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PROSPECTUS
SELECT TAX FREE INCOME FUNDS
INTERMEDIATE TAX FREE INCOME FUND
TAX FREE INCOME FUND
NEW YORK INTERMEDIATE TAX FREE INCOME FUND
INVESTMENT STRATEGY: Income
December 29, 1997, As revised March 13, 1998
This Prospectus explains concisely what you should know before investing.
Please read it carefully and keep it for future reference. You can find more
detailed information about the Funds in their December 29, 1997 Statement of
Additional Information, as amended periodically (the "SAI"). For a free copy of
the SAI, call the Chase Vista Select Service Center at 1-800-622-4273. The SAI
has been filed with the Securities and Exchange Commission and is incorporated
into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Investments in the Funds are not bank deposits or obligations of, or
guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates
and are not insured by the FDIC, the Federal Reserve Board or any other
government agency. Investments in mutual funds involve risk, including the
possible loss of the principal amount invested.
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TABLE OF CONTENTS
Expense Summary ..................................... 4
Financial Highlights ................................ 5
Fund Objectives and Investment Approach ............. 6
Common Investment Policies .......................... 7
Management .......................................... 14
How to Purchase and Redeem Shares ................... 15
How the Funds Value Their Shares .................... 16
How Distributions Are Made; Tax Information ......... 17
Other Information Concerning the Funds .............. 18
Performance Information ............................. 22
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing. The following
table summarizes your costs from investing in the Funds based on estimated
expenses for the current fiscal year. The example shows the cumulative expenses
attributable to a hypothetical $1,000 investment over specified periods.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Select
Select Select New York Select
Intermediate Tax Free Intermediate New Jersey
Tax Free Income Tax Free Tax Free
Income Fund Fund Income Fund Income Fund
----------- ---- ---------------- ---------------
<S> <C> <C> <C> <C>
ANNUAL FUND
OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fee ................. 0.30% 0.30% 0.30% 0.30%
12b-1 Fee ............................... None None None None
Shareholder Servicing Fee ............... None None None None
Other Expenses
(after reimbursements, where
indicated) ............................ 0.19%* 0.19% 0.20%* 0.19%*
Total Fund Operating Expenses
(after reimbursements, where
indicated) ............................ 0.49%* 0.49% 0.50%* 0.49%*
EXAMPLE:
Your investment of $1,000 would
incur the following expenses
assuming 5% annual return:
1 Year .................................. $ 5 $ 5 $ 5 $ 5
3 Years ................................. $ 16 $ 16 $ 16 $ 16
</TABLE>
* Reflects the agreement by Chase voluntarily to reimburse certain expenses
for a period of at least one year after the date of this Prospectus. Absent
such reimbursements, Other Expenses for Select Intermediate Tax Free Income
Fund, Select New York Intermediate Tax Free Income Fund and Select New
Jersey Tax Free Income Fund would be 0.20%, 0.23% and 0.27%, respectively,
and Total Fund Operating Expenses for Select Intermediate Tax Free Income
Fund, Select New York Intermediate Tax Free Income Fund and Select New
Jersey Tax Free Income Fund would be 0.50%, 0.53% and 0.57%, respectively.
The table is provided to help you understand the expenses of investing in the
Funds and your share of the operating expenses that the Funds incur. The
example should not be considered a representation of past or future expenses or
returns; actual expenses and returns may be greater or less than shown.
Charges or credits, not reflected in the expense table above, may be incurred
directly by customers of financial institutions in connection with an
investment in the Fund
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FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for one
share outstanding for each Fund throughout the period January 1, 1997 to August
31, 1997. This information is supplemented by financial statements and
accompanying notes appearing in the Fund's Annual Report to Shareholders for
the period ended August 31, 1997, which is incorporated by reference into the
Statement of Additional Information. Shareholders may obtain a copy of this
Annual Report by contacting the Fund. The financial statements and notes, as
well as the financial information set forth in the table below, have been
audited by Price Waterhouse LLP, independent accountants, whose report thereon
is also included in the Annual Report to Shareholders.
<TABLE>
<CAPTION>
Select Select
Select Intermediate New York Select
Tax Free Tax Free Tax Free New Jersey
Income Income Income Tax Free
Fund Fund Fund Income Fund
--------- -------- --------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net Asset Value, Beginning of Period ............. $ 6.39 $ 10.75 $ 7.09 $9.99
--------- -------- --------- -------
Income from Investment Operations:
Net Investment Income ........................... 0.243 0.386 0.260 0.366
Net Gains or (Losses) in Securities
(both realized and unrealized) ................ 0.060 0.100 0.060 0.050
--------- -------- --------- -------
Total from Investment Operations ................ 0.303 0.486 0.320 0.416
--------- -------- --------- -------
Less Distributions:
Dividends from Net Investment
Income ........................................ 0.243 0.386 0.260 0.366
--------- -------- --------- -------
Net Asset Value, End of Period ................... $ 6.45 $ 10.85 $ 7.15 $10.04
========= ======== ========= =======
Total Return ..................................... 4.86% 4.58% 4.62% 4.20%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ......... $677,302 $631,301 $235,444 $64,218
Ratio to Average Net Assets#:
Ratio of Expenses .............................. 0.02% 0.02% 0.03% 0.02%
Ratio of Net Investment Income ................. 5.73% 5.40% 5.52% 5.52%
Ratio of Expenses Without Waivers
and Assumption of Expenses ................... 0.49% 0.50% 0.53% 0.57%
Ratio of Net Investment Income
Without Waivers and Assumption
of Expenses .................................. 5.26% 4.92% 5.02% 4.97%
Portfolio Turnover Rate .......................... 48% 60% 32% 14%
</TABLE>
* Commencement of operations.
# Short periods have been annualized.
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FUND OBJECTIVES AND INVESTMENT APPROACH
SELECT INTERMEDIATE TAX FREE INCOME FUND
The Fund's objective is to provide monthly dividends which are excluded from
gross income for federal tax purposes, as well as to protect the value of its
shareholders' investment.
The Fund invests primarily in Municipal Obligations (as defined under
"Municipal Obligations"). As a fundamental policy, under normal market
conditions, the Fund will have at least 80% of its assets in Municipal
Obligations the interest on which, in the opinion of bond counsel, is excluded
from gross income for federal income tax purposes and does not constitute a
preference item which would be subject to the federal alternative minimum tax
on individuals (these preference items are referred to as "AMT Items"). The
Fund reserves the right under normal market conditions to invest up to 20% of
its total assets in AMT Items or securities the interest on which is subject to
federal income tax. For temporary defensive purposes, the Fund may exceed this
limitation.
The Fund is classified as a "non-diversified" fund under federal securities
law.
SELECT TAX FREE INCOME FUND
The Fund's objective is to provide monthly dividends which are excluded from
gross income for federal tax purposes, as well as to protect the value of its
shareholders' investment, by investing primarily (i.e., at least 80% of its
assets under normal conditions) in Municipal Obligations.
As a fundamental policy, under normal market conditions, the Fund will have at
least 80% of its assets in Municipal Obligations the interest on which, in the
opinion of bond counsel, is excluded from gross income for federal income tax
purposes and does not constitute an AMT Item. The Fund reserves the right under
normal market conditions to invest up to 20% of its total assets in AMT Items
or securities the interest on which is subject to federal income tax. For
temporary defensive purposes, the Fund may exceed this limitation.
There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security.
The Fund is classified as a "non-diversified" fund under federal securities
law.
SELECT NEW YORK
INTERMEDIATE TAX FREE
INCOME FUND
The Fund's objective is to provide monthly dividends which are excluded from
gross income for federal tax purposes and exempt from New York State and New
York City personal income taxes, as well as to protect the value of its
shareholders' investment.
The Fund invests primarily in New York Municipal Obligations (as defined under
"Municipal Obligations"). As a fundamental policy, under normal market
conditions, the Fund will have at least 80% of its assets in New York Municipal
Obligations the interest on which, in the opinion of bond
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counsel, does not constitute an AMT Item. The Fund reserves the right under
normal market conditions to invest up to 20% of its total assets in AMT Items
or securities the interest on which is subject to federal income tax and New
York State and New York City personal income taxes. For temporary defensive
purposes, the Fund may exceed this limitation.
The average dollar-weighted maturity of the Fund's portfolio will be greater
than three years but will not exceed ten years.
The Fund is classified as a "non-diversified" fund under federal securities
law.
SELECT NEW JERSEY
TAX FREE INCOME FUND
The Fund's objective is to provide monthly dividends which are excluded from
gross income for federal tax purposes and exempt from New Jersey personal
income tax. As used in this Prospectus, the term "New Jersey personal income
tax" refers to the New Jersey Gross Income Tax.
Under normal market conditions, the Fund will invest at least 80% of its assets
in New Jersey Municipal Obligations (as defined under "Municipal Obligations").
As a fundamental policy, under normal market conditions, the Fund will have at
least 80% of its assets in Municipal Obligations the interest on which, in the
opinion of bond counsel, does not constitute an AMT Item. The Fund reserves the
right under normal market conditions to invest up to 20% of its total assets in
AMT Items or securities the interest on which is subject to federal income tax
and New Jersey personal income tax. For temporary defensive purposes, the Fund
may exceed this limitation.
There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security.
The Fund is classified as a "non-diversified" fund under federal securities
law.
COMMON INVESTMENT POLICIES
Each Fund's investments may include, among other instruments, fixed, variable
or floating rate general obligation and revenue bonds, zero coupon securities,
inverse floaters and bonds with interest rate caps. Each Fund's Municipal
Obligations will be rated at time of purchase at least in the category Baa,
MIG-3 or VMIG-3 by Moody's Investors Service, Inc. ("Moody's"), or BBB or SP-2
by Standard & Poor's Corporation ("S&P"), or BBB or F-3 by Fitch Investors
Service, Inc. ("Fitch") or comparably rated by another national rating
organization, or, if unrated, considered by the Fund's advisers to be of
comparable quality. Bonds rated in the category Baa or BBB are generally
considered to be investment grade obligations which are neither highly
protected nor poorly secured; obligations rated MIG-3, VMIG-3, SP-2 or F-3 are
generally considered to have satisfactory capacity to pay principal and
interest.
Each Fund's advisers may adjust the average maturity of the Fund's portfolio
based upon their assessment of the relative yields
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available on securities of different maturities and their expectations of
future changes in interest rates.
Each Fund is classified as a "non-diversified" fund under federal securities
law. Each of such Fund's assets may be more concentrated in the securities of
any single issuer or group of issuers than if the Fund were diversified.
For temporary defensive purposes, each Fund may invest without limitation in
high quality money market instruments and repurchase agreements, the interest
income from which may be taxable to shareholders as ordinary income for federal
income tax purposes.
In lieu of investing directly, each Fund is authorized to seek to achieve its
objective by investing all of its investable assets in an investment company
having substantially the same investment objective and policies as such Fund.
It is anticipated that certain Funds will adopt this approach during 1997. See
"Unique Characteristics of Master/Feeder Fund Structure."
No Fund is intended to be a complete investment program, and there is no
assurance that any Fund will achieve its investment objective.
MUNICIPAL OBLIGATIONS
"Municipal Obligations" are obligations issued by or on
behalf of states, territories and possessions of the United States, and their
authorities, agencies, instrumentalities and political subdivisions, the
interest on which, in the opinion of bond counsel, is excluded from gross
income for federal income tax purposes (without regard to whether the interest
thereon is also exempt from the personal income taxes of any state or whether
the interest thereon constitutes a preference item for purposes of the federal
alternative minimum tax). "New York Municipal Obligations" are Municipal
Obligations of the State of New York and its political subdivisions and of
Puerto Rico, other U.S. territories and their political subdivisions, the
interest on which, in the opinion of bond counsel, is exempt from New York
State and New York City personal income taxes. "New Jersey Municipal
Obligations" are Municipal Obligations of the State of New Jersey and its
political subdivisions and of Puerto Rico, other U.S. territories and their
political subdivisions, the interest on which, in the opinion of bond counsel,
is exempt from New Jersey personal income tax. Municipal Obligations are issued
to obtain funds for various public purposes, such as the construction of public
facilities, the payment of general operating expenses or the refunding of
outstanding debts. They may also be issued to finance various private
activities, including the lending of funds to public or private institutions
for the construction of housing, educational or medical facilities, and may
include certain types of industrial development bonds, private activity bonds
or notes issued by public authorities to finance privately owned or operated
facilities, or to fund short-term cash requirements. Short-term Municipal
Obligations may be issued as interim financing in anticipation of tax
collections, revenue receipts or bond sales to finance various public purposes.
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The two principal classifications of Municipal Obligations are general
obligation and revenue obligation securities. General obligation securities
involve a pledge of the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. Their payment may
depend on an appropriation by the issuer's legislative body. The
characteristics and methods of enforcement of general obligation securities
vary according to the law applicable to the particular issuer. Revenue
obligation securities are payable only from revenues derived from a particular
facility or class of facilities, or a specific revenue source, and generally
are not payable from the unrestricted revenues of the issuer. Industrial
development bonds and private activity bonds are in most cases revenue
obligation securities, the credit quality of which is directly related to the
private user of the facilities.
From time to time, each Fund may invest more than 25% of the value of its total
assets in industrial development bonds which, although issued by industrial
development authorities, may be backed only by the assets and revenues of
non-governmental issuers such as hospitals or airports, provided, however, that
a Fund may not invest more than 25% of the value if its total assets in such
bonds if the issuers are in the same industry.
MUNICIPAL LEASE OBLIGATIONS.
Each Fund may invest in municipal lease obligations. These are participations
in a lease obligation or installment purchase contract obligation and typically
provide a premium interest rate. Municipal lease obligations do not constitute
general obligations of the municipality. Certain municipal lease obligations in
which the Funds may invest contain "non-appropriation" clauses which provide
that the municipality has no obligation to make lease or installment payments
in future years unless money is later appropriated for such purpose. Although
"non-appropriation" lease obligations are secured by the leased property,
disposition of the property in the event of foreclosure might prove difficult.
Certain investments in municipal lease obligations may be illiquid. Each Fund's
advisers will evaluate the liquidity of municipal lease obligations in
accordance with procedures established by the Funds.
OTHER INVESTMENT PRACTICES
Each Fund may also engage in the following investment practices, when
consistent with the Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI.
MONEY MARKET INSTRUMENTS.
Each Fund may invest in cash or high-quality, short-term money market
instruments. These may include U.S. Government securities, commercial paper of
domestic and foreign issuers and obligations of domestic and foreign banks.
Investments in foreign money market instruments may involve certain risks
associated with foreign investment.
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U.S. GOVERNMENT OBLIGATIONS. Each Fund may invest in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
REPURCHASE AGREEMENTS AND FORWARD AND STAND-BY COMMITMENTS. Each Fund may enter
into agreements to purchase and resell securities at an agreed-upon price and
time. Each Fund may purchase securities for delivery at a future date, which
may increase its overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date. Each Fund may
enter into put transactions, including those sometimes referred to as stand-by
commitments, with respect to securities in its portfolio. In these
transactions, a Fund would acquire the right to sell a security at an agreed
upon price within a specified period prior to its maturity date. A put
transaction will increase the cost of the underlying security and consequently
reduce the available yield. Each of these transactions involve some risk to a
Fund if the other party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral or completing the
transaction.
BORROWINGS AND REVERSE REPURCHASE AGREEMENTS.
Each Fund may borrow money from banks for temporary or short-term purposes, but
will not borrow to buy additional securities, known as "leveraging." Each Fund
may also sell and simultaneously commit to repurchase a portfolio security at
an agreed-upon price and time. A Fund may use this practice to generate cash
for shareholder redemptions without selling securities during unfavorable
market conditions. Whenever a Fund enters into a reverse repurchase agreement,
it will establish a segregated account in which it will maintain liquid assets
on a daily basis in an amount at least equal to the repurchase price (including
accrued interest). A Fund would be required to pay interest on amounts obtained
through reverse repurchase agreements, which are considered borrowings under
federal securities laws.
STRIPS AND ZERO COUPON OBLIGATIONS. Each Fund may invest up to 20% of its
total assets in stripped obligations (i.e., separately traded principal and
interest components of securities) where the underlying obligation is backed by
the full faith and credit of the U.S. Government, including instruments known
as "STRIPS." Each Fund may also invest in zero coupon obligations. Zero coupon
obligations are debt securities that do not pay regular interest payments, and
instead are sold at substantial discounts from their value at maturity. The
value of STRIPS and zero coupon obligations tends to fluctuate more in response
to changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer.
FLOATING AND VARIABLE RATE SECURITIES; PARTICIPATION CERTIFICATES. Each Fund
may invest in floating rate securities, whose interest rates adjust
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automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which a Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the floating or variable
rate nature of these investments, a Fund's yield may decline and it may forego
the opportunity for capital appreciation during periods when interest rates
decline; however, during periods when interest rates increase, the Fund's yield
may increase and it may have reduced risk of capital depreciation. Demand
features on certain floating or variable rate securities may obligate a Fund to
pay a "tender fee" to a third party. Demand features provided by foreign banks
involve certain risks associated with foreign investments. The Internal Revenue
Service has not ruled on whether interest on participations in floating or
variable rate municipal obligations is tax exempt, and the Fund would purchase
such instruments based on opinions of bond counsel.
INVERSE FLOATERS AND INTEREST RATE CAPS. Each Fund may invest in inverse
floaters and in securities with interest rate caps. Inverse floaters are
instruments whose interest rates bear an inverse relationship to the interest
rate on another security or the value of an index. The market value of an
inverse floater will vary inversely with changes in market interest rates, and
will be more volatile in response to interest rate changes than that of a
fixed-rate obligation. Interest rate caps are financial instruments under which
payments occur if an interest rate index exceeds a certain predetermined
interest rate level, known as the cap rate, which is tied to a specific index.
These financial products will be more volatile in price than municipal
securities which do not include such a structure.
OTHER INVESTMENT COMPANIES. Each Fund may invest up to 10% of its total assets
in shares of other investment companies when consistent with its investment
objective and policies, subject to applicable regulatory limitations.
Additional fees may be charged by other investment companies.
DERIVATIVES AND RELATED INSTRUMENTS. Each Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
its income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. Each Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and
options on futures contracts; (iii) employ forward interest rate
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contracts; and (iv) purchase and sell structured products, which are
instruments designed to restructure or reflect the characteristics of certain
other investments.
There are a number of risks associated with the use of derivatives and related
instruments and no assurance can be given that any strategy will succeed. The
value of certain derivatives or related instruments in which a Fund invests may
be particularly sensitive to changes in prevailing economic conditions and
market value. The ability of a Fund to successfully utilize these instruments
may depend in part upon the ability of its advisers to forecast these factors
correctly. Inaccurate forecasts could expose a Fund to a risk of loss. There
can be no guarantee that there will be a correlation between price movements in
a hedging instrument and in the portfolio assets being hedged. The Funds are
not required to use any hedging strategies. Hedging strategies, while reducing
risk of loss, can also reduce the opportunity for gain. Derivatives
transactions not involving hedging may have speculative characteristics,
involve leverage and result in losses that may exceed the original investments
of the Fund. There can be no assurance that a liquid market will exist at a
time when a Fund seeks to close out a derivatives position. Activities of large
traders in the futures and securities markets involving arbitrage, "program
trading," and other investment strategies may cause price distortions in
derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater
potential that a counterparty or broker may default. In the event of a default,
the Fund may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.
PORTFOLIO TURNOVER. The frequency of a Fund's buy and sell transactions will
vary from year to year. Each Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including dealer mark-ups, and would make it more difficult
for a Fund to qualify as a registered investment company under federal tax law.
See "How Distributions are Made; Tax Information" and "Other Information
Concerning the Fund Certain Regulatory Matters."
LIMITING INVESTMENT RISKS
Specific investment restrictions help the Funds limit investment risks for
their shareholders. These restrictions prohibit each Fund from: (a) investing
more than 15% of its net assets in illiquid securities (which include
securities restricted as to resale unless they are determined to be readily
marketable in accordance with procedures established by the Board of Trustees);
or (b) investing more than 25% of its total assets in any one industry (this
would apply to municipal obligations backed only by the assets and revenues of
nongovernmental users, but excludes obligations of states, cities,
municipalities or other public authorities). A complete description
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of these and other investment policies is included in the SAI. Except for
restriction (b) above and investment policies designated as fundamental above
or in the SAI, the Fund's investment policies (including their investment
objectives) are not fundamental. The Trustees may change any non-fundamental
investment policy without shareholder approval. However, in the event of a
change in a Fund's investment objective, shareholders must be given at least 30
days' prior written notice.
RISK FACTORS
No Fund constitutes a balanced or complete investment program, and the net
asset value of the shares of each Fund can be expected to fluctuate based on
the value of the securities in such Fund's portfolio.
Changes in interest rates may affect the value of the obligations held by the
Funds. The value of fixed income securities varies inversely with changes in
prevailing interest rates. For a discussion of certain other risks associated
with each Fund's additional investment activities, see "Common Investment
Policies-Other Investment Practices" and "-Municipal Obligations."
Because each Fund will invest primarily in obligations issued by states,
cities, public authorities and other municipal issuers, the Funds are
susceptible to factors affecting such states and their municipal issuers. A
number of municipal issuers, including New York and New Jersey issuers, have a
recent history of significant financial and fiscal difficulties. If an issuer
in which a Fund invests is unable to meet its financial obligations, the income
derived by the Fund and the Fund's ability to preserve capital and liquidity
could be adversely affected. See the SAI for further information regarding New
York and New Jersey municipal issuers.
Interest on certain Municipal Obligations (including certain industrial
development bonds), while exempt from federal income tax, is a preference item
for the purpose of the alternative minimum tax. Where a mutual fund receives
such interest, a proportionate share of any exempt-interest dividend paid by
the mutual fund may be treated as such a preference item to shareholders.
Federal tax legislation enacted over the past few years has limited the types
and volume of bonds which are not AMT Items and the interest on which is not
subject to federal income tax. This legislation may affect the availability of
Municipal Obligations for investment by a Fund.
Each Fund may invest up to 25% of its total assets in Municipal Obligations
secured by letters of credit or guarantees from U.S. and foreign banks, and
other foreign institutions. The dependence on banking institutions may involve
certain credit risks, such as defaults or downgrades, if at some future date
adverse economic conditions prevail in the banking industry. U.S. banks are
subject to extensive governmental regulations which may limit both the amount
and types of loans which may be made and interest rates which may be charged.
In addition, the profitability of the banking industry is largely dependent
upon the availability and cost of funds for the
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purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important
part in the operations of this industry.
Obligations backed by foreign banks, foreign branches of U.S. banks and foreign
governmental and private issuers involve investment risks in addition to those
of obligations of domestic issuers, including risks relating to future
political and economic developments, more limited liquidity of foreign
obligations than comparable domestic obligations, the possible imposition of
withholding taxes on interest income, the possible seizure or nationalization
of foreign assets and the possible establishment of exchange controls or other
restrictions. There may be less publicly available information concerning
foreign issuers, there may be difficulties in obtaining or enforcing a judgment
against a foreign issuer (including branches) and accounting, auditing and
financial reporting standards and practices may differ from those applicable to
U.S. issuers. In addition, foreign banks are not subject to regulations
comparable to U.S. banking regulations.
Because each Fund is "non-diversified," the value of its shares is more
susceptible to developments affecting issuers in which such Fund invests. In
addition, more than 25% of each Fund's assets may be invested in securities to
be paid from revenue of similar projects, which may cause the Fund to be more
susceptible to similar economic, political, or regulatory developments. The New
York Tax Free Income Fund and the New Jersey Tax Free Income Fund will be
particularly susceptible to such economic, political and regulatory
developments since the issuers in which such Funds invest will generally be
located in the States of New York and New Jersey, respectively.
For a discussion of certain other risks associated with the Funds' additional
investment activities, see "Common Investment Policies-Other Investment
Practices" above.
MANAGEMENT
THE FUNDS' ADVISERS
The Chase Manhattan Bank ("Chase") acts as investment adviser to the Funds
under an Investment Advisory Agreement and has overall responsibility for
investment decisions of the Funds, subject to the oversight of the Board of
Trustees. Chase is a wholly-owned subsidiary of The Chase Manhattan
Corporation, a bank holding company. Chase and its predecessors have over 100
years of money management experience. For its investment advisory services to
the Funds, Chase is entitled to receive an annual fee computed daily and paid
monthly at an annual rate equal to 0.30% of the average daily net assets of
each Fund. Chase is located at 270 Park Avenue, New York, New York 10017.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is the
sub-investment adviser to the Funds under a Sub-Investment Advisory Agreement
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between CAM and Chase. CAM is a wholly-owned operating subsidiary of Chase. CAM
makes investment decisions for the Funds on a day-to-day basis. For these
services, CAM is entitled to receive a fee, payable by Chase from its advisory
fee, at an annual rate equal to 0.15% of the average daily net assets of each
Fund. CAM provides discretionary investment advisory services to institutional
clients. The same individuals who serve as portfolio managers for Chase also
serve as portfolio managers for CAM. CAM is located at 1211 Avenue of the
Americas, New York, New York 10036.
PORTFOLIO MANAGERS. Pamela Hunter, Vice President and Head of Tax Exempt
Investments of Chase, is responsible for the day-to-day management of the Tax
Free Income Fund and New York Tax Free Income Fund. Ms. Hunter manages the
investment team providing tax exempt strategy, portfolio management and product
development, and has been employed at Chase (including its predecessors) since
1980.
Ms. Hunter and Carolyn J. Gill, Vice President and Senior Portfolio Manager of
Chase, are responsible for the day-to-day management of the New Jersey Tax Free
Income Fund.Ms. Gill has been employed with Chase and its predecessors since
1986 where she has been responsible for managing fund, institutional and
individual assets.
Ms. Hunter and Ms. Gill are responsible for the day-to-day management for the
Intermediate Tax Free Income Fund.
HOW TO PURCHASE
AND REDEEM SHARES
HOW TO PURCHASE SHARES
Shares of the Funds may be purchased through Chase and other selected financial
institutions that have entered into an agreement with the Funds (such
institutions are referred to herein as "Financial Institutions") on each
business day during which Chase and the New York Stock Exchange are open ("Fund
Business Day"). The Funds reserve the right to reject any purchase order or
cease offering shares for purchase at any time.
Shares are purchased at their public offering price, which is their next
determined net asset value. Orders received by the account administrator at
your Financial Institution in proper form prior to the New York Stock Exchange
closing time (or such earlier cut-off time as may be established by your
Financial Institution) are confirmed at that day's net asset value, provided
the order is received by the relevant Fund prior to its close of business
accompanied by payment in federal funds. Financial Institutions are responsible
for forwarding orders for the purchase of shares on a timely basis. Shares will
be maintained in book entry form and share certificates will not be issued.
Management reserves the right to refuse to sell shares of any Fund to any
institution.
Federal regulations require that each investor provide a certified Taxpayer
Identification Number upon opening an account.
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ELIGIBLE INVESTORS
Qualified investors are defined as trusts and fiduciary accounts. Financial
Institutions may establish additional eligibility requirements, including
minimum investment requirements, for qualified investors. Financial
Institutions are required to maintain at least $5,000,000 in an omnibus account
with one or more of the Select Funds. Financial Institutions may offer
investors that cease to be qualified investors the ability to continue to hold
their shares in the Select Funds through a separate account, for which a
separate account fee and transaction costs may be charged to the investor.
Financial Institutions that do not offer this feature may redeem an investor's
shares if the investor ceases to be qualified.
HOW TO REDEEM SHARES
You may redeem all or any portion of the shares in your account at any time at
the net asset value next determined after a redemption request in proper form
is furnished by you to the account administrator at your Financial Institution
and transmitted to and received by the relevant Fund.
In making redemption requests, the names of the registered shareholders on your
account and your account number must be supplied. The price you will receive is
the next net asset value calculated after the relevant Fund receives your
request in proper form. In order to receive that day's net asset value, the
Fund must receive your request before the close of regular trading on the New
York Stock Exchange. Your Financial Institution will be responsible for
furnishing all necessary documentation to the Funds, and may charge you for its
services.
DELIVERY OF PROCEEDS. A Fund generally sends your Financial Institution payment
for your shares in federal funds on the business day after your request is
received in proper form. Under unusual circumstances, the Funds may suspend
redemptions, or postpone payment for more than seven days, as permitted by
federal securities law.
TELEPHONE REDEMPTIONS. If a Financial Institution is authorized to act upon
redemption and transfer instructions received by telephone from an investor and
the Financial Institution fails to employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, it may be liable for any
losses due to unauthorized or fraudulent instructions. An investor agrees,
however, that to the extent permitted by applicable law, neither the Funds nor
the investor's Financial Institution nor any of their agents will be liable for
any loss, liability, cost or expense arising out of any redemption request,
including any fraudulent or unauthorized request. For information, consult your
account administrator.
HOW THE FUNDS
VALUE THEIR SHARES
The net asset value of each Fund's shares is determined once daily based upon
prices determined as of the close of regular trading on the New York Stock
Exchange (normally 4:00 p.m., Eastern time,
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however, options are priced at 4:15 p.m., Eastern time), on each Fund Business
Day, by dividing the net assets of a Fund by the total number of outstanding
shares of that Fund. Values of assets held by the Funds are determined on the
basis of their market or other fair value, as described in the SAI.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Funds declare dividends daily and distribute any net investment income
other than short term capital gains at least monthly and any net realized short
term and long term capital gains at least annually. Distributions from capital
gains are made after applying any available capital loss carryovers.
DISTRIBUTION PAYMENT OPTION. You can choose from three distribution options if
made available by your Financial Institution: (1) reinvest all distributions in
additional Fund shares; (2) receive distributions from net investment income in
cash while reinvesting capital gains distributions in additional shares; or (3)
receive all distributions in cash. You can change your distribution option by
notifying your account administrator in writing. If your Financial Institution
does not offer distribution reinvestment or if you do not select an option when
you open your account, all distributions will be made in cash.
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for
it to be relieved of federal taxes on income and gains it distributes to
shareholders. Each Fund intends to distribute substantially all of its income
and gain on a current basis. If a Fund does not qualify as a regulated
investment company for any taxable year or does not make such distributions,
such Fund will be subject to tax on all of its income and gains.
TAXATION OF DISTRIBUTIONS.
Distributions by the Funds of their tax-exempt interest income will not be
subject to federal income tax. With respect to the Intermediate Tax Free Income
Fund and Tax Free Income Fund, such distributions will generally be subject to
state and local income taxes, but may be exempt if paid out of interest on
municipal obligations of the state or locality in which the shareholder
resides. To the extent paid out of interest on New York Municipal Obligations,
such distributions of the New York Tax Free Income Fund will also be exempt
from New York State and New York City personal income taxes for a New York
individual resident shareholder. To the extent paid out of interest or net
gains from the sale or disposition on New Jersey Municipal Obligations, such
distributions of the New Jersey Tax Free Income Fund will also be exempt from
New Jersey personal income tax for a New Jersey individual resident shareholder
as long as the Fund is a qualified investment fund. A "qualified investment
fund" is any investment company or trust, or any series of an investment
company or trust, registered with the Securities and Exchange Commission which,
for the calendar year in which a distribution is paid: (a) has no investments
other than interest-
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bearing obligations, obligations issued at a discount, cash, cash items,
including receivables, and financial options, futures, forward contracts, or
other similar financial instruments related to interest-bearing obligations,
obligations issued at a discount or bond indexes related thereto; and (b) has
not less than 80% of the aggregate principal amount of all of its investments
(excluding cash, cash items, including receivables, and financial options,
futures, forward contracts, or other similar financial instruments related to
interest-bearing obligations, obligations issued at a discount or bond indexes
related thereto) in New Jersey Municipal Obligations. Qualified investment
trusts are also subject to certain filing requirements.
All other Fund distributions of net investment income will be taxable as
ordinary income. Any distributions of net capital gain which are designated as
"capital gain dividends" will be taxable as long-term capital gain, regardless
of how long you have held the shares. The taxation of your distribution is the
same whether received in cash or in shares through the reinvestment of
distributions.
You should carefully consider the tax implications of purchasing shares just
prior to a distribution date. This is because you will be taxed on the entire
amount of the distribution received, even though the net asset value per share
will be higher on the date of such purchase as it will include the distribution
amount.
Early in each calendar year the Funds will notify your Financial Institution of
the amount and tax status of distributions paid for the preceding year.
The above is only a summary of certain federal income tax consequences of
investing in the Funds. You should consult your tax adviser to determine the
precise effect of an investment in the Funds on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).
OTHER INFORMATION
CONCERNING THE FUNDS
Your Financial Institution may offer additional services to its customers,
including specialized procedures for the purchase and redemption of Fund
shares, such as pre-authorized or systematic purchase and redemption plans.
Each Financial Institution may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect
to such services. Certain Financial Institutions may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees.
For shareholders that bank with Chase, Chase may aggregate investments in the
Chase Vista Funds with balances held in Chase bank accounts for purposes of
determining eligibility for certain bank privileges that are based on specified
minimum balance requirements, such as reduced or no fees for certain banking
services or preferred rates on loans and deposits. Chase and certain other
Financial Institutions may, at their own expense, provide gifts, such as
computer software packages, guides
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and books related to investment or additional Fund shares valued up to $250 to
their customers that invest in the Chase Vista Funds.
Chase and its affiliates and the Chase Vista Funds, affiliates, agents and
subagents may exchange among themselves and others certain information about
shareholders and their accounts, including information used to offer investment
products and insurance products to them, unless otherwise contractually
prohibited.
ADMINISTRATOR
Chase acts as the Funds' administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of each Fund's
average daily net assets.
SUB-ADMINISTRATOR
AND DISTRIBUTOR
Vista Fund Distributors, Inc. ("VFD") acts as the Funds' sub-administrator and
distributor. VFD is a subsidiary of The BISYS Group, Inc. and is unaffiliated
with Chase. For the sub-administrative services it performs, VFD is entitled to
receive a fee from each Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay
for certain expenses incurred in connection with organizing new series of the
Trust and certain other ongoing expenses of the Trust. VFD is located at One
Chase Manhattan Plaza, Third Floor, New York, New York 10081.
CUSTODIAN
Chase acts as custodian for the Funds and receives compensation under an
agreement with the Trust. Chase may sub-contract for the provision of certain
services to be provided under the custody agreement. Fund securities and cash
may be held by sub-custodian banks if such arrangements are reviewed and
approved by the Trustees.
EXPENSES
Each Fund pays the expenses incurred in its operations, including its pro rata
share of expenses of the Trust. These expenses include investment advisory and
administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Funds' custodian
for all services to the Funds, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of
the Trust; insurance premiums; and expenses of calculating the net asset value
of, and the net income on, shares of the Funds. In addition, each Fund may
allocate transfer agency and certain other expenses by class if additional
classes of such Fund are established in the future. Service providers to a Fund
may, from time to time, voluntarily waive all or a portion
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of any fees to which they are entitled.
ORGANIZATION AND
DESCRIPTION OF SHARES
The Funds are portfolios of Mutual Fund Select Trust, an open-end management
investment company organized as a Massachusetts business trust in 1996 (the
"Trust"). The Trust has reserved the right to create and issue additional
series and classes. Each share of a series or class represents an equal
proportionate interest in that series or class with each other share of that
series or class. The shares of each series or class participate equally in the
earnings, dividends and assets of the particular series or class. Shares have
no pre-emptive or conversion rights. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one
vote for each whole share held, and each fractional share shall be entitled to
a proportionate fractional vote, except that Trust shares held in the treasury
of the Trust shall not be voted.
Each Fund currently issues a single class of shares but may, in the future,
offer other classes of shares. The categories of investors that are eligible to
purchase shares may differ for each class of Fund shares. In addition, other
classes of Fund shares may be subject to differences in sales charge
arrangements, ongoing distribution and service fee levels, and levels of
certain other expenses, which will affect the relative performance of the
different classes. Investors may call 1-800-622-4273 to obtain additional
information about other classes of shares of the Funds that may be offered in
the future. Any person entitled to receive compensation for selling or
servicing shares of a Fund may receive different levels of compensation with
respect to one class of shares over another. Shares of each class of a Fund
would generally vote together except when required under federal securities
laws to vote separately on matters that only affect a particular class, such as
the approval of distribution plans for a particular class.
The business and affairs of the Trust are managed under the general direction
and supervision of the Trust's Board of Trustees. The Trust is not required to
hold annual meetings of shareholders but will hold special meetings of
shareholders of all series or classes when in the judgment of the Trustees it
is necessary or desirable to submit matters for a shareholder vote. The
Trustees will promptly call a meeting of shareholders to remove a trustee(s)
when requested to do so in writing by record holders of not less than 10% of
all outstanding shares of the Trust.
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE
Unlike other mutual funds which directly acquire and manage their
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own portfolio securities, each Fund is permitted to invest all of its
investable assets in a separate registered investment company (a "Portfolio").
In that event, a shareholder's interest in a Fund's underlying investment
securities would be indirect. In addition to selling a beneficial interest to a
Fund, a Portfolio could also sell beneficial interests to other mutual funds or
institutional investors. Such investors would invest in such Portfolio on the
same terms and conditions and would pay a proportionate share of such
Portfolio's expenses. However, other investors in a Portfolio would not be
required to sell their shares at the same public offering price as a Fund, and
might bear different levels of ongoing expenses than the Fund. Shareholders of
the Funds should be aware that these differences may result in differences in
returns experienced in the different funds that invest in a Portfolio. Such
differences in return are also present in other mutual fund structures.
Smaller funds investing in a Portfolio could be materially affected by the
actions of larger funds investing the Portfolio. For example, if a large fund
were to withdraw from a Portfolio, the remaining funds might experience higher
pro rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio could become less diverse, resulting in increased portfolio risk.
However, this possibility also exists for traditionally structured funds which
have large or institutional investors. Funds with a greater pro rata ownership
in a Portfolio could have effective voting control of such Portfolio. Under
this master/feeder investment approach, whenever the Trust was requested to
vote on matters pertaining to a Portfolio, the Trust would hold a meeting of
shareholders of the relevant Fund and would cast all of its votes in the same
proportion as did such Fund's shareholders. Shares of a Fund for which no
voting instructions had been received would be voted in the same proportion as
those shares for which voting instructions had been received. Certain changes
in a Portfolio's objective, policies or restrictions might require the Trust to
withdraw the relevant Fund's interest in such Portfolio. Any such withdrawal
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution from such Portfolio). A Fund could incur brokerage fees or
other transaction costs in converting such securities to cash. In addition, a
distribution in kind could result in a less diversified portfolio of
investments or adversely affect the liquidity of the relevant Fund.
A Fund will not adopt a master/feeder structure under which the disinterested
Trustees of the Trust are Trustees of the Portfolio unless the Trustees of the
Trust, including a majority of the disinterested Trustees, adopt procedures they
believe to be reasonably appropriate to deal with any conflict of interest up to
and including creating a separate Board of Trustees.
If a Fund invests all of its investable assets in a Portfolio, investors in
such Fund will be able to obtain information about whether investment in the
Portfolio might be available through other funds
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by contacting the Fund at 1-800- 622-4273. In the event a Fund adopts a
master/feeder structure and invests all of its investable assets in a Porfolio,
shareholders of that Fund will be given at least 30 days' prior written notice.
PERFORMANCE
INFORMATION
Each Fund's investment performance may from time to time be included in
advertisements about the Fund. "Yield" is calculated by dividing the annualized
net investment income per share during a recent 30-day period by the maximum
public offering price per share on the last day of that period.
"Total return" for the one-, five- and ten-year periods (or for the life of a
class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in a Fund
invested at the public offering price. Total return may also be presented for
other periods.
All performance data is based on each Fund's past investment results and does
not predict future performance. The performance data for each Fund prior to
January 1, 1997 includes the historical performance of a predecessor common
trust fund, adjusted to reflect historical expenses at the levels indicated
(absent reimbursements) in the Expense Summary for that Fund. These predecessor
common trust funds were not registered under the Investment Company Act of 1940
(the "1940 Act") and thus were not subject to certain investment restrictions
that are imposed by the 1940 Act. If the common trust funds had been registered
under the 1940 Act, their performance might have been adversely affected.
Because each Fund is the successor to one or more common trust funds, the
assets of which it acquired on a tax free basis at the time the Fund commenced
operations, a Fund's portfolio may include net unrealized appreciation
comparable to that of a mutual fund which has been in existence for the life of
the predecessor common trust fund or funds. Additional information on
unrealized appreciation is included under "Performance Information" in the SAI.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a Fund's portfolio and a Fund's operating
expenses. Investment performance also often reflects the risks associated with
a Fund's investment objectives and policies.
These factors should be considered when comparing a Fund's investment results
to those of other mutual funds and other investment vehicles. Quotation of
investment performance for any period when a fee waiver or expense limitation
was in effect will be greater than if the waiver or limitation had not been in
effect. Each Fund's performance may be compared to other mutual funds, relevant
indices and rankings prepared by independent services. See the SAI.
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MAKE THE MOST OF YOUR CHASE VISTA PRIVILEGES
The following services are available to you as a Chase Vista Fund shareholder.
[bullet] SYSTEMATIC INVESTMENT PLAN--Invest as much as you wish ($100 or more)
in the first or third week of any month. The amount will be
automatically transferred from your checking or savings account.
[bullet] SYSTEMATIC WITHDRAWAL PLAN--Make regular withdrawals of $50 or more
($100 or more for Class B and Class C accounts) monthly, quarterly or
semiannually. A minimum account balance of $5,000 is required to
establish a systematic withdrawal plan for Class A accounts.
[bullet] SYSTEMATIC EXCHANGE--Transfer assets automatically from one Chase
Vista account to another on a regular, prearranged basis. There is no
additional charge for this service.
[bullet] FREE EXCHANGE PRIVILEGE--Exchange money between Chase Vista Funds in
the same class of shares without charge. The exchange privilege allows
you to adjust your investments as your objectives change. Investors may
not maintain, within the same fund, simultaneous plans for systematic
investment or exchange and systematic withdrawal or exchange.
[bullet] REINSTATEMENT PRIVILEGE--Class A shareholders have a one time
privilege of reinstating their investment in the Fund at net asset
value next determined subject to written request within 90 calendar
days of the redemption, accompanied by payment for the shares (not in
excess of the redemption).
Class B and Class C shareholders who have redeemed their shares and paid a
CDSC with such redemption may purchase Class A shares with no initial sales
charge (in an amount not in excess of their redemption proceeds) if the
purchase occurs within 90 days of the redemption of the Class B and Class C
shares.
For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Chase Vista
Service Center at 1-800-34-VISTA. These privileges are subject to change or
termination.
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TRANSFER AGENT AND DIVIDEND PAYING AGENT
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
[Logo of Chase Vista Funds]
CHASE VISTA FUNDS
101 Park Avenue
New York, NY 10178
VSTF-1-398
