As filed via EDGAR with the Securities and Exchange Commission on
July 6, 1999
File No.
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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MUTUAL FUND MASTER INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
One Chase Manhattan Plaza
New York, New York 10081
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(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (212) 492-1600
George Martinez, Esq. Peter Eldridge, Esq. Gary S. Schpero, Esq.
BISYS Fund Services, Inc. Chase Manhattan Bank Simpson Thacher & Bartlett
3435 Stelzer Road 270 Park Avenue 425 Lexington Avenue
Columbus, Ohio 43219 New York, New York 10017 New York, New York
10017
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(Name and Address of Agent for Service)
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PART A
Responses to Items 1 through 3, 5 and 9 have been omitted pursuant to
paragraph 2(b) of Instruction B of the General Instructions to Form
N-1A.
Item 4. Investment Objectives, Principal Investment Strategies and
Related Risks
CORE EQUITY PORTFOLIO
The Core Equity Portfolio aims to maximize total investment return with
an emphasis on long-term capital appreciation and current income while
taking reasonable risk.
The Core Equity Portfolio uses an active equity
management style which focuses on strong earnings momentum and
profitability within the universe of S&P stocks. The Core Equity
Portfolio normally invests at least 70% of its total assets in equity
securities.
The Core Equity Portfolio seeks capital appreciation by emphasizing
companies with a superior record of earnings growth relative to the
equity markets in general or a projected rate of earnings growth that's
greater than or equal to the equity markets.
The Core Equity Portfolio seeks to earn current income and manage risk by
focusing on larger companies with a stable record of earnings growth. In
addition, it diversifies its portfolio across all sectors of the S&P 500.
The Core Equity Portfolio also emphasizes companies with return on assets
and return on equity equal to or greater than the equity markets.
The Core Equity Portfolio may invest up to 30% of its total assets in
foreign securities, including Depositary Receipts. Its equity investments
may include convertible securities, which generally pay interest or
dividends and which can be converted into common or preferred stock.
The Core Equity Portfolio may also invest in investment grade debt
securities. When the adviser wishes to limit the Core Equity Portfolio's
equity investments because of adverse market conditions, the Core Equity
Portfolio may temporarily invest any amount in investment grade debt
securities. There is no restriction on the maturity of the Core Equity
Portfolio's debt portfolio or on any individual security in the
portfolio.
The Core Equity Portfolio may invest any portion of its assets that
aren't in stocks or fixed income securities in high quality money market
instruments and repurchase agreements. To temporarily defend its assets,
the Core Equity Portfolio may put any amount of its assets in these types
of investments.
The Core Equity Portfolio may invest in derivatives, which are financial
instruments whose value is based on another security, index or exchange
rate. The Core Equity Portfolio may use derivatives to hedge various
market risks or to increase the Core Equity Portfolio's income or gain.
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The Core Equity Portfolio may change any of these investment policies
(including its investment objective) without shareholder approval.
The Core Equity Portfolio may trade securities actively, which could
increase transaction costs (and lower performance) and increase your
taxable dividends.
Here are some of the specific risks of investing in Core Equity
Portfolio.
The value of interests of the Core Equity Portfolio will be influenced by
conditions in stock markets as well as the performance of the companies
selected for the Core Equity Portfolio's portfolio.
Investments in foreign securities may be riskier than investments in the
U.S. Because foreign securities are usually denominated in foreign
currencies, the value of the Core Equity Portfolio's portfolio may be
influenced by currency exchange rates and exchange control regulations.
Foreign securities may be affected by political, social and economic
instability. Some securities may be harder to trade without incurring a
loss and may be difficult to convert into cash. There may be less public
information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may
nationalize or expropriate assets or impose exchange controls. These
risks increase when investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about
the underlying issuer and may not carry the same voting privileges as
sponsored depositary receipts.
In early 1999, the European Monetary Union implemented a new currency
called the "euro." It is possible that the euro could increase volatility
in financial markets, which could have a negative effect on the strength
and value of the U.S. dollar and, as a result, the value of interests of
the Core Equity Portfolio.
The market value of convertible securities and debt securities tends to
decline as interest rates increase. The value of convertible securities
also tends to change whenever the market value of the underlying common
or preferred stock fluctuates.
If the Core Equity Portfolio invests a substantial portion of its assets
in money market instruments, repurchase agreements and U.S. Government
obligations, including where the Core Equity Portfolio is investing for
temporary defensive purposes, it could reduce the Core Equity Portfolio's
potential return.
Derivatives may be more risky than other types of investments because
they may respond more to changes in economic conditions than other types
of investments. If they are used for non-hedging purposes, they could
cause losses that exceed the Core Equity Portfolio's original investment.
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An investment in the Core Equity Portfolio isn't a deposit of The Chase
Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
EQUITY GROWTH PORTFOLIO
The Equity Growth Portfolio aims to provide capital appreciation.
Producing current income is a secondary objective.
The Equity Growth Portfolio uses an active equity management style which
focuses on strong earnings momentum and profitability within the universe
of growth-oriented stocks. The Equity Growth Portfolio normally invests
at least 70% of its total assets in equity securities.
The Equity Growth Portfolio seeks capital appreciation by emphasizing the
growth sectors of the economy. It looks for companies with one or more of
the following characteristics:
o a projected earnings growth rate that's greater than or equal to the
equity markets in general
o a return on assets and return on equity equal to or greater than the
equity markets
o above market average price-earnings ratios
o below-average dividend yield
o above-average market volatility
o a market capitalization of more than $500 million.
The Equity Growth Portfolio focuses on companies with strong earnings and
high levels of profitability as well as positive industry or company
characteristics.
The Equity Growth Portfolio may invest up to 30% of its total assets in
foreign securities, including Depositary Receipts. Its equity investments
may include convertible securities, which generally pay interest or
dividends and which can be converted into common or preferred stock.
The Equity Growth Portfolio may also invest in investment grade debt
securities. When the adviser wishes to limit the Equity Growth
Portfolio's equity investments because of adverse market conditions, the
Equity Growth Portfolio may temporarily invest any amount in investment
grade debt securities. There is no restriction on the maturity of the
Equity Growth Portfolio's debt portfolio or on any individual security in
the portfolio.
The Equity Growth Portfolio may invest any portion of its assets that
aren't in stocks or fixed income securities in high quality money market
instruments and repurchase agreements. To temporarily defend its assets,
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the Equity Growth Portfolio may put any amount of its assets in these
types of investments.
The Equity Growth Portfolio may invest in derivatives, which are
financial instruments whose value is based on another security, index or
exchange rate. The Equity Growth Portfolio may use derivatives to hedge
various market risks or to increase the Equity Growth Portfolio's income
or gain.
The Equity Growth Portfolio may change any of these investment policies
(including its investment objective) without shareholder approval.
The Equity Growth Portfolio may trade securities actively, which could
increase transaction costs (and lower performance) and increase your
taxable dividends.
Here are some of the specific risks of investing in Equity Growth
Portfolio.
The value of interests of the Equity Growth Portfolio will be influenced
by conditions in stock markets as well as the performance of the
companies selected for the Equity Growth Portfolio's portfolio.
The securities of mid-capitalization companies may trade less frequently
and in smaller volumes than securities of larger, more established
companies. As a result, share price changes may be more sudden or more
erratic. Mid-sized companies may have limited product lines, markets or
financial resources, and they may depend on a small management group.
Investments in foreign securities may be riskier than investments in the
U.S. Because foreign securities are usually denominated in foreign
currencies, the value of the Equity Growth Portfolio's portfolio may be
influenced by currency exchange rates and exchange control regulations.
Foreign securities may be affected by political, social and economic
instability. Some securities may be harder to trade without incurring a
loss and may be difficult to convert into cash. There may be less public
information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may
nationalize or expropriate assets or impose exchange controls. These
risks increase when investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about
the underlying issuer and may not carry the same voting privileges as
sponsored depositary receipts.
In early 1999, the European Monetary Union implemented a new currency
called the "euro." It is possible that the euro could increase volatility
in financial markets, which could have a negative effect on the strength
and value of the U.S. dollar and, as a result, the value of interests of
the Equity Growth Portfolio.
The market value of convertible securities and debt securities tends to
decline as interest rates increase. The value of convertible securities
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also tends to change whenever the market value of the underlying common
or preferred stock fluctuates.
If the Equity Growth Portfolio invests a substantial portion of its
assets in money market instruments, repurchase agreements and U.S.
Government obligations, including where the Equity Growth Portfolio is
investing for temporary defensive purposes, it could reduce the Equity
Growth Portfolio's potential return.
Derivatives may be more risky than other types of investments because
they may respond more to changes in economic conditions than other types
of investments. If they are used for non-hedging purposes, they could
cause losses that exceed the Equity Growth Portfolio's original
investment.
An investment in the Equity Growth Portfolio isn't a deposit of The Chase
Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Item 6. Management, Organization and Capital Structure
The Chase Manhattan Bank (Chase) is the investment adviser to the
Portfolios. Chase is a wholly owned subsidiary of The Chase Manhattan
Corporation (CMC), a bank holding company. Chase provides the Portfolios
with investment advice and supervision. Chase and its predecessors have
more than a century of money management experience. Chase is located at
270 Park Avenue, New York, NY 10017.
Chase is entitled to receive an annual management fee at the rate of
0.75% of the average daily net assets of each Portfolio.
Chase Bank of Texas, N.A. (Chase Texas) is the sub-adviser to the
Portfolios. Chase Texas is a wholly-owned subsidiary of The Chase
Manhattan Corporation. It makes the day-to-day investment decisions for
the Portfolios. Chase Texas is located at 712 Main Street, Houston,
Texas 77002.
Henry Lartigue, the Chief Investment Officer at Chase Texas, is the
portfolio manager for each of the Portfolios. Mr. Lartigue has worked
for Chase Texas since 1994. In the two years before coming to Chase
Texas, Mr. Lartigue was an independent registered investment adviser.
Item 7. Shareholder Information
Each Portfolio is a series of Mutual Fund Master Investment Trust
(the "Trust"), which is organized as a business trust under the laws of
the Commonwealth of Massachusetts. Under the Trust's Declaration of
Trust, the Trustees are authorized to issue beneficial interests in each
Portfolio. Each investor is entitled to a vote in proportion to the
amount of its investment in a Portfolio. Investments in a Portfolio may
not be transferred, but an investor may withdraw all or any portion of
its investment at any time at net asset value. Investors in a Portfolio
(e.g., investment companies, insurance company separate accounts and
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common and commingled trust funds) will each be liable for all
obligations of the Portfolio. However, the risk of an investor in a
Portfolio incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance existed and
the Portfolio itself was unable to meet its obligations.
Investments in a Portfolio have no preemptive or conversion rights and
are fully paid and nonassessable, except as set forth below. The
Portfolios are not required to hold annual meetings of investors but a
Portfolio will hold special meetings of investors when in the judgment of
the Trustees it is necessary or desirable to submit matters for an
investor vote. Investors have the right to communicate with other
investors to the extent provided in Section 16(c) of the Investment
Company Act of 1940, as amended (the "1940 Act"), in connection with
requesting a meeting of investors for the purpose of removing one or more
Trustees, which removal requires a two-thirds vote of the Portfolio's
beneficial interests. Investors also have under certain circumstances
the right to remove one or more Trustees without a meeting. Upon
liquidation of a Portfolio, investors would be entitled to share pro rata
in the net assets of the Portfolio available for distribution to
investors.
Each Portfolio does not intend to distribute to its investors its net
investment income or its net realized capital gains, if any. The end of
each Portfolio's fiscal year is December 31.
Under the anticipated method of operation of each Portfolio, the
Portfolios will not be subject to any income tax. However, each investor
in a Portfolio will be taxable on its share (as determined in accordance
with the governing instruments of the Portfolio) of the Portfolio's
taxable income, gain, loss, deductions and credits in determining its
income tax liability. The determination of such share will be made in
accordance with the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder.
It is intended that each Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio will be
able to satisfy the requirements of Subchapter M of the Code, assuming
that the investor invested all of its assets in the Portfolio.
Investor inquiries may be directed to the Portfolios' transfer agent, DST
Systems, Inc., at 210 West 10th Street, Kansas City, Missouri 64105.
Beneficial interests in a Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act.
An investment in a Portfolio may be made in U.S. dollars without a sales
load at the net asset value next determined after an order is received in
"good order" by the Portfolio. There is no minimum initial or subsequent
investment in a Portfolio.
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Each Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
Each investor in a Portfolio may add to or reduce its investment in the
Portfolio on each day the New York Stock Exchange is open for trading.
At the close of regular trading on the New York Stock Exchange on each
such day (normally 4:00 p.m., Eastern time; however, options are priced
at 4:15 p.m., Eastern time), the value of each investor's beneficial
interest in each Portfolio will be determined by multiplying the net
asset value of the Portfolio by the percentage, effective for that day,
which represents that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or reductions, which are to be
effected as of the close of regular trading on such day, will then be
effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the close of regular trading
on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the investor's investment in the Portfolio
effected as of the close of regular trading, and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of the close
of regular trading on such day plus or minus, as the case may be, the
amount of net additions to or reductions in the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so
determined will then be applied to determine the value of the investor's
interest in the Portfolio as of the close of regular trading on the
following day the New York Stock Exchange is open for trading.
An investor in a Portfolio may reduce any portion or all of its
investment at any time without charge at the net asset value next
determined after a request in "good order" is furnished by the investor
to the Portfolio. The proceeds of a reduction will be paid in U.S.
dollars by the Portfolio normally on the next business day after the
reduction is effected, but in any event within seven days. Investments
in a Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom
postponed during any period in which the New York Stock Exchange is
closed (other than weekends or holidays) or trading on such Exchange is
restricted, or, to the extent otherwise permitted by the 1940 Act, if an
emergency exists.
Item 8. Distribution Arrangements
Not applicable
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PART B
Item 10. Cover Page and Table of Contents
Fund History . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
Description of the Portfolios and their Investments and Risks. . . . B-
Management of the Portfolios . . . . . . . . . . . . . . . . . . . B-
Control Persons and Principal Holders of Securities . . . . . . . . B-
Investment Advisory and Other Services . . . . . . . . . . . . . . . B-
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . B-
Capital Stock and Other Securities . . . . . . . . . . . . . . . . . B-
Purchase, Redemption and Pricing of Shares . . . . . . . . . . . . . B-
Taxation of the Portfolios . . . . . . . . . . . . . . . . . . . . . B-
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
Calculation of Performance Data . . . . . . . . . . . . . . . . . . B-
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .B-
Item 11. Fund History
Mutual Fund Master Investment Trust (the "Trust") is an open-end
management investment company organized as a business trust under the
laws of the Commonwealth of Massachusetts. The Trust presently consists
of two separate series (the "Portfolios").
Immediately upon the inception of the Trust on __________, 1999, the
Chase Core Equity Fund and Chase Equity Growth Fund series of Mutual Fund
Investment Trust, another open-end management investment company, were
converted to a master/feeder structure and the Core Equity Portfolio and
Equity Growth Portfolio were formed.
The Board of Trustees of the Trust provides broad supervision over
the affairs of the Trust including the Portfolios. The Chase Manhattan
Bank ("Chase") is the investment adviser for the Portfolios. Chase also
serves as the Trust's administrator (the "Administrator") and supervises
the overall administration of the Trust and is the administrator of the
Portfolios. A majority of the Trustees of the Trust are not affiliated
with the investment adviser or sub-adviser.
Item 12. Description of the Portfolios and Their Investment and Risks
Part A sets forth the investment objectives, principal investment
strategies and related risks of the Portfolios This Part B supplements
and should be read in conjunction with the related section of Part A.
For descriptions of the securities ratings of Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Corporation ("Standard & Poor's") and
Fitch Investors Service, Inc. ("Fitch"), see Appendix B.
U.S. Government Securities. The Portfolios may invest in U.S.
Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest
rates, maturities and times of issuance, including: U.S. Treasury bills
(maturities of one year or less), U.S. Treasury notes (maturities of one
to ten years) and U.S. Treasury bonds (generally maturities of greater
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than ten years); and (2) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities which are supported by any of
the following: (a) the full faith and credit of the U.S. Treasury, (b)
the right of the issuer to borrow any amount listed to a specific line of
credit from the U.S. Treasury, (c) discretionary authority of the U.S.
Government to purchase certain obligations of the U.S. Government agency
or instrumentality or (d) the credit of the agency or instrumentality.
Agencies and instrumentalities of the U.S. Government include but are not
limited to: Federal Land Banks, Federal Financing Banks, Banks for
Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
National Mortgage Association, Student Loan Marketing Association, United
States Postal Service, Chrysler Corporate Loan Guarantee Board, Small
Business Administration, Tennessee Valley Authority and any other
enterprise established or sponsored by the U.S. Government. Certain U.S.
Government Securities, including U.S. Treasury bills, notes and bonds,
Government National Mortgage Association certificates and Federal Housing
Administration debentures, are supported by the full faith and credit of
the United States. Other U.S. Government Securities are issued or
guaranteed by federal agencies or government sponsored enterprises and
are not supported by the full faith and credit of the United States.
These securities include obligations that are supported by the right of
the issuer to borrow from the U.S. Treasury, such as obligations of the
Federal Home Loan Banks, and obligations that are supported by the
creditworthiness of the particular instrumentality, such as obligations
of the Federal National Mortgage Association or Federal Home Loan
Mortgage Corporation. For a description of certain obligations issued or
guaranteed by U.S. Government agencies and instrumentalities, see
Appendix A.
In addition, certain U.S. Government agencies and instrumentalities
issue specialized types of securities, such as guaranteed notes of the
Small Business Administration, Federal Aviation Administration,
Department of Defense, Bureau of Indian Affairs and Private Export
Funding Corporation, which often provide higher yields than are available
from the more common types of government-backed instruments. However,
such specialized instruments may only be available from a few sources, in
limited amounts, or only in very large denominations; they may also
require specialized capability in portfolio servicing and in legal
matters related to government guarantees. While they may frequently offer
attractive yields, the limited-activity markets of many of these
securities means that, if a Portfolio were required to liquidate any of
them, it might not be able to do so advantageously; accordingly, each
Portfolio investing in such securities normally to hold such securities
to maturity or pursuant to repurchase agreements, and would treat such
securities (including repurchase agreements maturing in more than seven
days) as illiquid for purposes of its limitation on investment in
illiquid securities.
Bank Obligations. Investments in bank obligations are limited to
those of U.S. banks (including their foreign branches) which have total
assets at the time of purchase in excess of $1 billion and the deposits
of which are insured by either the Bank Insurance Fund or the Savings
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Association Insurance Fund of the Federal Deposit Insurance Corporation,
and foreign banks (including their U.S. branches) having total assets in
excess of $10 billion (or the equivalent in other currencies), and such
other U.S. and foreign commercial banks which are judged by the advisers
to meet comparable credit standing criteria.
Bank obligations include negotiable certificates of deposit,
bankers' acceptances, fixed time deposits and deposit notes. A
certificate of deposit is a short-term negotiable certificate issued by a
commercial bank against funds deposited in the bank and is either
interest-bearing or purchased on a discount basis. A bankers' acceptance
is a short-term draft drawn on a commercial bank by a borrower, usually
in connection with an international commercial transaction. The borrower
is liable for payment as is the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Fixed time
deposits are obligations of branches of United States banks or foreign
banks which are payable at a stated maturity date and bear a fixed rate
of interest. Although fixed time deposits do not have a market, there are
no contractual restrictions on the right to transfer a beneficial
interest in the deposit to a third party. Fixed time deposits subject to
withdrawal penalties and with respect to which a Portfolio cannot realize
the proceeds thereon within seven days are deemed "illiquid" for the
purposes of its restriction on investments in illiquid securities.
Deposit notes are notes issued by commercial banks which generally bear
fixed rates of interest and typically have original maturities ranging
from eighteen months to five years.
The dependence on the banking industry may involve certain credit
risks, such as defaults or downgrades, if at some future date adverse
economic conditions prevail in such industry. Banks are subject to
extensive governmental regulations that may limit both the amounts and
types of loans and other financial commitments that may be made and the
interest rates and fees that may be charged. The profitability of this
industry is largely dependent upon the availability and cost of capital
funds for the purpose of financing lending operations under prevailing
money market conditions. Also, general economic conditions play an
important part in the operations of this industry and exposure to credit
losses arising from possible financial difficulties of borrowers might
affect a bank's ability to meet its obligations. Bank obligations may be
general obligations of the parent bank or may be limited to the issuing
branch by the terms of the specific obligations or by government
regulation. Investors should also be aware that securities of foreign
banks and foreign branches of United States banks may involve foreign
investment risks in addition to those relating to domestic bank
obligations. These investment risks may involve, among other
considerations, 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
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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.
Foreign Securities. For purposes of a Portfolio's investment
policies, the issuer of a security may be deemed to be located in a
particular country if (i) the principal trading market for the security
is in such country, (ii) the issuer is organized under the laws of such
country or (iii) the issuer derives at least 50% of its assets situated
in such country.
Depositary Receipts. The Portfolios may invest their assets in
securities of multinational companies in the form of American Depositary
Receipts or other similar securities representing securities of foreign
issuers, such as European Depositary Receipts, Global Depositary Receipts
and other similar securities representing securities of foreign issuers
(collectively, "Depositary Receipts"). The Portfolios treat Depositary
Receipts as interests in the underlying securities for purposes of their
investment policies.
Money Market Instruments. Each Portfolio 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.
Corporate Reorganizations. In general, securities that are the
subject of a tender or exchange offer or proposal sell at a premium to
their historic market price immediately prior to the announcement of the
offer or proposal. The increased market price of these securities may
also discount what the stated or appraised value of the security would be
if the contemplated action were approved or consummated. These
investments may be advantageous when the discount significantly
overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders
of the prospective portfolio company as a result of the contemplated
transaction; or, fails adequately to recognize the possibility that the
offer or proposal may be replaced or superseded by an offer or proposal
of greater value. The evaluation of these contingencies requires
unusually broad knowledge and experience on the part of the advisers that
must appraise not only the value of the issuer and its component
businesses as well as the assets or securities to be received as a result
of the contemplated transaction, but also the financial resources and
business motivation of the offeror as well as the dynamics of the
business climate when the offer or proposal is in progress. Investments
in reorganization securities may tend to increase the turnover ratio of a
Portfolio and increase its brokerage and other transaction expenses.
Warrants and Rights. Warrants basically are options to purchase
equity securities at a specified price for a specific period of time.
Their prices do not necessarily move parallel to the prices of the
underlying securities. Rights are similar to warrants but normally have a
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shorter duration and are distributed directly by the issuer to
shareholders. Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
Commercial Paper. Commercial paper consists of short-term (usually
from 1 to 270 days) unsecured promissory notes issued by corporations in
order to finance their current operations. A variable amount master
demand note (which is a type of commercial paper) represents a direct
borrowing arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper issuer and
an institutional lender pursuant to which the lender may determine to
invest varying amounts.
Preferred Stock. Preferred Stock are securities that represent an
ownership interest in a corporation and that give the owner a prior claim
over common stock on the corporation's earnings or assets.
Investment Grade Debt Securities. Each Portfolio may invest in
investment grade debt securities. Investment grade debt securities are
securities rated in the category BBB or higher by Standard & Poor's
Corporation ("S&P"), or Baa or higher by Moody's Investors Service, Inc.
("Moody's") or the equivalent by another national rating organization,
or, if unrated, determined by the advisers to be of comparable quality.
Repurchase Agreements. Each Portfolio may enter into repurchase
agreements. A Portfolio will enter into repurchase agreements only with
member banks of the Federal Reserve System and securities dealers
believed creditworthy, and only if fully collateralized by securities in
which such Portfolio is permitted to invest. Under the terms of a typical
repurchase agreement, a Portfolio would acquire an underlying instrument
for a relatively short period (usually not more than one week) subject to
an obligation of the seller to repurchase the instrument and the
Portfolio to resell the instrument at a fixed price and time, thereby
determining the yield during the Portfolio's holding period. This
procedure results in a fixed rate of return insulated from market
fluctuations during such period. A repurchase agreement is subject to the
risk that the seller may fail to repurchase the security. Repurchase
agreements are considered under the 1940 Act to be loans collateralized
by the underlying securities. All repurchase agreements entered into by a
Portfolio will be fully collateralized at all times during the period of
the agreement in that the value of the underlying security will be at
least equal to 100% of the amount of the loan, including the accrued
interest thereon, and the Portfolio or its custodian or sub-custodian
will have possession of the collateral, which the Board of Trustees
believes will give it a valid, perfected security interest in the
collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established.
This might become an issue in the event of the bankruptcy of the other
party to the transaction. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the
underlying securities would not be owned by the Portfolio, but would only
constitute collateral for the seller's obligation to pay the repurchase
price. Therefore, a Portfolio may suffer time delays and incur costs in
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connection with the disposition of the collateral. The Board of Trustees
believes that the collateral underlying repurchase agreements may be
more susceptible to claims of the seller's creditors than would be the
case with securities owned by a Portfolio. Repurchase agreements maturing
in more than seven days are treated as illiquid for purposes of the
Portfolios' restrictions on purchases of illiquid securities. Repurchase
agreements are also subject to the risks described below with respect to
stand-by commitments.
Forward Commitments. Each Portfolio may purchase securities on a
forward commitment basis. In order to invest a Portfolio's assets
immediately, while awaiting delivery of securities purchased on a forward
commitment basis, short-term obligations that offer same-day settlement
and earnings will normally be purchased. When a commitment to purchase a
security on a forward commitment basis is made, procedures are
established consistent with the General Statement of Policy of the
Securities and Exchange Commission concerning such purchases. Since that
policy currently recommends that an amount of the respective Portfolio's
assets equal to the amount of the purchase be held aside or segregated to
be used to pay for the commitment, a separate account of such Portfolio
consisting of cash or liquid securities equal to the amount of such
Portfolio's commitments securities will be established at such
Portfolio's custodian bank. For the purpose of determining the adequacy
of the securities in the account, the deposited securities will be valued
at market value. If the market value of such securities declines,
additional cash, cash equivalents or highly liquid securities will be
placed in the account daily so that the value of the account will equal
the amount of such commitments by the respective Portfolio.
Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment
basis may involve more risk than other types of purchases. Securities
purchased on a forward commitment basis and the securities held in the
respective Portfolio's portfolio are subject to changes in value based
upon the public's perception of the issuer and changes, real or
anticipated, in the level of interest rates. Purchasing securities on a
forward commitment basis can involve the risk that the yields available
in the market when the delivery takes place may actually be higher or
lower than those obtained in the transaction itself. On the settlement
date of the forward commitment transaction, the respective Portfolio will
meet its obligations from then available cash flow, sale of securities
held in the separate account, sale of other securities or, although it
would not normally expect to do so, from sale of the forward commitment
securities themselves (which may have a value greater or lesser than such
Portfolio's payment obligations). The sale of securities to meet such
obligations may result in the realization of capital gains or losses.
Purchasing securities on a forward commitment basis can also involve the
risk of default by the other party on its obligation, delaying or
preventing the Portfolio from recovering the collateral or completing the
transaction.
To the extent a Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities
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consistent with its investment objective and policies and not for the
purpose of investment leverage, and settlement of such transactions will
be within 90 days from the trade date.
Borrowings. Each Portfolio may borrow money from banks for temporary
or short-term purposes. But, neither of the Portfolios may borrow money
to buy additional securities, which is known as "leveraging."
Reverse Repurchase Agreements. Each Portfolio may enter into reverse
repurchase agreements. Reverse repurchase agreements involve the sale of
securities held by a Portfolio with an agreement to repurchase the
securities at an agreed upon price and date. Each Portfolio may use this
practice to generate cash for shareholder redemptions without selling
securities during unfavorable market conditions. Whenever a Portfolio
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). The Portfolio would be required to pay interest on
amounts obtained through reverse repurchase agreements, which are
considered borrowings under federal securities laws. The repurchase price
is generally equal to the original sales price plus interest. Reverse
repurchase agreements are usually for seven days or less and cannot be
repaid prior to their expiration dates. Reverse repurchase agreements
involve the risk that the market value of the portfolio securities
transferred may decline below the price at which the Portfolio is obliged
to purchase the securities.
Other Investment Companies. Each Portfolio 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.
Stripped Obligations. The principal and interest components of
United States Treasury bonds with remaining maturities of longer than ten
years are eligible to be traded independently under the Separate Trading
of Registered Interest and Principal of Securities ("STRIPS") program.
Under the STRIPS program, the principal and interest components are
separately issued by the United States Treasury at the request of
depository financial institutions, which then trade the component parts
separately. The interest component of STRIPS may be more volatile than
that of United States Treasury bills with comparable maturities. The
risk is greater when the period to maturity is longer.
Each Portfolio may invest up to 20% of its total assets in stripped
obligations where the underlying obligations are backed by the full faith
and credit of the U.S. Government.
Illiquid Securities. For purposes of its limitation on investments
in illiquid securities, each Portfolio may elect to treat as liquid, in
accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary
market of qualified institutional buyers as contemplated by Rule 144A
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under the Securities Act of 1933, as amended (the "Securities Act") and
commercial obligations issued in reliance on the so-called "private
placement" exemption from registration afforded by Section 4(2) of the
Securities Act ("Section 4(2) paper"). Rule 144A provides an exemption
from the registration requirements of the Securities Act for the resale
of certain restricted securities to qualified institutional buyers.
Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as
a Portfolio who agree that they are purchasing the paper for investment
and not with a view to public distribution. Any resale of Section 4(2)
paper by the purchaser must be in an exempt transaction.
One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid
market for Rule 144A securities or Section 4(2) paper will develop or be
maintained. The Trustees have adopted policies and procedures for the
purpose of determining whether securities that are eligible for resale
under Rule 144A and Section 4(2) paper are liquid or illiquid for
purposes of the limitation on investment in illiquid securities. Pursuant
to those policies and procedures, the Trustees have delegated to the
advisers the determination as to whether a particular instrument is
liquid or illiquid, requiring that consideration be given to, among other
things, the frequency of trades and quotes for the security, the number
of dealers willing to sell the security and the number of potential
purchasers, dealer undertakings to make a market in the security, the
nature of the security and the time needed to dispose of the security.
The Trustees will periodically review the Portfolios' purchases and sales
of Rule 144A securities and Section 4(2) paper.
Convertible Securities. The Portfolios may invest in convertible
securities, which are securities generally offering fixed interest or
dividend yields that may be converted either at a stated price or stated
rate for common or preferred stock.
Stand-By Commitments. Each Portfolio may utilize stand-by
commitments in securities sales transactions. In a put transaction, a
Portfolio acquires the right to sell a security at an agreed upon price
within a specified period prior to its maturity date, and a stand-by
commitment entitles a Portfolio to same-day settlement and to receive an
exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Stand-by
commitments are subject to certain risks, which include the inability of
the issuer of the commitment to pay for the securities at the time the
commitment is exercised, the fact that the commitment is not marketable
by a Portfolio, and that the maturity of the underlying security will
generally be different from that of the commitment. A put transaction
will increase the cost of the underlying security and consequently reduce
the available yield.
Securities Loans. Each Portfolio is permitted to lend its securities
to broker-dealers and other institutional investors in order to generate
additional income. Such loans of portfolio securities may not exceed 30%
of the value of a Portfolio's total assets. In connection with such
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loans, a Portfolio will receive collateral consisting of cash, cash
equivalents, U.S. Government securities or irrevocable letters of credit
issued by financial institutions. Such collateral will be maintained at
all times in an amount equal to at least 100% of the current market
value plus accrued interest of the securities loaned. A Portfolio can
increase its income through the investment of such collateral. A
Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in
addition, to receive interest on the amount of the loan. However, the
receipt of any dividend-equivalent payments by a Portfolio on a loaned
security from the borrower will not qualify for the dividends-received
deduction. Such loans will be terminable at any time upon specified
notice. A Portfolio might experience risk of loss if the institutions
with which it has engaged in portfolio loan transactions breach their
agreements with such Portfolio. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in the recovery of
the securities or possible loss of rights in the collateral should the
borrower experience financial difficulty. Loans will be made only to
firms deemed by the advisers to be of good standing and will not be made
unless, in the judgment of the advisers, the consideration to be earned
from such loans justifies the risk.
Diversified Funds. Each Portfolio is classified as "diversified"
under federal securities law.
Unique characteristics of Master Feeder Structure. Smaller funds
investing in a Portfolio could be materially affected by the actions of
larger funds investing in 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, the 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 a fund was requested to vote on matters
pertaining to a Portfolio, the fund would hold a meeting of shareholders
of the fund and would cast all of its votes in the same proportion as did
the 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 a fund to withdraw its 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). The 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 fund.
Additional Policies Regarding Derivative and Related Transactions
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Introduction. As explained more fully below, the Portfolios may
employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be
considered a security or other instrument which derives its value from
the value or performance of other instruments or assets, interest or
currency exchange rates, or indexes. For instance, derivatives include
futures, options, forward contracts, structured notes and various
over-the-counter instruments.
Like other investment tools or techniques, the impact of using
derivatives strategies or similar instruments depends to a great extent
on how they are used. Derivatives are generally used by portfolio
managers in three ways: first, to reduce risk by hedging (offsetting) an
investment position; second, to substitute for another security
particularly where it is quicker, easier and less expensive to invest in
derivatives; and lastly, to speculate or enhance portfolio performance.
When used prudently, derivatives can offer several benefits, including
easier and more effective hedging, lower transaction costs, quicker
investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks,
thereby leading to potentially greater losses for a Portfolio.
Each Portfolio may invest its assets in derivative and related
instruments subject only to the Portfolio's investment objective and
policies and the requirement that the Portfolio maintain segregated
accounts consisting of cash or other liquid assets (or, as permitted by
applicable regulation, enter into certain offsetting positions) to cover
its obligations under such instruments with respect to positions where
there is no underlying portfolio asset so as to avoid leveraging the
Portfolio.
The value of some derivative or similar instruments in which the
Portfolios may invest may be particularly sensitive to changes in
prevailing interest rates or other economic factors, and--like other
investments of the Portfolios--the ability of a Portfolio to successfully
utilize these instruments may depend in part upon the ability of the
advisers to forecast interest rates and other economic factors correctly.
If the advisers inaccurately forecast such factors and has taken
positions in derivative or similar instruments contrary to prevailing
market trends, a Portfolio could be exposed to the risk of a loss. The
Portfolios might not employ any or all of the strategies described
herein, and no assurance can be given that any strategy used will
succeed.
Set forth below is an explanation of the various derivatives
strategies and related instruments the Portfolios may employ along with
risks or special attributes associated with them. This discussion is
intended to supplement Part A as well as provide useful information to
prospective investors.
Risk Factors. As explained more fully below and in the discussions
of particular strategies or instruments, there are a number of risks
associated with the use of derivatives and related instruments, and no
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assurance can be given that any strategy will succeed. The value of
certain derivatives or related instruments in which a Portfolio may
invest may be particularly sensitive to changes in prevailing economic
conditions and market value. The ability of a Portfolio 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 Portfolio to a risk of loss. There can be no guarantee that
there will be a correlation between price movements in a hedging vehicle
and in the portfolio assets being hedged. An incorrect correlation could
result in a loss on both the hedged assets in a Portfolio and the hedging
vehicle so that the portfolio return might have been greater had hedging
not been attempted. This risk is particularly acute in the case of
"cross-hedges" between currencies. The advisers may inaccurately forecast
interest rates, market values or other economic factors in utilizing a
derivatives strategy. In such a case, a Portfolio may have been in a
better position had it not entered into such strategy. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity
for gain. In other words, hedging usually limits both potential losses as
well as potential gains. The Portfolios are not required to use any
hedging strategies, and strategies not involving hedging involve leverage
and may increase the risk to a Portfolio. Certain strategies, such as
yield enhancement, can have speculative characteristics and may result in
more risk to a Portfolio than hedging strategies using the same
instruments. There can be no assurance that a liquid market will exist at
a time when a Portfolio seeks to close out an option, futures contract or
other derivative or related position. Many exchanges and boards of trade
limit the amount of fluctuation permitted in option or futures contract
prices during a single day; once the daily limit has been reached on
particular contract, no trades may be made that day at a price beyond
that limit. In addition, certain instruments are relatively new and
without a significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist.
Finally, over-the-counter instruments typically do not have a liquid
market. Lack of a liquid market for any reason may prevent a Fund from
liquidating an unfavorable position. Activities of large traders in the
futures and securities markets involving arbitrage, "program trading,"
and other investment strategies may cause price distortions in these
markets. In certain instances, particularly those involving
over-the-counter transactions, forward contracts there is a greater
potential that a counterparty or broker may default or be unable to
perform on its commitments. In the event of such a default, a Portfolio
may experience a loss. In transactions involving currencies, the value of
the currency underlying an instrument may fluctuate due to many factors,
including economic conditions, interest rates, governmental policies and
market forces.
Specific Uses and Strategies. Set forth below are explanations of
various strategies involving derivatives and related instruments which
may be used by a Portfolio.
Options on Securities, Securities Indexes and Debt Instruments. A
Portfolio may PURCHASE, SELL or EXERCISE call and put options on (i)
securities, (ii) securities indexes, and (iii) debt instruments.
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Specifically, each Portfolio 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) and (ii) enter into swaps, futures contracts and options on
futures contracts. Each Portfolio may also (i) employ forward currency
contracts and (ii) purchase and sell structured products, which are
instruments designed to restructure or reflect the characteristics of
certain other investments.
Although in most cases these options will be exchange-traded, the
Portfolios may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they
are two-party contracts with price and other terms negotiated between
buyer and seller. As such, over-the-counter options generally have much
less market liquidity and carry the risk of default or nonperformance by
the other party.
One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market
value. One purpose of purchasing call options is to protect against
substantial increases in prices of securities the Portfolio intends to
purchase pending its ability to invest in such securities in an orderly
manner. A Portfolio may also use combinations of options to minimize
costs, gain exposure to markets or take advantage of price disparities or
market movements. For example, a Portfolio may sell put or call options
it has previously purchased or purchase put or call options it has
previously sold. These transactions may result in a net gain or loss
depending on whether the amount realized on the sale is more or less than
the premium and other transaction costs paid on the put or call option
which is sold. A Portfolio may write a call or put option in order to
earn the related premium from such transactions. Prior to exercise or
expiration, an option may be closed out by an offsetting purchase or sale
of a similar option. The Portfolios will not write uncovered options.
In addition to the general risk factors noted above, the purchase
and writing of options involve certain special risks. During the option
period, a Portfolio writing a covered call (i.e., where the underlying
securities are held by the Portfolio) has, in return for the premium on
the option, given up the opportunity to profit from a price increase in
the underlying securities above the exercise price, but has retained the
risk of loss should the price of the underlying securities decline. The
writer of an option has no control over the time when it may be required
to fulfill its obligation as a writer of the option. Once an option
writer has received an exercise notice, it cannot effect a closing
purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price.
If a put or call option purchased by a Portfolio is not sold when it
has remaining value, and if the market price of the underlying security,
in the case of a put, remains equal to or greater than the exercise price
or, in the case of a call, remains less than or equal to the exercise
price, such Portfolio will lose its entire investment in the option.
Also, where a put or call option on a particular security is purchased to
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hedge against price movements in a related security, the price of the put
or call option may move more or less than the price of the related
security. There can be no assurance that a liquid market will exist when
a Portfolio seeks to close out an option position. Furthermore, if
trading restrictions or suspensions are imposed on the options markets, a
Portfolio may be unable to close out a position.
Futures Contracts and Options on Futures Contracts. A Portfolio may
purchase or sell (i) interest-rate futures contracts, (ii) futures
contracts on specified instruments or indices, and (iii) options on these
futures contracts ("futures options").
The futures contracts and futures options may be based on various
instruments or indices in which the Portfolios may invest such as foreign
currencies, certificates of deposit, Eurodollar time deposits, securities
indices, economic indices (such as the Consumer Price Indices compiled by
the U.S. Department of Labor).
Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For
example, a Portfolio may sell a futures contract--or buy a futures
option--to protect against a decline in value, or reduce the duration, of
portfolio holdings. Likewise, these instruments may be used where a
Portfolio intends to acquire an instrument or enter into a position. For
example, a Portfolio may purchase a futures contract--or buy a futures
option--to gain immediate exposure in a market or otherwise offset
increases in the purchase price of securities or currencies to be
acquired in the future. Futures options may also be written to earn the
related premiums.
When writing or purchasing options, the Portfolios may
simultaneously enter into other transactions involving futures contracts
or futures options in order to minimize costs, gain exposure to markets,
or take advantage of price disparities or market movements. Such
strategies may entail additional risks in certain instances. The
Portfolios may engage in cross-hedging by purchasing or selling futures
or options on a security or currency different from the security or
currency position being hedged to take advantage of relationships between
the two securities or currencies.
Investments in futures contracts and options thereon involve risks
similar to those associated with options transactions discussed above.
The Portfolios will only enter into futures contracts or options on
futures contracts which are traded on a U.S. or foreign exchange or board
of trade, or similar entity, or quoted on an automated quotation system.
Forward Contracts. A Portfolio may use foreign currency and
interest-rate forward contracts for various purposes as described below.
Foreign currency exchange rates may fluctuate significantly over
short periods of time. They generally are determined by the forces of
supply and demand in the foreign exchange markets and the relative merits
of investments in different countries, actual or perceived changes in
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interest rates and other complex factors, as seen from an international
perspective. A Portfolio that may invest in securities denominated in
foreign currencies may, in addition to buying and selling foreign
currency futures contracts and options on foreign currencies and foreign
currency futures, enter into forward foreign currency exchange contracts
to reduce the risks or otherwise take a position in anticipation of
changes in foreign exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency
at a future date, which may be a fixed number of days from the date of
the contract agreed upon by the parties, at a price set at the time of
the contract. By entering into a forward foreign currency contract, a
Portfolio "locks in" the exchange rate between the currency it will
deliver and the currency it will receive for the duration of the
contract. As a result, a Portfolio reduces its exposure to changes in the
value of the currency it will deliver and increases its exposure to
changes in the value of the currency it will exchange into. The effect on
the value of a Portfolio is similar to selling securities denominated in
one currency and purchasing securities denominated in another.
Transactions that use two foreign currencies are sometimes referred to as
"cross-hedges."
A Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from the Portfolio's
investments or anticipated investments in securities denominated in
foreign currencies. A Portfolio may also enter into these contracts for
purposes of increasing exposure to a foreign currency or to shift
exposure to foreign currency fluctuations from one country to another.
A Portfolio may also use forward contracts to hedge against changes
in interest rates, increase exposure to a market or otherwise take
advantage of such changes. An interest-rate forward contract involves the
obligation to purchase or sell a specific debt instrument at a fixed
price at a future date.
Currency Transactions. A Portfolio may employ currency management
techniques, including transactions in options (including yield curve
options), futures, options on futures, forward foreign currency exchange
contracts, currency options and futures and currency swaps. The aggregate
amount of a Fund's or Portfolio's net currency exposure will not exceed
the total net asset value of its portfolio. However, to the extent that a
Portfolio is fully invested while also maintaining currency positions, it
may be exposed to greater combined risk.
The Portfolios will only enter into currency swaps on a net basis,
i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. Currency swaps do not involve the delivery of securities, the
underlying currency, other underlying assets or principal. Accordingly,
the risk of loss with respect to currency swaps is limited to the net
amount of currency payments that a Portfolio is contractually obligated
to make. If the other party to a currency swap defaults, a Portfolio's
risk of loss consists of the net amount of currency payments that the
Portfolio is contractually entitled to receive. Since currency swaps are
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individually negotiated, the Portfolios expect to achieve an acceptable
degree of correlation between their portfolio investments and their
currency swap positions.
A Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert
such currency into U.S. dollars at a later date, based on anticipated
changes in the relevant exchange rate.
A Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when
the advisers anticipate that the foreign currency will appreciate or
depreciate in value, but securities denominated in that currency do not
present attractive investment opportunities and are not held by such
Portfolio. In addition, a Portfolio may enter into forward foreign
currency exchange contracts in order to protect against adverse changes
in future foreign currency exchange rates. A Portfolio may engage in
cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different
currency if its advisers believe that there is a pattern of correlation
between the two currencies. Forward contracts may reduce the potential
gain from a positive change in the relationship between the U.S. Dollar
and foreign currencies. Unanticipated changes in currency prices may
result in poorer overall performance for a Portfolio than if it had not
entered into such contracts. The use of foreign currency forward
contracts will not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the prices of or rates of return on a Portfolio's
foreign currency denominated portfolio securities and the use of such
techniques will subject the Portfolio to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency
denominated asset that is the subject of the hedge generally will not be
precise. In addition, a Portfolio may not always be able to enter into
foreign currency forward contracts at attractive prices, and this will
limit a Portfolio's ability to use such contract to hedge or cross-hedge
its assets. Also, with regard to a Portfolio's use of cross-hedges, there
can be no assurance that historical correlations between the movement of
certain foreign currencies relative to the U.S. dollar will continue.
Thus, at any time poor correlation may exist between movements in the
exchange rates of the foreign currencies underlying a Portfolio's
cross-hedges and the movements in the exchange rates of the foreign
currencies in which the Portfolio's assets that are the subject of such
cross-hedges are denominated.
A Portfolio may enter into currency swaps to the maximum allowed
limits under applicable law. Currency swaps involve the exchange of their
respective rights to make or receive payments in specified currencies.
Structured Products. A Portfolio may invest in interests in entities
organized and operated solely for the purpose of restructuring the
investment characteristics of certain other investments. This type of
restructuring involves the deposit with or purchase by an entity, such as
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a corporation or trust, or specified instruments (such as commercial bank
loans) and the issuance by that entity of one or more classes of
securities ("structured products") backed by, or representing interests
in, the underlying instruments. The cash flow on the underlying
instruments may be apportioned among the newly issued structured products
to create securities with different investment characteristics such as
varying maturities, payment priorities and interest rate provisions, and
the extent of the payments made with respect to structured products is
dependent on the extent of the cash flow on the underlying instruments. A
Portfolio may invest in structured products which represent derived
investment positions based on relationships among different markets or
asset classes.
A Portfolio may also invest in other types of structured products,
including, among others, inverse floaters, spread trades and notes linked
by a formula to the price of an underlying instrument. Inverse floaters
have coupon rates that vary inversely at a multiple of a designated
floating rate (which typically is determined by reference to an index
rate, but may also be determined through a dutch auction or a remar-
keting agent or by reference to another security) (the "reference rate").
As an example, inverse floaters may constitute a class of CMOs with a
coupon rate that moves inversely to a designated index, such as LIBOR
(London Interbank Offered Rate) or the Cost of Funds Index. Any rise in
the reference rate of an inverse floater (as a consequence of an increase
in interest rates) causes a drop in the coupon rate while any drop in the
reference rate of an inverse floater causes an increase in the coupon
rate. A spread trade is an investment position relating to a difference
in the prices or interest rates of two securities where the value of the
investment position is determined by movements in the difference between
the prices or interest rates, as the case may be, of the respective
securities. When a Portfolio invests in notes linked to the price of an
underlying instrument, the price of the underlying security is determined
by a multiple (based on a formula) of the price of such underlying
security. A structured product may be considered to be leveraged to the
extent its interest rate varies by a magnitude that exceeds the magnitude
of the change in the index rate of interest. Because they are linked to
their underlying markets or securities, investments in structured
products generally are subject to greater volatility than an investment
directly in the underlying market or security. Total return on the
structured product is derived by linking return to one or more
characteristics of the underlying instrument. Because certain structured
products of the type in which a Portfolio may invest may involve no
credit enhancement, the credit risk of those structured products
generally would be equivalent to that of the underlying instruments. A
Portfolio may invest in a class of structured products that is either
subordinated or unsubordinated to the right of payment of another class.
Subordinated structured products typically have higher yields and present
greater risks than unsubordinated structured products. Although a
Portfolio's purchase of subordinated structured products would have
similar economic effect to that of borrowing against the underlying
securities, the purchase will not be deemed to be leverage for purposes
of a Portfolio' fundamental investment limitation related to borrowing
and leverage.
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<PAGE>
Certain issuers of structured products may be deemed to be
"investment companies" as defined in the 1940 Act. As a result, a
Portfolio's investments in these structured products may be limited by
the restrictions contained in the 1940 Act. Structured products are
typically sold in private placement transactions, and there currently is
no active trading market for structured products. As a result, certain
structured products in which a Portfolio invests may be deemed illiquid
and subject to its limitation on illiquid investments.
Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or
security. In addition, because structured products are typically sold in
private placement transactions, there currently is no active trading
market for structured products.
Additional Restrictions on the Use of Futures and Option Contracts.
Neither of the Portfolios is a "commodity pool" (i.e., a pooled
investment vehicle which trades in commodity futures contracts and
options thereon and the operator of which is registered with the CFTC)
and futures contracts and futures options will be purchased, sold or
entered into only for bona fide hedging purposes, provided that a Fund
may enter into such transactions for purposes other than bona fide
hedging if, immediately thereafter, the sum of the amount of its initial
margin and premiums on open contracts and options would not exceed 5% of
the liquidation value of the Portfolio's portfolio, provided, further,
that, in the case of an option that is in-the-money, the in-the-money
amount may be excluded in calculating the 5% limitation.
When a Portfolio purchases a futures contract, an amount of cash or
cash equivalents or high quality debt securities will be deposited in a
segregated account with such Portfolio's custodian or sub-custodian so
that the amount so segregated, plus the initial deposit and variation
margin held in the account of its broker, will at all times equal the
value of the futures contract, thereby insuring that the use of such
futures is unleveraged.
Investment Restrictions
The Portfolios have adopted the following investment restrictions
which may not be changed without approval by a "majority of the
outstanding shares" of a Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more
of the total beneficial interests of a Portfolio present at a meeting, if
the holders of more than 50% of the outstanding beneficial interests of a
Portfolio are present or represented by proxy, or (ii) more than 50% of
the total beneficial interests of a Portfolio. Except as otherwise
indicated herein, the Portfolio is not subject to any percentage limits
with respect to the practices described below.
Except for the investment policies designated as fundamental herein,
the Portfolios' investment policies are not fundamental. In the event of
a change in a Portfolio's investment objective where the investment
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<PAGE>
objective is not fundamental, shareholders will be given at least 30
days' written notice prior to such a change.
Each Portfolio may not:
(1) borrow money, except that each Portfolio may borrow money
for temporary or emergency purposes, or by engaging in reverse
repurchase transactions, in an amount not exceeding 33-1/3% of the value
of its total assets at the time when the loan is made and may pledge,
mortgage or hypothecate no more than 1/3 of its net assets to secure such
borrowings. Each Portfolio may borrow money only for temporary or
emergency purposes. Any borrowings representing more than 5% of a
Portfolio's total assets for each Portfolio must be repaid before the
Portfolio may make additional investments;
(2) make loans, except that each Portfolio may: (i) purchase
and hold debt instruments (including without limitation, bonds, notes,
debentures or other obligations and certificates of deposit, bankers'
acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with
respect to portfolio securities; and (iii) lend portfolio securities with
a value not in excess of one-third of the value of its total assets;
(3) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities, or repurchase agreements secured thereby)
if, as a result, more than 25% of the Portfolio's total assets would be
invested in the securities of companies whose principal business
activities are in the same industry. Notwithstanding the foregoing, with
respect to a Portfolio's permissible futures and options transactions in
U.S. Government securities, positions in such options and futures shall
not be subject to this restriction;
(4) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments but this shall
not prevent a Portfolio from (i) purchasing or selling options and
futures contracts or from investing in securities or other instruments
backed by physical commodities or (ii) engaging in forward purchases or
sales of foreign currencies or securities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
a Portfolio from investing in securities or other instruments backed by
real estate or securities of companies engaged in the real estate
business). Investments by a Portfolio in securities backed by mortgages
on real estate or in marketable securities of companies engaged in such
activities are not hereby precluded;
(6) issue any senior security (as defined in the 1940 Act), except
that (a) a Portfolio may engage in transactions that may result in the
issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order;
(b) a Portfolio may acquire other securities, the acquisition of which
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<PAGE>
may result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; and (c)
subject to the restrictions set forth above, a Portfolio may borrow
money as authorized by the 1940 Act. For purposes of this restriction,
collateral arrangements with respect to permissible options and futures
transactions, including deposits of initial and variation margin, are
not considered to be the issuance of a senior security; or
(7) underwrite securities issued by other persons except insofar as a
Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security; or
(8) Each Portfolio may not, with respect to 75% of its assets, hold
more than 10% of the outstanding voting securities of any issuer or
invest more than 5% of its assets in the securities of any one issuer
(other than obligations of the U.S. Government, its agencies and
instrumentalities).
For purposes of investment restriction (5) above, real estate
includes Real Estate Limited Partnerships.
For purposes of investment restriction (3) above, industrial
development bonds, where the payment of principal and interest is the
ultimate responsibility of companies within the same industry, are
grouped together as an "industry." Investment restriction (3) above,
however, is not applicable to investments by a Portfolio in municipal
obligations where the issuer is regarded as a state, city, municipality
or other public authority since such entities are not members of an
"industry." Supranational organizations are collectively considered to be
members of a single "industry" for purposes of restriction (3) above.
In addition, each Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder
approval:
(1) Each Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase securities on
margin except for short-term credits necessary for clearance of
portfolio transactions, provided that this restriction will not be
applied to limit the use of options, futures contracts and related
options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of a Portfolio. No
Portfolio has the current intention of making short sales against the
box.
(2) Each Portfolio may not purchase or sell interests in oil, gas or
mineral leases.
(3) Each Portfolio may not invest more than 15% of its net assets in
illiquid securities.
(4) Each Portfolio may not write, purchase or sell any put or call
option or any combination thereof, provided that this shall not prevent
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<PAGE>
(i) the writing, purchasing or selling of puts, calls or combinations
thereof with respect to portfolio securities or (ii) with respect to a
Portfolio's permissible futures and options transactions, the writing,
purchasing, ownership, holding or selling of futures and options
positions or of puts, calls or combinations thereof with respect to
futures.
(5) Except as specified above, each Portfolio may invest in the
securities of other investment companies to the extent permitted by
applicable Federal securities law; provided, however, that a Mauritius
holding company (a "Mauritius Portfolio Company") will not be considered
an investment company for this purpose.
For purposes of the Portfolios' investment restrictions, the issuer
of a tax-exempt security is deemed to be the entity (public or private)
ultimately responsible for the payment of the principal of and interest
on the security.
In order to permit the sale of its shares in certain states and
foreign countries, a Portfolio may make commitments more restrictive
than the investment policies and limitations described above and in Part
A. Should a Portfolio determine that any such commitment is no longer in
its best interests, it will revoke the commitment by terminating sales
of its shares in the state or country involved. In order to comply with
certain regulatory policies, as a matter of operating policy, each
Portfolio will not: (i) borrow money in an amount which would cause, at
the time of such borrowing, the aggregate amount of borrowing by the
Portfolio to exceed 10% of the value of the Portfolio's total assets,
(ii) invest more than 10% of its total assets in the securities of any
one issuer (other than obligations of the U.S. Government, its agencies
and instrumentalities), (iii) acquire more than 10% of the outstanding
shares of any issuer and may not acquire more than 15% of the
outstanding shares of any issuer together with other mutual funds
managed by The Chase Manhattan Bank, (iv) invest more than 10% of its
total assets in the securities of other investment companies, except as
they might be acquired as part of a merger, consolidation or acquisition
of assets, (v) invest more than 10% 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 the
procedures established by the Board of Trustees), (vi) grant privileges
to purchase shares of the Portfolio to investors by issuing warrants,
subscription rights or options, or other similar rights or (vii) sell,
purchase or loan securities (excluding interests in the Portfolio) or
grant or receive a loan or loans to or from the adviser, corporate and
domiciliary agent, or paying agent, the distributors and the authorized
agents or any of their directors, officers or employees or any of their
major shareholders (meaning a shareholder who holds, in his own or other
name (as well as a nominee's name), more than 10% of the total issued and
outstanding shares of stock of such company) acting as principal, or for
their own account, unless the transaction is made within the other
restrictions set forth above and either (a) at a price determined by
current publicly available quotations, or (b) at competitive prices or
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<PAGE>
interest rates prevailing from time to time on internationally recognized
securities markets or internationally recognized money markets.
A Mauritius Portfolio Company is a special purpose company
organized under the laws of the Republic of Mauritius. Each Portfolio
may invest in India through a Mauritius Portfolio Company, which is
intended to allow a Portfolio to take advantage of a favorable tax
treaty between India and Mauritius.
If a percentage or rating restriction on investment or use of assets
set forth herein or in Part A is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other
than actions by a Portfolio will not be considered a violation. If the
value of a Portfolio's holdings of illiquid securities at any time
exceeds the percentage limitation applicable at the time of acquisition
due to subsequent fluctuations in value or other reasons, the Board of
Trustees will consider what actions, if any, are appropriate to maintain
adequate liquidity.
Item 13 Management of the Portfolios
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, unless, as to liability to the Trust or its
shareholders, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices or with respect to any matter unless it
is finally adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interest of the
Trust. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination
based upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel,
that such officers or Trustees have not engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties.
Trustees and Officers
The Trustees and officers of the Trust and their principal occupations
for at least the past five years are set forth below. Their titles may
have varied during that period.
*Sarah F. Jones--Chair and Trustee. President and Chief Operating
Officer of Chase Mutual Funds Corp.; formerly Managing Director for the
Global Asset Management and Private Banking Division of The Chase
Manhattan Bank. Trustee, Chase Vista Funds. Age: 46. Address: Chase
Mutual Funds Corp., One Chase Manhattan Plaza, Third Floor, New York, NY
10081.
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<PAGE>
Frank A. Liddell, Jr.--Trustee. Retired, Of Counsel, Liddell, Sapp,
Zivley, Hill & LeBoon. Member of AVESTA Trust Supervisory Committee from
inception to 1997. Age: 69. Address: P.O. Box 2533, Houston, TX 77252.
George E. McDavid--Trustee. President, Houston Chronicle Publishing
Company. Member of AVESTA Trust Supervisory Committee from inception to
1997. Age: 66. Address: P.O. Box 2558, Houston, TX 77252.
Kenneth L. Otto--Trustee. Retired; formerly Senior Vice President,
Temeco Inc. Member of AVESTA Trust Supervisory Committee from inception
to 1997. Age: 66. Address: P.O. Box 2558, Houston, TX 77252.
Fergus Reid, III--Trustee. Chairman and Chief Executive Officer,
Lutteline Corporation since September 1985. Chairman and Trustee, the
Chase Vista Funds. Trustee, Morgan Stanley Funds. Age: 65. Address: 202
June Road, Stamford, CT 06903.
H. Michael Tyson--Trustee. Retired; formerly Executive Vice
President, Texas Commerce Bank from 1990 to 1995. Member of AVESTA Trust
Supervisory Committee from 1988 to 1997. Age: 58. Address: P.O. Box 2558,
Houston, TX 77252.
Martin R. Dean--Treasurer. Associate Director, Accounting Services,
BISYS Fund Services; formerly Senior Manager, KPMG Peat Marwick
(1987-1994). Age: 33. Address: 3435 Stelzer Road, Columbus, OH 43219.
Richard Baxt--Secretary. Senior Vice President, Client Services,
BISYS Fund Services; formerly General Manager of Investment and
Insurance, First Fidelity Bank, President of First Fidelity Brokers, and
President of Citicorp Investment Services. Age: 44. Address: 125 W. 55th
Street, New York, NY 10019.
Vicky M. Hayes--Assistant Secretary. Vice President and Global
Marketing Manager, Vista Fund Distributor, Inc.; formerly Assistant Vice
President, Alliance Capital Management and held various positions with J.
& W. Seligman & Co. Age: 36. Address: One Chase Manhattan Plaza, Third
Floor, New York, NY 10081.
Alaina Metz--Assistant Secretary. Chief Administrative Officer,
BISYS Fund Services; formerly Supervisor, Blue Sky Department, Alliance
Capital Management L.P. Age: 30. Address: 3535 Stelzer Road, Columbus, OH
43210.
Ms. Jones is also a Trustee of Mutual Fund Group, Mutual Fund Trust,
Mutual Fund Select Group, Mutual Fund Select Trust, Mutual Fund Variable
Annuity Trust, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio (these entities are referred to as the
"Chase Vista Funds"). Mr. Reid is Chairman and a Trustee of the Chase
Vista Funds. Messrs. Dean, Baxt and Schultheis and Ms. Hayes and Metz
also serve in the same capacities of the Chase Vista Funds. Each Trustee
and officer of the Trust also serves in the same capacities for Mutual
Fund Investment Trust.
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<PAGE>
- ----------
* Asterisks indicate those Trustees that are "interested persons" (as
defined in the 1940 Act). The Board of Trustees of the Trust presently
has an Audit Committee. The member of the Audit Committee are Messrs.
Liddell, McDavid, Otto, Reid and Tyson. The function of the Audit
Committee is to recommend independent auditors and monitor accounting
and financial matters.
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee
who is not an affiliate of the advisers is compensated for his or her
services. Each such Trustee receives a fee, which consists of an annual
retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or
accrued during the fiscal year ended December 31, 1998 for each member of
the Board of Trustees.
<TABLE>
<CAPTION>
Total Compensation from "Fund Complex"<F1>(includes
Mutual Fund Investment Trust and Core Equity Portfolio
and Equity Growth Portfolio)
-------------------------------------------------------
<S> <C>
Frank A. Liddell, Jr., Trustee $7,000
George E. McDavid, Trustee 7,000
Kenneth L. Otto, Trustee 7,000
H. Michael Tyson, Trustee 7,000
<FN>
<F1> Data reflects total compensation during the period January 1, 1998
to December 31, 1998 for service as a Trustee to Mutual Fund
Investment Trust. The Core Equity Portfolio and Equity Growth
Portfolio were not in existence during this period, and,
accordingly, the Trustees did not receive any compensation with
respect to them.
</TABLE>
The Trustees and officers as a group directly or beneficially own
less than 1% of each Portfolio. The Trust pays no direct remuneration to
any officer of the Trust.
Item 14. Control Persons and Principal Holders of Securities.
As of the inception of the Trust on ________, 1999, the Chase Core
Equity Fund owned approximately ___% of the value of the outstanding
interests in the Core Equity Portfolio and the Chase Equity Growth Fund
owned approximately ___% of the value of the outstanding interests in the
Equity Growth Portfolio. Because the Chase Core Equity Fund and Chase
Equity Growth Fund control their respective Portfolios, such Funds may
take actions without the approval of any other investor. Each of these
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two Funds has informed the Trust that whenever it is requested to vote on
any proposal of its respective Portfolio, it will hold a meeting of
shareholders and will cast its vote as instructed by its shareholders.
The other investors in the Portfolios follow the same or a similar
practice.
Item 15. Investment Advisory and Other Services
Adviser and Sub-Adviser
Chase acts as investment adviser to the Portfolios pursuant to an
Investment Advisory Agreement (the "Advisory Agreement"). Subject to such
policies as the Board of Trustees may determine, Chase is responsible for
investment decisions for the Portfolios. Pursuant to the terms of the
Advisory Agreement, Chase provides the Portfolios with such investment
advice and supervision as it deems necessary for the proper supervision
of the Portfolios' investments. The advisers continuously provide
investment programs and determine from time to time what securities shall
be purchased, sold or exchanged and what portion of the Portfolios'
assets shall be held uninvested. The advisers to the Portfolios furnish,
at their own expense, all services, facilities and personnel necessary in
connection with managing the investments and effecting portfolio
transactions for the Portfolios. The Advisory Agreement for the
Portfolios will continue in effect from year to year only if such
continuance is specifically approved at least annually by the Board of
Trustees or by vote of a majority of a Portfolio's outstanding voting
securities and by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting
called for the purpose of voting on such Advisory Agreement.
Under the Advisory Agreement, the adviser may utilize the
specialized portfolio skills of all its various affiliates, thereby
providing the Portfolios with greater opportunities and flexibility in
accessing investment expertise.
Pursuant to the terms of the Advisory Agreement and the
sub-advisers' agreements with the adviser, the adviser and sub-advisers
are permitted to render services to others. Each advisory agreement is
terminable without penalty by the Trust on behalf of the Portfolios on
not more than 60 days', nor less than 30 days', written notice when
authorized either by a majority vote of a Portfolio's investors or by a
vote of a majority of the Board of Trustees of the Trust, or by the
adviser or sub-adviser on not more than 60 days', nor less than 30 days',
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The advisory agreements
provide that the adviser or sub-adviser under such agreement shall not be
liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution
of portfolio transactions for the respective Portfolio, except for wilful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
thereunder.
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The equity research team of the adviser looks for two key variables
when analyzing stocks for potential investment by equity portfolios:
value and momentum. To uncover these qualities, the team uses a
combination of quantitative analysis, fundamental research and computer
technology to help identify undervalued stocks.
In the event the operating expenses of the Portfolios, including all
investment advisory, administration and sub-administration fees, but
excluding brokerage commissions and fees, taxes, interest and
extraordinary expenses such as litigation, for any fiscal year exceed the
most restrictive expense limitation applicable to the Portfolios imposed
by the securities laws or regulations thereunder of any state in which
the interests in the Portfolios are qualified for sale, as such
limitations may be raised or lowered from time to time, the adviser shall
reduce its advisory fee (which fee is described below) to the extent of
its share of such excess expenses. The amount of any such reduction to be
borne by the adviser shall be deducted from the monthly advisory fee
otherwise payable with respect to the Portfolios during such fiscal year;
and if such amounts should exceed the monthly fee, the adviser shall pay
to a Portfolio its share of such excess expenses no later than the last
day of the first month of the next succeeding fiscal year.
Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement
provides that Chase may render services through its own employees or the
employees of one or more affiliated companies that are qualified to act
as an investment adviser of the Portfolio and are under the common
control of Chase as long as all such persons are functioning as part of
an organized group of persons, managed by authorized officers of Chase.
Chase, on behalf of the Portfolios, has entered into an investment
sub-advisory agreement with Chase Bank of Texas, National Association
("Chase Texas"). With respect to the day-to-day management of the
Portfolios, under the sub-advisory agreements, the sub-advisers make
decisions concerning, and place all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and
sales. The sub-advisers may, in their discretion, provide such services
through their own employees or the employees of one or more affiliated
companies that are qualified to act as an investment adviser to the
Company under applicable laws and are under the common control of Chase;
provided that (i) all persons, when providing services under the
sub-advisory agreement, are functioning as part of an organized group of
persons, and (ii) such organized group of persons is managed at all times
by authorized officers of the sub-advisers. This arrangement will not
result in the payment of additional fees by the Portfolios.
Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation,
a registered bank holding company, is a commercial bank offering a wide
range of banking and investment services to customers throughout the
United States and around the world. Also included among Chase's accounts
are commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives.
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<PAGE>
Chase Texas, a wholly-owned subsidiary of The Chase Manhattan
Corporation, is a commercial bank offering a wide range of banking and
investment services to customers throughout the United States and around
the world. Also included among Chase Texas's accounts are commingled
trust funds and a broad spectrum of individual trust and investment
management portfolios. These accounts have varying investment objectives.
In consideration of the services provided by the adviser pursuant to
the Advisory Agreement, the adviser is entitled to receive from each
Portfolio an investment advisory fee computed daily and paid monthly
based on a rate equal to a percentage of such Portfolio's average daily
net assets specified in Part A. However, the adviser may voluntarily
agree to waive a portion of the fees payable to it on a month-to-month
basis.
For its services under its sub-advisory agreement, Chase Texas is
entitled to receive a sub-advisory fee, payable by the adviser out of its
advisory fee, at the annual rate of 0.375% of the average daily net
assets of the Core Equity Portfolio and Equity Growth Portfolio.
For the fiscal years ended December 31, 1996, 1997 and 1998, Chase
was paid or accrued the following investment advisory fees with respect
to the following Funds, and voluntarily waived the amounts in parentheses
following such fees with respect to each such period:
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-------------------------------
1996 1997 1998
Fund paid/accrued waived paid/accrued waived paid/accrued
waived
- ------------- ------------ ------ ------------ ------ -----------------
<S> <C> <C> <C> <C> <C>
Core Equity Fund
Equity Group Fund
</TABLE>
Administrator
Pursuant to an Administration Agreement (the "Administration
Agreement"), Chase is the administrator of each Portfolio. Chase provides
certain administrative services to the Portfolios, including, among other
responsibilities, coordinating the negotiation of contracts and fees
with, and the monitoring of performance and billing of, the Portfolios'
independent contractors and agents; preparation for signature by an
officer of the Trust and Portfolios of all documents required to be filed
for compliance by the Trust and Portfolios with applicable laws and
regulations excluding those of the securities laws of various states;
arranging for the computation of performance data, including net asset
value and yield; responding to shareholder inquiries; and arranging for
the maintenance of books and records of the Portfolios and providing, at
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<PAGE>
its own expense, office facilities, equipment and personnel necessary to
carry out its duties. Chase in its capacity as administrator does not
have any responsibility or authority for the management of the
Portfolios or the determination of investment policy.
Under the Administration Agreement, Chase is permitted to render
administrative services to others. The Administration Agreement will
continue in effect from year to year with respect to each Portfolio only
if such continuance is specifically approved at least annually by the
Board of Trustees of the Trust or by vote of a majority of such
Portfolio's outstanding voting securities and, in either case, by a
majority of the Trustees who are not parties to the Administration
Agreements or "interested persons" (as defined in the 1940 Act) of any
such party. The Administration Agreement is terminable without penalty by
the Trust on behalf of each Portfolio on 60 days' written notice when
authorized either by a majority vote of such Portfolio shareholders or by
vote of a majority of the Board of Trustees, including a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust, or by Chase on 60 days' written notice, and will automatically
terminate in the event of its "assignment" (as defined in the 1940 Act).
The Administration Agreement also provides that neither Chase or its
personnel shall be liable for any error of judgment or mistake of law or
for any act or omission in the administration of the Portfolios, except
for willful misfeasance, bad faith or gross negligence in the performance
of its or their duties or by reason of reckless disregard of its or their
obligations and duties under the Administration Agreement.
In addition, the Administration Agreement provides that, in the
event the operating expenses of any Portfolio, including all investment
advisory, administration and sub-administration fees, but excluding
brokerage commissions and fees, taxes, interest and extraordinary
expenses such as litigation, for any fiscal year exceed the most
restrictive expense limitation applicable to that Portfolio imposed by
the securities laws or regulations thereunder of any state in which the
interests of such Portfolio are qualified for sale, as such limitations
may be raised or lowered from time to time, Chase shall reduce its
administration fee (which fee is described below) to the extent of its
share of such excess expenses. The amount of any such reduction to be
borne by Chase shall be deducted from the monthly administration fee
otherwise payable to Chase during such fiscal year, and if such amounts
should exceed the monthly fee, Chase shall pay to such Portfolio its
share of such excess expenses no later than the last day of the first
month of the next succeeding fiscal year.
In consideration of the services provided by Chase pursuant to the
Administration Agreement, Chase receives from each Portfolio a fee
computed daily and paid monthly at an annual rate equal to 0.05% of its
respective average daily net assets. Chase may voluntarily waive a
portion of the fees payable to it with respect to each Portfolio on a
month-to-month basis.
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For the fiscal years ended December 31, 1996, 1997 and 1998, Chase
was paid or accrued the following administration fees and voluntarily
waived the amounts in parentheses following such fees:
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-----------------------------------------------------------------
Fund 1996 1997 1998 Fund
Waived paid/accrued waived paid/accrued waived paid/accrued
- ------------- ------------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C>
Core Equity Fund
Equity Growth Fund
Transfer Agent and Custodian
The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for
the Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of
the assets of each Portfolio and receives such compensation as is from
time to time agreed upon by the Trust and Chase. As custodian, Chase
provides oversight and record keeping for the assets held in the
portfolios of each Portfolio. Chase also provides fund accounting
services for the income, expenses and shares outstanding for such
Portfolios. Chase is located at 3 Metrotech Center, Brooklyn, NY 11245.
Independent Accountants
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, NY
10036, independent accountants of the Portfolios, provides the Portfolios
with audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.
Counsel
Counsel to the Portfolios is Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, NY 10017.
CERTAIN REGULATORY MATTERS
Banking laws, including the Glass-Steagall Act as currently
interpreted, prohibit bank holding companies and their affiliates from
sponsoring, organizing, controlling, or distributing shares of, mutual
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funds, and generally prohibit banks from issuing, underwriting, selling
or distributing securities. These laws do not prohibit banks or their
affiliates from acting as investment adviser, administrator or custodian
to mutual funds or from purchasing mutual fund shares as agent for a
customer. Chase and the Trust believe that Chase (including its
affiliates) may perform the services to be performed by it as described
in the Prospectus and this Statement of Additional Information without
violating such laws. If future changes in these laws or interpretations
required Chase to alter or discontinue any of these services, it is
expected that the Board of Trustees would recommend alternative
arrangements and that investors would not suffer adverse financial
consequences. State securities laws may differ from the interpretations
of banking law described above and banks may be required to register as
dealers pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf
of any of the Funds, including outstanding loans to such issuers which
may be repaid in whole or in part with the proceeds of securities so
purchased. Chase and its affiliates deal, trade and invest for their own
accounts in U.S. Government obligations, municipal obligations and
commercial paper and are among the leading dealers of various types of
U.S. Government obligations and municipal obligations. Chase and its
affiliates may sell U.S. Government obligations and municipal obligations
to, and purchase them from, other investment companies sponsored by the
Funds' distributor or affiliates of the distributor. Chase will not
invest any Fund assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate,
although under certain circumstances such securities may be purchased
from other members of an underwriting syndicate in which Chase or an
affiliate is a non-principal member. This restriction my limit the amount
or type of U.S. Government obligations, municipal obligations or
commercial paper available to be purchased by any Fund. Chase has
informed the Funds that in making its investment decision, it does not
obtain or use material inside information in the possession of any other
division or department of Chase, including the division that performs
services for the Trust as custodian, or in the possession of any
affiliate of Chase. Shareholders of the Funds should be aware that,
subject to applicable legal or regulatory restrictions, Chase and its
affiliates may exchange among themselves certain information about the
shareholder and his account. Transactions with affiliated broker-dealers
will only be executed on an agency basis in accordance with applicable
federal regulations.
Item 16. Brokerage Allocation and Other Practices.
Specific decisions to purchase or sell securities for a Portfolio
are made by a portfolio manager who is an employee of the adviser or
sub-adviser to such Portfolio and who is appointed and supervised by
senior officers of such adviser or sub-adviser. Changes in a Portfolio's
investments are reviewed by the Board of Trustees of the Trust. The
portfolio managers may serve other clients of the advisers in a similar
capacity.
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The frequency of a Portfolio's portfolio transactions--the portfolio
turnover rate--will vary from year to year depending upon market
conditions. A high turnover rate may increase transaction costs,
including brokerage commissions and dealer mark-ups, and the possibility
of taxable short-term gains. A high turn-over rate could thus make it
more difficult for a Portfolio to qualify as a registered investment
company under federal tax law. Therefore, the advisers will weigh the
added costs of short-term investment against anticipated gains, and each
Portfolio will engage in portfolio trading if its advisers believe a
transaction, net of costs (including custodian charges), will help it
achieve its investment objective. Funds investing in both equity and debt
securities apply this policy with respect to both the equity and debt
portions of their portfolios.
For the fiscal years ended December 31, 1996, 1997 and 1998, the
annual rates of portfolio turnover for the Chase Core Equity Fund and
Chase Equity Growth Fund Series of Mutual Fund Investment Trust were as
follows:
</TABLE>
<TABLE>
<CAPTION>
1996 1997 1998
----- ---- ----
<S> <C> <C> <C>
Core Equity Fund Equity Growth Fund
</TABLE>
Under the advisory agreement and the sub-advisory agreements, the
adviser and sub-advisers shall use their best efforts to seek to execute
portfolio transactions at prices which, under the circumstances, result
in total costs or proceeds being the most favorable to the Portfolios. In
assessing the best overall terms available for any transaction, the
adviser and sub-advisers consider all factors they deem relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker
or dealer, research services provided to the adviser or sub-advisers, and
the reasonableness of the commissions, if any, both for the specific
transaction and on a continuing basis. The adviser and sub-advisers are
not required to obtain the lowest commission or the best net price for
any Portfolio on any particular transaction, and are not required to
execute any order in a fashion either preferential to any Portfolio
relative to other accounts they manage or otherwise materially adverse
to such other accounts.
Debt securities are traded principally in the over-the-counter
market through dealers acting on their own account and not as brokers. In
the case of securities traded in the over-the-counter market (where no
stated commissions are paid but the prices include a dealer's markup or
markdown), the adviser or sub-adviser to a Portfolio normally seeks to
deal directly with the primary market makers unless, in its opinion, best
execution is available elsewhere. In the case of securities purchased
from underwriters, the cost of such securities generally includes a fixed
underwriting commission or concession. From time to time, soliciting
dealer fees are available to the adviser or sub-adviser on the tender of
a Portfolio's portfolio securities in so-called tender or exchange
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offers. Such soliciting dealer fees are in effect recaptured for
Portfolios by the adviser and sub-advisers. At present, no other
recapture arrangements are in effect.
Under the advisory and sub-advisory agreements and as permitted by
Section 28(e) of the Securities Exchange Act of 1934, the adviser or
sub-advisers may cause the Portfolios to pay a broker-dealer which
provides brokerage and research services to the adviser or sub-advisers,
the Portfolios and/or other accounts for which they exercise investment
discretion an amount of commission for effecting a securities transaction
for a Portfolio in excess of the amount other broker-dealers would have
charged for the transaction if they determine in good faith that the
greater commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker-dealer
viewed in terms of either a particular transaction or their overall
responsibilities to accounts over which they exercise investment
discretion. Not all of such services are useful or of value in advising
the Portfolios. The adviser and sub-advisers report to the Board of
Trustees regarding overall commissions paid by the Portfolios and their
reasonableness in relation to the benefits to the Portfolios. The term
"brokerage and research services" includes advice as to the value of
securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or of purchasers or
sellers of securities, furnishing analyses and reports concerning issues,
industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts, and effecting securities transactions
and performing functions incidental thereto such as clearance and
settlement.
The management fees that the Portfolios pay to the adviser will not
be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Portfolios' portfolio
transactions are used to obtain such services, the brokerage commissions
paid by the Portfolios will exceed those that might otherwise be paid by
an amount which cannot be presently determined. Such services generally
would be useful and of value to the adviser or sub-advisers in serving
one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients
generally would be useful to the adviser and sub-advisers in carrying out
their obligations to the Portfolios. While such services are not expected
to reduce the expenses of the adviser or sub-advisers, the advisers
would, through use of the services, avoid the additional expenses which
would be incurred if they should attempt to develop comparable
information through their own staffs.
In certain instances, there may be securities that are suitable for
one or more of the Portfolios as well as one or more of the adviser's or
sub-advisers' other clients. Investment decisions for the Portfolios and
for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision
is made for more than one client or 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
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for one or more clients when one or more 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 Portfolios or other
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 as
far as the Portfolios are concerned. However, it is believed that the
ability of the Portfolios to participate in volume transactions will
generally produce better executions for the Portfolios.
For the fiscal years ended December 31, 1996, 1997 and 1998, the
Chase Core Equity Fund paid aggregate brokerage commissions of
______________, respectively. For the fiscal years ended December 31,
1996, 1997 and 1998, the Equity Growth Fund paid aggregate brokerage
commissions of _____________, respectively.
Item 17. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolios. Investors are entitled to
participate pro rata in distributions of taxable income, loss, gain and
credit of the Portfolio. Upon liquidation or dissolution of a Portfolio,
investors are entitled to share pro rata in the Portfolio's net assets
available for distribution to its investors. Investments in each
Portfolio have no preference, preemptive, conversion or similar rights
and are fully paid and nonassessable, except as set forth below.
Investments in a Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolios are
issued only upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of
its investment in a Portfolio. Investors in the Portfolios do not have
cumulative voting rights, and investors holding more than 50% of the
aggregate beneficial interest in a Portfolio may elect all of the
Trustees of the Portfolio if they choose to do so and in such event the
other investors in the Portfolio would not be able to elect any Trustee.
The Portfolios are not required to hold annual meetings of investors but
each Portfolio will hold special meetings of investors when in the
judgment of the Trustees it is necessary or desirable to submit matters
for an investor vote. No material amendment may be made to the Trust's
Declaration of Trust without the affirmative majority vote of investors
(with the vote of each being in proportion to the amount of its
investment).
The Trust may, on behalf of a Portfolio, enter into a merger or
consolidation, or sell all or substantially all of its assets, if
approved by the vote of two-thirds of its investors (with the vote of
each being in proportion to the amount of their investment), except that
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if the Trustees recommend such sale of assets, the approval by vote of a
majority of the investors (with the vote of each being in proportion to
the amount of its investment) will be sufficient. A Portfolio may also
be terminated (i) upon liquidation and distribution of its assets, if
approved by the vote of two-thirds of its investors (with the vote of
each being in proportion to the amount of its investment), or (ii) by the
Trustees by written notice to its investors.
The Trust is organized as a series trust under the laws of the
Commonwealth of Massachusetts. Investors in a Portfolio will be held
personally liable for its obligations and liabilities, subject, however,
to indemnification by the Portfolio in the event that there is imposed
upon an investor a greater portion of the liabilities and obligations of
the Portfolio than its proportionate beneficial interest in the
Portfolio. The Declaration of Trust also provides that each Portfolio
shall maintain appropriate insurance (for example, fidelity bonding and
errors and omissions insurance) for the protection of the Portfolio, its
investors, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of an investor incurring
financial loss on account of investor liability is limited to
circumstances in which both inadequate insurance existed and the
Portfolio itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of a
Portfolio are not binding upon the Trustees individually but only upon
the property of the Portfolio and that the Trustees will not be liable
for any action or failure to act, but nothing in the Declaration of Trust
protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
The Declaration of Trust provides that the trustees and officers will be
indemnified by each Portfolio against liabilities and expenses incurred
in connection with litigation in which they may be involved because of
their offices with the Portfolio, unless, as to liability to the
Portfolio or its investors, it is finally adjudicated that they engaged
in willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good
faith in the reasonable belief that their actions were in the best
interests of the Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a
court or other body approving the settlement or other disposition, or by
a reasonable determination, based upon a review of readily available
facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
Each Portfolio will furnish to each of its investors at least
annually as of the end of its fiscal year a report of operations
containing a balance sheet and a statement of income prepared in
conformity with generally accepted accounting principles and an opinion
of an independent public accountant on such financial statements. Each
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Portfolio will also furnish to each of its investors at least
semiannually an interim report of operations containing an unaudited
balance sheet and an unaudited statement of income.
Item 18. Purchase, Redemption and Pricing of Shares
As of the date of this Part B, the New York Stock Exchange is open
for trading every weekday except for the following holidays: New Year's
Day, Martin Luther King Jr.'s Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities in a Portfolio's portfolio are valued at the last
sale price on the exchange on which they are primarily traded or on the
NASDAQ National Market System, or at the last quoted bid price for
securities in which there were no sales during the day or for other
unlisted (over-the-counter) securities not reported on the NASDAQ
National Market System. Bonds and other fixed income securities (other
than short-term obligations, but including listed issues) in a
Portfolio's portfolio are valued on the basis of valuations furnished by
a pricing service, the use of which has been approved by the Board of
Trustees. In making such valuations, the pricing service utilizes both
dealer-supplied valuations and electronic data processing techniques that
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, since such valuations are believed to reflect more accurately the
fair value of such securities. Short-term obligations which mature in 60
days or less are valued at amortized cost, which constitutes fair value
as determined by the Board of Trustees. Futures and option contracts that
are traded on commodities or securities exchanges are normally valued at
the settlement price on the exchange on which they are traded. Portfolio
securities (other than short-term obligations) for which there are no
such quotations or valuations are valued at fair value as determined in
good faith by or at the direction of the Board of Trustees.
Interest income on long-term obligations in a Portfolio's portfolio
is determined on the basis of coupon interest accrued plus amortization
of discount (the difference between acquisition price and stated
redemption price at maturity) and premiums (the excess of purchase price
over stated redemption price at maturity). Interest income on short-term
obligations is determined on the basis of interest and discount accrued
less amortization of premium.
Each investor in a Portfolio may add to or reduce its investment in
the Portfolio on each day that the New York Stock Exchange is open for
business. As of the close of regular trading on the New York Stock
Exchange on each such day (normally 4:00 p.m. Eastern time; however,
options are priced at 4:15 p.m., Eastern time), the value of each
investor's interest in the Portfolio will be determined by multiplying
the net asset value of the Portfolio by the percentage representing that
investor's share of the aggregate beneficial interests in the Portfolio.
Any additions or reductions which are to be effected on that day will
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then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the close of regular trading
on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the investor's investment in the Portfolio
effected on such day and (ii) the denominator of which is the aggregate
net asset value of the Portfolio as of the close of regular trading on
such day plus or minus, as the case may be, the amount of net additions
to or reductions in the aggregate investments in the Portfolio by all
investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the
Portfolio as of the close of regular trading on the following day the New
York Stock Exchange is open for trading.
Each Portfolio reserves the right, if conditions exist which make
cash payments undesirable, to honor any request for redemption by making
payment in whole or in part in readily marketable securities chosen by
the Portfolio and valued as they are for purposes of computing the
Portfolio's net asset value (a redemption in kind). If payment is made in
securities, an investor may incur transaction expenses in converting
these securities into cash.
Each Portfolio will not redeem in kind except in circumstances in
which the owner of a beneficial interest in the Portfolio is permitted to
redeem in kind or unless requested by such owner.
Item 19. Taxation of the Portfolios.
Each Portfolio will be classified for federal income tax purposes as
a partnership that will not be a "publicly traded partnership." As a
result, each Portfolio will not be subject to federal income taxation.
Instead, the investors in a Portfolio will take into account, in
computing their federal income tax liability, their share of the
Portfolio's income, gains, losses, deductions, credits and tax preference
items for the taxable year of the Portfolio ending within or with the
taxable year of the investor, without regard to whether they have
received any cash distributions from the Portfolio. Each Portfolio's
taxable year end is December 31.
Under interpretations of the Internal Revenue Service, for purposes
of determining whether an investor in a Portfolio satisfies the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") the investor will be deemed to own a proportionate
share of the Portfolio's assets and will be deemed to be entitled to the
Portfolio's income attributable to that share. Each Portfolio intends to
conduct its operations so as to enable investors to satisfy those
requirements.
Distributions received by investors in a Portfolio generally will
not result in the investor's recognizing any gain or loss for federal
income tax purposes, except that (1) gain will be recognized to the
extent that any cash distributed exceeds the investor's basis in its
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interest in the Portfolio prior to the distribution, (2) income or gain
may be recognized if the distribution is made in liquidation of the
investor's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the
Portfolio, (3) loss may be recognized if the distribution is made in
liquidation of the investor's entire interest in the Portfolio and
consists solely of cash and/or unrealized receivables and the investor's
share of the Portfolio's losses, and (4) gain or loss may be recognized
on a distribution to an investor that contributed property to the
Portfolio. The investor's basis in its interest in the Portfolio
generally will equal the amount of cash and the basis of any property
which the investor invests in the Portfolio, increased by the investor's
share of net income and gains from the Portfolio, and decreased by the
amount of any cash distributions and the basis of any property
distributed from the Portfolio.
The foregoing is intended to be a general summary of certain United
States federal income tax considerations affecting each Portfolio and its
investors. Accordingly, investors are advised to consult their own tax
advisers with respect to the particular federal, state, local and foreign
tax consequences of an investment in a Portfolio.
Item 20. Underwriters.
Not applicable.
Item 21. Calculation of Performance Data.
Not applicable.
Item 22. Financial Statements.
Audited financial statements and reports thereon for the Chase Core
Equity Fund and Chase Equity Growth Fund series of Mutual Fund Investment
Trust ("MFIT") are incorporated herein by reference from MFIT's Annual
Report to Shareholders for the fiscal year ended December 31, 1998 as
filed with the Securities and Exchange Commission by MFIT via Edgar on
Form N-30D on February 22, 1999, accession numbers 0000889812-99-000600
and 0000889812-99-000601.
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APPENDIX A
DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES
Federal Farm Credit System Notes and Bonds--are bonds issued by a
cooperatively owned nationwide system of banks and associations
supervised by the Farm Credit Administration, an independent agency of
the U.S. Government. These bonds are not guaranteed by the U.S.
Government.
Maritime Administration Bonds--are bonds issued and provided by the
Department of Transportation of the U.S. Government are guaranteed by the
U.S. Government.
FNMA Bonds--are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.
FHA Debentures--are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S.
Government.
FHA Insured Notes--are bonds issued by the Farmers Home
Administration of the U.S. Government and are guaranteed by the U.S.
Government.
GNMA Certificates--are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders
such as mortgage bankers, commercial banks and savings and loan
associations. Each mortgage loan included in the pool is either insured
by the Federal Housing Administration or guaranteed by the Veterans
Administration and therefore guaranteed by the U.S. Government. As a
consequence of the fees paid to GNMA and the issuer of GNMA Certificates,
the coupon rate of interest of GNMA Certificates is lower than the
interest paid on the VA-guaranteed or FHA-insured mortgages underlying
the Certificates. The average life of a GNMA Certificate is likely to be
substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures may result in the return of the greater part of
principal invested far in advance of the maturity of the mortgages in the
pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee. As the prepayment rate of individual mortgage pools will
vary widely, it is not possible to accurately predict the average life of
a particular issue of GNMA Certificates. The yield which will be earned
on GNMA Certificates may vary from their coupon rates for the following
reasons: (i) Certificates may be issued at a premium or discount, rather
than at par; (ii) Certificates may trade in the secondary market at a
premium or discount after issuance; (iii) interest is earned and
compounded monthly which has the effect of raising the effective yield
earned on the Certificates; and (iv) the actual yield of each Certificate
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is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates. Principal which is so prepaid will be
reinvested although possibly at a lower rate. In addition, prepayment of
mortgages included in the mortgage pool underlying a GNMA Certificate
purchased at a premium could result in a loss to a Fund. Due to the large
amount of GNMA Certificates outstanding and active participation in the
secondary market by securities dealers and investors, GNMA Certificates
are highly liquid instruments. Prices of GNMA Certificates are readily
available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate. If agency
securities are purchased at a premium above principal, the premium is not
guaranteed by the issuing agency and a decline in the market value to par
may result in a loss of the premium, which may be particularly likely in
the event of a prepayment. When and if available, U.S. Government
obligations may be purchased at a discount from face value.
FHLMC Certificates and FNMA Certificates--are mortgage-backed bonds
issued by the Federal Home Loan Mortgage Corporation and the Federal
National Mortgage Association, respectively, and are guaranteed by the
U.S. Government.
A-1 <PAGE>
GSA Participation Certificates--are participation certificates
issued by the General Services Administration of the U.S. Government and
are guaranteed by the U.S. Government.
New Communities Debentures--are debentures issued in accordance with
the provisions of Title IV of the Housing and Urban Development Act of
1968, as supplemented and extended by Title VII of the Housing and Urban
Development Act of 1970, the payment of which is guaranteed by the U.S.
Government.
Public Housing Bonds--are bonds issued by public housing and urban
renewal agencies in connection with programs administered by the
Department of Housing and Urban Development of the U.S. Government, the
payment of which is secured by the U.S. Government.
Penn Central Transportation Certificates--are certificates issued by
Penn Central Transportation and guaranteed by the U.S. Government.
SBA Debentures--are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
Washington Metropolitan Area Transit Authority Bonds--are bonds
issued by the Washington Metropolitan Area Transit Authority. Some of the
bonds issued prior to 1993 are guaranteed by the U.S. Government.
FHLMC Bonds--are bonds issued and guaranteed by the Federal Home
Loan Mortgage Corporation. These bonds are not guaranteed by the U.S.
Government.
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Federal Home Loan Bank Notes and Bonds--are notes and bonds issued
by the Federal Home Loan Bank System and are not guaranteed by the U.S.
Government.
Student Loan Marketing Association ("Sallie Mae") Notes and
bonds--are notes and bonds issued by the Student Loan Marketing
Association and are not guaranteed by the U.S. Government.
D.C. Armory Board Bonds--are bonds issued by the District of
Columbia Armory Board and are guaranteed by the U.S. Government.
Export-Import Bank Certificates--are certificates of beneficial
interest and participation certificates issued and guaranteed by the
Export-Import Bank of the U.S. and are guaranteed by the U.S. Government.
In the case of securities not backed by the "full faith and credit"
of the U.S. Government, the investor must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment, and may
not be able to assert a claim against the U.S. Government itself in the
event the agency or instrumentality does not meet its commitments.
Investments may also be made in obligations of U.S. Government
agencies or instrumentalities other than those listed above.
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APPENDIX B
DESCRIPTION OF RATINGS
A description of the rating policies of Moody's, S&P and Fitch with
respect to bonds and commercial paper appears below.
Moody's Investors Service's Corporate Bond Ratings
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality
and carry the smallest degree of investment risk. 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
fluctuation 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 qualities
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.
Ba--Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance and other terms of the contract over any long period of time
may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
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Ca--Bonds which are rated "Ca" represent obligations which are
speculative in high degree.
Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies numerical modifiers "1", "2", and "3" to certain of its
rating classifications. The modifier "1" indicates that the security
ranks in the higher end of its generic rating category; the modifier "2"
indicates a mid-range ranking; and the modifier "3" indicates that the
issue ranks in the lower end of its generic rating category.
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal
and pay interest.
AA--Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and differs from
"AAA" issues only in small degree.
A--Bonds rated "A" have a strong capacity to repay principal and pay
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB--Bonds rated "BBB" are regarded as having an adequate capacity to
repay principal and pay interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to repay
principal and pay interest for bonds in this category than for higher
rated categories.
BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligations. BB indicates the lowest degree of speculation and C
the highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
CI--Bonds rated "CI" are income bonds on which no interest is being paid.
D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such
payments will be made during such grace period. The "D" rating is also
used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
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<PAGE>
The ratings set forth above may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
Moody's Investors Service's Commercial Paper Ratings
Prime-1--Issuers (or related supporting institutions) rated "Prime-1"
have a superior ability for repayment of senior short-term debt
obligations. "Prime-1" repayment ability will often be evidenced by many
of the following characteristics: leading market positions in
well-established industries, high rates of return on funds employed,
conservative capitalization structures with moderate reliance on debt and
ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well-established
access to a range of financial markets and assured sources of alternate
liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2"
have a strong ability for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is
maintained.
Prime-3--Issuers (or related supporting institutions) rated "Prime-3"
have an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection
measurements and the requirement for relatively high financial leverage.
Adequate alternate liquidity is maintained.
Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime
rating categories.
Standard & Poor's Ratings Group Commercial Paper Ratings
A S&P commercial paper rating is current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365
days. Ratings are graded in several categories, ranging from "A-1" for
the highest quality obligations to "D" for the lowest. The four
categories are as follows:
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign
designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1".
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<PAGE>
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
B--Issues rated "B" are regarded as having only speculative capacity for
timely payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date
due, even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period.
Fitch Bond Ratings
AAA--Bonds rated AAA by Fitch are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA--Bonds rated AA by Fitch are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issues is generally rated F-1+ by Fitch.
A--Bonds rated A by Fitch are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with
higher ratings.
BBB--Bonds rated BBB by Fitch are considered to be investment grade and
of satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
consequences on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position
of a credit within a rating category. Plus and minus signs, however, are
not used in the AAA category.
Fitch Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years,
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<PAGE>
including commercial paper, certificates of deposit, medium-term notes,
and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in
a timely manner.
Fitch's short-term ratings are as follows:
F-1+--Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
F-1--Issues assigned this rating reflect an assurance of timely payment
only slightly less in degree than issues rated F-1+.
F-2--Issues assigned this rating have a satisfactory degree of assurance
for timely payment but the margin of safety is not as great as for issues
assigned F-1+ and F-1 ratings.
F-3--Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term
adverse changes could cause these securities to be rated below investment
grade.
LOC--The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
Like higher rated bonds, bonds rated in the Baa or BBB categories are
considered to have adequate capacity to pay principal and interest.
However, such bonds may have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the
case with higher grade bonds.
After purchase by a Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by such Fund.
Neither event will require a sale of such security by a Fund. However, a
Fund's investment manager will consider such event in its determination
of whether such Fund should continue to hold the security. To the extent
the ratings given by Moody's, S&P or Fitch may change as a result of
changes in such organizations or their rating systems, a Fund will
attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in this Prospectus and
in the Statement of Additional Information.
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<PAGE>
PART C
MUTUAL FUND MASTER INVESTMENT TRUST
PART C. OTHER INFORMATION
ITEM 23. Exhibits
Exhibit
Number
- -------
1 Declaration of Trust. (1)
2 By-laws. (1)
3 None.
4(a) Form of Investment Advisory Agreement.(1)
4(b) Form of Sub-Advisory Agreement between The Chase Manhattan
Bank and Chase Bank of Texas, N.A.(1)
5 None
6 None
7 Custodian Agreement. (1)
8 Transfer Agency Agreement. (1)
9 None
10 None
11 None
12 None
13 None
14 None
15 None
- --------------------
(1) To be filed by amendment.
ITEM 24. Persons Controlled by or Under Common
Control with Registrant
Not applicable
ITEM 25. Indemnification
Reference is hereby made to Article V of the Registrant's
Declaration of Trust.
The Trustees and officers of the Registrant and the personnel
of the Registrant's investment adviser, administrator and distributor are
insured under an errors and omissions liability insurance policy. The
Registrant and its officers are also insured under the fidelity bond
required by Rule 17g-1 under the Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of Trust, the
Registrant may indemnify any person who was or is a Trustee, officer or
employee of the Registrant to the maximum extent permitted by law;
provided, however, that any such indemnification (unless ordered by a
court) shall be made by the Registrant only as authorized in the specific
case upon a determination that indemnification of such persons is proper
in the circumstances. Such determination shall be made (i) by the
Trustees, by a majority vote of a quorum which consists of Trustees who
are neither in Section 2(a)(19) of the Investment Company Act of 1940,
nor parties to the proceeding, or (ii) if the required quorum is not
obtainable or, if a quorum of such Trustees so directs, by independent
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<PAGE>
legal counsel in a written opinion. No indemnification will be provided
by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of duty.
Insofar as the conditional advancing of indemnification monies
for actions based upon the Investment Company Act of 1940 may be
concerned, such payments will be made only on the following conditions:
(i) the advances must be limited to amounts used, or to be used, for the
preparation or presentation of a defense to the action, including costs
connected with the preparation of a settlement; (ii) advances may be made
only upon receipt of a written promise by, or on behalf of, the recipient
to repay that amount of the advance which exceeds that amount to which it
is ultimately determined that he is entitled to receive from the
Registrant by reason of indemnification; and (iii) (a) such promise must
be secured by a surety bond, other suitable insurance or an equivalent
form of security which assures that any repayments may be obtained by the
Registrant without delay or litigation, which bond, insurance or other
form of security must be provided by the recipient of the advance, or (b)
a majority of a quorum of the Registrant's disinterested, non-party
Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the
recipient of the advance ultimately will be found entitled to
indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of it counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
ITEM 26(a). Business and Other Connections of Investment Adviser
The Chase Manhattan Bank (the "Adviser") is a commercial
bank providing a wide range of banking and investment services.
To the knowledge of the Registrant, none of the Directors or
executive officers of the Adviser, except those described below, are or
have been, at any time during the past two years, engaged in any other
business, profession, vocation or employment of a substantial nature,
except that certain Directors and executive officers of the Adviser also
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<PAGE>
hold or have held various positions with bank and non-bank affiliates of
the Adviser, including its parent, The Chase Manhattan Corporation. Each
Director listed below is also a Director of The Chase Manhattan
Corporation.
Principal Occupation or Other
Position with Employment of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ------------- -----------------------------
Thomas G. Labreque President and Chief Chairman, Chief
Operating Officer Executive Officer
and Director and a Director of The Chase
Manhattan Corporation and a Director
of AMAX, Inc.
M. Anthony Burns Director Chairman of the Board, President
and Chief Executive Officer of
Ryder System, Inc.
H. Laurance Fuller Director Chairman, President, Chief
Executive Officer and Director of
Amoco Corporation and Director of
Abbott Laboratories
Henry B. Schacht Director Chairman and Chief Executive
Officer of Cummins Engine
Company, Inc. and a Director of
each of American Telephone and
Telegraph Company and CBS Inc.
James L. Ferguson Director Retired Chairman and Chief
Executive Officer of General Foods
Corporation
William H. Gray III Director President and Chief Executive
Officer of the United Negro
College Fund, Inc.
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<PAGE>
Frank A. Bennack, Jr. Director President and Chief Executive Officer
The Hearst Corporation
Susan V. Berresford Director President, The Ford Foundation
Melvin R. Goodes Director Chairman of the Board and
Chief Executive Officer, The
Warner-Lambert Company
George V. Grune Director Retired Chairman and Chief Executive
Officer, The Reader's
Digest Association,
Inc.; Chairman, The DeWitt Wallace-
Reader's Digest Fund; The Lila-Wallace
Reader's Digest Fund
William B. Harrison, Jr. Vice Chairman
of the Board
Harold S. Hook Director Chairman and Chief Executive Officer,
General Corporation
Helen L. Kaplan Director Of Counsel, Skadden, Arps, Slate,
Meagher & Flom
Walter V. Shipley Chairman of
the Board and
Chief Executive
Officer
Andrew C. Sigler Director Chairman of the Board and Chief
Executive Officer, Champion
International Corporation
John R. Stafford Director Chairman, President and Chief
Executive Officer, American Home
Products Corporation
Marina v. N. Whitman Director Professor of Business Administration
and Public Policy,
University of Michigan
ITEM 26(b)
Not applicable
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<PAGE>
ITEM 27. Principal Underwriters
Not applicable.
ITEM 28. Location of Accounts and Records
The accounts and records of the Registrant are located, in
whole or in part, at the office of the Registrant and the following
locations:
Name Address
- ---- -------
DST Systems, Inc. 210 W. 10th Street,
Kansas City, MO 64105
The Chase Manhattan Bank 270 Park Avenue,
New York, NY 10017
Chase Bank of Texas, N.A. The Chase Manhattan Bank
One Chase Square,
Rochester, NY 14363
ITEM 29. Management Services
Not applicable
ITEM 30. Undertakings
Registrant undertakes that its trustees shall
promptly call a meeting of shareholders of the Trust for the purpose of
voting upon the question of removal of any such trustee or trustees when
requested in writing so to do by the record holders of not less than 10
per centum of the outstanding shares of the Trust. In addition, the
Registrant shall, in certain circumstances, give such shareholders
assistance in communicating with other shareholders of a fund as required
by Section 16(c) of the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the city of New York and the State of New York on the 6th day of July,
1999.
MUTUAL FUND GROUP
By /s/ Sarah E. Jones
---------------------
President
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
/s/ Sarah E. Jones Chair July 6, 1999
- ------------------------------- and Trustee
Sarah E. Jones
/s/ Frank A. Liddell, Jr. Trustee July 6, 1999
- -------------------------------
Frank A. Liddell, Jr.
/s/ George E. McDavid Trustee July 6, 1999
- -------------------------------
George E. McDavid
/s/ Kenneth L. Otto Trustee July 6,1999
- -------------------------------
Kenneth L. Otto
/s/ Fergus Reid, III Trustee July 6, 1999
- -------------------------------
Fergus Reid, III
/s/ H. Michael Tyson Trustee July 6,1999
- -------------------------------
H. Michael Tyson
/s/ Martin R. Dean Treasurer and July 6, 1999
- ------------------------------- Principal Financial
Martin R. Dean Officer
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