<PAGE> 1
[PACIFICA LOGO]
(SERVICE SHARES)
PACIFICA PRIME MONEY
MARKET FUND
PACIFICA TREASURY
MONEY MARKET FUND
PROSPECTUS
FEBRUARY 1, 1996
As Revised February 9, 1996
[FIRST INTERSTATE BANK LOGO]
Investment Advisor to The Pacifica Funds
<PAGE> 2
PACIFICA FUNDS TRUST
(SERVICE SHARES)
237 PARK AVENUE, NEW YORK, NEW YORK 10017
GENERAL AND ACCOUNT INFORMATION:
(800) 662-8417
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. --
INVESTMENT ADVISOR
("FICM" OR THE "ADVISOR")
THE DREYFUS CORPORATION -- ADMINISTRATOR
(THE "ADMINISTRATOR")
PACIFICA FUNDS DISTRIBUTOR INC. -- DISTRIBUTOR
("PFD INC." OR THE "DISTRIBUTOR")
Pacifica Funds Trust (the "Trust") is an open-end investment company (a
mutual fund) that offers a selection of separate investment portfolios. This
Prospectus describes the Service Shares of the following two money market funds
(the "Funds"):
- Pacifica Prime Money Market Fund
- Pacifica Treasury Money Market Fund
Service Shares of the Funds are sold to investors maintaining qualified
accounts at bank affiliates of First Interstate Bancorp or other banks or
institutions designated by First Interstate Bancorp ("Banks").
This Prospectus sets forth concisely the information a prospective investor
should know before investing in either of the Funds and should be read and
retained for future reference. A Statement of Additional Information for the
Funds' Service and Institutional Shares (the "SAI") dated February 1, 1996
(which may be revised from time to time), containing additional and more
detailed information about the Funds, has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference into the
Prospectus. For a free copy, call the telephone number above.
----------------------------
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FIRST INTERSTATE OR OTHER BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996.
(Revised as of February 9, 1996)
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND EXPENSES............................................ 3
FEE TABLE -- SERVICE SHARES.............................. 3
FINANCIAL HISTORY........................................ 5
THE FUNDS................................................ 10
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS........... 10
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES....... 11
INVESTMENT RESTRICTIONS.................................. 16
MANAGEMENT OF THE FUNDS.................................. 17
HOW TO BUY SERVICE SHARES................................ 20
HOW TO EXCHANGE SERVICE SHARES........................... 22
HOW TO REDEEM SERVICE SHARES............................. 23
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES........ 23
OTHER INFORMATION........................................ 25
</TABLE>
2
<PAGE> 4
FUND EXPENSES
The following table lists the annual costs and expenses that an investor
will incur either directly or indirectly as a shareholder of a Fund's Service
Shares based upon the Fund's operating expenses for the year ended September 30,
1995, adjusted to reflect current fees and expenses. See "Other
Information -- Capitalization."
FEE TABLE -- SERVICE SHARES
<TABLE>
<CAPTION>
PRIME TREASURY
MONEY MONEY
MARKET MARKET
FUND FUND
------ --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)............. None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price).................................... None None
Deferred Sales Load (as a percentage of
redemption proceeds)...................... None None
Redemption Fees.............................. None None
Exchange Fee................................. None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers)+............. 0.12% 0.12%
Other Expenses (after waivers)++............. 0.33 0.34
----- -----
TOTAL FUND OPERATING EXPENSES:
(after waivers)+++........................... 0.45% 0.46%
===== =====
</TABLE>
- ---------------
+ The investment advisory agreement for the Funds provides for management
fees payable 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. These amounts may be reduced pursuant to
undertakings by the Advisor.
++ Other Expenses (before waivers) would be 0.38% for the Prime Money
Market Fund and 0.38% for the Treasury Money Market Fund.
+++ Total Fund Operating Expenses (before waivers) would be 0.63% for the
Prime Money Market Fund and 0.62% for the Treasury Money Market Fund.
The purpose of this table is to assist shareholders in understanding the
various costs and expenses that an investor in the Fund's Service Shares
3
<PAGE> 5
will bear. The table does not reflect any charges that may be imposed by a First
Interstate Bank or other institution directly on their customer accounts in
connection with investments in the Funds.
EXAMPLE:+
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:++
<TABLE>
<CAPTION>
PRIME TREASURY
MONEY MONEY
MARKET MARKET
FUND FUND
------ --------
<S> <C> <C>
1 year....................................... $ 5 $ 5
3 years...................................... 14 15
5 years...................................... 25 26
10 years..................................... 57 58
</TABLE>
- ---------------
+ THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN
IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE MORE OR LESS THAN THE ASSUMED
AMOUNT.
++ The amount of expenses a Service class shareholder would pay without
waivers under these assumptions and assuming redemption after one, three,
five and ten years would be $6, $20, $35 and $79, respectively, for the
Prime Money Market Fund and $6, $20, $35 and $77, respectively, for the
Treasury Money Market Fund.
4
<PAGE> 6
FINANCIAL HISTORY
The financial data shown below is to assist investors in evaluating the
performance of the Funds for each of the ten years in the period ended September
30, 1995. The following information for the year ended September 30, 1995 and
the six months ended September 30, 1994 has been audited by Ernst & Young LLP,
the Funds' current independent auditors, whose report on the financial
statements appears in the 1995 Annual Report to Shareholders for the Funds.
Their report and the financial statements are incorporated by reference into the
SAI. The following information for each of the four years in the period ended
March 31, 1994 has been audited by the Funds' former independent accountants.
Prior to August 11, 1995, the Funds offered only one class of shares to
institutional investors, which class is now known as Service Shares. The Funds
currently offer three classes of shares to institutional and non-institutional
investors. See "Other Information -- Capitalization."
5
<PAGE> 7
PRIME MONEY MARKET FUND*
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning
of year.......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997 $ .9998
-------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
OPERATIONS:
Investment
income -- net.... .0754 .0581 .0634 .0764 .0849 .0745 .0510 .0327 .0296
Net realized gain
(loss) on
investments...... -- -- -- -- -- -- (.0003) .0001 --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from
Investment
Operations...... .0754 .0581 .0634 .0764 .0849 .0745 .0507 .0328 .0296
-------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from
investment
income -- net.... (.0754) (.0581) (.0634) (.0764) (.0849) (.0745) (.0510) (.0327) (.0296)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value,
end
of year.......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997 $ .9998 $ .9998
======== ======== ======== ======== ======== ======== ======== ======== ========
Total Investment
Return.......... 7.80% 5.97% 6.50% 7.88% 8.82% 7.72% 5.22% 3.32% 3.00%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses
to average net
assets........... .66%(2) .68%(3) .58%(4) .56%(4) .54%(5) .47%(6) .43%(7) .41%(8) .41%(9)
Ratio of net
investment income
to average net
assets........... 7.47%(2) 5.81%(3) 6.38%(4) 7.58%(4) 7.95%(5) 7.38%(6) 5.09%(7) 3.27%(8) 2.96%(9)
Net Assets, end of
year (000's
Omitted)......... $350,344 $407,815 $628,987 $496,675 $493,641 $543,834 $528,397 $468,479 $527,599
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FISCAL
ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994** 1995
------------- -------------
<S> <C> <C>
PER SHARE DATA:
Net asset value,
beginning
of year.......... $ .9998 $ .9998
--------- ---------
INVESTMENT
OPERATIONS:
Investment
income -- net.... .0185 .0546
Net realized gain
(loss) on
investments...... -- --
--------- ---------
Total from
Investment
Operations...... .0185 .0546
--------- ---------
DISTRIBUTIONS:
Dividends from
investment
income -- net.... (.0185) (.0546)
--------- ---------
Net asset value,
end
of year.......... $ .9998 $ .9998
=========== =========
Total Investment
Return.......... 3.71%(1) 5.60%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses
to average net
assets........... .41%(1)(10) .41%(11)
Ratio of net
investment income
to average net
assets........... 3.67%(1)(10) 5.47%(11)
Net Assets, end of
year (000's
Omitted)......... $ 565,305 $ 614,101
</TABLE>
- ---------------
* The Prime Money Market Fund operated as Pacific American Liquid Assets, Inc.
from commencement of operations on April 30, 1981 until it was reorganized
as a portfolio of Pacific American Fund on October 1, 1985. On October 1,
1994, the Fund was reorganized as the "Pacific American Money Market
Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the Fund was
renamed the "Pacifica Prime Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end changed from March 31 to
September 30.
(Footnotes continued on next page)
6
<PAGE> 8
(Footnotes continued from previous page)
(1) Annualized basis.
(2) During the year ended March 31, 1986, the Fund's investment advisor waived
a portion of its fees (.13% of average net assets).
(3) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees (.25% of average net assets). In addition, during the
period from January 1, 1987 to March 31, 1987, the Fund's investment
advisor waived an additional portion of its fees (.02% of average net
assets).
(4) During the years ended March 31, 1988 and 1989, the Fund's investment
advisor waived a portion of its fees (.35% and .34% of average net assets,
respectively.)
(5) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(6) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(7) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(8) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(9) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(10) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.48% (annualized) of average net assets).
(11) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.27% of average net assets).
7
<PAGE> 9
TREASURY MONEY MARKET FUND*
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------
1986(1) 1987 1988 1989 1990 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of
year............. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- --------
INVESTMENT
OPERATIONS:
Investment
income -- net.... .0353 .0550 .0604 .0743 .0827 .0716
Net realized gain
(loss) on
investments...... -- -- -- -- -- .0003
-------- -------- -------- -------- -------- --------
Total from
Investment
Operations...... .0353 .0550 .0604 .0743 .0827 .0719
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from
investment
income -- net.... (.0353) (.0550) (.0604) (.0743) (.0827) (0.716)
-------- -------- -------- -------- -------- --------
Dividends from net
realized gain on
investment....... -- -- -- -- -- (.0002)
-------- -------- -------- -------- -------- --------
Total
Distributions... (.0353) (.0550) (.0604) (.0743) (.0827) (.0718)
-------- -------- -------- -------- -------- --------
Net asset value,
end of year....... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001
======== ======== ======== ======== ======== ========
Total Investment
Return.......... 7.18%(2) 5.64% 6.20% 7.63% 8.58% 7.42%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses
to average net
assets........... .80%(2)(3) .69%(4) .69%(5) .63%(6) .56%(7) .48%(8)
Ratio of net
investment income
to average net
assets........... 6.91%(2)(3) 5.50%(4) 6.12%(5) 7.36%(6) 7.73%(7) 7.10%(8)
Net Assets, end of
year (000's
Omitted)......... $123,243 $134,375 $101,066 $ 90,672 $ 98,398 $118,623
<CAPTION>
SIX MONTHS FISCAL
FISCAL YEAR ENDED MARCH 31, ENDED YEAR ENDED
---------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1994** 1995
-------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of
year............. $ 1.0001 $ .9999 $ 1.0001 $ 1.0000 $ 1.0000
-------- -------- -------- -------- ----------
INVESTMENT
OPERATIONS:
Investment
income -- net.... .0489 .0309 .0277 .0186 .0529
Net realized gain
(loss) on
investments...... .0002 .0002 -- -- --
-------- -------- -------- -------- ----------
Total from
Investment
Operations...... .0491 .0311 .0277 .0186 .0529
-------- -------- -------- -------- ----------
DISTRIBUTIONS:
Dividends from
investment
income -- net.... (.0489) (.0309) (.0277) (.0186) (.0529)
-------- -------- -------- -------- ----------
Dividends from net
realized gain on
investment....... (.0004) -- (.0001) -- --
-------- -------- -------- -------- ----------
Total
Distributions... (.0493) (.0309) (.0278) (.0186) (.0529)
-------- -------- -------- -------- ----------
Net asset value,
end of year....... $ .9999 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ==========
Total Investment
Return.......... 5.03% 3.13% 2.81% 3.75%(2) 5.42%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses
to average net
assets........... .45%(9) .43%(10) .43%(11) .43%(2)(12) .42%(13)
Ratio of net
investment income
to average net
assets........... 4.73%(9) 3.04%(10) 2.77%(11) 3.72%(2)(12) 5.32%(13)
Net Assets, end of
year (000's
Omitted)......... $281,343 $614,237 $654,950 $690,630 $1,001,707
</TABLE>
- ---------------
* Prior to August 1, 1990, the Treasury Money Market Fund was known as the
Short-Term Government Fund and invested in obligations issued or guaranteed
by agencies and instrumentalities of the U.S. Government in accordance with
fundamental policies that were then effective for the Fund. The Treasury
Money Market Fund operated as a portfolio of Pacific American Fund through
October 1, 1994 when it was reorganized as the "Pacific American U.S.
Treasury Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the
Fund was renamed the "Pacifica Treasury Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end changed from March 31 to
September 30.
(Footnotes continued on next page)
8
<PAGE> 10
(Footnotes continued from previous page)
(1) From October 1, 1985 (commencement of operations) to March 31, 1986.
(2) Annualized basis.
(3) During the period from October 1, 1985 (Commencement of Operations) to
March 31, 1986, the Fund's investment advisor waived a portion of its fees
(.25% (annualized) of average net assets).
(4) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees aggregating $264,629 (.25% of average net assets). In
addition, during the period from January 1, 1987 to March 31, 1987, the
Fund's investment advisor and the Fund's prior distributor waived a portion
of their respective fees (.09% of average net assets).
(5) During the year ended March 31, 1988, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(6) During the year ended March 31, 1989, the Fund's investment advisor waived
a portion of its fees (.35% of average net assets).
(7) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.41% of
average net assets).
(8) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.46% of average net assets).
(9) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(10) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(11) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(12) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.47% (annualized) of average net assets).
(13) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.24% of average net assets).
9
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THE FUNDS
The Funds are portfolios of Pacifica Funds Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts as an open-end,
management investment company. The Trust's Board of Trustees oversees the
overall management of the Funds and elects the officers of each Fund.
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund seeks to maintain a net asset value of $1.00 per share. Their
assets consist only of obligations with remaining maturities (as defined by the
SEC) of 13 months or less at the date of acquisition, and the dollar-weighted
average maturity of each Fund's investments is 90 days or less. There can be no
assurance that each Fund's investment objective as described below will be
achieved or that the Funds will be able to maintain a net asset value of $1.00
per share.
The Prime Money Market Fund's investment objective is to seek the
maximization of current income to the extent consistent with the preservation of
capital and maintenance of liquidity. To achieve its objective the Prime Money
Market Fund may invest in a broad range of short-term, high quality U.S.
dollar-denominated instruments, consisting of commercial paper, certificates of
deposit, bankers' acceptances, time deposits, bank notes, variable rate master
demand note agreements, medium-term notes, corporate notes, U.S. Agency
obligations and U.S. Treasury obligations. The Prime Money Market Fund also
invests in repurchase agreements collateralized or secured by U.S. Agency
obligations and U.S. Treasury obligations.
The Treasury Money Market Fund's investment objective is to seek current
income and stability of principal. To achieve its objective, the Treasury Money
Market Fund's fundamental policy is to invest only in obligations issued or
guaranteed by the U.S. Treasury and in notes and other instruments, including
repurchase agreements, collateralized or secured by such obligations. The Funds'
investment objectives, and the Treasury Money Market Fund's fundamental policy
stated above, may not be changed without the vote of a majority of the
outstanding shares of the particular Fund.
Each Fund will purchase only "First Tier Eligible Securities" (as defined
by the SEC) that present minimal credit risks as determined by FICM pursuant to
guidelines approved by the Trust's Board of Trustees. First Tier Eligible
Securities consist of (i) securities that either (a) have
10
<PAGE> 12
short-term debt ratings at the time of purchase in the highest rating category
by at least two unaffiliated nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if the security was rated by only one
NRSRO), or (b) are issued by issuers with such ratings, and (ii) certain
securities that are unrated (including securities of issuers that have long-term
but not short-term ratings) but are of comparable quality as determined in
accordance with guidelines approved by the Board of Trustees. The Appendix to
the SAI includes a description of applicable NRSRO ratings.
The types of securities and investment practices used by the Funds are
described in greater detail below under "Description of Securities and
Investment Practices."
DESCRIPTION OF SECURITIES AND
INVESTMENT PRACTICES
INFORMATION FOR BOTH FUNDS
The Treasury Money Market Fund may invest only in obligations issued or
guaranteed by the U.S. Treasury such as bills, notes, bonds and certificates of
indebtedness, and in notes and repurchase agreements collateralized or secured
by such obligations. These obligations may also include U.S. Treasury STRIPS
(U.S. Treasury securities that have been separated into their component parts of
principal and interest payments and recorded as such in the Federal Reserve
book-entry record keeping system). The Prime Money Market Fund may invest in
U.S. Treasury obligations, as well as in obligations of agencies and
instrumentalities of the U.S. Government. Some obligations issued or guaranteed
by U.S. Government agencies and instrumentalities, such as Government National
Mortgage Association pass-through certificates, are supported by the full faith
and credit of the U.S. Government; others, such as those of the Federal Home
Loan Banks, by the right of the issuer to borrow from the U.S. Treasury; others,
such as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, such as some obligations issued by
the Student Loan Marketing Association, only by the credit of the agency or
instrumentality. While the U.S. Government provides financial support to these
latter U.S. Government-sponsored agencies and instrumentalities, no assurance
can be given that it will always do so since such support is not required by
law. The Prime Money Market Fund will invest in such securities only
11
<PAGE> 13
when FICM is satisfied that the credit risk with respect to the issuer is
minimal.
Each Fund may engage in repurchase agreements with financial institutions
such as banks or broker-dealers. In these transactions, a Fund buys a security
at one price and simultaneously promises to sell that same security back to the
seller at a higher price. Securities purchased subject to repurchase agreements
are deposited with the Fund's 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 value of the repurchase price
plus accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. The repurchase date is generally within
seven days of the original purchase, but in no event more than 365 days. In all
cases, FICM must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of the
bankruptcy or default of the other party to a repurchase agreement, the Fund
could experience delays and costs in recovering its cash. To the extent that, in
the meantime, the value of the securities purchased may have decreased, the Fund
could experience a loss. Repurchase agreements may be considered to be loans by
the Fund under the Investment Company Act of 1940, as amended (the "1940 Act") .
Securities purchased by a Fund may include variable and floating rate
instruments, which may have a stated maturity in excess of the Fund's maturity
limitations but are deemed to have shorter maturities because the Fund can
demand payment of the principal of the instrument at least once every thirteen
months upon not more than thirty days' notice (this demand feature is not
required if an instrument is guaranteed by the U.S. Government or an agency or
instrumentality thereof). These instruments may include variable amount master
demand notes that permit the indebtedness thereunder to vary in addition to
providing for periodic adjustments in the interest rate. There may be no active
secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to a Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days notice and do not have an active trading market) that
are acquired by a Fund are subject to the percentage limitations described
below.
Each Fund will not knowingly invest more than 10% of the value of its net
assets in securities that are illiquid. Repurchase agreements that do not
provide for payment to a Fund within seven days after notice, and securities
12
<PAGE> 14
that are not registered under the Securities Act of 1933 but that may be
purchased by institutional buyers under Rule 144A, are subject to this 10% limit
(unless, in the case of the Prime Money Market Fund, such securities are
variable amount master demand notes with maturities of nine months or less or
unless the Board or FICM, pursuant to guidelines adopted by the Board,
determines that a liquid trading market exists).
Each Fund may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "forward commitment" basis. The Funds may also purchase
or sell securities on a "delayed settlement" basis. When-issued and forward
commitment transactions, which involve a commitment by a Fund to purchase or
sell particular securities with payment and delivery taking place at a future
date (perhaps one or two months later), permit the Fund to lock in a price or
yield on a security it owns or intends to purchase, regardless of future changes
in interest rates. Delayed settlement describes settlement of a securities
transaction in the secondary market which will occur sometime in the future.
When issued, forward commitment and delayed settlement transactions involve the
risk, however, that the yield or price obtained in a transaction may be less
favorable than the yield or price available in the market when the securities
delivery takes place. A Fund's forward commitments, when-issued purchases and
delayed settlements are not expected to exceed 25% of the value of the Fund's
total assets absent unusual market conditions. The Funds do not intend to engage
in these transactions for speculative purposes but only in furtherance of their
investment objectives.
Each Fund may borrow monies for temporary purposes by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, a Fund would sell portfolio securities to
financial institutions and agree to repurchase them at an agreed upon date and
price. At the time a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account liquid assets or high grade debt
securities having a value equal to or greater than the repurchase price and FICM
will continuously monitor the account to ensure that the value is maintained. A
Fund would only enter into reverse repurchase agreements to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions.
Reverse repurchase agreements involve the risk that the market value of the
portfolio securities sold by a Fund may decline below the price of the
securities the Fund is obligated to repurchase. Interest paid by a Fund in
connection with a reverse repurchase agreement will reduce the Fund's net
investment income. The Funds currently intend to limit their investments in
reverse repurchase agreements to no more than 20% of their total assets and will
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only engage in such transactions with primary dealers. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.
The Funds may attempt to increase yields by trading to take advantage of
short-term market variations. This policy could result in high portfolio
turnover, but should not adversely affect the Funds since they do not ordinarily
pay brokerage commissions on the purchase of short-term debt obligations.
In connection with the management of their daily cash positions, each Fund
may invest up to 10% of its assets in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. The Treasury Money Market Fund may only
invest in shares of other investment companies that are structured to seek a
similar investment objective. As a shareholder of another investment company, a
Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses including advisory fees. These expenses
would be in addition to the advisory fees and other expenses the Fund bears
directly in connection with its own operations. Securities of other investment
companies will be acquired by the Funds within the limits prescribed by the 1940
Act.
ADDITIONAL PORTFOLIO INFORMATION FOR PRIME MONEY MARKET FUND
In addition to the types of instruments described above, the Prime Money
Market Fund may purchase U.S. dollar-denominated bank obligations such as time
deposits, certificates of deposit, bankers' acceptances, bank notes and deposit
notes issued by domestic and foreign banks. Time deposits are non-negotiable
deposits maintained at a banking institution for a specified period of time
normally at a stated interest rate. Certificates of deposit are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time. Bankers acceptances are negotiable deposits or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank (meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument at maturity).
Bank notes usually represent senior debt of the bank.
The Prime Money Market Fund may also purchase commercial paper, short-term
notes, medium-term notes and bonds issued by domestic and foreign corporations
that meet the Fund's maturity limitations.
Commercial paper purchased by the Fund may include paper issued in reliance
on the so-called "private placement" exemption under Sec-
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tion 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2)
paper is restricted as to disposition under the federal securities laws and
generally is sold to institutional investors such as the Fund that agree that
they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through
or with the assistance of the issuer or investment dealers that make a market in
Section 4(2) paper. Section 4(2) paper will not be subject to the Fund's 10%
limitation on illiquid securities described above where the Board of Trustees or
FICM (pursuant to guidelines adopted by the Board) determines that a liquid
trading market exists.
The Prime Money Market Fund may also lend its portfolio securities in order
to increase income to broker-dealers and other institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral
equal at all times in value to at least the market value of the securities
loaned plus accrued interest. Collateral for such loans may include cash, U.S.
Treasury securities or other U.S. government securities or an irrevocable letter
of credit issued by a bank which meets the investment standards of the Fund.
Such loans will not be made if, as a result, the aggregate of all outstanding
loans of the Fund exceeds one-third of the value of its total assets. There may
be risks 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 Prime Money Market Fund may also invest in U.S. dollar denominated
obligations issued or guaranteed by foreign governments or any of their
political subdivisions, agencies or instrumentalities. Such obligations include
debt obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples of these include the
International Bank for Reconstruction and Development (the "World Bank"), the
Asian Development Bank and the InterAmerican Development Bank.
The Prime Money Market Fund may purchase asset-backed securities, which are
securities backed by mortgages, installment sales contracts, credit card
receivables or other assets. The average life of asset-backed securities varies
with the maturities of the underlying instruments, and the average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as
the result of mortgage prepayments. For this and other reasons, an asset-backed
security's stated maturity may be shortened, and
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<PAGE> 17
the securities' total return may be difficult to predict precisely. Such
difficulties are not, however, expected to have a significant effect on the Fund
since the remaining maturity of any asset-backed security acquired will be
thirteen months or less. Asset-backed securities purchased by the Fund may
include collateralized mortgage obligations ("CMOs") issued by private
companies.
Since the Prime Money Market Fund may purchase securities issued by foreign
issuers, the Fund may be subject to investment risks that are different in some
respects from those incurred by a fund which invests exclusively in debt
obligations of domestic issuers. Such potential risks include future political
and economic developments, the possible imposition of withholding taxes on
interest income payable on the securities by the particular country in which the
issuer is located, the possible seizure or nationalization of foreign deposits,
the possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on these securities. In addition, foreign banks and other issuers
are not necessarily subject to the same regulatory requirements that apply to
domestic issuers (such as reserve requirements, loan limitations, examinations,
accounting, auditing and recordkeeping requirements, and public availability of
information), and the Fund may experience difficulties in obtaining or enforcing
a judgment against a foreign issuer. Absent any unusual market conditions, the
Fund will not invest more than 25% of its total assets in securities issued by
foreign issuers.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions that may
be changed only with the approval of a majority of the outstanding shares of the
Fund. The following descriptions summarize several of the Funds' fundamental
investment restrictions, which are set forth in full in the SAI.
Neither Fund may:
1. purchase securities (with certain exceptions including U.S. Treasury
securities) if more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this 5% limitation; and
2. invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry
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(with certain exceptions including U.S. Government securities and, with
respect to the Prime Money Market Fund, the obligations of U.S. banks
and certain U.S. branches of foreign banks).
These investment restrictions are applied at the time investment securities
are purchased. As a matter of non-fundamental 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 non-U.S. governmental issuer to not
more than 5% of its total assets at the time of purchase, provided that the
Prime Money Market Fund may invest up to 25% of its assets in the obligations of
one non-U.S. governmental issuer for a period of up to three business days.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the direction of
the Board of Trustees. Information about the Trustees, as well as the Funds'
executive officers, may be found in the SAI under the heading "Trustees and
Officers."
ADVISOR
First Interstate Capital Management, Inc. serves as the Funds' investment
advisor. FICM is an indirect wholly-owned subsidiary of First Interstate
Bancorp, a publicly-held, multi-state bank holding company.
FICM supervises and assists in the overall management of the Funds' affairs
pursuant to an Investment Advisory and Management Agreement, subject to the
overall authority of the Board of Trustees. These management responsibilities
include, among other things, making decisions and placing orders for all
purchases and sales of the Funds' investment securities, furnishing economic and
statistical information as requested by the Board of Trustees, and monitoring
the Funds' arrangements with Service Organizations. Under its Agreement, FICM is
entitled to a fee, computed daily and payable monthly, at the 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. The advisory fee FICM receives may be
reduced in some cases by the amount paid to the Funds' Service Organizations
(see "Servicing Agreements" below), and FICM may voluntarily waive an additional
portion of the advisory fee payable by the Funds from time to time. The
annualized effective rates of the advisory fees paid by the Prime Money Market
Fund and the Treasury Money Market
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Fund were (after fee reductions and waivers) 0.12% and 0.13%, respectively, of
the average net assets of the Funds for the fiscal year ended September 30,
1995.
FICM maintains offices at 7501 East McCormick Parkway, Scottsdale, Arizona
85258.
On January 24, 1996, First Interstate Bancorp signed a definitive merger
agreement to merge with Wells Fargo & Company ("Wells Fargo"), a publicly-held
bank holding company with its head office at 420 Montgomery Street, San
Francisco, California 94104. The merger is conditioned upon, among other things,
certain regulatory approvals. Upon completion of the merger, currently expected
to occur during the second quarter of 1996, FICM will be wholly-owned by Wells
Fargo, and the existing investment advisory agreement between the Trust and FICM
will automatically terminate. It is contemplated that an application will be
filed with the Securities and Exchange Commission to ensure there is no
disruption as a result of the merger in the provision of investment advisory
services to the Funds, and that a meeting of shareholders will be held not later
than 120 days after the merger to approve ongoing investment advisory
arrangements for the Funds.
ADMINISTRATOR
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. The Administrator, as of November 30, 1995, managed
or administered approximately $83 billion in assets for more than 1.7 million
investor accounts nationwide. Pursuant to its Administration Agreement with the
Funds, 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 each Fund's shares and dividends and capital
gains distributions to shareholders; and generally assists in all aspects of the
Funds' operations (except with respect to investment management services). For
its administrative services for the fiscal year ended September 30, 1995, the
Administrator received a fee from each Fund at the annual rate of 0.10% of each
Fund's average daily net assets. From time to time, the Administrator may waive
all or a portion of its fees with respect to a Fund.
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DISTRIBUTOR
Pacifica Funds Distributor Inc., located at 230 Park Avenue, New York, New
York 10169, acts as distributor for the Funds. PFD Inc. is an affiliate of
Furman Selz LLC ("Furman Selz") and was organized specifically to distribute
shares of the Trust; however, offers and sales of shares of the Trust will be
made only through Furman Selz or other registered (or exempt) dealers.
CUSTODIAN
First Interstate Bank of California ("FICAL") is the Funds' Custodian and
receives fees for its custodial services as described in the SAI. FICAL
maintains offices at 707 Wilshire Blvd., Los Angeles, California 90017.
TRANSFER AND DIVIDEND DISBURSING AGENT
Furman Selz serves as the Funds' Transfer and Dividend Disbursing Agent.
Furman Selz maintains offices at 230 Park Avenue, New York, New York 10169.
SERVICING AGREEMENTS
The Funds have entered into Servicing Agreements with certain banks and
other institutions that are record shareholders of the Funds' Service Shares
("Service Organizations"). The Service Organizations render support services to
their customers ("Customers"), who are the beneficial owners of Service Shares,
in consideration of the Funds' payment (on an annualized basis) of up to 0.25%
of the average daily net asset value of the Service Shares held by the Service
Organizations for the benefit of their Customers. From time to time, the Service
Organizations may waive all or a portion of their fees with respect to Service
Shares of a Fund. FICM, FICAL and their affiliates are eligible to become
Service Organizations and receive fees under Servicing Agreements. Such
services, which are described more fully in the SAI, include aggregating and
processing purchase and redemption requests for Fund shares from Customers and
placing net purchase and redemption orders with the Distributor, processing
dividend payments from the Funds on behalf of Customers, providing information
periodically to Customers showing their positions in Fund shares, and providing
sub-accounting with respect to Fund shares beneficially owned by Customers or
the information necessary for sub-accounting. 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
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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% of the
Fund's average daily net assets.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any non-bank
affiliate thereof from sponsoring, organizing, controlling, or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but do not prohibit such a holding company or affiliate, or banks
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 Customers. FICM and FICAL and certain of the Service
Organizations are subject to such banking laws and regulations.
In the event of changes in federal or state statutes or regulations or in
interpretations or decisions pertaining to permissible activities by banks, FICM
and FICAL or certain of the Service Organizations could be prevented from
continuing their arrangements with the Funds; however, in such an event it is
expected that the Funds' Board of Trustees would make other arrangements and
shareholders would not suffer adverse financial consequences.
HOW TO BUY SERVICE SHARES
Service Shares of each Fund are sold to Customers of affiliate, franchise
or correspondent banks of First Interstate Bancorp and other selected
institutions (the "Banks"). Clients of a Bank's trust division, as well as
individuals, corporations, partnerships and other businesses which maintain
qualified accounts at a Bank (including Individual Retirement and Keogh Plan
accounts) may invest in the Funds. Investors purchasing Fund shares may include
officers, directors or employees of a Bank.
All Service Share purchases are effected through Customers' accounts at
their Banks. Differing types of Bank accounts may from time to time purchase
Service Shares, including discretionary and non-discretionary personal and other
trust accounts, managing agency accounts and custodian accounts. The Funds have
no minimum investment requirement, although the Banks may impose account
minimums in connection with investments in the Funds.
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<PAGE> 22
Service Shares are purchased through procedures established in connection
with the requirements of such Bank accounts. These procedures may include
instructions under which a Customer's account is "swept" automatically, usually
not less frequently than weekly, and amounts (federal funds) in excess of a
minimum balance agreed to by the Bank and the Customer are invested in Service
Shares of one or both of the Funds as directed by the Customer. The Funds expect
that Banks will transmit orders for the purchase of Service Shares arising from
automatic investment programs the same day as the "excess" balances are swept.
Depending upon the terms of the particular account, a Bank may charge a
Customer's account fees for the automatic sweep and other cash management
services provided, including, for example, account maintenance fees,
compensating balance requirements, or fees based upon account transactions,
assets, or income. Banks are responsible for providing information concerning
these services and their charges to their Customers prior to any purchase of
Service Shares, and an investor should read this Prospectus in light of the
terms of the investor's Bank account before investing.
Service Shares normally will be registered in the name of a Bank or a
nominee of a Bank. The Bank will receive a written statement at least monthly of
each purchase or redemption of shares. Beneficial ownership of Service Shares
will be recorded by the Banks and reflected in the account statements provided
by such Banks to their Customers at such times as the Banks may determine.
It is the responsibility of the Banks to transmit orders for purchases of
Service Shares by their Customers to the Transfer Agent, and for the Banks to
deliver required funds on a timely basis. Each Fund's Service Shares are sold on
a continuous basis, without a sales charge imposed by the Funds, at the per
share net asset value next determined after federal funds (which are held on
deposit at a Federal Reserve Bank) are received by Furman Selz as Transfer
Agent. The net asset value per share ("NAV") for each Fund is calculated daily
at 12:00 noon, Pacific time, on days when the Funds are open for business (i.e.,
days on which the San Francisco branch of the Federal Reserve Bank, FICAL as the
Funds' Custodian and, in the case of the Treasury Money Market Fund, the New
York Stock Exchange are open).
The NAV of the Service Shares of the Funds is computed by dividing the
value of a Fund's assets allocated to its Service Shares, less the liabilities
charged to that class, by the total number of outstanding shares of that class.
Each Fund uses the amortized cost method of valuing its securities. This
technique involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or
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<PAGE> 23
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty valuation, it may
result in periods during which value, as determined by amortized cost, is higher
or lower than the price a Fund would receive if it sold the instrument.
Federal regulations generally require that investors provide a certified
Taxpayer Identification Number ("TIN") upon opening an account. See "Dividends,
Distributions and Federal Income Taxes" for further information concerning this
requirement. Failure to furnish a certified TIN could subject the investor to a
$50 penalty by the Internal Revenue Service (the "IRS"). In the interest of
economy and convenience, certificates for Fund shares will not be issued.
Shareholder inquiries and further information regarding purchases of Fund shares
or the names of participating Banks may be obtained by calling (800) 662-8417.
The Funds reserve the right to reject any purchase order.
HOW TO EXCHANGE SERVICE SHARES
Each Fund's Service Shares may be exchanged without cost for Service Shares
of the other Fund described in this Prospectus. Exchange requests may be made by
a Customer to the Customer's Bank in accordance with the procedures or
instructions specified by the Bank. Consult your Bank for the proper procedure
to be followed. Banks will be responsible for transmitting exchange requests
from their Customers to the Funds. Exchanges will be made by the Funds following
the receipt by its Transfer Agent of an exchange request from a Bank.
An exchange involves a redemption of all or a portion of the Service Shares
in one Fund and the investment of the redemption proceeds in Service Shares of
the other Fund. The redemption will be made at the per share NAV of the Service
Shares to be redeemed next determined after the exchange request is received and
accepted by the Funds' Transfer Agent. The Service Shares of the Fund to be
acquired will be purchased at the NAV of those shares next determined after
acceptance of the purchase order by the Transfer Agent, in accordance with the
Funds' customary policy for accepting investments.
Bank Customers may find the exchange privilege useful if their investment
objectives or market outlook should change. Before making an exchange request,
please obtain and read the current prospectus for the Funds.
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<PAGE> 24
HOW TO REDEEM SERVICE SHARES
A Customer may redeem all or part of the value of the Customer's Service
Shares in accordance with instructions and limitations pertaining to the account
at the Customer's Bank. Consult your Bank for the appropriate procedures to be
followed.
All redemption requests properly received by Furman Selz as the Fund's
Transfer Agent from a Bank prior to 12:00 noon, Pacific time, on a day the Funds
are open for business, are effected at the next determined NAV calculated that
day. If the redemption request is received at or after 12:00 noon, Pacific time,
Service Shares will be redeemed at their next determined NAV the next business
day. It is the responsibility of Banks to transmit redemption orders on a timely
basis in accordance with their agreements with Customers.
The Funds ordinarily will transmit payment for all Service Shares redeemed
within two business days after receipt of a redemption request in proper form,
but in any event payment will be made within seven days thereafter, except as
provided by the rules of the SEC. During the period prior to the time the
redemption request is executed, dividends on such Service Shares will accrue and
be payable as described under "Dividends, Distributions and Federal Income
Taxes," and investors will be entitled to exercise all other beneficial rights
of ownership.
If an investor has agreed with a particular Bank to maintain a minimum
balance in an account, and the balance in the account falls below that minimum,
the investor may be obliged to redeem all of the investor's Service Shares in
the Funds.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES
Each Fund's net investment income ordinarily is declared as a dividend on
each day that the Funds are open for business. Dividends are paid within five
business days after the end of each month. Service Shares begin accruing
dividends on the day the purchase is effected and continue to accrue dividends
through the day before the redemption request is executed. Each Fund's earnings
for non-business days are declared as dividends to shareholders of record on the
preceding business day. All dividends are reinvested automatically in additional
Service Shares of that Fund at net asset value or, at the option of the Bank
Customer, as indicated on the authorization form provided by the Customer's
Bank, are either credited to the Customer's Bank account or paid in cash.
Distributions from net realized securities gains are normally declared and paid
once a
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year, but each Fund may make distributions on a more frequent basis to comply
with the distribution requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). In all cases distributions will be made in a manner that
is consistent with the provisions of the 1940 Act. Neither Fund will make
distributions from net realized securities gains unless capital loss carryovers,
if any, have been utilized or have expired. These distributions, if any, are
reinvested automatically in additional Service Shares of the Fund involved at
net asset value or, at the Customer's option, are credited as described above.
If all Service Shares in the account are redeemed at any time during the month,
all dividends to which the Customer is entitled will be paid within five
business days after the end of the month by crediting the Customer's Bank
account or, if this is not possible, in cash. All expenses are accrued daily and
deducted before declaration of dividends.
Notice as to the tax status of dividends and distributions declared by each
Fund is mailed annually. Each Customer will also receive periodic account
summaries which will include information as to income dividends and
distributions from securities gains, if any, declared during the year.
Since each Fund's income is derived from interest rather than dividends, no
portion of either Fund's dividends or distributions will qualify for the
dividends received deduction allowable to certain U.S. corporations. Dividends
from net investment income, together with distributions from the excess, if any,
of net realized short-term over net realized long-term losses and all or a
portion of the gains from the sale or other disposition of certain market
discount bonds, are taxable to those shareholders who are not exempt from
federal income taxes as ordinary income, whether or not reinvested in additional
shares. Distributions from net realized long-term securities gains, if any, are
taxable to those shareholders who are not exempt from federal income taxes as
long-term capital gains. Shareholders in the Funds may be subject to state and
local taxes on dividends and distributions declared by the Funds.
To avoid a federal excise tax, each Fund must distribute substantially all
of its ordinary income, and capital gain net income, if any, by the end of each
calendar year. Dividends or distributions, if any, payable to shareholders of
record on a date in October, November or December of any year are deemed to have
been paid in that year, if they are paid by the following January.
Federal regulations may require, in certain cases, a Customer's Bank to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of dividends
and distributions paid to such Customer if the Customer (i) has provided either
an incorrect TIN or no TIN at all, (ii) is subject to backup
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withholding by the Internal Revenue Service for failure to report the
receipt of taxable interest or dividend income properly, or (iii) has failed to
certify to the Bank that he or she is not subject to backup withholding or that
he or she is an "exempt recipient."
A TIN is either the Social Security number or employer identification
number of the beneficial owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
beneficial owner of the account, and may be claimed as a credit on the
beneficial owner's federal income tax return.
Each Fund will be treated as a separate entity for tax purposes, and has
qualified and intends to continue to qualify as a regulated investment company
under the Code as long as this qualification is in the best interest of its
shareholders. Such qualification generally relieves each Fund of liability for
federal income taxes to the extent its earnings are distributed in accordance
with the applicable provisions of the Code.
Investors should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
OTHER INFORMATION
CAPITALIZATION
Pacifica Funds Trust (formerly Fund Source) was organized as a
Massachusetts business trust on July 17, 1984, and consists of a series of
separately managed portfolios. This Prospectus relates to the Service Shares of
two of these managed portfolios -- the Pacifica Prime Money Market Fund and
Pacifica Treasury Money Market Fund -- which were reorganized as portfolios of
Pacifica Funds Trust on October l, 1994 and which are classified as diversified,
open-end management investment companies under the 1940 Act.
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 per share. The Board of
Trustees has authorized the issuance of three classes of shares in each of the
Funds -- Institutional Shares, Service Shares and Investor Shares. Each share of
a Fund is entitled to cash dividends and distributions earned on such Fund's
shares as are declared in the discretion of the Board of Trustees, and
represents the same proportionate interest in a particular Fund with other
shares of the Fund, except that a Fund's Institutional, Service and Investor
Shares each bear all of the Service Organization fees,
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distribution payments (if any) and other "class" expenses that are allocated to
a particular class.
Investor Shares pay higher combined fees for shareholder support and
distribution services than Service Shares, and Service Shares pay higher
shareholder support fees than Institutional Shares. This difference in expenses
will create different performance results for the three classes. The Funds will
offer various services and privileges in connection with their Investor Shares
that are not offered in connection with their Service Shares or Institutional
Shares, such as an automatic investment plan, an automatic withdrawal plan and
certain check writing privileges. Additional information concerning each class
of shares may be obtained by calling (800) 662-8417 or by contacting a
Customer's Service Organization.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims liability of the shareholders, Trustees or
officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property 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. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a Fund itself would
be unable to meet its obligations and should be considered remote.
When issued, shares of the Trust are fully paid, non-assessable and freely
transferable.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to vote. The Trust is not required to hold annual
meetings, but in the event that a special meeting is held, shareholders of each
Fund will be entitled to one vote for each full share held and fractional votes
for fractional shares held, and will vote in the aggregate and not on a
Fund-by-Fund basis, except as required by the 1940 Act or other applicable law.
It is contemplated that, as required by the 1940 Act, the shareholders of the
respective Funds will vote separately on a Fund-by-Fund basis on matters
relating to a particular Fund's investment advisory agreement or changes in a
Fund's fundamental investment limitations, and on other matters where the
interests of the respective Funds are not substantially identical. Similarly,
shareholders of each of the Funds will
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<PAGE> 28
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.
Voting rights are not cumulative.
The Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust and in connection with the meeting to comply with the shareholders'
communications provisions of Section 16(c) of the 1940 Act. See "Description of
the Funds" in the SAI.
PERFORMANCE INFORMATION
From time to time each Fund advertises the yield and effective yield of its
Service Shares. Both yield figures will fluctuate, are based on historical
earnings and are not intended to indicate future performance. The yield for
Service Shares of each Fund refers to the income generated by an investment in
Service Shares of a Fund over a seven-day period (which period will be stated in
the advertisement). This income is then annualized. That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned by an investment in Service Shares of a Fund is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. Each Fund's yield and effective
yield for Service Shares may reflect voluntary fee waivers. See "Management of
the Funds."
Yield information is useful in reviewing each Fund's performance, but
because yields will fluctuate, such information may not provide a basis for
comparison with domestic bank deposits or other investments which pay a fixed
yield for a stated period of time.
For purposes of comparison, the Funds may, from time to time,
quote performance information from IBC/Donoghue's MONEY FUND REPORT of
Holliston, Massachusetts 01746. IBC/Donoghue's MONEY FUND AVERAGE is a widely
recognized index of money market fund performance. Figures reflect average
yields of all taxable money funds included in IBC/Donoghue's index.
IBC/Donoghue's U.S. TREASURY & REPO MONEY FUND AVERAGE is a component of this
27
<PAGE> 29
average and reflects average yields of all taxable U.S. Treasury money funds.
Any fees which may be imposed by Banks directly on their Customer accounts
for cash management services in connection with investments in the Funds are not
reflected in yield figures and any such fees, if charged, will reduce the actual
return received by Bank Customers on their investments.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Funds at 237 Park
Avenue, Suite 910, New York, New York 10017.
General and Account Information: (800) 662-8417.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTED,
ENDORSED OR OTHERWISE SUPPORTED BY FIRST INTERSTATE BANCORP OR ITS AFFILIATES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
28
<PAGE> 30
INVESTMENT ADVISOR
First Interstate Capital Management, Inc.
7501 East McCormick Parkway
Scottsdale, Arizona 85258
ADMINISTRATOR
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
DISTRIBUTOR
Pacifica Funds Distributor Inc.
230 Park Avenue
New York, New York 10169
CUSTODIAN
First Interstate Bank of California
707 Wilshire Boulevard
Los Angeles, California 90017
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
[PACIFICA LOGO] PACPTMMSE-2/96
<PAGE> 31
[PACIFICA LOGO]
(INVESTOR SHARES)
PACIFICA PRIME MONEY
MARKET FUND
PACIFICA TREASURY
MONEY MARKET FUND
PROSPECTUS
FEBRUARY 1, 1996
As Revised February 9, 1996
[FIRST INTERSTATE BANK LOGO]
Investment Advisor to The Pacifica Funds
<PAGE> 32
PACIFICA FUNDS TRUST
(INVESTOR SHARES)
237 PARK AVENUE, NEW YORK, NEW YORK 10017
GENERAL AND ACCOUNT INFORMATION:
(800) 662-8417
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. --
INVESTMENT ADVISOR
("FICM" OR THE "ADVISOR")
THE DREYFUS CORPORATION -- ADMINISTRATOR
(THE "ADMINISTRATOR")
PACIFICA FUNDS DISTRIBUTOR INC. -- DISTRIBUTOR
("PFD INC." OR THE "DISTRIBUTOR")
Pacifica Funds Trust (the "Trust") is an open-end investment company (a
mutual fund) that offers a selection of separate investment portfolios. This
Prospectus describes the Investor Shares of the following two money market funds
(the "Funds"):
- Pacifica Prime Money Market Fund
- Pacifica Treasury Money Market Fund
Investor Shares of the Funds are sold to the public by PFD Inc. as an
investment vehicle for individuals, institutions, corporations and fiduciaries.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in either of the Funds and should be read and
retained for future reference. A Statement of Additional Information for the
Funds' Investor Shares (the "SAI") dated February 1, 1996 (which may be revised
from time to time), containing additional and more detailed information about
the Funds, has been filed with the Securities and Exchange Commission (the
"SEC") and is hereby incorporated by reference into this Prospectus. For a free
copy, call the telephone number above.
----------------------------
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FIRST INTERSTATE OR OTHER BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996.
(Revised as of February 9, 1996)
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND EXPENSES............................................. 3
FEE TABLE -- INVESTOR SHARES.............................. 3
FINANCIAL HISTORY......................................... 5
THE FUNDS................................................. 10
INVESTMENT POLICIES AND PRACTICES OF THE
FUNDS................................................... 10
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES........ 11
INVESTMENT RESTRICTIONS................................... 16
MANAGEMENT OF THE FUNDS................................... 17
PRICING OF INVESTOR SHARES................................ 21
MINIMUM PURCHASE REQUIREMENTS............................. 21
PURCHASE OF INVESTOR SHARES OF THE FUNDS.................. 22
INDIVIDUAL RETIREMENT ACCOUNTS............................ 23
EXCHANGE OF INVESTOR SHARES............................... 24
REDEMPTION OF INVESTOR SHARES............................. 25
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES......... 28
OTHER INFORMATION......................................... 30
</TABLE>
2
<PAGE> 34
FUND EXPENSES
The following table is an estimate of the annual costs and expenses that an
investor will incur either directly or indirectly as a shareholder of a Fund's
Investor Shares based upon the Fund's operating expenses for the fiscal year
ended September 30, 1995, adjusted to reflect current fees and expenses. See
"Other Information -- Capitalization."
FEE TABLE -- INVESTOR SHARES
<TABLE>
<CAPTION>
PRIME MONEY TREASURY MONEY
MARKET FUND MARKET FUND
------------ --------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).................. None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price).... None None
Deferred Sales Load (as a percentage
of redemption proceeds).......... None None
Redemption Fees..................... None None
Exchange Fee........................ None None
ANNUAL FUND OPERATING EXPENSES: (as a
percentage of average net assets)
Management Fees (after
waivers)(++)..................... 0.12% 0.12%
12b-1 Fees.......................... 0.05 0.05
Other Expenses...................... 0.38 0.38
----- -----
TOTAL FUND OPERATING EXPENSES: (after
waivers)(++)++...................... 0.55% 0.55%
========== ============
</TABLE>
- ---------------
(++) The investment advisory agreement for the Funds provides for management
fees payable 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. These amounts may be reduced pursuant to
undertakings by the Advisor.
(++)++ Total Fund Operating Expenses (before waivers) would be 0.68% for the
Prime Money Market Fund and 0.67% for the Treasury Money Market Fund.
The purpose of this table is to assist shareholders in understanding the
various costs and expenses that an investor in the Fund's Investor Shares will
bear. The table does not reflect any charges that may be imposed by a First
Interstate Bank or other institution directly on their customer accounts in
connection with investments in the Funds.
3
<PAGE> 35
EXAMPLE:(++)
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:(++)++
<TABLE>
<CAPTION>
PRIME TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
1 year............................... $ 6 $ 6
3 years.............................. 18 18
5 years.............................. 31 31
10 years.............................. 69 69
</TABLE>
- ---------------
(++) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN
IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE MORE OR LESS THAN THE ASSUMED
AMOUNT.
(++)++ The amount of expenses an Investor class shareholder would pay without
waivers under these assumptions and assuming redemption after one, three,
five and ten years would be $7, $22, $38 and $85, respectively, for the
Prime Money Market Fund and $7, $21, $37 and $83, respectively, for the
Treasury Money Market Fund.
4
<PAGE> 36
FINANCIAL HISTORY
The financial data shown below is to assist investors in evaluating the
performance of the Funds for each of the ten years in the period ended September
30, 1995. The following information for the year ended September 30, 1995 and
six months ended September 30, 1994 has been audited by Ernst & Young LLP, the
Funds' current independent auditors, whose report on the financial statements
appears in the 1995 Annual Report to Shareholders for the Funds. Their report
and the financial statements are incorporated by reference into the SAI. The
following information for each of the four years in the period ended March 31,
1994 has been audited by the Funds' former independent accountants. Prior to
August 11, 1995, the Funds offered only one class of shares to institutional
investors, which class is now known as Service Shares. Currently, each Fund
offers two classes of shares to institutional investors in addition to offering
Investor Shares. The financial data shown below pertains to the Service Shares
of the Funds, which are not offered through this Prospectus. No financial data
is shown for Investor Shares because that class of shares had not yet commenced
operations during the periods shown. See "Other Information -- Capitalization."
5
<PAGE> 37
PRIME MONEY MARKET FUND*
(SERVICE SHARES)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994
-------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning
of year........... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997 $ .9998
-------- -------- -------- -------- ------- ------- -------- ------- --------
INVESTMENT
OPERATIONS:
Investment
income -- net..... .0754 .0581 .0634 .0764 .0849 .0745 .0510 .0327 .0296
Net realized gain
(loss) on
investments....... -- -- -- -- -- -- (.0003) .0001 --
------- ------- ------- ------- ------ ------- ------- ------- -------
Total from
Investment
Operations....... .0754 .0581 .0634 .0764 .0849 .0745 .0507 .0328 .0296
------- ------- ------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Dividends from
investment
income -- net..... (.0754) (.0581) (.0634) (.0764) (.0849) (.0745) (.0510) (.0327) (.0296)
-------- -------- -------- ------- ------- -------- ------- ------- -------
Net asset value, end
of year........... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997 $ .9998 $ .9998
======== ======== ======= ======== ======= ======== ======= ======= =======
Total Investment
Return........... 7.80% 5.97% 6.50% 7.88% 8.82% 7.72% 5.22% 3.32% 3.00%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net
assets............ .66%(2) .68%(3) .58%(4) .56%(4) .54%(5) .47%(6) .43%(7) .41%(8) .41%(9)
Ratio of net
investment income
to average net
assets............ 7.47%(2) 5.81%(3) 6.38%(4) 7.58%(4) 7.95%(5) 7.38%(6) 5.09%(7) 3.27%(8) 2.96%(9)
Net Assets, end of
year (000's
Omitted).......... $350,344 $407,815 $628,987 $496,675 $493,641 $543,834 $528,397 $468,479 $527,599
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FISCAL
ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994** 1995
------------- -------------
<S> <C> <C>
PER SHARE DATA:
Net asset value,
beginning
of year........... $ .9998 $ .9998
--------- ---------
INVESTMENT
OPERATIONS:
Investment
income -- net..... .0185 .0546
Net realized gain
(loss) on
investments....... -- --
--------- ---------
Total from
Investment
Operations....... .0185 .0546
--------- --------
DISTRIBUTIONS:
Dividends from
investment
income -- net..... (.0185) (.0546)
--------- ----------
Net asset value, end
of year........... $ .9998 $ .9998
========= =========
Total Investment
Return........... 3.71%(1) 5.60%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net
assets............ .41%(1)(10) .41%(11)
Ratio of net
investment income
to average net
assets............ 3.67%(1)(10) 5.47%(11)
Net Assets, end of
year (000's
Omitted).......... $ 565,305 $ 614,101
</TABLE>
- ---------------
* The Prime Money Market Fund operated as Pacific American Liquid Assets, Inc.
from commencement of operations on April 30, 1981 until it was reorganized
as a portfolio of Pacific American Fund on October 1, 1985. On October 1,
1994, the Fund was reorganized as the "Pacific American Money Market
Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the Fund was
renamed the "Pacifica Prime Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end changed from March 31 to
September 30.
(Footnotes continued on next page)
6
<PAGE> 38
(Footnotes continued from previous page)
(1) Annualized basis.
(2) During the year ended March 31, 1986, the Fund's investment advisor waived
a portion of its fees (.13% of average net assets).
(3) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees (.25% of average net assets). In addition, during the
period from January 1, 1987 to March 31, 1987, the Fund's investment
advisor waived an additional portion of its fees (.02% of average net
assets).
(4) During the years ended March 31, 1988 and 1989, the Fund's investment
advisor waived a portion of its fees (.35% and .34% of average net assets,
respectively).
(5) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(6) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(7) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(8) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(9) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(10) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.48% (annualized) of average net assets).
(11) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.27% of average net assets).
7
<PAGE> 39
TREASURY MONEY MARKET FUND*
(SERVICE SHARES)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------------------------
1986(1) 1987 1988 1989 1990 1991 1992 1993 1994
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of
year............... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001 $ .9999 $ 1.0001
-------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT OPERATIONS:
Investment
income -- net...... .0353 .0550 .0604 .0743 .0827 .0716 .0489 .0309 .0277
Net realized gain
(loss) on
investments........ -- -- -- -- -- .0003 .0002 .0002 --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from
Investment
Operations........ .0353 .0550 .0604 .0743 .0827 .0719 .0491 .0311 .0277
-------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from
investment
income -- net...... (.0353) (.0550) (.0604) (.0743) (.0827) (.0716) (.0489) (.0309) (.0277)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Dividends from net
realized gain on
investment......... -- -- -- -- -- (.0002) (.0004) -- (.0001)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions..... (.0353) (.0550) (.0604) (.0743) (.0827) (.0718) (.0493) (.0309) (.0278)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of year............. $ 1.0000 $ 1.0000 $ 1.0000 $1.0000 $1.0000 $ 1.0001 $ .9999 $ 1.0001 $ 1.0000
======== ======== ======== ======== ======== ======== ======== ======== ========
Total Investment
Return............ 7.18%(2) 5.64% 6.20% 7.63% 8.58% 7.42% 5.03% 3.13% 2.81%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net
assets............. .80%(2)(3) .69%(4) .69%(5) .63%(6) .56%(7) .48%(8) .45%(9) .43%(10) .43%(11)
Ratio of net
investment income
to average net
assets............. 6.91%(2)(3) 5.50%(4) 6.12%(5) 7.36%(6) 7.73%(7) 7.10%(8) 4.73%(9) 3.04%(10) 2.77%(11)
Net Assets, end of
year (000's
Omitted)........... $123,243 $134,375 $101,066 $90,672 $98,398 $118,623 $281,343 $614,237 $654,950
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994** 1995
------------- -------------
<S> <C> <C>
PER SHARE DATA:
Net asset value,
beginning of
year............... $ 1.0000 $ 1.0000
--------- -----------
INVESTMENT OPERATIONS:
Investment
income -- net...... .0186 .0529
Net realized gain
(loss) on
investments........ -- --
--------- -----------
Total from
Investment
Operations........ .0186 .0529
--------- -----------
DISTRIBUTIONS:
Dividends from
investment
income -- net...... (.0186) (.0529)
--------- -----------
Dividends from net
realized gain on
investment......... -- --
--------- -----------
Total
Distributions..... (.0186) (.0529)
--------- -----------
Net asset value, end
of year............. $ 1.0000 $ 1.0000
========= ============
Total Investment
Return............ 3.75%(2) 5.42%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of expenses to
average net
assets............. .43%(2)(12) .42%(13)
Ratio of net
investment income
to average net
assets............. 3.72%(2)(12) 5.32%(13)
Net Assets, end of
year (000's
Omitted)........... $ 690,630 $ 1,001,707
</TABLE>
- ---------------
* Prior to August 1, 1990, the Treasury Money Market Fund was known as the
Short-Term Government Fund and invested in obligations issued or guaranteed
by agencies and instrumentalities of the U.S. Government in accordance with
fundamental policies that were then effective for the Fund. The Treasury
Money Market Fund operated as a portfolio of Pacific American Fund through
October 1, 1994 when it was reorganized as the "Pacific American U.S.
Treasury Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the
Fund was renamed the "Pacifica Treasury Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end was changed from March 31 to
September 30.
(Footnotes continued on next page)
8
<PAGE> 40
(Footnotes continued from previous page)
(1) From October 1, 1985 (commencement of operations) to March 31, 1986.
(2) Annualized basis.
(3) During the period from October 1, 1985 (Commencement of Operations) to
March 31, 1986, the Fund's investment advisor waived a portion of its fees
(.25% (annualized) of average net assets).
(4) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees aggregating $264,629 (.25% of average net assets). In
addition, during the period from January 1, 1987 to March 31, 1987, the
Fund's investment advisor and the Fund's prior distributor waived a portion
of their respective fees (.09% of average net assets).
(5) During the year ended March 31, 1988, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(6) During the year ended March 31, 1989, the Fund's investment advisor waived
a portion of its fees (.35% of average net assets).
(7) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.41% of
average net assets).
(8) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.46% of average net assets).
(9) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(10) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(11) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(12) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.47% (annualized) of average net assets).
(13) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.24% of average net assets).
9
<PAGE> 41
THE FUNDS
The Funds are portfolios of Pacifica Funds Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts as an open-end,
management investment company. The Trust's Board of Trustees oversees the
overall management of the Funds and elects the officers of each Fund.
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund seeks to maintain a net asset value of $1.00 per share. Their
assets consist only of obligations with remaining maturities (as defined by the
SEC) of 13 months or less at the date of acquisition, and the dollar-weighted
average maturity of each Fund's investments is 90 days or less. There can be no
assurance that each Fund's investment objective as described below will be
achieved or that the Funds will be able to maintain a net asset value of $1.00
per share.
The Prime Money Market Fund's investment objective is to seek the
maximization of current income to the extent consistent with the preservation of
capital and maintenance of liquidity. To achieve its objective the Prime Money
Market Fund may invest in a broad range of short-term, high quality U.S.
dollar-denominated instruments, consisting of commercial paper, certificates of
deposit, bankers' acceptances, time deposits, bank notes, variable rate master
demand note agreements, medium-term notes, corporate notes, U.S. Agency
obligations and U.S. Treasury obligations. The Prime Money Market Fund also
invests in repurchase agreements collateralized or secured by U.S. Agency
obligations and U.S. Treasury obligations.
The Treasury Money Market Fund's investment objective is to seek current
income and stability of principal. To achieve its objective, the Treasury Money
Market Fund's fundamental policy is to invest only in obligations issued or
guaranteed by the U.S. Treasury and in notes and other instruments, including
repurchase agreements, collateralized or secured by such obligations. The Funds'
investment objectives, and the Treasury Money Market Fund's fundamental policy
stated above, may not be changed without the vote of a majority of the
outstanding shares of the particular Fund.
Each Fund will purchase only "First Tier Eligible Securities" (as defined
by the SEC) that present minimal credit risks as determined by FICM pursuant to
guidelines approved by the Trust's Board of Trustees. First Tier Eligible
Securities consist of (i) securities that either (a) have short-term debt
ratings at the time of purchase in the highest rating
10
<PAGE> 42
category by at least two unaffiliated nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if the security was rated by only one
NRSRO), or (b) are issued by issuers with such ratings, and (ii) certain
securities that are unrated (including securities of issuers that have long-term
but not short-term ratings) but are of comparable quality as determined in
accordance with guidelines approved by the Board of Trustees. The Appendix to
the SAI includes a description of applicable NRSRO ratings.
The types of securities and investment practices used by the Funds are
described in greater detail below under "Description of Securities and
Investment Practices."
DESCRIPTION OF SECURITIES AND
INVESTMENT PRACTICES
INFORMATION FOR BOTH FUNDS
The Treasury Money Market Fund may invest only in obligations issued or
guaranteed by the U.S. Treasury such as bills, notes, bonds and certificates of
indebtedness, and in notes and repurchase agreements collateralized or secured
by such obligations. These obligations may also include U.S. Treasury STRIPS
(U.S. Treasury securities that have been separated into their component parts of
principal and interest payments and recorded as such in the Federal Reserve
book-entry record keeping system). The Prime Money Market Fund may invest in
U.S. Treasury obligations, as well as in obligations of agencies and
instrumentalities of the U.S. Government. Some obligations issued or guaranteed
by U.S. Government agencies and instrumentalities, such as Government National
Mortgage Association pass-through certificates, are supported by the full faith
and credit of the U.S. Government; others, such as those of the Federal Home
Loan Banks, by the right of the issuer to borrow from the U.S. Treasury; others,
such as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, such as some obligations issued by
the Student Loan Marketing Association, only by the credit of the agency or
instrumentality. While the U.S. Government provides financial support to these
latter U.S. Government-sponsored agencies and instrumentalities, no assurance
can be given that it will always do so since such support is not required by
law. The Prime Money Market Fund will invest in such securities only when FICM
is satisfied that the credit risk with respect to the issuer is minimal.
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Each Fund may engage in repurchase agreements with financial institutions
such as banks or broker-dealers. In these transactions, a Fund buys a security
at one price and simultaneously promises to sell that same security back to the
seller at a higher price. Securities purchased subject to repurchase agreements
are deposited with the Fund's custodian and subcustodians 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 value of the repurchase price
plus accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. The repurchase date is generally within
seven days of the original purchase, but in no event more than 365 days. In all
cases, FICM must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of the
bankruptcy or default of the other party to a repurchase agreement, the Fund
could experience delays and costs in recovering its cash. To the extent that, in
the meantime, the value of the securities purchased may have decreased, the Fund
could experience a loss. Repurchase agreements may be considered to be loans by
the Fund under the Investment Company Act of 1940, as amended (the "1940 Act").
Securities purchased by a Fund may include variable and floating rate
instruments, which may have a stated maturity in excess of the Fund's maturity
limitations but are deemed to have shorter maturities because the Fund can
demand payment of the principal of the instrument at least once every thirteen
months upon not more than thirty days' notice (this demand feature is not
required if an instrument is guaranteed by the U.S. Government or an agency or
instrumentality thereof). These instruments may include variable amount master
demand notes that permit the indebtedness thereunder to vary in addition to
providing for periodic adjustments in the interest rate. There may be no active
secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to a Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days notice and do not have an active trading market) that
are acquired by a Fund are subject to the percentage limitations described
below.
Each Fund will not knowingly invest more than 10% of the value of its net
assets in securities that are illiquid. Repurchase agreements that do not
provide for payment to a Fund within seven days after notice, and securities
that are not registered under the Securities Act of 1933 but that may be
purchased by institutional buyers under Rule 144A, are subject to this 10%
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limit (unless, in the case of the Prime Money Market Fund, such securities are
variable amount master demand notes with maturities of nine months or less or
unless the Board or FICM, pursuant to guidelines adopted by the Board,
determines that a liquid trading market exists).
Each Fund may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "forward commitment" basis. The Funds may also purchase
or sell securities on a "delayed settlement" basis. When-issued and forward
commitment transactions, which involve a commitment by a Fund to purchase or
sell particular securities with payment and delivery taking place at a future
date (perhaps one or two months later), permit the Fund to lock in a price or
yield on a security it owns or intends to purchase, regardless of future changes
in interest rates. Delayed settlement describes settlement of a securities
transaction in the secondary market which will occur sometime in the future.
When-issued, forward commitment and delayed settlement transactions involve the
risk, however, that the yield or price obtained in a transaction may be less
favorable than the yield or price available in the market when the securities
delivery takes place. A Fund's forward commitments, when-issued purchases and
delayed settlements are not expected to exceed 25% of the value of the Fund's
total assets absent unusual market conditions. The Funds do not intend to engage
in these transactions for speculative purposes but only in furtherance of their
investment objectives.
Each Fund may borrow monies for temporary purposes by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, a Fund would sell portfolio securities to
financial institutions and agree to repurchase them at an agreed upon date and
price. At the time a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account liquid assets or high grade debt
securities having a value equal to or greater than the repurchase price and FICM
will continuously monitor the account to ensure that the value is maintained. A
Fund would only enter into reverse repurchase agreements to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions.
Reverse repurchase agreements involve the risk that the market value of the
portfolio securities sold by a Fund may decline below the price of the
securities the Fund is obligated to repurchase. Interest paid by a Fund in
connection with a reverse repurchase agreement will reduce the Fund's net
investment income. The Funds currently intend to limit their investments in
reverse repurchase agreements to no more than 20% of their total assets and will
only engage in such transactions with primary dealers. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.
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The Funds may attempt to increase yields by trading to take advantage of
short-term market variations. This policy could result in high portfolio
turnover, but should not adversely affect the Funds since they do not ordinarily
pay brokerage commissions on the purchase of short-term debt obligations.
In connection with the management of their daily cash positions, each Fund
may invest up to 10% of its assets in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. The Treasury Money Market Fund may only
invest in shares of other investment companies that are structured to seek a
similar investment objective. As a shareholder of another investment company, a
Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses including advisory fees. These expenses
would be in addition to the advisory fees and other expenses the Fund bears
directly in connection with its own operations. Securities of other investment
companies will be acquired by the Funds within the limits prescribed by the 1940
Act.
ADDITIONAL PORTFOLIO INFORMATION FOR PRIME MONEY MARKET FUND
In addition to the types of instruments described above, the Prime Money
Market Fund may purchase U.S. dollar-denominated bank obligations such as time
deposits, certificates of deposit, bankers' acceptances, bank notes and deposit
notes issued by domestic and foreign banks. Time deposits are non-negotiable
deposits maintained at a banking institution for a specified period of time
normally at a stated interest rate. Certificates of deposit are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time. Bankers acceptances are negotiable deposits or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank (meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument at maturity).
Bank notes usually represent senior debt of the bank.
The Prime Money Market Fund may also purchase commercial paper, short-term
notes, medium-term notes and bonds issued by domestic and foreign corporations
that meet the Fund's maturity limitations.
Commercial paper purchased by the Fund may include paper issued in reliance
on the so-called "private placement" exemption under Section 4(2) of the
Securities Act of 1933 ("Section 4(2) paper"). Section 4(2) paper is restricted
as to disposition under the federal securities laws and generally is sold to
institutional investors such as the Fund that
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<PAGE> 46
agree that they are purchasing the paper for investment and not with a view to
public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) paper normally is resold to other institutional
investors through or with the assistance of the issuer or investment dealers
that make a market in Section 4(2) paper. Section 4(2) paper will not be subject
to the Fund's 10% limitation on illiquid securities described above where the
Board of Trustees or FICM (pursuant to guidelines adopted by the Board)
determines that a liquid trading market exists.
The Prime Money Market Fund may also lend its portfolio securities in order
to increase income to broker-dealers and other institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral
equal at all times in value to at least the market value of the securities
loaned plus accrued interest. Collateral for such loans may include cash, U.S.
Treasury securities or other U.S. government securities or an irrevocable letter
of credit issued by a bank which meets the investment standards of the Fund.
Such loans will not be made if, as a result, the aggregate of all outstanding
loans of the Fund exceeds one-third of the value of its total assets. There may
be risks 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 Prime Money Market Fund may also invest in U.S. dollar denominated
obligations issued or guaranteed by foreign governments or any of their
political subdivisions, agencies or instrumentalities. Such obligations include
debt obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples of these include the
International Bank for Reconstruction and Development (the "World Bank"), the
Asian Development Bank and the InterAmerican Development Bank.
The Prime Money Market Fund may purchase asset-backed securities, which are
securities backed by mortgages, installment sales contracts, credit card
receivables or other assets. The average life of asset-backed securities varies
with the maturities of the underlying instruments, and the average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as
the result of mortgage prepayments. For this and other reasons, an asset-backed
security's stated maturity may be shortened, and the securities' total return
may be difficult to predict precisely. Such difficulties are not, however,
expected to have a significant effect on the Fund since the remaining maturity
of any asset-backed security acquired
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will be thirteen months or less. Asset-backed securities purchased by the Fund
may include collateralized mortgage obligations ("CMOs") issued by private
companies.
Since the Prime Money Market Fund may purchase securities issued by foreign
issuers, the Fund may be subject to investment risks that are different in some
respects from those incurred by a fund which invests exclusively in debt
obligations of domestic issuers. Such potential risks include future political
and economic developments, the possible imposition of withholding taxes on
interest income payable on the securities by the particular country in which the
issuer is located, the possible seizure or nationalization of foreign deposits,
the possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on these securities. In addition, foreign banks and other issuers
are not necessarily subject to the same regulatory requirements that apply to
domestic issuers (such as reserve requirements, loan limitations, examinations,
accounting, auditing and recordkeeping requirements, and public availability of
information), and the Fund may experience difficulties in obtaining or enforcing
a judgment against a foreign issuer. Absent any unusual market conditions, the
Fund will not invest more than 25% of its total assets in securities issued by
foreign issuers.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions that may
be changed only with the approval of a majority of the outstanding shares of the
Fund. The following descriptions summarize several of the Funds' fundamental
investment restrictions, which are set forth in full in the SAI.
Neither Fund may:
(1) purchase securities (with certain exceptions including U.S.
Treasury securities) if more than 5% of its total assets will be invested
in the securities of any one issuer, except that up to 25% of the Fund's
total assets may be invested without regard to this 5% limitation; and
(2) invest 25% or more of its total assets in one or more issuers
conducting their principal business activities in the same industry (with
certain exceptions including U.S. Government securities and, with respect
to the Prime Money Market Fund, the obligations of U.S. banks and certain
U.S. branches of foreign banks).
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These investment restrictions are applied at the time investment securities
are purchased. As a matter of non-fundamental 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 non-U.S. governmental issuer to not
more than 5% of its total assets at the time of purchase, provided that the
Prime Money Market Fund may invest up to 25% of its assets in the obligations of
one non-U.S. governmental issuer for a period of up to three business days.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the direction of
the Board of Trustees. Information about the Trustees, as well as the Funds'
executive officers, may be found in the SAI under the heading "Trustees and
Officers."
ADVISOR
First Interstate Capital Management, Inc. serves as the Funds' investment
advisor. FICM is an indirect wholly-owned subsidiary of First Interstate
Bancorp, a publicly-held, multi-state bank holding company.
FICM supervises and assists in the overall management of the Funds' affairs
pursuant to an Investment Advisory and Management Agreement, subject to the
overall authority of the Board of Trustees. These management responsibilities
include, among other things, making decisions and placing orders for all
purchases and sales of the Funds' investment securities, furnishing economic and
statistical information as requested by the Board of Trustees, and monitoring
the Funds' arrangements with Service Organizations. Under its Agreement, FICM is
entitled to a fee, computed daily and payable monthly, at the 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. The advisory fee FICM receives may be
reduced in some cases by the amount paid to the Funds' Service Organizations
(see "Servicing Agreements" below), and FICM may voluntarily waive an additional
portion of the advisory fee payable by the Funds from time to time. The
annualized effective rates of the advisory fees paid by the Prime Money Market
Fund and the Treasury Money Market Fund were (after fee reductions and waivers)
0.12% and 0.13%, respectively, of the average net assets of the Funds for the
fiscal year ended September 30, 1995.
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FICM maintains offices at 7501 East McCormick Parkway, Scottsdale, Arizona
85258.
On January 24, 1996, First Interstate Bancorp signed a definitive merger
agreement to merge with Wells Fargo & Company ("Wells Fargo"), a publicly-held
bank holding company with its head office at 420 Montgomery Street, San
Francisco, California 94104. The merger is conditioned upon, among other things,
certain regulatory approvals. Upon completion of the merger, currently expected
to occur during the second quarter of 1996, FICM will be wholly-owned by Wells
Fargo, and the existing investment advisory agreement between the Trust and FICM
will automatically terminate. It is contemplated that an application will be
filed with the Securities and Exchange Commission to ensure there is no
disruption as a result of the merger in the provision of investment advisory
services to the Funds, and that a meeting of shareholders will be held not later
than 120 days after the merger to approve ongoing investment advisory
arrangements for the Funds.
ADMINISTRATOR
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. The Administrator, as of November 30, 1995, managed
or administered approximately $83 billion in assets for more than 1.7 million
investor accounts nationwide. Pursuant to its Administration Agreement with the
Funds, 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 each Fund's shares and dividends and capital
gains distributions to shareholders; and generally assists in the Funds'
operations (except with respect to investment management services). For its
administrative services for the fiscal year ended September 30, 1995, the
Administrator received a fee from each Fund at the annual rate of 0.10% of each
Fund's average daily net assets. From time to time, the Administrator may waive
all or a portion of its fees with respect to a Fund.
DISTRIBUTOR
Pacifica Funds Distributor Inc., located at 230 Park Avenue, New York, New
York 10169, acts as distributor for the Funds. PFD Inc. is an affiliate of
Furman Selz LLC ("Furman Selz") and was organized specifically to distribute
shares of the Trust; however, offers and sales of shares of
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the Trust will be made only through Furman Selz or other registered (or exempt)
dealers.
Under the Distribution Plan (the "Plan") adopted by the Funds for their
Investor Shares, each Fund may pay directly or reimburse the Distributor monthly
for (subject to a limit of 0.30% per annum of the average daily net asset value
of the outstanding Investor Shares of each Fund) costs and expenses of the
Distributor incurred in connection with the distribution of Investor Shares of
the Funds. These costs and expenses include (i) advertising by radio,
television, newspapers, magazines, brochures, sales literature, direct mail or
any other form of advertising; (ii) expenses of sales employees or agents of the
Distributor, including salary, commissions, travel and related expenses; (iii)
payments to broker-dealers and financial institutions for services in connection
with the distribution of Investor Shares, including promotional incentives and
fees calculated with reference to the average daily net asset value of Investor
Shares held by shareholders who have a brokerage or other service relationship
with the broker-dealer or other institution receiving such fees; (iv) costs of
printing prospectuses and other materials to be given or sent to prospective
investors; and (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of Investor Shares of the Funds.
Each Fund will pay all costs and expenses in connection with the preparation,
printing and distribution of prospectuses to current shareholders and the
operation of its Plan, including related legal and accounting fees. A Fund will
not be liable for distribution expenditures made by the Distributor in any given
year in excess of the maximum annual amount payable under the Plan for that
Fund. All payments made under the Plan for Investor Shares are borne entirely by
a Fund's Investor Shares.
The Distributor may from time to time pay a bonus or other incentive to
dealers which employ registered representatives who sell a minimum dollar amount
of the Investor Shares of the Funds and/or other funds distributed by Furman
Selz or the Distributor during a specific period of time. Such bonus or other
incentive may take the form of payment for travel expenses, including lodging,
incurred in connection with trips taken by qualifying registered representatives
and members of their families to places within or outside the United States, or
other bonuses, such as gift certificates or the cash equivalent of such bonuses.
The Distributor has established such a special promotional incentive program
with First Interstate Securities, Inc.
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SERVICE ORGANIZATIONS
Various banks (including banks affiliated with First Interstate Bancorp),
trust companies, broker-dealers (other than Furman Selz) or other financial
organizations (collectively, "Service Organizations") also may provide
administrative services with respect to the Funds' Investor Shares, such as
maintaining shareholder accounts and records. The Funds may pay fees to Service
Organizations (which vary depending upon the services provided) in amounts up to
an annual rate of 0.25% of the average daily net asset value of the outstanding
Investor Shares of the Funds owned by shareholders with whom a Service
Organization has a servicing relationship. These fees will be borne entirely by
the Funds' Investor Shares. FICM intends to waive a portion of the advisory fee
otherwise payable by a Fund to 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% of the Funds average
daily net assets. The Funds currently intend to limit the total of payments made
to Service Organizations and payments made pursuant to the Distribution Plan to
no more than 0.30% per annum of the average daily net asset value of the
outstanding Investor Shares of each Fund.
Some Service Organizations may impose additional or different conditions on
their clients, such as requiring their clients to invest a specified amount in
the Funds or charging a direct fee for servicing. If imposed, these fees would
be in addition to any amounts which might be paid to the Service Organization by
the Funds. Shareholders using Service Organizations are urged to consult with
them regarding any such fees or conditions.
CUSTODIAN
First Interstate Bank of California ("FICAL") is the Funds' Custodian and
receives fees for its custodial services as described in the SAI. FICAL
maintains offices at 707 Wilshire Blvd., Los Angeles, California 90017.
TRANSFER AND DIVIDEND DISBURSING AGENT
Furman Selz serves as the Funds' Transfer and Dividend Disbursing Agent.
Furman Selz maintains offices at 230 Park Avenue, New York, New York 10169.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any non-bank
affiliate thereof from sponsoring, organizing, controlling, or
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distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but do not prohibit such a holding company or
affiliate, or banks 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 customers. FICM and FICAL and
certain of the Service Organizations are subject to such banking laws and
regulations.
In the event of changes in federal or state statutes or regulations or in
interpretations or decisions pertaining to permissible activities by banks, FICM
and FICAL or certain of the Service Organizations could be prevented from
continuing their arrangements with the Funds; however, in such an event it is
expected that the Funds' Board of Trustees would make other arrangements and
shareholders would not suffer adverse financial consequences.
PRICING OF INVESTOR SHARES
Orders for the purchase of Investor Shares will be executed at the net
asset value per share next determined after an order has become effective.
Investor Shares of the Funds are sold without a sales charge. The net asset
value per share ("NAV") for each Fund is calculated daily at 12:00 noon, Pacific
time, on days when the Funds are open for business (i.e., days on which the San
Francisco branch of the Federal Reserve Bank, FICAL as the Funds' Custodian and,
in the case of the Treasury Money Market Fund, the New York Stock Exchange are
open). The NAV of the Investor Shares of the Funds is computed by dividing the
value of a Fund's assets allocated to its Investor Shares, less the liabilities
charged to that class, by the total number of outstanding shares of that class.
Each Fund uses the amortized cost method of valuing its securities. 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 a Fund would receive if it sold the instrument.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Funds is $500, except that the
minimum is $250 for an IRA. Any subsequent investments must be at least $50,
including an IRA investment. All initial investments should be
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accompanied by a completed Purchase Application. A separate application is
required for IRA investments.
PURCHASE OF INVESTOR SHARES OF THE FUNDS
THE FOLLOWING PURCHASE PROCEDURES DO NOT APPLY TO CERTAIN TRUST OR OTHER
ACCOUNTS THAT ARE MANAGED BY FIRST INTERSTATE BANCORP, ITS SUBSIDIARIES OR
AFFILIATES. AN ACCOUNT CUSTOMER SHOULD CONSULT HIS OR HER ACCOUNT OFFICER FOR
PROPER INSTRUCTIONS.
All funds received by the Trust are invested in full and fractional
Investor Shares of the appropriate Fund. Certificates for Investor Shares are
not issued. Furman Selz maintains records of each shareholder's holdings of Fund
shares, and each shareholder receives a statement of transactions, holdings and
dividends. The Funds reserve the right to reject any purchase.
An investment may be made using any of the following methods:
Through an Authorized Broker, Investment Advisor or Service
Organization. Investor Shares are available to new and existing shareholders
through authorized brokers, investment advisors and Service Organizations. To
make an investment using this method, simply complete a Purchase Application and
contact your broker, investment advisor or Service Organization with
instructions as to the amount you wish to invest. Your broker will then contact
the Fund to place the order on your behalf on that day.
Orders received by your broker or Service Organization for the Funds in
proper order (and transmitted to the Trust prior to 12:00 noon Pacific time),
will become effective that day. Brokers who receive orders are obligated to
transmit them promptly. You should receive written confirmation of your order
within a few days of receipt of instructions from your broker.
By Wire. Investments may be made directly through the use of wire
transfers of Federal funds. Contact your bank and request it to wire Federal
funds to the applicable Fund. In most cases, your bank will either be a member
of the Federal Reserve Banking System or have a relationship with a bank that
is. Your bank will normally charge you a fee for handling the transaction. To
purchase Investor Shares by a Federal funds wire, please first contact Furman
Selz Mutual Funds Client Services. They will establish a record of information
for the wire to ensure its correct processing. You can reach the Wire Desk at
1-800-662-8417.
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Have your bank wire funds using the following instructions:
Investors Fiduciary Trust Company
Kansas City, MO 64105
ABA #1010-0362-1
Account #7527950
Further Credit to: Fund Name
As long as you have read the Prospectus, you may establish a new regular
account through the Wire Desk; IRAs may not be opened in this way. When new
accounts are established by wire, the distribution options will be set to
reinvest and the social security or tax identification number ("TIN") will not
be certified until a signed application is received. Completed applications
should be forwarded immediately to the Funds. With the Purchase Application, the
shareholder can specify other distribution options and add any special features
offered by a Fund. Should any dividend distributions or redemptions be paid
before the TIN is certified, they will be subject to 31% Federal tax
withholding.
Automatic Investment Program. An eligible shareholder may also participate
in the Pacifica Automatic Investment Program, an investment plan that
automatically debits money from the shareholder's bank account and invests it in
one or more of the Funds through the use of electronic funds transfers or
automatic bank drafts. Shareholders may elect to make subsequent investments by
transfers of a minimum of $50 on either the fifth or twentieth day of each month
into their established Fund accounts. Contact the Trust at 1-800-662-8417 for
more information about the Pacifica Automatic Investment Program.
INDIVIDUAL RETIREMENT ACCOUNTS
The Funds may be used as a funding medium for IRAs. Investor Shares may
also be purchased for IRAs established with an affiliate of First Interstate
Bancorp or other authorized custodians. In addition, an IRA may be established
through a custodial account with Investors Fiduciary Trust Company. Completion
of a special application is required in order to create such an account, and the
minimum initial investment for an IRA is $250. Contributions to IRAs are subject
to prevailing amount limits set by the Internal Revenue Service. A $5.00
establishment fee and an annual $12.00 maintenance and custody fee is payable
with respect to each IRA, and there will be a $10.00 termination fee when the
account is closed. For more information, call the Funds at 1-800-662-8417.
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EXCHANGE OF INVESTOR SHARES
The Funds offer two convenient ways to exchange Investor Shares in a Fund
for Investor Shares in another investment portfolio of the Trust. Before
engaging in an exchange transaction, a shareholder should read carefully the
Prospectus describing the investment portfolio into which the exchange will
occur, which is available without charge and can be obtained by writing to the
Funds at 237 Park Avenue, Suite 910, New York, New York 10017, or by calling
1-800-662-8417. A shareholder may not exchange Investor Shares of one portfolio
for Investor Shares of another portfolio if both or either are not qualified for
sale in the state of the shareholder's residence. The minimum amount for an
initial exchange is $500. No minimum is required in subsequent exchanges. The
Trust may terminate or amend the terms of the exchange privilege at any time.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by the Trust in good order, plus any applicable sales charge.
An exchange is taxable as a sale of a security on which a gain or loss may
be recognized. Shareholders should receive written confirmation of the exchange
within a few days of the completion of the transaction.
In the case of transactions subject to a sales charge, the sales charge
will be assessed on an exchange of Investor Shares, equal to the excess of the
sales load applicable to the Investor Shares to be acquired, over the amount of
any sales load previously paid on the Investor Shares to be exchanged. No
service fee is imposed.
In addition, Institutional Shares of a Fund may be exchanged for Investor
Shares of the same Fund in connection with the distribution of assets held in a
qualified trust, agency or custodial account maintained with the trust
department of a First Interstate or other bank, trust company or thrift
institution, or in other cases where Institutional Shares are not held in such
qualified accounts. Similarly, Investor Shares may be exchanged for
Institutional Shares of the same Fund if the shares are to be held in such a
qualified trust, agency or custodial account. These exchanges are made without a
sales charge at the net asset value of the respective share classes.
Exchange by Mail. To exchange Investor Shares of a Fund by mail, simply
send a letter of instruction to Furman Selz. The letter of instruction must
include: (i) your account number; (ii) the Fund from and the Fund into which you
wish to exchange your investment; (iii) the dollar or share amount you wish to
exchange; and (iv) the signatures of all registered
24
<PAGE> 56
owners or authorized parties. All signatures must be guaranteed by an eligible
guarantor institution including a member of a national securities exchange or by
a commercial bank or trust company, broker-dealers, credit unions and savings
associations.
Exchange by Telephone. To exchange Investor Shares of a Fund by telephone,
or if you have any questions, simply call the Trust at 1-800-662-8417. You
should be prepared to give the telephone representative the following
information: (i) your account number, social security number and account
registration; (ii) the name of the portfolio from and the portfolio into which
you wish to transfer your investment; and (iii) the dollar or share amount you
wish to exchange. The conversation may be recorded to protect you and the Funds.
Telephone exchanges are available only if the shareholder so indicates by
checking the "yes" box on the Purchase Application. See "Redemption of Investor
Fund Shares -- By Telephone" for a discussion of telephone transactions
generally.
REDEMPTION OF INVESTOR SHARES
Shareholders may redeem their Investor Shares, in whole or in part, on any
Business Day. Investor Shares will be redeemed at the net asset value next
determined after a redemption request in good order has been received and
accepted by the Trust. A redemption may be a taxable transaction on which gain
or loss may be recognized. Generally, however, gain or loss is not expected to
be recognized on a redemption of shares of the Funds, both of which seek to
maintain a net asset value of $1.00 per share.
Where the Investor Shares to be redeemed have been purchased by check, the
Trust may delay payment of the redemption proceeds until the purchasing check
has cleared, which may take up to 15 days. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the period prior to
the time the Investor Shares are redeemed, dividends on the Investor Shares will
continue to accrue and be payable and the shareholder will be entitled to
exercise all other beneficial rights of ownership.
Once the Investor Shares are redeemed, a Fund will ordinarily send the
proceeds by check to the shareholder at the address of record on the next
Business Day. The Funds may, however, take up to seven days to make payment.
This will not be customary practice. Also, if the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than the customary
weekend or holiday closing or if an emergency condition as determined by the SEC
merits such action, the Funds may suspend redemptions or postpone payment dates.
25
<PAGE> 57
To ensure acceptance of your redemption request, it is important to follow
the procedures described below. Although the Trust has no present intention to
do so, it reserves the right to refuse or to limit the frequency of any
telephone or wire redemptions. Of course, it may be difficult to place orders by
telephone during periods of severe market or economic change, and a shareholder
should consider alternative methods of communications, such as couriers or U.S.
mail. The services offered by the Funds may be modified or terminated at any
time. If the Funds terminate any particular service, they will do so only after
giving written notice to shareholders.
If Investor Shares of the Funds are represented by a share certificate, the
certificate must be surrendered to the Funds' transfer agent for cancellation
before the shares can be redeemed.
You may redeem your Investor Shares using any of the following methods:
Through an Authorized Broker, Investment Advisor or Service
Organization. You may redeem your Investor Shares by contacting your broker or
investment advisor and instructing him or her to redeem your Investor Shares. He
or she will then contact PFD Inc. and place a redemption trade on your behalf.
He or she may charge you a fee for this service.
By Mail. You may redeem your Investor Shares by sending a letter directly
to the Funds. To be accepted, a letter requesting redemption must include: (i)
the Fund name and account registration from which you are redeeming Investor
Shares; (ii) your account number; (iii) the amount to be redeemed; (iv) the
signatures of all registered owners; and (v) a signature guarantee by any
eligible guarantor institution including a member of a national securities
exchange or a commercial bank or trust company, broker-dealers, credit unions
and savings associations. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.
By Telephone. You may redeem your Investor Shares by calling the Funds
toll free at 1-800-662-8417. You should be prepared to give the telephone
representative the following information: (i) your account number, social
security number and account registration; (ii) the Fund name from which you are
redeeming Investor Shares; and (iii) the amount to be redeemed. The conversation
may be recorded to protect you and the Fund. Telephone redemptions are available
only if the shareholder so indicates by checking the "yes" box on the Purchase
Application or on the Optional Services Form. The Funds employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
If a Fund fails to employ such reasonable procedures, it may be liable for any
loss, damage or
26
<PAGE> 58
expense arising out of any telephone transactions purporting to be on a
shareholder's behalf. In order to assure the accuracy of instructions received
by telephone, the Funds require some form of personal identification prior to
acting upon instructions received by telephone, record telephone instructions
and provide written confirmation to investors of such transactions.
By Wire. You may redeem your Investor Shares by contacting the Funds by
mail or telephone and instructing them to send a wire transmission to your
personal bank.
Your instructions should include: (i) your account number, social security
number and account registration; (ii) the Fund name from which you are redeeming
Investor Shares; and (iii) the amount to be redeemed. Wire redemptions can be
made only if the "yes" box has been checked on your Purchase Application, and a
copy of a void check from the account where proceeds are to be wired is attached
to the Purchase Application. Your bank may charge you a fee for receiving a wire
payment on your behalf.
Check Writing. A check redemption ($500 minimum, no maximum) feature is
available with respect to the Funds. Checks are free and may be obtained from
PFD Inc. It is not possible to use a check to close out your account since
additional shares accrue daily.
The above-mentioned services "By Telephone," "By Wire" and "Check Writing"
are not available for IRAs and trust clients of an affiliate of First Interstate
Bancorp.
Systematic Withdrawal Plan. An owner of $10,000 or more of Investor Shares
of a Fund may elect to have periodic redemptions from his or her account to be
paid on a monthly, quarterly, semi-annual or annual basis. The minimum periodic
payment is $100. A sufficient number of Investor Shares to make the scheduled
redemption will normally be redeemed on the date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in the net asset
value, if any, of the Investor Shares redeemed, redemptions for the purpose of
making such payments may reduce or even exhaust the account. A shareholder may
request that these payments be sent to a predesignated bank or other designated
party. Capital gains and dividend distributions paid to the account will
automatically be reinvested at net asset value on the distribution payment date.
Redemption of Small Accounts. Due to the disproportionately higher cost of
servicing small accounts, the Funds reserve the right to redeem, on not less
than 30 days notice, an account in a Fund that has been reduced by
27
<PAGE> 59
a shareholder to $500 or less. However, if during the 30-day notice period the
shareholder purchases sufficient Investor Shares to bring the value of the
account above $500, this restriction will not apply.
Redemption in Kind. All redemptions of Investor Shares of the Funds shall
be made in cash, except that the commitment to redeem Investor 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.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES
Each Fund's net investment income ordinarily is declared as a dividend on
each day that the Funds are open for business. Dividends are paid within five
business days after the end of each month. Investor Shares begin accruing
dividends on the day the purchase is effected and continue to accrue dividends
through the day before the redemption request is executed. Each Fund's earnings
for non-business days are declared as dividends to shareholders of record on the
preceding business day. All dividends are reinvested automatically in additional
Investor Shares of that Fund at net asset value unless the shareholder elects in
writing, not less than five full business days prior to the record date, to
receive dividends in cash. Distributions from net realized securities gains are
normally declared and paid once a year, but each Fund may make distributions on
a more frequent basis to comply with the distribution requirements of the
Internal Revenue Code of 1986, as amended (the "Code"). In all cases
distributions will be made in a manner that is consistent with the provisions of
the 1940 Act. Neither Fund will make distributions from net realized securities
gains unless capital loss carryovers, if any, have been utilized or have
expired. These distributions, if any, are reinvested automatically in additional
Investor Shares of the Fund involved at net asset value or, at the Customer's
option, are paid in cash. If all Investor Shares in the account are redeemed at
any time during the month, all dividends to which the
28
<PAGE> 60
shareholder is entitled will be paid within five business days after the end of
the month in cash. All expenses are accrued daily and deducted before
declaration of dividends.
Notice as to the tax status of dividends and distributions declared by each
Fund is mailed annually. Each shareholder will also receive periodic account
summaries which will include information as to income dividends and
distributions from securities gains, if any, declared during the year.
Since each Fund's income is derived from interest rather than dividends, no
portion of either Fund's dividends or distributions will qualify for the
dividends received deduction allowable to certain U.S. corporations. Dividends
from net investment income, together with distributions from the excess, if any,
of net realized short-term over net realized long-term losses and all or a
portion of the gains from the sale or other disposition of certain market
discount bonds, are taxable to those shareholders who are not exempt from
federal income taxes as ordinary income, whether or not reinvested in additional
shares. Distributions from net realized long-term securities gains, if any, are
taxable to those shareholders who are not exempt from federal income taxes as
long-term capital gains. Shareholders in the Funds may be subject to state and
local taxes on dividends and distributions declared by the Funds.
To avoid a federal excise tax, each Fund must distribute substantially all
of its ordinary income, and capital gain net income, if any, by the end of each
calendar year. Dividends or distributions, if any, payable to shareholders of
record on a date in October, November or December of any year are deemed to have
been paid in that year, if they are paid by the following January.
Federal regulations may require, in certain cases, the Funds to withhold
("backup withholding") and remit to the U.S. Treasury 31% of dividends and
distributions paid to an investor if the investor (i) has provided either an
incorrect TIN or no TIN at all, (ii) is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of taxable interest
or dividend income properly, or (iii) has failed to certify that he or she is
not subject to backup withholding or that he or she is an "exempt recipient."
A TIN is either the Social Security number or employer identification
number of the beneficial owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
beneficial owner of the account, and may be claimed as a credit on the
beneficial owner's federal income tax return.
29
<PAGE> 61
Each Fund will be treated as a separate entity for tax purposes, and has
qualified and intends to continue to qualify as a regulated investment company
under the Code as long as this qualification is in the best interest of its
shareholders. Such qualification generally relieves each Fund of liability for
federal income taxes to the extent its earnings are distributed in accordance
with the applicable provisions of the Code.
Investors should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
OTHER INFORMATION
CAPITALIZATION
Pacifica Funds Trust (formerly Fund Source) was organized as a
Massachusetts business trust on July 17, 1984, and consists of a series of
separately managed portfolios. This Prospectus relates to the Investor Shares of
two of these managed portfolios -- the Pacifica Prime Money Market Fund and
Pacifica Treasury Money Market Fund -- which were reorganized as portfolios of
Pacifica Funds Trust on October 1, 1994 and which are classified as diversified,
open-end management investment companies under the 1940 Act.
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 per share. The Board of
Trustees has authorized the issuance of three classes of shares in each of the
Funds - Investor Shares, Service Shares and Institutional Shares. Each share of
a Fund is entitled to cash dividends and distributions earned on such Fund's
shares as are declared in the discretion of the Board of Trustees, and
represents the same proportionate interest in a particular Fund with other
shares of the Fund, except that a Fund's Service, Institutional and Investor
Shares each bear all of the Service Organization fees, distribution plan
payments (if any) and other "class" expenses that are allocated to a particular
class.
Investor Shares pay higher combined fees for shareholder support and
distribution services than Service Shares, and Service Shares pay higher
shareholder support fees than Institutional Shares. This difference in expenses
will create different performance results for the three classes. The Funds offer
various services and privileges in connection with their Investor Shares that
are not offered in connection with their Service Shares or Institutional Shares,
such as an automatic investment plan, an automatic withdrawal plan and certain
check writing privileges. Additional information concerning each class of shares
may be obtained by calling the Trust at 1-800-662-8417 or by contacting a
Service Organization.
30
<PAGE> 62
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims liability of the shareholders, Trustees or
officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property 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. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a Fund itself would
be unable to meet its obligations and should be considered remote.
When issued, shares of the Trust are fully paid, nonassessable and freely
transferable.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to vote. The Trust is not required to hold regular
annual meetings of the Funds' shareholders, but in the event that a special
meeting is held, shareholders of each portfolio offered by the Trust will be
entitled to one vote for each full share held and fractional votes for
fractional shares held, and will vote in the aggregate and not on a
portfolio-by-portfolio basis, except as required by the 1940 Act or other
applicable law. It is contemplated that, as required by the 1940 Act, the
shareholders of a portfolio will vote separately on a portfolio-by-portfolio
basis on matters relating to a particular portfolio's investment advisory
agreement, distribution plan or changes in a portfolio's fundamental investment
limitations, and on other matters where the interests of the respective
portfolios are not substantially identical. Similarly, shareholders of each
portfolio will vote in the aggregate and not by class unless the Trustees
determine that the matter to be voted on affects only the interests of the
holders of a particular class of a Fund's shares. Voting rights are not
cumulative.
The Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust and in connection with the meeting to comply with the
31
<PAGE> 63
shareholders' communications provisions of Section 16(c) of the 1940 Act. See
"Description of the Funds" in the SAI.
PERFORMANCE INFORMATION
From time to time each Fund advertises the yield and effective yield of its
Investor Shares. Both yield figures will fluctuate, are based on historical
earnings and are not intended to indicate future performance. The yield for
Investor Shares of each Fund refers to the income generated by an investment in
Investor Shares of a Fund over a seven-day period (which period will be stated
in the advertisement). This income is then annualized. That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned by an investment in Investor Shares of a Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment. Each Fund's yield and
effective yield for Investor Shares may reflect voluntary fee waivers. See
"Management of the Funds."
Yield information is useful in reviewing each Fund's performance, but
because yields will fluctuate, such information may not provide a basis for
comparison with domestic bank deposits or other investments which pay a fixed
yield for a stated period of time.
For purposes of comparison, the Funds may, from time to time, quote
performance information from IBC/Donoghue's MONEY FUND REPORT of Holliston,
Massachusetts 01746. IBC/Donoghue's MONEY FUND AVERAGE is a widely recognized
index of money market fund performance. Figures reflect average yields of all
taxable money funds included in IBC/Donoghue's index. IBC/Donoghue's U.S.
TREASURY & REPO MONEY FUND AVERAGE is a component of this average and reflects
average yields of all taxable U.S. Treasury money funds.
Any fees which may be imposed by Service Organizations directly on their
customer accounts for cash management services in connection with investments in
the Funds are not reflected in yield figures and any such fees, if charged, will
reduce the actual return received by customers on their investments.
ACCOUNT SERVICES
All transactions in shares of the Funds will be reflected in a statement
for each shareholder. In those cases where a Service Organization or its nominee
is shareholder of record of shares purchased for its customer, the
32
<PAGE> 64
Funds have been advised that the statement may be transmitted to the customer at
the discretion of the Service Organization.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Funds at 237 Park
Avenue, Suite 910, New York, New York 10017.
General and Account Information: (800) 662-8417.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY FIRST INTERSTATE BANCORP OR ITS AFFILIATES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
33
<PAGE> 65
INVESTMENT ADVISOR
First Interstate Capital Management, Inc.
7501 East McCormick Parkway
Scottsdale, Arizona 85258
ADMINISTRATOR
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
DISTRIBUTOR
Pacifica Funds Distributor Inc.
230 Park Avenue
New York, New York 10169
CUSTODIAN
First Interstate Bank of California
707 Wilshire Boulevard
Los Angeles, California 90017
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
[PACIFICA LOGO] PACPTMMIV-2/96
<PAGE> 66
[PACIFICA LOGO]
(INSTITUTIONAL SHARES)
PACIFICA PRIME MONEY
MARKET FUND
PACIFICA TREASURY
MONEY MARKET FUND
PROSPECTUS
FEBRUARY 1, 1996
As Revised February 9, 1996
[FIRST INTERSTATE BANK LOGO]
Investment Advisor to The Pacifica Funds
<PAGE> 67
PACIFICA FUNDS TRUST
(INSTITUTIONAL SHARES)
237 PARK AVENUE, NEW YORK, NEW YORK 10017
GENERAL AND ACCOUNT INFORMATION:
(800) 662-8417
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. --
INVESTMENT ADVISOR
("FICM" OR THE "ADVISOR")
THE DREYFUS CORPORATION -- ADMINISTRATOR
(THE "ADMINISTRATOR")
PACIFICA FUNDS DISTRIBUTOR INC. -- DISTRIBUTOR
("PFD INC." OR THE "DISTRIBUTOR")
Pacifica Funds Trust (the "Trust") is an open-end investment company (a
mutual fund) that offers a selection of separate investment portfolios. This
Prospectus describes the Institutional Shares of the following two money market
funds (the "Funds"):
- Pacifica Prime Money Market Fund
- Pacifica Treasury Money Market Fund
Institutional Shares of the Funds are sold to investors maintaining
qualified accounts at bank affiliates of First Interstate Bancorp or other banks
or institutions designated by First Interstate Bancorp ("Banks").
This Prospectus sets forth concisely the information a prospective investor
should know before investing in either of the Funds and should be read and
retained for future reference. A Statement of Additional Information for the
Funds' Service and Institutional Shares (the "SAI") dated February 1, 1996
(which may be revised from time to time), containing additional and more
detailed information about the Funds, has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference into
this Prospectus. For a free copy, call the telephone number above.
----------------------------
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FIRST INTERSTATE OR OTHER BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 1, 1996.
(Revised as of February 9, 1996)
<PAGE> 68
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND EXPENSES............................................ 3
FEE TABLE -- INSTITUTIONAL SHARES........................ 3
FINANCIAL HISTORY........................................ 5
THE FUNDS................................................ 10
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS........... 10
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES....... 11
INVESTMENT RESTRICTIONS.................................. 16
MANAGEMENT OF THE FUNDS.................................. 17
HOW TO BUY INSTITUTIONAL SHARES.......................... 20
HOW TO EXCHANGE INSTITUTIONAL SHARES..................... 22
HOW TO REDEEM INSTITUTIONAL SHARES....................... 23
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES........ 23
OTHER INFORMATION........................................ 25
</TABLE>
2
<PAGE> 69
FUND EXPENSES
The following table is an estimate of the annual costs and expenses that an
investor will incur either directly or indirectly as a shareholder of a Fund's
Institutional Shares based upon the Fund's operating expenses for the year ended
September 30, 1995, adjusted to reflect current fees and expenses. See "Other
Information -- Capitalization."
FEE TABLE -- INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
PRIME TREASURY
MONEY MONEY
MARKET MARKET
FUND FUND
------ --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....... None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price).................................... None None
Deferred Sales Load (as a percentage of
redemption proceeds)...................... None None
Redemption Fees.............................. None None
Exchange Fee................................. None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers)*............. 0.12% 0.12%
Other Expenses (after waivers)**............. 0.13 0.13
------ --------
TOTAL FUND OPERATING EXPENSES:
(after waivers)***........................... 0.25% 0.25%
===== ======
</TABLE>
- ---------------
* The investment advisory agreement for the Funds provides for management
fees payable 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. These amounts may be reduced pursuant to undertakings
by the Advisor.
** The Funds do not expect to make any payments to Service Organizations
with respect to Institutional Shares (otherwise payable at an annual rate
of up to 0.25%) for the current fiscal year.
*** Total Fund Operating Expenses (before waivers) would be 0.63% for the
Prime Money Market Fund and 0.62% for the Treasury Money Market Fund.
The purpose of this table is to assist shareholders in understanding the
various costs and expenses that an investor in the Funds' Institutional
3
<PAGE> 70
Shares will bear. The table does not reflect any charges that may be
imposed by a First Interstate Bank or other institution directly on their
customer accounts in connection with investments in the Funds.
EXAMPLE:(++)
You would pay the following expenses on a $1,000 investment, assuming (1)
5% gross annual return and (2) redemption at the end of each time period:(++)++
<TABLE>
<CAPTION>
PRIME TREASURY
MONEY MONEY
MARKET MARKET
FUND FUND
------ --------
<S> <C> <C>
1 year......................................... $ 3 $ 3
3 years........................................ 8 8
5 years........................................ 14 14
10 years....................................... 32 32
</TABLE>
- ---------------
(++) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN
IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE MORE OR LESS THAN THE ASSUMED
AMOUNT.
(++)++ The amount of expenses an Institutional class shareholder would pay
without waivers under these assumptions and assuming redemption after
one, three, five and ten years would be $6, $20, $35 and $79,
respectively, for the Prime Money Market Fund and $6, $20, $35 and $77,
respectively, for the Treasury Money Market Fund.
4
<PAGE> 71
FINANCIAL HISTORY
The financial data shown below is to assist investors in evaluating the
performance of the Funds for each of the ten years in the period ended September
30, 1995. The following information for the year ended September 30, 1995 and
the six-months ended September 30, 1994 has been audited by Ernst & Young LLP,
the Funds' current independent auditors, whose report on the financial
statements appears in the 1995 Annual Report to Shareholders for the Funds.
Their report and the financial statements are incorporated by reference into the
SAI. The following information for each of the four years in the period ended
March 31, 1994 has been audited by the Funds' former independent accountants.
Prior to August 11, 1995, the Funds offered only one class of shares to
institutional investors, which class is now known as Service Shares. The Funds
currently offer three classes of shares to institutional and non-institutional
investors. Contained below is the financial data for Institutional Shares of
each Fund for the period from August 11, 1995 to September 30, 1995. The
financial data shown below for each of the ten years in the period ended
September 30, 1995 pertains to the Service Shares of the Funds, which are not
offered through this Prospectus. See "Other Information -- Capitalization."
5
<PAGE> 72
PRIME MONEY MARKET FUND*
<TABLE>
<CAPTION>
SERVICE SHARES
--------------------------------------------------------------------------------------------
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
year.......................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997
-------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT OPERATIONS:
Investment income -- net...... .0754 .0581 .0634 .0764 .0849 .0745 .0510 .0327
Net realized gain (loss) on
investments................. -- -- -- -- -- -- (.0003) .0001
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS................. .0754 .0581 .0634 .0764 .0849 .0745 .0507 .0328
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from investment
income -- net............... (.0754) (.0581) (.0634) (.0764) (.0849) (.0745) (.0510) (.0327)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
year........................ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ .9997 $ .9998
======== ======== ======== ======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN..... 7.80% 5.97% 6.50% 7.88% 8.82% 7.72% 5.22% 3.32%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.................. .66%(3) .68%(4) .58%(5) .56%(5) .54%(6) .47%(7) .43%(8) .41%(9)
Ratio of net investment income
to average net assets....... 7.47%(3) 5.81%(4) 6.38%(5) 7.58%(5) 7.95%(6) 7.38%(7) 5.09%(8) 3.27%(9)
Net Assets, end of year (000's
Omitted).................... $350,344 $407,815 $628,987 $496,675 $493,641 $543,834 $528,397 $468,479
<CAPTION>
INSTITUTIONAL
SERVICE SHARES SHARES
------------------------------------------ -------------
SIX MONTHS FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1994 1994** 1995 1995(1)
-------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
year.......................... $ .9998 $ .9998 $ .9998 $ 1.000
-------- ------------- ------------- ------
INVESTMENT OPERATIONS:
Investment income -- net...... .0296 .0185 .0546 .0079
Net realized gain (loss) on
investments................. -- -- -- --
-------- ------------- ------------- ------
TOTAL FROM INVESTMENT
OPERATIONS................. .0296 .0185 .0546 .0079
-------- ------------- ------------- ------
DISTRIBUTIONS:
Dividends from investment
income -- net............... (.0296) (.0185) (.0546) (.0079)
-------- ------------- ------------- ------
Net asset value, end of
year........................ $ .9998 $ .9998 $ .9998 $ 1.000
======== ============ ============ ============
TOTAL INVESTMENT RETURN..... 3.00% 3.71%(2) 5.60% 5.65%(2)
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets.................. .41%(10) .41%(2)(11) .41%(12) .26%(2)(13)
Ratio of net investment income
to average net assets....... 2.96%(10) 3.67%(2)(11) 5.47%(12) 5.67%(2)(13)
Net Assets, end of year (000's
Omitted).................... $527,599 $ 565,305 $ 614,101 $30,606
</TABLE>
(footnotes on next page)
6
<PAGE> 73
(footnotes from previous page)
- ---------------
* The Prime Money Market Fund operated as Pacific American Liquid Assets,
Inc. from commencement of operations on April 30, 1981 until it was
reorganized as a portfolio of Pacific American Fund on October 1, 1985. On
October 1, 1994, the Fund was reorganized as the "Pacific American Money
Market Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the
Fund was renamed the "Pacifica Prime Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end changed from March 31 to
September 30.
(1) From August 11, 1995 (commencement of initial offering) to September 30,
1995.
(2) Annualized basis.
(3) During the year ended March 31, 1986, the Fund's investment advisor waived
a portion of its fees (.13% of average net assets).
(4) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees (.25% of average net assets). In addition, during the
period from January 1, 1987 to March 31, 1987, the Fund's investment
advisor waived an additional portion of its fees (.02% of average net
assets).
(5) During the years ended March 31, 1988 and 1989, the Fund's investment
advisor waived a portion of its fees (.35% and .34% of average net assets,
respectively.)
(6) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(7) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(8) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(9) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(10) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(11) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.48% (annualized) of average net assets).
(12) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.27% of average net assets).
(13) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.43% (annualized) of average net assets).
7
<PAGE> 74
TREASURY MONEY MARKET FUND*
<TABLE>
<CAPTION>
SERVICE SHARES
--------------------------------------------------------------------------------------
FISCAL YEAR ENDED MARCH 31,
--------------------------------------------------------------------------------------
1986(1) 1987 1988 1989 1990 1991
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset
value,
beginning of
year......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- --------- ---------
INVESTMENT
OPERATIONS:
Investment
income -- net... .0353 .0550 .0604 .0743 .0827 .0716
Net realized
gain (loss)
on
investments... -- -- -- -- -- .0003
--------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS... .0353 .0550 .0604 .0743 .0827 .0719
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS:
Dividends from
investment
income -- net... (.0353) (.0550) (.0604) (.0743) (.0827) (.0716)
Dividends from
net realized
gain on
investment... -- -- -- -- -- (.0002)
--------- --------- --------- --------- --------- ---------
TOTAL
DISTRIBUTIONS... (.0353) (.0550) (.0604) (.0743) (.0827) (.0718)
--------- --------- --------- --------- --------- ---------
Net asset
value, end of
year......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0001
======== ======== ======== ======= ======= ========
TOTAL
INVESTMENT
RETURN...... 7.18%(3) 5.64% 6.20% 7.63% 8.58% 7.42%
RATIOS/SUPPLEMENTAL
DATA:
Ratio of
expenses to
average net
assets....... .80%(3)(4) .69%(5) .69%(6) .63%(7) .56%(8) .48%(9)
Ratio of net
investment
income to
average net
assets....... 6.91%(3)(4) 5.50%(5) 6.12%(6) 7.36%(7) 7.73%(8) 7.10%(9)
Net Assets, end
of year
(000's
Omitted)..... $ 123,243 $ 134,375 $ 101,066 $ 90,672 $ 98,398 $ 118,623
<CAPTION>
INSTITUTIONAL
SERVICE SHARES SHARES
-------------------------------------------------------------------- ---------
SIX FISCAL FISCAL
MONTHS YEAR YEAR
ENDED ENDED ENDED
FISCAL YEAR ENDED MARCH 31, SEPTEMBER SEPTEMBER SEPTEMBER
------------------------------------- 30, 30, 30,
1992 1993 1994 1994** 1995 1995(2)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset
value,
beginning of
year.........$ 1.0001 $ .9999 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- --------- ---------
INVESTMENT
OPERATIONS:
Investment
income -- net... .0489 .0309 .0277 .0186 .0529 .0077
Net realized
gain (loss)
on
investments... .0002 .0002 -- -- -- --
--------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS... .0491 .0311 .0277 .0186 .0529 .0077
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS:
Dividends from
investment
income -- net... (.0489) (.0309) (.0277) (.0186) (.0529) (.0077)
Dividends from
net realized
gain on
investment... (.0004) -- (.0001) -- -- --
--------- --------- --------- --------- --------- ---------
TOTAL
DISTRIBUTIONS... (.0493) (.0309) (.0278) (.0186) (.0529) (.0077)
--------- --------- --------- --------- --------- ---------
Net asset
value, end of
year.........$ .9999 $ 1.0001 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ============ ============ ============
TOTAL
INVESTMENT
RETURN...... 5.03% 3.13% 2.81% 3.75%(3) 5.42% 5.51%(3)
RATIOS/SUPPLEMEN
DATA:
Ratio of
expenses to
average net
assets....... .45%(10) .43%(11) .43%(12) .43%(3)(13) .42%(14) .26%(3)(15)
Ratio of net
investment
income to
average net
assets....... 4.73%(10) 3.04%(11) 2.77%(12) 3.72%(3)(13) 5.32%(14) 5.42%(3)(15)
Net Assets, end
of year
(000's
Omitted).....$ 281,343 $ 614,237 $ 654,950 $690,630 $1,001,707 $ 36,443
</TABLE>
(footnotes on next page)
8
<PAGE> 75
(footnotes from previous page)
- ---------------
* Prior to August 1, 1990, the Treasury Money Market Fund was known as the
Short-Term Government Fund and invested in obligations issued or guaranteed
by agencies and instrumentalities of the U.S. Government in accordance with
fundamental policies that were then effective for the Fund. The Treasury
Money Market Fund operated as a portfolio of Pacific American Fund through
October 1, 1994 when it was reorganized as the "Pacific American U.S.
Treasury Portfolio," a portfolio of Pacifica Funds Trust. In July 1995, the
Fund was renamed the "Pacifica Treasury Money Market Fund."
** On October 1, 1994, the Fund's fiscal year end changed from March 31 to
September 30.
(1) From October 1, 1985 (commencement of operations) to March 31, 1986.
(2) From August 11, 1995 (commencement of initial offerings) to September 30,
1995.
(3) Annualized basis.
(4) During the period from October 1, 1985 (Commencement of Operations) to
March 31, 1986, the Fund's investment advisor waived a portion of its fees
(.25% (annualized) of average net assets).
(5) During the year ended March 31, 1987, the Fund's investment advisor waived
a portion of its fees (.25% of average net assets). In addition, during the
period from January 1, 1987 to March 31, 1987, the Fund's investment
advisor and the Fund's prior distributor waived a portion of their
respective fees (.09% of average net assets).
(6) During the year ended March 31, 1988, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.36% of
average net assets).
(7) During the year ended March 31, 1989, the Fund's investment advisor waived
a portion of its fees (.35% of average net assets).
(8) During the year ended March 31, 1990, the Fund's investment advisor and the
Fund's prior distributor waived a portion of their respective fees (.41% of
average net assets).
(9) During the year ended March 31, 1991, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.46% of average net assets).
(10) During the year ended March 31, 1992, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(11) During the year ended March 31, 1993, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.48% of average net assets).
(12) During the year ended March 31, 1994, the Fund's investment advisor and the
Fund's Service Organizations waived a portion of their respective fees
(.47% of average net assets).
(13) During the six month period ended September 30, 1994, the Fund's investment
advisor and the Fund's Service Organizations waived a portion of their
respective fees (.47% (annualized) of average net assets).
(14) During the year ended September 30, 1995, the Fund's investment advisor and
Fund's Service Organizations waived a portion of their respective fees
(.24% of average net assets).
(15) During the year ended September 30, 1995, the Fund's investment advisor and
the Fund's Service Organizations waived a portion of their respective fees
(.43% (annualized) of average net assets).
9
<PAGE> 76
THE FUNDS
The Funds are portfolios of Pacifica Funds Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts as an open-end,
management investment company. The Trust's Board of Trustees oversees the
overall management of the Funds and elects the officers of each Fund.
INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund seeks to maintain a net asset value of $1.00 per share. Their
assets consist only of obligations with remaining maturities (as defined by the
SEC) of 13 months or less at the date of acquisition, and the dollar-weighted
average maturity of each Fund's investments is 90 days or less. There can be no
assurance that each Fund's investment objective as described below will be
achieved or that the Funds will be able to maintain a net asset value of $1.00
per share.
The Prime Money Market Fund's investment objective is to seek the
maximization of current income to the extent consistent with the preservation of
capital and maintenance of liquidity. To achieve its objective the Prime Money
Market Fund may invest in a broad range of short-term, high quality U.S.
dollar-denominated instruments, consisting of commercial paper, certificates of
deposit, bankers' acceptances, time deposits, bank notes, variable rate master
demand note agreements, medium-term notes, corporate notes, U.S. Agency
obligations and U.S. Treasury obligations. The Prime Money Market Fund also
invests in repurchase agreements collateralized or secured by U.S. Agency
obligations and U.S. Treasury obligations.
The Treasury Money Market Fund's investment objective is to seek current
income and stability of principal. To achieve its objective, the Treasury Money
Market Fund's fundamental policy is to invest only in obligations issued or
guaranteed by the U.S. Treasury and in notes and other instruments, including
repurchase agreements, collateralized or secured by such obligations. The Funds'
investment objectives, and the Treasury Money Market Fund's fundamental policy
stated above, may not be changed without the vote of a majority of the
outstanding shares of the particular Fund.
Each Fund will purchase only "First Tier Eligible Securities" (as defined
by the SEC) that present minimal credit risks as determined by FICM pursuant to
guidelines approved by the Trust's Board of Trustees. First Tier Eligible
Securities consist of (i) securities that either (a) have
10
<PAGE> 77
short-term debt ratings at the time of purchase in the highest rating category
by at least two unaffiliated nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if the security was rated by only one
NRSRO), or (b) are issued by issuers with such ratings, and (ii) certain
securities that are unrated (including securities of issuers that have long-term
but not short-term ratings) but are of comparable quality as determined in
accordance with guidelines approved by the Board of Trustees. The Appendix to
the SAI includes a description of applicable NRSRO ratings.
The types of securities and investment practices used by the Funds are
described in greater detail below under "Description of Securities and
Investment Practices."
DESCRIPTION OF SECURITIES AND
INVESTMENT PRACTICES
INFORMATION FOR BOTH FUNDS
The Treasury Money Market Fund may invest only in obligations issued or
guaranteed by the U.S. Treasury such as bills, notes, bonds and certificates of
indebtedness, and in notes and repurchase agreements collateralized or secured
by such obligations. These obligations may also include U.S. Treasury STRIPS
(U.S. Treasury securities that have been separated into their component parts of
principal and interest payments and recorded as such in the Federal Reserve
book-entry record keeping system). The Prime Money Market Fund may invest in
U.S. Treasury obligations, as well as in obligations of agencies and
instrumentalities of the U.S. Government. Some obligations issued or guaranteed
by U.S. Government agencies and instrumentalities, such as Government National
Mortgage Association pass-through certificates, are supported by the full faith
and credit of the U.S. Government; others, such as those of the Federal Home
Loan Banks, by the right of the issuer to borrow from the U.S. Treasury; others,
such as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and others, such as some obligations issued by
the Student Loan Marketing Association, only by the credit of the agency or
instrumentality. While the U.S. Government provides financial support to these
latter U.S. Government-sponsored agencies and instrumentalities, no assurance
can be given that it will always do so since such support is not required by
law. The Prime Money Market Fund will invest in such securities only
11
<PAGE> 78
when FICM is satisfied that the credit risk with respect to the issuer is
minimal.
Each Fund may engage in repurchase agreements with financial institutions
such as banks or broker-dealers. In these transactions, a Fund buys a security
at one price and simultaneously promises to sell that same security back to the
seller at a higher price. Securities purchased subject to repurchase agreements
are deposited with the Fund's 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 value of the repurchase price
plus accrued interest, the Fund will require the seller to deposit additional
collateral by the next business day. The repurchase date is generally within
seven days of the original purchase, but in no event more than 365 days. In all
cases, FICM must be satisfied with the creditworthiness of the other party to
the agreement before entering into a repurchase agreement. In the event of the
bankruptcy or default of the other party to a repurchase agreement, the Fund
could experience delays and costs in recovering its cash. To the extent that, in
the meantime, the value of the securities purchased may have decreased, the Fund
could experience a loss. Repurchase agreements may be considered to be loans by
the Fund under the Investment Company Act of 1940, as amended (the "1940 Act").
Securities purchased by a Fund may include variable and floating rate
instruments, which may have a stated maturity in excess of the Fund's maturity
limitations but are deemed to have shorter maturities because the Fund can
demand payment of the principal of the instrument at least once every thirteen
months upon not more than thirty days' notice (this demand feature is not
required if an instrument is guaranteed by the U.S. Government or an agency or
instrumentality thereof). These instruments may include variable amount master
demand notes that permit the indebtedness thereunder to vary in addition to
providing for periodic adjustments in the interest rate. There may be no active
secondary market with respect to a particular variable or floating rate
instrument. Nevertheless, the periodic readjustments of their interest rates
tend to assure that their value to a Fund will approximate their par value.
Illiquid variable and floating rate instruments (instruments which are not
payable upon seven days notice and do not have an active trading market) that
are acquired by a Fund are subject to the percentage limitations described
below.
Each Fund will not knowingly invest more than 10% of the value of its net
assets in securities that are illiquid. Repurchase agreements that do not
provide for payment to a Fund within seven days after notice, and securities
12
<PAGE> 79
that are not registered under the Securities Act of 1933 but that may be
purchased by institutional buyers under Rule 144A, are subject to this 10% limit
(unless, in the case of the Prime Money Market Fund, such securities are
variable amount master demand notes with maturities of nine months or less or
unless the Board or FICM, pursuant to guidelines adopted by the Board,
determines that a liquid trading market exists).
Each Fund may purchase securities on a "when-issued" basis and may purchase
or sell securities on a "forward commitment" basis. The Funds may also purchase
or sell securities on a "delayed settlement" basis. When-issued and forward
commitment transactions, which involve a commitment by a Fund to purchase or
sell particular securities with payment and delivery taking place at a future
date (perhaps one or two months later), permit the Fund to lock in a price or
yield on a security it owns or intends to purchase, regardless of future changes
in interest rates. Delayed settlement describes settlement of a securities
transaction in the secondary market which will occur sometime in the future.
When-issued, forward commitment and delayed settlement transactions involve the
risk, however, that the yield or price obtained in a transaction may be less
favorable than the yield or price available in the market when the securities
delivery takes place. A Fund's forward commitments, when-issued purchases and
delayed settlements are not expected to exceed 25% of the value of the Fund's
total assets absent unusual market conditions. The Funds do not intend to engage
in these transactions for speculative purposes but only in furtherance of their
investment objectives.
Each Fund may borrow monies for temporary purposes by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, a Fund would sell portfolio securities to
financial institutions and agree to repurchase them at an agreed upon date and
price. At the time a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account liquid assets or high grade debt
securities having a value equal to or greater than the repurchase price and FICM
will continuously monitor the account to ensure that the value is maintained. A
Fund would only enter into reverse repurchase agreements to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions.
Reverse repurchase agreements involve the risk that the market value of the
portfolio securities sold by a Fund may decline below the price of the
securities the Fund is obligated to repurchase. Interest paid by a Fund in
connection with a reverse repurchase agreement will reduce the Fund's net
investment income. The Funds currently intend to limit their investments in
reverse repurchase agreements to no more than 20% of their total asset and will
13
<PAGE> 80
only engage in such transactions with primary dealers. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.
The Funds may attempt to increase yields by trading to take advantage of
short-term market variations. This policy could result in high portfolio
turnover, but should not adversely affect the Funds since they do not ordinarily
pay brokerage commissions on the purchase of short-term debt obligations.
In connection with the management of their daily cash positions, each Fund
may invest up to 10% of its assets in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. The Treasury Money Market Fund may only
invest in shares of other investment companies that are structured to seek a
similar investment objective. As a shareholder of another investment company, a
Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses including advisory fees. These expenses
would be in addition to the advisory fees and other expenses the Fund bears
directly in connection with its own operations. Securities of other investment
companies will be acquired by the Funds within the limits prescribed by the 1940
Act.
ADDITIONAL PORTFOLIO INFORMATION FOR PRIME MONEY MARKET FUND
In addition to the types of instruments described above, the Prime Money
Market Fund may purchase U.S. dollar-denominated bank obligations such as time
deposits, certificates of deposit, bankers' acceptances, bank notes and deposit
notes issued by domestic and foreign banks. Time deposits are non-negotiable
deposits maintained at a banking institution for a specified period of time
normally at a stated interest rate. Certificates of deposit are certificates
evidencing the obligation of a bank to repay funds deposited with it for a
specified period of time. Bankers acceptances are negotiable deposits or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank (meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument at maturity).
Bank notes usually represent senior debt of the bank.
The Prime Money Market Fund may also purchase commercial paper, short-term
notes, medium-term notes and bonds issued by domestic and foreign corporations
that meet the Fund's maturity limitations.
Commercial paper purchased by the Fund may include paper issued in reliance
on the so-called "private placement" exemption under Sec-
14
<PAGE> 81
tion 4(2) of the Securities Act of 1933 ("Section 4(2) paper"). Section 4(2)
paper is restricted as to disposition under the federal securities laws and
generally is sold to institutional investors such as the Fund that agree that
they are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through
or with the assistance of the issuer or investment dealers that make a market in
Section 4(2) paper. Section 4(2) paper will not be subject to the Fund's 10%
limitation on illiquid securities described above where the Board of Trustees or
FICM (pursuant to guidelines adopted by the Board) determines that a liquid
trading market exists.
The Prime Money Market Fund may also lend its portfolio securities in order
to increase income to broker-dealers and other institutional investors pursuant
to agreements requiring that the loans be continuously secured by collateral
equal at all times in value to at least the market value of the securities
loaned plus accrued interest. Collateral for such loans may include cash, U.S.
Treasury securities or other U.S. government securities or an irrevocable letter
of credit issued by a bank which meets the investment standards of the Fund.
Such loans will not be made if, as a result, the aggregate of all outstanding
loans of the Fund exceeds one-third of the value of its total assets. There may
be risks 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 Prime Money Market Fund may also invest in U.S. dollar denominated
obligations issued or guaranteed by foreign governments or any of their
political subdivisions, agencies or instrumentalities. Such obligations include
debt obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples of these include the
International Bank for Reconstruction and Development (the "World Bank"), the
Asian Development Bank and the InterAmerican Development Bank.
The Prime Money Market Fund may purchase asset-backed securities, which are
securities backed by mortgages, installment sales contracts, credit card
receivables or other assets. The average life of asset-backed securities varies
with the maturities of the underlying instruments, and the average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as
the result of mortgage prepayments. For this and other reasons, an asset-backed
security's stated maturity may be shortened, and
15
<PAGE> 82
the securities' total return may be difficult to predict precisely. Such
difficulties are not, however, expected to have a significant effect on the Fund
since the remaining maturity of any asset-backed security acquired will be
thirteen months or less. Asset-backed securities purchased by the Fund may
include collateralized mortgage obligations ("CMOs") issued by private
companies.
Since the Prime Money Market Fund may purchase securities issued by foreign
issuers, the Fund may be subject to investment risks that are different in some
respects from those incurred by a fund which invests exclusively in debt
obligations of domestic issuers. Such potential risks include future political
and economic developments, the possible imposition of withholding taxes on
interest income payable on the securities by the particular country in which the
issuer is located, the possible seizure or nationalization of foreign deposits,
the possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on these securities. In addition, foreign banks and other issuers
are not necessarily subject to the same regulatory requirements that apply to
domestic issuers (such as reserve requirements, loan limitations, examinations,
accounting, auditing and recordkeeping requirements, and public availability of
information), and the Fund may experience difficulties in obtaining or enforcing
a judgment against a foreign issuer. Absent any unusual market conditions, the
Fund will not invest more than 25% of its total assets in securities issued by
foreign issuers.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions that may
be changed only with the approval of a majority of the outstanding shares of the
Fund. The following descriptions summarize several of the Funds' fundamental
investment restrictions, which are set forth in full in the SAI.
Neither Fund may:
1. purchase securities (with certain exceptions including U.S. Treasury
securities) if more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the Fund's total
assets may be invested without regard to this 5% limitation; and
2. invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry
16
<PAGE> 83
(with certain exceptions including U.S. Government securities and, with
respect to the Prime Money Market Fund, the obligations of U.S. banks
and certain U.S. branches of foreign banks).
These investment restrictions are applied at the time investment securities
are purchased. As a matter of non-fundamental 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 non-U.S. governmental issuer to not
more than 5% of its total assets at the time of purchase, provided that the
Prime Money Market Fund may invest up to 25% of its assets in the obligations of
one non-U.S. governmental issuer for a period of up to three business days.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the direction of
the Board of Trustees. Information about the Trustees, as well as the Funds'
executive officers, may be found in the SAI under the heading "Trustees and
Officers."
ADVISOR
First Interstate Capital Management, Inc. serves as the Funds' investment
advisor. FICM is an indirect wholly-owned subsidiary of First Interstate
Bancorp, a publicly-held, multi-state bank holding company.
FICM supervises and assists in the overall management of the Funds' affairs
pursuant to an Investment Advisory and Management Agreement, subject to the
overall authority of the Board of Trustees. These management responsibilities
include, among other things, making decisions and placing orders for all
purchases and sales of the Funds' investment securities, furnishing economic and
statistical information as requested by the Board of Trustees, and monitoring
the Funds' arrangements with Service Organizations. Under its Agreement, FICM is
entitled to a fee, computed daily and payable monthly, at the 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. The advisory fee FICM receives may be
reduced in some cases by the amount paid to the Funds' Service Organizations
(see "Servicing Agreements" below), and FICM may voluntarily waive an additional
portion of the advisory fee payable by the Funds from time to time. The
annualized effective rates of the advisory fees paid by the Prime Money Market
Fund and the Treasury Money Market
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Fund were (after fee reductions and waivers) 0.12% and 0.13%, respectively, of
the average net assets of the Funds for the fiscal year ended September 30,
1995.
FICM maintains offices at 7501 East McCormick Parkway, Scottsdale, Arizona
85258.
On January 24, 1996, First Interstate Bancorp signed a definitive merger
agreement to merge with Wells Fargo & Company ("Wells Fargo"), a publicly-held
bank holding company with its head office at 420 Montgomery Street, San
Francisco, California 94104. The merger is conditioned upon, among other things,
certain regulatory approvals. Upon completion of the merger, currently expected
to occur during the second quarter of 1996, FICM will be wholly-owned by Wells
Fargo, and the existing investment advisory agreement between the Trust and FICM
will automatically terminate. It is contemplated that an application will be
filed with the Securities and Exchange Commission to ensure there is no
disruption as a result of the merger in the provision of investment advisory
services to the Funds, and that a meeting of shareholders will be held not later
than 120 days after the merger to approve ongoing investment advisory
arrangements for the Funds.
ADMINISTRATOR
The Dreyfus Corporation, located at 200 Park Avenue, New York, New York
10166, was formed in 1947. The Administrator, as of November 30, 1995, managed
or administered approximately $83 billion in assets for more than 1.7 million
investor accounts nationwide. Pursuant to its Administration Agreement with the
Funds, 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 each Fund's shares and dividends and capital
gains distributions to shareholders; and generally assists in all aspects of the
Funds' operations (except with respect to investment management services). For
its administrative services for the fiscal year ended September 30, 1995, the
Administrator received a fee from each Fund at the annual rate of 0.10% of each
Fund's average daily net assets. From time to time, the Administrator may waive
all or a portion of its fees with respect to a Fund.
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DISTRIBUTOR
Pacifica Funds Distributor Inc., located at 230 Park Avenue, New York, New
York 10169, acts as distributor for the Funds. PFD Inc. is an affiliate of
Furman Selz LLC ("Furman Selz") and was organized specifically to distribute
shares of the Trust; however, offers and sales of shares of the Trust will be
made only through Furman Selz or other registered (or exempt) dealers.
CUSTODIAN
First Interstate Bank of California ("FICAL") is the Funds' Custodian and
receives fees for its custodial services as described in the SAI. FICAL
maintains offices at 707 Wilshire Blvd., Los Angeles, California 90017.
TRANSFER AND DIVIDEND DISBURSING AGENT
Furman Selz serves as the Fund's Transfer and Dividend Disbursing Agent.
Furman Selz maintains offices at 230 Park Avenue, New York, New York 10169.
SERVICING AGREEMENTS
Although the Funds do not expect to do so during the current fiscal year,
the Funds may enter into Servicing Agreements with certain banks and other
institutions that are record shareholders of the Funds' Institutional Shares
("Service Organizations"). The Service Organizations would render support
services to their customers ("Customers"), who are the beneficial owners of
Institutional Shares, in consideration of the Funds' payment (on an annualized
basis) of up to 0.25% of the average daily net asset value of the Institutional
Shares held by the Service Organizations for the benefit of their Customers.
From time to time, the Service Organizations may waive all or a portion of their
fees with respect to Institutional Shares of a Fund. FICM, FICAL and their
affiliates are eligible to become Service Organizations and receive fees under
Servicing Agreements. Such services, which are described more fully in the SAI,
include aggregating and processing purchase and redemption requests for Fund
shares from Customers and placing net purchase and redemption orders with the
Distributor, processing dividend payments from the Funds on behalf of Customers,
providing information periodically to Customers showing their positions in Fund
shares, and providing sub-accounting with respect to Fund shares beneficially
owned by Customers or the information necessary for sub-accounting. FICM intends
to waive a portion of the advisory fee
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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% of the Fund's average daily net assets.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any non-bank
affiliate thereof from sponsoring, organizing, controlling, or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but do not prohibit such a holding company or affiliate, or banks
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 Customers. FICM and FICAL and certain of the Service
Organizations are subject to such banking laws and regulations.
In the event of changes in federal or state statutes or regulations or in
interpretations or decisions pertaining to permissible activities by banks, FICM
and FICAL or certain of the Service Organizations could be prevented from
continuing their arrangements with the Funds; however, in such an event it is
expected that the Funds' Board of Trustees would make other arrangements and
shareholders would not suffer adverse financial consequences.
HOW TO BUY INSTITUTIONAL SHARES
Institutional Shares of each Fund are sold to Customers of affiliate,
franchise or correspondent banks of First Interstate Bancorp and other selected
institutions (the "Banks"). Clients of a Bank's trust division, as well as
individuals, corporations, partnerships and other businesses which maintain
qualified accounts at a Bank (including Individual Retirement and Keogh Plan
accounts) may invest in the Funds. Investors purchasing Fund shares may include
officers, directors or employees of a Bank.
All Institutional Share purchases are effected through Customers' accounts
at their Banks. Differing types of Bank accounts may from time to time purchase
Institutional Shares, including discretionary and non-discretionary personal and
other trust accounts, managing agency accounts and custodian accounts. The Funds
have no minimum investment requirement, although the Banks may impose account
minimums in connection with investments in the Funds.
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<PAGE> 87
Institutional Shares are purchased through procedures established in
connection with the requirements of such Bank accounts. These procedures may
include instructions under which a Customer's account is "swept" automatically,
usually not less frequently than weekly, and amounts (federal funds) in excess
of a minimum balance agreed to by the Bank and the Customer are invested in
Institutional Shares of one or both of the Funds as directed by the Customer.
The Funds expect that Banks will transmit orders for the purchase of
Institutional Shares arising from automatic investment programs the same day as
the "excess" balances are swept. Depending upon the terms of the particular
account, a Bank may charge a Customer's account fees for the automatic sweep and
other cash management services provided, including, for example, account
maintenance fees, compensating balance requirements, or fees based upon account
transactions, assets, or income. Banks are responsible for providing information
concerning these services and their charges to their Customers prior to any
purchase of Institutional Shares, and an investor should read this Prospectus in
light of the terms of the investor's Bank account before investing.
Institutional Shares normally will be registered in the name of a Bank or a
nominee of a Bank. The Bank will receive a written statement at least monthly of
each purchase or redemption of shares. Beneficial ownership of Institutional
Shares will be recorded by the Banks and reflected in the account statements
provided by such Banks to their Customers at such times as the Banks may
determine.
It is the responsibility of the Banks to transmit orders for purchases of
Institutional Shares by their Customers to the Transfer Agent, and for the Banks
to deliver required funds on a timely basis. Each Fund's Institutional Shares
are sold on a continuous basis, without a sales charge imposed by the Funds, at
the per share net asset value next determined after federal funds (which are
held on deposit at a Federal Reserve Bank) are received by the Funds. The net
asset value per share ("NAV") for each Fund is calculated daily at 12:00 noon,
Pacific time, on days when the Funds are open for business (i.e., days on which
the San Francisco branch of the Federal Reserve Bank, FICAL as the Funds'
Custodian and, in the case of the Treasury Money Market Fund, the New York Stock
Exchange are open).
The NAV of the Institutional Shares of the Funds is computed by dividing
the value of a Fund's assets allocated to its Institutional Shares, less the
liabilities charged to that class, by the total number of outstanding shares of
that class. Each Fund uses the amortized cost method of valuing its securities.
This technique involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or
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<PAGE> 88
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 a Fund would receive if it sold the instrument.
Federal regulations generally require that investors provide a certified
Taxpayer Identification Number ("TIN") upon opening an account. See "Dividends,
Distributions and Federal Income Taxes" for further information concerning this
requirement. Failure to furnish a certified TIN could subject the investor to a
$50 penalty by the Internal Revenue Service (the "IRS"). In the interest of
economy and convenience, certificates for Fund shares will not be issued.
Shareholder inquiries and further information regarding purchases of Fund shares
or the names of participating Banks may be obtained by calling (800) 662-8417.
The Funds reserve the right to reject any purchase order.
HOW TO EXCHANGE INSTITUTIONAL SHARES
Each Fund's Institutional Shares may be exchanged without cost for
Institutional Shares in another investment portfolio of the Trust. Exchange
requests may be made by a Customer to the Customer's Bank in accordance with the
procedures or instructions specified by the Bank. Consult your Bank for the
proper procedure to be followed. Banks will be responsible for transmitting
exchange requests from their Customers to the Funds. Exchanges will be made by
the Funds following the receipt by its Transfer Agent of an exchange request
from a Bank.
An exchange involves a redemption of all or a portion of the Institutional
Shares in one Fund and the investment of the redemption proceeds in
Institutional Shares of the other Fund. The redemption will be made at the per
share NAV of the Institutional Shares to be redeemed next determined after the
exchange request is received and accepted by the Funds' Transfer Agent. The
Institutional Shares of the Fund to be acquired will be purchased at the NAV of
those shares next determined after acceptance of the purchase order by the
Transfer Agent, in accordance with the Funds' customary policy for accepting
investments.
In addition, Institutional Shares of a Fund may be exchanged for Investor
Shares of the same Fund in connection with the distribution of assets held in a
qualified trust, agency or custodial account maintained with the trust
department of a First Interstate or other bank, trust company or thrift
institution, or in other cases where Institutional Shares are not held in
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<PAGE> 89
such qualified accounts. Similarly, Investor Shares may be exchanged for
Institutional Shares of the same Fund if the shares are to be held in such a
qualified trust, agency or custodial account. These exchanges are made without a
sales charge at the net asset value of the respective share classes.
Bank Customers may find the exchange privilege useful if their investment
objectives or market outlook should change. Before making an exchange request,
please obtain and read the current prospectus for the Funds.
HOW TO REDEEM INSTITUTIONAL SHARES
A Customer may redeem all or part of the value of the Customer's
Institutional Shares in accordance with instructions and limitations pertaining
to the account at the Customer's Bank. Consult your Bank for the appropriate
procedures to be followed.
All redemption requests properly received by Furman Selz as the Funds'
Transfer Agent from a Bank prior to 12:00 noon, Pacific time, on a day the Funds
are open for business, are effected at the next determined NAV calculated that
day. If the redemption request is received at or after 12:00 noon, Pacific time,
Institutional Shares will be redeemed at their next determined NAV the next
business day. It is the responsibility of Banks to transmit redemption orders on
a timely basis in accordance with their agreements with Customers.
The Funds ordinarily will transmit payment for all Institutional Shares
redeemed within two business days after receipt of a redemption request in
proper form, but in any event payment will be made within seven days thereafter,
except as provided by the rules of the SEC. During the period prior to the time
the redemption request is executed, dividends on such Institutional Shares will
accrue and be payable as described under "Dividends, Distributions and Federal
Income Taxes," and investors will be entitled to exercise all other beneficial
rights of ownership.
If an investor has agreed with a particular Bank to maintain a minimum
balance in an account, and the balance in the account falls below that minimum,
the investor may be obliged to redeem all of the investor's Institutional Shares
in the Funds.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXES
Each Fund's net investment income ordinarily is declared as a dividend on
each day that the Funds are open for business. Dividends are paid
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<PAGE> 90
within five business days after the end of each month. Institutional Shares
begin accruing dividends on the day the purchase is effected and continue to
accrue dividends through the day before the redemption request is executed. Each
Fund's earnings for non-business days are declared as dividends to shareholders
of record on the preceding business day. All dividends are reinvested
automatically in additional Institutional Shares of that Fund at net asset value
or, at the option of the Bank Customer, as indicated on the authorization form
provided by the Customer's Bank, are either credited to the Customer's Bank
account or paid in cash. Distributions from net realized securities gains are
normally declared and paid once a year, but each Fund may make distributions on
a more frequent basis to comply with the distribution requirements of the
Internal Revenue Code of 1986, as amended (the "Code"). In all cases
distributions will be made in a manner that is consistent with the provisions of
the 1940 Act. Neither Fund will make distributions from net realized securities
gains unless capital loss carryovers, if any, have been utilized or have
expired. These distributions, if any, are reinvested automatically in additional
Institutional Shares of the Fund involved at net asset value or, at the
Customer's option, are credited as described above. If all Institutional Shares
in the account are redeemed at any time during the month, all dividends to which
the Customer is entitled will be paid within five business days after the end of
the month by crediting the Customer's Bank account or, if this is not possible,
in cash. All expenses are accrued daily and deducted before declaration of
dividends.
Notice as to the tax status of dividends and distributions declared by each
Fund is mailed annually. Each Customer will also receive periodic account
summaries which will include information as to income dividends and
distributions from securities gains, if any, declared during the year.
Since each Fund's income is derived from interest rather than dividends, no
portion of either Fund's dividends or distributions will qualify for the
dividends received deduction allowable to certain U.S. corporations. Dividends
from net investment income, together with distributions from the excess, if any,
of net realized short-term over net realized long-term losses and all or a
portion of the gains from the sale or other disposition of certain market
discount bonds, are taxable to those shareholders who are not exempt from
federal income taxes as ordinary income, whether or not reinvested in additional
shares. Distributions from net realized long-term securities gains, if any, are
taxable to those shareholders who are not exempt from federal income taxes as
long-term capital gains. Shareholders in the Funds may be subject to state and
local taxes on dividends and distributions declared by the Funds.
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To avoid a federal excise tax, each Fund must distribute substantially all
of its ordinary income, and capital gain net income, if any, by the end of each
calendar year. Dividends or distributions, if any, payable to shareholders of
record on a date in October, November or December of any year are deemed to have
been paid in that year, if they are paid by the following January.
Federal regulations may require, in certain cases, a Customer's Bank to
withhold ("backup withholding") and remit to the U.S. Treasury 31% of dividends
and distributions paid to such Customer if the Customer (i) has provided either
an incorrect TIN or no TIN at all, (ii) is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of taxable interest
or dividend income properly, or (iii) has failed to certify to the Bank that he
or she is not subject to backup withholding or that he or she is an "exempt
recipient."
A TIN is either the Social Security number or employer identification
number of the beneficial owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the
beneficial owner of the account, and may be claimed as a credit on the
beneficial owner's federal income tax return.
Each Fund will be treated as a separate entity for tax purposes, and has
qualified and intends to continue to qualify as a regulated investment company
under the Code as long as this qualification is in the best interest of its
shareholders. Such qualification generally relieves each Fund of liability for
federal income taxes to the extent its earnings are distributed in accordance
with the applicable provisions of the Code.
Investors should consult their tax advisors regarding specific questions as
to federal, state or local taxes.
OTHER INFORMATION
CAPITALIZATION
Pacifica Funds Trust (formerly Fund Source) was organized as a
Massachusetts business trust on July 17, 1984, and consists of a series of
separately managed portfolios. This Prospectus relates to the Institutional
Shares of two of these managed portfolios -- the Pacifica Prime Money Market
Fund and Pacifica Treasury Money Market Fund -- which were reorganized as
portfolios of Pacifica Funds Trust on October 1, 1994 and which are classified
as diversified, open-end management investment companies under the 1940 Act.
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The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 per share. The Board of
Trustees has authorized the issuance of three classes of shares in each of the
Funds -- Institutional Shares, Service Shares and Investor Shares. Each share of
a Fund is entitled to cash dividends and distributions earned on such Fund's
shares as are declared in the discretion of the Board of Trustees, and
represents the same proportionate interest in a particular Fund with other
shares of the Fund, except that a Fund's Institutional, Service and Investor
Shares each bear all of the Service Organization fees, distribution payments (if
any) and other "class" expenses that are allocated to a particular class.
Investor Shares pay higher combined fees for shareholder support and
distribution services than Service Shares, and Service Shares pay higher
shareholder support fees than Institutional Shares. This difference in expenses
will create different performance results for the three classes. The Funds will
offer various services and privileges in connection with their Investor Shares
that are not offered in connection with their Service Shares or Institutional
Shares, such as an automatic investment plan, an automatic withdrawal plan and
certain check writing privileges. Additional information concerning each class
of shares may be obtained by calling (800) 662-8417 or by contacting a
Customer's Service Organization.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims liability of the shareholders, Trustees or
officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property 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. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which a Fund itself would
be unable to meet its obligations and should be considered remote.
When issued, shares of the Trust are fully paid, non-assessable and freely
transferable.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to vote. The Trust is not required to hold annual
meetings, but in the event that a special meeting is held, shareholders of each
Fund will be entitled to one vote for each full share
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held and fractional votes for fractional shares held, and will vote in the
aggregate and not on a Fund-by-Fund basis, except as required by the 1940 Act or
other applicable law. It is contemplated that, as required by the 1940 Act, the
shareholders of the respective Funds will vote separately on a Fund-by-Fund
basis on matters relating to a particular Fund's investment advisory agreement
or changes in a Fund's fundamental investment limitations, and on other matters
where the interests of the respective Funds are not substantially identical.
Similarly, 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. Voting rights are not
cumulative.
The Declaration of Trust provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving as
Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust and in connection with the meeting to comply with the shareholders'
communications provisions of Section 16(c) of the 1940 Act. See "Description of
the Funds" in the SAI.
PERFORMANCE INFORMATION
From time to time each Fund advertises the yield and effective yield of its
Institutional Shares. Both yield figures will fluctuate, are based on historical
earnings and are not intended to indicate future performance. The yield for
Institutional Shares of each Fund refers to the income generated by an
investment in Institutional Shares of a Fund over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in Institutional Shares of a
Fund is assumed to be reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed reinvestment.
Each Fund's yield and effective yield for Institutional Shares may reflect
voluntary fee waivers. See "Management of the Funds."
Yield information is useful in reviewing each Fund's performance, but
because yields will fluctuate, such information may not provide a basis for
comparison with domestic bank deposits or other investments which pay a fixed
yield for a stated period of time.
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For purposes of comparison, the Funds may, from time to time, quote
performance information from IBC/Donoghue's MONEY FUND REPORT of Holliston,
Massachusetts 01746. IBC/Donoghue's MONEY FUND AVERAGE is a widely recognized
index of money market fund performance. Figures reflect average yields of all
taxable money funds included in IBC/Donoghue's index. IBC/Donoghue's U.S.
TREASURY & REPO MONEY FUND AVERAGE is a component of this average and reflects
average yields of all taxable U.S. Treasury money funds.
Any fees which may be imposed by Banks directly on their Customer accounts
for cash management services in connection with investments in the Funds are not
reflected in yield figures and any such fees, if charged, will reduce the actual
return received by Bank Customers on their investments.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Funds, 237 Park Avenue,
Suite 910, New York, New York 10017.
General and Account Information: (800) 662-8417.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS
OR THEIR DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
FUNDS OR BY THEIR DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY FIRST INTERSTATE BANCORP OR ITS AFFILIATES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
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INVESTMENT ADVISOR
First Interstate Capital Management, Inc.
7501 East McCormick Parkway
Scottsdale, Arizona 85258
ADMINISTRATOR
The Dreyfus Corporation
200 Park Avenue
New York, New York 10166
DISTRIBUTOR
Pacifica Funds Distributor Inc.
230 Park Avenue
New York, New York 10169
CUSTODIAN
First Interstate Bank of California
707 Wilshire Boulevard
Los Angeles, California 90017
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
[PACIFICA LOGO] PACPTMMIS-2/96
