PACIFICA PRIME MONEY MARKET FUND
PACIFICA TREASURY MONEY MARKET FUND
PART B
STATEMENT OF ADDITIONAL INFORMATION
JUNE 30, 1995
(AS REVISED DECEMBER 15, 1995)
FOR SERVICE AND INSTITUTIONAL SHARES
This Statement of Additional Information (the "SAI"), which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectuses for the Service and Institutional Shares of the Pacifica Prime
Money Market Fund and Pacifica Treasury Money Market Fund (collectively,
the "Funds") of Pacifica Funds Trust (the "Trust") dated June 30, 1995 (as
they may be revised from time to time). To obtain a copy of the Funds'
Prospectuses, please write to the Funds at 237 Park Avenue, New York, New
York 10017, or call 1-800-662-8417.
First Interstate Capital Management, Inc. ("FICM" or the "Advisor")
serves as the Funds' investment advisor.
The Dreyfus Corporation (the "Administrator") serves as the Funds'
administrator.
Pacifica Funds Distributor Inc. ("PFD Inc." or the "Distributor") is
the distributor of the Funds' Service and Institutional Shares.
Furman Selz Incorporated ("Furman Selz") is the transfer and dividend
disbursing agent for the Funds' Service and Institutional Shares. First
Interstate Bank of California ("FICAL") is the Funds' custodian.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies. . . . . . . . B-3
Trustees and Officers. . . . . . . . . . . . . . . . . . . . B-9
Management of the Funds. . . . . . . . . . . . . . . . . . . B-11
Purchase of Service and Institutional Shares . . . . . . . . B-17
Redemption of Service and Institutional Shares . . . . . . . B-17
Determination of Net Asset Value . . . . . . . . . . . . . . B-18
Dividends and Distributions. . . . . . . . . . . . . . . . . B-19
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-20
Yield Calculations . . . . . . . . . . . . . . . . . . . . . B-20
Portfolio Transactions . . . . . . . . . . . . . . . . . . . B-21
Description of the Funds . . . . . . . . . . . . . . . . . . B-23
Custodian, Transfer and Dividend Disbursing Agent,
Counsel, and Independent Auditors. . . . . . . . . . . . . B-25
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Financial Statements . . . . . . . . . . . . . . . . . . . . B-29
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
General
The assets of each of the Funds consist only of obligations maturing
within thirteen months from the date of acquisition (as determined in
accordance with the regulations of the Securities and Exchange Commission
(the "SEC")), and the dollar-weighted average maturity of each Fund may not
exceed 90 days.
The securities in which each Fund may invest will not yield as high a
level of current income as may be achieved from securities with less
liquidity and less safety. There can be no assurance that each Fund's
investment objective will be realized as described in the Funds'
Prospectuses.
Subsequent to its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Trustees or the Advisor, pursuant to
guidelines established by the Board, will consider such an event in
determining whether the Fund involved should continue to hold the security
in accordance with the interests of the Fund and applicable regulations of
the SEC.
Subject to the general supervision and approval of the Board of
Trustees, the Advisor makes decisions with respect to and places orders for
all purchases and sales of securities for the Funds. Securities are
generally purchased and sold either directly from the issuer or from
dealers who specialize in money market instruments. Such purchases are
usually effected as principal transactions and therefore do not involve the
payment of brokerage commissions.
The Funds may from time to time purchase securities issued by their
regular dealers. At September 30, 1994, the Funds held securities issued
by Goldman Sachs & Co., J.P. Morgan Securities, Inc., Salomon Brothers
Inc., and HSBC Securities Inc., valued at $20,000,000, $144,655,355,
$61,436,033 and $165,000,000, respectively.
Portfolio Securities
A description of the securities in which each of the Funds may invest
is set forth in their Prospectuses, to which reference is hereby made.
Additional information about these instruments follows.
The Prime Money Market Fund may lend its securities to brokers,
dealers and financial institutions, provided (1) the loan is secured
continuously by collateral consisting of cash, U.S. Treasury securities, or
other U.S. Government securities or a letter of credit which is marked to
market daily to ensure that each loan is fully collateralized at all times;
(2) the Fund may at any time call the loan and obtain the return of the
securities loaned within five business days; (3) the Fund will receive any
interest or dividends paid on the securities loaned; and (4) the aggregate
market value of securities loaned will not at any time exceed one-third of
the total assets of the Fund. The Fund may earn income in connection with
securities loans either through the reinvestment of the cash collateral or
the payment of fees by the borrower. The Treasury Money Market Fund does
not currently intend to lend its portfolio securities.
Each Fund may engage in a repurchase agreement with respect to any
security in which that Fund is authorized to invest, including U.S.
Treasury STRIPS, although the underlying security may mature in more than
thirteen months. Repurchase agreements are transactions by which a Fund
purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon price, on an agreed upon date within a number
of days (usually not more than seven, but in no event more than 365) from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon market rate of interest which is unrelated to the coupon rate
or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value of the underlying security, which shall be
at least equal to the amount of the agreed upon resale price plus the
transaction costs (including loss of interest) that the Fund could
reasonably expect to incur if the seller defaults. Securities subject to
repurchase agreements will be physically held by the Funds' custodian (or
sub-custodian) or registered in the name of the Funds or their custodian
(or sub-custodian) in a book-entry system, in the case of a security
registered on a book-entry system. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delay and costs to a Fund in connection with insolvency
proceedings), it is the policy of each Fund to limit repurchase agreements
to selected securities dealers or domestic banks or other recognized
financial institutions. Repurchase agreements are considered to be loans
by a Fund under the Investment Company Act of 1940 (the "1940 Act").
The Funds may acquire variable and floating rate instruments as
described in the Prospectuses. Variable and floating rate instruments are
frequently not rated by credit rating agencies; however, unrated variable
and floating rate instruments purchased by a Fund will be determined by the
Advisor under guidelines established by the Board of Trustees to be of
comparable quality at the time of purchase to rated instruments eligible
for purchase by the Funds. In making such determinations, the Advisor will
consider the earning power, cash flows and other liquidity ratios of the
issuers of such instruments (such issuers include financial, merchandising,
investment banking, bank holding and other companies) and will continuously
monitor their financial condition. There may not be an active secondary
market with respect to a particular variable or floating rate instrument
purchased by a Fund. The absence of such an active secondary market could
make it difficult for a Fund to dispose of the variable or floating rate
instrument involved. In the event the issuer of the instrument defaulted
on its payment obligations, a Fund could, for this or other reasons, suffer
a loss to the extent of the default. Variable and floating rate
instruments may be secured by bank letters of credit, guarantees or lending
commitments.
The Funds may purchase securities on a "when-issued," forward
commitment or delayed settlement basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When a Fund agrees to
purchase securities on this basis, the Fund's custodian will set aside cash
or liquid portfolio securities equal to the amount of the commitment in a
separate account. Normally the custodian will set aside portfolio
securities to satisfy a purchase commitment, and in such case a Fund may be
required subsequently to place additional assets in the separate account so
that the value of the account remains equal to the amount of the Fund's
commitment. A Fund's net assets may be expected to fluctuate to a greater
degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. The Funds do not intend to
engage in these transactions for speculative purposes but only in
furtherance of their investment objectives. Because a Fund will set aside
cash or liquid investments to satisfy its purchase commitments in the
manner described above, the Fund's liquidity may be affected in the event
the Fund's forward commitments, commitments to purchase "when-issued"
securities and delayed settlements ever exceeded 25% of the value of its
assets.
A Fund will purchase securities on a "when-issued," forward commitment
or delayed settlement basis only with the intention of completing the
transaction. If deemed advisable as a matter of investment strategy,
however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before
those securities are delivered to the Fund on the settlement date. In this
case the Fund may realize a taxable capital gain or loss. When a Fund
engages in "when-issued," forward commitment and delayed settlement
transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Fund's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a "when-issued" purchase, a
forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of a Fund starting on the day the Fund agrees
to purchase the securities. A Fund does not earn interest on the
securities it has committed to purchase until they are paid for and
delivered on the settlement date.
Each Fund currently intends to limit its investments in securities
issued by other investment companies so that, as determined immediately
after a purchase of such securities is made: (i) not more than 5% of the
value of the Fund's total assets will be invested in the securities of any
one investment company; (ii) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting
securities of any one investment company will be owned by a Fund or by the
Trust as a whole.
It is possible that unregistered securities purchased by the Prime
Money Market Fund in reliance upon Rule 144A under the Securities Act of
1933, could have the effect of increasing the level of the Fund's
illiquidity to the extent that qualified institutional buyers become, for a
period, uninterested in purchasing these securities.
Investment Restrictions
The Prospectuses summarize certain fundamental investment restrictions
that have been adopted for the Funds. All of the Funds' restrictions are
stated in full herein and cannot be changed with respect to a Fund without
approval by the holders of a majority, as defined in the 1940 Act, of the
Fund's outstanding voting shares.
The Prime Money Market Fund may not:
1. Purchase common stocks, preferred stocks, warrants or other
equity securities, except for securities of other investment companies.
2. Borrow money or issue senior securities, except that the Fund
may borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to one-third of the value of its total assets at the
time of such borrowing. The Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
3. Mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of one-third of
the value of the Fund's total assets at the time of its borrowing. Securities
held in escrow or separate accounts in connection with the Fund's
investment practices are not deemed to be pledged for purposes of this
investment restriction.
4. Sell securities short or purchase securities on margin, except
for delayed delivery or when-issued transactions or such short-term credits
as are necessary for the clearance of transactions.
5. Write put or call options.
6. Underwrite the securities of other issuers, except as the Fund
may be deemed to be an underwriter in connection with the purchase or sale
of portfolio instruments in accordance with its investment objective and
portfolio management policies.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this restriction shall not prevent the Fund from investing directly or
indirectly in instruments secured by real estate or interest therein.
8. Make loans to others, except through the purchase of debt
obligations of the type which the Fund is permitted to purchase, loans of
portfolio securities and entry into repurchase agreements referred to in
the Prospectuses and herein.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation, acquisition of
assets or where otherwise permitted by the 1940 Act.
11. Lend its portfolio securities in excess of one- third of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Trust's Board of
Trustees, including maintenance of collateral of the borrower equal at all
times to at least the current market value of the securities loaned.
12. Purchase the securities of any one issuer, other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if immediately after such purchase more than 5% of the
value of the Fund's total assets would be invested in such issuer, except
that (a) up to 25% of the value of its total assets may be invested in any
securities without regard to this 5% limitation; and (b) such 5% limitation
shall not apply to repurchase agreements collateralized by obligations of
the U.S. Government, its agencies or instrumentalities.
As a matter of nonfundamental policy and in accordance with the
current regulations of the SEC, the Prime Money Market Fund intends to
limit its investments in the obligations of any one issuer to not more than
5% of the Fund's total assets at the time of purchase provided, however,
that the Fund may invest up to 25% of its assets in the obligations of any
one issuer for a period of up to three business days.
13. Purchase any securities which cause 25% or more of the value
of the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to: (a) instruments that are issued or guaranteed by the United
States, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies, instrumentalities or
political subdivisions; (b) instruments issued or guaranteed by U.S. banks and
U.S. branches of foreign banks (provided that, with respect to U.S. branches of
foreign banks, such branches are subject to the same regulations as domestic
branches of U.S. banks and, with respect to foreign branches of U.S. banks, the
domestic parent is unconditionally liable in the event that the foreign branch
fails to pay on its instruments for any reason); and (c) repurchase agreements
secured by the instruments described in clauses (a) and (b).
The Treasury Money Market Fund may not:
1. Buy common stocks or voting securities (except for securities
of other investment companies) or state, municipal, or industrial revenue
bonds.
2. Borrow money or issue senior securities, except that the Fund
may borrow from banks or enter into reverse, repurchase agreements for
temporary purposes in amounts up to one-third of the value of its total
assets at the time of such borrowing. The Fund will not purchase securities
while its borrowings (including reverse repurchase agreements) in excess of
5% of its total assets are outstanding.
3. Mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of one-third of
the value of the Fund's total assets at the time of its borrowing. Securities
held in escrow or separate accounts in connection with the Fund's
investment practices are not deemed to be pledged for purpose of this
investment restriction.
4. Purchase securities on margin, except for delayed delivery or
when-issued transactions or such short-term credits as are necessary for
the clearance of transactions; or make short sales of securities, or
maintain a short position.
5. Write put or call options.
6. Underwrite the securities of other issuers except as the Fund
may be deemed to be an underwriter in connection with the purchase and sale of
portfolio instruments in accordance with its investment objective and
portfolio management polices.
7. Purchase or sell real estate.
8. Purchase or sell commodity contracts, or invest in oil, gas,
or mineral exploration or development programs.
9. Make loans, except that the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies and
may enter into loans of portfolio securities and repurchase agreements
referred to in the Prospectuses and herein.
10. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization,
or acquisition of assets or where otherwise permitted by the 1940 Act.
11. Lend its portfolio securities in excess of one-third of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Trust's Board of
Trustees, including maintenance of collateral of the borrower equal at all
times to at least the current market value of the securities loaned.
12. Purchase the securities of any one issuer, other than
obligations issued or guaranteed by the U.S. Treasury and repurchase agreements
secured by such obligations, if immediately after such purchase more than 5% of
the value of the Fund's total assets would be invested in such issuer, except
that up to 25% of the value of the Fund's total assets may be invested
without regard to such 5% limitation.
13. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or repurchase agreements secured by such
obligations.
The Trust may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Trust determine that such a commitment is no longer in the best
interests of the Fund involved and its shareholders, the Trust reserves the
right to revoke the commitment by terminating the sale of Fund shares in
the state involved.
Pursuant to state securities regulations applicable to the Funds, the
Treasury Money Market Fund has adopted the following non-fundamental
investment limitation: the Fund will not purchase warrants, valued at the
lower of cost or market, in excess of 5% of the value of its net assets
(included within that amount, but not to exceed 2% of the value of the
Fund's net assets, may be warrants that are not listed on the New York or
American Stock Exchanges) except that warrants acquired by the Fund at any
time in units or attached to securities are not subject to this limitation.
Investors should note, however, that neither Fund currently intends to
purchase any warrants whatsoever, or to acquire any put option that may be
sold, transferred or assigned separately from the underlying security.
Whenever an investment policy or limitation states a maximum
percentage of a Fund's assets that may be invested in any security or other
asset or sets forth a policy regarding quality standards, such standard or
percentage limitation shall be determined immediately after and as a result
of a Fund's acquisition of such security or other asset. Accordingly, any
later increase or decrease resulting from a change in values, net assets,
or other circumstances will not be considered when determining whether the
investment complies with each Fund's investment policies and limitations.
For purposes of determining industry classifications of issuers,
wholly-owned fiance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents, and utilities will be classified according to
their services (for example, gas, gas transmission, electric and gas, and
electric and telephone each will be considered a separate industry). In
accordance with the current views of the staff of the SEC and as a matter
of nonfundamental policy that may be changed without a vote of
shareholders, a Fund will treat all supranational organizations as a single
industry and each foreign government (and all of its agencies) as a
separate industry.
TRUSTEES AND OFFICERS
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years,
are shown below. Each Trustee who is deemed to be an "interested person"
of the Trust or of the Advisor, as defined in the 1940 Act, is indicated by
an asterisk(*).
DENNIS W. DRAPER, Trustee. Dr. Draper, age 45, has been an Associate
Professor of Finance, at University of Southern California since 1978;
Director of Data Analysis, Inc. (financial services); and Editorial
Board Member of Chicago Board of Trade. His address is School of
Business, Hoffman 701-F, University of Southern California, Los
Angeles, California 90089.
JOSEPH N. HANKIN, Trustee. Dr. Hankin, age 54, has been President,
Westchester Community College since 1971; President of Hartford Junior
College from 1967 to 1971; Adjunct Professor of Columbia University
Teachers College since 1976. His address is Westchester Community
College, 75 Grasslands Road, Valhalla, New York 10595.
JOHN E. HEILMANN, Trustee. Mr. Heilmann, age 53, is retired and the former
Chairman, President and Chief Executive Officer of Distillers
Somerset, Inc. and Norwood Enterprises, Inc. from 1987-1992. His
address is Old Norwood Plantation, Route 1, Box II A, Winginia,
Virginia 24599.
JACK D. HENDERSON, ESQ., Trustee. Mr. Henderson, age 67, is a partner of
the law firm of Clanahan, Tanner, Downing & Knowlton, P.C. He is a
Trustee of Westcore Trust (a mutual fund family). His address is 1600
Broadway, Denver, Colorado 80202.
RICHARD A. WEDEMEYER, Trustee. Mr. Wedemeyer, age 59, has been Vice
President of Performance Advantage, Inc., since 1992; Vice President
of Jim Henson Productions from 1979 to 1992; Author of In Transition
(Harper Collins); co-founder and co-conductor of Harvard Business
School Club of New York Career Seminar; Trustee of Jim Henson Legacy
Trust. His address is 17 High Street, Norwalk, Connecticut 06851.
MICHAEL C. PETRYCKI, President. Mr. Petrycki, age 52, has been Executive
Vice President and Director of Furman Selz since 1984. His address is
237 Park Avenue, New York, New York, 10017.
JOHN J. PILEGGI, Vice President and Treasurer. Mr. Pileggi, age 36, has
been Managing Director of Furman Selz, from 1984 to 1992, and Senior
Managing Director, since 1992. His address is 237 Park Avenue, New
York, New York, 10017.
MARK J. DUGGAN, Vice President and Secretary. Mr. Duggan, age 30, has been
Assistant Vice President and Counsel of The Boston Company Advisers,
Inc. ("TBCA") since January 1994 and Counsel to TBCA since May 1993.
From September 1990 to May of 1993, he was a corporate associate in
the law firm of Ropes & Gray. His address is 1 Boston Place, Boston,
MA 02108-4402.
ELLEN M. FURLONG, Vice President and Treasurer. Ms. Furlong, age 38, has
been a Vice President of Boston Safe Deposit and Trust Company,
heading the firm's custody administration division since 1991. From
November 1989 to 1991, she was Assistant Vice President of The Boston
Company Advisors, Inc., also in the area of custody administration.
Her address is 1 Cabot Road, Medford, MA 02155-5159.
KEVIN F. MAWE, Assistant Secretary. Since September 1994, Mr. Mawe, age
40, has served as Senior Counsel to Boston Safe Deposit & Trust
Company ("BSD&T"). From 1990 to September 1994 he was Associate
Counsel to Mellon Bank, N.A.. His address is 1 Boston Place, Boston,
MA 02108-4402.
STEPHEN P. BROWNE, Assistant Treasurer. Mr. Browne, age 32, has been a
Vice President of Boston Safe Deposit and Trust Company since August
1992. From 1990 to August of 1992, he served as an Assistant Vice
President of The Boston Company Advisers, Inc. His address is 1 Cabot
Road, Medford, MA 02155-5159.
The authority of each of the officers listed above, with the exception
of Messrs. Petrycki and Pileggi, is limited solely to matters related to
the Funds. Such officers have no authority over the affairs of the other
portfolios of the Trust. By virtue of the responsibilities assumed by the
Trust's service contractors, the Trust requires no employees other than its
officers. Further, none of the Trust's officers devotes full time to the
affairs of the Trust. No officer, director, or employee of the Trust's
service contractors, or of any of their parents or subsidiaries, receives
any compensation from the Trust for serving as a Trustee or officer of the
Trust, although such service contractors receive fees for the advisory,
administrative, custodial and other services they provide to the Trust.
Each Trustee receives $5,000 per annum plus $1,000 per regular meeting
attended, $500 per committee meeting attended, and reimbursement for travel
and out-of-pocket expenses.
For the twelve-month period ended September 30, 1994, the Trustees
received the following compensation from the Trust and from certain other
investment companies (as indicated) that have the same investment advisor
as the Trust or an investment advisor that is an affiliated person of the
Trust's investment advisor:
<TABLE>
<CAPTION>
Pension
or Retirement Total
Aggregate Benefits Accrued Estimated Annual Compensation From
Compensation as Part of Benefits Upon Registrant and
Name of Trustee from the Trust Trust Expense Retirement Fund Complex
- --------------- -------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Edmund A. Hajim $0 $0 $0 $0
Dennis W. Draper $0 $0 $0 $12,000*
Joseph N. Hankin $10,500 $0 $0 $10,500
John E. Heilmann $10,000 $0 $0 $10,000
Jack D. Henderson $0 $0 $0 $31,500**
Richard A. Wedemeyer $10,500 $0 $0 $10,500
______________________
* Includes amounts received for service as a member of the Board of Trustees of
Pacific American Fund.
** Includes amounts received for service as a member of the Boards of Trustees of
Pacific American Fund and Westcore Trust.
</TABLE>
As of the date of this SAI, the Trust's Trustees and officers as a
group own less than 1% of the outstanding shares of each Fund.
MANAGEMENT OF THE FUNDS
Investment Advisory Agreement
First Interstate Capital Management, Inc., previously named First
Interstate Investment Services, Inc., serves as the Funds' investment
advisor pursuant to an Investment Advisory and Management Agreement dated
October 1, 1994 (the "Investment Advisory and Management Agreement"). FICM
is located at 7501 East McCormick Parkway, Scottsdale, Arizona 85258, and
is a wholly-owned subsidiary of First Interstate Bank of California
("FICAL") which is a wholly-owned subsidiary of First Interstate Bancorp (a
bank holding company with headquarters in Los Angeles, California).
The Investment Advisory and Management Agreement will continue in
force with respect to each Fund until March 17, 1996. Thereafter, its
continuance with respect to a Fund is subject to annual approval by (i) the
Trust's Board of Trustees or (ii) the affirmative vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund,
provided that in either event the continuance is also approved by a
majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of any party to such agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Advisory and Management Agreement is terminable with respect to either Fund
without penalty, by the Board of Trustees, by vote of the holders of a
majority of the Fund's outstanding shares, or by FICM upon not less than
sixty days' written notice. The Investment Advisory and Management
Agreement will terminate automatically in the event of its assignment.
Under the Investment Advisory and Management Agreement, FICM
supervises and assists in the overall management of the Trust. Subject to
the supervision of the Board of Trustees, FICM manages the Funds'
investments in accordance with the stated policies of each Fund. FICM
makes investment decisions for the Funds and places purchase and sale
orders for portfolio transactions. FICM provides the Funds with investment
officers who are authorized by the Board of Trustees to execute purchases
and sales of securities. For this purpose the Trustees have appointed the
following officers or employees of FICM to serve as Assistant Vice
Presidents - Investment and Administration of the Trust: Michael Hughes,
Vice President of FICM; Thomas Hooker, Vice President of FICM; Susan K.
Riechel, Vice President of FICM; Gerald Wagner, Vice President of FICM; and
Michael Neitzke; Vice President of FICM. In addition, FICM's management
responsibilities include, among other things, furnishing economic and
statistical information as requested by the Board of Trustees and
monitoring the Funds' arrangements with Service Organizations.
As compensation for services rendered by FICM to the Funds, FICM is
entitled to a fee, computed daily and paid monthly, at an annual rate of
0.30% of the first $500 million of the average daily net assets of each
Fund (considered separately on a Fund-by-Fund basis), 0.25% of the next
$500 million of each Fund's average daily net assets, and 0.20% of each
Fund's average daily net assets in excess of $1 billion. Prior to October
1, 1994 FICM, served as investment advisor to each of the Funds, and
affiliates of FICM served as sub-investment advisor. For the six-month
fiscal period ended September 30, 1994, FICM voluntarily reduced its
advisory and management fee for each Fund by an annual rate of 0.38% with
respect to the Prime Money Market Fund and 0.37% with respect to the
Treasury Money Market Fund. For the fiscal year ended March 31, 1994, FICM
voluntarily reduced its advisory and management fee for each Fund by an
annual rate of 0.38 % with respect to the Prime Money Market Fund and 0.37%
with respect to the Treasury Money Market Fund. For the fiscal year ended
March 31, 1993, FICM voluntarily reduced its advisory and management fee
for each Fund by an annual rate of 0.37%. For the fiscal year ended March
31, 1992, FICM voluntarily reduced its advisory and management fee for each
Fund by an annual rate of 0.37%. The monthly advisory and management fee
was further reduced voluntarily by the amounts the Funds agreed to pay to
Service Organizations. As a result, FICM actually received an advisory and
management fee at an annual rate of 0.12% of the value of the Prime Money
Market Fund's average daily net assets and 0.13% of the value of the
Treasury Money Market Fund's average daily net assets for the six-month
fiscal period ended September 30, 1994, and 0.12% of the value of the Prime
Money Market Fund's average daily net assets and 0.13% of the value of the
Treasury Money Market Fund's average daily net assets for the fiscal year
ended March 31, 1994, and 0.12% of the value of each Fund's average daily
net assets for the fiscal years ended March 31, 1993 and 1992. During the
six-month fiscal period ended September 30, 1994 and the fiscal years ended
March 31, 1994, 1993 and 1992, the advisory fees paid to FICM by the Prime
Money Market Fund were $330,715, $737,811, $640,620 and $674,535,
respectively. During the six-month fiscal period ended September 30, 1994
and the fiscal years ended March 31, 1994, 1993 and 1992, the advisory fees
paid to FICM by the Treasury Money Market Fund were $454,029, $900,919,
$629,121 and $242,930, respectively. All of these fees were, in turn, paid
by FICM to its affiliates which served as sub-investment advisors during
the periods indicated.
Pursuant to state securities regulations applicable to the Fund, FICM
has agreed that if, in any fiscal year, the aggregate expenses of a Fund
(as defined under the securities regulations of any such state having
jurisdiction over the Fund), exceed the expense limitations of any such
state, FICM will reimburse the Fund for such excess expenses to the extent
described in any written undertaking provided by FICM or the Trust to such
state. To the knowledge of the Trust, as of the date of this SAI, the most
restrictive expense limitation limits aggregate annual expenses, including
management and advisory fees but excluding interest, taxes, brokerage
commissions, and certain other expenses, to 2-1/2% of the first $30 million
of each Fund's average net assets, 2% of the next $70 million, and 1-1/2%
of its remaining average net assets.
Expenses incurred in the organization and operation of each Fund,
including taxes, interest, penalties, brokerage and other fees and
commissions, if any, fees and expenses of Trustees, SEC fees and related
expenses, state Blue Sky qualification fees, advisory fees, administration
fees, charges of custodians, costs of transfer and dividend disbursing
agents, certain insurance premiums, outside auditing and legal expenses,
costs of maintenance of trust existence, costs of independent pricing
services, investor services, preparation and printing of prospectuses for
regulatory purposes and for distribution to shareholders, shareholders'
reports and shareholders' meetings, costs of the Funds' arrangements with
Service Organizations and extraordinary expenses, are borne by each Fund.
Certain expenses that are directly incurred by or attributed to a
particular class of shares will be charged solely to shareholders of that
class of shares. Currently, the only expenses that are allocated
differently between the Funds' separate classes of shares are expenses
arising from the Service Agreements entered into by the Trust with certain
institutions.
Banking laws and regulations, including the Glass-Steagall Act as
presently interpreted by the Board of Governors of the Federal Reserve
System, (a) prohibit a bank holding company registered under the Federal
Bank Holding Company Act of 1956 (the "Holding Company Act") or any bank or
non-bank affiliate thereof from sponsoring, organizing, or controlling a
registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but (b) do not prohibit such a bank holding company or
affiliate generally from acting as investment advisor, transfer agent, or
custodian to such an investment company, or from purchasing shares of such
a company as agent for and upon the order of a customer. In some states,
banks or other institutions through which transactions in Fund shares are
effected, may be required to register as dealers pursuant to state law.
FICM, FICAL, and the Service Organizations that are governed by
banking laws and regulations believe that they may perform services for the
Funds without violating the Glass-Steagall Act. There have, however, been
no cases deciding whether a bank and its affiliates may perform services
comparable to those performed by either FICM, FICAL, or the Service
Organizations, and future changes in either federal or state statutes or
regulations relating to the permissible activities of banks or trust
companies or their subsidiaries or affiliates, as well as further judicial
or administrative decisions or interpretations of present and future
statutes and regulations, could prevent FICM, FICAL, or the Service
Organizations from continuing to perform services for the Funds or from
continuing to purchase Fund shares for the accounts of customers. If FICM,
FICAL, or the Service Organizations were prohibited from providing services
to the Funds, it is expected that the Board of Trustees would make other
arrangements and that shareholders would not suffer adverse consequences.
Any new advisory agreement would be subject to shareholder approval.
On the other hand, legislation has been introduced in Congress from
time to time which, if enacted, would permit a bank holding company
subsidiary to organize, sponsor and distribute shares of investment
companies such as the Funds notwithstanding present restrictions under the
Glass-Steagall Act and the Holding Company Act. As described herein, the
Funds are currently distributed by Premier Mutual Fund Services, Inc. and
receive certain administrative services from The Dreyfus Corporation. If
current restrictions preventing a bank holding company subsidiary from
legally sponsoring, organizing, controlling and distributing shares of an
investment company were relaxed, it is anticipated that FICM, FICAL, or the
Service Organizations would consider the possibility of offering to perform
additional services for the Funds.
It is not possible of course, to predict whether or in what form such
legislation might be enacted or the terms upon which FICM, FICAL, or the
Service Organizations might offer to provide services for consideration by
the Board of Trustees.
FICM's investment advisory agreement provides that FICM shall not be
liable for any error of judgment or mistake of law, or in any other event
whatsoever, except by reason of a breach of fiduciary duty with respect to
the receipt of compensation for services or for loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties
or from the reckless disregard of its obligations and duties under the
agreement.
Administration Agreement
Pursuant to an Administration Agreement dated as of October 1, 1994
(the "Administration Agreement"), The Dreyfus Corporation (the
"Administrator") serves as administrator for the Funds. Under the
Administration Agreement, the Administrator supplies office facilities;
provides statistical and research data, data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal services,
and internal executive and administrative services; prepares reports to
shareholders; prepares reports to and filings with the SEC and state
securities authorities; prepares tax returns; calculates the net asset
value of Fund shares and dividends and capital gains distributions to
shareholders; and generally assists in all aspects of the Funds' operations
(except with respect to services provided by the Funds' investment
advisor). For these administrative services, the Administrator is entitled
to receive a fee at the annual rate of 0.10% of each Fund's average daily
net assets. During the six-month fiscal period ended September 30, 1994
and the fiscal years ended March 31, 1994, 1993 and 1992, the
administration fees paid to the Administrator by the Prime Money Market
Fund were $275,596, $614,901, $533,850 and $562,112, respectively. During
the six-month fiscal period ended September 30, 1994 and the fiscal years
ended March 31, 1994, 1993 and 1992, the administration fees paid to the
Administrator by the Treasury Money Market Fund were $347,499, $690,137,
$524,268 and $202,442, respectively.
The Administration Agreement with the Administrator will continue in
effect automatically with respect to each Fund for successive annual
periods ending on March 17th of each year, provided such continuation is
approved at least annually by the Board of Trustees or by the vote of a
majority of the outstanding shares of the particular Fund involved (as
defined in the 1940 Act), and by a majority of the Trustees who are not
interested persons of any party to the Administration Agreement by vote
cast in person at a meeting called for such purpose. The Administration
Agreement is terminable at any time with respect to either Fund by the
Board of Trustees or by a vote of a majority of the Fund's outstanding
shares upon 60 days' notice to the Administrator, or by the Administrator
upon not less than 90 days' notice to the Trust.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered
by the Funds or its security holders in connection with the performance of
the Administration Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties
or from the reckless disregard by it of its obligations and duties
thereunder.
If the aggregate expenses of either Fund in any fiscal year exceed the
expense limitations imposed by applicable state securities regulations, the
Fund may deduct from the fees to be paid with respect to such Fund to the
Administrator, or the Administrator will bear, to the extent required by
such regulations, that portion of such excess which bears the same relation
to the total excess as the Administrator's fees bear to the total
administration and investment advisory and management fees otherwise
payable for the fiscal year by the Fund involved to the Administrator and
the Funds' investment advisor. Such amount, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a
monthly basis. The Administrator may also voluntarily waive its fee from
either Fund from time to time.
Distribution Contract
Pursuant to a Distribution Contract dated as of October 1, 1995 (the
"Distribution Contract"), Pacifica Funds Distributor Inc., serves as
distributor of the Funds' Service and Institutional Shares. Service and
Institutional Shares of each Fund are sold on a continuous basis by the
Funds' distributor pursuant to the Distribution Agreement which is
renewable annually. PFD Inc. is not obliged to sell any particular amount
of shares. PFD Inc. is not entitled to any payments from the Funds for its
distribution services.
Service Organizations
The Trust has entered into Service Agreements with certain
institutions that are record shareholders in the Funds ("Service
Organizations"), providing that the Service Organizations will render
support services to their customers ("Customers") who are the beneficial
owners of Service and Institutional Shares in consideration of the Funds'
payment of up to 0.25% (on an annual basis) of the average daily net asset
value of the Service and Institutional Shares held by the Service
Organizations for the benefit of their Customers. Currently, the Funds
make payments to Service Organizations at the rate of 0.21% (on an annual
basis) of the average daily net asset value of Service Shares. The Funds
do not intend to make any payments to Service Organizations with respect to
Institutional Shares during the current fiscal year. All payments made
under Servicing Agreements with respect to a particular class of shares are
borne by that class. The services provided by a Service Organization may
include: (i) aggregating and processing purchase and redemption requests
from Customers; (ii) providing Customers with a service that invests the
assets of their accounts in Fund shares; (iii) processing dividend payments
from the Funds; (iv) providing information periodically to Customers; (v)
arranging for bank wires; (vi) responding to Customer inquiries; (vii)
providing sub-accounting with respect to Fund shares beneficially owned by
Customers; (viii) forwarding shareholder communications; and (ix) other
similar services requested by the Trust. Agreements with the Service
Organizations are terminable at any time by the Trust without penalty.
FICM intends to waive a portion of the advisory fee otherwise payable by a
Fund on assets invested by Customers of Service Organizations to the extent
that the investment advisory fees paid by a Fund to FICM plus the fees paid
by the Fund to Service Organizations exceed the annual rate of 0.50% the
Fund's average daily net assets. For the six-month fiscal period ended
September 30, 1994, and the fiscal years ended March 31, 1994, 1993 and
1992, the Prime Money Market Fund paid $413,393, $922,351, $800,774 and
$843,168, respectively, to Service Organizations. For the same periods,
the Treasury Money Market Fund paid $521,248, $1,035,205, $786,402 and
$303,664, respectively, to Service Organizations. Of these amounts, for
the six-month fiscal period ended September 30, 1994 and the fiscal years
ended March 31, 1994, 1993 and 1992, respectively, a total of $924,045,
$1,935,703, $1,551,971 and $1,106,598 was paid to FICAL, and other
affiliates of First Interstate Bancorp; and a total of $10,596, $21,853,
$35,205 and $40,234 was paid to Western Asset Management Company, a prior
affiliate of FICAL. For the six-month fiscal period ended September 30,
1994, and the fiscal years ended March 31, 1994, 1993 and 1992, the Service
Organizations voluntarily waived fees aggregating $275,596, $614,901,
$533,850 and $562,112, respectively, with respect to the Prime Money Market
Fund and $347,498, $690,137, $524,268 and $202,442, respectively, with
respect to the Treasury Money Market Fund. For the periods indicated
above, each Fund offered only one class of shares to institutional
investors.
Depending upon the terms governing the particular Customer accounts,
Service Organizations may charge Customers directly for cash management and
other services provided in connection with the accounts, including, for
example, account maintenance fees, compensating balance requirements, or
fees based upon account transactions, assets, or income. A Customer should
therefore read this SAI in light of the terms of the account with a Service
Organization before purchasing Fund shares.
PURCHASE OF SERVICE AND INSTITUTIONAL SHARES
The Funds' Service and Institutional Shares are sold at the net asset
value next determined after federal funds (monies of member banks within
the Federal Reserve System which are held on deposit at a Federal Reserve
Bank) are received by the transfer agent, as hereafter provided.
Orders for the purchase of Service and Institutional Shares are
effected as of the business day an order is received if federal funds are
received by the Funds by 12:00 noon, Pacific time. If federal funds are
received at or after 12:00 noon, Pacific time, orders are effected the next
business day.
All Service and Institutional Shares purchased are credited to the
appropriate shareholder's account at the net asset value determined as
described below. Service and Institutional Shares purchased begin accruing
income dividends on the day on which shares are purchased and continue to
accrue dividends through the day before the shares are redeemed.
In order to maximize earnings the Funds intend to be as completely
invested as is feasible. The Funds are required to make immediate
settlement in federal funds for portfolio securities purchased.
REDEMPTION OF SERVICE AND INSTITUTIONAL SHARES
Upon receipt of a proper request by the transfer agent, the Funds will
redeem Service and Institutional Shares at their next determined net asset
value. Customers should submit redemption requests to their Banks in
accordance with the instructions and limitations of the Banks.
Requests for redemption of Service and Institutional Shares are
processed after a proper redemption request is received by the Fund's
transfer agent. If such requests are received by the Fund's transfer agent
on a business day by 12:00 noon, Pacific time, the shares are redeemed at
the net asset value determined as of 12:00 noon, Pacific time, on that day;
if requests are received by the transfer agent at or after 12:00 noon,
Pacific time, the redemption is made at the net asset value determined as
of 12:00 noon, Pacific time, on the next business day.
Ordinarily, the Funds will transmit payment for all Service and
Institutional Shares redeemed within two business days after a redemption
request is executed, but in any event payment will be made within seven
days thereafter. The right of redemption may be suspended or the date of
payment postponed (a) during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday closings), (b) when
trading in the markets the Funds ordinarily utilize is restricted, or when
an emergency exists as determined by the SEC so that disposal of a Fund's
investments or determination of its net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit
to protect the Funds' shareholders.
DETERMINATION OF NET ASSET VALUE
The net asset value per share ("NAV") for each share class of both
Funds is determined as of 12:00 noon, Pacific time, on days on which the
Trust is open for business (i.e., days on which the San Francisco branch of
the Federal Reserve Bank and First Interstate Bank of California, the
Funds' custodian, and in the case of the Treasury Money Market Fund, the
New York Stock Exchange, are open for business -- "business days"). For
1995, the San Francisco branch of the Federal Reserve Bank and the Funds'
custodian have designated the following holiday closings: New Year's Day
(observed), Martin Luther King, Jr. Day, Presidents' Day (observed), Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day. The San Francisco branch of the
Federal Reserve Bank or the Funds' custodian may designate different dates
for the observance of these holidays as well as designate different
holidays for closing in the future. To the extent that the Funds'
securities are traded on various markets on days when the Federal Reserve
Bank of San Francisco or the Funds' custodian is closed, a Fund's NAV may
be affected on days when the shareholders may not purchase or redeem
shares. NAV of each class of shares of the Funds is computed by dividing
the value of a Fund's assets allocable to that class, less the liabilities
charged to that class, by the total number of outstanding shares of that
class.
The Funds' instruments are valued on the basis of amortized cost.
This technique involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value
of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost,
is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of a Fund computed as described above may tend to be higher than a
like computation made by a fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices
for all of its instruments. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values and existing investors in a Fund would receive less investment
income. The converse would apply in a period of rising interest rates.
The valuation of the Funds' instruments, based upon their amortized
cost and the concomitant maintenance by each Fund of a net asset value of
$1.00, is permitted in accordance with Rule 2a-7 under the 1940 Act,
pursuant to which each Fund must adhere to certain conditions. Each Fund
must maintain a dollar-weighted average maturity of 90 days or less,
purchase only instruments having remaining maturities of thirteen months or
less, and invest only in securities which are determined to present minimal
credit risks pursuant to guidelines adopted by the Trustees. Instruments
having variable or floating interest rates or demand features may be deemed
to have remaining maturities as follows: (a) a government security with a
variable rate of interest readjusted no less frequently than every thirteen
months may be deemed to have a maturity equal to the period remaining until
the next readjustment of the interest rate; (b) an instrument with a
variable rate of interest, the principal amount of which is scheduled on
the face of the instrument to be paid in thirteen months or less, may be
deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate; (c) an instrument with a variable rate
of interest that is subject to a demand feature may be deemed to have a
maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the
principal amount can be recovered through demand; (d) an instrument with a
floating rate of interest that is subject to a demand feature may be deemed
to have a maturity equal to the period remaining until the principal amount
can be recovered through demand; and (e) a repurchase agreement may be
deemed to have a maturity equal to the period remaining until the date on
which the repurchase of the underlying securities is scheduled to occur or,
where no date is specified but the agreement is subject to demand, the
notice period applicable to a demand for the repurchase of the securities.
The Trustees have established procedures designed to stabilize, to the
extent reasonably possible, each Fund's price per share as computed for the
purpose of sales and redemptions at a single value. Such procedures will
include the determination, at such intervals as the Trustees deem
appropriate, of the extent to which each Fund's NAV as calculated by using
available market quotations deviates from $1.00 per share, such deviation
may result in material dilution or other unfair results to existing
shareholders or investors. In the event the Trustees determine that such a
material deviation exists, they have agreed to take such corrective action
as they regard as necessary and appropriate, which may include selling
portfolio instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends; redeeming
shares in kind or without monetary or other consideration; or establishing
a net asset value per share by using available market quotations. It is
the intention of each Fund to maintain a per share net asset value of
$1.00, but there can be no assurance that either Fund will do so.
DIVIDENDS AND DISTRIBUTIONS
Each Fund ordinarily declares dividends from its net investment income
on each day that the Fund is open for business. Dividends usually are
payable within five business days after the end of each month. Each Fund's
earnings for non-business days are declared as dividends to the
shareholders of record on the preceding business day.
If an investor redeems all shares in its account at any time during
the month, all dividends declared to the day prior to redemption are paid
to the investor within five business days after the end of the month by
crediting its bank account or, if this is not possible, in cash.
Distributions of realized securities gains, if any, are declared and paid
at least annually.
Each Fund seeks to maintain a net asset value of $1.00 per share for
purposes of purchases and redemptions. To effectuate this policy, under
certain circumstances the Board of Trustees may consider the advisability
of temporarily reducing or suspending declaration of daily dividends, or
the advisability of making a capital gains or other distributions. See
"Determination of Net Asset Value."
TAXES
Each Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute their taxable net investment
income and net realized capital gains, if any. Net investment income and
net realized capital gains, if any, will be distributed to investors of a
Fund that actually realized the income or gain. Distributions of net
investment income and capital gains are taxable to those investors who are
not exempt from federal income taxes. It is expected that each Fund will
distribute any net realized short-term gains (unless negligible in amount)
at least annually. Neither Fund expects to realize any long-term capital
gains. Each Fund will be treated separately for federal tax-purposes.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be
treated as ordinary income under Section 1276 of the Code.
The Prime Money Market Fund has an unused capital loss carryover of
approximately $103,100 available for federal income tax purposes to be
applied against future profits from sales of securities, if any, realized
subsequent to September 30, 1994. If not applied, $46,700 expire on
September 30, 1999 and $56,400 expires on September 30, 2000.
For federal income tax purposes, an exchange of shares is a taxable
event and, accordingly, a capital gain or loss may be used. Please consult
a tax or other financial advisor to determine the tax consequences of a
particular exchange.
Dividends derived from net investment income, together with
distributions from the excess, if any, of net realized short-term gains
over net realized long-term losses and gains from the sale or other
disposition of certain market discount bonds paid by each Fund to a foreign
investor generally are subject to U.S. nonresident withholding taxes at the
rate of 30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from the excess, if any, of net
realized long-term securities gains over net realized short-term securities
losses paid by each Fund to a foreign investor will not be subject to any
U.S. withholding taxes. However, such distributions may be subject to
backup withholding, as described in the Prospectuses, unless the foreign
investor certifies his non-U.S. residency status. Different tax
consequences may apply to foreign investors engaged in a U.S. trade or
business. Foreign investors should consult their tax advisors regarding
the U.S. and foreign tax consequences of investing in the Funds.
YIELD CALCULATIONS
The "yields" and "effective yields" of each Fund described in the
Prospectuses are calculated according to formulas prescribed by the SEC.
The standardized seven-day yields for the respective classes of shares of a
Fund are computed separately for each class by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account in the Fund having a balance of one share at the beginning of the
period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period
return, and multiplying the base period return by (365/7). The net change
in the value of an account in each Fund includes the value of additional
shares purchased with dividends from the original share, and dividends
declared on both the original share and any such additional shares, and all
fees, other than non-recurring account or sales charges, that are charged
to all shareholder accounts in proportion to the length of the base period
and the Fund's average account size. The capital changes to be excluded
from the calculation of the net change in account value are realized gains
and losses from the sale of securities and used appreciation and
depreciation. The effective annualized yields for a Fund are also computed
separately for each class by compounding the unannualized base period
return (calculated as above) by adding 1 to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result. The fees which may be imposed by Banks for cash management
services in connection with investments in shares of the Funds are not
reflected in the Funds' yields, and any such fees, if charged, will reduce
the actual return received by Customers for their investments. For the
periods indicated below, each of the Funds offered only one class of shares
to institutional investors. See "Management of the Funds" in the
Prospectuses. For the seven-day period ended March 31, 1995, the Prime
Money Market Fund's yield was 5.87% and its effective yield was 6.04%. For
the seven-day period ended March 31, 1995, the Treasury Money Market Fund's
yield was 5.68% and its effective yield was 5.84%. During this seven-day
period, the Investment Advisor and Service Organizations waived portions of
their fees amounting to 0.28% of the average daily net assets of the Prime
Money Market Fund and 0.26% of the average net assets of the Treasury Money
Market Fund. Had expenses not been waived, the yield and effective yield
for the same period would have been 5.60% and 5.76%, respectively, for the
Prime Money Market Fund and 5.43% and 5.58%, respectively, for the Treasury
Money Market Fund.
Yield information may be useful in reviewing the Funds' performance
and for providing a basis for comparison with other investment
alternatives. However, yields fluctuate, unlike investments which pay a
fixed yield for a stated period of time. Yields for the Funds are
calculated on the same basis as other money market funds as required by
applicable regulations. Investors should give consideration to the quality
and maturity of the portfolio securities of the respective investment
companies when comparing investment alternatives.
Investors should recognize that in periods of declining interest
rates, the Funds' yields will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the Funds' yields
will tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to the Funds from the continuous sale of their
shares will likely be invested in instruments producing lower yields than
the balance of the Funds, thereby reducing the current yields of the Funds.
In periods of rising interest rates, the opposite can be expected to occur.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities ordinarily are purchased directly from
the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid by either Fund for such
purchases. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers include the spread between
the bid and asked price. While FICM generally seeks competitive spreads or
commissions, the Funds may not necessarily be paying the lowest available
spread or commission for the reasons stated below.
The Funds' agreement with FICM provides that, in executing portfolio
transactions and selecting brokers or dealers, FICM will use its best
efforts to seek, on behalf of the Funds, the best overall terms available.
In assessing the best overall terms available for any transaction, FICM is
to consider all factors it deems 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, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis.
In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, FICM may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to either
Fund and/or other accounts over which it or an affiliate exercises
investment discretion. FICM is authorized, subject to the review of the
Board of Trustees, to pay to a broker or dealer which provides such
brokerage and research services a commission for executing a portfolio
transaction for either Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, such commission is determined in good faith to be
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer in accordance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934. Information so
received will supplement but will not replace that which is to be provided
by FICM, and the fees are not reduced as a consequence of the receipt of
such supplemental information. Such information may be useful to FICM in
serving both the Funds and other clients and conversely, supplemental
information obtained by the placement of business of other clients may be
useful to FICM in carrying out its obligations to the Funds.
Investment decisions for each Fund will be made independently from
those of any fiduciary or other accounts that may be managed by FICM.
However, to the extent that the same securities transaction may be deemed
to be equally suitable at the same time for two or more accounts, the
transaction will be allocated in a manner believed to be equitable to each
account. In some cases, this procedure may adversely affect the price paid
or received, or the size of the position obtained for or disposed of, by a
Fund.
The Funds do not purchase any obligations issued by First Interstate
Bancorp or its affiliates. In addition, no portfolio securities are
purchased from, sold to, or executed through First Interstate Bancorp or
its affiliates. However, First Interstate Bancorp or its affiliates engage
in transactions involving bank obligations, commercial paper, repurchase
agreements, and securities of the U.S. Government and of certain U.S.
Government agencies or instrumentalities. Such activities may have some
effect on the market of such securities, and First Interstate Bancorp and
its affiliates may be competing in the market place with the Funds in the
purchase and sale of such securities.
FICM has agreed to maintain a policy and practice of conducting its
investment advisory services to the Trust independently of the commercial
banking operations of any of its affiliates.
DESCRIPTION OF THE FUNDS
Capitalization
The Trust is a Massachusetts business trust established under a
Declaration of Trust dated July 17, 1984 and consists of a series of
separately managed portfolios. Prior to February 9, 1993 the name of the
Trust was Fund Source. This SAI relates only to the Service and
Institutional Shares of two of those portfolios - the Prime Money Market
Fund and the Treasury Money Market Fund.
The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest with a par value of $0.001 each. The
Board of Trustees may establish additional portfolios (with different
investment objectives and fundamental policies) at anytime in the future.
Establishment and offering of additional portfolios will not alter the
rights of the Funds' shareholders. When issued, shares are fully paid,
non-assessable, redeemable and freely transferable. Shares do not have
preemptive rights or subscription rights.
In the event of a liquidation or dissolution of the Trust or an
individual Fund, shareholders of a particular Fund would be entitled to
receive the assets available for distribution belong to such Fund, and a
proportionate distribution, based upon the relative net asset values of the
Trust's respective Funds, of any general assets not belonging to any
particular Fund which are available for distribution. Shareholders of a
Fund are entitled to participate in the net distributable assets of the
particular Fund involved on liquidation, based on the number of shares of
the Fund that are held by each shareholder, except that each class of
shares of a Fund shall each be solely responsible for the Service
Organization fees, distribution payments and other "class" expenses, if
any, that are allocated to the particular share class.
Shareholder and Trustee Liability
The Trust is an entity of the type commonly known as a "Massachusetts
Business Trust." Under Massachusetts law, shareholders of such a trust
may, under certain circumstances, be held personally liable as partners for
the obligations of the trust. However, the Declaration of Trust contains
an express disclaimer of shareholder liability for acts or obligations of
the Trust. The Declaration of Trust also provides for indemnification out
of the property of a Fund of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the
risk of a shareholder incurring financial loss because of status as a
shareholder is limited to circumstances in which a Fund itself would be
unable to meet its obligations.
The Declaration of Trust further provides that the Trustees and
officers will not be liable except for liability to the Trust or its
shareholders to which he would be subject by reason of willful misfeasance,
bad faith, gross negligence in the performance of his duties, or reckless
disregard of the duties involved in the conduct of his office. The Trust
may have an obligation to indemnify its Trustees and officers with respect
to any litigation.
Voting Rights
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares held) and will vote in the election
of Trustees (to the extent hereinafter provided) and on other matters
submitted to the vote of shareholders. Each matter to be voted on by
shareholders shall be voted by all of the Trust's outstanding shares,
irrespective of portfolio, unless a separate vote of one or more portfolios
is required by the 1940 Act or other applicable law or regulations or the
Trustees determine that the particular matter affects only the rights or
interests of one or more portfolios (and not all portfolios). Rule 18f-2
under the 1940 Act provides that any matter required to be submitted to the
holders of the outstanding voting securities of an investment company such
as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
portfolio affected by the matter. A portfolio is affected by a matter
unless it is clear that the interests of each portfolio in the matter are
substantially identical or that the matter does not affect any interest of
the portfolio. Under the Rule, the approval of an investment advisory or
sub-advisory agreement or any change in a fundamental investment policy
would be effectively acted upon with respect to a portfolio only if
approved by a majority of the outstanding shares of such portfolio.
However, the Rule also provides that the ratification of the appointment of
independent public accountants, the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of all portfolios voting together in the aggregate without
regard to particular portfolios. Shareholders of each of the Funds will
vote in the aggregate and not by class unless the matter to be voted on
affects only the interests of the holders of a particular class of a Fund's
shares.
There normally will be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Pursuant to an undertaking, shareholder meetings
will be called upon the written request of the holders of at least 10% of
the outstanding shares entitled to vote. Except as set forth above, the
Trustees shall continue to hold office and may appoint successor Trustees.
Voting rights are not cumulative.
As of June 22, 1995, First Interstate Bank of California and its
affiliated banks held of record substantially all of the outstanding shares
of each Fund as agent, custodian, trustee or investment advisor on behalf
of their customers. At such date the following persons held as beneficial
owner five percent or more of the outstanding shares of a Fund because they
possessed sole or shared voting or investment power with respect to such
shares: Prime Money Market Fund - Retail CIK - Pacific Income Advisers,
Janet Garner, 190 N. Wiget Lane, Walnut Creek, CA 94598-2426 -- 7.70%; SC
UFCW Jr Tr Fds - Benefit Operating, Colleen P. Thompson, P.O. Box 6010,
6425 Katella Ave., Cypress, CA 90630 -- 8.55%; EBMUD Equity - B.H.M. & S.,
Lloyd Sawchuk, 375 11th Street, Oakland, CA 94607 -- 15.54%; Treasury
Money Market Fund - Nevada Pers - Custodial Income Acct, Ann Schleich, 693
West Nye Lane, Carson City, NV 89703 -- 5.34%.
As used in this SAI and the Funds' Prospectuses, a "majority of the
outstanding shares" of the Trust or a Fund or class of stock means, with
respect to the approval of an investment advisory agreement, a distribution
plan or a change in a fundamental investment policy, the lesser of (1) 67%
of the shares of the Trust or Fund or class represented at a meeting at
which the holders of more than 50% of the outstanding shares of the Trust
or Fund or class are present in person or by proxy, or (2) more than 50% of
the outstanding shares of the Trust or Fund or class.
CUSTODIAN, TRANSFER AGENT,
COUNSEL, AND INDEPENDENT AUDITORS
FICAL, 707 Wilshire Boulevard, Los Angeles, California 90017, serves
as custodian for the Funds. As custodian, FICAL has agreed, among other
things, to keep and maintain the assets of each Fund, collect income due
and payable to the Funds, make disbursements of money on the Funds' behalf,
and prepare and maintain books and records relating to its duties. For its
custodial services, FICAL is entitled to a fee, payable monthly, at the
following annual rates based upon the aggregate assets of the Funds: 0.10%
of the first $1 million; 0.05% of the next $4 million; 0.025% of the next
$95 million; 0.015% of the next $100 million; and 0.01% of the balance over
$200 million. In addition, FICAL is entitled to certain transaction
charges and to reimbursement for its out-of-pocket expenses.
Furman Selz, 230 Park Avenue, New York, New York 10169, serves as the
transfer agent for the Funds. As transfer agent, Furman Selz has agreed to
perform such services as maintaining shareholder accounts, preparing annual
meeting lists, mailing proxies, disbursing income dividends, and filing
certain tax forms, and is entitled to reimbursement from the Funds for
certain reasonable out-of-pocket expenses incurred in connection with the
performance of its services. Furman Selz may appoint co-transfer agents
and sub-dividend disbursing agents to assist in the performance of its
services to the Funds, provided that Furman Selz shall be as fully
responsible to the Funds for the acts and omissions of any such agent as it
is for its own acts and omissions.
Drinker Biddle & Reath, 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107, serves as counsel for the Funds.
Ernst & Young LLP, 515 South Flower Street, Los Angeles, California,
have been selected to serve as the Funds' independent auditors for the
current fiscal year. The audited financial statements which appear in this
SAI and the audited financial information for the six-month fiscal period
ended September 30, 1994 which appears in the Funds' Prospectuses under the
heading "Financial History," have been audited by Ernst & Young LLP, the
Funds' current independent auditors. The audited financial statements
which appear in this SAI, and the audited financial information for each of
the five years in the period ended March 31, 1994 for the Funds which
appears in the Funds' Prospectuses under the heading "Financial History,"
have been audited by the Funds' former independent accountants, Price
Waterhouse LLP. The audited financial statements that have been included
herein and included or incorporated by reference in the Funds' Prospectuses
are so included or incorporated in reliance on the reports of Ernst & Young
LLP and Price Waterhouse LLP given upon the authority of such firms as
experts in accounting and auditing.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
The following is a description of the securities ratings of Duff &
Phelps Credit Rating Co. ("D&P"), Fitch Investors Service, Inc. ("Fitch"),
Standard & Poor's Ratings Group, Division of McGraw Hill ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), IBC Limited and IBCA Inc. ("IBCA") and
Thomson BankWatch, Inc. ("Thomson").
Long-Term Corporate Debt Rating
The two highest ratings of D&P for corporate fixed-income securities
are AAA and AA. Securities rated AAA are of the highest credit quality.
The risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt. Securities rated AA are of high
credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. The AA
rating may be modified by an addition of a plus (+) or minus (-) sign to
show relative standing within the major rating category.
The two highest ratings of Fitch for corporate bonds are AAA and AA.
AAA bonds are considered to be investment grade and of the highest credit
quality. The obligor is judged to have an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events. AA bonds 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 issuers is generally rated F-1+. Plus (+) and minus (-)
signs are used with the AA rating symbol to indicate relative standing
within the rating category.
The two highest ratings of S&P for corporate bonds are AAA and AA.
Bonds rated AAA bear the highest rating assigned by S&P to a debt
obligation and the AAA rating indicates in its opinion an extremely strong
capacity to pay interest and repay principal. Bonds rated AA by S&P are
judged by it to have a very strong capacity to pay interest and repay
principal, and they differ from AAA issues only in small degree. The AA
rating may be modified by an addition of a plus (+) or minus (-) sign to
show relative standing within the major rating category.
The two highest ratings of Moody's for corporate bonds are Aaa and Aa.
Bonds rated Aaa are judged to be of the best quality. The rating of Aa is
assigned to bonds which are of "high quality by all standards." Aa bonds
are rated lower than Aaa bonds because margins of protection may not be as
large or fluctuations of protective elements may be of greater amplitude or
there may be other elements which make the long-term risks appear somewhat
larger. Moody's may modify a rating of Aa by adding numerical modifiers of
1, 2 or 3 to show relative standing within the Aa category. Moody's has
advised that the short-term credit risk of a long-term instrument sometimes
carries a MIG rating or one of the commercial paper ratings described
below.
The two highest ratings of IBCA for corporate bonds are AAA and AA.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
Obligations for which there is a very low expectation of investment risk
are rated AA. IBCA may append a rating of plus (+) or minus (-) to a
rating to denote relative status within a major rating category.
The two highest ratings of Thomson for corporate bonds are AAA and AA.
Bonds rated AAA are of the highest credit quality. The ability of the
obligor to repay principal and interest on a timely basis is considered to
be extremely high. Bonds rated AA indicate a very strong ability on the
part of the obligor to repay principal and interest on a timely basis with
limited incremental risk versus issues rated in the highest category.
These ratings may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within the rating categories.
Short-Term Corporate Debt Ratings
The highest rating of D&P for commercial paper is Duff 1. D&P employs
three designations, Duff 1 plus, Duff 1 and Duff 1 minus, within the
highest rating category. Duff 1 plus indicates highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is judged to be outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations. Duff
1 indicates very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors. Risk
factors are considered to be minor. Duff 1 minus indicates high certainty
of timely payment. Liquidity factors are strong and supported by good
fundamental protection factors. Risk factors are very small.
Fitch's short-term ratings apply to corporate debt obligations that
are payable on demand or have original maturities of up to three years.
The highest rating of Fitch for short-term securities encompasses both the
F-1+ and F-1 ratings. F-1+ securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment. F-1 securities possess very strong
credit quality. Issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
S&P's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The A-1 designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus (+)
designation.
Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually promissory obligations not having an original maturity
in excess of nine months. Issuers rated Prime-1 (or related supporting
institutions) in the opinion of Moody's have a superior capacity for
repayment of short-term promissory obligations.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal banking subsidiaries. The designation A1 by
IBCA indicates that the obligation is supported by the highest capacity for
timely repayment. Where issues posses a particularly strong credit
feature, a rating of A1+ is assigned.
Thomson's short-term ratings assess the likelihood of an untimely
payment of principal or interest of debt having a maturity of one year or
less which is issued by banks and other financial institutions. The
designation TBW-1 represents the highest short-term rating category and
indicates a very high degree of likelihood that principal and interest will
be paid on a timely basis.
<TABLE>
<CAPTION>
PACIFICA PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
PRINCIPAL
BANKER'S ACCEPTANCES-5.4% AMOUNT VALUE
________ ________
<S> <C> <C>
Huntington National Bank
5.78%, 11/2/95............. $ 10,000,000 $ 9,999,560
Mellon Bank NA
5.85%, 2/7/96........................................................... 25,000,000 24,991,424
___________
TOTAL BANKER'S ACCEPTANCES (cost $34,990,984).................. $34,990,984
===========
COMMERCIAL PAPER-57.8%
Associates Corp. of North America
5.75%, 10/26/95.................................... $ 30,000,000 $29,881,250
Budget Funding Corp.
5.78%, 10/13/95......................................................... 20,000,000 19,961,867
Ciesco L.P.
6.40%, 10/23/95......................................................... 10,000,000 9,962,294
6.45%, 11/27/95......................................................... 10,000,000 9,902,308
Corestates Capital Corp.
5.77%, 12/20/95......................................................... 15,000,000 14,811,000
Corporate Asset Funding Co. Inc.
5.78%, 10/30/95......................................................... 25,000,000 24,884,201
Deere (John) Capital Corp.
5.77%, 2/2/96........................................................... 25,000,000 24,517,778
Dynamic Funding (Series A)
5.88%, 10/31/95......................................................... 17,547,000 17,462,107
5.88%, 11/30/95......................................................... 7,948,000 7,871,567
Ford Motor Credit Co.
5.77%, 10/3/95.......................................................... 30,000,000 29,990,450
General Electric Capital Corp.
5.76%, 12/4/95.......................................................... 20,000,000 19,798,045
General Electric Capital Services Inc.
5.82%, 1/17/96.......................................................... 15,000,000 14,744,400
Matterhorn Capital Corp.
5.79%, 11/7/95 (a)...................................................... 25,000,000 24,852,257
Penney (J.C.) Funding Corp.
5.76%, 10/6/95.......................................................... 15,000,000 14,988,125
PHH Corp.
5.77%, 10/6/95.......................................................... 25,000,000 24,980,104
Phillip Morris Companies Inc.
5.76%, 10/20/95......................................................... 25,000,000 24,924,660
US Bancorp
5.76%, 11/14/95......................................................... 12,500,000 12,412,611
PACIFICA PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
________ ________
USL Captal Corp.
5.75%, 11/2/95.......................................................... $20,000,000 $19,898,311
5.77%, 11/10/95......................................................... 7,000,000 6,955,433
Weyerhauser Mortgage Co.
5.77%, 10/6/95.......................................................... 20,000,000 19,984,083
_________
TOTAL COMMERCIAL PAPER (cost $372,782,851).................................. $372,782,851
===========
BANK NOTES-3.1%
Comerica Bank, Detroit
6.15%, 6/13/96 (b)
(cost $20,000,000)...................................................... $ 20,000,000 $20,000,000
===========
CORPORATE NOTES-6.2%
Bear Stearns Companies Inc.
5.91%, 10/30/95 (b)..................................................... $20,000,000 $20,000,000
Merrill Lynch & Co. Inc.
6.05%, 5/1/96 (b)....................................................... 20,000,000 20,000,000
_________
TOTAL CORPORATE NOTES (cost $40,000,000).................................... $40,000,000
===========
MASTER DEMAND NOTES-7.8%
Goldman Sachs Group L.P.
5.87%, 10/27/95 (b)..................................................... $25,000,000 $25,000,000
Morgan (J.P.) & Co.
6.50%, 1/3/96 (b)....................................................... 25,000,000 25,000,000
_________
TOTAL MASTER DEMAND NOTES (cost $50,000,000)................................ $50,000,000
===========
REPURCHASE AGREEMENT-19.6%
Salomon Brothers Inc.
6.45%, dated 9/29/95 due 10/2/95 in the amount of
$126,111,511 (fully collateralized by $468,106,000
U.S. Treasury Strips due from 2/15/96 to 8/15/2023,
value $128,570,726)
(cost $126,043,763)........................... $126,043,763 $126,043,763
===========
TOTAL INVESTMENTS (cost $643,817,598)............................... 99.9% $643,817,598
====== ===========
CASH AND RECEIVABLES (NET).......................................... .1% $ 785,790
====== ===========
NET ASSETS ................................................... 100.0% $ 644,603,388
====== ===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS-41.6% PURCHASE AMOUNT VALUE
______ ________ ________
<S> <C> <C> <C>
10/5/95.................................................... 5.18% $ 160,000,000 $ 159,908,089
10/12/95................................................... 5.16 155,000,000 154,756,663
10/19/95................................................... 6.14 20,000,000 19,940,750
11/24/95................................................... 5.47 25,000,000 24,799,563
5/2/96..................................................... 5.75 40,000,000 38,686,278
5/30/96.................................................... 5.74 35,000,000 33,708,325
___________
TOTAL U.S. TREASURY BILLS (cost $431,799,668).................. $431,799,668
============
U.S. TREASURY NOTES-13.1%
3.88%, 10/31/95............................................ 5.32% $30,000,000 $29,959,821
7.88%, 2/15/96............................................. 5.56 65,000,000 65,503,078
8.88%, 2/15/96............................................. 5.56 20,000,000 20,224,607
7.38%, 5/15/96............................................. 5.53 20,000,000 20,190,354
___________
TOTAL U.S. TREASURY NOTES (cost $135,877,860).................. $135,877,860
============
REPURCHASE AGREEMENTS-45.2%
Goldman, Sachs & Co.
dated 9/29/95, due 10/2/95 in the amount of
$134,182,871 (fully collateralized by
$9,872,000 U.S. Treasury Bonds, 9.875%-11.75%,
due from 2/15/2010 to 11/15/2015, value
$13,397,535 and by $122,702,000 U.S. Treasury
Notes, 4.75%-9.875% due from 4/15/96 to
2/15/2003, value $120,714,395)............................. 6.40% $ 134,111,345 $ 134,111,345
HSBC Securities Inc.
dated 9/29/95, due 10/2/95 in the amount of
$160,086,000 (fully collateralized by
$57,104,000 U.S. Treasury Bills, due from
10/12/95 to 9/19/96, value $55,066,635, by
$8,204,000 U.S. Treasury Bonds, 3.5%-15.75%,
due from 11/15/1995 to 8/15/2005, value
$10,697,802, and by $90,799,000 U.S. Treasury Notes
5.5%-8.875%, due from 1/15/2000 to 8/15/2001
value $97,438,386)......................................... 6.45 160,000,000 160,000,000
PACIFICA TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
REPURCHASE AGREEMENTS (CONTINUED) PURCHASE AMOUNT VALUE
_________ ________ ________
J.P. Morgan Securities
dated 9/29/95, due 10/2/95 in the amount of
$175,093,333 (fully collateralized by
$169,692,000 U.S. Treasury Notes, 6.125%-8.5%,
due from 6/30/99 to 11/15/2000, value
$178,504,456).............................................. 6.40% $175,000,000 $175,000,000
___________
TOTAL REPURCHASE AGREEMENTS (cost $469,111,345)................ $469,111,345
============
TOTAL INVESTMENTS (cost $1,036,788,873)............ 99.9% $1,036,788,873
======= ============
CASH AND RECEIVABLES (NET)......................... .1% $ 1,361,193
======= ============
NET ASSETS......................................... 100.0% $1,038,150,066
======= ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Backed by irrevocable letter of credit.
(b) Variable interest rate subject to periodic change.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
PACIFICA PRIME PACIFICA TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
________ _________
<S> <C> <C>
ASSETS:
Investments in securities, at value
(including repurchase agreements of $126,043,763 and $469,111,345
for the Prime Money Market Fund and Treasury Money Market Fund,
respectively)-Note 2(a,b)....................................... $643,817,598 $1,036,788,873
Cash.............................................................. 2,930,853 4,344,679
Interest receivable............................................... 846,534 2,101,731
Prepaid expenses.................................................. 58,688 154,046
_____________- _____________-
647,653,673 1,043,389,329
_____________- _____________-
LIABILITIES:
Due to First Interstate Capital Management, Inc................... $ 154,346 $ 276,255
Due to The Dreyfus Corporation.................................... 50,203 85,539
Dividends payable................................................. 2,745,983 4,552,495
Accrued expenses.................................................. 99,753 324,974
_____________- _____________-
3,050,285 5,239,263
_____________- _____________-
NET ASSETS ............................................... $644,603,388 $1,038,150,066
============= ==============
REPRESENTED BY:
Paid-in capital................................................... $644,706,476 $1,038,150,066
Accumulated undistributed net realized (loss) on investments...... (103,088) _-
_____________- _____________-
NET ASSETS, at value.................................................. $644,603,388 $1,038,150,066
============= ==============
Shares of Beneficial Interest outstanding-Note 4:
Service Shares
(unlimited number of $.001 par value shares authorized)......... 614,100,571 1,001,707,107
============= ==============
Institutional Shares
(unlimited number of $.001 par value shares authorized)......... 30,605,905 36,442,959
============= ==============
NET ASSET VALUE per share:
Prime Money Market Fund:
Service shares ($613,997,483 / 614,100,571 shares).............. $1.00
======
Institutional shares ($30,605,905 / 30,605,905 shares).......... $1.00
======
Treasury Money Market Fund:
Service shares ($1,001,707,107 / 1,001,707,107 shares).......... $1.00
======
Institutional shares ($36,442,959 / 36,442,959 shares).......... $1.00
======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
PACIFICA PRIME PACIFICA TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
____________ ______________
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $33,982,412 $52,925,189
__________ __________
EXPENSES-NOTE 2(C):
Investment advisory and management fee-Note 3(a)...................... $1,694,406 $2,545,887
Shareholder servicing costs-Note 3(b)................................. 1,444,406 2,304,715
Administration fee-Note 3(a).......................................... 577,763 921,886
Custodian fees-Note 3(c).............................................. 67,459 108,325
Professional fees..................................................... 56,616 86,005
Prospectus and shareholders' reports.................................. 12,510 13,536
Trustees' fees and expenses-Note 3(d)................................. 9,492 8,612
Registration fees..................................................... 8,956 55,297
Miscellaneous......................................................... 28,517 81,882
__________ __________
3,900,125 6,126,145
Less-reduction in investment advisory and management
fee and shareholder servicing costs due to
undertakings-Note 3(a,b).......................................... 1,545,737 2,228,713
__________ __________
TOTAL EXPENSES.................................................. 2,354,388 3,897,432
__________ __________
INVESTMENT INCOME-NET, representing net increase in net
assets resulting from operations........................................ $31,628,024 $49,027,757
=========== ===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF CHANGES IN NET ASSETS
PACIFICA PRIME MONEY MARKET FUND PACIFICA TREASURY MONEY MARKET FUND
_____________________________________________ ____________________________________________
YEAR ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1994* 1995 1994 1994* 1995
_______ _____________ ________ _______ _________ _______
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income-net... $18,196,599 $10,119,420 $ 31,628,024 $19,111,559 $12,935,211 $ 49,027,757
Net realized gain
on investments.. 9,560 - - - - _
_______ _____________ ________ _______ _________ _______
Net Increase In Net Assets
Resulting From Operation 18,206,159 10,119,420 31,628,024 19,111,559 12,935,211 49,027,757
_______ _____________ ________ _______ _________ _______
DIVIDENDS TO
SHAREHOLDERS FROM:
Investment income-net:
Service shares...... (18,196,599) (10,119,420) (31,328,215) (19,111,559) (12,935,211) (48,762,724)
Institutional shares... _ _ (299,809) _ - (265,033)
Net realized gain
on investments:
Service shares............ _ _ _ (30,993) _ -
Institutional shares...... _ _ - - - -
_______ _____________ ________ _______ _________ _______
TOTAL DIVIDENDS....... (18,196,599) (10,119,420) (31,628,024) (19,142,552) (12,935,211) (49,027,757)
_______ _____________ ________ _______ _________ _______
CAPITAL SHARE TRANSACTIONS
(NET)-Note 4....... 59,110,337 37,705,886 79,298,223 40,743,629 35,680,545 347,519,721
_______ _____________ ________ _______ _________ _______
TOTAL INCREASE IN
NET ASSETS.... 59,119,897 37,705,886 79,298,223 40,712,636 35,680,545 347,519,721
NET ASSETS:
Beginning of period.... 468,479,382 527,599,279 565,305,165 614,237,164 654,949,800 690,630,345
_______ _____________ ________ _______ _________ _______
End of period........... $527,599,279 $565,305,165 $ 644,603,388 $654,949,800 $690,630,345 $1,038,150,066
============ ============ =========== ============ ============ ==============
*The Funds changed their fiscal year ends from March 31 to September 30.
</TABLE>
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1-GENERAL:
Pacifica Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940 (the "Act") as an open-end management investment company
and operates as a series company offering multiple investment portfolios,
including Pacifica Prime Money Market Fund and Pacifica Treasury Money Market
Fund (the "Funds"). The Trust accounts separately for the assets, liabilities
and operations of each investment portfolio. First Interstate Capital
Management, Inc. ("FICM" or "Advisor"), an indirect wholly-owned subsidiary
of First Interstate Bancorp, serves as the Funds' Investment Adviser. The
Dreyfus Corporation ("Dreyfus") serves as the Funds' Administrator. Dreyfus
is a direct subsidiary of Mellon Bank, N.A. First Interstate Bank of
California ("FICAL"), a wholly-owned banking subsidiary of First Interstate
Bancorp, serves as the Funds' Custodian. Furman Selz Incorporated ("Furman
Selz") serves as the Funds' Transfer Agent and Dividend Disbursing Agent.
Premier Mutual Fund Services, Inc., until September 30, 1995, acted as the
distributor of the Funds' shares, which are sold to the public without a
sales charge. Effective October 1, 1995 Pacifica Funds Distributor Inc. (the
"Distributor") was engaged as the Funds' distributor.
The Funds were formerly separate investment portfolios of Pacific
American Fund. Effective October 1, 1994, Pacific American Fund was
reorganized into Pacifica Funds Trust. In connection therewith, the Funds
have changed their fiscal year ends from March 31 to September 30.
In July 1995, Pacific American Money Market Portfolio and Pacific
American U.S. Treasury Portfolio were renamed Pacifica Prime Money Market
Fund and Pacifica Treasury Money Market Fund, respectively.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that it will be able to do so.
On May 12, 1995, the Funds' Board of Trustees approved the issuance of
multiple classes of shares of each Fund. Effective August 11, 1995, existing
shares of the Funds were classified as Service shares and the Funds began
offering both Service and Institutional shares to investors. Effective
October 1, 1995 the Funds began offering Investor shares to investors.
Effective October 1, 1995, the Pacifica Prime Money Market Fund acquired
all of the assets and assumed all of the liabilities of the Westcore Cash
Reserve Fund and the Westcore Money Market "A" Fund. In addition, effective
October 1, 1995, the Pacifica Treasury Money Market Fund acquired all of the
assets and all of the liabilities of the Westcore Treasury Money Market Fund
and the Westcore Government Money Market Fund. These acquisitions were
accomplished in separate tax-free exchanges for shares of the respective
Fund.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Funds' Board of Trustees to represent the fair
value of the Funds' investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
The Funds may enter into repurchase agreements with financial
institutions deemed to be creditworthy by the Funds' Adviser, subject to the
seller's agreement to repurchase and the Funds' agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Funds' custodian and
sub-custodians and, pursuant to the terms of the repurchase agreement, must
have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the value of the
underlying securities falls below the
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
value of the repurchase price plus accrued interest, the Funds will require
the seller to deposit additional
collateral by the next business day. If the request for additional collateral
is not met, or the seller defaults on its repurchase obligation, the Funds
maintain the right to sell the underlying securities at market value and may
claim any resulting loss against the seller.
The Prime Money Market Fund may lend its securities to broker-dealers and
other institutional investors. The Fund's policy is to receive collateral on
each loan equal at all times to the market value of the securities loaned
plus accrued interest. The Fund may bear the risk of delay in receiving
additional collateral or in recovering the securities loaned or even a loss
of rights in the collateral should the borrower of the securities fail
financially. The Fund receives compensation for lending its securities in the
form of fees or it retains a portion of interest on the investment of any
cash received as collateral. The Fund also continues to receive interest on
the securities loaned, and any gain or loss in the market price of the
securities loaned that may occur during the term of the loan will be for the
account of the Fund.
(C) EXPENSES: Expenses directly attributable to each Fund are charged to
that Fund's operations; expenses which are applicable to more than one
investment portfolio of the Trust are allocated between them, based on net
assets.
(D) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Trust, with
respect to both Funds, to declare dividends from investment income-net on
each business day; such dividends are paid monthly. Dividends from net
realized gain, if any, with respect to both Funds, are normally declared and
paid annually, but each Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code.
However, to the extent that a net realized gain of either Fund can be reduced
by a capital loss carryover of that Fund, such gain will not be distributed.
(E) FEDERAL INCOME TAXES: It is the policy of each Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
The Pacifica Prime Money Market Fund has an unused capital loss carryover
of approximately $103,100 available for Federal income tax purposes to be
applied against future profits from sales of securities, if any, realized
subsequent to September 30, 1995. If not applied, $46,700 expires on
September 30, 1999 and $56,400 expires on September 30, 2000.
At September 30, 1995, the cost of investments of each Fund for Federal
income tax purposes was substantially the same as the cost for financial
reporting purposes (see the Statement of Investments).
NOTE 3-INVESTMENT ADVISORY AND MANAGEMENT FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Effective October 1, 1994, fees payable by the Funds pursuant to the
provisions of a new Investment Advisory and Management Agreement with FICM
are payable monthly, at an annual rate of .30 of 1% of the first $500 million
of each Fund's average daily net assets, .25 of 1% of the next $500 million
of each Fund's net assets, and .20 of 1% of each Fund's net assets in excess
of $1 billion. Fees payable by the Funds pursuant to the provisions of an
Administration Agreement with Dreyfus are payable monthly based on an annual
rate of .10 of 1% of the average daily value of each Fund's net assets. The
Investment Advisory and Management Agreement and the Administration Agreement
further provide that FICM and Dreyfus will make certain reimbursements to
the Funds if, in any fiscal year, the
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
aggregate expenses of each Fund (as determined in accordance with the
Agreements and applicable state securities regulations)
exceed the expense limitations of any state having jurisdiction over the
Funds. California "blue sky" regulations, the most stringent state expense
limitation applicable to the Funds, presently require reimbursement of
expenses in any fiscal year that such expenses exceed 2 1/2% of the first $30
million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of either Funds' net assets.
For the year ended September 30, 1995, FICM voluntarily agreed to waive
receipt of the advisory and management fees payable to it by the Pacifica
Prime Money Market Fund in excess of .12 of 1% of the average daily value of
the Fund's net assets. From October 1, 1994 through August 10, 1995, FICM
voluntarily agreed to waive receipt of the advisory and management fees
payable to it by the Pacifica Treasury Money Market Fund in excess of .13 of
1% of the average daily value of the Fund's net assets and thereafter has
undertaken through September 30, 1995 to waive receipt of the advisory and
management fee in excess of .12 of 1% of the average daily value of the
Fund's net assets. The advisory and management fees paid by each Fund to FICM
for the year ended September 30, 1995 amounted to $693,315 for the Pacifica
Prime Money Market Fund and $1,160,424 for the Pacifica Treasury Money Market
Fund after total reductions in the advisory and management fee of $1,001,091
and $1,385,463 for each Fund, respectively.
(B) The Trust has entered into service agreements with certain
institutions ("service organizations") that may be affiliated with FICM. The
service organizations render shareholder accounting and support services to
their customers who are the beneficial owners of shares of the Trust. The
Funds pay the service organizations fees at an annual rate of up to .25 of 1%
of the average daily net asset value of the Service and Institutional shares
held by the service organizations for the benefit of their customers.
Agreements between the Funds and service organizations are terminable at any
time by the Funds without penalty. From October 1, 1994 through August 10,
1995, the service organizations voluntarily agreed to reduce the fees payable
to them by each Fund by .10 of 1% of the average daily value of the
respective Fund's net assets. From August 11, 1995 through September 30,
1995, the service organizations voluntarily agreed to reduce the fees payable
to them by the Pacifica Prime Money Market and Pacifica Treasury Money Market
Funds by .05 of 1% and .04 of 1% of the average daily value of the respective
Fund's net assets for the Service shares. Additionally, From August 11, 1995
through September 30, 1995, there were no fees charged by service organization
s on Institutional shares. For the year ended September 30, 1995, the
Pacifica Prime Money Market Fund and Pacifica Treasury Money Market Fund made
payments to service organizations, totalling $899,761 and $1,461,465 (which
include payments to affiliates of $894,783 and $1,461,465), respectively, net
of amounts voluntarily waived, which were $544,645 and $843,250,
respectively.
(C) During the year ended September 30, 1995, FICAL, a wholly-owned
banking subsidiary of First Interstate Bancorp, served as the Custodian and
Transfer Agent of the Funds. For such period, custodian fees amounted to
$67,459 and $108,325 for the Pacifica Prime Money Market Fund and Pacifica
Treasury Money Market Fund, respectively. No fees were paid to FICAL as
Transfer Agent, although it did receive payments as a service organization as
described in Note 3(b) above. Effective October 1, 1995, Furman Selz became
the Fund's Transfer Agent.
(D) For the year ended September 30, 1995, each trustee received from the
Trust $5,000 per annum plus $1,000 per regular meeting attended, $500 per
committee meeting attended, and reimbursement for travel and out-of-pocket
expenses.
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4-SHARES OF BENEFICIAL INTEREST:
At September 30, 1995, there were an unlimited number of Service and
Institutional shares of Beneficial Interest authorized for each portfolio.
Transactions in the Fund's Service and Institutional shares of each
portfolio were all at $1.00 per share and are summarized as follows (000's
omitted):
<TABLE>
<CAPTION>
PACIFICA PRIME MONEY MARKET FUND PACIFICA TREASURY MONEY MARKET FUND
____________________________________________ ___________________________________________
YEAR ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1994* 1995 1994 1994* 1995
_______ _________ _______ _________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Service shares........... $9,426,994 $3,580,239 $8,252,511 $9,765,954 $5,705,462 $20,388,948
Institutional shares..... __ __ 104,661 __ __ 120,817
Shares redeemed:
Service shares........... (9,367,884) (3,542,533) (8,203,819) (9,725,210) (5,669,781) (20,077,871)
Institutional shares..... __ __ (74,055) __ __ (84,374)
_______ _________ _______ _________ ________ ________
Net increase............... $59,110 $ 37,706 $79,298 $40,744 $35,681 $ 347,520
========= ========= ========= ======== ========= ============
*The Funds changed their fiscal year ends from March 31 to September 30.
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS:
Reference is made to page __ of the Fund's Prospectus dated December 15, 1995.
PACIFICA FUNDS TRUST
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PACIFICA FUNDS TRUST
We have audited the accompanying statement of assets and liabilities,
including the statements of investments, of Pacifica Prime Money Market Fund
and Pacifica Treasury Money Market Fund (two of the portfolios comprising
Pacifica Funds Trust), as of September 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
and financial highlights for the year ended September 30, 1995 and the six
months ended September 30, 1994. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statement of changes in net
assets for the year ended March 31, 1994 and the financial highlights for
each of the four years in the period ended March 31, 1994 were audited by
other auditors whose report dated May 4, 1994 expressed an unqualified
opinion on that statement and those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included verification by
examination of securities held by the Custodian as of September 30, 1995, and
confirmation of securities not held by the Custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above and audited by us present fairly, in all material respects,
the financial position of Pacifica Prime Money Market Fund and Pacifica
Treasury Money Market Fund, at September 30, 1995, and the results of their
operations for the year then ended and the changes in their net assets and
the financial highlights for the year then ended and for the six months ended
September 30, 1994, in conformity with generally accepted accounting
principles.
[Ernst & Young signature logo]
New York, New York
November 15, 1995
PACIFICA PRIME MONEY MARKET FUND
PACIFICA TREASURY MONEY MARKET FUND
PART B
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 25, 1995
(AS REVISED DECEMBER 15, 1995)
FOR INVESTOR SHARES
This Statement of Additional Information (the "SAI"), which is not a
prospectus, supplements and should be read in conjunction with the current
Prospectus for the Investor Shares of the Pacifica Prime Money Market Fund
and Pacifica Treasury Money Market Fund (collectively, the "Funds") of
Pacifica Funds Trust (the "Trust") dated August 25, 1995 (as it may be
revised from time to time). To obtain a copy of the Funds' Prospectus,
please write to the Funds at 237 Park Avenue, New York, New York 10017, or
call 1-800-662-8417.
First Interstate Capital Management, Inc. ("FICM" or the "Advisor")
serves as the Funds' investment advisor.
The Dreyfus Corporation (the "Administrator") serves as the Funds'
administrator.
Pacifica Funds Distributor Inc. ("PFD Inc." or the "Distributor") is
the distributor of the Funds' Investor Shares.
Furman Selz Incorporated ("Furman Selz") is the transfer and dividend
disbursing agent for the Funds' Investor Shares.
First Interstate Bank of California ("FICAL") is the Funds' custodian.
TABLE OF CONTENTS
Page
Investment Objectives and Management Policies . . . . . . . . . B-2
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . B-8
Management of the Funds . . . . . . . . . . . . . . . . . . . . B-10
Purchase of Investor Shares . . . . . . . . . . . . . . . . . . B-16
Redemption of Investor Shares . . . . . . . . . . . . . . . . . B-16
Determination of Net Asset Value. . . . . . . . . . . . . . . . B-17
Dividends and Distributions . . . . . . . . . . . . . . . . . . B-19
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-19
Yield Calculations. . . . . . . . . . . . . . . . . . . . . . . B-20
Portfolio Transactions. . . . . . . . . . . . . . . . . . . . . B-21
Description of the Funds. . . . . . . . . . . . . . . . . . . . B-22
Custodian, Transfer Agent,
Counsel, and Independent Auditors. . . . . . . . . . . . . B-25
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Financial Statements. . . . . . . . . . . . . . . . . . . . . . B-29
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
General
The assets of each of the Funds consist only of obligations maturing
within thirteen months from the date of acquisition (as determined in
accordance with the regulations of the Securities and Exchange Commission
(the "SEC")), and the dollar-weighted average maturity of each Fund may not
exceed 90 days.
The securities in which each Fund may invest will not yield as high a
level of current income as may be achieved from securities with less
liquidity and less safety. There can be no assurance that each Fund's
investment objective will be realized as described in the Funds'
Prospectus.
Subsequent to its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Board of Trustees or the Advisor, pursuant to
guidelines established by the Board, will consider such an event in
determining whether the Fund involved should continue to hold the security
in accordance with the interests of the Fund and applicable regulations of
the SEC.
Subject to the general supervision and approval of the Board of
Trustees, the Advisor makes decisions with respect to and places orders for
all purchases and sales of securities for the Funds. Securities are
generally purchased and sold either directly from the issuer or from
dealers who specialize in money market instruments. Such purchases are
usually effected as principal transactions and therefore do not involve the
payment of brokerage commissions.
The Funds may from time to time purchase securities issued by their
regular dealers. At September 30, 1994, the Funds held securities issued
by Goldman Sachs & Co., J.P. Morgan Securities, Inc., Salomon Brothers
Inc., and HSBC Securities Inc., valued at $20,000,000, $144,655,355,
$61,436,033 and $165,000,000, respectively.
Portfolio Securities
A description of the securities in which each of the Funds may invest
is set forth in their Prospectus, to which reference is hereby made.
Additional information about these instruments follows.
The Prime Money Market Fund may lend its securities to brokers,
dealers and financial institutions, provided (1) the loan is secured
continuously by collateral consisting of cash, U.S. Treasury securities, or
other U.S. Government securities or a letter of credit which is marked to
market daily to ensure that each loan is fully collateralized at all times;
(2) the Fund may at any time call the loan and obtain the return of the
securities loaned within five business days; (3) the Fund will receive any
interest or dividends paid on the securities loaned; and (4) the aggregate
market value of securities loaned will not at any time exceed one-third of
the total assets of the Fund. The Fund may earn income in connection with
securities loans either through the reinvestment of the cash collateral or
the payment of fees by the borrower. The Treasury Money Market Fund does
not currently intend to lend its portfolio securities.
Each Fund may engage in a repurchase agreement with respect to any
security in which that Fund is authorized to invest, including U.S.
Treasury STRIPS, although the underlying security may mature in more than
thirteen months. Repurchase agreements are transactions by which a Fund
purchases a security and simultaneously commits to resell that security to
the seller at an agreed upon price, on an agreed upon date within a number
of days (usually not more than seven, but in no event more than 365) from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon market rate of interest which is unrelated to the coupon rate
or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is
in effect secured by the value of the underlying security, which shall be
at least equal to the amount of the agreed upon resale price plus the
transaction costs (including loss of interest) that the Fund could
reasonably expect to incur if the seller defaults. Securities subject to
repurchase agreements will be physically held by the Funds' custodian (or
sub-custodian) or registered in the name of the Funds or their custodian
(or sub-custodian) in a book-entry system, in the case of a security
registered on a book-entry system. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delay and costs to a Fund in connection with insolvency
proceedings), it is the policy of each Fund to limit repurchase agreements
to selected securities dealers or domestic banks or other recognized
financial institutions. Repurchase agreements are considered to be loans
by a Fund under the Investment Company Act of 1940 (the "1940 Act").
The Funds may acquire variable and floating rate instruments as
described in the Prospectus. Variable and floating rate instruments are
frequently not rated by credit rating agencies; however, unrated variable
and floating rate instruments purchased by a Fund will be determined by the
Advisor under guidelines established by the Board of Trustees to be of
comparable quality at the time of purchase to rated instruments eligible
for purchase by the Funds. In making such determinations, the Advisor will
consider the earning power, cash flows and other liquidity ratios of the
issuers of such instruments (such issuers include financial, merchandising,
investment banking, bank holding and other companies) and will continuously
monitor their financial condition. There may not be an active secondary
market with respect to a particular variable or floating rate instrument
purchased by a Fund. The absence of such an active secondary market could
make it difficult for a Fund to dispose of the variable or floating rate
instrument involved. In the event the issuer of the instrument defaulted
on its payment obligations, a Fund could, for this or other reasons, suffer
a loss to the extent of the default. Variable and floating rate
instruments may be secured by bank letters of credit, guarantees or lending
commitments.
The Funds may purchase securities on a "when-issued," forward
commitment or delayed settlement basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). When a Fund agrees to
purchase securities on this basis, the Fund's custodian will set aside cash
or liquid portfolio securities equal to the amount of the commitment in a
separate account. Normally the custodian will set aside portfolio
securities to satisfy a purchase commitment, and in such case a Fund may be
required subsequently to place additional assets in the separate account so
that the value of the account remains equal to the amount of the Fund's
commitment. A Fund's net assets may be expected to fluctuate to a greater
degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. The Funds do not intend to
engage in these transactions for speculative purposes but only in
furtherance of their investment objectives. Because a Fund will set aside
cash or liquid investments to satisfy its purchase commitments in the
manner described above, the Fund's liquidity may be affected in the event
the Fund's forward commitments, commitments to purchase "when-issued"
securities and delayed settlements ever exceeded 25% of the value of its
assets.
A Fund will purchase securities on a "when-issued," forward commitment
or delayed settlement basis only with the intention of completing the
transaction. If deemed advisable as a matter of investment strategy,
however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before
those securities are delivered to the Fund on the settlement date. In this
case the Fund may realize a taxable capital gain or loss. When a Fund
engages in "when-issued," forward commitment and delayed settlement
transactions, it relies on the other party to consummate the trade.
Failure of such party to do so may result in the Fund's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a "when-issued" purchase, a
forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of a Fund starting on the day the Fund agrees
to purchase the securities. A Fund does not earn interest on the
securities it has committed to purchase until they are paid for and
delivered on the settlement date.
Each Fund currently intends to limit its investments in securities
issued by other investment companies so that, as determined immediately
after a purchase of such securities is made: (i) not more than 5% of the
value of the Fund's total assets will be invested in the securities of any
one investment company; (ii) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting
securities of any one investment company will be owned by a Fund or by the
Trust as a whole.
It is possible that unregistered securities purchased by the Prime
Money Market Fund in reliance upon Rule 144A under the Securities Act of
1933, could have the effect of increasing the level of the Fund's
illiquidity to the extent that qualified institutional buyers become, for a
period, uninterested in purchasing these securities.
Investment Restrictions
The Prospectus summarizes certain fundamental investment restrictions
that have been adopted for the Funds. All of the Funds' restrictions are
stated in full herein and cannot be changed with respect to a Fund without
approval by the holders of a majority, as defined in the 1940 Act, of the
Fund's outstanding voting shares.
The Prime Money Market Fund may not:
1. Purchase common stocks, preferred stocks, warrants or other
equity securities, except for securities of other investment companies.
2. Borrow money or issue senior securities, except that the Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
purposes in amounts up to one-third of the value of its total assets at the
time of such borrowing. The Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
3. Mortgage, pledge, or hypothecate any assets, except in connection
with any such borrowing and in amounts not in excess of one-third of the
value of the Fund's total assets at the time of its borrowing. Securities
held in escrow or separate accounts in connection with the Fund's
investment practices are not deemed to be pledged for purposes of this
investment restriction.
4. Sell securities short or purchase securities on margin, except
for delayed delivery or when-issued transactions or such short-term credits
as are necessary for the clearance of transactions.
5. Write put or call options.
6. Underwrite the securities of other issuers, except as the Fund
may be deemed to be an underwriter in connection with the purchase or sale
of portfolio instruments in accordance with its investment objective and
portfolio management policies.
7. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas interests,
but this restriction shall not prevent the Fund from investing directly or
indirectly in instruments secured by real estate or interest therein.
8. Make loans to others, except through the purchase of debt
obligations of the type which the Fund is permitted to purchase, loans of
portfolio securities and entry into repurchase agreements referred to in
the Prospectus and herein.
9. Invest in companies for the purpose of exercising control.
10. Invest in securities of other investment companies, except as
they may be acquired as part of a merger, consolidation, acquisition of
assets or where otherwise permitted by the 1940 Act.
11. Lend its portfolio securities in excess of one- third of the
value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Trust's Board of
Trustees, including maintenance of collateral of the borrower equal at all
times to at least the current market value of the securities loaned.
12. Purchase the securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
if immediately after such purchase more than 5% of the value of the Fund's total
assets would be invested in such issuer, except that (a) up to 25% of the value
of its total assets may be invested in any securities without regard to this 5%
limitation; and (b) such 5% limitation shall not apply to repurchase agreements
collateralized by obligations of the U.S. Government, its agencies or
instrumentalities.
As a matter of nonfundamental policy and in accordance with the
current regulations of the SEC, the Prime Money Market Fund intends to
limit its investments in the obligations of any one issuer to not more than
5% of the Fund's total assets at the time of purchase provided, however,
that the Fund may invest up to 25% of its assets in the obligations of any
one issuer for a period of up to three business days.
13. Purchase any securities which cause 25% or more of the value of
the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to: (a) instruments that are issued or guaranteed by the United
States, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies,
instrumentalities or political subdivisions; (b) instruments issued or
guaranteed by U.S. banks and U.S. branches of foreign banks (provided that,
with respect to U.S. branches of foreign banks, such branches are subject
to the same regulations as domestic branches of U.S. banks and, with
respect to foreign branches of U.S. banks, the domestic parent is
unconditionally liable in the event that the foreign branch fails to pay on
its instruments for any reason); and (c) repurchase agreements secured by
the instruments described in clauses (a) and (b).
The Treasury Money Market Fund may not:
1. Buy common stocks or voting securities (except for securities of
other investment companies) or state, municipal, or industrial revenue
bonds.
2. Borrow money or issue senior securities, except that the Fund may
borrow from banks or enter into reverse, repurchase agreements for
temporary purposes in amounts up to one-third of the value of its total
assets at the time of such borrowing. The Fund will not purchase securities
while its borrowings (including reverse repurchase agreements) in excess of
5% of its total assets are outstanding.
3. Mortgage, pledge, or hypothecate any assets, except in connection
with any such borrowing and in amounts not in excess of one-third of the
value of the Fund's total assets at the time of its borrowing. Securities
held in escrow or separate accounts in connection with the Fund's
investment practices are not deemed to be pledged for purpose of this
investment restriction.
4. Purchase securities on margin, except for delayed delivery or
when-issued transactions or such short-term credits as are necessary for
the clearance of transactions; or make short sales of securities, or
maintain a short position.
5. Write put or call options.
6. Underwrite the securities of other issuers except as the Fund may
be deemed to be an underwriter in connection with the purchase and sale of
portfolio instruments in accordance with its investment objective and
portfolio management polices.
7. Purchase or sell real estate.
8. Purchase or sell commodity contracts, or invest in oil, gas, or
mineral exploration or development programs.
9. Make loans, except that the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies and
may enter into loans of portfolio securities and repurchase agreements
referred to in the Prospectus and herein.
10. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization,
or acquisition of assets or where otherwise permitted by the 1940 Act.
11. Lend its portfolio securities in excess of one-third of the value
of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Trust's Board of
Trustees, including maintenance of collateral of the borrower equal at all
times to at least the current market value of the securities loaned.
12. Purchase the securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Treasury and repurchase agreements secured
by such obligations, if immediately after such purchase more than 5% of the
value of the Fund's total assets would be invested in such issuer, except
that up to 25% of the value of the Fund's total assets may be invested
without regard to such 5% limitation.
13. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or repurchase agreements secured by such
obligations.
The Trust may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states.
Should the Trust determine that such a commitment is no longer in the best
interests of the Fund involved and its shareholders, the Trust reserves the
right to revoke the commitment by terminating the sale of Fund shares in
the state involved.
Pursuant to state securities regulations applicable to the Funds, the
Treasury Money Market Fund has adopted the following non-fundamental
investment limitation: the Fund will not purchase warrants, valued at the
lower of cost or market, in excess of 5% of the value of its net assets
(included within that amount, but not to exceed 2% of the value of the
Fund's net assets, may be warrants that are not listed on the New York or
American Stock Exchanges) except that warrants acquired by the Fund at any
time in units or attached to securities are not subject to this limitation.
Investors should note, however, that neither Fund currently intends to
purchase any warrants whatsoever, or to acquire any put option that may be
sold, transferred or assigned separately from the underlying security.
Whenever an investment policy or limitation states a maximum
percentage of a Fund's assets that may be invested in any security or other
asset or sets forth a policy regarding quality standards, such standard or
percentage limitation shall be determined immediately after and as a result
of a Fund's acquisition of such security or other asset. Accordingly, any
later increase or decrease resulting from a change in values, net assets,
or other circumstances will not be considered when determining whether the
investment complies with each Fund's investment policies and limitations.
For purposes of determining industry classifications of issuers,
wholly-owned fiance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents, and utilities will be classified according to
their services (for example, gas, gas transmission, electric and gas, and
electric and telephone each will be considered a separate industry). In
accordance with the current views of the staff of the SEC and as a matter
of nonfundamental policy that may be changed without a vote of
shareholders, a Fund will treat all supranational organizations as a single
industry and each foreign government (and all of its agencies) as a
separate industry.
TRUSTEES AND OFFICERS
Trustees and Officers
Trustees and officers of the Trust, together with information as to
their principal business occupations during at least the last five years,
are shown below. None of the Trustees are considered to be an "interested
person" of the Trust or of the Advisor, as defined in the 1940 Act.
DENNIS W. DRAPER, Trustee. Dr. Draper, age 45, has been an Associate
Professor of Finance, at University of Southern California since 1978;
Director of Data Analysis, Inc. (financial services); and Editorial
Board Member of Chicago Board of Trade. His address is School of
Business, Hoffman 701-F, University of Southern California, Los
Angeles, California 90089.
JOSEPH N. HANKIN, Trustee. Dr. Hankin, age 54, has been President,
Westchester Community College since 1971; President of Hartford Junior
College from 1967 to 1971; Adjunct Professor of Columbia University
Teachers College since 1976. His address is Westchester Community
College, 75 Grasslands Road, Valhalla, New York 10595.
JOHN E. HEILMANN, Trustee. Mr. Heilmann, age 63, is retired and the former
Chairman, President and Chief Executive Officer of Distillers
Somerset, Inc. and Norwood Enterprises, Inc. from 1987-1992. His
address is Old Norwood Plantation, Route 1, Box II A, Winginia,
Virginia 24599.
JACK D. HENDERSON, ESQ., Trustee. Mr. Henderson, age 67, is a partner of
the law firm of Clanahan, Tanner, Downing & Knowlton, P.C. He is a
Trustee of Westcore Trust (a mutual fund family). His address is 1600
Broadway, Denver, Colorado 80202.
RICHARD A. WEDEMEYER, Trustee. Mr. Wedemeyer, age 59, has been Vice
President of Performance Advantage, Inc., since 1992; Vice President
of Jim Henson Productions from 1979 to 1992; Author of In Transition
(Harper Collins); co-founder and co-conductor of Harvard Business
School Club of New York Career Seminar; Trustee of Jim Henson Legacy
Trust. His address is 17 High Street, Norwalk, Connecticut 06851.
MICHAEL C. PETRYCKI, President. Mr. Petrycki, age 52, has been Executive
Vice President and Director of Furman Selz since 1984. His address is
237 Park Avenue, New York, New York, 10017.
JOHN J. PILEGGI, Vice President and Treasurer. Mr. Pileggi, age 36, has
been Managing Director of Furman Selz, from 1984 to 1992, and Senior
Managing Director, since 1992. His address is 237 Park Avenue, New
York, New York 10017.
MARK J. DUGGAN, Vice President and Secretary. Mr. Duggan, age 30, has been
Assistant Vice President and Counsel of The Boston Company Advisers,
Inc. ("TBCA") since January 1994 and Counsel to TBCA since May 1993.
From September 1990 to May of 1993, he was a corporate associate in
the law firm of Ropes & Gray. His address is 1 Boston Place, Boston,
MA 02108-4402.
ELLEN M. FURLONG, Vice President and Treasurer. Ms. Furlong, age 38, has
been a Vice President of Boston Safe Deposit and Trust Company,
heading the firm's custody administration division since 1991. From
November 1989 to 1991, she was Assistant Vice President of The Boston
Company Advisors, Inc., also in the area of custody administration.
Her address is 1 Cabot Road, Medford, MA 02155-5159.
KEVIN F. MAWE, Assistant Secretary. Since September 1994, Mr. Mawe, age
40, has served as Senior Counsel to Boston Safe Deposit & Trust
Company ("BSD&T"). From 1990 to September 1994 he was Associate
Counsel to Mellon Bank, N.A. His address is 1 Boston Place, Boston,
MA 02108-4402.
STEPHEN P. BROWNE, Assistant Treasurer. Mr. Browne, age 32, has been a
Vice President of Boston Safe Deposit and Trust Company since August
1992. From 1990 to August of 1992, he served as an Assistant Vice
President of The Boston Company Advisers, Inc. His address is 1 Cabot
Road, Medford, MA 02155-5159.
The authority of each of the officers listed above, with the exception
of Messrs. Petrycki and Pileggi, is limited solely to matters related to
the Funds. Such officers have no authority over the affairs of the other
portfolios of the Trust. By virtue of the responsibilities assumed by the
Trust's service contractors, the Trust requires no employees other than its
officers. Further, none of the Trust's officers devotes full time to the
affairs of the Trust. No officer, director, or employee of the Trust's
service contractors, or of any of their parents or subsidiaries, receives
any compensation from the Trust for serving as a Trustee or officer of the
Trust, although such service contractors receive fees for the advisory,
administrative, custodial and other services they provide to the Trust.
Each Trustee receives $5,000 per annum plus $1,000 per regular meeting
attended, $500 per committee meeting attended, and reimbursement for travel
and out-of-pocket expenses.
For the twelve-month period ended September 30, 1994, the Trustees
received the following compensation from the Trust and from certain other
investment companies (as indicated) that have the same investment advisor
as the Trust or an investment advisor that is an affiliated person of the
Trust's investment advisor:
<TABLE>
<CAPTION>
Pension
or Retirement Total
Aggregate Benefits Accrued Estimated Annual Compensation From
Compensation as Part of Benefits Upon Registrant and
Name of Trustee from the Trust Trust Expense Retirement Fund Complex
- --------------- -------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Dennis W. Draper $0 $0 $0 $12,000*
Joseph N. Hankin $10,500 $0 $0 $10,500
John E. Heilmann $10,000 $0 $0 $10,000
Jack D. Henderson $0 $0 $0 $31,500**
Richard A. Wedemeyer $10,500 $0 $0 $10,500
* Includes amounts received for service as a member of the Board of Trustees of
Pacific American Fund.
** Includes amounts received for service as a member of the Boards of Trustees of
Pacific American Fund and Westcore Trust.
</TABLE>
As of the date of this SAI, the Trust's Trustees and officers as a
group own less than 1% of the outstanding shares of each Fund.
MANAGEMENT OF THE FUNDS
Investment Advisory Agreement
First Interstate Capital Management, Inc., previously named First
Interstate Investment Services, Inc., serves as the Funds' investment
advisor pursuant to an Investment Advisory and Management Agreement dated
October 1, 1994 (the "Investment Advisory and Management Agreement"). FICM
is located at 7501 East McCormick Parkway, Scottsdale, Arizona 85258, and
is a wholly-owned subsidiary of First Interstate Bank of California
("FICAL"), which is a wholly-owned subsidiary of First Interstate Bancorp
(a bank holding company with headquarters in Los Angeles, California).
The Investment Advisory and Management Agreement will continue in
force with respect to each Fund until March 17, 1996. Thereafter, its
continuance with respect to a Fund is subject to annual approval by (i) the
Trust's Board of Trustees or (ii) the affirmative vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund,
provided that in either event the continuance is also approved by a
majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of any party to such agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Advisory and Management Agreement is terminable with respect to either Fund
without penalty, by the Board of Trustees, by vote of the holders of a
majority of the Fund's outstanding shares, or by FICM upon not less than
sixty days' written notice. The Investment Advisory and Management
Agreement will terminate automatically in the event of its assignment.
Under the Investment Advisory and Management Agreement, FICM
supervises and assists in the overall management of the Trust. Subject to
the supervision of the Board of Trustees, FICM manages the Funds'
investments in accordance with the stated policies of each Fund. FICM
makes investment decisions for the Funds and places purchase and sale
orders for portfolio transactions. FICM provides the Funds with investment
officers who are authorized by the Board of Trustees to execute purchases
and sales of securities. For this purpose the Trustees have appointed the
following officers or employees of FICM to serve as Assistant Vice
Presidents - Investment and Administration of the Trust: Michael Hughes,
Vice President of FICM; Thomas Hooker, Vice President of FICM; Susan K.
Riechel, Vice President of FICM; Gerald Wagner, Vice President of FICM; and
Michael Neitzke; Vice President of FICM. In addition, FICM's management
responsibilities include, among other things, furnishing economic and
statistical information as requested by the Board of Trustees and
monitoring the Funds' arrangements with Service Organizations.
As compensation for services rendered by FICM to the Funds, FICM is
entitled to a fee, computed daily and paid monthly, at an annual rate of
0.30% of the first $500 million of the average daily net assets of each
Fund (considered separately on a Fund-by-Fund basis), 0.25% of the next
$500 million of each Fund's average daily net assets, and 0.20% of each
Fund's average daily net assets in excess of $1 billion. Prior to October
1, 1994 FICM, served as investment advisor to each of the Funds, and
affiliates of FICM served as sub-investment advisor. For the six-month
fiscal period ended September 30, 1994, FICM voluntarily reduced its
advisory and management fee for each Fund by an annual rate of 0.38% with
respect to the Prime Money Market Fund and 0.37% with respect to the
Treasury Money Market Fund. For the fiscal year ended March 31, 1994, FICM
voluntarily reduced its advisory and management fee for each Fund by an
annual rate of 0.38% with respect to the Prime Money Market Fund and 0.37%
with respect to the Treasury Money Market Fund. For the fiscal year ended
March 31, 1993, FICM voluntarily reduced its advisory and management fee
for each Fund by an annual rate of 0.37%. For the fiscal year ended March
31, 1992, FICM voluntarily reduced its advisory and management fee for each
Fund by an annual rate of 0.37%. The monthly advisory and management fee
was further reduced voluntarily by the amounts the Funds agreed to pay to
Service Organizations. As a result, FICM actually received an advisory and
management fee at an annual rate of 0.12% of the value of the Prime Money
Market Fund's average daily net assets and 0.13% of the value of the
Treasury Money Market Fund's average daily net assets for the six-month
fiscal period ended September 30, 1994, and 0.12% of the value of the Prime
Money Market Fund's average daily net assets and 0.13% of the value of the
Treasury Money Market Fund's average daily net assets for the fiscal year
ended March 31, 1994, and 0.12% of the value of each Fund's average daily
net assets for the fiscal years ended March 31, 1993 and 1992. During the
six-month fiscal period ended September 30, 1994 and the fiscal years ended
March 31, 1994, 1993 and 1992, the advisory fees paid to FICM by the Prime
Money Market Fund were $330,715, $737,811, $640,620 and $674,535,
respectively. During the six-month fiscal period ended September 30, 1994
and the fiscal years ended March 31, 1994, 1993 and 1992, the advisory fees
paid to FICM by the Treasury Money Market Fund were $454,029, $900,919,
$629,121 and $242,930, respectively. All of these fees were, in turn, paid
by FICM to its affiliates which served as sub-investment advisors during
the periods indicated.
Pursuant to state securities regulations applicable to the Fund, FICM
has agreed that if, in any fiscal year, the aggregate expenses of a Fund
(as defined under the securities regulations of any such state having
jurisdiction over the Fund), exceed the expense limitations of any such
state, FICM will reimburse the Fund for such excess expenses to the extent
described in any written undertaking provided by FICM or the Trust to such
state. To the knowledge of the Trust, as of the date of this SAI, the most
restrictive expense limitation limits aggregate annual expenses, including
management and advisory fees but excluding interest, taxes, brokerage
commissions, and certain other expenses, to 2-1/2% of the first $30 million
of each Fund's average net assets, 2% of the next $70 million, and 1-1/2%
of its remaining average net assets.
Expenses incurred in the organization and operation of each Fund,
including taxes, interest, penalties, brokerage and other fees and
commissions, if any, fees and expenses of Trustees, SEC fees and related
expenses, state Blue Sky qualification fees, advisory fees, administration
fees, charges of custodians, costs of transfer and dividend disbursing
agents, certain insurance premiums, outside auditing and legal expenses,
costs of maintenance of trust existence, costs of independent pricing
services, investor services, preparation and printing of prospectuses for
regulatory purposes and for distribution to shareholders, shareholders'
reports and shareholders' meetings, costs of the Funds' arrangements with
Service Organizations and extraordinary expenses, are borne by each Fund.
Certain expenses that are directly incurred by or attributed to a
particular class of shares will be charged solely to shareholders of that
class of shares. Currently, the only expenses that are allocated
differently between the Funds' separate classes of shares are expenses
arising from the Service Agreements entered into by the Trust with certain
institutions.
Banking laws and regulations, including the Glass-Steagall Act as
presently interpreted by the Board of Governors of the Federal Reserve
System, (a) prohibit a bank holding company registered under the Federal
Bank Holding Company Act of 1956 (the "Holding Company Act") or any bank or
non-bank affiliate thereof from sponsoring, organizing, or controlling a
registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but (b) do not prohibit such a bank holding company or
affiliate generally from acting as investment advisor, transfer agent, or
custodian to such an investment company, or from purchasing shares of such
a company as agent for and upon the order of a customer. In some states,
banks or other institutions through which transactions in Fund shares are
effected, may be required to register as dealers pursuant to state law.
FICM, FICAL, and the Service Organizations that are governed by
banking laws and regulations believe that they may perform services for the
Funds without violating the Glass-Steagall Act. There have, however, been
no cases deciding whether a bank and its affiliates may perform services
comparable to those performed by either FICM, FICAL, or the Service
Organizations, and future changes in either federal or state statutes or
regulations relating to the permissible activities of banks or trust
companies or their subsidiaries or affiliates, as well as further judicial
or administrative decisions or interpretations of present and future
statutes and regulations, could prevent FICM, FICAL, or the Service
Organizations from continuing to perform services for the Funds or from
continuing to purchase Fund shares for the accounts of customers. If FICM,
FICAL, or the Service Organizations were prohibited from providing services
to the Funds, it is expected that the Board of Trustees would make other
arrangements and that shareholders would not suffer adverse consequences.
Any new advisory agreement would be subject to shareholder approval.
On the other hand, legislation has been introduced in Congress from
time to time which, if enacted, would permit a bank holding company
subsidiary to organize, sponsor and distribute shares of investment
companies such as the Funds notwithstanding present restrictions under the
Glass-Steagall Act and the Holding Company Act. As described herein, the
Funds are currently distributed by Premier Mutual Fund Services, Inc. and
receive certain administrative services from The Dreyfus Corporation. If
current restrictions preventing a bank holding company subsidiary from
legally sponsoring, organizing, controlling and distributing shares of an
investment company were relaxed, it is anticipated that FICM, FICAL, or the
Service Organizations would consider the possibility of offering to perform
additional services for the Funds.
It is not possible of course, to predict whether or in what form such
legislation might be enacted or the terms upon which FICM, FICAL, or the
Service Organizations might offer to provide services for consideration by
the Board of Trustees.
FICM's investment advisory agreement provides that FICM shall not be
liable for any error of judgment or mistake of law, or in any other event
whatsoever, except by reason of a breach of fiduciary duty with respect to
the receipt of compensation for services or for loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties
or from the reckless disregard of its obligations and duties under the
agreement.
Administration Agreement
Pursuant to an Administration Agreement dated as of October 1, 1994
(the "Administration Agreement"), The Dreyfus Corporation (the
"Administrator") serves as administrator for the Funds. Under the
Administration Agreement, the Administrator supplies office facilities;
provides statistical and research data, data processing services, clerical,
accounting and bookkeeping services, internal auditing and legal services,
and internal executive and administrative services; prepares reports to
shareholders; prepares reports to and filings with the SEC and state
securities authorities; prepares tax returns; calculates the net asset
value of Fund shares and dividends and capital gains distributions to
shareholders; and generally assists in all aspects of the Funds' operations
(except with respect to services provided by the Funds' investment
advisor). For these administrative services, the Administrator is entitled
to receive a fee at the annual rate of 0.10% of each Fund's average daily
net assets. During the six-month fiscal period ended September 30, 1994
and the fiscal years ended March 31, 1994, 1993 and 1992, the
administration fees paid to the Administrator by the Prime Money Market
Fund were $275,596, $614,901, $533,850 and $562,112, respectively. During
the six-month fiscal period ended September 30, 1994 and the fiscal years
ended March 31, 1994, 1993 and 1992, the administration fees paid to the
Administrator by the Treasury Money Market Fund were $347,499, $690,137,
$524,268 and $202,442, respectively.
The Administration Agreement with the Administrator will continue in
effect automatically with respect to each Fund for successive annual
periods ending on March 17th of each year, provided such continuation is
approved at least annually by the Board of Trustees or by the vote of a
majority of the outstanding shares of the particular Fund involved (as
defined in the 1940 Act), and by a majority of the Trustees who are not
interested persons of any party to the Administration Agreement by vote
cast in person at a meeting called for such purpose. The Administration
Agreement is terminable at any time with respect to either Fund by the
Board of Trustees or by a vote of a majority of the Fund's outstanding
shares upon 60 days' notice to the Administrator, or by the Administrator
upon not less than 90 days' notice to the Trust.
The Administration Agreement provides that the Administrator shall not
be liable for any error of judgment or mistake of law or any loss suffered
by the Funds or its security holders in connection with the performance of
the Administration Agreement, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties
or from the reckless disregard by it of its obligations and duties
thereunder.
If the aggregate expenses of either Fund in any fiscal year exceed the
expense limitations imposed by applicable state securities regulations, the
Fund may deduct from the fees to be paid with respect to such Fund to the
Administrator, or the Administrator will bear, to the extent required by
such regulations, that portion of such excess which bears the same relation
to the total excess as the Administrator's fees bear to the total
administration and investment advisory and management fees otherwise
payable for the fiscal year by the Fund involved to the Administrator and
the Funds' investment advisor. Such amount, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a
monthly basis. The Administrator may also voluntarily waive its fee from
either Fund from time to time.
Distribution of Investor Shares
The Trust has retained Pacifica Funds Distributor Inc., an affiliate
of Furman Selz, to serve as principal underwriter for the Investor Shares
of the Funds pursuant to a Distribution Contract. The Distribution
Contract provides that the Distributor will use its best efforts to
maintain a broad distribution of the Funds' Investor Shares among bona fide
investors and may enter into selling group agreements with responsible
dealers and dealer managers as well as sell the Funds' Investor Shares to
individual investors. PFD Inc. is not obligated to sell any specific
amount of shares.
Under a Distribution Plan adopted by the Funds for their Investor
Shares (the "Plan"), the Funds may pay directly or reimburse the
Distributor monthly in amounts described in the Prospectus for costs and
expenses of marketing the Funds' Investor Shares. The Board of Trustees
has concluded that there is a reasonable likelihood that the Plan will
benefit the Funds and their Investor class shareholders.
The Plan provides that it may not be amended to increase materially
the costs which a Fund may bear pursuant to the Plan without approval of
the Fund's Investor class shareholders and that other material amendments
of the Plan must be approved by the Board of Trustees, and by the Trustees
who are neither "interested persons" (as defined in the 1940 Act) of the
Trust nor have any direct or indirect financial interest in the operation
of the Plan or in any related agreement, by vote cast in person at a
meeting called for the purpose of considering such amendments. The
selection and nomination of the Trustees of the Trust have been committed
to the discretion of the Trustees who are not "interested persons" of the
Trust. The Plan between the Trust and the Distributor has been approved
and is subject to annual approval by the Board of Trustees and by the
Trustees who are neither "interested persons" of the Trust nor have any
direct or indirect financial interest in the operation of the Plan, by vote
cast in person at a meeting called for the purpose of voting on the Plan.
The Plan is terminable with respect to the Funds at any time by a vote
of a majority of the Trustees who are not "interested persons" of the Trust
and who have no direct or indirect financial interest in the operation of
the Plan or by vote of the holders of a majority of the Investor Shares of
the Funds.
Service Organizations
The Trust has entered into Service Agreements with certain
institutions that are record shareholders in the Funds ("Service
Organizations"), providing that the Service Organizations will render
support services to their customers ("Customers") who are the beneficial
owners of Investor, Service and Institutional Shares in consideration of
the Funds' payment of up to 0.25% (on an annual basis) of the average daily
net asset value of the Investor, Service and Institutional Shares held by
the Service Organizations for the benefit of their Customers. Currently,
the Funds make payments to Service Organizations at the rate of 0.25% and
0.21% (on an annual basis) of the average daily net asset value of Investor
and Service Shares, respectively. The Funds do not intend to make any
payments to Service Organizations with respect to Institutional Shares
during the current fiscal year. All payments made under Servicing
Agreements with respect to a particular class of shares are borne by that
class. The services provided by a Service Organization may include: (i)
aggregating and processing purchase and redemption requests from Customers;
(ii) providing Customers with a service that invests the assets of their
accounts in Fund shares; (iii) processing dividend payments from the Funds;
(iv) providing information periodically to Customers; (v) arranging for
bank wires; (vi) responding to Customer inquiries; (vii) providing sub-
accounting with respect to Fund shares beneficially owned by Customers;
(viii) forwarding shareholder communications; and (ix) other similar
services requested by the Trust. Agreements with the Service Organizations
are terminable at any time by the Trust without penalty. FICM intends to
waive a portion of the advisory fee otherwise payable by a Fund on assets
invested by Customers of Service Organizations to the extent that the
investment advisory fees paid by a Fund to FICM plus the fees paid by the
Fund to Service Organizations exceed the annual rate of 0.50% the Fund's
average daily net assets. For the six-month fiscal period ended September
30, 1994, and the fiscal years ended March 31, 1994, 1993 and 1992, the
Prime Money Market Fund paid $413,393, $922,351, $800,774 and $843,168,
respectively, to Service Organizations. For the same periods, the Treasury
Money Market Fund paid $521,248, $1,035,205, $786,402 and $303,664,
respectively, to Service Organizations. Of these amounts, for the six-
month fiscal period ended September 30, 1994 and the fiscal years ended
March 31, 1994, 1993 and 1992, respectively, a total of $924,045,
$1,935,703, $1,551,971 and $1,106,598 was paid to FICAL, and other
affiliates of First Interstate Bancorp; and a total of $10,596, $21,853,
$35,205 and $40,234 was paid to Western Asset Management Company, a prior
affiliate of FICAL. For the six-month fiscal period ended September 30,
1994, and the fiscal years ended March 31, 1994, 1993 and 1992, the Service
Organizations voluntarily waived fees aggregating $275,596, $614,901,
$533,850 and $562,112, respectively, with respect to the Prime Money Market
Fund and $347,498, $690,137, $524,268 and $202,442, respectively, with
respect to the Treasury Money Market Fund. For the periods indicated
above, each Fund offered only one class of shares to institutional
investors.
Depending upon the terms governing the particular Customer accounts,
Service Organizations may charge Customers directly for cash management and
other services provided in connection with the accounts, including, for
example, account maintenance fees, compensating balance requirements, or
fees based upon account transactions, assets, or income. A Customer should
therefore read this SAI in light of the terms of the account with a Service
Organization before purchasing Fund shares.
PURCHASE OF INVESTOR SHARES
All Investor Shares purchased are credited to the appropriate
shareholder's account at the net asset value determined as described below.
Investor Shares purchased begin accruing income dividends on the day on
which shares are purchased and continue to accrue dividends through the day
before the shares are redeemed.
In order to maximize earnings the Funds intend to be as completely
invested as is feasible. The Funds are required to make immediate
settlement in federal funds for portfolio securities purchased.
REDEMPTION OF INVESTOR SHARES
Upon receipt of a proper request by the transfer agent, the Funds will
redeem Investor Shares at their next determined net asset value.
Ordinarily, the Funds will transmit payment for all shares redeemed
within two business days after a redemption request is executed, but in any
event payment will be made within seven days thereafter. The right of
redemption may be suspended or the date of payment postponed (a) during any
period when the New York Stock Exchange is closed (other than customary
weekend and holiday closings), (b) when trading in the markets the Funds
ordinarily utilize is restricted, or when an emergency exists as determined
by the SEC so that disposal of a Fund's investments or determination of its
net asset value is not reasonably practicable, or (c) for such other
periods as the SEC by order may permit to protect the Funds' shareholders.
The Trust may suspend redemption rights or postpone redemption
payments (as well as suspend the recordation of the transfer of shares) for
such periods as are permitted under the 1940 Act. The Trust may also
redeem Investor Shares involuntarily or make payment for redemption in
securities or other property if it appears appropriate to do so in light of
the Trust's responsibilities under the 1940 Act.
In addition, the Trust may redeem Investor Shares involuntarily to
reimburse a Fund for any loss sustained by reason of the failure of a
shareholder to make full payment for the shares purchased by the
shareholder or to collect any charge relating to a transaction effected for
the benefit of a shareholder which is applicable to Investor Shares of a
Fund as provided from time to time in the Prospectus.
All redemptions of shares of the Funds will be made in cash, except
that the commitment to redeem shares in cash extends only to redemption
requests made by each shareholder of a Fund during any 90-day period of up
to the lesser of $250,000 or 1% of the net asset value of that Fund at the
beginning of such period. This commitment is irrevocable without the prior
approval of the SEC and is a fundamental policy of the Funds that may not
be changed without shareholder approval. In the case of redemption
requests by shareholders in excess of such amounts, the Board of Trustees
reserves the right to have the Funds make payment, in whole or in part in
securities or other assets, in case of an emergency or any time a cash
distribution would impair the liquidity of a Fund to the detriment of the
existing shareholders. In this event, the securities would be valued in
the same manner as the securities of that Fund are valued. If the
recipient were to sell such securities, he or she would incur brokerage
charges.
DETERMINATION OF NET ASSET VALUE
The net asset value per share ("NAV") for each share class of both
Funds is determined as of 12:00 noon, Pacific time, on days on which the
Trust is open for business (i.e., days on which the San Francisco branch of
the Federal Reserve Bank and First Interstate Bank of California, the
Funds' custodian, and in the case of the Treasury Money Market Fund, the
New York Stock Exchange, are open for business -- "business days"). For
1995, the San Francisco branch of the Federal Reserve Bank and the Funds'
custodian have designated the following holiday closings: New Year's Day
(observed), Martin Luther King, Jr. Day, Presidents' Day (observed), Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day. The San Francisco branch of the
Federal Reserve Bank or the Funds' custodian may designate different dates
for the observance of these holidays as well as designate different
holidays for closing in the future. To the extent that the Funds'
securities are traded on various markets on days when the Federal Reserve
Bank of San Francisco or the Funds' custodian is closed, a Fund's NAV may
be affected on days when the shareholders may not purchase or redeem
shares. NAV of each class of shares of the Funds is computed by dividing
the value of a Fund's assets allocable to that class, less the liabilities
charged to that class, by the total number of outstanding shares of that
class.
The Funds' instruments are valued on the basis of amortized cost.
This technique involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value
of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost,
is higher or lower than the price the Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield on
shares of a Fund computed as described above may tend to be higher than a
like computation made by a fund with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices
for all of its instruments. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a somewhat higher
yield than would result from investment in a fund utilizing solely market
values and existing investors in a Fund would receive less investment
income. The converse would apply in a period of rising interest rates.
The valuation of the Funds' instruments, based upon their amortized
cost and the concomitant maintenance by each Fund of a net asset value of
$1.00, is permitted in accordance with Rule 2a-7 under the 1940 Act,
pursuant to which each Fund must adhere to certain conditions. Each Fund
must maintain a dollar-weighted average maturity of 90 days or less,
purchase only instruments having remaining maturities of thirteen months or
less, and invest only in securities which are determined to present minimal
credit risks pursuant to guidelines adopted by the Trustees. Instruments
having variable or floating interest rates or demand features may be deemed
to have remaining maturities as follows: (a) a government security with a
variable rate of interest readjusted no less frequently than every thirteen
months may be deemed to have a maturity equal to the period remaining until
the next readjustment of the interest rate; (b) an instrument with a
variable rate of interest, the principal amount of which is scheduled on
the face of the instrument to be paid in thirteen months or less, may be
deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate; (c) an instrument with a variable rate
of interest that is subject to a demand feature may be deemed to have a
maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the
principal amount can be recovered through demand; (d) an instrument with a
floating rate of interest that is subject to a demand feature may be deemed
to have a maturity equal to the period remaining until the principal amount
can be recovered through demand; and (e) a repurchase agreement may be
deemed to have a maturity equal to the period remaining until the date on
which the repurchase of the underlying securities is scheduled to occur or,
where no date is specified but the agreement is subject to demand, the
notice period applicable to a demand for the repurchase of the securities.
The Trustees have established procedures designed to stabilize, to the
extent reasonably possible, each Fund's price per share as computed for the
purpose of sales and redemptions at a single value. Such procedures will
include the determination, at such intervals as the Trustees deem
appropriate, of the extent to which each Fund's NAV as calculated by using
available market quotations deviates from $1.00 per share, such deviation
may result in material dilution or other unfair results to existing
shareholders or investors. In the event the Trustees determine that such a
material deviation exists, they have agreed to take such corrective action
as they regard as necessary and appropriate, which may include selling
portfolio instruments prior to maturity to realize capital gains or losses
or to shorten average portfolio maturity; withholding dividends; redeeming
shares in kind or without monetary or other consideration; or establishing
a net asset value per share by using available market quotations. It is
the intention of each Fund to maintain a per share net asset value of
$1.00, but there can be no assurance that either Fund will do so.
DIVIDENDS AND DISTRIBUTIONS
Each Fund ordinarily declares dividends from its net investment income
on each day that the Fund is open for business. Dividends usually are
payable within five business days after the end of each month. Each Fund's
earnings for non-business days are declared as dividends to the
shareholders of record on the preceding business day.
If an investor redeems all shares in its account at any time during
the month, all dividends declared to the day prior to redemption are paid
to the investor within five business days after the end of the month in
cash. Distributions of realized securities gains, if any, are declared and
paid at least annually.
Each Fund seeks to maintain a net asset value of $1.00 per share for
purposes of purchases and redemptions. To effectuate this policy, under
certain circumstances the Board of Trustees may consider the advisability
of temporarily reducing or suspending declaration of daily dividends, or
the advisability of making a capital gains or other distributions. See
"Determination of Net Asset Value."
TAXES
Each Fund intends to qualify each year as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to federal income
taxes to the extent that they distribute their taxable net investment
income and net realized capital gains, if any. Net investment income and
net realized capital gains, if any, will be distributed to investors of a
Fund that actually realized the income or gain. Distributions of net
investment income and capital gains are taxable to those investors who are
not exempt from federal income taxes. It is expected that each Fund will
distribute any net realized short-term gains (unless negligible in amount)
at least annually. Neither Fund expects to realize any long-term capital
gains. Each Fund will be treated separately for federal tax-purposes.
Ordinarily, gains and losses realized from portfolio transactions will
be treated as capital gain or loss. However, all or a portion of the gain
realized from the disposition of certain market discount bonds will be
treated as ordinary income under Section 1276 of the Code.
The Prime Money Market Fund has an unused capital loss carryover of
approximately $103,100 available for federal income tax purposes to be
applied against future profits from sales of securities, if any, realized
subsequent to September 30, 1994. If not applied, $46,700 expire on
September 30, 1999 and $56,400 expires on September 30, 2000.
For federal income tax purposes, an exchange of shares is a taxable
event and, accordingly, a capital gain or loss may be used. Please consult
a tax or other financial advisor to determine the tax consequences of a
particular exchange.
Dividends derived from net investment income, together with
distributions from the excess, if any, of net realized short-term gains
over net realized long-term losses and gains from the sale or other
disposition of certain market discount bonds paid by each Fund to a foreign
investor generally are subject to U.S. nonresident withholding taxes at the
rate of 30%, unless the foreign investor claims the benefit of a lower rate
specified in a tax treaty. Distributions from the excess, if any, of net
realized long-term securities gains over net realized short-term securities
losses paid by each Fund to a foreign investor will not be subject to any
U.S. withholding taxes. However, such distributions may be subject to
backup withholding, as described in the Prospectus, unless the foreign
investor certifies his non-U.S. residency status. Different tax
consequences may apply to foreign investors engaged in a U.S. trade or
business. Foreign investors should consult their tax advisors regarding
the U.S. and foreign tax consequences of investing in the Funds.
YIELD CALCULATIONS
The "yields" and "effective yields" of each Fund described in the
Prospectus are calculated according to formulas prescribed by the SEC. The
standardized seven-day yields for the respective classes of shares of a
Fund are computed separately for each class by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account in the Fund having a balance of one share at the beginning of the
period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period
return, and multiplying the base period return by (365/7). The net change
in the value of an account in each Fund includes the value of additional
shares purchased with dividends from the original share, and dividends
declared on both the original share and any such additional shares, and all
fees, other than non-recurring account or sales charges, that are charged
to all shareholder accounts in proportion to the length of the base period
and the Fund's average account size. The capital changes to be excluded
from the calculation of the net change in account value are realized gains
and losses from the sale of securities and used appreciation and
depreciation. The effective annualized yields for a Fund are also computed
separately for each class by compounding the unannualized base period
return (calculated as above) by adding 1 to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result. The fees which may be imposed by Banks for cash management
services in connection with investments in shares of the Funds are not
reflected in the Funds' yields, and any such fees, if charged, will reduce
the actual return received by Customers for their investments. For the
periods indicated below, each of the Portfolios offered only one class of
shares to institutional investors. See "Management of the Funds" in the
Prospectus. For the seven-day period ended March 31, 1995, the Prime Money
Market Fund's yield was 5.87% and its effective yield was 6.04%. For the
seven-day period ended March 31, 1995, the Treasury Money Market Fund's
yield was 5.68% and its effective yield was 5.84%. During this seven-day
period, the Investment Advisor and Service Organizations waived portions of
their fees amounting to 0.28% of the average daily net assets of the Prime
Money Market Fund and 0.26% of the average net assets of the Treasury Money
Market Fund. Had expenses not been waived, the yield and effective yield
for the same period would have been 5.60% and 5.76%, respectively, for the
Prime Money Market Fund and 5.43% and 5.58%, respectively, for the Treasury
Money Market Fund.
Yield information may be useful in reviewing the Funds' performance
and for providing a basis for comparison with other investment
alternatives. However, yields fluctuate, unlike investments which pay a
fixed yield for a stated period of time. Yields for the Funds are
calculated on the same basis as other money market funds as required by
applicable regulations. Investors should give consideration to the quality
and maturity of the portfolio securities of the respective investment
companies when comparing investment alternatives.
Investors should recognize that in periods of declining interest
rates, the Funds' yields will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates, the Funds' yields
will tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to the Funds from the continuous sale of their
shares will likely be invested in instruments producing lower yields than
the balance of the Funds, thereby reducing the current yields of the Funds.
In periods of rising interest rates, the opposite can be expected to occur.
PORTFOLIO TRANSACTIONS
Purchases and sales of portfolio securities usually are principal
transactions. Portfolio securities ordinarily are purchased directly from
the issuer or from an underwriter or market maker for the securities.
There usually are no brokerage commissions paid by either Fund for such
purchases. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers include the spread between
the bid and asked price. While FICM generally seeks competitive spreads or
commissions, the Funds may not necessarily be paying the lowest available
spread or commission for the reasons stated below.
The Funds' agreement with FICM provides that, in executing portfolio
transactions and selecting brokers or dealers, FICM will use its best
efforts to seek, on behalf of the Funds, the best overall terms available.
In assessing the best overall terms available for any transaction, FICM is
to consider all factors it deems 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, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis.
In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, FICM may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to either
Fund and/or other accounts over which it or an affiliate exercises
investment discretion. FICM is authorized, subject to the review of the
Board of Trustees, to pay to a broker or dealer which provides such
brokerage and research services a commission for executing a portfolio
transaction for either Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, such commission is determined in good faith to be
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer in accordance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934. Information so
received will supplement but will not replace that which is to be provided
by FICM, and the fees are not reduced as a consequence of the receipt of
such supplemental information. Such information may be useful to FICM in
serving both the Funds and other clients and conversely, supplemental
information obtained by the placement of business of other clients may be
useful to FICM in carrying out its obligations to the Funds.
Investment decisions for each Fund will be made independently from
those of any fiduciary or other accounts that may be managed by FICM.
However, to the extent that the same securities transaction may be deemed
to be equally suitable at the same time for two or more accounts, the
transaction will be allocated in a manner believed to be equitable to each
account. In some cases, this procedure may adversely affect the price paid
or received, or the size of the position obtained for or disposed of, by a
Fund.
The Funds do not purchase any obligations issued by First Interstate
Bancorp or its affiliates. In addition, no portfolio securities are
purchased from, sold to, or executed through First Interstate Bancorp or
its affiliates. However, First Interstate Bancorp or its affiliates engage
in transactions involving bank obligations, commercial paper, repurchase
agreements, and securities of the U.S. Government and of certain U.S.
Government agencies or instrumentalities. Such activities may have some
effect on the market of such securities, and First Interstate Bancorp and
its affiliates may be competing in the market place with the Funds in the
purchase and sale of such securities.
FICM has agreed to maintain a policy and practice of conducting its
investment advisory services to the Trust independently of the commercial
banking operations of any of its affiliates.
DESCRIPTION OF THE FUNDS
Capitalization
The Trust is a Massachusetts business trust established under a
Declaration of Trust dated July 17, 1984 and consists of a series of
separately managed portfolios. Prior to February 9, 1993 the name of the
Trust was Fund Source. This SAI relates only to the Investor Shares of two
of those portfolios - the Prime Money Market Fund and the Treasury Money
Market Fund.
The capitalization of the Trust consists solely of an unlimited number
of shares of beneficial interest with a par value of $0.001 each. The
Board of Trustees may establish additional portfolios (with different
investment objectives and fundamental policies) at any time in the future.
Establishment and offering of additional portfolios will not alter the
rights of the Funds' shareholders. When issued, shares are fully paid,
non-assessable, redeemable and freely transferable. Shares do not have
preemptive rights or subscription rights.
In the event of a liquidation or dissolution of the Trust or an
individual Fund, shareholders of a particular Fund would be entitled to
receive the assets available for distribution belonging to such Fund, and a
proportionate distribution, based upon the relative net asset values of the
Trust's respective Funds, of any general assets not belonging to any
particular Fund which are available for distribution. Shareholders of a
Fund are entitled to participate in the net distributable assets of the
Fund on liquidation, based on the number of shares of the Fund that are
held by each shareholder, except that each class of shares of a Fund shall
each be solely responsible for the Service Organization fees, distribution
payments and other "class" expenses, if any, that are allocated to the
particular share class.
Shareholder and Trustee Liability
The Trust is an entity of the type commonly known as a "Massachusetts
Business Trust." Under Massachusetts law, shareholders of such a trust
may, under certain circumstances, be held personally liable as partners for
the obligations of the trust. However, the Declaration of Trust contains
an express disclaimer of shareholder liability for acts or obligations of
the Trust. The Declaration of Trust also provides for indemnification out
of the property of a Fund of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the
risk of a shareholder incurring financial loss because of status as a
shareholder is limited to circumstances in which a Fund itself would be
unable to meet its obligations.
The Declaration of Trust further provides that the Trustees and
officers will not be liable except for liability to the Trust or its
shareholders to which he would be subject by reason of willful misfeasance,
bad faith, gross negligence in the performance of his duties, or reckless
disregard of the duties involved in the conduct of his office. The Trust
may have an obligation to indemnify its Trustees and officers with respect
to any litigation.
Voting Rights
Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares held) and will vote in the election
of Trustees (to the extent hereinafter provided) and on other matters
submitted to the vote of shareholders. Each matter to be voted on by
shareholders shall be voted by all of the Trust's outstanding shares,
irrespective of portfolio, unless a separate vote of one or more portfolios
is required by the 1940 Act or other applicable law or regulations or the
Trustees determine that the particular matter affects only the rights or
interests of one or more portfolios (and not all portfolios). Rule 18f-2
under the 1940 Act provides that any matter required to be submitted to the
holders of the outstanding voting securities of an investment company such
as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
portfolio affected by the matter. A portfolio is affected by a matter
unless it is clear that the interests of each portfolio in the matter are
substantially identical or that the matter does not affect any interest of
the portfolio. Under the Rule, the approval of an investment advisory or
sub-advisory agreement or any change in a fundamental investment policy
would be effectively acted upon with respect to a portfolio only if
approved by a majority of the outstanding shares of such portfolio.
However, the Rule also provides that the ratification of the appointment of
independent public accountants, the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
shareholders of all portfolios voting together in the aggregate without
regard to particular portfolios. Shareholders of each of the Funds will
vote in the aggregate and not by class unless the matter to be voted on
affects only the interests of the holders of a particular class of a Fund's
shares.
There normally will be no meetings of shareholders for the purpose of
electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Pursuant to an undertaking, shareholder meetings
will be called upon the written request of the holders of at least 10% of
the outstanding shares entitled to vote. Except as set forth above, the
Trustees shall continue to hold office and may appoint successor Trustees.
Voting rights are not cumulative.
As of August 18, 1995, First Interstate Bank of California and its
affiliated banks held of record substantially all of the outstanding shares
of each Fund as agent, custodian, trustee or investment advisor on behalf
of their customers. At such date the following persons held as beneficial
owner five percent or more of the outstanding shares of a Fund because they
possessed sole or shared voting or investment power with respect to such
shares: Prime Money Market Fund (Service Shares): San Joaquin Hills
Constr. Design, Laura Barker, Controller, Transportation Corridor Agency,
P.O. Box 28870, Santa Ana, CA 92799 - 5.26%; Retail Clk-Pacific Income
Advisors, Janet Garner, Retail Clerks Benefit Fund, Drawer 9000, Walnut
Creek, CA 94598 - 6.84%. Prime Money Market Fund (Institutional Shares):
Brea Medical Development Company, Brea Community Hospital, 1111 S. Grand
Avenue, Diamond Bar CA 91765, Attn. Sherry Green - 13.46%; Quality Beer
Dist., Dan McKinney Company, 5525 Market Street, Sand Diego, CA 92174 -
9.00%. Treasury Money Market Fund (Institutional Shares): Overland
National Land Fund, A Delaware Limited Partnership, 147 East Olive Avenue
Attn. Mr. Hsu, Monrovia, CA 91016 - 5.25%; RRKK, Ltd.-Cash Reserve Account,
120 S. Bayfront, Newport Beach, CA 92662 - 5.82%; Wolff Revocable Trust-
Cash a/c, Lewis N. Wolff, 11828 Lagrange Avenue, Suite 200, Los Angeles, CA
90025 - 7.78%; La Jolla Vlg Homeowners, Michael Morgan Treasurer, 8120
Caminito Giannat, La Jolla, CA 92037 - 7.87%; National Master Trust Kelsey,
Kelsey National Corp, 3030 S. Bundy Drive, Los Angeles, CA 90066, Attn.
David Mishalof - 11.01%; Interlocken Metro Dist./Const. Fd, 1300 Walnut
Street, Suite 200, Boulder, CO 80302, Attn. Richard Gonzales - 21.73%.
As used in this SAI and the Funds' Prospectus, a "majority of the
outstanding shares" of the Trust or a Fund or class of stock means, with
respect to the approval of an investment advisory agreement, a distribution
plan or a change in a fundamental investment policy, the lesser of (1) 67%
of the shares of the Trust or Fund or class represented at a meeting at
which the holders of more than 50% of the outstanding shares of the Trust
or Fund or class are present in person or by proxy, or (2) more than 50% of
the outstanding shares of the Trust or Fund or class.
CUSTODIAN, TRANSFER AGENT,
COUNSEL, AND INDEPENDENT AUDITORS
FICAL, 707 Wilshire Boulevard, Los Angeles, California 90017, serves
as custodian for the Funds. As custodian, FICAL has agreed, among other
things, to keep and maintain the assets of each Fund, collect income due
and payable to the Funds, make disbursements of money on the Funds' behalf,
and prepare and maintain books and records relating to its duties. For its
custodial services, FICAL is entitled to a fee, payable monthly, at the
following annual rates based upon the aggregate assets of the Funds: 0.10%
of the first $1 million; 0.05% of the next $4 million; 0.025% of the next
$95 million; 0.015% of the next $100 million; and 0.01% of the balance over
$200 million. In addition, FICAL is entitled to certain transaction
charges and to reimbursement for its out-of-pocket expenses.
Furman Selz, 230 Park Avenue, New York, New York 10169, serves as
transfer agent for the Funds. As transfer agent, Furman Selz has agreed to
perform such services as maintaining shareholder accounts, preparing annual
meeting lists, mailing proxies, disbursing income dividends, and filing
certain tax forms, and is entitled to reimbursement from the Funds for
certain reasonable out-of-pocket expenses incurred in connection with the
performance of its services. Furman Selz may appoint co-transfer agents
and sub-dividend disbursing agents to assist in the performance of its
services to the Funds, provided that Furman Selz shall be as fully
responsible to the Funds for the acts and omissions of any such agent as it
is for its own acts and omissions.
Drinker Biddle & Reath, 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107, serves as counsel for the Funds.
Ernst & Young LLP, 515 South Flower Street, Los Angeles, California,
have been selected to serve as the Funds' independent auditors for the
current fiscal year. The audited financial statements which appear in this
SAI and the audited financial information for the six-month fiscal period
ended September 30, 1994 which appears in the Funds' Prospectus under the
heading "Financial History," have been audited by Ernst & Young LLP, the
Funds' current independent auditors. The audited financial statements
which appear in this SAI, and the audited financial information for each of
the five years in the period ended March 31, 1994 for the Funds which
appears in the Funds' Prospectus under the heading "Financial History,"
have been audited by the Funds' former independent accountants, Price
Waterhouse LLP. The financial statements that have been included herein
and included or incorporated by reference in the Funds' Prospectus are so
included or incorporated in reliance on the reports of Ernst & Young LLP
and Price Waterhouse LLP given upon the authority of such firms as experts
in accounting and auditing.
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
The following is a description of the securities ratings of Duff &
Phelps Credit Rating Co. ("D&P"), Fitch Investors Service, Inc. ("Fitch"),
Standard & Poor's Ratings Group, Division of McGraw Hill ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), IBC Limited and IBCA Inc. ("IBCA") and
Thomson BankWatch, Inc. ("Thomson").
Long-Term Corporate Debt Rating
The two highest ratings of D&P for corporate fixed-income securities
are AAA and AA. Securities rated AAA are of the highest credit quality.
The risk factors are considered to be negligible, being only slightly more
than for risk-free U.S. Treasury debt. Securities rated AA are of high
credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions. The AA
rating may be modified by an addition of a plus (+) or minus (-) sign to
show relative standing within the major rating category.
The two highest ratings of Fitch for corporate bonds are AAA and AA.
AAA bonds are considered to be investment grade and of the highest credit
quality. The obligor is judged to have an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events. AA bonds 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 issuers is generally rated F-1+. Plus (+) and minus (-)
signs are used with the AA rating symbol to indicate relative standing
within the rating category.
The two highest ratings of S&P for corporate bonds are AAA and AA.
Bonds rated AAA bear the highest rating assigned by S&P to a debt
obligation and the AAA rating indicates in its opinion an extremely strong
capacity to pay interest and repay principal. Bonds rated AA by S&P are
judged by it to have a very strong capacity to pay interest and repay
principal, and they differ from AAA issues only in small degree. The AA
rating may be modified by an addition of a plus (+) or minus (-) sign to
show relative standing within the major rating category.
The two highest ratings of Moody's for corporate bonds are Aaa and Aa.
Bonds rated Aaa are judged to be of the best quality. The rating of Aa is
assigned to bonds which are of "high quality by all standards." Aa bonds
are rated lower than Aaa bonds because margins of protection may not be as
large or fluctuations of protective elements may be of greater amplitude or
there may be other elements which make the long-term risks appear somewhat
larger. Moody's may modify a rating of Aa by adding numerical modifiers of
1, 2 or 3 to show relative standing within the Aa category. Moody's has
advised that the short-term credit risk of a long-term instrument sometimes
carries a MIG rating or one of the commercial paper ratings described
below.
The two highest ratings of IBCA for corporate bonds are AAA and AA.
Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
Obligations for which there is a very low expectation of investment risk
are rated AA. IBCA may append a rating of plus (+) or minus (-) to a
rating to denote relative status within a major rating category.
The two highest ratings of Thomson for corporate bonds are AAA and AA.
Bonds rated AAA are of the highest credit quality. The ability of the
obligor to repay principal and interest on a timely basis is considered to
be extremely high. Bonds rated AA indicate a very strong ability on the
part of the obligor to repay principal and interest on a timely basis with
limited incremental risk versus issues rated in the highest category.
These ratings may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within the rating categories.
Short-Term Corporate Debt Ratings
The highest rating of D&P for commercial paper is Duff 1. D&P employs
three designations, Duff 1 plus, Duff 1 and Duff 1 minus, within the
highest rating category. Duff 1 plus indicates highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is judged to be outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations. Duff
1 indicates very high certainty of timely payment. Liquidity factors are
excellent and supported by strong fundamental protection factors. Risk
factors are considered to be minor. Duff 1 minus indicates high certainty
of timely payment. Liquidity factors are strong and supported by good
fundamental protection factors. Risk factors are very small.
Fitch's short-term ratings apply to corporate debt obligations that
are payable on demand or have original maturities of up to three years.
The highest rating of Fitch for short-term securities encompasses both the
F-1+ and F-1 ratings. F-1+ securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment. F-1 securities possess very strong
credit quality. Issues assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
S&P's commercial paper ratings are current assessments of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. The A-1 designation indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics will be denoted with a plus (+)
designation.
Moody's short-term debt ratings are opinions of the ability of issuers
to repay punctually promissory obligations not having an original maturity
in excess of nine months. Issuers rated Prime-1 (or related supporting
institutions) in the opinion of Moody's have a superior capacity for
repayment of short-term promissory obligations.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal banking subsidiaries. The designation A1 by
IBCA indicates that the obligation is supported by the highest capacity for
timely repayment. Where issues posses a particularly strong credit
feature, a rating of A1+ is assigned.
Thomson's short-term ratings assess the likelihood of an untimely
payment of principal or interest of debt having a maturity of one year or
less which is issued by banks and other financial institutions. The
designation TBW-1 represents the highest short-term rating category and
indicates a very high degree of likelihood that principal and interest will
be paid on a timely basis.
<TABLE>
<CAPTION>
PACIFICA PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
PRINCIPAL
BANKER'S ACCEPTANCES-5.4% AMOUNT VALUE
________ ________
<S> <C> <C>
Huntington National Bank
5.78%, 11/2/95............. $ 10,000,000 $ 9,999,560
Mellon Bank NA
5.85%, 2/7/96........................................................... 25,000,000 24,991,424
___________
TOTAL BANKER'S ACCEPTANCES (cost $34,990,984).................. $34,990,984
===========
COMMERCIAL PAPER-57.8%
Associates Corp. of North America
5.75%, 10/26/95.................................... $ 30,000,000 $29,881,250
Budget Funding Corp.
5.78%, 10/13/95......................................................... 20,000,000 19,961,867
Ciesco L.P.
6.40%, 10/23/95......................................................... 10,000,000 9,962,294
6.45%, 11/27/95......................................................... 10,000,000 9,902,308
Corestates Capital Corp.
5.77%, 12/20/95......................................................... 15,000,000 14,811,000
Corporate Asset Funding Co. Inc.
5.78%, 10/30/95......................................................... 25,000,000 24,884,201
Deere (John) Capital Corp.
5.77%, 2/2/96........................................................... 25,000,000 24,517,778
Dynamic Funding (Series A)
5.88%, 10/31/95......................................................... 17,547,000 17,462,107
5.88%, 11/30/95......................................................... 7,948,000 7,871,567
Ford Motor Credit Co.
5.77%, 10/3/95.......................................................... 30,000,000 29,990,450
General Electric Capital Corp.
5.76%, 12/4/95.......................................................... 20,000,000 19,798,045
General Electric Capital Services Inc.
5.82%, 1/17/96.......................................................... 15,000,000 14,744,400
Matterhorn Capital Corp.
5.79%, 11/7/95 (a)...................................................... 25,000,000 24,852,257
Penney (J.C.) Funding Corp.
5.76%, 10/6/95.......................................................... 15,000,000 14,988,125
PHH Corp.
5.77%, 10/6/95.......................................................... 25,000,000 24,980,104
Phillip Morris Companies Inc.
5.76%, 10/20/95......................................................... 25,000,000 24,924,660
US Bancorp
5.76%, 11/14/95......................................................... 12,500,000 12,412,611
PACIFICA PRIME MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
PRINCIPAL
COMMERCIAL PAPER (CONTINUED) AMOUNT VALUE
________ ________
USL Captal Corp.
5.75%, 11/2/95.......................................................... $20,000,000 $19,898,311
5.77%, 11/10/95......................................................... 7,000,000 6,955,433
Weyerhauser Mortgage Co.
5.77%, 10/6/95.......................................................... 20,000,000 19,984,083
_________
TOTAL COMMERCIAL PAPER (cost $372,782,851).................................. $372,782,851
===========
BANK NOTES-3.1%
Comerica Bank, Detroit
6.15%, 6/13/96 (b)
(cost $20,000,000)...................................................... $ 20,000,000 $20,000,000
===========
CORPORATE NOTES-6.2%
Bear Stearns Companies Inc.
5.91%, 10/30/95 (b)..................................................... $20,000,000 $20,000,000
Merrill Lynch & Co. Inc.
6.05%, 5/1/96 (b)....................................................... 20,000,000 20,000,000
_________
TOTAL CORPORATE NOTES (cost $40,000,000).................................... $40,000,000
===========
MASTER DEMAND NOTES-7.8%
Goldman Sachs Group L.P.
5.87%, 10/27/95 (b)..................................................... $25,000,000 $25,000,000
Morgan (J.P.) & Co.
6.50%, 1/3/96 (b)....................................................... 25,000,000 25,000,000
_________
TOTAL MASTER DEMAND NOTES (cost $50,000,000)................................ $50,000,000
===========
REPURCHASE AGREEMENT-19.6%
Salomon Brothers Inc.
6.45%, dated 9/29/95 due 10/2/95 in the amount of
$126,111,511 (fully collateralized by $468,106,000
U.S. Treasury Strips due from 2/15/96 to 8/15/2023,
value $128,570,726)
(cost $126,043,763)........................... $126,043,763 $126,043,763
===========
TOTAL INVESTMENTS (cost $643,817,598)............................... 99.9% $643,817,598
====== ===========
CASH AND RECEIVABLES (NET).......................................... .1% $ 785,790
====== ===========
NET ASSETS ................................................... 100.0% $ 644,603,388
====== ===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1995
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
U.S. TREASURY BILLS-41.6% PURCHASE AMOUNT VALUE
______ ________ ________
<S> <C> <C> <C>
10/5/95.................................................... 5.18% $ 160,000,000 $ 159,908,089
10/12/95................................................... 5.16 155,000,000 154,756,663
10/19/95................................................... 6.14 20,000,000 19,940,750
11/24/95................................................... 5.47 25,000,000 24,799,563
5/2/96..................................................... 5.75 40,000,000 38,686,278
5/30/96.................................................... 5.74 35,000,000 33,708,325
___________
TOTAL U.S. TREASURY BILLS (cost $431,799,668).................. $431,799,668
============
U.S. TREASURY NOTES-13.1%
3.88%, 10/31/95............................................ 5.32% $30,000,000 $29,959,821
7.88%, 2/15/96............................................. 5.56 65,000,000 65,503,078
8.88%, 2/15/96............................................. 5.56 20,000,000 20,224,607
7.38%, 5/15/96............................................. 5.53 20,000,000 20,190,354
___________
TOTAL U.S. TREASURY NOTES (cost $135,877,860).................. $135,877,860
============
REPURCHASE AGREEMENTS-45.2%
Goldman, Sachs & Co.
dated 9/29/95, due 10/2/95 in the amount of
$134,182,871 (fully collateralized by
$9,872,000 U.S. Treasury Bonds, 9.875%-11.75%,
due from 2/15/2010 to 11/15/2015, value
$13,397,535 and by $122,702,000 U.S. Treasury
Notes, 4.75%-9.875% due from 4/15/96 to
2/15/2003, value $120,714,395)............................. 6.40% $ 134,111,345 $ 134,111,345
HSBC Securities Inc.
dated 9/29/95, due 10/2/95 in the amount of
$160,086,000 (fully collateralized by
$57,104,000 U.S. Treasury Bills, due from
10/12/95 to 9/19/96, value $55,066,635, by
$8,204,000 U.S. Treasury Bonds, 3.5%-15.75%,
due from 11/15/1995 to 8/15/2005, value
$10,697,802, and by $90,799,000 U.S. Treasury Notes
5.5%-8.875%, due from 1/15/2000 to 8/15/2001
value $97,438,386)......................................... 6.45 160,000,000 160,000,000
PACIFICA TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1995
ANNUALIZED
YIELD ON
DATE OF PRINCIPAL
REPURCHASE AGREEMENTS (CONTINUED) PURCHASE AMOUNT VALUE
_________ ________ ________
J.P. Morgan Securities
dated 9/29/95, due 10/2/95 in the amount of
$175,093,333 (fully collateralized by
$169,692,000 U.S. Treasury Notes, 6.125%-8.5%,
due from 6/30/99 to 11/15/2000, value
$178,504,456).............................................. 6.40% $175,000,000 $175,000,000
___________
TOTAL REPURCHASE AGREEMENTS (cost $469,111,345)................ $469,111,345
============
TOTAL INVESTMENTS (cost $1,036,788,873)............ 99.9% $1,036,788,873
======= ============
CASH AND RECEIVABLES (NET)......................... .1% $ 1,361,193
======= ============
NET ASSETS......................................... 100.0% $1,038,150,066
======= ============
NOTES TO STATEMENT OF INVESTMENTS:
(a) Backed by irrevocable letter of credit.
(b) Variable interest rate subject to periodic change.
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1995
PACIFICA PRIME PACIFICA TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
________ _________
<S> <C> <C>
ASSETS:
Investments in securities, at value
(including repurchase agreements of $126,043,763 and $469,111,345
for the Prime Money Market Fund and Treasury Money Market Fund,
respectively)-Note 2(a,b)....................................... $643,817,598 $1,036,788,873
Cash.............................................................. 2,930,853 4,344,679
Interest receivable............................................... 846,534 2,101,731
Prepaid expenses.................................................. 58,688 154,046
_____________- _____________-
647,653,673 1,043,389,329
_____________- _____________-
LIABILITIES:
Due to First Interstate Capital Management, Inc................... $ 154,346 $ 276,255
Due to The Dreyfus Corporation.................................... 50,203 85,539
Dividends payable................................................. 2,745,983 4,552,495
Accrued expenses.................................................. 99,753 324,974
_____________- _____________-
3,050,285 5,239,263
_____________- _____________-
NET ASSETS ............................................... $644,603,388 $1,038,150,066
============= ==============
REPRESENTED BY:
Paid-in capital................................................... $644,706,476 $1,038,150,066
Accumulated undistributed net realized (loss) on investments...... (103,088) _-
_____________- _____________-
NET ASSETS, at value.................................................. $644,603,388 $1,038,150,066
============= ==============
Shares of Beneficial Interest outstanding-Note 4:
Service Shares
(unlimited number of $.001 par value shares authorized)......... 614,100,571 1,001,707,107
============= ==============
Institutional Shares
(unlimited number of $.001 par value shares authorized)......... 30,605,905 36,442,959
============= ==============
NET ASSET VALUE per share:
Prime Money Market Fund:
Service shares ($613,997,483 / 614,100,571 shares).............. $1.00
======
Institutional shares ($30,605,905 / 30,605,905 shares).......... $1.00
======
Treasury Money Market Fund:
Service shares ($1,001,707,107 / 1,001,707,107 shares).......... $1.00
======
Institutional shares ($36,442,959 / 36,442,959 shares).......... $1.00
======
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1995
PACIFICA PRIME PACIFICA TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
____________ ______________
<S> <C> <C>
INVESTMENT INCOME:
INTEREST INCOME......................................................... $33,982,412 $52,925,189
__________ __________
EXPENSES-NOTE 2(C):
Investment advisory and management fee-Note 3(a)...................... $1,694,406 $2,545,887
Shareholder servicing costs-Note 3(b)................................. 1,444,406 2,304,715
Administration fee-Note 3(a).......................................... 577,763 921,886
Custodian fees-Note 3(c).............................................. 67,459 108,325
Professional fees..................................................... 56,616 86,005
Prospectus and shareholders' reports.................................. 12,510 13,536
Trustees' fees and expenses-Note 3(d)................................. 9,492 8,612
Registration fees..................................................... 8,956 55,297
Miscellaneous......................................................... 28,517 81,882
__________ __________
3,900,125 6,126,145
Less-reduction in investment advisory and management
fee and shareholder servicing costs due to
undertakings-Note 3(a,b).......................................... 1,545,737 2,228,713
__________ __________
TOTAL EXPENSES.................................................. 2,354,388 3,897,432
__________ __________
INVESTMENT INCOME-NET, representing net increase in net
assets resulting from operations........................................ $31,628,024 $49,027,757
=========== ===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
PACIFICA FUNDS TRUST
STATEMENT OF CHANGES IN NET ASSETS
PACIFICA PRIME MONEY MARKET FUND PACIFICA TREASURY MONEY MARKET FUND
_____________________________________________ ____________________________________________
YEAR ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1994* 1995 1994 1994* 1995
_______ _____________ ________ _______ _________ _______
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income-net... $18,196,599 $10,119,420 $ 31,628,024 $19,111,559 $12,935,211 $ 49,027,757
Net realized gain
on investments.. 9,560 - - - - _
_______ _____________ ________ _______ _________ _______
Net Increase In Net Assets
Resulting From Operation 18,206,159 10,119,420 31,628,024 19,111,559 12,935,211 49,027,757
_______ _____________ ________ _______ _________ _______
DIVIDENDS TO
SHAREHOLDERS FROM:
Investment income-net:
Service shares...... (18,196,599) (10,119,420) (31,328,215) (19,111,559) (12,935,211) (48,762,724)
Institutional shares... _ _ (299,809) _ - (265,033)
Net realized gain
on investments:
Service shares............ _ _ _ (30,993) _ -
Institutional shares...... _ _ - - - -
_______ _____________ ________ _______ _________ _______
TOTAL DIVIDENDS....... (18,196,599) (10,119,420) (31,628,024) (19,142,552) (12,935,211) (49,027,757)
_______ _____________ ________ _______ _________ _______
CAPITAL SHARE TRANSACTIONS
(NET)-Note 4....... 59,110,337 37,705,886 79,298,223 40,743,629 35,680,545 347,519,721
_______ _____________ ________ _______ _________ _______
TOTAL INCREASE IN
NET ASSETS.... 59,119,897 37,705,886 79,298,223 40,712,636 35,680,545 347,519,721
NET ASSETS:
Beginning of period.... 468,479,382 527,599,279 565,305,165 614,237,164 654,949,800 690,630,345
_______ _____________ ________ _______ _________ _______
End of period........... $527,599,279 $565,305,165 $ 644,603,388 $654,949,800 $690,630,345 $1,038,150,066
============ ============ =========== ============ ============ ==============
*The Funds changed their fiscal year ends from March 31 to September 30.
</TABLE>
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1-GENERAL:
Pacifica Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940 (the "Act") as an open-end management investment company
and operates as a series company offering multiple investment portfolios,
including Pacifica Prime Money Market Fund and Pacifica Treasury Money Market
Fund (the "Funds"). The Trust accounts separately for the assets, liabilities
and operations of each investment portfolio. First Interstate Capital
Management, Inc. ("FICM" or "Advisor"), an indirect wholly-owned subsidiary
of First Interstate Bancorp, serves as the Funds' Investment Adviser. The
Dreyfus Corporation ("Dreyfus") serves as the Funds' Administrator. Dreyfus
is a direct subsidiary of Mellon Bank, N.A. First Interstate Bank of
California ("FICAL"), a wholly-owned banking subsidiary of First Interstate
Bancorp, serves as the Funds' Custodian. Furman Selz Incorporated ("Furman
Selz") serves as the Funds' Transfer Agent and Dividend Disbursing Agent.
Premier Mutual Fund Services, Inc., until September 30, 1995, acted as the
distributor of the Funds' shares, which are sold to the public without a
sales charge. Effective October 1, 1995 Pacifica Funds Distributor Inc. (the
"Distributor") was engaged as the Funds' distributor.
The Funds were formerly separate investment portfolios of Pacific
American Fund. Effective October 1, 1994, Pacific American Fund was
reorganized into Pacifica Funds Trust. In connection therewith, the Funds
have changed their fiscal year ends from March 31 to September 30.
In July 1995, Pacific American Money Market Portfolio and Pacific
American U.S. Treasury Portfolio were renamed Pacifica Prime Money Market
Fund and Pacifica Treasury Money Market Fund, respectively.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although there is no assurance that it will be able to do so.
On May 12, 1995, the Funds' Board of Trustees approved the issuance of
multiple classes of shares of each Fund. Effective August 11, 1995, existing
shares of the Funds were classified as Service shares and the Funds began
offering both Service and Institutional shares to investors. Effective
October 1, 1995 the Funds began offering Investor shares to investors.
Effective October 1, 1995, the Pacifica Prime Money Market Fund acquired
all of the assets and assumed all of the liabilities of the Westcore Cash
Reserve Fund and the Westcore Money Market "A" Fund. In addition, effective
October 1, 1995, the Pacifica Treasury Money Market Fund acquired all of the
assets and all of the liabilities of the Westcore Treasury Money Market Fund
and the Westcore Government Money Market Fund. These acquisitions were
accomplished in separate tax-free exchanges for shares of the respective
Fund.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES:
(A) PORTFOLIO VALUATION: Investments are valued at amortized cost, which
has been determined by the Funds' Board of Trustees to represent the fair
value of the Funds' investments.
(B) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the identified cost basis. Interest
income is recognized on the accrual basis. Cost of investments represents
amortized cost.
The Funds may enter into repurchase agreements with financial
institutions deemed to be creditworthy by the Funds' Adviser, subject to the
seller's agreement to repurchase and the Funds' agreement to resell such
securities at a mutually agreed upon price. Securities purchased subject to
repurchase agreements are deposited with the Funds' custodian and
sub-custodians and, pursuant to the terms of the repurchase agreement, must
have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the value of the
underlying securities falls below the
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
value of the repurchase price plus accrued interest, the Funds will require
the seller to deposit additional
collateral by the next business day. If the request for additional collateral
is not met, or the seller defaults on its repurchase obligation, the Funds
maintain the right to sell the underlying securities at market value and may
claim any resulting loss against the seller.
The Prime Money Market Fund may lend its securities to broker-dealers and
other institutional investors. The Fund's policy is to receive collateral on
each loan equal at all times to the market value of the securities loaned
plus accrued interest. The Fund may bear the risk of delay in receiving
additional collateral or in recovering the securities loaned or even a loss
of rights in the collateral should the borrower of the securities fail
financially. The Fund receives compensation for lending its securities in the
form of fees or it retains a portion of interest on the investment of any
cash received as collateral. The Fund also continues to receive interest on
the securities loaned, and any gain or loss in the market price of the
securities loaned that may occur during the term of the loan will be for the
account of the Fund.
(C) EXPENSES: Expenses directly attributable to each Fund are charged to
that Fund's operations; expenses which are applicable to more than one
investment portfolio of the Trust are allocated between them, based on net
assets.
(D) DIVIDENDS TO SHAREHOLDERS: It is the policy of the Trust, with
respect to both Funds, to declare dividends from investment income-net on
each business day; such dividends are paid monthly. Dividends from net
realized gain, if any, with respect to both Funds, are normally declared and
paid annually, but each Fund may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code.
However, to the extent that a net realized gain of either Fund can be reduced
by a capital loss carryover of that Fund, such gain will not be distributed.
(E) FEDERAL INCOME TAXES: It is the policy of each Fund to continue to
qualify as a regulated investment company, if such qualification is in the
best interests of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from substantially all Federal income and excise
taxes.
The Pacifica Prime Money Market Fund has an unused capital loss carryover
of approximately $103,100 available for Federal income tax purposes to be
applied against future profits from sales of securities, if any, realized
subsequent to September 30, 1995. If not applied, $46,700 expires on
September 30, 1999 and $56,400 expires on September 30, 2000.
At September 30, 1995, the cost of investments of each Fund for Federal
income tax purposes was substantially the same as the cost for financial
reporting purposes (see the Statement of Investments).
NOTE 3-INVESTMENT ADVISORY AND MANAGEMENT FEE, ADMINISTRATION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES:
(A) Effective October 1, 1994, fees payable by the Funds pursuant to the
provisions of a new Investment Advisory and Management Agreement with FICM
are payable monthly, at an annual rate of .30 of 1% of the first $500 million
of each Fund's average daily net assets, .25 of 1% of the next $500 million
of each Fund's net assets, and .20 of 1% of each Fund's net assets in excess
of $1 billion. Fees payable by the Funds pursuant to the provisions of an
Administration Agreement with Dreyfus are payable monthly based on an annual
rate of .10 of 1% of the average daily value of each Fund's net assets. The
Investment Advisory and Management Agreement and the Administration Agreement
further provide that FICM and Dreyfus will make certain reimbursements to
the Funds if, in any fiscal year, the
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
aggregate expenses of each Fund (as determined in accordance with the
Agreements and applicable state securities regulations)
exceed the expense limitations of any state having jurisdiction over the
Funds. California "blue sky" regulations, the most stringent state expense
limitation applicable to the Funds, presently require reimbursement of
expenses in any fiscal year that such expenses exceed 2 1/2% of the first $30
million, 2% of the next $70 million and 1 1/2% of the excess over $100
million of the average value of either Funds' net assets.
For the year ended September 30, 1995, FICM voluntarily agreed to waive
receipt of the advisory and management fees payable to it by the Pacifica
Prime Money Market Fund in excess of .12 of 1% of the average daily value of
the Fund's net assets. From October 1, 1994 through August 10, 1995, FICM
voluntarily agreed to waive receipt of the advisory and management fees
payable to it by the Pacifica Treasury Money Market Fund in excess of .13 of
1% of the average daily value of the Fund's net assets and thereafter has
undertaken through September 30, 1995 to waive receipt of the advisory and
management fee in excess of .12 of 1% of the average daily value of the
Fund's net assets. The advisory and management fees paid by each Fund to FICM
for the year ended September 30, 1995 amounted to $693,315 for the Pacifica
Prime Money Market Fund and $1,160,424 for the Pacifica Treasury Money Market
Fund after total reductions in the advisory and management fee of $1,001,091
and $1,385,463 for each Fund, respectively.
(B) The Trust has entered into service agreements with certain
institutions ("service organizations") that may be affiliated with FICM. The
service organizations render shareholder accounting and support services to
their customers who are the beneficial owners of shares of the Trust. The
Funds pay the service organizations fees at an annual rate of up to .25 of 1%
of the average daily net asset value of the Service and Institutional shares
held by the service organizations for the benefit of their customers.
Agreements between the Funds and service organizations are terminable at any
time by the Funds without penalty. From October 1, 1994 through August 10,
1995, the service organizations voluntarily agreed to reduce the fees payable
to them by each Fund by .10 of 1% of the average daily value of the
respective Fund's net assets. From August 11, 1995 through September 30,
1995, the service organizations voluntarily agreed to reduce the fees payable
to them by the Pacifica Prime Money Market and Pacifica Treasury Money Market
Funds by .05 of 1% and .04 of 1% of the average daily value of the respective
Fund's net assets for the Service shares. Additionally, From August 11, 1995
through September 30, 1995, there were no fees charged by service organization
s on Institutional shares. For the year ended September 30, 1995, the
Pacifica Prime Money Market Fund and Pacifica Treasury Money Market Fund made
payments to service organizations, totalling $899,761 and $1,461,465 (which
include payments to affiliates of $894,783 and $1,461,465), respectively, net
of amounts voluntarily waived, which were $544,645 and $843,250,
respectively.
(C) During the year ended September 30, 1995, FICAL, a wholly-owned
banking subsidiary of First Interstate Bancorp, served as the Custodian and
Transfer Agent of the Funds. For such period, custodian fees amounted to
$67,459 and $108,325 for the Pacifica Prime Money Market Fund and Pacifica
Treasury Money Market Fund, respectively. No fees were paid to FICAL as
Transfer Agent, although it did receive payments as a service organization as
described in Note 3(b) above. Effective October 1, 1995, Furman Selz became
the Fund's Transfer Agent.
(D) For the year ended September 30, 1995, each trustee received from the
Trust $5,000 per annum plus $1,000 per regular meeting attended, $500 per
committee meeting attended, and reimbursement for travel and out-of-pocket
expenses.
PACIFICA FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4-SHARES OF BENEFICIAL INTEREST:
At September 30, 1995, there were an unlimited number of Service and
Institutional shares of Beneficial Interest authorized for each portfolio.
Transactions in the Fund's Service and Institutional shares of each
portfolio were all at $1.00 per share and are summarized as follows (000's
omitted):
<TABLE>
<CAPTION>
PACIFICA PRIME MONEY MARKET FUND PACIFICA TREASURY MONEY MARKET FUND
____________________________________________ ___________________________________________
YEAR ENDED SIX MONTHS ENDED YEAR ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1994* 1995 1994 1994* 1995
_______ _________ _______ _________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Service shares........... $9,426,994 $3,580,239 $8,252,511 $9,765,954 $5,705,462 $20,388,948
Institutional shares..... __ __ 104,661 __ __ 120,817
Shares redeemed:
Service shares........... (9,367,884) (3,542,533) (8,203,819) (9,725,210) (5,669,781) (20,077,871)
Institutional shares..... __ __ (74,055) __ __ (84,374)
_______ _________ _______ _________ ________ ________
Net increase............... $59,110 $ 37,706 $79,298 $40,744 $35,681 $ 347,520
========= ========= ========= ======== ========= ============
*The Funds changed their fiscal year ends from March 31 to September 30.
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS:
Reference is made to page __ of the Fund's Prospectus dated December 15, 1995.
PACIFICA FUNDS TRUST
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF TRUSTEES
PACIFICA FUNDS TRUST
We have audited the accompanying statement of assets and liabilities,
including the statements of investments, of Pacifica Prime Money Market Fund
and Pacifica Treasury Money Market Fund (two of the portfolios comprising
Pacifica Funds Trust), as of September 30, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets
and financial highlights for the year ended September 30, 1995 and the six
months ended September 30, 1994. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statement of changes in net
assets for the year ended March 31, 1994 and the financial highlights for
each of the four years in the period ended March 31, 1994 were audited by
other auditors whose report dated May 4, 1994 expressed an unqualified
opinion on that statement and those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included verification by
examination of securities held by the Custodian as of September 30, 1995, and
confirmation of securities not held by the Custodian by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above and audited by us present fairly, in all material respects,
the financial position of Pacifica Prime Money Market Fund and Pacifica
Treasury Money Market Fund, at September 30, 1995, and the results of their
operations for the year then ended and the changes in their net assets and
the financial highlights for the year then ended and for the six months ended
September 30, 1994, in conformity with generally accepted accounting
principles.
[Ernst & Young signature logo]
New York, New York
November 15, 1995
