 21, (b) has worked for the
employer during at least 3 of 5 years immediately preceding the tax
year, and (c) has received at least $400 (as indexed for inflation) in
compensation in the tax year.
An employer is not required to make any contribution to the
SEP-IRA. However, if the employer does make a contribution, the
contribution must be based on a written allocation formula and must not
discriminate in favor of highly compensated employees, as defined in
Code Section 414(q). The employer may make annual contributions on
behalf of each qualifying employee, provided that the contributions,
when combined with the employee's elective deferrals, do not exceed 15%
of the employee's compensation or $30,000, whichever is less.
A SEP-IRA that is part of a SEP established before 1997 may include
a salary reduction arrangement under which the employee can choose to
have the employer make contributions ("elective deferrals") to his or
her SEP-IRA out of his or her salary. However, employees may make
elective deferrals only if (i) at least 50% of the employer's eligible
employees choose elective deferrals; (ii) the employer did not have
more than 25 eligible employees at any time during the preceding year;
and (iii) the amount deferred each year by each eligible highly
compensated employee as a percentage of pay is no more than 125% of the
average deferral percentage of all other eligible employees. An
elective deferral arrangement is not available for a SEP maintained by
a state or local government, or any of their political subdivisions,
agencies, or instrumentalities, or to exempt organizations.
In general, the total income which an employee can defer under a
salary reduction arrangement included in a SEP and certain other
elective deferral arrangements is limited to $9,240 (indexed annually
for inflation). This dollar limit applies only to the elective
deferrals, not to any contributions from employer funds. The Code may
require that contributions be further limited to prevent discrimination
in favor of highly compensated employees. An employee may also make
regular IRA contributions to his or her SEP-IRA (see discussion of
IRAs, above).
Under the terms of the SEP-IRA, contributions by or on behalf of
participants may be invested in shares of the Funds (or shares of other
funds designated by the Adviser as eligible investments), as specified
by the participant. All dividends and distributions on shares held in
SEP-IRAs are reinvested in full and fractional shares of the same class
of the same Fund. Since no Fund is intended as a complete investment
program it is important, in connection with the adoption of a SEP-IRA,
that employers give careful consideration to the fiduciary obligation
requirements of ERISA, particularly those pertaining to diversification
of investments.
Withdrawals before age 59 may involve the payment of a 10%
nondeductible penalty on the amount withdrawn. Withdrawals must
commence no later than the required beginning date (see discussions of
"Prototype Retirement Plans" above). The time and rate of withdrawal
must conform with Code requirements in order to avoid adverse tax
consequences. Contributions to a SEP-IRA by an employer are excluded
from the employee's income rather than deducted from it. Elective
deferrals made to an employee's SEP-IRA generally are excluded from his
income in the year of deferral, but are included in wages for social
security (FICA) and unemployment (FUTA) tax purposes. However, if the
employee makes regular IRA contributions to his SEP-IRA (other than
elective deferrals), he can deduct them the same way as contributions
to a regular IRA, up to the amount of his deduction limit. Investors
should consult their tax advisers for further tax information including
information with respect to the imposition of state and local income
taxes and the effects of tax law changes.
The Fund has arranged for Boston Safe Deposit and Trust Company to
furnish the required custodial services for SEP-IRAs using the Funds as
the underlying investment. Boston Safe Deposit and Trust Company will
charge an acceptance fee of $10 for each new SEP-IRA and an annual
maintenance fee of $15 for each year that a SEP-IRA is in existence.
There is a $10 fee for each premature distribution. These fees will be
deducted from the SEP-IRA account and may be changed by the Custodian
upon 30 days' prior written notice.
To establish a SEP-IRA, an employer and employee should complete
the WPG IRA application materials, as well as IRS Form 5305-SEP.
Pursuant to IRS regulations, an investor may for seven days following
establishment of a SEP-IRA revoke the SEP-IRA. Detailed information on
SEP-IRAs, together with the necessary form of application and custodial
agreement, is available from the Fund and should be studied carefully
by persons interested in utilizing the Fund for SEP-IRA investments.
Such persons should also consult their own advisers regarding all
aspects of the Fund as an appropriate SEP-IRA investment vehicle.
Effective for plan years after 1996, an employer may establish a
SIMPLE retirement plan under new Section 408(p) of the Code. Under such
plan, the employer may make contributions to individual retirement
accounts established for each employee. Such individual retirement
accounts must, by their terms, be limited to contributions under a
SIMPLE retirement program. THE WEISS, PECK & GREER IRA IS NOT SO
LIMITED AND MAY NOT BE USED TO FUND A SIMPLE RETIREMENT PROGRAM.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each Fund within the Trust is separate for investment and
accounting purposes and is treated as a separate entity for federal
income tax purposes.
A regulated investment company qualifying under Subchapter M of
the Code is not subject to federal income tax on distributed amounts to
the extent that it distributes annually its taxable and, if any,
tax-exempt net investment income and net realized capital gains in
accordance with the timing requirements of the Code. Each Fund intends
to elect and to qualify to be treated as a regulated investment company
and intends to continue to so qualify for each taxable year.
Qualification of a Fund for treatment as a regulated investment
company under the Code requires, among other things, that (a) at least
90% of a Fund's annual gross income, without offset for losses from the
sale or other disposition of stock or securities or other transactions,
be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of stock or
securities or foreign currencies, or other income (including but not
limited to gains from options, futures, or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (b) the Fund derive less than 30% of its annual gross
income from gains (without deduction for losses) from the sale or other
disposition of any of the following held (for tax purposes) for less
than three months: (i) stock or securities; (ii) options, futures or
forward contracts (not on foreign currencies) or (iii) foreign
currencies (or options, futures or forward contracts on foreign
currencies) not directly related to the Fund's principal business of
investing in stock or securities and related options or futures; (c)
the Fund distribute at least annually to its shareholders as dividends
at least 90% of its taxable and tax-exempt net investment income, the
excess of net short-term capital gain over net long-term capital loss
earned in each year and any other net income (except for the excess, if
any, of net long-term capital gain over net short-term capital loss,
which need not be distributed in order for the Fund to qualify as a
regulated investment company but is taxed to the Fund if it is not
distributed); and (d) the Fund diversify its assets so that, at the
close of each quarter of its taxable year, (i) at least 50% of the fair
market value of its total (gross) assets is comprised of cash, cash
items, U.S. Government securities, securities of other regulated
investment companies and other securities limited in respect of any one
issuer to no more than 5% of the fair market value of the Fund's total
assets and 10% of the outstanding voting securities of such issuer and
(ii) no more than 25% of the fair market value of its total assets is
invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment
companies) or of two or more issuers controlled by the Fund and engaged
in the same, similar, or related trades or businesses.
It is expected that Separate Accounts of Participating Insurance
Companies will be purchasing Institutional Class shares of the Funds.
As such, each Fund must, and intends to, comply with the
diversification requirements imposed by Section 817(h) of the Code and
the regulations thereunder. These requirements, which are in addition
to the diversification requirements imposed on a Fund by the 1940 Act
and Subchapter M of the Code, place certain limitations on the assets
of each Separate Account and, because Section 817(h) and those
regulations treat the assets of the Fund as assets of the related
Separate Account, the assets of a Fund, that may be invested in
securities of a single issuer. Specifically, the regulations provide
that, except as permitted by the "safe harbor" described below, as of
the end of each calendar quarter or within 30 days thereafter no more
than 55% of the total assets of a Fund may be represented by any one
investment, no more than 70% by any two investments, no more than 80%
by any three investments and no more than 90% by any four investments.
For this purpose, all securities of the same issuer are considered a
single investment, and each U.S. Government agency and instrumentality
is considered a separate issuer. Section 817(h) provides, as a safe
harbor, that a Separate Account will be treated as being adequately
diversified if the diversification requirements under Subchapter M of
the Code are satisfied and no more than 55% of the value of the
Separate Account's total assets are cash and cash items (including
receivables), U.S. Government securities and securities of other
regulated investment companies. Failure by a Fund to both qualify as a
regulated investment company and satisfy the Section 817(h)
requirements would generally result in treatment of the Variable
Contract holders other than as described in the applicable Variable
Contract prospectus, including inclusion in ordinary income of income
accrued under the contracts for the current and all prior taxable
years. Any such failure may also result in adverse tax consequences for
the Participating Insurance Company issuing the Variable Contracts.
Unless its only shareholders are life insurance company segregated
asset accounts held in connection with Variable Contracts, trusts that
are described in section 401(a) of the Code and exempt from tax under
section 501(a) of the Code, and investors of "seed money" not in excess
of $250,000, each Fund is subject to a 4% nondeductible federal excise
tax on amounts required to be but not distributed under a prescribed
formula. The formula requires that a Fund distribute (or be deemed to
have distributed) to shareholders during a calendar year at least 98%
of the Fund's ordinary income (not including tax-exempt interest) for
the calendar year, at least 98% of the excess of its capital gains over
the capital losses realized during the one-year period ending October
31 during such year, as well as any income or gain (as so computed)
from the prior calendar year that was not distributed for such year and
on which the Fund paid no federal income tax. Each Fund has
distribution policies that should generally enable it to avoid
liability for this tax.
Net investment income for each Fund is the Fund's investment
income less its expenses. Dividends from taxable net investment income
and the excess, if any, of net short-term capital gain over net
long-term capital loss of a Fund will be treated under the Code as
ordinary income, and dividends from net long-term capital gain in
excess of net short-term capital loss ("capital gain dividends") will
be treated under the Code as long-term capital gain, for federal income
tax purposes. These dividends are paid after taking into account, and
reducing the distribution to the extent of, any available capital loss
carryforwards. Distributions from a Fund's current or accumulated
earnings and profits, as computed for Federal income tax purposes, will
be treated as described above whether taken in shares or in cash.
Certain distributions received in January may be treated as if paid by
a Fund and received by a shareholder on December 31 of the prior year.
Dividends, including capital gain dividends, paid by a Fund
shortly after a shareholder's purchase of shares have the effect of
reducing the net asset value per share of his shares by the amount per
share of the dividend distribution. Although such dividends are, in
effect, a partial return of the shareholder's purchase price to the
shareholder, they may be characterized as ordinary income or capital
gain as described above.
Equity options (including options on stock and options on
narrow-based stock indices) and over-the-counter options on debt
securities written or purchased by a Fund will be subject to tax under
Section 1234 of the Code. In general, no loss is recognized by a Fund
upon payment of a premium in connection with the purchase of a put or
call option. The character of any gain or loss recognized (i.e.,
long-term or short-term) will generally depend, in the case of a lapse
or sale of the option, on the Fund's holding period for the option, and
in the case of an exercise of the option, on the Fund's holding period
for the underlying security. The purchase of a put option may
constitute a short sale for federal income tax purposes, causing an
adjustment in the holding period of the underlying stock or security or
a substantially identical stock or security in the Fund's portfolio. If
a Fund writes a put or call option, no gain is recognized upon its
receipt of a premium. If the option lapses or is closed out, any gain
or loss is treated as a short-term capital gain or loss. If a call
option is exercised, whether the gain or loss is long-term or
short-term depends on the holding period of the underlying stock or
security. The exercise of a put option written by a Fund is not a
taxable transaction for the Fund.
All futures contracts entered into by a Fund and all listed
nonequity options written or purchased by a Fund (including options on
debt securities, options on futures contracts, options on securities
indices and options on broad-based stock indices) will be governed by
Section 1256 of the Code. Absent a tax election to the contrary, gain
or loss attributable to the lapse, exercise or closing out of any such
position will be treated as 60% long-term and 40% short-term capital
gain or loss, and on the last trading day of a Fund's taxable year, all
outstanding Section 1256 positions will be marked to market (i.e.,
treated as if such positions were closed out at their closing price on
such day), and any resulting gain or loss will be recognized as 60%
long-term and 40% short-term capital gain or loss. Under certain
circumstances, entry into a futures contract to sell a security may
constitute a short sale for federal income tax purposes, causing an
adjustment in the holding period of the underlying security or a
substantially identical security in a Fund's portfolio.
Because options and futures activities of a Fund may increase the
amount of gains from the sale of securities or investments held or
treated as held for less than three months, the Funds may have to limit
their options and futures transactions in order to comply with the 30%
limitation described above.
Positions of a Fund which consist of at least one stock and at
least one stock option or other position with respect to a related
security which substantially diminishes the Fund's risk of loss with
respect to such stock could be treated as a "straddle" which is
governed by Section 1092 of the Code, the operation of which may cause
deferral of losses, adjustments in the holding periods of stock or
securities and conversion of short-term capital losses into long-term
capital losses. An exception to these straddle rules exists for any
"qualified covered call options" on stock written by a Fund.
Positions of a Fund which consist of at least one debt security
not governed by Section 1256 and at least one futures contract or
listed nonequity option governed by Section 1256 which substantially
diminishes the Fund's risk of loss with respect to such debt security
will be treated as a "mixed straddle." Although mixed straddles are
subject to the straddle rules of Section 1092 of the Code, certain tax
elections exist for them which reduce or eliminate the operation of
these rules. Each Fund will monitor its transactions in options and
futures and may make certain tax elections in order to mitigate the
operation of these rules and prevent disqualification of the Fund as a
regulated investment company for federal income tax purposes.
These special tax rules applicable to options and futures
transactions could affect the amount, timing and character of a Fund's
income or loss and hence of its distributions to shareholders by
causing holding period adjustments, converting short-term capital
losses into long-term capital losses, and accelerating a Fund's income
or deferring its losses.
A Fund's investment in zero coupon securities or other securities
having original issue discount (or market discount, if the Fund elects
to include market discount in income currently) will generally cause it
to realize income prior to the receipt of cash payments with respect to
these securities. The mark to market rules described above may also
require a Fund to recognize gains without a concurrent receipt of cash.
In such case, a Fund will not be able to purchase additional income
producing securities with the cash generated by the sale of such
securities but will be required to use such cash to make such required
distributions, and its current portfolio income may ultimately be
reduced accordingly. In order to distribute this income or gains,
maintain its qualification as a regulated investment company, and avoid
federal income or excise taxes, the Fund may be required to liquidate
portfolio securities that it might otherwise have continued to hold.
The Funds may be subject to foreign withholding or other foreign
taxes with respect to income (possibly including, in some cases,
capital gains) derived from foreign securities. These taxes may be
reduced or eliminated under the terms of an applicable U.S. income tax
treaty. However, the Funds will not be eligible to pass through to
shareholders any foreign tax credits or deductions for foreign taxes
paid by the Funds that are not thus reduced or eliminated. Certain
foreign exchange gains and losses realized by the Funds with respect to
such securities or related currency transactions will generally be
treated as ordinary income and losses. Certain uses of foreign currency
and investments by the Funds in certain "passive foreign investment
companies" may be limited in order to avoid adverse tax consequences
for the Funds (or an election, if available, may be made with respect
to such investments).
Different tax treatment, including a penalty on certain
distributions, excess contributions or other transactions is accorded
to accounts maintained as IRAs or other retirement plans. Investors
should consult their tax advisers for more information. See "Prototype
Retirement Plan For Employers and Self-Employed Individuals,"
"Simplified Employee Pension Plans (SEP-IRA)," and "Individual
Retirement Accounts."
Redemptions, including exchanges, of shares may give rise to
realized gains or losses, recognizable for tax purposes except for
investors subject to tax provisions that do not require them to
recognize such gains or losses. All or a portion of a loss realized
upon the redemption of shares may be disallowed under "wash sale" rules
to the extent shares are purchased (including shares acquired by means
of reinvested dividends) within a 61-day period beginning 30 days
before and ending 30 days after such redemption. Any loss realized upon
a shareholder's sale, redemption or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term
capital loss to the extent of any distribution of long-term capital
gains with respect to such shares. Exchanges and withdrawals under the
Systematic Withdrawal Plan are treated as redemptions for federal
income tax purposes.
The Trust is organized as a Delaware business trust, and neither
the Trust nor the Funds will be subject to any corporate excise or
franchise tax in the State of Delaware, nor will they be liable for
Delaware income taxes provided that each Fund qualifies as a regulated
investment company for federal income tax purposes and satisfies
certain income source requirements of Delaware law. If each Fund so
qualifies and distributes all of its income and capital gains, it will
also be exempt from the New York State franchise tax and the New York
City general corporation tax, except for small minimum taxes.
The foregoing discussion of U.S. federal income tax law does not
address the special tax rules applicable to certain classes of
investors, such as insurance companies. Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of
ownership of shares of the Funds, including the possibility that such a
shareholder may be subject to a U.S. withholding tax at a rate of 30%
(or at a lower rate under an applicable income tax treaty) on Fund
distributions treated as ordinary dividends.
This discussion of the federal income tax treatment of the Funds
and their distributions is based on the federal income tax law in
effect as of the date of this Statement of Additional Information.
Shareholders should consult their tax advisers about the application of
the provisions of tax law described in this statement of additional
information and about the possible application of state, local and
foreign taxes in light of their particular tax situations.
<PAGE>
PORTFOLIO BROKERAGE
(See "Portfolio Brokerage" in the Prospectuses.)
It is the general policy of the Trust not to employ any broker in
the purchase or sale of securities for a Fund's portfolio unless the
Trust believes that the broker will obtain the best results for the
Fund under the circumstances, taking into consideration such relevant
factors as price, the ability of the broker to effect the transaction
and the broker's facilities, reliability and financial responsibility.
Commission rates, being a component of price, are considered together
with such factors. Subject to the foregoing, where transactions are
effected on securities exchanges, the Trust intends to employ primarily
WPG as its broker. The Trust is not obligated to deal with any broker
or group of brokers in the execution of transactions in portfolio
securities.
WPG acts as broker for the Funds on exchange transactions,
subject, however, to the general policy of the Trust set forth above
and the procedures adopted by the Trustees. Commissions paid to WPG
must be at least as favorable as those believed to be contemporaneously
charged by other brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities
exchange. A transaction is not placed with WPG if a Fund would have to
pay a commission rate less favorable than WPG's contemporaneous charges
for comparable transactions for its other most favored, but
unaffiliated, customers except for accounts for which WPG acts as a
clearing broker for another brokerage firm, and any customers of WPG
determined by a majority of the Independent Trustees not to be
comparable to the Funds. With regard to comparable customers, in
isolated situations, subject to the approval of a majority of the
Independent Trustees, exceptions may be made. Since WPG has, as
investment adviser to the Funds, the obligation to provide management,
which includes elements of research and related skills, such research
and related skills will not be used by WPG as a basis for negotiating
commissions at a rate higher than that determined in accordance with
the above criteria.
The commission rate on all exchange orders is subject to
negotiation. Section 17(e) of the 1940 Act limits to "the usual and
customary broker's commission" the amount which can be paid by the
Trust to an affiliated person, such as WPG, acting as broker in
connection with transactions effected on a securities exchange. The
Trustees, including a majority of the Independent Trustees, have
adopted procedures designed to comply with the requirements of Section
17(e) of the 1940 Act and Rule 17e-1 thereunder to ensure a broker's
commission that is "reasonable and fair compared to the commission, fee
or other remuneration received by other brokers in connection with
comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time ...."
Rule 17e-1 also requires the Trustees, including a majority of the
Independent Trustees, to adopt procedures reasonably designed to
provide that the commission paid is consistent with the above standard,
review those procedures at least annually to determine that they
continue to be appropriate and determine at least quarterly that
transactions have been effected in compliance with those procedures.
The Trustees of the Trust, including a majority of the Independent
Trustees, have adopted procedures designed to comply with the
requirements of Rule 17e-1.
In selecting brokers other than WPG to effect transactions on
securities exchanges, the Trust considers the factors set forth in the
first paragraph under this heading and any investment products or
services provided by such brokers, subject to the criteria of Section
28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Section 28(e) specifies that a person with investment discretion
shall not be "deemed to have acted unlawfully or to have breached a
fiduciary duty" solely because such person has caused the account to
pay a higher commission than the lowest rate available. To obtain the
benefit of Section 28(e), the person so exercising investment
discretion must make a good faith determination that the commissions
paid are "reasonable in relation to the value of the brokerage and
research services provided viewed in terms of either that particular
transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion." Accordingly,
if the Trust determines in good faith that the amount of commissions
charged by a broker is reasonable in relation to the value of the
brokerage and research products and services provided by such broker,
the Trust may pay commissions to such broker in an amount greater than
the amount another firm might charge. Research products and services
provided to the Trust include research reports on particular industries
and companies, economic surveys and analyses, recommendations as to
specific securities and other products or services (e.g., quotation
equipment and computer related costs and expenses) providing lawful and
appropriate assistance to WPG (and its subsidiaries) in the performance
of their decision-making responsibilities.
Each year, the Adviser considers the amount and nature of the
research products and services provided by other brokers as well as the
extent to which such products and services are relied upon, and
attempts to allocate a portion of the brokerage business of their
clients, such as the Trust, on the basis of that consideration. In
addition, brokers sometimes suggest a level of business they would like
to receive in return for the various services they provide. Actual
brokerage business received by any broker may be less than the
suggested allocations, but can (and often does) exceed the suggestions,
because total brokerage is allocated on the basis of all the
considerations described above. In no instance is a broker excluded
from receiving business because it has not been identified as providing
research services. As permitted by Section 28(e), the investment
information received from other brokers may be used by WPG (and its
subsidiaries) in servicing all its accounts and not all such
information may be used by WPG, in its capacity as the Adviser, in
connection with the Trust. Nonetheless, the Trust believes that such
investment information provides the Trust with benefits by
supplementing the research otherwise available to the Trust.
As set forth above, the Trust employs WPG, a member firm of the
NYSE, as its principal broker on U.S. exchange transactions. Section
11(a) of the Exchange Act provides that a member firm of a national
securities exchange (such as WPG) may not effect transactions on such
exchange for the account of an investment company (such as the Trust)
of which the member firm or its affiliate (such as the Adviser) is the
investment adviser unless certain conditions are met. These conditions
require that the investment company authorize the practice and that the
investment company receive from the member firm at least annually a
statement of all commissions paid in connection with such transactions.
WPG's transactions on behalf of the Funds are effected in compliance
with these conditions.
WPG furnishes to the Trust at least quarterly a statement setting
forth the total amount of all compensation retained by WPG or any
associated person of WPG in connection with effecting transactions for
the account of the Trust, and the Trustees of the Trust review and
approve all the Trust's portfolio transactions and the compensation
received by WPG in connection therewith.
WPG does not knowingly participate in commissions paid by the
Trust to other brokers or dealers and does not seek or knowingly
receive any reciprocal business as the result of the payment of such
commissions. In the event WPG at any time learns that it has knowingly
received reciprocal business, it will so inform the Trustees.
To the extent that WPG receives brokerage commissions on Trust
portfolio transactions, officers and Trustees of the Trust who are also
principals in WPG may receive indirect compensation from the Trust
through their participation in such brokerage commissions.
In certain instances there may be securities which are suitable
for a Fund's portfolio as well as for that of another Fund or one or
more of the other clients of the Adviser. Investment decisions for a
Fund and for the Adviser's other clients are made with a view to
achieving their respective investment objectives. It may develop that a
particular security is bought or sold for only one client even though
it might be held by, or bought or sold for, other clients. Likewise, a
particular security may be bought for one or more clients when one or
more other clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment
advice from the same investment adviser, particularly when the same
security is suitable for the investment objectives of more than one
client. When two or more clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated
among clients in a manner believed to be equitable to each. It is
recognized that in some cases this system could have a detrimental
effect on the price or volume of the security in a particular
transaction as far as a Fund is concerned. The Trust believes that over
time its ability to participate in volume transactions will produce
better executions for the Funds. When appropriate, orders for the
account of the Funds are combined with orders for other investment
companies or other clients advised by WPG in order to obtain a more
favorable commission rate. When the same security is purchased for a
Fund and one or more other funds or other clients on the same day, each
party pays the average price and commissions paid are allocated in
direct proportion to the number of shares purchased.
The U.S. Government and debt securities in which the Funds invest
are traded primarily in the over-the-counter market. Transactions in
the over-the-counter market are generally principal transactions with
dealers and the costs of such transactions involve dealer spreads
rather than brokerage commissions. With respect to over-the-counter
transactions, the Trust, where possible, deals directly with the
dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available
elsewhere. Under the 1940 Act, persons affiliated with the Trust are
prohibited from dealing with the Trust as a principal in the purchase
and sale of securities. Since transactions in the over-the-counter
market usually involve transactions with dealers acting as principal
for their own account, affiliated persons of the Trust, including WPG,
may not serve as the Trust's dealer in connection with such
transactions. However, affiliated persons of the Trust may serve as its
broker in transactions conducted on an exchange or over-the-counter
transactions conducted on an agency basis. On occasion, certain money
market instruments may be purchased directly from an issuer, in which
case no commissions or discounts are paid.
Subject to the supervision of the Trustees, all investment
decisions of the Trust are executed through WPG's trading department.
<TABLE>
<CAPTION>
BROKERAGE COMMISSIONS
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF
AGGREGATE DOLLAR
AMOUNT OF
TRANSACTIONS
INVOLVING THE
PERCENTAGE OF PAYMENT OF
AGGREGATE COMMISSIONS
AGGREGATE BROKERAGE COMMISSIONS EFFECTED THROUGH
COMMISSIONS PAID TO WPG WPG
------------------- ------------- ----------------
FUND 1994 1995 1996 DURING 1996 DURING 1996
- ---- ---- ---- ---- ----------- -----------
Long-Term Retirement Fund N/A N/A $846 97% 97%
Medium-Term Retirement Fund N/A N/A 2,094 99% 99%
Short-Term Retirement Fund N/A N/A 2,056 97% 99%
Core Large-Cap Stock Fund N/A N/A 1,651 99% 99%
Core Small-Cap Stock Fund N/A N/A 2,387 100% 100%
</TABLE>
The foregoing amounts do not include any profits of losses realized
by brokers or dealers on "net" transactions for the account of any Fund
(such as transactions in U.S. Government securities and transactions
executed through market makers and in the third market).
PORTFOLIO TURNOVER
See "Financial Highlights" and "Risk Considerations and Other
Investment Practices and Policies -- Portfolio Turnover" in the
Prospectus.
The annual portfolio turnover rate of a Fund is calculated by
dividing the lesser of the purchase or sales of a Fund's portfolio
securities for the year by the monthly average of the value of the
portfolio securities owned by that Fund during the year. The monthly
average is calculated by totalling the values of the portfolio
securities as of the beginning and end of the first month of the year
and as of the end of the succeeding 11 months and dividing the sum by
13. In determining portfolio turnover, securities (including options)
which have maturities at the time of acquisition of one year or less
("short-term securities"), are excluded. A turnover rate of 100% would
occur if all of a Fund's portfolio securities (other than short-term
securities) were replaced once in a period of one year. It should be
noted that if a Fund were to write a substantial number of options
which are exercised, the portfolio turnover rate of that Fund would
increase. Increased portfolio turnover results in increased brokerage
costs which the Trust must pay and the possibility of more short-term
gains which may increase the difficulty of qualifying as a regulated
investment company.
To the extent that their portfolios are traded for short-term
market considerations and exceeds 100%, the annual portfolio turnover
rate of the Funds could be higher than most mutual funds. None of the
Funds will engage in short-term trading to an extent which would
disqualify them as regulated investment companies under Subchapter M of
the Code.
ORGANIZATION
(See "Management of the Funds" and "The Trust" in the
Prospectuses.)
As a Delaware business trust, the Trust's operations are governed
by its Agreement and Declaration of Trust dated June 21, 1995 (the
"Declaration of Trust"). A copy of the Trust's Certificate of Trust,
also dated June 21, 1995, is on file with the Office of the Secretary
of State of the State of Delaware. Upon the initial purchase of shares,
the shareholder agrees to be bound by the Trust's Declaration of Trust,
as amended from time to time. Generally, Delaware business trust
shareholders are not personally liable for obligations of the Delaware
business trust under Delaware law. The Delaware Business Trust Act (the
"Delaware Act") provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit corporations. The Trust's
Declaration of Trust expressly provides that the Trust has been
organized under the Delaware Act and that the Declaration of Trust is
to be governed by Delaware law. It is nevertheless possible that a
Delaware business trust, such as the Trust, might become a party to an
action in another state whose courts refused to apply Delaware law, in
which case the Trust's shareholders could be subject to personal
liability.
To guard against this risk, the Declaration of Trust (i) contains
an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides that notice of such disclaimer may be given
in each agreement, obligation and instrument entered into or executed
by the Trust or its Trustees, (ii) provides for the indemnification out
of Trust property of any shareholders held personally liable for any
obligations of the Trust or any series of the Trust and (iii) provides
that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and
satisfy any judgment thereon. Thus, the risk of a Trust shareholder
incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refused to apply Delaware
law; (2) the liability arose under tort law or, if not, no contractual
limitation of lability was in effect; and (3) the Trust itself would be
unable to meet its obligations. In the light of Delaware law, the
nature of the Trust's business and the nature of its assets, the risk
of personal liability to a Fund shareholder is remote.
The Declaration of Trust further provides that the Trust shall
indemnify each of its Trustees and officers against liabilities and
expenses reasonably incurred by them, in connection with, or arising
out of, any action, suit or proceeding, threatened against or otherwise
involving such Trustee or officer, directly or indirectly, by reason of
being or having been a Trustee or officer of the Trust. The Declaration
of Trust does not authorize the Trust to indemnify any Trustee or
officer against any liability to which he or she would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
Under the Declaration of Trust, the Trust is not required to hold
annual meetings to elect Trustees or for other purposes. It is not
anticipated that the Trust will hold shareholders' meetings unless
required by law or the Declaration of Trust. The Trust will be required
to hold a meeting to elect Trustees to fill any existing vacancies on
the Board if, at any time, fewer than a majority of the Trustees have
been elected by the shareholders of the Trust. The Board is required to
call a meeting for the purpose of considering the removal of persons
serving as Trustee if requested in writing to do so by the holders of
not less than 10% of the outstanding shares of the Trust.
Shares of the Trust do not entitle their holders to cumulative
voting rights, so that the holders of more than 50% of the outstanding
shares of the Trust may elect all of the Trustees, in which case the
holders of the remaining shares would not be able to elect any
Trustees. As determined by the Trustees, shareholders are entitled to
one vote for each full share held and fractional votes for fractional
shares held or one vote for each dollar of net asset value (number of
shares held times the net asset value of the applicable class of the
applicable Fund).
As it is expected that Separate Accounts of Participating
Insurance Companies will be purchasing Institutional Class shares of
each of the Funds, it should be noted that the rights, if any, of
Variable Contract holders to vote the Institutional Class shares of a
Fund beneficially owned by such Variable Contract holders are governed
by the relevant Variable Contract.
Pursuant to the Declaration of Trust, the Trustees may create
additional funds by establishing additional series of shares in the
Trust. The establishment of additional series would not affect the
interests of current shareholders in the existing six Funds. As of the
date of this Statement of Additional Information, the Board does not
have any plan to establish another series of shares in the Trust.
Pursuant to the Declaration of Trust, the Board may establish and
issue multiple classes of shares for each Fund. As of the date of this
Statement of Additional Information, the Trustees have authorized the
issuance of two classes of shares for each series, designated Adviser
Class and Institutional Class. See "The Trust" in the Prospectuses for
a detailed description of the respective rights of the two classes of
shares. The Trustees do not have any plan to establish additional
classes of shares for any Fund.
Each share of each class of a Fund is entitled to such dividends
and distributions out of the income earned on the assets belonging to
that Fund which are attributable to such class as are declared in the
discretion of the Board. In the event of the liquidation or dissolution
of the Trust, shares of each class of each Fund are entitled to receive
their proportionate share of the assets which are attributable to such
class of such Fund and which are available for distribution as the
Trustees in their sole discretion may determine. Shareholders are not
entitled to any preemptive, conversion or subscription rights. All
shares, when issued, will be fully paid and non-assessable by the
Trust.
Pursuant to the Declaration of Trust and subject to shareholder
approval (if then required), the Trustees may authorize each Fund to
invest all or part of its investable assets in a single open-end
investment company that has substantially the same investment
objectives, policies and restrictions as the Fund. As of the date of
this Statement of Additional Information, the Board does not have any
plan to authorize any Fund to so invest its assets.
"Tomorrow Funds Retirement Trust" is the designation of the Trust
for the time being under the Declaration of Trust, and all persons
dealing with a Fund must look solely to the property of that Fund for
the enforcement of any claims against that Fund as neither the
Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of a Fund or the
Trust. No Fund is liable for the obligations of any other Fund. Since
the Funds use combined prospectuses, however, it is possible that one
Fund might become liable for a misstatement or omission in its
prospectus regarding the other Fund with which its disclosure is
combined. The Trustees have considered this factor in approving the use
of the combined prospectuses.
<PAGE>
CUSTODIAN
The Custodian for the Trust is Boston Safe Deposit and Trust
Company at One Exchange Place, Boston, Massachusetts 02109. In its
capacity as Custodian, Boston Safe Deposit and Trust Company performs
all accounting services, holds the assets of the Trust and is
responsible for calculating the net asset value per share.
TRANSFER AGENT
First Data Investor Services Group, Inc. acts as transfer agent for
the Trust and, in such capacity, processes purchases, transfers and
redemptions of shares, acts as dividend disbursing agent, and maintains
records and handles correspondence with respect to shareholder
accounts.
LEGAL COUNSEL
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
serves as legal counsel to the Trust.
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS
KPMG Peat Marwick LLP ("KPMG"), 345 Park Avenue, New York, New York
10154, are the independent auditors for the Trust. Professional
services performed by KPMG include audits of the financial statements
of the Trust, consultation on financial, accounting and reporting
matters, review and consultation regarding various filings with the SEC
and attendance at the meetings of the Audit Committee and Board of
Trustees. KPMG also performs other professional services for the Trust
including preparation of income tax returns of the Funds. Each Fund's
audited financial statements and related report of KPMG, independent
auditors, included in the Annual Report to Shareholders of the Funds
for the year ended December 31, 1996, is attached hereto and hereby
incorporated by reference into this Statement of Additional
Information.
<PAGE>
APPENDIX
Description of Bond Ratings Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuations of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's also provides credit ratings for preferred stocks. It
should be borne in mind that preferred stock occupies a junior position
to bonds within a particular capital structure and that these
securities are rated within the universe of preferred stocks.
aaa: An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
aa: An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
<PAGE>
a: An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater
than in the "aaa" and "aa" classifications, earnings and asset
protections are, nevertheless, expected to be maintained at adequate
levels.
baa: An issue which is rated "baa" is considered to be a medium grade
preferred stock, neither highly protected nor poorly secured. Earnings
and asset protection appear adequate at present but may be questionable
over any great length of time.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term and long-term credit
risk. Loans bearing the designation MIG 1 are of the best quality,
enjoying strong protection by establishing cash flows of funds for
their servicing or by established and broad-based access to the market
for refinancing, or both. Loans bearing the designation MIG 2 are of
high quality, with margins of protection ample although not so large as
in the preceding group. A short term issue having a demand feature
(i.e. payment relying on external liquidity and usually payable on
demand rather than fixed maturity dates) is differentiated by Moody's
with the use of the Symbol VMIG, instead of MIG.
Moody's also provides credit ratings for tax-exempt commercial
paper. These are promissory obligations (1) not having an original
maturity in excess of nine months, and (2) backed by commercial banks.
Notes bearing the designation P-1 have a superior capacity for
repayment. Notes bearing the designation P-2 have a strong capacity for
repayment.
Standard & Poor's Ratings Group
AAA: Bonds rated AAA have the higher rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small
degree.
A: Bonds rated A have a very strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
S&P's top ratings for municipal notes issued after July 29, 1984
are SP-1 and SP-2. The designation SP-1 indicates a very strong
capacity to pay principal and interest. A "+" is added for those issues
determined to possess overwhelming safety characteristics. An "SP-2"
designation indicates a satisfactory capacity to pay principal and
interest.
Commercial paper rated A-2 or better by S&P is described as having
a very strong degree of safety regarding timeliness and capacity to
repay. Additionally, as a precondition for receiving an S&P commercial
paper rating, a bank credit line and/or liquid assets must be present
to cover the amount of commercial paper outstanding at all times.
The Moody's Prime-2 rating and above indicates a strong capacity
for repayment of short-term promissory obligations.
<PAGE>
GLOSSARY
Commercial Paper: Short-term promissory notes of large
corporations with excellent credit ratings issued to finance their
current operations.
Certificates of Deposit: Negotiable certificates representing a
commercial bank's obligations to repay funds deposited with it, earning
specified rates of interest over given periods.
Bankers' Acceptances: Negotiable obligations of a bank to pay a
draft which has been drawn on it by a customer. These obligations
are backed by large banks and usually are backed by goods in
international trade.
Time Deposits: Non-negotiable deposits in a banking institution
earning a specified interest rate over a given period of time.
Corporate Obligations: Bonds and notes issued by corporations and
other business organizations in order to finance their long-term
credit needs.
<PAGE>
TOMORROW FUNDS
RETIREMENT TRUST
A Lifecycle Retirement Program
Annual Report
DECEMBER 31, 1996
TOMORROW LONG-TERM RETIREMENT FUND
TOMORROW MEDIUM-TERM RETIREMENT FUND
TOMORROW SHORT-TERM RETIREMENT FUND
CORE LARGE-CAP STOCK FUND
CORE SMALL-CAP STOCK FUND
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Table of Contents
Chairman's Letter ................................ 1
Average Annual Total Return ...................... 2
Ten Largest Holdings ............................ 5
Schedules of Investments
Core Large Cap Stock Fund................... 6
Core Small Cap Stock Fund................... 9
Tomorrow Long-Term Retirement Fund.......... 14
Tomorrow Medium-Term Retirement Fund ....... 23
Tomorrow Short-Term Retirement Fund ........ 31
Statements of Assets and Liabilities............ 38
Statements of Operations ....................... 39
Statements of Changes in Net Assets ............ 40
Notes to Financial Statements .................. 41
Financial Highlights ........................... 47
Independent Auditor's Report.................... 48
<PAGE>
DEAR SHAREHOLDER:
Continued low inflation, a cooling economy (3rd quarter growth of 2.0%),
declining interest rates, and healthy profit margins set the stage for yet
another strong increase in the market in the 4th quarter of 1996.
Record cash flows into equity mutual funds helped November's 7.6% rise in the
S&P 500 replace September's 5.6% gain as the strongest monthly performance since
December 1991. The market's fourth quarter return of 8.4% was the eighth
straight 3% or greater quarterly gain. Since January 1995, the S&P 500 has
returned an astonishing 68.9%.
In December cautionary comments on the current bull market by Fed Chairman
Greenspan tempered to some degree the prevailing market optimism, and resulted
in an increase in market volatility similar to what we saw in July.
Since their inception in March 1996 the Tomorrow Short Term, Medium Term and
Long Term Retirement Funds have performed slightly below their benchmark
allocations of fixed income, domestic and international equities. The Core Small
Cap Fund had a very strong 1996, outperforming its benchmark, the Russell 2000,
by over four percentage points. Since its inception in February 1996, the Core
Large Cap Fund slightly underperformed the S&P 500.
The Tomorrow Funds utilize a highly structured quantitative process in the
domestic equity allocations. The objective of the process is to maximize return
while minimizing investment risk as well as style and capitalization drift.
Historically, this risk-averse strategy has fared well relative to the markets
over a market cycle, and has underperformed when stock prices rise sharply.
Given the powerful up market of 1995-96, the slight underperformance of the
Funds is consistent with our long term goal of reducing risk.
Weiss, Peck & Greer is committed to helping you invest wisely prior to and
during your retirement. The Tomorrow Retirement Funds were created to simplify
investment decision making and help you enjoy today. We wish you and your family
a happy, healthy and prosperous 1997.
Sincerely,
/s/ Roger J. Weiss
Roger J. Weiss
Chairman of the Board
January 15, 1997
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
CORE LARGE-CAP
The Tomorrow Fund Large-Cap portfolio underperformed the S&P 500 in 1996 with a
return of 15.4% as compared to the index's return of 16.9% over the same period.
This year's extended and unusually powerful run in the market, coming at the end
of a long economic cycle, was an inhospitable environment for the Fund's risk
control strategy. The strongly defensive character of the strategy caused the
risk controlled portfolio to lag its benchmark during this extended run.
[Graph shown here]
Average Annual Total Return
(for the period February 6, 1996 (commencement of
operations) through December 31, 1996
<TABLE>
<S> <C>
CORE LARGE-CAP..................... 15.35
S&p 500............................ 16.39%
</TABLE>
CORE SMALL-CAP
The Tomorrow Fund Small-Cap portfolio outperformed the Russell 2000 in 1996 with
a 17.7% return vs. the benchmark's 13.6% return.
The Fund uses a highly quantitative strategy that focuses on minimizing the
total risk of the investment portfolio. In 1996 this focus resulted in a value
tilt to the portfolio as well as concentrations in the real property and
mortgage industries. The strong performance of the financial sector in
conjunction with small cap value stocks outperforming growth in 1996, were the
primary contributors to the Fund's strong performance relative to the Russell
2000.
[Graph shown here]
Average Annual Total Return
(for the period February 6, 1996 (commencement of
operations) through December 31, 1996
<TABLE>
<S> <C>
CORE SMALL-CAP..................... 17.70%
S&P 500............................ 13.63%
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
LONG, MEDIUM & SHORT TERM
TOMORROW FUNDS
In 1996 the Adviser class of each Tomorrow Life Cycle Fund, which consist of a
blended allocation of domestic and international equities and fixed income
instruments, underperformed their respective benchmarks by an average of 1.8%.
Performance for the Institutional class will vary from the Adviser class due to
differences in expenses charged to their class.
The domestic equity portfolios comprise the largest allocation in the Life
Cycle Tomorrow Funds. These portfolios utilize the same risk control strategy
employed in the Large and Small Cap Tomorrow Funds. This risk-averse strategy
has historically performed well relative to the markets over a market cycle and
have underperformed in sharply rising markets. Given the powerful up market of
1995-1996 the underperformance in the Funds is consistent with our long term
goal of reducing volatility.
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
<TABLE>
<S> <C>
TOMORROW LONG-TERM
(Adviser Class)............... 9.08+
(Institutional Class)......... 9.03%++
Tomorrow Long-Term Benchmark..... 11.00%
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
TOMORROW MEDIUM-TERM
(Adviser Class)............... 8.89+
(Institutional Class)......... 8.54%++
Tomorrow Long-Term Benchmark..... 10.53%
[Graph shown here]
Average Annual Total Return
(Inception through December 31, 1996)
TOMORROW SHORT-TERM
(Adviser Class)............... 8.54+
(Institutional Class)......... 8.23%++
Tomorrow Long-Term Benchmark..... 10.39%
<FN>
+ Inception March 7, 1996.
++ Inception April 2, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Average Annual Total Return
Performance represents historical data. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Each Fund's
results and their indices assume the reinvestment of all capital gain
distributions and income dividends. Each Fund's past performance is not
indicative of future performance and should be considered in light of each
Fund's investment policy and objectives, the characteristics and quality of its
portfolio securities and the periods selected. The S&P 500 Stock Index and the
S&P 400 MidCap Stock Index are each broad based measurement of changes in stock
market conditions based on the average performance of 500 and 400, respectively,
widely held common stocks. The Russell 2000 Growth Index is a measurement of
changes in stock market conditions based on the average performance of small
U.S. growth oriented securities with a median market capitalization of
approximately $200 million. The Lehman Government Corporate Index is a market
weighted blend of all U.S. Government securities and all U.S. Corporate
securities. The Morgan Stanley Capital International Europe, Australia, Far East
("EAFE") is an index of more than 800 companies in Europe, Australia and the Far
East.
The benchmarks used by the Long-Term Retirement Fund, Medium-Term Retirement
Fund and Short-Term Retirement Fund are each comprised of an allocated portion
of several of the above mentioned indices. The allocated portions are as
follows:
<TABLE>
<S> <C> <C> <C>
Long- Medium- Short
Term Term Term
S&P 500 30% 35% 40%
S&P 400 MidCap 20% 15% 10%
Russell 2000 Growth 25% 15% 10%
Lehman Government Corporate 20% 30% 40%
EAFE 5% 5% 0%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Ten Largest Holdings at December 31, 1996*
<S> <C> <C>
Market Percent
Core Large-Cap Value of Fund
Exxon Corp................................... $64,680 4.1%
Royal Dutch Petroleum Co ADR................. 47,298 3.0%
Standard & Poor's Depositary
Receipt.................................. 44,362 2.8%
Lilly Eli & Co.............................. 29,492 1.9%
Mobil Corp................................... 28,362 1.8%
GTE Corp..................................... 26,481 1.7%
Bristol-Myers Squibb Co...................... 26,426 1.7%
Eastman Kodak Co............................. 25,038 1.6%
International Business Machines
Corp.................................... 23,707 1.5%
Amoco Corp................................... 23,579 1.5%
$339,425 21.6%
Market Percent
Core Small-Cap Value of Fund
BRE Properties Inc........................... $10,568 0.5%
Home Beneficial Corp......................... 6,780 0.4%
Financial Trust Corp......................... 6,699 0.4%
IWC Resources Corp........................... 6,567 0.3%
Citizens Bancorp Maryland.................. 6,200 0.3%
Boole & Babbage Inc.......................... 6,025 0.3%
Ekco Group Inc............................... 5,998 0.3%
Liberty Bancorp Inc.......................... 5,920 0.3%
SPX Corp..................................... 5,890 0.3%
Interstate Bakeries Corp..................... 5,846 0.3%
$66,493 3.4%
Long-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $120,187 9.5%
US Treasury Note
6.500%, Due 8/15/05...................... 98,628 7.8%
Exxon Corp .................................. 91,140 7.2%
Standard & Poor's Depositary
Receipt................................... 57,302 4.6%
BT EAFE Equity Index Fund.................... 53,861 4.3%
US Treasury Bond
6.875%, Due 8/15/25...................... 35,689 2.8%
U.S. Robotics Corp .......................... 23,040 1.8%
Amgen Inc ................................... 18,542 1.5%
State Auto Financial Corp ................... 18,486 1.5%
Sprint Corp.................................. 18,343 1.5%
$535,218 42.5%
Medium-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $501,606 13.6%
US Treasury Note
6.500%, Due 8/15/05...................... 425,711 11.6%
Standard & Poor's Depositary
Receipt.................................. 177,450 4.8%
US Treasury Bond
6.875%, Due 8/15/25...................... 161,111 4.4%
BT EAFE Equity Index Fund.................... 144,849 3.9%
Exxon Corp................................... 53,214 1.4%
May Department Stores Co..................... 39,083 1.1%
Kimberly-Clark Corp ......................... 37,243 1.0%
Royal Dutch Petroleum Co ADR ................ 36,882 1.0%
Viacom Inc Cl B ............................. 35,433 1.0%
$1,612,582 43.8%
Short-Term Retirement
US Treasury Note
5.500%, Due 11/15/98..................... $880,046 18.5%
US Treasury Note
6.500%, Due 8/15/05...................... 743,737 15.6%
US Treasury Bond
6.875%, Due 8/15/25...................... 275,316 5.8%
Standard & Poor's Depositary
Receipt.................................. 221,813 4.7%
Royal Dutch Petroleum Co ADR ................ 126,013 2.6%
Exxon Corp................................... 91,140 1.9%
GTE Corp .................................... 84,766 1.8%
Pharmacia & Upjohn Inc ...................... 75,169 1.6%
Mobil Corp .................................. 73,350 1.5%
Chevron Corp ................................ 71,825 1.5%
$2,643,175 55.5%
<FN>
* The composition of the largest securities in each porfolio is subje
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
<C> <S> <C>
Number
of Shares Security Value
Core Large-Cap Stock Fund
COMMON STOCKS (96.6%)
Basic Materials (9.3%)
185 Dow Chemical Co ............................. $14,499
360 Barrick Gold Corp ........................... 10,305
235 Monsanto Co ................................. 9,136
117 PPG Industries Inc. ......................... 6,567
274 Placer Dome Inc ADR ......................... 5,960
88 Phelps Dodge Corp ........................... 5,940
82 Pioneer Hi Bred International ............... 5,740
117 Great Lakes Chemical Corp. .................. 5,470
105 W.R. Grace & Co.............................. 5,434
105 International Flavors &
Fragrances Inc ........................... 4,725
144 Inco Ltd .................................... 4,590
99 Newmont Mining Corp ......................... 4,430
48 Rohm & Haas Co .............................. 3,918
66 Reynolds Metals Co .......................... 3,720
194 Engelhard Corp .............................. 3,710
110 James River Corp of Virginia ................ 3,644
114 USX US Steel Group .......................... 3,577
61 Temple Inland Inc ........................... 3,302
64 Nucor Corp .................................. 3,264
79 International Paper Co. ..................... 3,190
133 Cyprus Amax Minerals Co. .................... 3,109
47 Sigma Aldrich Corp .......................... 2,935
188 Homestake Mining Co ......................... 2,679
80 Boise Cascade Corp .......................... 2,540
46 Union Camp Corp ............................. 2,197
224 +Bethlehem Steel Corp. ....................... 2,016
70 Westvaco Corp................................ 2,013
86 Allegheny Teledyne Inc ...................... 1,978
51 Bemis Inc ................................... 1,881
103 Worthington Industries....................... 1,867
92 Inland Steel Industries Inc ................. 1,840
25 +FMC Corp .................................... 1,753
231 Echo Bay Mines Ltd .......................... 1,530
37 BF Goodrich Co............................... 1,499
100 Stone Container Corp ........................ 1,487
36 Ecolab Inc .................................. 1,354
35 Nalco Chemical Co ........................... 1,264
159 +Armco Inc ................................... 656
13 Potlach Corp ................................ 559
--------
146,278
--------
Capital Goods (12.2%)
216 Boeing Co ................................... 22,977
222 Minnesota Mining &
Manufacturing Co ......................... 18,398
222 McDonnell Douglas Corp ...................... 14,208
204 +Rockwell International....................... 12,418
124 Emerson Electric Co. ........................ 11,997
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
204 Corning Inc ................................. $9,435
405 Westinghouse Electric Corp .................. 8,049
107 Honeywell Inc. .............................. 7,035
110 Fluor Corp .................................. 6,902
89 Eaton Corp .................................. 6,208
105 Crown Cork & Seal Inc ....................... 5,709
114 Cooper Industries ........................... 4,802
89 Tyco International Ltd ...................... 4,706
47 Textron Inc ................................. 4,430
76 Alco Standard Corp .......................... 3,924
91 Parker Hannifin Corp ........................ 3,526
42 Northrop Grumman Corp ....................... 3,476
62 Dover Corp .................................. 3,115
118 Pall Corp ................................... 3,009
120 PP & L Resources Inc ........................ 2,760
34 Raychem Corp................................. 2,724
55 Harnischfeger Industries Inc. ............... 2,647
36 General Dynamics ............................ 2,538
30 Grainger WW Inc ............................. 2,408
58 Millipore Corp .............................. 2,400
205 Laidlaw Inc Cl B............................. 2,358
46 Cummins Engine Inc .......................... 2,116
80 Moore Corp Ltd .............................. 1,630
44 Avery Dennison Corp ......................... 1,556
35 General Signal Corp ......................... 1,496
78 McDermott International Inc ................. 1,297
57 Cincinnati Milacron Inc ..................... 1,247
47 Ball Corp ................................... 1,222
27 Briggs & Stratton Corp ...................... 1,188
40 Crane Co .................................... 1,160
29 Trinova Corp ................................ 1,055
28 National Services Industries Inc ............ 1,046
23 Thomas & Betts Corp ......................... 1,021
43 Premark International........................ 957
98 +Navistar International Corp ................. 894
14 Timken Co. .................................. 642
42 Giddings & Lewis Inc. ....................... 541
6 NACCO Industries Inc Cl A ................... 321
--------
191,548
--------
Communication Services (3.1%)
582 GTE Corp..................................... 26,481
326 US West Inc ................................. 10,513
171 Sprint Corp ................................. 6,818
163 ALLTEL Corp ................................. 5,114
--------
48,926
--------
Consumer Cyclical (12.4%)
312 Eastman Kodak Co ............................ 25,038
237 May Department Stores Co .................... 11,080
378 Dun & Bradstreet Corp ....................... 8,978
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
382 The Limited Inc ............................. $7,019
225 Gap Inc. .................................... 6,778
89 Gannet Inc .................................. 6,664
240 Mattel Inc................................... 6,660
156 Dayton Hudson Corp .......................... 6,123
170 Masco Corp .................................. 6,120
153 Service Corp International .................. 4,284
96 Tandy Corp................................... 4,224
136 Dillard Department Stores ................... 4,199
106 New York Times Co Cl A ...................... 4,028
90 Genuine Parts Co ............................ 4,016
83 Interpublic Group of Cos Inc ................ 3,942
375 +K mart Stores ............................... 3,891
81 Harcourt General Inc......................... 3,736
109 Dow Jones & Co Inc .......................... 3,692
113 Black & Decker Corp.......................... 3,404
98 Cognizant Corp .............................. 3,234
70 McGraw-Hill Cos Inc ......................... 3,229
64 TRW Inc. .................................... 3,168
71 Owens Corning ............................... 3,026
94 Echlin Inc. ................................. 2,973
67 Polaroid Corp ............................... 2,914
42 VF Corp ..................................... 2,835
40 Armstrong World Industries Inc............... 2,780
139 Cooper Tire & Rubber ........................ 2,745
65 Reebok International Ltd .................... 2,730
135 Maytag Corp ................................. 2,666
69 Liz Claiborne Inc. .......................... 2,665
63 Hasbro Inc .................................. 2,449
31 Tribune Co. ................................. 2,445
80 Circuit City Store Inc ...................... 2,410
43 Sherwin-Williams Co. ........................ 2,408
61 Knight- Ridder Inc .......................... 2,333
106 +Woolworth Corp .............................. 2,319
77 American Greetings-Cl A ..................... 2,185
52 +Fruit of the Loom Inc ....................... 1,969
71 Stanley Works ............................... 1,917
37 Mercantile Stores ........................... 1,827
102 Viad Corp ................................... 1,683
35 TJX Cos Inc.................................. 1,658
71 Ogden Corp .................................. 1,331
60 Jostens Inc ................................. 1,268
34 Snap-On Inc ................................. 1,211
40 Russell Corp ................................ 1,190
28 +Payless ShoeSource Inc ...................... 1,050
20 Springs Industries Inc ...................... 860
16 Meredith Corp ............................... 844
54 Stride Rite Corp ............................ 540
32 +ACNielsen Corp .............................. 484
22 Outboard Marine Inc. ........................ 363
9 +Footstar Inc ................................ 224
--------
193,809
--------
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
Consumer Staples (13.1%)
101 Unilever NV ADR ............................. $17,700
212 Walt Disney Co .............................. 14,761
398 +Viacom Inc Cl B ............................ 13,880
205 Kellogg Co .................................. 13,453
309 Heinz H J Co ................................ 11,124
483 Archer Daniels Midland Co.................... 10,626
254 Anheuser- Busch Cos Inc. .................... 10,160
118 Ralston Purina Co ........................... 8,658
165 Conagra Inc ................................. 8,209
87 Colgate-Palmolive Co ........................ 8,026
102 CPC International Inc. ...................... 7,905
234 UST Inc. .................................... 7,576
109 General Mills Inc ........................... 6,908
158 Quaker Oats Co............................... 6,024
129 +Kroger Co ................................... 5,999
69 Avon Products Inc ........................... 3,942
96 American Stores Co........................... 3,924
115 Winn Dixie Stores ........................... 3,637
76 Hershey Foods Corp .......................... 3,325
79 Rite Aid Corp. .............................. 3,140
127 Whitman Corp ................................ 2,905
87 Sysco Corp .................................. 2,838
67 +CVS Corp .................................... 2,764
51 Tupperware Corp.............................. 2,735
26 Clorox Co. .................................. 2,610
74 Giant Food Inc Cl A ......................... 2,553
122 Wendy's International ....................... 2,501
57 +Ceridian Corp ............................... 2,308
67 Deluxe Corp ................................. 2,194
50 +King World Productions Inc .................. 1,844
123 Dial Corp ................................... 1,814
60 Supervalu Inc. .............................. 1,703
29 Brown-Forman Corp Class B .................. 1,327
74 Fleming Cos Inc ............................. 1,277
70 Safety Kleen Corp ........................... 1,146
28 Great Atlantic & Pacific Tea ................ 892
25 Hilton Hotels Corp .......................... 653
32 Coors (Adolph) Co Cl B ...................... 608
29 Luby's Cafeterias Inc. ...................... 576
77 +Shoney's Inc ................................ 539
8 Alberto Culver Co............................ 384
43 +Ryan's Family Steak Houses Inc .............. 296
6 Longs Drug Stores Corp....................... 295
7 Harland Co. ................................. 231
--------
205,970
--------
Energy (18.0%)
660 Exxon Corp .................................. 64,680
277 Royal Dutch Petroleum Co ADR ................ 47,298
232 Mobil Corp. ................................. 28,362
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
292 Amoco Corp .................................. $23,579
317 Chevron Corp................................. 20,605
137 Texaco Inc .................................. 13,443
134 Schlumberger Ltd ............................ 13,383
93 Atlantic Richfield .......................... 12,334
240 Phillips Petroleum Co. ...................... 10,620
331 Occidental Petroleum Corp ................... 7,737
117 Halliburton Co............................... 7,049
127 Burlington Resources Inc .................... 6,398
170 Dresser Industries Inc ...................... 5,270
78 Amerada Hess Corp. .......................... 4,514
105 Baker Hughes Inc ............................ 3,623
98 Sun Co ...................................... 2,389
30 Kerr McGee Corp ............................. 2,160
83 +Oryx Energy Co .............................. 2,054
28 Louisiana Land & Exploration Co ............. 1,502
33 Ashland Inc ................................. 1,448
21 Pennzoil Co. ................................ 1,187
71 +Santa Fe Energy Resources ................... 985
38 +Rowan Cos ................................... 860
11 Helmerich & Payne Inc........................ 573
--------
282,053
--------
Financial (3.8%)
79 Loews Corp .................................. 7,446
127 Lincoln National Corp Ltd. .................. 6,667
74 UNUM Corp ................................... 5,347
76 First Bank System Inc ....................... 5,254
43 Marsh & McLennan Cos ........................ 4,472
99 U.S. Bancorp ................................ 4,449
64 St Paul Cos. Inc Corp ....................... 3,752
55 Boatmen's Bancshares Inc .................... 3,548
44 Transamerica Corp ........................... 3,481
76 National City Corp .......................... 3,411
80 Safeco Corp ................................. 3,155
44 Jefferson- Pilot Corp ....................... 2,492
117 USF&G Corp .................................. 2,442
25 Republic NY Corp ............................ 2,041
18 Aetna Inc ................................... 1,440
21 USLife Corp ................................. 698
--------
60,095
--------
Health Care (11.9%)
404 Lilly Eli & Co .............................. 29,492
243 Bristol-Myers Squibb Co. .................... 26,426
341 Schering-Plough Corp. ....................... 22,080
543 Pharmacia & Upjohn Inc....................... 21,516
316 American Home Products Corp.................. 18,526
257 +Amgen Inc. .................................. 13,974
140 Warner Lambert Co ........................... 10,500
148 +Boston Scientific Corp ...................... 8,880
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
262 +Humana Inc .................................. $5,011
188 +Tenet Healthcare Corp ....................... 4,113
96 +St. Jude Medical Inc. ....................... 4,092
91 Becton Dickinson & Co. ...................... 3,947
84 Allergan Inc. ............................... 2,992
83 Bausch & Lomb Inc ........................... 2,946
63 Mallinckrodt Inc. ........................... 2,780
169 Biomet ...................................... 2,556
92 +ALZA Corp ................................... 2,381
83 +Fresenius Medical Care ADR .................. 2,334
43 United States Surgical Corp ................. 1,693
78 +Transitional Hospitals Corp ................. 751
--------
186,990
--------
Technology (4.6%)
157 International Business Machines
Corp..................................... 23,707
415 First Data Corp ............................. 15,147
143 Raytheon Co ................................. 6,882
593 +Novell Inc .................................. 5,615
233 +Apple Computer Inc .......................... 4,864
105 +Advanced Micro Devices Inc .................. 2,704
90 Autodesk Inc ................................ 2,520
33 Perkin Elmer Corp............................ 1,943
26 Harris Corp.................................. 1,784
126 +Amdahl Corp ................................. 1,528
75 EG&G Inc .................................... 1,509
190 +Unisys Corp ................................. 1,282
25 Shared Medical Systems Corp ................. 1,231
71 +Intergraph Corp ............................. 728
40 +Data General Corp ........................... 580
--------
72,024
--------
Transportation (0.7%)
136 +Federal Express Corp. ....................... 6,052
123 Caliber Systems Inc ......................... 2,368
60 Consolidated Freightways Inc ................ 1,335
43 +USAir Group Inc ............................. 1,005
23 +Yellow Corp ................................. 331
30 +Consolidated Freightways Corp ............... 266
--------
11,357
--------
Utilities (7.5%)
465 Southern Co ................................. 10,521
239 Enron Corp .................................. 10,307
139 FPL Group Inc. .............................. 6,394
137 Duke Power Co ............................... 6,371
153 Williams Cos Inc ............................ 5,738
142 Dominion Resources Inc....................... 5,467
251 Pacific Gas & Electric Co. .................. 5,271
107 Coastal Corp ................................ 5,230
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Large-Cap Stock Fund (continued)
117 American Electric Power Co .................. $4,812
117 Texas Utilities Co .......................... 4,768
164 Entergy Corp................................. 4,551
226 Edison International ........................ 4,492
185 Houston Industries .......................... 4,186
153 Central & South West Corp ................... 3,921
110 Cinergy Corp. ............................... 3,671
71 Sonat Inc. .................................. 3,656
59 Consolidated National Gas Co ................ 3,260
101 Pacific Enterprises ......................... 3,068
90 GPU Inc ..................................... 3,026
46 Columbia Gas System Inc ..................... 2,927
76 Union Electric Co............................ 2,925
95 Public Service Entreprise ................... 2,588
111 Ohio Edison Co .............................. 2,525
210 +Niagara Mohawk Power Corp.................... 2,074
42 Northern States Power........................ 1,927
67 ENSERCH Corp ................................ 1,541
82 Noram Energy Corp. .......................... 1,261
26 Nicor Inc. .................................. 929
26 Oneok Inc. .................................. 780
6 Eastern Enterprises ......................... 212
--------
118,399
--------
Total Common Stocks
(Cost $1,408,895)........................ 1,517,449
---------
Unit Investment Trust (2.8%)
(Cost $44,815)
600 Standard & Poor's
Depositary Receipt ...................... 44,362
--------
CONVERTIBLE PREFERRED
STOCK (0.0%)
(Cost $327)
Financial (0.0%)
5 Aetna Inc Class C 6.250% .................... 397
--------
Total Investments (99.4%)
(Cost $1,454,037)........................ 1,562,208
Other Assets in Excess
of Liabilities (0.6%).................... 8,924
--------
Total Net Assets (100.0%).................... $1,571,132
<FN>
=========
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Core Small-Cap Stock Fund
COMMON STOCKS (97.0%)
Basic Materials (4.8%)
213 Tuscarora Inc ............................... $5,831
112 Ameron International Inc .................... 5,782
114 Cleveland Cliffs Inc......................... 5,173
807 +Amax Gold Inc ............................... 5,145
157 Florida Rock Industries Inc.................. 5,142
136 Carpenter Technology Corp ................... 4,981
222 Lawter International Inc .................... 4,962
139 Mosinee Paper Corp .......................... 4,934
179 Fab Industries Inc .......................... 4,922
150 Cambrex Corp ................................ 4,913
149 Liqui-Box Corp .............................. 4,842
318 Coeur D'Alene Mines Corp..................... 4,810
291 Quaker Chemical Corp ........................ 4,765
145 Dexter Corp ................................. 4,622
244 Wausau Paper Mills Co ....................... 4,514
765 +Hecla Mining Co ............................. 4,207
109 +Getchell Gold Corp .......................... 4,183
302 Calgon Carbon Corp .......................... 3,699
61 Fuller H B Co ............................... 2,867
151 Lilly Industries Inc Cl A ................... 2,775
57 Penwest Ltd ................................. 998
--------
94,067
--------
Capital Goods (12.8%)
109 NACCO Industries Inc Cl A ................... 5,831
166 McClatchy Newspapers Inc Cl A ............... 5,810
139 Butler Manufacturing Co ..................... 5,630
274 Penn Engineering &
Manufacturing Corp....................... 5,617
133 Kimball International Inc Cl B............... 5,503
372 Daniel Industries Inc........................ 5,487
87 +SEACOR Holdings Inc ......................... 5,481
133 Manitowoc Inc ............................... 5,387
132 Tredegar Industries Inc ..................... 5,297
352 Oil-Dri Corp America ........................ 5,280
161 Kysor Industrial Corp ....................... 5,253
212 Amcast Industrial Corp ...................... 5,247
210 Brady W H Co ................................ 5,171
127 IDEX Corp ................................... 5,064
107 Fisher Scientific International Inc.......... 5,042
84 Barnes Group Inc ............................ 5,040
94 Mine Safety Appliances Co ................... 5,006
227 +Osmonics Inc ................................ 4,994
202 Baldor Electric Co .......................... 4,974
111 Thiokol Corp ................................ 4,967
117 American Filtrona Corp ...................... 4,958
214 Albany International Corp Cl A .............. 4,949
177 +Bearings Inc................................. 4,934
81 Carlisle Cos Inc ............................ 4,900
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
76 +SPS Technologies Inc ........................ $4,883
237 Varlen Corp ................................. 4,873
145 Donaldson Co................................. 4,858
100 +Littelfuse Inc. ............................. 4,850
149 +Avatar Holdings Inc ......................... 4,768
91 Teleflex Inc ................................ 4,743
185 International Aluminum Corp ................. 4,718
205 Learonal Inc ................................ 4,715
211 +Ladd Furniture Inc .......................... 4,680
155 Commercial Metals Co......................... 4,669
151 Standex International Corp .................. 4,662
631 +Insituform Technologies Inc Cl A ............ 4,654
145 +USA Waste Services Inc ...................... 4,622
188 Graco Inc ................................... 4,606
145 Stone & Webster Inc ......................... 4,604
204 +Lydall Inc .................................. 4,590
492 +Thermo Fibertek Inc ......................... 4,582
262 Raymond Corp ................................ 4,552
316 Woodhead Industries Inc ..................... 4,345
679 UNR Industries Inc .......................... 4,074
101 +Sequa Corp Cl A ............................. 3,964
109 +Dionex Corp ................................. 3,815
302 +Nashua Corp. ................................ 3,624
114 +Syratech Corp ............................... 3,591
326 Sealright Co ................................ 3,423
156 Granite Construction Inc .................... 2,964
100 Grief Bros Corp Cl A ........................ 2,850
167 +Cuno Inc .................................... 2,484
63 AAR Corp .................................... 1,905
19 Miller (Herman) Inc ......................... 1,076
35 Harmon Industries ........................... 652
22 +Devon Group Inc ............................. 605
42 +Durakon Industries Inc. ..................... 536
15 Gleason Corp ................................ 497
34 +Intermagnetics General Corp ................. 408
--------
251,264
--------
Consumer Cyclical (14.3%)
1,371 Ekco Group Inc .............................. 5,998
152 SPX Corp .................................... 5,890
124 Pultizer Publishing Co....................... 5,750
88 +Culbro Corp ................................. 5,709
417 +Johnson Worldwide
Association Inc Cl A..................... 5,525
284 Sturm Ruger & Co Inc ........................ 5,502
222 Donnelly Corp ............................... 5,439
96 Houghton Mifflin Co ......................... 5,436
386 ADVO Inc .................................... 5,404
214 American Business Products................... 5,377
195 K2 Inc ...................................... 5,362
210 Standard Products Co ........................ 5,355
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
527 Graphic Industries .......................... $5,336
449 +Lifetime Hoan Corp .......................... 5,276
120 Hughes Supply Inc ........................... 5,175
157 Wiley (John) & Sons Inc Cl A ................ 5,063
160 Wynns International Inc ..................... 5,060
505 Crown Crafts Inc ............................ 5,050
154 +Gelman Sciences Inc ......................... 5,005
202 Bassett Furniture Industries Inc............. 4,949
82 NCH Corp .................................... 4,940
172 Starrett LS Co Cl A ......................... 4,881
830 +American Media Inc........................... 4,876
164 Lawson Products Inc ......................... 4,856
177 Unitog Co.................................... 4,823
181 Guilford Mills Inc .......................... 4,819
315 +National Education Corp ..................... 4,804
565 +Handleman Co ................................ 4,803
253 Caseys General Stores Inc ................... 4,744
274 Wackenhut Corp Cl A ......................... 4,726
262 Russ Berrie & Co Inc ........................ 4,716
308 Osh Kosh B'Gosh Inc Cl A .................... 4,697
50 Dart Group Corp Cl A ........................ 4,650
697 +Uno Restaurant Corp ......................... 4,618
116 Apogee Enterprises Inc ...................... 4,611
297 Genovese Drugs Stores ....................... 4,603
87 Meredith Corp ............................... 4,589
318 Falcon Products Inc ......................... 4,532
169 Stanhome Inc ................................ 4,479
231 Delechamps Inc .............................. 4,476
243 Brown Group Inc ............................. 4,465
393 La-Z-Boy Chair Co ........................... 4,454
127 Plenum Publishing Corp ...................... 4,445
205 Smart & Final Inc ........................... 4,433
277 Strawbridge & Clothier ...................... 4,397
86 WD-40 Co .................................... 4,387
227 +Lands' End Inc .............................. 4,346
198 True North Communications Inc ............... 4,331
425 Stride Rite Corp ............................ 4,250
274 Cadmus Communications Corp .................. 4,247
49 United Television Inc ....................... 4,220
175 Waverly Inc ................................. 4,156
227 Walbro Corp. ................................ 4,143
211 Alico Inc ................................... 3,956
385 +Playboy Enterprises Inc Cl B ................ 3,754
207 Commercial Intertech Corp ................... 2,820
320 +GRC International Inc ....................... 2,600
127 +Pre-Paid Legal Services Inc ................. 2,318
530 +Topps Co Inc ................................ 2,120
84 Shopko Stores Inc ........................... 1,260
70 +AnnTaylor Stores Corp ....................... 1,225
70 +American Classic Voyages Co.................. 919
28 Thomas Nelson Inc............................ 417
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
20 +Galey & Lord Inc ............................ $297
15 Outboard Marine Inc. ........................ 247
--------
280,111
--------
Consumer Staples (6.7%)
119 Interstate Bakeries Corp .................... 5,846
172 Harland Co. ................................. 5,676
244 Nash Finch Corp ............................. 5,185
326 Rykoff-Sexton Inc ........................... 5,175
351 Dames & Moore Inc ........................... 5,133
224 Church & Dwight Co........................... 5,124
129 Tootsie Roll Industries...................... 5,112
365 Ruddick Corp ................................ 5,110
104 Longs Drug Stores ........................... 5,109
281 International Multifoods Corp ............... 5,093
261 Blair Corp .................................. 5,024
286 Arbor Drugs Inc ............................. 4,969
267 ABM Industries Inc .......................... 4,940
350 +Foodbrands America Inc ...................... 4,813
127 National Presto Industries .................. 4,747
181 +Carmike Cinemas Inc. Cl A ................... 4,593
278 Goodmark Foods Inc .......................... 4,587
241 Coors (Adolph) Co Cl B ...................... 4,579
30 Farmer Brothers Co .......................... 4,560
212 Flowers Industries Inc ...................... 4,558
227 +International Dairy Queen Inc
Cl A..................................... 4,540
348 WLR Foods Inc ............................... 4,307
216 Luby's Cafeterias Inc. ...................... 4,293
359 A.T. Cross Co Cl A .......................... 4,173
217 Angelica Corp ............................... 4,150
591 +Shoney's Inc ................................ 4,137
255 +AMC Entertainment Inc ....................... 3,666
76 Rival Co..................................... 1,891
37 +Valassis Communications Inc. ................ 782
30 +Bone Care International Inc.................. 218
--------
132,090
--------
Energy (4.1%)
320 Landauer Inc ................................ 5,562
265 Wiser Oil Co ................................ 5,234
188 Ashland Coal Inc ............................ 5,217
100 Helmerich & Payne Inc........................ 5,213
143 Vintage Petroleum Inc ....................... 4,933
343 Berry Petroleum Cl A ........................ 4,931
137 Apache Corp ................................. 4,846
519 +Allied Waste Industries Inc ................. 4,801
290 Getty Petroleum Corp ........................ 4,712
296 +Tuboscope Vetco International
Corp..................................... 4,588
275 +HS Resources Inc ............................ 4,537
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
105 +Barrett Resources Corp ...................... $4,476
293 Quaker State Corp ........................... 4,139
152 Holly Corp .................................. 4,066
212 +Plains Resources Inc ........................ 3,313
129 +Belden & Blake Corp ......................... 3,290
200 +Pool Energy Services Co ..................... 3,075
58 +Newpark Resources Inc ....................... 2,161
140 +Hondo Oil & Gas Co .......................... 1,523
69 +Box Energy Corp Cl B......................... 630
--------
81,247
--------
Financial Services (31.0%)
427 BRE Properties Inc .......................... 10,568
179 Home Beneficial Corp ........................ 6,780
168 Financial Trust Corp ........................ 6,699
100 Citizens Bancorp Maryland ................... 6,200
119 Liberty Bancorp Inc.......................... 5,920
95 Forest City Enterprises Inc Cl A ............ 5,748
319 State Auto Financial Corp ................... 5,742
385 Burham Pacific Properties Inc ............... 5,727
175 Wesbanco Inc ................................ 5,688
215 American Heritage Life Inc................... 5,644
139 Horace Mann Educator Corp.................... 5,612
198 Brenton Banks Inc ........................... 5,470
254 F & M National Corp ......................... 5,429
130 CNB Bancshares Inc .......................... 5,427
183 First Michigan Bank Corp .................... 5,421
146 One Valley Bancorp Inc ...................... 5,420
166 First Midwest Bancorp Inc ................... 5,416
155 Susquehanna Bancshares Inc................... 5,367
164 +UICI ........................................ 5,330
242 MGI Properties .............................. 5,324
430 First Union Real Estate Corp................. 5,321
335 Commercial Net Lease Realty
Inc...................................... 5,318
128 Banknorth Group Inc ......................... 5,312
142 Student Loan Corp ........................... 5,289
170 Deposit Guaranty Corp ....................... 5,270
132 Protective Life Corp ........................ 5,264
91 Westamerica Bancorp.......................... 5,255
212 Irwin Financial Corp ........................ 5,247
193 Federal Realty Investment Trust.............. 5,235
135 New York Bancorp Inc ........................ 5,231
309 South West Property Trust ................... 5,214
137 Fort Wayne National Corp .................... 5,206
153 Provident Bancorp ........................... 5,202
109 Pennsylvania Real Estate
Investment............................... 5,192
135 Suffolk Bancorp ............................. 5,164
136 National Health Investors Inc. .............. 5,151
65 +Alexander's Inc ............................. 5,143
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
154 RLI Corp .................................... $5,140
293 Washington Real Estate
Investment Trust......................... 5,127
155 United Bankshares Inc ....................... 5,115
405 ALFA Corp ................................... 5,113
239 Trustco Bank Corp ........................... 5,109
276 LTC Properties Inc .......................... 5,106
302 Kranzco Realty Trust......................... 5,096
152 Omega Healthcare Investors Inc .............. 5,054
439 IRT Property Co ............................. 5,049
246 Universal Health Realty Income .............. 5,043
155 First Financial Bancorp ..................... 5,037
207 Nationwide Health Properties
Inc...................................... 5,020
207 Wellsford Residential Property
Trust.................................... 5,020
210 American Health Properties .................. 5,014
135 First Commercial Corp ....................... 5,012
142 United Fire & Casualty Co.................... 5,005
118 US Bancorp Inc............................... 5,000
180 Bancorp South Inc ........................... 4,995
141 Whitney Holding Corp ........................ 4,988
505 Berkshire Realty Co ......................... 4,987
94 Park National Corp .......................... 4,982
147 +MAIC Holdings Inc ........................... 4,980
223 SEI Corp .................................... 4,962
181 Zenith National Insurance Corp............... 4,955
125 BT Financial Corp ........................... 4,953
157 Citizens Banking Corp........................ 4,945
384 CRIIMI MAE Inc. ............................. 4,944
216 Crawford & Co ............................... 4,941
129 National Communications
Bancorp.................................. 4,934
511 Gainsco Inc ................................. 4,918
168 National City Bancshares Inc ................ 4,914
125 Liberty Corp ................................ 4,906
381 Taubman Centers Inc ......................... 4,905
185 First Merchants Corp ........................ 4,903
272 NYMagic Inc ................................. 4,896
100 Mark Twain Bancshares Inc ................... 4,875
134 Capitol American Financial Corp ............. 4,874
177 Community First Bankshares .................. 4,868
140 Firstbank Co ................................ 4,865
119 American General Corp ....................... 4,864
128 Selective Insurance Group ................... 4,864
123 United Carolina Bancshares .................. 4,859
114 Associated Banc Corp ........................ 4,845
119 UMB Financial Corp .......................... 4,805
196 Hubco Inc ................................... 4,802
46 Zions Bancorp................................ 4,784
196 Health Care Real Estate
Investment Trust......................... 4,778
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
154 Gallagher (Arthur J.) & Co .................. $4,774
180 Poe & Brown Inc ............................. 4,770
155 Argonaut Group Inc .......................... 4,766
125 JSB Financial Inc ........................... 4,750
151 Albank Financial Corp ....................... 4,738
163 Acordia Inc ................................. 4,727
203 Allied Capital Commercial Corp .............. 4,720
93 Berkley W R Corp ............................ 4,720
250 American Federal Bank ....................... 4,719
356 Hilb, Rogal & Hamilton Co ................... 4,717
52 +Markel Corp ................................. 4,680
63 First Union Corp ............................ 4,662
358 Western Investment Real Estate
Trust.................................... 4,654
177 First Western Bancorp Inc ................... 4,646
216 Fulton Financial Corp ....................... 4,644
181 Valley National Bancorp ..................... 4,638
189 First Source Corp ........................... 4,630
248 First Commonwealth Financial
Corp..................................... 4,619
113 Farmers Capital Bank Corp ................... 4,605
178 McGrath Rent Corp ........................... 4,584
183 Keystone Financial Inc ...................... 4,575
269 Ramco-Gershenson Properties
Trust.................................... 4,539
290 Avemco Corp ................................. 4,531
172 National Penn Bancshares Inc ................ 4,494
145 S&T Bancorp Inc ............................. 4,459
137 Corus Bankshares Inc ........................ 4,418
257 Mid Am Inc .................................. 4,401
150 Bank of Granite Corp ........................ 4,350
92 Trenwick Group Inc .......................... 4,255
473 Cash America International Inc. ............. 4,021
112 MAF Bancorp ................................. 3,892
76 U.S. Bancorp ................................ 3,415
189 Bradley Real Estate Inc ..................... 3,402
89 Anchor Bancorp Inc .......................... 3,182
71 Value Line Inc .............................. 3,142
88 Southtrust Corp ............................. 3,069
93 Fremont General Corp ........................ 2,883
55 Homeland Bankshares Corp .................... 2,282
78 HCC Insurance Holdings Inc .................. 1,872
78 FNB Corp..................................... 1,794
113 Trust Company of New Jersey ................. 1,582
40 UST Corp .................................... 825
--------
610,243
--------
Health Care (2.9%)
349 +Tecnol Medical Products Inc. ................ 5,279
130 Seafield Capital Corp ....................... 5,037
102 +Synetic Inc ................................. 4,947
175 West Inc .................................... 4,944
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
466 +Medco Research Inc .......................... $4,893
305 +Advanced Magnetics Inc ...................... 4,728
134 +Lunar Corp .................................. 4,690
119 Chemed Corp ................................. 4,343
369 +Epitope Inc ................................. 4,243
130 Diagnostic Products Corp..................... 3,364
274 Kinetic Concepts Inc ........................ 3,356
1,710 +Foxmeyer Health Corp ........................ 2,993
71 +Vivra Inc ................................... 1,961
64 +Barr Laboratories Inc ....................... 1,624
25 +American Homepatient Inc .................... 681
100 + Faulding Inc ................................ 612
--------
57,695
--------
Technology (4.3%)
241 +Boole & Babbage Inc ......................... 6,025
123 +BRC Holdings Inc ............................ 5,504
233 Cubic Corp .................................. 5,388
164 +Keane Inc ................................... 5,207
119 CTS Corp .................................... 5,087
114 Fluke Corp .................................. 5,087
381 Kaman Corp Cl A.............................. 4,953
171 Analysts International Corp ................. 4,831
225 +Bell Industries Inc ......................... 4,809
183 +Esterline Technologies Corp ................. 4,781
227 MTS Systems Corp ............................ 4,540
247 X-Rite Inc .................................. 4,075
234 +Trident Microsystems Inc .................... 3,949
162 +DH Technology Inc ........................... 3,888
135 +Kent Electronics Corp ....................... 3,476
71 +Dynatech Corp ............................... 3,142
81 Logicon Inc ................................. 2,957
163 +Tekelec ..................................... 2,567
53 +Kronos Inc. ................................. 1,696
88 +Integrated Process Equipment
Corp..................................... 1,584
22 +Silicon Graphics Inc......................... 561
--------
84,107
--------
Transportation (1.9%)
276 International Shipholding Corp .............. 5,106
402 Rollins Truck Leasing Corp .................. 5,075
346 +Yellow Corp.................................. 4,974
192 +Swift Transportation Co Inc ................. 4,512
51 Florida East Coast Industries ............... 4,456
493 Frozen Foods Express
Industries Inc........................... 4,437
174 Expeditors International of
Washington Inc........................... 4,002
199 Hunt J B Transportation
Services Inc............................. 2,786
109 Harper Group Inc ............................ 2,589
--------
37,937
--------
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
Utilities (14.2%)
211 IWC Resources Corp .......................... $6,567
188 Oneok Inc. .................................. 5,640
132 California Water Services Co ................ 5,544
116 +Tejas Gas Corp............................... 5,525
116 SJW Corp .................................... 5,438
193 Black Hills Corp ............................ 5,428
173 Energen Corp ................................ 5,233
185 Aquarion Co ................................. 5,157
302 Cascade Natural Gas Corp .................... 5,134
151 Laclede Gas Co .............................. 5,090
129 KN Energy Inc ............................... 5,063
197 Connecticut Natural Gas Corp ................ 5,023
210 Atmos Energy Corp ........................... 5,014
243 Washington Energy Co ........................ 5,012
183 TNP Enterprise Inc .......................... 5,010
447 +Citizens Utilities Co Cl B .................. 4,976
249 Philadelphia Suburban Corp .................. 4,949
203 South Jersey Industries Inc.................. 4,948
156 E'Town Corp ................................. 4,933
214 MDU Resources Group Inc ..................... 4,922
320 St Joseph Light & Power Co................... 4,920
137 Wicor Inc ................................... 4,915
282 Eastern Utilities Association................ 4,900
249 Public Service Co of New
Mexico................................... 4,867
540 +TPC Corp .................................... 4,860
199 Indiana Energy Inc .......................... 4,851
228 Connecticut Energy Corp ..................... 4,845
258 Empire District Electric Co.................. 4,838
202 Green Mountain Power Corp.................... 4,823
307 United Water Resources Inc .................. 4,797
213 Pennsylvania Enterprises Inc ................ 4,782
152 Central Hudson Gas & Electric
Corp..................................... 4,769
163 New Jersey Resources Corp ................... 4,768
168 Bay State Gas Co ............................ 4,746
246 Western Gas Resources Inc ................... 4,735
137 Northwestern Public Service Co............... 4,692
402 Central Maine Power Co. ..................... 4,673
218 Yankee Energy System Inc..................... 4,660
127 Cilcorp Inc ................................. 4,651
134 Sigcorp Inc ................................. 4,640
207 UGI Corp .................................... 4,632
155 IES Industries Inc .......................... 4,631
129 Orange & Rockland Utilities Inc.............. 4,628
198 Piedmont Natural Gas Inc .................... 4,628
204 United Cities Gas Co......................... 4,590
161 WPS Resources Corp .......................... 4,589
248 Public Service Co of North
Carolina................................. 4,544
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Core Small-Cap Stock Fund (continued)
194 Commonwealth Energy System .................. $4,535
157 North Carolina Natural Gas Corp ............. 4,533
222 Madison Gas & Electric Co.................... 4,495
185 Northwest Natural Gas Co .................... 4,440
203 Southern California Water Co ................ 4,415
137 Otter Tail Power Co ......................... 4,401
203 Colonial Gas Co ............................. 4,314
121 Eastern Enterprises Inc...................... 4,280
132 United Illuminating Co....................... 4,141
299 Central Vermont Public Services
Corp..................................... 3,588
137 Consumers Water Co .......................... 2,466
74 +Southern Union Co............................ 1,628
--------
279,816
--------
Total Investments (97.0%)
(Cost $1,707,952)........................ 1,908,577
Other Assets in Excess
of Liabilities (3.0%).................... 58,814
--------
Total Net Assets (100.0%)................... $1,967,391
==========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund
COMMON STOCKS (75.2%)
Basic Materials (3.3%)
59 IMC Global Inc .............................. $2,308
34 Vulcan Materials Co ......................... 2,070
24 Dow Chemical Co ............................. 1,881
37 Consolidated Papers Inc ..................... 1,818
57 Barrick Gold Corp ........................... 1,632
130 Ethyl Corp .................................. 1,251
48 Allegheny Teledyne Inc ...................... 1,104
59 Wausau Paper Mills Co ....................... 1,092
27 Bowater Inc ................................. 1,016
42 Placer Dome Inc ADR ......................... 914
70 Lawter International Inc .................... 884
35 Schulman Inc ................................ 858
22 Olin Corp .................................. 828
11 Pioneer Hi Bred International ............... 770
11 Phelps Dodge Corp ........................... 742
11 Aluminum Co. of America ..................... 701
101 Battle Mountain Gold Co ..................... 694
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
54 Calgon Carbon Corp .......................... $661
12 Ameron International Inc ................... 619
12 Nucor Corp .................................. 612
19 Dexter Corp ................................. 606
10 Betzdearborn Inc. ........................... 585
30 Crompton & Knowles Corp ..................... 577
10 Reynolds Metals Co .......................... 564
17 Florida Rock Industries Inc.................. 557
12 Newmont Mining Corp ......................... 537
17 Chesapeake Corp ............................. 533
12 Champion International Corp. ................ 519
25 Stepan Chemical Co .......................... 509
14 +Tremont Corp ................................ 506
16 USX-U.S. Steel Group ........................ 502
18 Fab Industries Inc .......................... 495
11 International Flavors &
Fragrances Inc ........................... 495
29 RPM Inc .................................... 493
12 Minerals Technologies Inc.................... 492
17 Ferro Corp .................................. 482
10 Petrolite Corp .............................. 480
13 Carpenter Technologies Corp ................. 476
14 Cambrex Corp ................................ 458
10 Cleveland-Cliffs Inc......................... 454
25 Glatefelter (PH) Co ......................... 450
80 +Hecla Mining Co ............................. 440
16 Tuscarora Inc ............................... 438
14 Puerto Rican Chemical Inc ................... 437
13 Liqui-Box Corp .............................. 422
27 Coeur D'Alene Mines Corp ................... 408
64 +Amax Gold Inc ............................... 408
21 Engelhard Corp .............................. 402
12 James River Corp of Virginia................. 398
11 Mosinee Paper Corp .......................... 390
12 South Down Inc .............................. 374
15 Cyprus Amax Minerals Co. .................... 351
11 Inco Ltd .................................... 351
12 Westvaco Corp ............................... 345
24 Homestake Mining Co ......................... 342
12 MacDermid Inc ............................... 330
12 Sonoco Products Co .......................... 311
15 Worthington Industries Inc................... 272
37 Echo Bay Mines Ltd .......................... 245
10 +ChemFirst Inc ............................... 231
25 +Bethlehem Steel Corp. ....................... 225
229 +Sunshine Mining & Refining .................. 215
12 Oregon Steel Mills .......................... 201
10 Inland Steel Industries Inc ................. 200
10 Lilly Industries Inc Cl A ................... 184
24 +Armco Inc ................................... 99
3 Mississippi Chemical Corp ................... 80
--------
41,324
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Capital Goods (7.8%)
320 U.S. Robotics Corp .......................... $23,040
525 Raymond Corp ................................ 9,122
326 +Vallen Corp ................................. 5,420
327 Tejon Ranch Co. ............................. 4,701
40 Boeing Co.................................... 4,255
28 Minnesota Mining &
Manufacturing Co ......................... 2,320
33 McDonnell Douglas Corp ...................... 2,112
42 Hubbell Inc Cl B ............................ 1,816
46 WMX Technologies Inc. ....................... 1,501
70 Westinghouse Electric Corp .................. 1,391
83 Sensormatic Electronics Corp ................ 1,390
12 Emerson Electric Co. ........................ 1,161
32 Wallace Computer Services Inc. .............. 1,104
19 Miller (Herman) Inc ......................... 1,076
22 Corning Inc ................................. 1,017
30 +Analog Devices Inc. ......................... 1,016
30 +Atmel Corp .................................. 994
30 +ADC Telecommunications Inc .................. 934
20 Molex Inc ................................... 782
12 Fluor Corp .................................. 753
20 Trinity Industries Inc ...................... 750
11 Honeywell Inc. .............................. 723
14 Alco Standard Corp .......................... 723
13 Crown Cork & Seal Inc ....................... 707
10 Eaton Corp .................................. 697
26 Amcast Industrial Corp ...................... 643
27 +Jacobs Engineering Group Inc ................ 638
10 Nordson Corp ................................ 637
19 Standard Register Co ........................ 617
19 Pentair Inc ................................. 613
15 Deere & Co .................................. 609
10 Carlisle Cos Inc ............................ 605
18 Donaldson Co Inc ............................ 603
27 Premark International Inc.................... 601
13 Thiokol Corp ................................ 582
11 Teleflex Inc ................................ 573
14 Tredegar Industrials Inc .................... 562
17 HON Industries .............................. 561
16 McClatchy Newspapers Inc Cl A ............... 560
27 Penn Engineering &
Manufacturing Corp ....................... 553
10 NACCO Industries Inc Cl A ................... 535
24 Ametek Inc .................................. 534
10 Tyco International Ltd ...................... 529
11 Fisher Scientific International ............. 518
13 IDEX Corp ................................... 518
21 Baldor Electric Co .......................... 517
23 +Osmonics Inc ................................ 506
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 Dover Corp .................................. $503
12 Butler Manufacturing Co ..................... 486
10 +Littelfuse Inc. ............................. 485
10 Kaydon Corp ................................. 471
19 Brady W H Co ................................ 468
14 Gleason Corp ................................ 464
17 Duriron Co Inc .............................. 461
20 Learonal Inc ................................ 460
18 International Aluminum Corp ................. 459
16 +Bearings Inc ................................ 446
14 Stone & Webster Inc ......................... 445
46 +Thermo Fibertek Inc ......................... 428
29 Daniel Industries Inc........................ 428
11 Parker Hannifin Corp ........................ 426
14 Commercial Metals Co......................... 422
28 Oil-Dri Corp America ........................ 420
22 Armor All Products Corp ..................... 418
23 Gencorp Inc ................................. 417
13 +Avatar Holdings Inc ......................... 416
56 +Insituform Technologies Cl A ................ 413
34 +Nashua Corp. ................................ 408
18 +Lydall Inc .................................. 405
14 Grief Brothers Corp Cl A .................... 399
10 +Sequa Corp Cl A ............................. 393
20 Granite Construction Inc .................... 380
33 Laidlaw Inc Cl B ........................... 380
18 Varlen Corp ................................. 370
16 Goulds Pumps Inc ............................ 367
18 Keystone International Inc .................. 362
11 Kysor Industrial Corp ....................... 359
14 Graco Inc ................................... 343
14 +Rohr Inc .................................... 317
13 Watts Industries Inc Cl A ................... 310
10 Standex International Corp .................. 309
11 Pall Corp ................................... 281
12 Albany International Corp Cl A .............. 278
11 Robbins & Myers Inc. ........................ 275
45 UNR Industries Inc .......................... 270
18 +Cuno Inc .................................... 268
17 +Ladd Furniture Inc .......................... 249
15 Brush Wellman Inc. .......................... 246
10 McDermott International Inc ................. 166
28 +Air & Water Technology Corp.................. 161
11 +MagneTek Inc ................................ 142
235 +Radius Inc .................................. 125
63 +Rollins Environmental Services
Inc...................................... 110
10 Sealright Co ................................ 105
11 +Navistar International Corp ................. 100
--------
98,933
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Communication Services (2.7%)
460 Sprint Corp ................................. $18,343
216 GTE Corp .................................... 9,828
44 US West Inc ................................. 1,419
39 Century Telephone Enterprises
Inc...................................... 1,204
35 ALLTEL Corp ................................. 1,098
14 SBC Communications .......................... 724
31 Aliant Communications Co..................... 527
17 Frontier Corp ............................... 385
--------
33,528
--------
Consumer Cyclical (10.6%)
821 Wackenhut Corp .............................. 14,162
725 Caseys General Stores Inc ................... 13,594
124 Eastman Kodak Co ............................ 9,951
527 Russ Berrie & Co ............................ 9,486
224 True North Communications Inc................ 4,900
668 +Uno Restaurant Corp ......................... 4,425
318 Commercial Intertech Corp ................... 4,333
222 Walbro Corp. ................................ 4,051
349 Stride Rite Corp ............................ 3,490
54 Omnicom Group Inc ........................... 2,470
37 May Department Stores Co .................... 1,730
40 PHH Corp .................................... 1,720
47 +Fred Meyer Inc .............................. 1,668
33 Penney (J.C.) Co Inc. ....................... 1,609
28 +Nine West Group Inc ......................... 1,298
40 Gap Inc. .................................... 1,205
30 +Fruit of the Loom Inc ....................... 1,136
30 +Jones Apparel Group ......................... 1,121
40 Mattel Inc .................................. 1,110
40 +Lands' End Inc .............................. 1,060
27 Dayton Hudson Corp .......................... 1,060
56 The Limited Inc ............................. 1,029
22 Lancaster Colony Corp ....................... 1,012
40 Dun & Bradstreet Corp ....................... 950
20 TJX Cos Inc ................................. 947
33 Service Corp International .................. 924
36 +HSN Inc ..................................... 855
11 Gannet Inc .................................. 824
95 +Handleman Co ................................ 807
21 Tiffany & Co ................................ 769
20 Masco Corp .................................. 720
39 Wellman Inc ................................. 668
43 Genovese Drugs Stores ....................... 665
60 +Burlington Industries Inc ................... 660
17 SPX Corp .................................... 659
19 Hannaford Brothers Co ....................... 646
24 Stanhome Inc ................................ 636
11 Houghton Mifflin Co ......................... 623
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 NCH Corp .................................... $602
11 Meredith Corp ............................... 580
13 Hughes Supply Inc ........................... 561
16 Belo (AH) Corp .............................. 558
21 +CSS Industries Inc .......................... 546
123 Ekco Group Inc .............................. 538
35 +National Education Corp ..................... 534
12 +Volt Information Sciences Inc ............... 525
16 Wiley (John) & Sons ......................... 516
21 Donnelly Corp ............................... 514
48 +Best Buy Co Inc ............................. 510
19 Modine Manufacturing ........................ 508
29 +AnnTaylor Stores Corp ....................... 507
26 Sturm Ruger & Co Inc ........................ 504
54 Blessings Corp .............................. 503
50 Crown Crafts Inc ............................ 500
35 Falcon Products Inc ......................... 499
48 +K mart Stores ............................... 498
10 TRW Inc. .................................... 495
11 Genuine Parts Co ............................ 491
37 +Johnson Worldwide Association
Inc Cl A ................................. 490
35 ADVO Inc .................................... 490
16 American List Corp. ......................... 486
26 Sotheby's Holdings Inc Cl A ................. 481
47 Graphic Industries Inc....................... 476
16 La-Z Boy Inc ................................ 472
10 Whirlpool Corp .............................. 466
38 Fingerhut Cos Inc. .......................... 465
10 Harcourt General Corp. ...................... 461
10 McGraw-Hill Cos Inc ......................... 461
39 +Lifetime Hoan Corp .......................... 458
29 Osh Kosh B'Gosh Cl A ........................ 442
18 Bassett Furniture Industries Inc............. 441
24 Brown Group Inc ............................. 441
10 Tandy Co .................................... 440
16 Tennant Co .................................. 440
17 +Christiana Cos............................... 438
20 Lawson Products Inc ......................... 437
16 Unitog Co ................................... 436
74 +American Media Inc........................... 435
31 +Information Resources Inc ................... 434
11 Hasbro Inc .................................. 428
18 Waverly Inc ................................. 427
14 Circuit City Store Inc ...................... 422
12 Plenum Publishing Corp ...................... 420
67 PT Tri Polyta Indonesia ADR ................. 419
11 New York Times Co Cl A ...................... 418
49 +Syms Corp ................................... 416
21 Delechamps Inc .............................. 407
10 Apogee Enterprises Inc ...................... 398
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
15 +MacFrugals Bargains Closeouts ............... $392
20 Alico Inc ................................... 375
11 Dow Jones & Co Inc .......................... 373
23 Strawbridge & Clothier ...................... 365
91 +Topps Co Inc ................................ 364
11 +Gelman Sciences Inc ......................... 358
18 Cooper Tire & Rubber ........................ 356
18 Maytag Corp ................................. 356
36 +Playboy Enterprises Inc Cl B ................ 351
11 Echlin Inc. ................................. 348
13 Guilford Mills Inc .......................... 346
12 Starrett (L.S) Co Cl A ...................... 341
10 Cognizant Corp .............................. 330
13 American Business Products .................. 327
14 Lee Enterprises Inc.......................... 326
22 Duty Free International Inc ................ 319
75 +Service Merchandise Inc ..................... 319
10 Dillard Department Stores ................... 309
12 Standard Products Co ........................ 306
10 Black & Decker Corp ......................... 301
12 Arvin Industries Inc ........................ 297
11 Stanley Works ............................... 297
10 American Greetings Cl A ..................... 284
13 Smart & Final Inc ........................... 281
31 +GRC International Inc ....................... 252
11 +Woolworth Corp .............................. 241
11 +Gibson Greetings Inc ........................ 216
13 Cadmus Communications Corp .................. 202
24 +Intelligent Electronics Inc. ................ 192
18 Hancock Fabrics Inc ......................... 187
10 CPI Corp .................................... 168
10 Viad Corp ................................... 165
13 Ennis Business Forms ........................ 146
38 CML Group Inc ............................... 128
3 +Payless Shoesource Inc ...................... 113
3 +ACNielsen Corp .............................. 45
--------
132,883
--------
Consumer Staples (4.9%)
334 WLR Foods Inc ............................... 4,133
96 =Revco D.S. Inc .............................. 3,552
40 Cardinal Health Inc ......................... 2,330
93 IBP Inc ..................................... 2,255
11 Unilever NV ADR ............................. 1,928
86 Archer Daniels Midland Co ................... 1,892
27 Kellogg Co .................................. 1,772
44 Anheuser- Busch Cos Inc. .................... 1,760
51 Tyson Foods Inc Cl A ........................ 1,747
50 +Viacom Inc Cl B ............................. 1,744
45 Albertsons Inc .............................. 1,603
16 Kimberly-Clark Corp ......................... 1,524
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
28 Conagra Inc ................................ $1,393
37 Heinz H J Co ................................ 1,332
35 UST Inc. .................................... 1,133
12 Colgate- Palmolive Co ....................... 1,107
32 Sysco Corp .................................. 1,044
33 Bergen Brunswig Corp ........................ 941
103 +Perrigo Co .................................. 940
34 Kelly Services Inc Cl A ..................... 918
42 Flowers Industries Inc ...................... 903
64 Ruddick Corp ................................ 896
23 Quaker Oats Co .............................. 877
11 CPC International Inc. ...................... 852
13 General Mills Inc ........................... 824
11 Ralston Purina Co ........................... 807
43 International Multifoods Corp ............... 779
19 Tambrands Inc. .............................. 777
33 Church & Dwight Co Inc ...................... 755
13 Paychex Inc ................................. 669
21 TCA Cable TV Inc ............................ 633
11 Avon Products Inc ........................... 628
39 Carter Wallace Inc .......................... 609
18 Dean Foods Co................................ 580
29 +International Dairy Queen Inc
Cl A..................................... 580
12 +Kroger Co ................................... 558
12 McDonald's Corp. ............................ 543
15 Universal Foods Corp ........................ 529
12 Hershey Foods Corp .......................... 525
13 Rite Aid Corp. .............................. 517
13 Tootsie Roll Industries ..................... 515
27 Coors (Adolph) Co Cl B....................... 513
22 Banta Corp. ................................. 503
27 +Ruby Tuesday Inc ............................ 499
10 Longs Drug Stores Inc........................ 491
13 National Presto Industries .................. 486
26 ABM Industries Inc .......................... 481
56 Bridgford Foods Corp ........................ 476
14 +Canandaigua Wine Co Cl B .................... 469
14 Harland Co. ................................. 462
11 +Chris Craft Industries Inc .................. 461
23 Luby's Cafeterias Inc. ...................... 457
11 American Stores Co .......................... 450
21 Nash Finch Corp ............................. 446
62 +Shoney's Inc ................................ 434
10 +CVS Corp .................................... 412
30 +Foodbrands America Inc ...................... 412
25 Goodmark Foods Inc .......................... 412
14 Dreyers Grand Ice Cream Inc ................. 406
10 +Ceridian Corp ............................... 405
14 First Brands Corp ........................... 397
17 Whitman Corp ................................ 389
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
20 Blair Corp .................................. $385
26 Dames & Moore Inc ........................... 380
21 Lance Inc ................................... 378
10 Giant Food Inc Cl A ......................... 345
10 Deluxe Corp ................................. 327
22 +AMC Entertainment Inc ....................... 316
32 +Buffets Inc ................................. 292
11 +Carmike Cinemas Inc. Cl A ................... 279
16 Arbor Drugs Inc ............................. 278
17 Savannah Foods & Industries ................. 230
14 Michael Foods Inc ........................... 179
10 Rykoff-Sexton Inc ........................... 159
10 Dial Corp ................................... 148
12 A.T. Cross Co Cl A .......................... 140
--------
62,701
--------
Energy (14.1%)
930 Exxon Corp .................................. 91,140
105 Royal Dutch Petroleum Co ADR ................ 17,929
79 Mobil Corp. ................................. 9,658
128 Chevron Corp ................................ 8,320
323 +Tuboscope Vetco International
Corp ..................................... 5,006
46 Amoco Corp .................................. 3,714
50 Anadarko Petroleum Co ....................... 3,237
141 +Global Marine Inc ........................... 2,908
43 +ENSCO International Inc ..................... 2,085
25 Tosco Corp .................................. 1,978
17 Schlumberger Ltd ............................ 1,698
52 +Weatherford Enterra Inc ..................... 1,560
35 Phillips Petroleum Co. ...................... 1,549
11 Atlantic Richfield .......................... 1,459
13 Texaco Inc .................................. 1,276
49 Occidental Petroleum Corp ................... 1,145
58 +Nabors Industries Inc ....................... 1,116
40 Georgia Gulf Corp ........................... 1,075
23 +Smith International Inc ..................... 1,032
20 +Triton Energy Ltd ........................... 970
18 +BJ Services Co............................... 918
24 Parker & Parsley Petroleum Co ............... 882
28 Dresser Industries Inc ...................... 868
36 USX-Marathon Group .......................... 859
24 Mapco Inc ................................... 816
53 Quaker State Corp ........................... 749
14 Helmerich & Payne Inc ....................... 730
23 Valero Energy Corp .......................... 658
11 Amerada Hess Corp. .......................... 637
64 Ranger Oil Ltd............................... 632
31 Wiser Oil Co ................................ 612
11 Murphy Oil Corp ............................. 612
10 Halliburton Co .............................. 602
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
17 Apache Corp ................................. $601
23 Landauer Inc ................................ 564
34 +HS Resources Inc ............................ 561
39 Berry Petroleum Cl A ........................ 561
11 Burlington Resources Inc .................... 554
17 Ultra Diamond Shamrock Corp.................. 538
32 Getty Petroleum Corp ........................ 520
14 Vintage Petroleum Inc ....................... 483
25 Sevenson Environmental
Services Inc.............................. 456
148 +Harken Energy Corp .......................... 444
47 +Allied Waste Industrials Inc ................ 435
16 Holly Corp .................................. 428
10 +Barrett Resources Corp ...................... 426
12 Baker Hughes Inc ............................ 414
16 Sun Co ...................................... 390
30 +Crown Central Petroleum Cl A ................ 371
12 Ashland Coal Inc ............................ 333
12 +Varco International Inc ..................... 278
27 +Parker Drilling Co .......................... 260
10 +Oryx Energy Co .............................. 248
15 +Pool Energy Services Co ..................... 231
13 +Plains Resources Inc ........................ 203
10 +Santa Fe Energy Resources ................... 139
11 +Hondo Oil & Gas Co .......................... 120
--------
177,988
--------
Financial (11.1%)
1,027 State Auto Financial Corp ................... 18,486
1,021 South West Property Trust ................... 17,229
220 Progressive Corp ............................ 14,823
230 Commerce Bancshares Inc ..................... 10,638
221 Universal Health Real Estate
Investment Trust......................... 4,530
336 Western Investment Real Estate
Investment Trust......................... 4,368
30 Summit Bancorp .............................. 1,312
40 Equifax Inc. ................................ 1,225
86 Hibernia Corp Cl A .......................... 1,139
40 Paine Webber Group Inc ...................... 1,125
21 Lincoln National Corp Ltd. .................. 1,102
20 Comerica Inc ................................ 1,047
30 Southtrust Corp ............................. 1,046
22 +Policy Management Systems
Corp Technologies......................... 1,015
30 Mercantile Bankshares Corp .................. 960
10 Loews Corp .................................. 942
11 Transatlantic Holdings Inc .................. 885
20 AFLAC Inc ................................... 855
67 First Union Real Estate Equity .............. 829
18 U.S. Bancorp ................................ 809
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
14 Chubb Corp .................................. $752
10 UNUM Corp ................................... 722
17 Bancorp Hawaii Inc. ......................... 714
33 City National Corp .......................... 714
18 Wilmington Trust Co ......................... 711
18 Capitol American Financial Corp ............. 655
16 Home Beneficial Corp ........................ 606
10 Forest City Enterprises Inc Cl A ............ 605
23 American Heritage Life Investors ............ 604
18 RLI Corp .................................... 601
15 Financial Trust Corp ........................ 598
26 F & M National Corp ......................... 556
22 BRE Properties Inc .......................... 544
14 New York Bancorp Inc ........................ 542
47 IRT Property Co ............................. 540
12 National City Corp .......................... 538
22 Pennsylvania Real Estate
Investment Trust......................... 536
16 Dauphin Deposit Corp ........................ 528
24 MGI Properties .............................. 528
41 CRIIMI MAE Inc. ............................. 528
28 LTC Properties Inc .......................... 518
19 Federal Realty Investment Trust.............. 515
27 Mid America Bancorp ......................... 513
13 Liberty Corp ................................ 510
21 Wellsford Residential Property
Trust .................................... 509
15 +MAIC Holdings Inc ........................... 508
22 Crawford & Co ............................... 503
12 CNB Bancshares Inc .......................... 501
15 Omega Healthcare Investors Inc .............. 499
10 Liberty Bancorp Inc ........................ 497
18 Zenith National Insurance ................... 493
13 National Health Investors Inc. .............. 492
31 Commercial Net Lease Realty ................. 492
33 Burham Pacific Properties Inc ............... 491
29 Kranzco Realty Trust ........................ 489
20 Health Care Real Estate
Investment Trust Inc ..................... 487
15 +UICI ........................................ 487
20 Nationwide Health Properties Inc............. 485
13 Student Loan Corp ........................... 484
12 Protective Life Corp ........................ 478
20 American Health Properties Inc............... 477
17 CBT Corp .................................... 467
10 Trenwick Group Inc .......................... 463
14 United Bankshares Inc ....................... 462
12 JSB Financial Inc ........................... 456
14 First Financial Bancorp ..................... 455
14 Wesbanco Inc ................................ 455
13 Firstbank Illinois Co ....................... 452
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
34 Hilb, Rogal & Hamilton Co ................... $451
13 Susquehanna Bancshares Inc .................. 450
11 Farmers Capital Bank Corp ................... 448
11 UMB Financial Corp .......................... 446
15 First Michigan Bank Corp .................... 444
12 First Financial Corp ........................ 444
24 Baldwin & Lyons Inc ......................... 441
18 Hubco Inc ................................... 441
17 McGrath Rent Corp ........................... 438
11 BT Financial Corp ........................... 436
11 United Carolina Bancshares .................. 435
14 Deposit Guaranty Corp ....................... 434
14 Gallagher (Arthur J.) & Co .................. 434
36 EMC Insurance Group Inc ..................... 432
18 F & M Bancorp ............................... 432
14 Argonaut Group Inc .......................... 431
14 S&T Bancorp Inc ............................. 431
23 First Commonwealth Financial
Corp ..................................... 428
16 BSB Bancorp Inc ............................. 428
10 Associated Banc Corp ........................ 425
20 Heritage Financial Service Inc .............. 425
12 Whitney Holding Corp ........................ 425
13 First Midwest Bancorp Inc ................... 424
16 First Merchants Corp ........................ 424
10 US Bancorp Inc............................... 424
11 Midland Co .................................. 424
19 SEI Corp .................................... 423
13 Merchants New York Bancorp .................. 423
27 Avemco Corp ................................. 422
11 Frontier Insurance Group Inc ................ 421
11 National Communications
Bancorp.................................. 421
15 American Financial Enterprise
Inc...................................... 420
13 Corus Bankshares Inc ........................ 419
13 First United Bancshares Inc ................. 419
18 Allied Capital Commerical Corp .............. 419
11 Fort Wayne National Corp .................... 418
11 Selective Insurance Group ................... 418
17 First Source Corp ........................... 417
22 American Federal Bank ....................... 415
10 Banknorth Group Inc ......................... 415
42 Berkshire Realty Co ......................... 415
15 Brenton Banks Inc ........................... 414
15 Community First Bankshares .................. 413
24 Mid Am Inc .................................. 411
13 Citizens Banking Corp ...................... 410
14 National City Bancshares Inc ................ 410
11 First Commercial Corp ....................... 408
11 One Valley Bancorp Inc ...................... 408
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
13 Albank Financial Corp ....................... $408
233 CRI Liquidating Real Estate
Investment Trust Inc ..................... 408
14 Acordia Inc ................................. 406
14 Bank of Granite Corp ........................ 406
10 Hancock Holding Co........................... 405
10 Horace Mann Educator Corp.................... 404
23 Magna Bancorp Inc ........................... 403
22 NYMagic Inc ................................. 396
10 Safeco Corp ................................. 394
15 First Western Bancorp Inc ................... 394
18 Fulton Financial Corp ....................... 387
40 Gainsco Inc ................................. 385
18 Trustco Bank Corp ........................... 385
45 Cash America International Inc. ............. 383
10 Suffolk Bancorp ............................. 383
15 Keystone Financial Inc ...................... 375
14 Poe & Brown Inc ............................. 371
14 National Penn Bancshares Inc ................ 366
13 Bancorp South Inc ........................... 361
10 Tompkins County Trustco Inc ................. 334
13 HCC Insurance Holdings Inc .................. 312
11 Valley National Bancorp ..................... 282
13 USF&G Corp .................................. 271
10 First Commerce Bancshares ................... 265
20 Citizens Inc Cl A ........................... 170
12 Taubman Centers Inc ......................... 155
12 ALFA Corp ................................... 152
3 +Echelon International Corp .................. 47
--------
139,987
--------
Health Care (7.0%)
341 +Amgen Inc. .................................. 18,542
242 Columbia Healthcare Corp .................... 9,862
86 Bristol-Myers Squibb Co. .................... 9,353
226 Pharmacia & Upjohn Inc ...................... 8,955
331 +Tecnol Medical Products Inc. ................ 5,006
42 American Home Products Corp.................. 2,462
33 Schering-Plough Corp. ....................... 2,137
125 Mylan Laboratories Inc ...................... 2,094
53 +Centocor Inc ................................ 1,895
57 +Forest Laboratories Inc ..................... 1,867
24 Warner Lambert Co ........................... 1,800
81 +Nellcor Puritan Bennett Inc ................. 1,772
36 +HealthCare COMPARE Corp ..................... 1,525
72 +Value Health Inc. ........................... 1,404
15 +Pacificare Health Systems Inc ............... 1,279
30 Beckman Instruments Inc ..................... 1,151
30 +HEALTHSOUTH Corp ............................ 1,144
19 +Boston Scientific Corp ...................... 1,140
25 +Watson Pharmaceuticals Inc................... 1,123
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
77 +Horizon/CMS Healthcare Corp ................. $972
30 +Vencor Inc .................................. 949
18 DENTSPLY International Inc................... 855
38 +Tenet Healthcare Corp ....................... 831
24 +Foundation Health Corp ...................... 762
28 Diagnostic Products Corp..................... 724
37 +Humana Inc .................................. 708
47 +NovaCare Inc ................................ 517
18 West Inc .................................... 508
11 Mallinckrodt Inc. ........................... 485
12 Seafield Capital Corp ....................... 465
17 +ALZA Corp ................................... 440
12 Chemed Corp ................................. 438
12 Allergan Inc. ............................... 427
10 +St. Jude Medical Inc. ....................... 426
17 +Acuson Corp.................................. 414
11 Bausch & Lomb Inc ........................... 390
37 +Medco Research Inc .......................... 388
33 +Epitope Inc ................................. 380
11 +Advanced Technology
Laboratories............................. 341
12 Bard (CR) Inc ............................... 336
22 Biomet Inc. ................................. 333
16 +Datascope Corp .............................. 320
21 Kinetic Concepts Inc ........................ 257
15 +Advanced Magnetics Inc ...................... 233
14 +Beverly Enterprises Inc...................... 179
10 +Systemix Inc ................................ 153
--------
87,742
--------
Technology (2.8%)
823 X-Rite Inc .................................. 13,580
239 +Trident Microsystems Inc .................... 4,033
42 First Data Corp ............................. 1,533
24 Raytheon Co ................................. 1,155
31 +Fiserv Inc .................................. 1,139
21 +Compuware Corp .............................. 1,053
22 +Litton Industries Inc ....................... 1,048
18 +Dell Computer Corp .......................... 956
42 +Structural Dynamics Research
Corp..................................... 840
72 +Novell Inc .................................. 682
27 +Bell Industries Inc ......................... 577
21 +Esterline Technologies Corp ................. 549
20 +Stratus Computer Inc. ....................... 545
12 Fluke Corp .................................. 535
23 Cubic Corp .................................. 532
21 +Boole & Babbage Inc ......................... 525
11 +Storage Technology Corp ..................... 524
11 +BRC Holdings Inc ............................ 492
23 +Apple Computer Inc .......................... 480
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
10 Interpublic Group of Cos Inc ................ $475
11 CTS Corp .................................... 470
36 Kaman Corp Cl A.............................. 468
84 +Borland International Inc.................... 457
14 Analysts International Corp ................. 395
162 +Executone Information Systems
Inc...................................... 385
14 +Advanced Micro Devices Inc .................. 361
11 +Keane Inc ................................... 349
17 MTS Systems Corp ............................ 340
13 +Tekelec ..................................... 205
10 EG&G Inc .................................... 201
41 +AST Research Inc ............................ 172
12 +Amdahl Corp ................................. 146
21 +Unisys Corp ................................. 142
12 +Intergraph Corp ............................. 123
--------
35,467
--------
Transportation (1.7%)
524 International Shipholding Corp .............. 9,694
326 +Yellow Corp.................................. 4,686
24 Burlington Northern Santa Fe
Corp..................................... 2,073
26 Alexander & Baldwin Inc...................... 650
29 Atlantic Southeast Airlines Inc. ............ 634
41 Hunt (JB) Transport Services Inc ............ 574
12 +Federal Express Corp. ....................... 534
42 Rollins Truck Leasing Corp .................. 530
50 +USA Truck Inc ............................... 400
44 Frozen Foods Express
Industries............................... 396
21 Arnold Industries Inc ....................... 333
10 +Swift Transportation Co...................... 235
12 Caliber Systems Inc ......................... 231
--------
20,970
--------
Utilities (9.2%)
727 Eastern Utilities Association................ 12,632
352 GPU Inc ..................................... 11,836
525 Public Service Co of North
Carolina.................................. 9,581
327 +Tucson Electric Power Co .................... 5,436
329 United Water Resources Inc .................. 5,141
222 Washington Energy Co ........................ 4,579
153 Northeast Utilities ......................... 2,027
53 Florida Progress Corp ....................... 1,709
73 Southern Co ................................. 1,652
32 El Paso Natural Gas ......................... 1,616
46 CMS Energy Corp ............................. 1,547
57 Scana Corp .................................. 1,525
67 Ohio Edison Co .............................. 1,524
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
35 Enron Corp .................................. $1,509
58 Potomac Electric Power Co.................... 1,493
45 Central Hudson Gas & Electric
Corp ..................................... 1,412
63 Montana Power Co ............................ 1,347
50 Boston Edison Co. ........................... 1,344
31 Nipsco Industries Inc........................ 1,228
30 Public Service Co of Colorado................ 1,166
32 +CalEnergy Inc ............................... 1,076
30 New England Electric ........................ 1,046
22 Duke Power Co ............................... 1,023
47 Pacific Gas & Electric Co. .................. 987
61 Midamerican Energy Holdings ................. 968
38 Puget Sound Power & Light ................... 912
34 Indiana Energy Inc .......................... 829
29 IPALCO Enterprises Inc....................... 790
40 Public Service Co of New
Mexico................................... 785
38 Edison International ........................ 755
20 Williams Cos Inc ............................ 731
25 MCN Corp Holding Co ......................... 722
29 LG & E Energy Corp .......................... 711
25 Black Hills Corp ............................ 703
32 New York State Electric & Gas
Corp...................................... 692
59 Central Maine Power Co. ..................... 686
13 Coastal Corp ................................ 635
21 Brooklyn Union Gas Co........................ 633
13 +Tejas Gas Corp............................... 619
30 American Water Works Inc..................... 619
27 Houston Industries Inc....................... 611
17 Southwestern Public Service ................. 601
14 National Fuel Gas Co ........................ 577
28 Pacificorp .................................. 574
18 IWC Resources Corp .......................... 560
13 California Water Services Co ................ 546
18 Energen Corp ................................ 544
21 Central & South West Corp ................... 538
27 Philadelphia Suburban Corp .................. 537
26 Nevada Power Co.............................. 533
19 TNP Entreprise Inc .......................... 520
10 Sonat Inc. .................................. 515
15 Northwestern Public Service Co............... 514
16 Idaho Power Co .............................. 498
12 Texas Utilities Co .......................... 489
20 South Jersey Industries Inc.................. 487
23 AGL Resources Inc ........................... 486
19 Connecticut Natural Gas Corp ................ 484
16 IES Industries Inc .......................... 478
20 Atmos Energy Corp ........................... 477
28 Cascade Natural Gas Corp .................... 476
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
15 E Town Corp ................................. $474
17 Aquarion Co ................................. 474
13 Hawaiian Electric Industries Inc............. 470
10 SJW Corp .................................... 469
16 New Jersey Resources Corp ................... 468
14 Cinergy Corp. ............................... 467
10 FPL Group Inc. .............................. 460
20 MDU Resources Group Inc ..................... 460
13 Eastern Enterprises Inc...................... 460
19 Laclede Gas Co .............................. 458
11 American Electric Power Co .................. 452
16 Bay State Gas Co............................. 452
13 Sig Corp Inc ................................ 450
24 Empire District Electric Co.................. 450
19 Commonwealth Energy System .................. 444
12 Cilcorp Inc ................................. 439
10 Pennsylvania Enterprises Inc ................ 439
20 Southern California Water Co ................ 435
39 +Citizens Utilities Co Cl B .................. 434
15 North Carolina Natural Gas Corp ............. 433
12 Orange & Rockland Utilities Inc.............. 430
12 Wicor Inc ................................... 430
18 Green Mountain Power Corp.................... 430
19 United Cities Gas Co......................... 428
15 WPS Resources Corp .......................... 428
19 UGI Corp .................................... 425
11 Dominion Resources Inc ...................... 424
18 Piedmont Natural Gas Inc .................... 421
13 Otter Tail Power Co ......................... 418
27 St Joseph Light & Power Co................... 415
17 Northwest Natural Gas Co .................... 408
20 Madison Gas & Electric Co.................... 405
17 PP & L Resources Inc ........................ 391
13 Oneok Inc. .................................. 390
10 Union Electric Co............................ 385
17 Washington Gas Light Co ..................... 385
18 Colonial Gas Co ............................. 383
12 United Illuminating Co....................... 377
12 Pacific Enterprises ......................... 365
13 Entergy Corp ................................ 361
40 +TPC Corp .................................... 360
104 +PhoneTel Technologies Inc ................... 332
15 Western Gas Resources Inc ................... 289
13 Yankee Energy System Inc..................... 278
11 Connecticut Energy Corp ..................... 234
11 Noram Energy Corp. .......................... 169
16 +Niagara Mohawk Power Corp.................... 158
--------
116,278
--------
Total Common Stocks
(Cost $914,983)........................... 947,801
--------
Number
of Shares Security Value
Tomorrow Long-Term Retirement Fund (continued)
Unit Investment Trust (4.5%)
(Cost $58,506)
775 Standard & Poor's
Depositary Receipts ................... $57,302
--------
Open End Investment Company (4.3%)
(Cost $53,052)
5,072 Bankers Trust EAFE Equity
Index Fund............................... 53,861
--------
Principal
Amount
U.S. Government
Obligations (20.2%)
U.S. Treasury Bond (2.8%)
$35,000 6.875% Due 8/15/25 .......................... 35,689
--------
U.S. Treasury Notes (17.4%)
121,000 5.500% Due 11/15/98 ......................... 120,187
98,000 6.500% Due 8/15/05 .......................... 98,628
--------
218,815
--------
Total U.S. Treasury Obligations
(Cost $254,302)........................... 254,504
--------
Total Investments (104.2%)
(Cost $1,280,843)......................... 1,313,468
Liabilities in Excess of
Other Assets (-4.2%)...................... (53,577)
--------
Total Net Assets (100.0%).................... $1,259,891
=========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund
COMMON STOCKS (59.8%)
Basic Materials (4.2%)
1,037 Barrick Gold Corp ........................... $29,684
306 Dow Chemical Co ............................. 23,983
500 Quaker Chemical Corp ........................ 8,188
382 Lawter International Inc .................... 4,823
229 Stepan Chemical Co .......................... 4,666
178 Placer Dome Inc ADR ......................... 3,872
235 Coeur D'Alene Mines Corp .................... 3,554
55 Aluminum Co of America ...................... 3,506
78 Newmont Mining Corp ......................... 3,490
63 Consolidated Papers Inc ..................... 3,095
69 Bowater Inc ................................. 2,596
35 Pioneer Hi Bred International ............... 2,450
251 Ethyl Corp .................................. 2,416
76 Georgia Gulf Corp ........................... 2,042
30 Phelps Dodge Corp ........................... 2,025
23 Rohm & Haas Co .............................. 1,877
44 Olin Corp ................................... 1,655
38 Champion International Corp. ................ 1,643
27 Reynolds Metals Co .......................... 1,522
26 BetzDearborn Inc. ........................... 1,521
78 Crompton & Knowles Corp ..................... 1,501
28 Nucor Corp .................................. 1,428
31 International Flavors &
Fragrances Inc............................ 1,395
44 Chesapeake Corp ............................. 1,380
44 USX-U.S. Steel Group ........................ 1,380
73 Wausau Paper Mills Co ....................... 1,350
41 Inco Ltd .................................... 1,307
20 Sigma Aldrich Corp .......................... 1,249
44 Ferro Corp .................................. 1,248
30 Minerals Technologies Inc ................... 1,230
69 RPM Inc ..................................... 1,173
63 Glatefelter (PH) Co ......................... 1,134
58 Engelhard Corp .............................. 1,109
47 Cyprus Amax Minerals Co. .................... 1,099
34 Dexter Corp ................................. 1,084
20 Temple Inland Inc ........................... 1,082
23 Cleveland Cliffs Inc ....................... 1,044
42 Schulman Inc ................................ 1,029
76 Calgon Carbon Corp .......................... 931
65 Homestake Mining Co ......................... 926
15 Mead Corp ................................... 872
126 Battle Mountain Gold Co ..................... 866
18 Petrolite Corp .............................. 864
18 Great Lakes Chemical Corp. .................. 841
24 James River Corp of Virginia ................ 795
16 Union Camp Corp ............................. 764
20 Mosinee Paper Corp .......................... 710
15 Fuller H B Co ............................... 705
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
24 Westvaco Corp ............................... $690
13 Ameron Inc .................................. 671
18 Bemis Inc ................................... 664
24 Tuscarora Inc ............................... 657
36 Worthington Industries ...................... 652
97 Echo Bay Mines Ltd .......................... 643
31 Inland Steel Industries Inc ................. 620
19 Liqui-Box Corp .............................. 618
17 +Tremont Corp ................................ 614
24 International Aluminum Corp ................. 612
22 FAB Industries Inc .......................... 605
16 Ecolab Inc .................................. 602
18 Florida Rock Industries Inc ................. 590
21 MacDermid Inc ............................... 578
17 South Down Inc .............................. 529
16 Cambrex Corp ................................ 524
20 Sonoco Products Co .......................... 518
36 Tejon Ranch Co. ............................. 518
89 +Hecla Mining Co ............................. 490
13 Nalco Chemical Co ........................... 470
15 Puerto Rican Cement Inc ..................... 469
71 +Amax Gold Inc ............................... 453
12 Carpenter Technology Corp ................... 440
9 +MAXXAM Inc .................................. 429
23 Oregon Steel Mills .......................... 385
40 +Bethlehem Steel Corp. ....................... 360
--------
153,505
--------
Capital Goods (6.1%)
532 McDonnell Douglas Corp ...................... 34,048
321 Minnesota Mining &
Manufacturing Co ......................... 26,603
1,033 Raymond Corp ................................ 17,948
122 Boeing Co ................................... 12,978
200 +Analog Devices Inc. ......................... 6,775
200 +ADC Telecommunications Inc .................. 6,225
62 Emerson Electric Co. ........................ 5,999
291 Westinghouse Electric Corp .................. 5,784
100 York International Corp ..................... 5,588
159 WMX Technologies Inc. ....................... 5,187
337 Oil-Dri Corp America ........................ 5,055
109 Corning Inc ................................. 5,041
228 Penn Engineering &
Manufacturing Corp ....................... 4,674
66 Honeywell Inc. .............................. 4,340
76 Crown Cork & Seal Inc ....................... 4,133
338 +Nashua Corp. ................................ 4,056
236 +Vallen Corp ................................. 3,924
51 Fluor Corp .................................. 3,200
52 Sundstrand Corp ............................. 2,210
40 Tyco International Ltd ...................... 2,115
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
20 Textron Inc ................................. $1,885
27 Eaton Corp .................................. 1,883
50 Trinity Industries Inc ...................... 1,875
80 Allegheny Teledyne Inc ...................... 1,840
30 Miller (Herman) Inc ......................... 1,699
74 Premark International Inc ................... 1,647
19 Raychem Corp ............................... 1,522
34 Hubbell Inc Cl B ............................ 1,471
29 Dover Corp .................................. 1,457
44 HON Industries .............................. 1,452
27 Alco Standard Corp .......................... 1,394
62 Ametek Inc .................................. 1,380
53 Pall Corp ................................... 1,352
27 Kaydon Corp ................................. 1,272
102 Laidlaw Inc Cl B ............................ 1,173
35 Donaldson Co Inc ............................ 1,173
30 Parker Hannifin Corp ........................ 1,162
23 Precision Castparts Corp .................... 1,141
32 Pentair Inc ................................. 1,032
12 Northrop Gruman Corp ........................ 993
30 Standard Register Co ........................ 975
41 +Jacobs Engineering Group Inc ................ 969
15 Nordson Corp ................................ 956
23 Millipore Corp .............................. 952
13 General Dynamics ............................ 916
45 Keystone International Inc .................. 906
11 Grainger WW Inc ............................. 883
17 Harnischfeger Industries Inc. ............... 818
18 General Signal Corp ......................... 769
28 Duriron Co Inc .............................. 759
16 Cummins Engine Inc .......................... 736
18 Butler Manufacturing Co ..................... 729
20 Avery Dennison Corp ......................... 707
38 Gencorp Inc ................................. 689
17 +Sequa Corp Cl A ............................. 667
11 Barnes Group Inc ............................ 660
51 +Magnetek Inc ................................ 657
44 Daniel Industries ........................... 649
16 IDEX Corp ................................... 638
85 +Insituform Technologies Cl A ................ 627
27 Learonal Inc ................................ 621
19 Kysor Industrial Corp ....................... 620
20 Standex International Corp .................. 617
25 Baldor Electric Co .......................... 616
25 Brady W H Co ................................ 616
10 Carlisle Cos Inc ............................ 605
19 Stone & Webster Inc ......................... 603
26 Goulds Pumps Inc ............................ 596
18 Gleason Corp ................................ 596
11 NACCO Industries Inc Cl A ................... 588
24 Watts Industries Inc Cl A ................... 573
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
19 Commercial Metals ........................... $572
26 +Osmonics Inc ................................ 572
22 Graco Inc ................................... 539
10 Mine Safety Appliances Co ................... 532
28 Armor All Products Corp ..................... 532
57 +Thermo Fibertek Inc ......................... 531
23 +Lydall Inc .................................. 517
24 Moore Corp Ltd .............................. 489
17 +Bearings Inc ................................ 474
21 Cincinnati Milacron Inc ..................... 459
22 Varlen Corp ................................. 452
25 McDermott International Inc ................. 416
21 Granite Construction Inc .................... 399
17 +Rohr Inc .................................... 385
60 UNR Industries Inc .......................... 360
7 Briggs & Stratton Corp ...................... 308
18 Brush Wellman Inc. .......................... 295
51 +Air and Water Technologies
Corp..................................... 293
10 Ball Corp ................................... 260
129 +Rollins Environmental Inc ................... 226
--------
225,610
--------
Communications Services (1.1%)
237 GTE Corp .................................... 10,784
256 Sprint Corp ................................. 10,208
189 US West Inc ................................. 6,095
135 ALLTEL Corp ................................. 4,236
77 NYNEX Corp .................................. 3,706
72 Century Telephone Enterprises
Inc...................................... 2,223
44 Frontier Corp ............................... 995
42 Aliant Communications ....................... 714
--------
38,961
--------
Consumer Cyclical (8.5%)
836 May Department Stores Co .................... 39,083
641 Penney (J.C.) Co Inc. ....................... 31,249
334 Eastman Kodak Co ............................ 26,804
1,033 Russ Berrie & Co Inc ........................ 18,594
725 Wackenhut Corp Ser A ........................ 12,506
243 +Fred Meyer Inc .............................. 8,627
200 +Atmel Corp .................................. 6,625
415 Ruddick Corp ................................ 5,810
342 +National Education Corp ..................... 5,216
163 Gap Inc. .................................... 4,910
120 +Fruit of the Loom Inc ....................... 4,545
233 Sturm Ruger & Co Inc ........................ 4,514
450 +Playboy Enterprises Inc Cl B ................ 4,388
157 Mattel Inc .................................. 4,357
221 Caseys General Stores Inc ................... 4,144
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
351 +Lifetime Hoan Corp .......................... $4,124
105 Dayton Hudson Corp .......................... 4,121
224 The Limited Inc ............................. 4,116
161 Dun & Bradstreet Corp ....................... 3,824
48 Gannet Inc .................................. 3,594
10 Washington Post Co .......................... 3,351
118 Service Corp International .................. 3,304
49 +Vons Cos Inc ................................ 2,934
74 +Jones Apparel Group ......................... 2,766
60 Omnicom Group Inc ........................... 2,745
67 Masco Corp .................................. 2,412
36 Vulcan Materials Co ......................... 2,192
39 +Nine West Group Inc ......................... 1,809
49 Hannaford Brothers Co ....................... 1,666
63 +HSN Inc ..................................... 1,496
30 TRW Inc. .................................... 1,485
143 +K mart Stores ............................... 1,484
38 New York Times Co Cl A ...................... 1,444
31 Lancaster Colony Corp ....................... 1,426
30 Interpublic Group of Cos Inc ................ 1,425
129 +Burlington Industries Inc ................... 1,419
53 +Lands' End Inc .............................. 1,405
40 Belo (AH) Corp - Ser A ...................... 1,395
45 Dillard Department Stores ................... 1,389
35 Hasbro Inc .................................. 1,361
24 Houghton Mifflin Co ......................... 1,359
36 Tiffany & Co ................................ 1,319
29 Genuine Parts Co ............................ 1,294
19 +Scholastic Corp ............................. 1,278
24 Meredith Corp ............................... 1,266
47 Modine Manufacturing ........................ 1,257
27 Harcourt General ............................ 1,245
67 Sotheby's Holdings Cl A ..................... 1,240
18 VF Corp ..................................... 1,215
26 McGraw-Hill Cos Inc ......................... 1,199
27 Tandy ....................................... 1,188
25 Whirlpool Corp .............................. 1,166
24 TJX Cos Inc ................................. 1,137
34 Cognizant Corp .............................. 1,122
29 Liz Claiborne Inc. .......................... 1,120
14 Tribune Co. ................................. 1,104
26 Reebok International Ltd .................... 1,092
26 +CVS Corp .................................... 1,073
61 Wellman Inc ................................. 1,045
36 First Brands Corp ........................... 1,022
33 Circuit City Store Inc ...................... 994
17 Sherwin-Williams Co. ........................ 952
89 +Best Buy Co Inc ............................. 946
93 Stride Rite Corp ............................ 930
34 Stanhome Inc ................................ 901
22 +Ceridian Corp ............................... 891
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
45 Cooper Tire & Rubber ........................ $889
26 Dow Jones & Co Inc .......................... 881
20 Polaroid Corp ............................... 870
14 NCH Corp .................................... 843
17 Mercantile Stores ........................... 839
12 Armstrong World Industries Inc .............. 834
192 +Service Merchandise Inc ..................... 816
27 Black & Decker Corp ......................... 813
41 Maytag Corp ................................. 810
62 Fingerhut Cos Inc. .......................... 759
24 Echlin Inc. ................................. 759
41 Brown Group Inc ............................. 753
26 American Greetings Cl A ..................... 738
30 Donnelly Corp ............................... 735
21 McClatchy Newspapers Cl A ................... 735
11 + Culbro Corp ................................. 714
163 Ekco Group Inc .............................. 713
22 Wiley John & Sons ........................... 709
70 Graphic Industries Inc ...................... 709
27 +MacFrugals Bargains Closeouts ............... 705
50 ADVO Inc .................................... 700
113 +American Media Inc .......................... 664
15 +Volt Information Sciences Inc ............... 656
48 +Johnson Worldwide Associates
Inc Cl A................................. 636
22 Starrett LS Co Cl A ......................... 624
23 Stanley Works ............................... 621
24 +Christiana Cos .............................. 618
12 WD-40 Co .................................... 612
24 Standard Products Co ........................ 612
87 +Shoney's Inc ................................ 609
46 Kaman Corp Cl A ............................ 598
15 Apogee Enterprises Inc ...................... 596
30 Luby's Cafeterias Inc. ...................... 596
17 Plenum Publishing Corp ...................... 595
58 Crown Crafts Inc ............................ 580
21 Tennant Co .................................. 577
67 +Handleman Co ................................ 569
26 True North Communications ................... 569
26 +Woolworth Corp .............................. 569
37 Osh Kosh B'Gosh Cl A ....................... 564
23 Bassett Furniture Industries Inc ............ 563
21 Guilford Mills Inc .......................... 559
22 American Business Products .................. 553
12 OEA Systems Inc ............................. 549
21 +CSS Industries Inc .......................... 546
20 Unitog Co ................................... 545
25 Smart and Final Inc ......................... 541
86 PT Tri Polyta Indonesia ADR ................. 537
23 Lee Enterprises Inc ......................... 535
132 +Topps Co Inc ................................ 528
62 +Syms Corp ................................... 527
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
19 K2 Inc ...................................... $522
28 Walbro Corp. ................................ 511
26 Delechamps Inc .............................. 504
21 Waverly Inc ................................. 499
26 Alico Inc ................................... 487
16 American List Corp. ......................... 486
30 Strawbridge & Clothier ...................... 476
12 Knight- Ridder Inc .......................... 459
31 Duty Free International Inc ................. 449
15 Russell Corp ................................ 446
47 Blessings Corp .............................. 438
39 Hancock Fabrics Inc ......................... 405
8 Home Depot Inc .............................. 401
49 +Intelligent Electronics Inc. ................ 392
15 Arvin Industries Inc ........................ 371
22 CPI Corp .................................... 368
26 +Information Resources Inc ................... 364
32 Ennis Business Forms ........................ 360
19 Ogden Corp .................................. 356
18 +Gibson Greetings Inc ........................ 353
95 CML Group Inc ............................... 321
39 +GRC International Inc ....................... 317
18 +AnnTaylor Stores Corp ....................... 315
14 Lawson Products Inc ......................... 306
21 Falcon Products Inc ......................... 299
25 A.T. Cross Co Cl A .......................... 291
11 +ACNielsen Corp .............................. 166
6 +Echelon International Corp .................. 93
--------
313,941
--------
Consumer Staples (9.5%)
391 Kimberly-Clark Corp ......................... 37,243
1,016 +Viacom Inc. Cl B ............................ 35,433
517 Kellogg Co .................................. 33,928
1,453 Archer Daniels Midland Co.................... 31,966
762 Anheuser-Busch Cos Inc. ..................... 30,480
152 Unilever NV ADR ............................ 26,638
416 +Revco D.S. Inc .............................. 15,392
731 Goodmark Foods Inc .......................... 12,062
734 Genovese Drugs Stores ....................... 11,379
543 Dames & Moore Inc ........................... 7,941
174 Albertsons Inc .............................. 6,199
105 Cardinal Health Inc ......................... 6,116
201 IBP Inc ..................................... 4,874
51 Colgate-Palmolive Co. ....................... 4,705
129 Heinz H J Co ................................ 4,644
93 Conagra Inc ................................. 4,627
62 Ralston Purina Co............................ 4,549
230 ABM Industries Inc .......................... 4,255
105 IMC Global Inc .............................. 4,108
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
123 UST Inc. .................................... $3,982
50 CPC International Inc. ...................... 3,875
106 Sysco Corp .................................. 3,458
51 General Mills Inc ........................... 3,232
82 Tyson Foods Inc Cl A ........................ 2,809
49 Tambrands Inc. .............................. 2,003
42 +Kroger Co ................................... 1,953
48 Quaker Oats Co .............................. 1,830
82 Flowers Industries Inc ...................... 1,763
59 Bergen Brunswig Corp ........................ 1,682
26 Avon Products Inc ........................... 1,485
46 Dean Foods Co ............................... 1,484
32 McDonald's Corp. ............................ 1,448
36 Rite Aid Corp. .............................. 1,431
52 Kelly Services Inc Cl A ..................... 1,404
32 Hershey Foods Corp .......................... 1,400
45 TCA Cable TV Inc ............................ 1,356
143 +Perrigo Co .................................. 1,305
31 American Stores Co .......................... 1,267
24 Paychex Inc ................................. 1,235
12 Clorox Co. .................................. 1,205
74 Dial Corp ................................... 1,091
59 International Multifoods Corp ............... 1,069
49 +International Dairy Queen Inc
Cl A..................................... 980
18 Longs Drug Stores Inc ....................... 884
24 Universal Foods Corp ........................ 846
44 +Ruby Tuesday Inc ............................ 814
35 Whitman Corp ................................ 801
42 Coors (Adolph) Co Cl B....................... 798
24 Harland Co. ................................. 792
24 Deluxe Corp ................................. 786
22 Giant Food Inc Cl A ......................... 759
28 Amcast Industrial Corp ...................... 693
18 +King World Productions Inc .................. 664
36 Lance Inc ................................... 648
28 Banta Corp. ................................. 640
17 National Presto Industries .................. 635
72 Bridgford Foods Corp ........................ 612
28 Nash Finch Corp ............................. 595
13 Brown-Forman Corp Cl B ...................... 595
21 West Co ..................................... 593
14 +Chris Craft Industries Inc .................. 586
18 Winn Dixie Stores ........................... 569
43 WLR Foods Inc ............................... 532
80 +Uno Restaurant Corp ......................... 530
18 Supervalu Inc. .............................. 511
36 Savannah Foods & Industries ................. 486
14 Dreyers Grand Ice Cream Inc ................. 406
17 +Carmike Cinemas Inc. Cl A ................... 431
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
29 +Foodbrands America Inc ...................... $399
42 +Buffets Inc ................................. 383
19 Blair Corp .................................. 366
6 Tecumseh Products Co Cl B ................... 341
9 National Services Industries Inc ............ 336
20 +AMC Entertainment Inc ....................... 287
7 +Footstar Inc ................................ 174
--------
349,778
--------
Energy (9.9%)
543 Exxon Corp .................................. 53,214
216 Royal Dutch Petroleum Co ADR ............... 36,882
249 Atlantic Richfield .......................... 33,024
194 Mobil Corp. ................................. 23,716
1,236 Sevenson Environmental
Services Inc ............................. 22,557
195 Schlumberger Ltd ............................ 19,476
225 Amoco Corp .................................. 18,169
181 Texaco Inc .................................. 17,761
1,066 Quaker State Corp ........................... 15,057
732 +HS Resources Inc ............................ 12,078
730 +Tuboscope Vetco International
Corp ..................................... 11,315
160 Chevron Corp ............................... 10,400
534 Getty Petroleum Corp ........................ 8,677
101 Anadarko Petroleum Co ....................... 6,540
130 Phillips Petroleum Co. ...................... 5,752
259 Global Marine Inc ........................... 5,342
216 Occidental Petroleum Corp ................... 5,049
60 Halliburton Co .............................. 3,615
79 Tidewater Inc ............................... 3,575
135 USX-Marathon Group .......................... 3,223
103 +Dresser Industries Inc ...................... 3,193
39 Tosco Co .................................... 3,086
58 +Ensco International Inc ..................... 2,813
58 +Smith International Inc ..................... 2,603
45 +BJ Services Co .............................. 2,295
76 +Weatherford Enterra Inc ..................... 2,280
62 Parker & Parsley Petroleum Co ............... 2,278
115 +Nabors Industries Inc ....................... 2,214
43 Burlington Resources Inc .................... 2,166
60 Mapco Inc ................................... 2,040
60 Valero Energy Corp .......................... 1,717
164 Ranger Oil Ltd .............................. 1,619
43 Apache Corp ................................. 1,521
44 Baker Hughes Inc ............................ 1,518
27 Murphy Oil Corp ............................. 1,502
27 Helmerich & Payne Inc ....................... 1,407
44 Ultramar Diamond Shamrock
Corp..................................... 1,391
22 Amerada Hess Corp. .......................... 1,273
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
39 Sun Co Inc .................................. $951
31 Black Hills Corp ............................ 872
33 +Oryx Energy Co .............................. 817
11 Kerr Mcgee Corp ............................. 792
37 Wiser Oil Co ................................ 731
29 +Varco International Inc ..................... 671
19 Vintage Petroleum Inc ....................... 655
45 Berry Petroleum Cl A ........................ 647
26 Landauer Inc ................................ 637
14 +Barrett Resources Corp ...................... 597
11 Louisiana Land & Exploration Co ............. 590
21 Ashland Coal Inc ............................ 583
187 +Harken Energy Corp .......................... 561
60 +Allied Waste Industries Inc ................. 555
57 +Parker Drilling Co .......................... 549
20 Holly Corp .................................. 535
12 Ashland Inc ................................. 526
42 +Crown Central Petroleum Cl A ................ 520
--------
364,127
--------
Financial (6.0%)
1,029 Mid Am Inc .................................. 17,622
1,039 Kranzco Realty Trust ....................... 17,533
1,037 Commercial Net Lease Realty ................. 16,462
533 Avemco Corp ................................. 8,328
200 Southtrust Corp ............................. 6,975
100 Progressive Corp ............................ 6,738
181 First Data Corp ............................. 6,607
132 PHH Corp .................................... 5,676
100 Comerica Inc ................................ 5,238
227 Universal Health Realty Income .............. 4,654
100 Commerce Bancshares Inc ..................... 4,625
230 Mid America Bancorp ......................... 4,370
230 LTC Properties Inc .......................... 4,255
234 State Auto Financial Corp ................... 4,212
232 Magna Bancorp Inc ........................... 4,060
225 NYMAGIC Inc ................................. 4,050
233 South West Property Trust ................... 3,932
73 Lincoln National Corp Ltd. .................. 3,833
69 Chubb Corp .................................. 3,709
36 Loews Corp .................................. 3,393
100 Paine Webber Group Inc ...................... 2,813
49 U.S. Bancorp ................................ 2,202
19 Marsh & McLennan Cos ........................ 1,976
45 Bancorp Hawaii Inc. ......................... 1,890
142 Hibernia Corp Cl A .......................... 1,882
26 UNUM Corp ................................... 1,879
23 Transatlantic Holdings Inc .................. 1,852
84 City National Corp .......................... 1,817
46 Northern Trust Corp ......................... 1,668
18 TransAmerica Corp ........................... 1,424
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
22 St Paul Cos. Inc. Corp ...................... $1,290
28 National City Corp .......................... 1,257
29 Wilmington Trust Co ......................... 1,146
31 Dauphin Deposit Corp ........................ 1,023
18 Jefferson- Pilot Corp ....................... 1,019
16 Citizens Bancorp ............................ 992
24 Safeco Corp ................................. 947
41 Church & Dwight Co Inc ...................... 938
24 Home Beneficial Corp ........................ 909
21 Financial Trust Corp ........................ 837
10 Republic NY Corp ............................ 816
21 New York Bancorp Inc ........................ 814
20 Capitol American Financial Corp ............. 727
17 CNB Bancshares Inc .......................... 710
28 BRE Properties Inc .......................... 693
18 Midland Co .................................. 693
33 USF&G Corp .................................. 689
30 Crawford & Co ............................... 686
31 MGI Properties .............................. 682
17 BT Financial Corp ........................... 674
45 Burham Pacific Properties Inc ............... 669
17 Liberty Corp ................................ 667
20 United Bankshares Inc ....................... 660
20 First Midwest Bancorp Inc ................... 652
22 First Michigan Bank Corp .................... 652
17 JSB Financial Inc ........................... 646
17 Selective Insurance Group ................... 646
21 Argonaut Group Inc .......................... 646
25 McGrath Rent Corp ........................... 644
16 Tredegar Industries Inc ..................... 642
16 UMB Financial Corp .......................... 638
18 Whitney Holding Corp ........................ 637
12 Park National Corp .......................... 636
15 USBancorp Inc ............................... 636
26 Penn Real Estate Investment
Trust.................................... 634
16 United Carolina Bancshares .................. 632
17 First Commercial Corp ....................... 631
17 First Financial Corp ........................ 629
18 Firstbank Illinois Co ....................... 625
19 First Financial Bancorp ..................... 617
45 Commercial Intertech Corp ................... 613
19 Corus Bankshares Inc ........................ 613
19 First United Bancshares Inc ................. 613
15 Farmers Capital Bank Corp ................... 611
21 Bank of Granite Corp ........................ 609
12 Berkley W R Corp ............................ 609
33 Baldwin & Lyons Inc ......................... 606
22 CBT Corp .................................... 605
22 Community First Bankshares .................. 605
23 American Heritage Life Investors ............ 604
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
22 Zenith National Insurance ................... $602
28 Fulton Financial Corp ....................... 602
13 Trenwick Group Inc .......................... 601
25 F & M Bancorp Frederick ..................... 600
28 Heritage Financial Service Inc .............. 595
48 First Union Real Estate ..................... 594
19 S&T Bancorp Inc ............................. 584
21 Bancorp South Inc ........................... 583
24 Nationwide Health ........................... 582
331 CRI Liquidating REIT Inc..................... 579
68 Cash America International Inc. ............. 578
22 First Western Bancorp Inc ................... 577
27 F & M National Corp ......................... 577
50 IRT Property Co ............................. 575
15 Frontier Insurance Group Inc ................ 574
44 Western Investment Real Estate .............. 572
15 National Health Investors, Inc. ............. 568
17 Tompkins County Trustco Inc ................. 567
17 Omega Healthcare Investors Inc .............. 565
23 Hubco Inc ................................... 563
20 American Financial Enterprise
Inc...................................... 560
21 First Merchants Corp ........................ 556
21 Poe & Brown Inc ............................. 556
25 SEI Corp .................................... 556
26 Trustco Bank Corp ........................... 556
7 +Alexander's Inc ............................. 554
20 Brenton Banks Inc ........................... 552
20 Federal Realty Investment Trust ............. 542
29 First Commonwealth Financial
Corp ..................................... 540
45 EMC Insurance Group Inc ..................... 540
6 +Markel Corp ................................. 540
22 First Source Corp ........................... 539
21 Valley National Bancorp ..................... 538
22 Health Care REIT Inc ........................ 536
11 Mark Twain Bancshares Inc ................... 536
20 BSB Bancorp Inc ............................. 535
23 Allied Capital Commercial Corp .............. 535
22 Wellsford Residential Property
Trust..................................... 533
17 Albank Financial Corp ....................... 533
40 Hilb, Rogal & Hamilton Co ................... 530
28 American Federal Bank ....................... 528
41 CRIIMI MAE Inc. ............................. 528
22 American Health Properties .................. 525
20 National Pennsylvania
Bancshares Inc ........................... 522
16 Merchants New York Bancorp .................. 520
15 +MAIC Holdings Inc ........................... 508
16 Citizens Banking Corp ...................... 504
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
20 Keystone Financial Inc ...................... $500
50 Berkshire Realty Co ......................... 494
51 Gainsco Inc ................................. 491
21 Albany International Corp Cl A ............. 486
16 Acordia Inc ................................. 464
14 Gallagher (Arthur J.) & Co .................. 434
16 HCC Insurance Holdings Inc .................. 384
--------
221,537
--------
Health Care (4.4%)
373 Schering-Plough Corp. ....................... 24,152
591 Columbia Healthcare Corp .................... 24,083
118 Bristol-Myers Squibb Co. .................... 12,833
199 American Home Products Corp. ................ 11,666
187 +Amgen Inc. .................................. 10,168
232 Pharmacia & Upjohn Inc ...................... 9,193
94 Warner Lambert Co ........................... 7,050
89 +Boston Scientific Corp ...................... 5,340
100 +HEALTHSOUTH Corp ............................ 3,813
300 Kinetic Concepts Inc ........................ 3,675
347 +Medco Research Inc .......................... 3,644
204 Mylan Laboratories Inc ...................... 3,417
96 +Forest Laboratories Inc ..................... 3,144
142 +Nellcor Inc ................................. 3,106
84 +Centocor Inc ................................ 3,003
35 +Pacificare Health Systems Inc ............... 2,984
65 +Watson Pharmaceuticals ...................... 2,921
70 +Biogen Inc. ................................. 2,713
52 +HealthCare COMPARE Corp ..................... 2,203
98 +Tenet Healthcare Corp ....................... 2,144
101 +Value Health Inc. ........................... 1,969
61 +Foundation Health Corp ...................... 1,937
100 +Humana Inc .................................. 1,912
135 +Horizon/CMS Healthcare Corp ................. 1,704
33 Mallinckrodt Inc. ........................... 1,456
29 DENTSPLY International Inc. ................. 1,377
25 +St. Jude Medical Inc. ....................... 1,066
34 Diagnostic Products Corp .................... 880
31 +ALZA Corp ................................... 802
22 Allergan Inc. ............................... 784
50 Biomet Inc .................................. 756
21 Bausch & Lomb Inc ........................... 745
18 United States Surgical Corp ................. 709
62 +Novacare Inc ................................ 682
45 +Tecnol Medical Products Inc. ................ 681
24 +Acuson ...................................... 585
12 +Synetic Inc ................................. 582
20 Bard (CR) Inc ............................... 560
31 Carter Wallace Inc .......................... 484
37 +Beverly Enterprises Inc ..................... 472
41 +Epitope Inc ................................. 471
20 +Datascope Corp .............................. 400
--------
162,266
--------
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
Technology (2.0%)
729 X-Rite Inc .................................. $12,029
309 Beckman Instruments Inc ..................... 11,858
282 +Loral Space Communications .................. 5,182
100 +Parametric Technology ....................... 5,138
91 Raytheon Co ................................. 4,379
82 Wallace Computer Services Inc. .............. 2,829
56 +Litton Industries Inc ....................... 2,667
44 +Compuware Corp .............................. 2,205
119 Sensormatic Electronics Corp ................ 1,993
47 +Fiserv Inc .................................. 1,727
181 Novell Inc .................................. 1,714
37 Thiokol Corp ................................ 1,656
30 +Dell Computer Corp .......................... 1,594
31 +Policy Management Systems
Corp..................................... 1,430
19 +3Com Corp ................................... 1,394
51 +Stratus Computer Inc. ....................... 1,390
25 Teleflex Inc ................................ 1,303
49 +Advanced Micro Devices Inc .................. 1,262
53 +Structural Dynamics Research
Corp ..................................... 1,060
46 +Apple Computer Inc .......................... 960
18 +Storage Technology Corp ..................... 857
11 Harris Corp ................................. 755
29 +Boole & Babbage Inc ......................... 725
16 +BRC Holdings Inc ............................ 716
24 Analysts International Corp ................. 678
27 Cubic Corp .................................. 624
19 +Gelman Sciences Inc ......................... 617
14 CTS Corp .................................... 598
28 EG&G Inc .................................... 563
101 +Borland International Inc .................. 549
21 +Esterline Technologies Corp ................. 549
24 +Bell Industries Inc ......................... 513
42 +Amdahl Corp ................................. 509
213 +Executone Information Systems
Inc ...................................... 506
68 +Unisys Corp ................................. 459
27 +Trident Microsystems Inc .................... 456
12 +Advanced Technology
Laboratories ............................. 372
18 MTS Systems Corp ............................ 360
84 +AST Research Inc ............................ 352
--------
74,528
--------
Transportation (1.9%)
389 Burlington Northern Santa Fe
Corp..................................... 33,600
1,033 International Shipholding Corp .............. 19,111
345 Rollins Truck Leasing Corp .................. 4,356
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
36 +Federal Express Corp. ....................... $1,602
52 Alexander & Baldwin Inc ..................... 1,300
47 Atlantic Southeast Airlines Inc. ............ 1,028
67 Hunt J B Transport Services Inc ............. 938
41 Caliber Systems Inc ......................... 789
11 Union Pacific Corp .......................... 661
69 Frozen Foods Express
Industries............................... 621
25 +USAir Group Inc ............................. 584
34 Arnold Industries Inc ....................... 540
37 +Yellow Corp ................................. 532
65 +USA Truck Inc ............................... 520
19 Consolidated Freightways Inc ................ 423
19 Overseas Shipholding Group .................. 323
3 Florida East Coast Industries ............... 262
9 +Consolidated Freightways Corp ............... 80
--------
67,270
--------
Utilities (6.2%)
1,029 Public Service Co ........................... 18,779
838 St Joseph Light & Power ..................... 12,884
737 Cascade Natural Gas Corp .................... 12,529
735 United Water Resources Inc .................. 11,484
400 Illinova Corp ............................... 11,000
200 New England Electric ........................ 6,975
276 Southern Co ................................. 6,245
133 Enron Corp .................................. 5,736
200 Boston Edison Co. ........................... 5,375
231 Ohio Edison Co .............................. 5,255
255 Public Service Co of New
Mexico................................... 5,004
228 Philadelphia Suburban Corp .................. 4,532
130 GPU Inc ..................................... 4,371
231 Eastern Utilities Association ............... 4,014
231 +Tucson Electric Power Co .................... 3,840
119 Allegheny Power System Inc .................. 3,615
72 Duke Power Co ............................... 3,348
246 Northeast Utilities ......................... 3,260
154 Pacific Gas & Electric Co. .................. 3,234
98 Florida Progress Corp ....................... 3,161
76 Texas Utilities Co .......................... 3,097
119 Potomac Electric Power Co ................... 3,064
80 Williams Cos Inc ............................ 2,981
108 Scana Corp .................................. 2,889
85 CMS Energy Corp ............................. 2,858
81 +CalEnergy Inc ............................... 2,724
118 Edison International ........................ 2,345
42 Coastal Corp ................................ 2,053
64 MCN Corp Holding Co ......................... 1,848
47 Public Service Co of Colorado ............... 1,827
39 FPL Group Inc. .............................. 1,794
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
82 New York State Electric &
Gas Corp ................................. $1,773
43 Nipsco Industries ........................... 1,704
44 Dominion Resources Inc ...................... 1,694
54 Brooklyn Union Gas Co ....................... 1,627
32 El Paso Natural Gas ......................... 1,616
58 Entergy Corp ................................ 1,610
97 MidAmerican Energy Holdings ................. 1,540
37 National Fuel Gas Co ........................ 1,526
37 American Electric Power Co .................. 1,522
42 Southwestern Public Service ................. 1,486
28 Sonat Inc. .................................. 1,442
60 Puget Sound Power & Light ................... 1,440
63 Houston Industries Inc ...................... 1,425
67 Pacificorp .................................. 1,374
30 Pennsylvania Enterprises Inc ................ 1,316
50 Central & South West Corp ................... 1,281
47 IPALCO Enterprises .......................... 1,281
38 Cinergy Corp. ............................... 1,268
51 LG & E Energy Corp .......................... 1,250
40 Idaho Power Co .............................. 1,245
58 Montana Power Co ............................ 1,240
58 AGL Resources Inc ........................... 1,225
32 Hawaiian Electric Industries ................ 1,156
19 Consolidated National Gas Co ................ 1,050
27 Union Electric .............................. 1,040
42 Indiana Energy Inc .......................... 1,024
43 Washington Gas Light Co ..................... 973
42 PP & L Resources Inc ........................ 966
15 Columbia Gas System Inc ..................... 954
82 Central Maine Power Co. ..................... 953
46 American Water Works Inc .................... 949
30 Pacific Enterprises ......................... 911
29 Oneok Inc. .................................. 870
23 Eastern Enterprises Inc ..................... 814
24 IWC Resources Corp .......................... 747
15 +Tejas Gas Corp .............................. 714
16 California Water Services Co ................ 672
32 Nevada Power ................................ 656
14 Northern States Power........................ 642
26 Laclede Gas Co .............................. 627
17 Cilcorp Inc ................................. 623
40 Noram Energy Corp. .......................... 615
25 South Jersey Industries Inc ................. 609
26 Commonwealth Energy System .................. 608
19 United Illuminating Co ...................... 596
53 +Citizens Utilities Co Cl B .................. 590
17 Northwestern Public Service ................. 582
18 Otter Tail Power Co ......................... 578
20 North Carolina Natural Gas Corp ............. 577
24 Northwest Natural Gas Co .................... 576
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Medium-Term Retirement Fund (continued)
21 TNP Enterprise Inc .......................... $575
25 United Cities Gas Co ........................ 562
22 Connecticut Natural Gas Corp ................ 561
24 Piedmont Natural Gas Inc .................... 561
26 Yankee Energy System ........................ 556
24 MDU Resources Group Inc ..................... 552
61 +TPC Corp .................................... 549
29 Empire District Electric Co ................. 544
55 +Niagara Mohawk Power Corp ................... 543
15 Wicor Inc ................................... 538
24 UGI Corp .................................... 537
19 Aquarion Co ................................. 530
22 Atmos Energy Corp ........................... 525
22 Green Mountain Power Corp ................... 525
18 Bay State Gas Co ............................ 509
14 Orange & Rockland Utilities Inc ............. 502
23 Southern California Water Co ................ 500
17 New Jersey Resources Corp ................... 497
24 Washington Energy Co ........................ 495
24 Western Gas Resources Inc ................... 462
20 Enserch Corp ................................ 460
21 Colonial Gas Co ............................. 446
15 WPS Resources Corp .......................... 428
133 +PhoneTel Technologies Inc ................... 424
19 Madison Gas & Electric ...................... 385
--------
228,444
--------
Total Common Stocks
(Cost $2,127,837)......................... 2,199,967
---------
OPEN END INVESTMENT
COMPANY (3.9%)
(Cost $141,920)
13,639 Bankers Trust EAFE Equity
Index Fund .............................. 144,849
--------
UNIT INVESTMENT
TRUST (4.8%)
(Cost $180,814)
Standard & Poor's
2,400 Depositary Receipt ...................... 177,450
--------
Principal
Amount
U.S. GOVERNMENT
OBLIGATIONS (40.9%)
$425,000 U.S. Treasury Bill (11.4%)
Due 4/17/97 ................................. 418,868
--------
158,000 U.S. Treasury Bond (4.4%)
6.875% Due 8/15/25 .......................... 161,111
--------
Principal
Amount Security Value
Tomorrow Medium-Term Retirement Fund (continued)
U.S. Treasury Notes (25.1%)
$505,000 5.500% Due 11/15/98 ......................... $501,606
423,000 6.500% Due 8/15/05 .......................... 425,711
--------
927,317
--------
Total U.S. Treasury Obligations
(Cost $1,507,528)......................... 1,507,296
--------
Total Investments (109.4%)
(Cost $3,958,099)......................... 4,029,562
Liabilities in Excess of Other
Assets (-9.4%)............................ (348,377)
---------
Total Net Assets (100.0%).................... $3,681,185
=========
<FN>
+ Non-income producing security.
</FN>
</TABLE>
<TABLE>
<C> <S> <C>
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund
COMMON STOCKS (55.3%)
Basic Materials (3.0%)
377 Dow Chemical Co ............................. $29,547
1,500 Coeur D'Alene Mines Corp..................... 22,687
700 Quaker Chemical Corp ........................ 11,463
385 Barrick Gold Corp ........................... 11,021
60 Pioneer Hi Bred International ............... 4,200
335 Calgon Carbon Corp .......................... 4,104
700 +Hecla Mining Co ............................. 3,850
600 +Amax Gold Inc ............................... 3,825
68 Nucor Corp .................................. 3,468
46 Phelps Dodge Corp ........................... 3,105
137 Placer Dome Inc ADR ......................... 2,980
67 IMC Global Inc .............................. 2,621
36 Aluminum Co of America ...................... 2,295
51 Newmont Mining Corp ......................... 2,282
27 Rohm & Haas Co .............................. 2,204
40 Consolidated Papers Inc ..................... 1,965
60 Inco Ltd .................................... 1,913
41 International Flavors &
Fragrances Inc............................. 1,845
31 Reynolds Metals Co .......................... 1,748
44 Bowater Inc ................................. 1,655
160 Ethyl Corp .................................. 1,540
40 Olin Corp .................................. 1,505
30 Champion International Corp. ................ 1,298
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
40 Ferro Corp .................................. $1,135
21 Great Lakes Chemical Corp. .................. 982
35 Georgia Gulf Corp ........................... 941
30 Lubrizol Corp ............................... 930
22 Tambrands Inc. .............................. 899
44 Engelhard Corp .............................. 841
22 Ecolab Inc .................................. 828
20 BF Goodrich Co............................... 810
30 Schulman Inc ................................ 735
12 BetzDearborn Inc. ........................... 702
36 Crompton & Knowles Corp ..................... 693
22 Chesapeake Corp ............................. 690
10 Harso Corp .................................. 685
18 Bemis Inc ................................... 664
28 Cyprus Amax Minerals Co. .................... 655
20 Westvaco Corp ............................... 575
11 Precision Castparts Corp .................... 546
29 Glatefelter (PH) Co ......................... 522
28 Wausau Paper Mills Co ....................... 518
11 Fuller H B Co ............................... 517
37 Lawter International Inc .................... 467
9 +MAXXAM Inc .................................. 429
10 +Sealed Air Corp ............................. 416
60 Battle Mountain Gold Co ..................... 413
23 Oregon Steel Mills .......................... 385
12 Dexter Corp ................................. 383
41 +Bethlehem Steel Corp. ....................... 369
14 Sonoco Products Co .......................... 362
10 James River Corp of Virginia ................ 331
9 Carpenter Technology Corp ................... 330
7 Cleveland-Cliffs Inc ........................ 318
45 Echo Bay Mines Ltd .......................... 298
--------
142,490
--------
Capital Goods (5.7%)
605 Boeing Co.................................... 64,357
402 Minnesota Mining &
Manufacturing Co........................... 33,316
1,200 +Vallen Corp ................................. 19,950
319 York International Corp ..................... 17,824
320 +Parametric Technology Corp .................. 16,440
205 McDonnell Douglas Corp ...................... 13,120
268 Deere & Co .................................. 10,888
100 U.S. Robotics Corp .......................... 7,200
300 Daniel Industries Inc ....................... 4,425
44 Emerson Electric Co. ........................ 4,257
87 Corning Inc ................................. 4,024
117 WMX Technologies Inc. ....................... 3,817
192 Westinghouse Electric Corp .................. 3,816
58 Honeywell Inc. .............................. 3,813
200 Armor All Products Corp ..................... 3,800
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
66 Crown Cork & Seal Inc ....................... $3,589
200 Raymond Corp ................................ 3,475
100 +Analog Devices Inc. ......................... 3,387
100 +Atmel Corp .................................. 3,311
100 +ADC Telecommunications Inc .................. 3,113
47 Tyco International Ltd ...................... 2,485
48 Alco Standard Corp .......................... 2,478
23 Textron Inc ................................. 2,168
88 Premark International Inc.................... 1,958
29 Fluor Corp .................................. 1,820
78 Allegheny Teledyne Inc ...................... 1,794
21 Raychem Corp ............................... 1,683
62 Pall Corp ................................... 1,581
76 Sensormatic Electronics Corp ................ 1,273
22 Miller (Herman) Inc ......................... 1,246
23 Dover Corp .................................. 1,156
24 Hubbell Inc Cl B ............................ 1,038
22 Kaydon Corp ................................. 1,037
57 Gencorp Inc ................................. 1,033
31 HON Industries .............................. 1,023
24 Sundstrand Corp ............................. 1,020
100 +Novell Inc .................................. 947
23 Trinity Industries Inc ...................... 862
49 RPM Inc ..................................... 833
20 +BMC Software Inc ............................ 827
20 Thermo Electron Corp ........................ 825
20 +Cadence Design Systems Inc .................. 795
20 Kennametal Inc .............................. 778
20 Avery Dennison Corp ......................... 707
11 Nordson Corp ................................ 701
21 Standard Register Co ........................ 683
20 +USA Waste Services Inc ...................... 638
28 Ametek Inc .................................. 623
13 Cummins Engine Inc .......................... 598
10 Avnet Inc ................................... 582
20 Duriron Co Inc .............................. 542
10 +Gateway 2000 Inc ............................ 536
10 +Solectron Corp .............................. 534
20 Reynolds & Reynolds Cl A .................... 520
23 Cincinnati Milacron Inc ..................... 503
7 +FMC Corp .................................... 491
10 Harnischfeger Industries Inc. ............... 481
20 +360 Communications Co........................ 462
18 +Jacobs Engineering Group Inc ................ 425
7 Carlisle Cos Inc ............................ 424
21 Keystone International Inc .................. 423
8 Teleflex Inc ................................ 417
17 Watts Industries Inc Cl A ................... 406
9 Thiokol Corp ................................ 403
17 +Rohr Inc .................................... 385
11 Donaldson Co Inc ............................ 369
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
15 Albany International Corp Cl 'A' ............ $347
10 Leggett & Platt Inc ......................... 346
18 Brush Wellman Inc. .......................... 295
14 +Datascope Corp .............................. 280
--------
271,703
--------
Communication Services (3.3%)
1,863 GTE Corp .................................... 84,766
894 Sprint Corp ................................. 35,648
198 AT&T Corp ................................... 8,613
169 Bellsouth Corp. ............................. 6,823
91 Bell Atlantic Corp .......................... 5,892
99 NYNEX Corp .................................. 4,764
123 US West Inc ................................. 3,967
70 ALLTEL Corp ................................. 2,196
46 Century Telephone Enterprises
Inc...................................... 1,420
39 Frontier Corp ............................... 882
20 Southern New England
Telecommunications......................... 777
30 Aliant Communications Co .................... 510
--------
156,258
--------
Consumer Cyclical (5.6%)
853 Eastman Kodak Co ............................ 68,453
417 Vulcan Materials Co ......................... 25,385
800 Caseys General Stores Inc ................... 15,000
1,000 Dames & Moore Inc ........................... 14,625
300 +Fruit of the Loom Inc ....................... 11,362
229 May Department Stores Co .................... 10,706
194 Penney (J.C.) Co. Inc. ...................... 9,457
155 General Motors Corp ......................... 8,641
139 Albertsons Inc .............................. 4,952
300 +AMC Entertainment Inc ....................... 4,313
120 +Fred Meyer Inc .............................. 4,260
700 +American Media Inc .......................... 4,112
110 Masco Corp .................................. 3,960
200 Delechamps Inc .............................. 3,875
200 Blair Corp .................................. 3,850
200 Alico Inc ................................... 3,750
200 Russ Berrie & Co Inc ........................ 3,600
200 Wackenhut Corp Ser A ........................ 3,450
121 Mattel Inc................................... 3,358
46 Eaton Corp .................................. 3,208
104 Gap Inc. .................................... 3,133
40 Gannet Inc .................................. 2,995
60 Whirlpool Corp .............................. 2,798
69 Dayton Hudson Corp .......................... 2,708
83 Sysco Corp .................................. 2,708
94 Service Corp International .................. 2,632
141 The Limited Inc ............................. 2,591
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
6 Washington Post Co .......................... $2,011
42 Lancaster Colony Corp ....................... 1,932
168 +K mart Stores ............................... 1,743
35 Interpublic Group of Cos Inc ................ 1,662
41 Hasbro Inc .................................. 1,594
32 Harcourt General Inc......................... 1,476
38 Wallace Computer Services Inc. .............. 1,311
32 American Stores Co .......................... 1,308
28 Omnicom Group Inc ........................... 1,281
34 +Jones Apparel Group ......................... 1,271
15 Tribune Co. ................................. 1,183
35 Cognizant Corp .............................. 1,155
35 Dillard Department Stores Inc
Cl A..................................... 1,081
34 Circuit City Store Inc ...................... 1,024
40 +HSN Inc ..................................... 950
20 Harley Davidson Inc ......................... 940
83 Burlington Industries Inc ................... 913
33 Modine Manufacturing Co ..................... 883
13 +Scholastic Corp ............................. 874
27 South Down Inc .............................. 840
12 Armstrong World Industries Inc............... 834
35 Dun & Bradstreet Corp ....................... 831
27 Black & Decker Corp ......................... 813
20 Dow Jones & Co Inc .......................... 678
24 +Lands' End Inc .............................. 636
20 Echlin Inc. ................................. 633
18 Belo (AH) Corp............................... 628
57 +Best Buy Co ................................. 606
35 Viad Corp ................................... 578
30 Sotheby's Holdings Cl A ..................... 555
26 Cooper Tire & Rubber Co...................... 514
19 +MacFrugals Bargains Closeout ................ 496
10 Mercantile Stores Co ........................ 494
8 Houghton Mifflin Co ......................... 453
25 Lance Inc ................................... 450
10 +Chris Craft Industries Inc .................. 419
16 Lee Enterprises Inc ......................... 372
15 Arvin Industries Inc ........................ 371
22 CPI Corp .................................... 369
13 Stanley Works ............................... 351
81 +Service Merchandise Inc ..................... 344
100 CML Group Inc ............................... 338
22 Duty Free International Inc ................ 319
18 +AnnTaylor Stores Corp ....................... 315
6 Home Depot Inc .............................. 301
13 Caliber Systems Inc ......................... 250
11 +ACNielsen Corp .............................. 166
--------
268,428
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
Consumer Staples (5.3%)
1,500 ABM Industries Inc .......................... $27,750
141 Unilever NV ADR ............................. 24,710
177 Kimberly-Clark Corp ......................... 16,859
1,030 Genovese Drugs Stores ....................... 15,965
177 Gillette Co. ................................ 13,762
173 Kellogg Co .................................. 11,353
324 +Viacom Inc. Cl 'B' .......................... 11,300
486 Archer Daniels Midland Co.................... 10,692
500 Goodmark Foods Inc .......................... 8,250
204 Anheuser- Busch Cos Inc. .................... 8,160
150 Coca Cola Co ................................ 7,894
57 Philip Morris Cos Inc. ...................... 6,469
174 +Revco D.S. Inc .............................. 6,438
178 Pepsico Inc. ................................ 5,207
223 Flowers Industries Inc ...................... 4,794
300 ADVO Inc .................................... 4,200
52 Ralston Purina Co ........................... 3,816
100 Quaker Oats Co............................... 3,813
200 Brown Group Inc ............................. 3,675
78 +Kroger Co ................................... 3,627
200 International Multifoods Corp ............... 3,625
99 Heinz H J Co ................................ 3,564
64 Conagra Inc ................................. 3,184
128 IBP Inc ..................................... 3,104
47 General Mills Inc ........................... 2,979
89 UST Inc. .................................... 2,881
31 Colgate- Palmolive Co ....................... 2,860
35 Avon Products Inc ........................... 1,999
38 Hershey Foods Corp .......................... 1,663
51 Dean Foods Co................................ 1,645
48 Tyson Foods Inc Cl A ........................ 1,644
23 +Vons Cos Inc ................................ 1,377
29 McDonald's Corp. ............................ 1,312
46 Bergen Brunswig Corp ........................ 1,311
30 +CVS Corp..................................... 1,237
31 Universal Foods Corp ........................ 1,093
10 Clorox Co. .................................. 1,004
23 +Ceridian Corp ............................... 931
20 +Symbol Technologies Inc. .................... 885
30 Supervalu Inc. .............................. 851
23 Hannaford Brothers Co ....................... 782
20 +King World Productions Inc .................. 738
26 Kelly Services Inc Cl A ..................... 702
21 Deluxe Corp ................................. 688
50 +NEXTEL Communications Inc Cl A .............. 653
30 +Mirage Resorts Inc. ......................... 649
13 Brown-Forman Corp Cl 'B' .................... 595
31 Coors (Adolph) Cl B ......................... 588
20 Callaway Golf Co ............................ 575
62 +Perrigo Co .................................. 566
50 +OfficeMax Inc. .............................. 531
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
35 Dial Corp.................................... $516
17 TCA Cable TV Inc ............................ 512
20 Sbarro Inc .................................. 510
10 Longs Drug Stores Inc ....................... 491
10 Coca Cola Entrerprises Inc .................. 485
35 Savannah Foods & Industries ................. 472
33 Ruddick Corp ................................ 462
20 Banta Corp. ................................. 457
16 First Brands Corp ........................... 454
20 International Game Technology ............... 365
22 Carter Wallace Inc .......................... 344
14 Church & Dwight Co .......................... 320
44 +Shoney's Inc ................................ 308
10 Dreyers Grand Ice Cream Inc ................. 290
30 +Buffets Inc ................................. 274
8 +Footstar Inc ................................ 199
--------
251,409
--------
Energy (12.8%)
738 Royal Dutch Petroleum Co ADR ................ 126,013
930 Exxon Corp .................................. 91,140
600 Mobil Corp. ................................. 73,350
1,105 Chevron Corp ................................ 71,825
374 Schlumberger Ltd ............................ 37,353
459 Amoco Corp .................................. 37,064
368 Texaco Inc .................................. 36,110
1,000 +HS Resources Inc ............................ 16,500
1,000 Getty Petroleum Corp ........................ 16,250
144 duPont (EI) de Nemours & Co ................. 13,590
700 +Tuboscope Vetco International
Corp..................................... 10,850
724 Quaker State Corp ........................... 10,227
500 Sevenson Environmental
Services Inc............................... 9,125
42 Atlantic Richfield .......................... 5,570
74 Anadarko Petroleum Co........................ 4,792
101 Phillips Petroleum Co. ...................... 4,469
300 Berry Petroleum Class A ..................... 4,313
300 +Crown Central Petroleum Cl A ................ 3,712
166 +Global Marine Inc ........................... 3,424
64 Burlington Resources Inc .................... 3,224
51 Halliburton Co............................... 3,073
128 Occidental Petroleum Corp ................... 2,992
124 USX-Marathon Group........................... 2,961
61 Baker Hughes Inc ............................ 2,105
59 Dresser Industries Inc ...................... 1,829
36 +ENSCO International Inc ..................... 1,746
36 Tidewater Inc ............................... 1,629
49 +Weatherford Enterra Inc ..................... 1,470
18 Tosco Corp................................... 1,424
73 +Nabors Industries Inc ....................... 1,405
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
39 Apache Corp ................................. $1,380
22 Amerada Hess Corp. .......................... 1,273
26 +Smith International Inc ..................... 1,167
21 +BJ Services Co .............................. 1,071
28 Parker & Parsley Petroleum Co ............... 1,029
28 Mapco Inc ................................... 952
28 Valero Energy Corp .......................... 802
75 Ranger Oil Ltd .............................. 741
13 Murphy Oil Corp ............................. 723
31 +Varco International Inc ..................... 717
20 Ultra Diamond Shamrock Corp ................. 632
58 +Parker Drilling Co .......................... 558
10 Helmerich & Payne Inc........................ 521
--------
611,101
--------
Financial (4.9%)
400 Summit Bankcorp ............................. 17,500
300 Comerica Inc ................................ 15,712
1,000 Avemco Corp ................................. 15,625
900 Kranzco Realty Trust ........................ 15,188
246 American Express Co. ........................ 13,899
314 PHH Corp .................................... 13,502
700 Mid Am Inc .................................. 11,987
400 Paine Webber Group Inc ...................... 11,250
700 Commercial Net Lease Realty ................. 11,113
93 Bankamerica Corp ............................ 9,277
500 State Auto Financial Corp ................... 9,000
500 South West Property Trust ................... 8,437
100 Progressive Corp ............................ 6,738
100 Commerce Bancshares Inc ..................... 4,625
300 Burham Pacific Properties Inc ............... 4,462
200 F & M National Corp ......................... 4,275
300 Hilb, Rogal & Hamilton Co ................... 3,975
300 CRIIMI Mae Inc. ............................. 3,863
200 American Federal Bank ....................... 3,775
200 First Commonwealth Financial
Corp..................................... 3,725
300 First Union Real Estate Trust ............... 3,712
2,100 CRI Liquidating REIT Inc .................... 3,675
300 EMC Insurance Group Inc ..................... 3,600
100 Southtrust Corp ............................. 3,488
300 IRT Property Co ............................. 3,450
65 Lincoln National Corp Ltd. .................. 3,413
45 UNUM Corp ................................... 3,251
32 Loews Corp .................................. 3,016
25 Marsh & McLennan Cos ........................ 2,600
36 Chubb Corp .................................. 1,935
40 National City Corp .......................... 1,795
33 +HealthCare COMPARE Corp ..................... 1,398
29 Bancorp Hawaii Inc. ......................... 1,218
32 Northern Trust Corp ......................... 1,160
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
20 +Policy Management Systems
Corp..................................... $922
20 U.S. Bancorp ................................ 899
11 Transatlantic Holdings Inc .................. 885
21 Wilmington Trust Co.......................... 830
38 City National Corp .......................... 822
38 USF&G Corp .................................. 793
10 American National Insurance Co. ............. 737
22 Dauphin Deposit Corp ........................ 726
10 Franklin Resource Inc ....................... 684
20 USLife Corp ................................. 665
10 State Street Boston Corp .................... 645
20 Charles Schwab Corp ......................... 640
4 +Echelon International Corp .................. 62
--------
234,949
--------
Health Care (8.7%)
1,897 Pharmacia & Upjohn Inc....................... 75,169
626 Bristol-Myers Squibb Co. .................... 68,077
1,658 Columbia Healthcare Corp .................... 67,564
1,050 American Home Products Corp. ................ 61,556
740 +Amgen Inc. .................................. 40,237
558 Schering-Plough Corp. ....................... 36,131
300 +HEALTHSOUTH Corp ............................ 11,437
101 Pfizer Inc .................................. 8,370
79 Warner Lambert Co ........................... 5,925
77 Cardinal Health Inc ......................... 4,485
100 Beckman Instruments Inc ..................... 3,837
165 +Tenet Healthcare Corp ....................... 3,609
60 +Boston Scientific Corp ...................... 3,600
300 +Epitope Inc ................................. 3,450
167 +Humana Inc .................................. 3,194
70 +Biogen Inc. ................................. 2,713
29 CPC International Inc. ...................... 2,247
131 Mylan Laboratories Inc ...................... 2,194
39 Mallinckrodt Inc. ........................... 1,721
65 +Value Health Inc. ........................... 1,268
31 +Forest Laboratories Inc ..................... 1,015
28 +Foundation Health Corp ...................... 889
31 +ALZA Corp ................................... 802
22 Allergan Inc. ............................... 784
21 Bausch & Lomb Inc ........................... 746
40 +Chiron Corp.................................. 745
19 +Centocor Inc ................................ 679
30 +Genzyme Corp ................................ 652
24 +Acuson Corp ................................. 585
20 Bard (CR) Inc ............................... 560
44 +Novacare Inc ................................ 484
11 Diagnostic Products Corp .................... 285
--------
415,010
--------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
Technology (1.5%)
500 Equifax Inc. ................................ $15,312
192 +Dell Computer Corp .......................... 10,200
134 +Cisco Systems Inc ........................... 8,526
64 Intel Corp .................................. 8,380
200 +Bell Industries Inc ......................... 4,275
225 +Loral Space Communications .................. 4,134
106 First Data Corp ............................. 3,869
64 Lucent Technologies Inc ..................... 2,960
60 Raytheon Co ................................. 2,888
41 +Compuware Corp .............................. 2,055
35 +Litton Industries Inc ....................... 1,667
50 +Advanced Micro Devices Inc .................. 1,288
33 +Fiserv Inc .................................. 1,213
47 +Apple Computer Inc .......................... 981
23 +Stratus Computer Inc. ....................... 627
12 +Storage Technology Corp ..................... 571
16 +Structural Dynamics Research
Corp..................................... 320
60 +AST Research Inc ............................ 251
24 +Borland International Inc.................... 130
--------
69,647
--------
Transportation (0.5%)
169 Burlington Northern Santa Fe
Corp..................................... 14,597
200 International Shipholding Corp .............. 3,700
34 +Federal Express Corp. ....................... 1,513
37 Alexander & Baldwin Inc ..................... 925
20 Illinois Central Corp ....................... 640
20 +Consolidated Freightways Inc ................ 445
24 Arnold Industries Inc ....................... 381
26 Hunt J B Transportation
Services Inc............................. 364
19 Overseas Shipholding Group .................. 323
10 Consolidated Freightways Corp ............... 89
--------
22,977
--------
Utilities (4.0%)
1,200 +Tucson Electric Power Co .................... 19,950
1,000 Cascade Natural Gas Corp .................... 17,000
600 Boston Edison Co. ........................... 16,125
800 Eastern Utilities Association................ 13,900
600 Ohio Edison Co .............................. 13,650
700 United Water Resources Inc .................. 10,938
700 St Joseph Light & Power Co .................. 10,762
177 Southern Co ................................. 4,005
327 Central Maine Power Co. ..................... 3,801
88 Enron Corp .................................. 3,795
200 Empire District Electric .................... 3,750
200 Public Service Co of North
Carolina................................. 3,650
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
100 New England Electric ........................ $3,487
100 GPU Inc ..................................... 3,362
300 Citizens Utilities Co Cl B .................. 3,338
66 FPL Group Inc. .............................. 3,036
77 Williams Cos Inc ............................ 2,869
68 American Electric Power Co .................. 2,796
140 Edison International ........................ 2,783
100 Illinova Corp ............................... 2,750
119 +Pacific Gas & Electric Co. .................. 2,499
57 Texas Utilities Co .......................... 2,323
76 Allegheny Power System Inc .................. 2,308
63 Florida Progress Corp ....................... 2,032
76 Potomac Electric Power ...................... 1,957
40 Duke Power Co ............................... 1,860
69 Scana Corp .................................. 1,846
54 CMS Energy Corp ............................. 1,816
135 Northeast Utilities ......................... 1,789
52 +CalEnergy Inc ............................... 1,748
84 Pacificorp .................................. 1,722
34 Coastal Corp ................................ 1,662
73 Houston Industries Inc ...................... 1,652
37 Public Service Co of Colorado ............... 1,438
35 Dominion Resources Inc....................... 1,347
45 Entergy Corp................................. 1,249
52 New York State Electric &
Gas Corp................................... 1,124
32 Cinergy Corp. ............................... 1,068
19 Consolidated National Gas Co ................ 1,050
16 Columbia Gas System Inc ..................... 1,018
62 Midamerican Energy Holdings ................. 984
38 Central & South West Corp ................... 975
29 MCN Corp Holdings Co ........................ 837
15 El Paso Natural Gas Co ...................... 758
18 National Fuel Gas Co ........................ 742
24 Brooklyn Union Gas Co ....................... 723
20 Southwestern Public Service ................. 707
27 Puget Sound Power & Light ................... 648
14 Pennsylvania Enterprises Inc ................ 614
27 Montana Power Co ............................ 577
27 AGL Resources Inc ........................... 570
18 Idaho Power Co .............................. 560
15 Hawaiian Electric Industries Inc ............ 542
25 Public Service Co of New
Mexico................................... 491
20 Washington Gas Light Co ..................... 453
13 Indiana Energy Inc .......................... 317
--------
189,753
--------
Total Common Stocks
(Cost $2,551,213).......................... 2,633,725
---------
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Schedules of Investments at December 31, 1996
Number
of Shares Security Value
Tomorrow Short-Term Retirement Fund (continued)
UNIT INVESTMENT
TRUST (4.7%)
(Cost $223,347)
3,000 Standard & Poor's Depositary
Receipts................................... $221,813
--------
Principal
Amount
U.S. GOVERNMENT
OBLIGATIONS (56.4%)
U.S. Treasury Bill (16.5%)
$800,000 5.148% Due 4/17/97 .......................... 788,458
--------
U.S. Treasury Bond (5.8%)
270,000 6.875% Due 8/15/25 ......................... 275,316
--------
U.S. Treasury Notes (34.1%)
886,000 5.500% Due 11/15/98 ......................... 880,046
739,000 6.500% Due 8/15/05 .......................... 743,737
--------
1,623,783
---------
Total U.S. Government
Obligations ($2,688,637).................. 2,687,557
---------
Total Investments (116.4%)
(Cost $5,463,197).......................... 5,543,095
Liabilities in Excess of
Other Assets (-16.4%)...................... (780,425)
---------
Total Net Assets (100.0%).................... $4,762,670
=========
<FN>
+ Non-incoming producing security.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Assets and Liabilities at December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long- Medium- Short-
Large- Small- Term Term Term
Cap Cap Retirement Retirement Retirement
Assets ------- --------- --------- --------- ----------
Investments at value (+)..................................... $1,562,208 $1,908,577 $1,313,468 $4,029,562 $5,543,095
Cash........................................................... 29,185 82,628 98,368 0 10,204
Receivable for Fund shares sold................................ 0 0 89,094 438,193 962,406
Receivable for securities sold................................ 0 0 600 1,500 700
Receivable from Adviser........................................ 14,152 11,516 7,490 8,321 4,543
Dividends and interest receivable.............................. 2,519 4,150 5,835 21,104 33,446
Deferred organizational expenses and
prepaid expenses........................................... 41,717 41,762 38,625 38,632 38,635
--------- --------- --------- --------- ----------
1,649,781 2,048,633 1,553,480 4,537,312 6,593,029
--------- --------- --------- --------- ----------
Liabilities
Payable for investment securities purchased.................... 0 0 217,952 745,197 1,756,290
Payable for Fund shares redeemed.............................. 549 5,230 9 137 11
Payable to custodian bank...................................... 0 0 0 32,392 0
Accrued distribution fees payable
(Adviser Shares)........................................... 0 0 210 676 710
Accrued service fees payable
(Institutional Shares)..................................... 0 0 184 347 209
Organization costs payable..................................... 51,083 51,083 47,200 47,110 47,110
Other accrued expenses......................................... 27,017 24,929 28,034 30,268 26,029
--------- --------- --------- --------- ----------
78,649 81,242 293,589 856,127 1,830,359
--------- --------- --------- --------- ----------
Net Assets........$1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========= ========= ========= ========= =========
Net Assets Represented by:
Shares of beneficial interest (par $0.001)..................... $140 $264 $180 $457 $520
Paid-in surplus................................................ 1,464,282 1,762,989 1,229,337 3,612,663 4,686,086
Accumulated undistributed/(overdistributed)
net investment income...................................... (1,618) 1,401 (2,127) (1,936) (1,788)
Undistributed/(overdistributed) realized
gains on investments....................................... 157 2,112 (124) (1,462) (2,046)
Net unrealized appreciation on investments..................... 108,171 200,625 32,625 71,463 79,898
--------- --------- --------- --------- ----------
Net Assets ....................................................$1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========= ========= ========= ========= =========
Net Asset Value and Redemption Price
per Share:
Adviser Shares:
Net Assets..................................................... - - $977,702 $3,416,022 $4,458,598
Shares of beneficial interest issued and
outstanding................................................. - - 140,044 423,387 486,601
Net asset value per share...................................... - - $6.98 $8.07 $9.16
========= ========= ========= ========= =========
Institutional Shares:
Net Assets.....................................................$1,571,132 $1,967,391 $282,189 $265,163 $304,072
Shares of beneficial interest issued and
outstanding................................................ 140,123 263,461 40,014 33,733 33,016
Net asset value per share...................................... $11.21 $7.47 $7.05 $7.86 $9.21
========= ========= ========= ========= =========
(+) Investments at cost...................................... 1,454,037 1,707,952 1,280,843 3,958,099 5,463,197
Unrealized Appreciation/(Depreciation): *
Gross appreciation......................................... 127,114 251,739 49,958 115,060 113,965
Gross depreciation......................................... (18,943) (51,114) (17,333) (43,597) (34,067)
--------- --------- --------- --------- ----------
Net unrealized appreciation.................................... 108,171 200,625 32,625 71,463 79,898
========= ========= ========= ========= =========
<FN>
* Based on cost of securities for Federal Income tax purposes which does not
differ from book cost.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Operations for the Period Ended December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long Medium Short
Large Small Term Term Term
Cap* Cap* Retirement** Retirement** Retirement**
Investment Income:
Dividends.................................................... $20,123 $37,946 $6,931 $15,543 $14,285
Interest..................................................... 182 0 4,085 17,971 23,969
Other........................................................ 2,725 1,622 479 1,272 0
------- ------- ------ ------ ------
23,030 39,568 11,495 34,786 38,254
------- ------- ------ ------ ------
Expenses:
Investment advisory fees - Note 5............................ 5,907 9,076 2,533 7,501 7,488
Transfer agent fees and expenses
(Advisor Class)............................................. 0 0 10,042 10,042 10,042
Transfer agent fees and expenses
(Institutional Shares)...................................... 11,000 11,000 9,042 9,042 9,042
Custodian fees and expenses - Note 7......................... 11,028 13,201 8,958 10,132 6,187
Professional fees............................................ 29,000 30,000 28,420 31,576 31,050
Administration fees - Note 5................................. 709 1,089 304 900 899
Shareholders' reports........................................ 4,000 4,500 3,249 4,198 3,600
Fund accounting fees......................................... 25,000 25,000 24,750 24,750 24,750
Registration fees and expenses............................... 46,688 47,466 46,322 48,330 47,215
Trustees' fees and expenses.................................. 6,000 6,000 6,000 6,000 6,000
Amortization of organization costs........................... 9,453 9,453 8,612 8,597 8,597
Distribution fees (Adviser Shares) - Note 5.................. 0 0 1,320 4,325 4,574
Service fees (Institutional Shares) - Note 5................. 0 0 184 338 209
Other expenses............................................... 40 73 18 58 63
------- ------- ------ ------ ------
Total Expenses............................................... 148,825 156,858 149,754 165,789 159,716
Less fees waived by Adviser and
Administrator - Note 5...................................... (6,616) (10,165) (2,837) (8,401) (8,387)
Less expenses reimbursed
by Adviser - Note 5....................................... (130,419) (131,089) (140,534) (138,948) (132,675)
Less expenses paid indirectly - Note 7....................... (1,941) (468) (658) (1,269) (1,390)
------- ------- ------ ------ ------
Net Expenses................................................. 9,849 15,136 5,725 17,171 17,264
------- ------- ------ ------ ------
Net Investment Income........................................ 13,181 24,432 5,770 17,615 20,990
------- ------- ------ ------ ------
Realized and Unrealized Gain on
Investments
Net realized gain on investments............................ 29,755 25,143 7,802 24,377 232
Change in unrealized appreciation on
Investments.............................................. 108,171 200,625 32,625 71,463 79,898
------- ------- ------ ------ ------
Net Gain on Investments...................................... 137,926 225,768 40,427 95,840 80,130
------- ------- ------ ------ ------
Net Increase in Net Assets Resulting
from Operations............................................. $151,107 $250,200 $46,197 $113,455 $101,120
======= ======= ====== ======= =======
<FN>
* Commencement of operations February 6, 1996.
** Commencement of operations March 7, 1996.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
Statements of Changes in Net Assets for the Period Ended December 31, 1996
<S> <C> <C> <C> <C> <C>
Core Core Long- Medium- Short-
Large- Small- Term Term Term
Cap* Cap* Retirement** Retirement** Retirement**
Operations:
Net investment income................................... $13,181 $24,432 $5,770 $17,615 $20,990
Net realized gain
on investments........................................ 29,755 25,143 7,802 24,377 232
Change in unrealized
appreciation on investments........................... 108,171 200,625 32,625 71,463 79,898
---------- ---------- ---------- --------- ----------
Net Increase in Net Assets
Resulting from Operations............................. 151,107 250,200 46,197 113,455 101,120
---------- ---------- ---------- --------- ----------
Dividends to shareholders from net investment income:
Adviser Shares 0 0 (7,897) (11,718) (22,778)
Institutional Shares (14,799) (23,031) 0 (7,833) 0
---------- ---------- ---------- --------- ----------
Total dividends to
shareholders from net
investment income (14,799) (23,031) (7,897) (19,551) (22,778)
---------- ---------- ---------- --------- ----------
Distributions to shareholders from net realized gains:
Adviser Shares 0 0 (6,017) (23,803) (2,278)
Institutional Shares (29,598) (23,031) (1,909) (2,036) 0
---------- ---------- ---------- --------- ----------
Total distributions from net
realized gains (29,598) (23,031) (7,926) (25,839) (2,278)
---------- ---------- ---------- --------- ----------
Transactions in Shares of
Beneficial Interest:
Received on issuance:
Shares sold........................................... 1,720,086 1,801,897 1,256,481 3,739,365 4,786,563
Shares issued in reinvestment
of dividends and distributions 44,396 46,062 15,823 45,391 25,055
Shares redeemed....................................... (400,060) (84,706) (42,787) (171,636) (125,012)
---------- ---------- ---------- --------- ----------
Net Increase from
Capital Share Transactions.......................... 1,364,422 1,763,253 1,229,517 3,613,120 4,686,606
---------- ---------- ---------- --------- ----------
Total Increase
in Net Assets......................................... 1,471,132 1,967,391 1,259,891 3,681,185 4,762,670
Net Assets:
Beginning of period..................................... 100,000 0 0 0 0
---------- ---------- ---------- --------- ----------
End of period+.......................................... $1,571,132 $1,967,391 $1,259,891 $3,681,185 $4,762,670
========== ========== ========== ========== ==========
+ Includes undistributed/
(overdistributed) net
investment income................................... ($1,618) $1,401 ($2,127) ($1,936) ($1,788)
========== ========== ========== ========== ==========
<FN>
* Commencement of operations February 6, 1996.
** Commencement of operations March 7, 1996.
</FN>
</TABLE>
See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements
1. General
The Tomorrow Long-Term Retirement Fund ("Long-Term Fund"), Tomorrow Medium-
Term Retirement Fund ("Medium-Term Fund"), Tomorrow Short-Term Retirement Fund
("Short-Term Fund"), Core Large-Cap Fund (Large-Cap Fund") and Core Small-Cap
Fund ("Small -Cap Fund") are separate funds (collectively the "Funds") of the
Tomorrow Funds Retirement Trust (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the
"Act"), as an open-end investment company. All of the funds are diversified.
The Trust offers two classes of shares: Adviser Class Shares and Institutional
Class Shares. Adviser Shares and Institutional Shares are substantially the same
except that Adviser Shares bear the fees payable under a plan adopted by the
Trust's Board of Trustees pursuant to Rule 12b-1 under the Act (the
"Distribution Plan") at an annual rate of up to 0.50% of the average daily net
assets attributable to the Adviser Shares; Institutional Shares bear the fees
that are payable under a Service Plan (the "Service Plan") at an annual rate of
up to 0.25% of the average daily net assets attributable to the Institutional
Shares. In addition to fees paid pursuant to the Distribution Plan and Service
Plan, each class also bears the expense associated with transfer agent fees.
Investment income, expenses (other than expenses incurred under the
Distribution Plan, the Service Plan and transfer agent fees and expenses), and
realized and unrealized gains and losses on investments of a Fund are allocated
to the separate classes of shares based upon their relative net asset value on
the date income is earned or expenses and realized and unrealized gains and
losses are incurred.
The Long-Term Fund, Medium-Term Fund and Short-Term Fund first
commenced offering Adviser Shares on March 7, 1996 and Institutional Shares on
April 2, 1996. The Large-Cap Fund and Small-Cap Fund first commenced offering
Institutional shares on February 6, 1996. There are currently no shares
outstanding for the Adviser Class of the Large-Cap Fund and Small-Cap Fund.
2. Significant Accounting Policies
Portfolio Valuation
Common Stock - Securities listed or admitted to trading on a national
securities exchange, including options, are valued at the last sale price on
such exchange as of the close of regular trading on the New York Stock Exchange
("NYSE") on each day that the Funds calculate their net asset values.
Unlisted securities and listed securities for which there are no sales reported
on the valuation date are valued at the mean between the most recent bid and
ask prices.
Bonds - Bonds and other fixed income securities (other than short-term
obligations but including listed issues) in the Funds' portfolios are valued by
a pricing service which utilizes both dealer-supplied valuations and electronic
data processing techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices, exchange or
over-the-counter prices, when such valuations are believed to reflect the market
value of such securities.
Money Market Securities - Investments in money market and other short-term
(60 days or less) securities are valued at amortized cost, which has been
determined by the Trust's Board of Trustees to represent the fair market value
of such securities.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
Foreign Securities - Securities listed or admitted to trading
on an international securities exchange, including options, are valued
at the last sale price, at the close of the primary international exchange
on the day that the Fund's calculate their net asset values. Unlisted foreign
securities and listed foreign securities for which there are no sales reported
on the valuation date are valued at the mean between the most recent bid and
asked prices.
Certain risks result from investing in foreign securities in addition to
the usual risk inherent in domestic investments. Such risks include
future political, economical and currency exchange developments
including restrictions and changes in foreign law.
Security Transactions and Investment Income
Security transactions are recorded on a trade date basis. Realized gains and
losses from security transactions are recorded utilizing the identification
method. Interest income is recognized on an accrual basis and dividend income is
recognized on ex-dividend date. Discounts on fixed income securities are
accreted to interest income over the life of the security or until an applicable
call date if sooner, with a corresponding increase in cost basis.
During the period from inception through December 31, 1996, none of the
Funds in the Trust entered into the following transactions: futures, options,
forward currency contracts or foreign currency transactions.
Federal Income Taxes
Each Fund's policy is to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies and to distribute all
of its taxable income to its shareholders. Accordingly, no federal tax or excise
tax provisions are required. The federal income tax basis of investments
approximates cost.
Distributions to Shareholders
Dividends from Net Investment Income - Dividends from net investment income
are declared and paid annually when available for each Fund and are recorded on
ex-dividend date.
Distributions from Capital Gains - Distributions from capital
gains are declared by December 31 of the year in which they are earned and are
paid by January 31 of the following year. However, to the extent that the net
realized gains of a Fund can be offset by capital loss carryovers of that Fund,
such gains will not be distributed.
The amounts of dividends from net investment income and distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or net
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
Use of Estimates
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ from these amounts.
3. Organizational Expenses
Weiss, Peck & Greer. L.L.C. ("WPG"), the Funds' investment Adviser, paid the
organizational expenses of the Funds in the amount of approximately $243,000
($51,000 each for the Large-Cap and Small-Cap Funds and $47,000 each for the
Long-Term, Medium-Term and Short-Term Funds). The Funds will reimburse WPG for
these expenses which have been deferred and are being amortized by the Funds on
a straight line method over a period of five years from the commencement of
operations.
4. Expenses
The Trust accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund while general
Trust expenses are allocated among the Trust's respective Funds.
5. Investment Advisory Fee and Other Transactions with Affiliates
The Trust, with respect to each Fund, has entered into an Investment Advisory
Agreement with WPG which entitles WPG to receive a fee, which is accrued daily
and paid monthly, at an annual rate of 0.75% of each Fund's average daily net
assets. WPG voluntarily agreed not to impose its advisory fee applicable to the
Funds for the period ended December 31, 1996.
WPG has agreed to voluntarily limit each Fund's total operating
expenses, (excluding taxes, brokerage commissions, interest, dividends paid on
securities sold short and extraordinary legal fees and expenses) to 1.75% of
the average daily net assets for the Adviser Class Shares and 1.50% of the
average daily net assets for the Institutional class shares. WPG will reduce
its advisory fee (but not below $0) when the total operating expenses exceed
these limits.
The Trust has entered into an Administration Agreement with WPG. For its
administrative services, WPG is entitled to receive a fee, which is accrued
daily and paid monthly, at an annual rate of 0.09% of each Fund's average
daily net assets. WPG voluntarily agreed not to impose its administration
services fee applicable to the funds for the period ended December 31, 1996.
The Trust with respect to the Adviser Class of each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Act. Under the Distribution
Plan, each Fund pays distribution and service fees at an aggregate annual rate
of up to 0.50% of the daily average net assets attributable to the Adviser
Class Shares. Up to 0.25% of this fee is for service fees and is intended to be
compensation for personnel services and/or account maintenance services. The
remaining amount is for distribution fees and is intended to compensate WPG for
its services and expenses associated with serving as principal underwriter of
the Adviser Class. These payments are borne solely by the Adviser Class Shares.
For the period April 2, 1996 through December 31,
1996 payments pursuant to the Distribution Plan from the Long-Term Fund,
Medium-Term Fund and Short-Term Fund amounted to $1,320, $4,325 and $4,574,
respectively. Of these amounts, WPG earned $670, $2,203 and $2,307,
respectively.
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
The Trust with respect to the Institutional Class of each Fund has
also adopted a Service Plan (the "Institutional Service Plan") pursuant to which
each Fund has agreed to pay fiduciaries of retirement plans investing in the
Funds a fee for various services and/or account maintenance services relating to
the Institutional Class Shares. The Institutional Service Plan fee is accrued
daily and paid quarterly at an annual rate of up to 0.25% of the average daily
net asset value attributable to the Institutional Class Shares of each Fund, and
is borne solely by the Institutional Class Shares. For the period through
December 31, 1996 payments made pursuant to the Institutional Service Plan from
the Long-Term Fund, Medium-Term Fund and Short-Term Fund amounted to $184, $338
and $209, respectively. No such payments were made for the Large-Cap Fund and
Small-Cap Fund.
6. Securities Transactions
Sale proceeds, cost of securities purchased, (excluding short term
investments), total commissions and commissions received by WPG on such
transactions were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Proceeds Cost of Commissions
of Securities Securities Total Received
Sold Purchased Commissions by WPG
Large-Cap* $427,821 $1,854,942 $1,651 $1,645
Small-Cap* 154,436 1,837,244 2,387 2,387
Long-Term** 115,061 1,388,034 846 821
Medium-Term** 296,128 3,810,468 2,094 2,070
Short-Term** 200,718 4,874,544 2,056 2,004
<FN>
* For the period February 6, 1996 (commencement of operations ) through December 31, 1996.
** For the period March 7, 1996 (commencement of operations) through December 31, 1996.
</FN>
</TABLE>
7. Custodian Fees
Each Fund has entered into an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever there
are uninvested cash balances. The Funds' custodian fee and related offset were
as follows:
<TABLE>
<S> <C> <C>
Custodian Fee Offset Credit
Large-Cap* $11,028 $1,941
Small-Cap* 13,201 468
Long-Term** 8,958 658
Medium-Term** 10,132 1,269
Short-Term** 6,187 1,390
The Funds could have invested its cash balances elsewhere if it had not agreed
to a reduction in fees under the expense offset agreement with its custodian.
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
** For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
8. Capital Share Transactions
Transactions in shares of the Funds were as follows:
<TABLE>
<S> <C> <C>
Core Large-Cap
Shares Amount
Institutional Class Shares*
Sold 161,419 $1,720,086
Reinvested from dividends
and distributions 3,905 44,396
Redeemed (35,201) (400,060)
Net increase 130,123 $1,364,422
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Core Small-Cap
Shares Amount
Institutional Class Shares*
Sold 268,942 $1,801,897
Reinvested from dividends
and distributions 6,191 46,062
Redeemed (11,672) (84,706)
Net increase 263,461 $1,763,253
<FN>
* For the period February 6, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Long-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 143,309 $977,964
Reinvested from dividends
and distributions 1,985 13,914
Redeemed (5,250) (35,184)
Net increase - Adviser Class 140,044 956,694
Institutional Class Shares**
Shares Amount
Sold 40,904 278,517
Reinvested from dividends
and distributions 270 1,909
Redeemed (1,160) (7,603)
Net increase - Institutional Class 40,014 272,823
Net increase in Fund 180,058 $1,229,517
<FN>
* For the period March 7, 1996 (commencement of operations) through December
31, 1996.
** For the period April 2, 1996 (commencement of operations) through December
31, 1996.
</FN>
</TABLE>
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
Notes to Financial Statements - (continued)
<TABLE>
<S> <C> <C>
Medium-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 434,251 $3,434,858
Reinvested from dividends
and distributions 4,374 35,521
Redeemed (15,238) (118,433)
Net increase - Adviser Class 423,387 3,351,946
Institutional Class Shares**
Sold 39,564 304,507
Reinvested from dividends
and distributions 1,248 9,870
Redeemed (7,079) (53,203)
Net increase - Institutional Class 33,733 261,174
Net increase in Fund 457,120 $3,613,120
<FN>
* For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
** For the period April 2, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<TABLE>
<S> <C> <C>
Short-Term Retirement
Shares Amount
Adviser Class Shares*
Sold 498,279 $4,497,333
Reinvested from dividends
and distributions 2,714 25,055
Redeemed (14,392) (123,915)
Net increase - Adviser Class 486,601 4,398,473
Institutional Class Shares**
Sold 33,138 289,230
Redeemed (122) 1,097)
Net increase - Institutional Class 33,016 288,133
Net increase in Fund 519,617 $4,686,606
<FN>
* For the period March 7, 1996 (commencement of operations) through
December 31, 1996.
** For the period April 2, 1996 (commencement of operations) through
December 31, 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOMORROW FUNDS RETIREMENT TRUST
FINANCIAL HIGHLIGHTS
$ per share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Net Total Dividends Distri- Net
Asset Realized Income From butions Asset
Value at Net and From Net from Total Value at
Beginning Investment Unrealized Investment Investment Capital Distri- End of
of Period Income Gains Operations Income Gains butions Period
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 10.00 0.10 1.24 1.34 (0.11) (0.02) (0.13) $11.21
Small-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 6.50 0.10 1.05 1.15 (0.09) (0.09) (0.18) 7.47
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 6.50 0.04 0.55 0.59 (0.06) (0.05) (0.11) 6.98
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 6.51 0.04 0.55 0.59 0.00 (0.05) (0.05) 7.05
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 7.50 0.04 0.63 0.67 (0.03) (0.07) (0.10) 8.07
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 7.53 0.10 0.55 0.65 (0.25) (0.07) (0.32) 7.86
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.50 0.06 0.72 0.78 (0.06) (0.06) (0.12) 9.16
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.51 0.00 0.70 0.70 0.00 0.00 0.00 9.21
</TABLE>
<TABLE>
ratios
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio information
assuming no fee waivers,
reimbursements or
Ratio of custody fee
Ratio of Net earnings credit receive
Expenses Income to Ratio of Ratio of
Net To Average Average Portfolio Average Expenses Net Income
Total Assets Net Net Turnover Commissions To Average To Average
Return++ (000's) Assets+ Assets+ Rate Per Share Net Assets+ Net Assets+
Large-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996 15.35% $1,571 1.25% 1.67% 48.62% $0.035 18.89% -15.97%
Small-Cap - Institutional Shares
For the period February 6, 1996*
through December 31, 1996
Long-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 9.08% 978 1.75% 1.63% 25.09% 0.035 45.36% -41.98%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 9.03% 282 1.50% 1.97% 25.09% 0.035 40.49% -37.02%
Medium-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.89% 3,416 1.75% 1.73% 22.56% 0.035 15.88% -12.40%
Institutional Shares
For the period April 2, 1996*
through December 31, 1996 8.54% 265 1.50% 1.96% 22.56% 0.035 20.86% -17.40%
Short-Term Retirement
Adviser Shares
For the period March 7, 1996*
through December 31, 1996 8.54% 4,459 1.75% 2.08% 14.16% 0.035 15.68% -11.85%
Institutional Shares
For the period March 7, 1996*
through December 31, 1996 8.23% 304 1.50% 2.31% 14.16% 0.035 19.10% -15.29%
<FN>
+ Annualized.
++ Not annualized.
* Commencement of operations.
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Independent Auditors' Report
To the Shareholders and Board of Trustees of:
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of Core Large-Cap Stock Fund, Core Small-Cap Stock
Fund, Tomorrow Long-Term Retirement Fund, Tomorrow Medium-Term Retirement Fund
and Tomorrow Short-Term Retirement Fund as of December 31, 1996, and the related
statements of operations, changes in net assets and financial highlights for the
period February 6, 1996 (commencement of operations) to December 31, 1996 for
the Core Large-Cap Stock Fund and Core Small-Cap Stock Fund and for the period
March 7, 1996 (commencement of operations) to December 31, 1996 for the Tomorrow
Long-Term Retirement Fund, Tomorrow Medium-Term Retirement Fund and Tomorrow
Short-Term Retirement Fund. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Core
Large-Cap Stock Fund, Core Small-Cap Stock Fund, Tomorrow Long-Term Retirement
Fund, Tomorrow Medium-Term Retirement Fund and Tomorrow Short-Term Retirement
Fund as of December 31, 1996, the results of their operations, changes in net
assets and financial highlights for the period February 6, 1996 (commencement of
operations) to December 31, 1996 for the Core Large-Cap Stock Fund and Core
Small-Cap Stock Fund and for the period March 7, 1996 (commencement of
operations) to December 31, 1996 for the Tomorrow Long-Term Retirement Fund,
Tomorrow Medium-Term Retirement Fund and Tomorrow Short-Term Retirement Fund, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 15, 1997
<PAGE>
Tomorrow Funds
RETIREMENT TRUST
A Lifecycle Retirement Program
One New York Plaza, New York, NY 1004
(800) 223-3332
INDEPENDENT TRUSTEES AND MEMBERS INVESTMENT ADVISER
OF AUDIT COMMITTEE Weiss, Peck & Greer, L.L.C.
Raymond R. Herrmann, Jr. One New York Plaza
Lawrence J. Israel New York, NY 10004
CUSTODIAN
OFFICERS Boston Safe Deposit and Trust Company
Roger J. Weiss One Exchange Place
Chairman of the Board, President Boston, MA 02109
and Trustee
Jay C. Nadel DIVIDEND DISBURSING AND
Executive Vice President TRANSFER AGENT
and Treasurer First Data Investor Services Group, Inc.
440 Computer Drive
Francis H. Powers Westboro, MA 01581-5120
Executive Vice President
and Treasurer
LEGAL COUNSEL
Daniel Cardell Hale and Dorr
Vice President 60 State Street
Boston, MA 02109
Stephen Gresham
Vice President INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Arlen S. Oransky 345 Park Avenue
Vice President New York, NY 10154
Joseph J. Reardon
Vice President
Daniel S. Vandivort
Vice President
Joseph Parascondola
Assistant Vice President
This report is submitted for general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein is to be considered
an offer of sale or solicitation of an offer to buy shares of the Tomorrow
Funds Retirement Trust. Such offering is made only by prospectus, which
includes details as to offering and other material information.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements: Attached to and incorporated by reference
into the Statements of Additional Information with respect to each
series of the Registrant except Tomorrow Post-Retirement Fund:
Included in Part A:
Financial Highlights for the period from inception ended
December 31, 1996
Included in Part B:
Schedule of Investments at December 31, 1996.
Statement of Assets and Liabilities at December 31, 1996.
Statement of Operations for the period ended December
31, 1996.
Statements of Changes in Net Assets for the period
ended December 31, 1996.
Notes to Financial Statements.
Financial Highlights.
Independent Auditor's Report.
(b) Exhibits:
1.(a) Agreement and Declaration of Trust.*
1.(b) Certificate of Trust.*
2. By-Laws.*
3. None.
4. None.
C-1
<PAGE>
5.(a) Form of Investment Advisory Agreement between the Registrant,
on behalf of Tomorrow Long-Term Retirement Fund, and Weiss,
Peck & Greer, L.L.C. ("WPG").*
5.(b) Form of Investment Advisory Agreement between the Registrant,
on behalf of Tomorrow Medium-Term Retirement Fund, and
WPG.*
5.(c) Form of Investment Advisory Agreement between the Registrant,
on behalf of Tomorrow Short-Term Retirement Fund, and WPG.*
5.(d) Form of Investment Advisory Agreement between the Registrant,
on behalf of Tomorrow Post-Retirement Fund, and WPG.*
5.(e) Form of Investment Advisory Agreement between the Registrant,
on behalf of Core Large-Cap Stock Fund, and WPG.*
5.(f) Form of Investment Advisory Agreement between the Registrant,
on behalf of Core Small-Cap Stock Fund, and WPG.*
5.(g) Form of Administration Agreement between the Registrant, on
behalf of Tomorrow Long-Term Retirement Fund, and WPG.*
5.(h) Form of Administration Agreement between the Registrant, on
behalf of Tomorrow Medium-Term Retirement Fund, and WPG.*
5.(i) Form of Administration Agreement between the Registrant, on
behalf of Tomorrow Short-Term Retirement Fund, and WPG.*
5.(j) Form of Administration Agreement between the Registrant, on
behalf of Tomorrow Post-Retirement Fund, and WPG.*
5.(k) Form of Administration Agreement between the Registrant, on
behalf of Core Large-Cap Stock Fund, and WPG.*
5.(l) Form of Administration Agreement between the Registrant, on
behalf of Core Small-Cap Stock Fund, and WPG.*
6. Form of Underwriting Agreement between the Registrant and
WPG.**
7. None.
8. Form of Custodian Agreement between the Registrant and Boston
Safe Deposit and Trust Company.**
C-2
<PAGE>
9.(a) Form of Transfer Agency Agreement between the Registrant and
The Shareholder Services Group, Inc.**
9.(b) Form of Account Administration Agreement between the
Registrant and The Shareholder Services Group, Inc.**
9.(c) Form of Institutional Class Shares Service Plan.***
10. Opinion and Consent of Counsel.*
11. Consent of Independent Public Accountants.+
12. None.
13. Form of Share Purchase Agreement.**
14. Not applicable.
15. Form of Adviser Class Shares Distribution Plan.**
16. None.
17.(a) Financial Data Schedule of Tomorrow Long-Term Retirement
Fund.+
17.(b) Financial Data Schedule of Tomorrow Medium-Term Retirement
Fund.+
17.(c) Financial Data Schedule of Tomorrow Short-Term Retirement
Fund.+
17.(d) Financial Data Schedule of Core Large-Cap Stock Fund.+
17.(e) Financial Data Schedule of Core Small-Cap Stock Fund.+
18. Multiple Class Plan adopted pursuant to Rule 18f-3.***
19. Powers of Attorney.*
- --------------
+ Filed herewith.
C-3
<PAGE>
* Filed with the Registrant's initial registration statement on Form N-1A on
July 3, 1995.
** Filed with Pre-Effective Amendment No. 1 on September 22, 1995.
*** Filed with Pre-Effective Amendment No. 2 on November 21, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER
COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of
Record Holders As
Title of Class of March 31, 1997
-------------- -----------------
Tomorrow Long-Term Retirement Fund
Institutional Class 12
Adviser Class 3
Tomorrow Medium-Term Retirement Fund
Institutional Class 8
Adviser Class 3
Tomorrow Short-Term Retirement Fund
Institutional Class 6
Adviser Class 3
Tomorrow Post-Retirement Fund
Institutional Class 0
Adviser Class 0
Core Large-Cap Stock Fund
Institutional Class 3
Adviser Class 0
Core Small-Cap Stock Fund
Institutional Class 17
Adviser Class 0
Item 27. INDEMNIFICATION.
Except for the Agreement and Declaration of Trust dated June 21,
1995, establishing the Registrant as a Trust under Delaware law, there is no
contract,
C-4
<PAGE>
arrangement or statute under which any trustee, officer, underwriter or
affiliated person of the Registrant is insured or indemnified. The Agreement and
Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment of the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
All of the information required by this item is set forth in the Form
ADV, as currently amended, of WPG (File No. 801-6604). The following sections of
such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2;
(b) Section 6, Business Background, of each Schedule D.
Item 29. PRINCIPAL UNDERWRITER
(a) WPG serves as the investment adviser to each investment company
in the Weiss, Peck & Greer Investments Group of Mutual Funds. These mutual funds
include: Weiss, Peck & Greer Funds Trust, which consists of WPG Government Money
Market Fund, WPG Tax-Free Money Market Fund, WPG Government Securities Fund, WPG
Municipal Bond Fund and WPG Quantitative Equity Fund; Weiss, Peck & Greer
International Fund; WPG Tudor Fund; WPG Growth Fund; WPG Growth and Income Fund;
and U.S. Large Stock Fund. WPG also serves as the investment adviser or
subadviser to SEI PA Tax Exempt Money Market Fund, SEI MuniBond Fund, Bullock
American Fund and Bullock Optimization USA Fund.
(b) Principals and Officers of WPG:
C-5
<PAGE>
<TABLE>
<S> <C> <C>
Positions and Offices Positions and Offices
Name* with WPG with Registrant
- ------ --------------------- ---------------------
Samuel H. Armacost Principal
Annette Bianchi Principal
John P. Callaghan Principal
Gill Cogan Principal
Candice Eggerss Principal
Ellen M. Feeney Principal
Janet Fiorenza Principal
Margery Z. Flicker Principal
Anthony J. Giammalva Principal
Philip Greer Senior Managing
Principal
Ronald M. Hoffner Principal
Steven N. Hutchinson Principal
James W. Kiley Principal
A. Roy Knutsen Principal
Alan D. Kohn Principal
Wesley W. Lang, Jr. Principal
Steven Lear Principal
Gary R. Lisk Principal
Marvin B. Markowitz Principal
Howard G. Mattsson Principal
Kathleen A. McCarragher Principal
John Murabito Principal
Jay C. Nadel Principal Executive Vice
President and
Secretary
Bradford R. Peck Principal
Peter B. Pfister Principal
Steven Pomerantz Principal
McGehee Porter Principal
Stuart W. Porter Principal
Francis H. Powers Principal Executive Vice
President and
Treasurer
R. Scott Richter Principal
Nelson Schaenen, Jr. Principal
James S. Schainuck Principal
Gary E. Scheier Principal
David J. Schilder Principal
Arthur L. Schwarz Principal
Melville Straus Principal
Daniel S. Vandivort Principal
Robert D. Weiss Principal
C-6
<PAGE>
Roger J. Weiss Senior Managing Chairman and
Principal President
Stephen H. Weiss Chairman of the
Executive Committee/
Senior Managing Principal
Ellen P. Welsh Principal
Hugh S. Zurkuhlen Principal
<FN>
- ------------
* The principal business address of each principal and officer of WPG is One
New York Plaza, New York, New York 10004
</FN>
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All account, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules thereunder will be maintained (1) at
the offices of the Registrant at One New York Plaza, New York, New York 10004
(2) at the offices of the Registrant's Custodian, Boston Safe Deposit and Trust
Company, at One Boston Place, Boston, MA 02109 and (3) at the offices of the
Registrant's Transfer Agent, First Data Investor Services Group, Inc., P.O. Box
9037, Boston, MA 02205.
ITEM 31. MANAGEMENT SERVICES
The Registrant is not a party to any management-related service
contract, except as described in the prospectuses and the statements of
additional information.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, within four to six
months from the commencement of operations of Tomorrow Post-Retirement Fund.
(c) The Registrant undertakes to deliver, or cause to be delivered
with the each prospectus, to each person to whom such prospectus is sent or
given a copy of the Registrant's report to shareholders furnished pursuant to
and meeting the requirements of Rule 30d-1 from which the specified information
is incorporated by reference, unless such person currently holds securities of
the Registrant and otherwise has received a copy of such report, in which case
the Registrant shall state in each prospectus that it will furnish, without
charge, a copy of such report on
C-7
<PAGE>
request, and the name, address and telephone number of the person to whom such a
request should be directed.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 2 to its Registration Statement (which meets all
the requirements for effectiveness pursuant to Rule 485(b) under the Securities
Act of 1933) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on the 23rd day of April, 1997.
TOMORROW FUNDS RETIREMENT TRUST
/s/ Roger J. Weiss
Roger J. Weiss, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the date
indicated:
Signature Title
--------- -----
Roger J. Weiss* Chairman of the Board, )
- -------------- Trustee and President )
Roger J. Weiss (Principal Executive )
Officer) )
)
Raymond R. Herrmann, Jr.* Trustee )
- -------------------------
Raymond R. Herrmann, Jr. ) April 23, 1997
)
)
)
Lawrence J. Israel* Trustee )
Lawrence J. Israel )
)
)
)
Harvey E. Sampson* Trustee )
Harvey E. Sampson )
)
)
)
<PAGE>
Francis H. Powers* Executive Vice President )
Francis H. Powers and Treasurer (Principal )
Financial and Accounting )
Officer) )
- ----------------
*By:/s/ Jay C. Nadel April 23, 1997
--------------------
Jay C. Nadel
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Document Title
- ------ --------------
11. Consent of Independent Public Accountants.
27.(a) Financial Data Schedule of Tomorrow Long-Term Retirement
Fund.
27.(b) Financial Data Schedule of Tomorrow Medium-Term Retirement
Fund.
27.(c) Financial Data Schedule of Tomorrow Short-Term Retirement
Fund.
27.(d) Financial Data Schedule of Core Large-Cap Stock Fund.
27.(e) Financial Data Schedule of Core Small-Cap Stock Fund.
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
To the Shareholders and Board of Trustees of:
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
We consent to the use of our report dated January 15, 1997 with respect to Core
Large-Cap Stock Fund and Core Small-Cap Stock Fund as of December 31, 1996, and
the Tomorrow Long-Term Retirement Fund, Tomorrow Medium-Term Retirement Fund and
Tomorrow Short-Term Retirement Fund as of December 31, 1996, incorporated herein
by reference and to the references to our Firm under the heading "Financial
Highlights" in the Prospectus and "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
May 1, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000945766
<NAME> TOMORROW FUNDS FUNDS TRUST
<SERIES>
<NUMBER> 3
<NAME> LONG-TERM RETIREMENT TRUST
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
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