MUTUAL FUND GROUP, 485BPOS, 1998-10-29

MUTUAL FUND GROUP
485BPOS, 1998-10-29

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As filed via EDGAR with the Securities and Exchange Commission on
October 28, 1998

File No. 811-5151
Registration No. 33-14196
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | |

Pre-Effective Amendment No. |_|

Post-Effective Amendment No. 55 |X|

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |

Post-Effective Amendment No. 94 |X|
-------------------------------
MUTUAL FUND GROUP
(Exact Name of Registrant as Specified in Charter)

One Chase Manhattan Plaza
New York, New York 10081
--------------------------------------------------
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code: (212) 492-1600

George Martinez, Esq. Peter Eldridge, Esq. Gary S. Schpero, Esq.
BISYS Fund Services, Inc. Chase Manhattan Bank Simpson Thacher & Bartlett
3435 Stelzer Road 270 Park Avenue 425 Lexington Avenue
Columbus, Ohio 43219 New York, New York 10017 New York, New York 10017
- --------------------------------------------------------------------------------

(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

If appropriate, check the following box:

|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

------------------

The Registrant has registered an indefinite number or amount of its shares of
common stock for each of its series under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940 on July 18, 1994 and
Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, 1997 was
filed on January 22, 1998.

<PAGE>

MUTUAL FUND GROUP
Registration Statement on Form N-1A

CROSS-REFERENCE SHEET
Pursuant to Rule 495(a) Under the Securities Act of 1933

U.S. TREASURY INCOME FUND
BALANCED FUND
EQUITY INCOME FUND
GROWTH AND INCOME FUND
CAPITAL GROWTH FUND
LARGE CAP EQUITY FUND
BOND FUND
SHORT-TERM BOND FUND
INTERNATIONAL EQUITY FUND
SMALL CAP EQUITY FUND
U.S. GOVERNMENT SECURITIES FUND
SOUTHEAST ASIAN FUND
JAPAN FUND
EUROPEAN FUND
SMALL CAP OPPORTUNITIES FUND
SELECT GROWTH AND INCOME FUND
LATIN AMERICAN EQUITY FUND
FOCUS FUND
STRATEGIC INCOME FUND

<TABLE>
<CAPTION>
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
- ----------- ------------------ -----------------------
<S> <C> <C>
Captions apply to all Prospectuses except where
indicated in parenthesis. Parenthesis indicate
captions for Institutional Shares Prospectuses

1 Front Cover Page *

2(a) Expense Summary *

(b) Not Applicable *

3(a) Financial Highlights *

(b) Not Applicable *

4(a)(b) Other Information *
Concerning the Fund;
Fund Objective; Investment
Policies

(d) Not Applicable *

5(a) Management *

(b) Management *

(c)(d) Management; Other Information Concerning the Fund *
</TABLE>

-i-
<PAGE>

<TABLE>
<CAPTION>
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
- ----------- ------------------ -----------------------
<S> <C> <C>

(e) Other Information Concerning *
the Fund; Back Cover Page

(f) Other Information Concerning *
the Fund

(g) Not Applicable *

5A Not Applicable *

6(a) Other Information Concerning *
the Fund

(b) Not Applicable *

(d) Not Applicable *

(e)(f) About Your Investment; How to Buy, Sell *
and Exchange Shares (How to Purchase, Redeem
and Exchange Shares); How Distributions Are
Made; Tax Information; Other Information
Concerning the Fund; Make the Most of Your
Vista Privileges.

(f) How Distributions are Made; *
Tax Information

(g) How Distributions are Made; Tax Matters
Tax Information

(h) About Your Investment; How to Buy, *
Sell and Exchange Shares (How to
Purchase, Redeem and Exchange Shares);
Other Information Concerning the Fund

7(a) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)

(b) How the Fund Values its Shares; *
How to Buy, Sell and Exchange
Shares (How to Purchase, Redeem
and Exchange Shares)

(d) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem and
Exchange Shares)

</TABLE>

-ii-

<PAGE>

<TABLE>
<CAPTION>
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
- ----------- ------------------ -----------------------
<S> <C> <C>

(e) Management; Other Information *
Concerning the Fund

(f) Other Information Concerning the *
Fund

8(a) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)

(b) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)

(d) How to Buy, Sell and Exchange *
Shares (How to Purchase, Redeem
and Exchange Shares)

9 Not Applicable *
</TABLE>

-iii-

<PAGE>

<TABLE>
<CAPTION>
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
- ----------- ------------------ -----------------------
<S> <C> <C>

10 * Front Cover Page

11 * Front Cover Page

12 * Not Applicable

13(a)(b) Fund Objective; Investment Investment Policies
Policies and Restrictions

14(c) * Management of the Trust and
Funds or Portfolios

(b) * Not Applicable

15(a) * Not Applicable

(b) * General Information

16(a) Management Management of the Trust and
Funds or Portfolios

(b) Management Management of the Trust and
Funds or Portfolios

(d) Management Management of the Trust and
Funds or Portfolios

(e) * Not Applicable
</TABLE>
-iv-

<PAGE>
<TABLE>
<CAPTION>
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
- ----------- ------------------ -----------------------
<S> <C> <C>

(f) How to Buy, Sell and Exchange Shares Management of the Trust and
(How to Purchase, Redeem and Exchange Shares); Funds or Portfolios
Other Information Concerning the Fund

(g) * Not Applicable

(h) * Management of the Trust and
Funds or Portfolios;
Independent Accountants

(i) * Not Applicable

17 Investment Policies Investment Policies and Restrictions

18(a) Other Information Concerning the Fund; General Information
How to Buy, Sell and Exchange Shares
(How to Purchase, Redeem and Exchange
Shares)

(b) * Not Applicable

19(a) How to Buy, Sell and Exchange Shares Purchases, Redemptions and Exchanges
(How to Purchase, Redeem and Exchange
Shares)

(b) How the Fund Values its Shares; How to Determination of Net Asset Value
Buy, Sell and Exchange Shares (How to
Purchase, Redeem and Exchange Shares)

20 How Distributions are Made; Tax Information Tax Matters

21(a) * Management of the Trust and Funds
or Portfolios

(b) * Management of the Trust and Funds
or Portfolios

22 * Performance Information

23 * Not Applicable
</TABLE>

-v-
<PAGE>

EXPLANATORY NOTE

Prospectuses for the Class A, Class B and Class C Shares of Capital Growth
Fund, Equity Income Fund, Growth and Income Fund and Small Cap Opportunities
Fund, Prospectuses for the Class A and Class B Shares of Balanced Fund, Bond
Fund, European Fund, International Equity Fund, Japan Fund, Large Cap Equity
Fund, Small Cap Equity Fund, Southeast Asian Fund, Prospectuses for the Class A
Shares of Short-Term Bond Fund, U.S. Government Securities Fund and U.S.
Treasury Income Fund, the Prospectus for Shares of American Value Fund and the
Prospectuses for the Institutional Shares of Bond Fund, Capital Growth Fund,
Growth and Income Fund, Large Cap Equity Fund, Small Cap Equity Fund,
Short-Term Bond Fund and U.S. Government Securities Fund are incorporated by
reference to Amendment No. 50 to the Registration Statement on Form N-1A of the
Registrant filed on February 27, 1998.

The Prospectus for Class A and Class B shares of Latin American Equity Fund
is incorporated by reference to the Registrant's filing of a definitive copy
under Rule 497(c) of the Securities Act of 1933, as amended, on March 13, 1998.

The Prospectus for Class A, Class B and Class C Shares and the Prospectus
for Institutional Shares of Focus Fund is incorporated by reference to
Amendment No. 53 to the Registration Statement on Form N-1A of the Registrant
filed on June 29, 1998.

The Statement of Additional Information for the Class A, Class B and Class
C Shares of Capital Growth Fund, Equity Income Fund, Growth and Income Fund,
Small Cap Opportunities Fund and Focus Fund, the Statement of Additional
Information for the Class A and Class B Shares of Balanced Fund, Bond Fund,
European Fund, International Equity Fund, Japan Fund, Large Cap Equity Fund,
Small Cap Equity Fund, Southeast Asian Fund, the Statement of Additional
Information for the Class A Shares of Short-Term Bond Fund, U.S. Government
Securities Fund and U.S. Treasury Income Fund, the Statement of Additional
Information for Shares of American Value Fund and the Statement of Additional
Information for the Institutional Shares of Bond Fund, Capital Growth Fund,
Growth and Income Fund, Large Cap Equity Fund, Small Cap Equity Fund,
Short-Term Bond Fund, U.S. Government Securities Fund and Focus Fund are
incorporated by reference to Amendment No. 53 to the Registration Statement on
Form N-1A of the Registrant filed on June 29, 1998.

The Statement of Additional Information for European Fund, International
Equity Fund, Japan Fund, Latin American Equity Fund and Southeast Asian Fund are
incorporated by reference to Amendment No. 50 to the Registration Statement on
Form N-1A of the Registrant filed on February 27, 1998.

The Prospectus and Statement of Additional Information for Select Growth
and Income Fund is incorporated by reference to Amendment No. 47 to the
Registration Statement on Form N-1A of the Registrant filed on December 15,
1997.

The Prospectus Supplement for the Class A and Class B Shares of Bond Fund
and for the Institutional Shares of Bond Fund are incorporated by inference to
the Registrant's filing of a definitive copy under Rule 497(e) of the Securities
Act of 1933 (the "Securities Act") on May 28, 1998.

The Prospectus Supplement for the Class A and Class B Shares of U.S.
Treasury Income Fund is hereby incorporated by reference to the Registrant's
filing of a definitive copy under Rule 497(e) of the Securities Act on May 28,
1998.

The Prospectus Supplement for the Class A and Class B Shares of Balanced
Fund is hereby incorporated by reference to the Registrant's filing of a
definitive copy under Rule 497(e) of the Securities Act on May 28, 1998.

The Prospectus Supplement for the Class A and Class B Shares of Large Cap
Equity Fund and Institutional Shares of Large Cap Equity Fund are hereby
incorporated by reference to the Registrant's filing of a definitive copy under
Rule 497(e) of the Securities Act on May 28, 1998.

The Prospectus Supplement for the Class A and Class B Shares of Latin
American Equity Fund is hereby incorporated by reference to the Registrant's
filing of a definitive copy under Rule 497(e) of the Securities Act on June 8,
1998.

The Prospectus Supplement for the Class A and Class B Shares of Balanced
Fund, for the Class A and Class B Shares of Bond Fund, for the Class A, Class B
and Class C Shares of Capital Growth Fund, for the Class A, Class B and Class C
Shares of Growth and Income Fund, for the Class A and Class B Shares of
International Equity Fund, for the Class A and Class B Shares of Large Cap
Equity Fund, for the Class A and Class B Shares of Small Cap Equity Fund, and
for the Class A and Class B Shares of U.S. Treasury Income Fund are hereby
incorporated by reference to the Registrant's filing of a definitive copy under
Rule 497(e) of the Securities Act on June 12, 1998.

The Prospectus Supplement for the Class A and Class B Shares of European
Fund, Japan Fund and Southeast Asian Fund is hereby incorporated by reference to
Registrant's filing of a definitive copy under rule 497(e) of the Securities Act
on July 1, 1998.

The Prospectus Supplement for the Class A and Class B Shares of Balanced
Fund is hereby incorporated by reference to Registrant's filing of a definitive
copy under rule 497(e) of the Securities Act on August 10, 1998.

<PAGE>

[CHASE VISTA FUNDS LOGO]

STRATEGIC INCOME FUND
CLASS A, B AND C SHARES

INVESTMENT STRATEGY: INCOME

October 30, 1998

This Prospectus explains concisely what you should know before investing. Please
read it carefully and keep it for future reference. You can find more detailed
information about the Fund in its October 30, 1998 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Chase Vista Funds Service Center at 1-800-34-VISTA. The SAI has been
filed with the Securities and Exchange Commission (the "Commission") and is
incorporated into this Prospectus by reference. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains the SAI, the Fund's
Annual Report to Shareholders and other information regarding the Fund which has
been electronically filed with the Commission.

The Fund invests principally in a diversified portfolio of U.S. dollar-
denominated securities in the following three market sectors: (1) investment
grade debt securities of U.S. issuers, (2) debt securities of foreign issuers
and (3) lower-rated high yield securities of U.S. issuers.

The Fund may invest in non-investment grade securities of U.S. and foreign
issuers, commonly referred to as "junk bonds," which are considered to be
speculative and entail greater risks, including default risk, than those found
in higher rated securities. Investors should carefully consider the risks
before investing. See "Investment Policies--Investment Approach, "--Risk
Factors" and "--Other Investment Practices."

<PAGE>

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

Investments in the Fund are not bank deposits or obligations of, or guaranteed
or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not
insured by the FDIC, the Federal Reserve Board or any other government agency.
Investments in mutual funds involve risk, including the possible loss of the
principal amount invested.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary ............................................................. 4
The expenses you might pay on your Fund investment, including examples
Fund Objective .............................................................. 6
Investment Policies ......................................................... 6
The kinds of securities in which the Fund invests, investment policies and
techniques, and risks
Management .................................................................. 17
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
About Your Investment ....................................................... 19
Choosing a share class
How to Buy, Sell and Exchange Shares ........................................ 20
How the Fund Values Its Shares .............................................. 28
How Distributions Are Made; Tax Information ................................. 28
How the Fund distributes its earnings, and tax treatment related
to those earnings
Other Information Concerning the Fund ....................................... 29
Distribution plans, shareholder servicing agents, administration, custodian,
expenses and organization
Performance Information ..................................................... 34
How performance is determined, stated and/or advertised
Make the Most of Your Chase Vista Privileges ................................ 35
Appendix A .................................................................. 36
</TABLE>

<PAGE>

EXPENSE SUMMARY

Expenses are one of several factors to consider when investing. The following
table summarizes your costs from investing in the Fund based on estimated
expenses for the current fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified periods.

<TABLE>

Class A Class B Class C
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ...................... 4.50% None None
Maximum Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds)* .................. None 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)** ......... 0.10% 0.10% 0.10%
12b-1 Fee .................................................. 0.25% 0.75% 0.75%+
Other Expenses (after estimated waiver)** .................. 0.90% 0.90% 0.90%
---- ---- -----
Total Fund Operating Expenses
(after waivers of fees)** ................................ 1.25% 1.75% 1.75%
==== ==== =====

EXAMPLES
Your investment of $1,000 would
incur the following expenses,
assuming 5% annual return: ................................. 1 Year 3 Years
------ -------
Class A Shares++ ........................................... $57 $83
Class B Shares:
Assuming complete redemption at the
end of the period+++ ..................................... $69 $88
Assuming no redemptions ................................... $18 $55
Class C Shares:
Assuming complete redemptions at the end of the
period+++ .................................................. $28 $55
Assuming no redemptions ..................................... $18 $55
</TABLE>

* The maximum deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter (except in the fourth year),
reaching zero after six years. The maximum deferred sales charge on
Class C shares applies to redemption during the first year after
purchase; the charge is 1% during the first year and zero thereafter.
See "How to Buy, Sell and Exchange Shares."
** Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such
waivers, the Investment Advisory Fee would be 0.50% for Class A, Class
B and Class C shares, the Other Expenses would be 1.00% for Class A,
Class B and Class C shares, and Total Fund Operating Expenses would be
1.75%, 2.25% and 2.25% for Class A, Class B and Class C shares,
respectively.
*** Long-term shareholders in mutual funds with 12b-1 fees, such as Class A,
Class B and Class C shareholders of the Fund, may pay more than the
economic equivalent of the maximum front-end sales charge permitted by
rules of the National Association of Securities Dealers, Inc.
+ Beginning with the 13th month following the purchase of Class C
shares by their customers, broker-dealers receive payments at an annual
rate of 1.00% of the average daily net asset value of the Class C shares
invested in the Fund by their customers, consisting of a 12b-1
distribution fee at an annual rate of 0.75% of such assets and a service
fee at an annual rate of 0.25% of such assets.
++ Assumes deduction at the time of purchase of the maximum sales charge.

+++ Assumes deduction at the time of redemption of the maximum applicable
deferred sales charge.

<PAGE>

The table is provided to help you understand the expenses of investing in the
Fund and your share of the operating expenses that the Fund incurs. The
examples should not be considered representations of past or future expenses or
returns; actual expenses and returns may be greater or less than shown.

Charges and credits, not reflected in the expense table above, may be incurred
directly by customers of financial institutions in connection with an
investment in the Fund. The Fund understands that Shareholder Servicing Agents
may credit to the accounts of their customers from whom they are already
receiving other fees amounts not exceeding such other fees or the fees received
by the Shareholder Servicing Agent from the Fund with respect to those
accounts. See "Other Information Concerning the Fund."

<PAGE>

FUND OBJECTIVE

The Fund seeks a high level of current income. The Fund is not intended to be a
complete investment program, and there is no assurance it will achieve its
objective.

INVESTMENT POLICIES

INVESTMENT APPROACH

The Fund will invest principally in a diversified portfolio of U.S. dollar-
denominated securities in the following three market sectors: (1) investment
grade debt securities of U.S. issuers (including the U.S. Government, its
agencies and U.S. companies), (2) debt securities of foreign issuers (including
foreign governments and companies), including up to 30% of its total assets in
issuers located in emerging market countries, and (3) lower-rated high yield
securities of U.S. issuers, including convertible securities and preferred
stock. Under normal market conditions, the Fund will invest between 25% and 40%
of its total assets in each of these three sectors. The Fund may invest without
limitation, however, in securities issued by the U.S. Government, its agencies
or instrumentalities.

INVESTMENT GRADE U.S. DEBT SECURITIES. The Fund may invest in U.S. Treasury
obligations, which are bills, notes and bonds backed by the full faith and
credit of the U.S. Government as to payments of principal and interest which
generally differ only as to their interest rates and maturities. The Fund may
also invest in securities issued or guaranteed by the U.S Government, its
agencies or instrumentalities, including obligations that are supported by the
full faith and credit of the U.S. Treasury, the limited authority of the issuer
or guarantor to borrow from the U.S. Treasury, or only the credit of the issuer
or guarantor. In the case of obligations not backed by the full faith and
credit of the U.S Government, the agency issuing or guaranteeing the obligation
is principally responsible for ultimate repayment.

All or a substantial portion of the Fund's investments in U.S. Government
securities may consist of mortgage-related securities. See "Certain Investment
Practices--Mortgage Related Securities."

The Fund may also invest in investment grade debt securities of U.S. companies.
Investment grade debt securities are securities rated in the category Baa or
higher by Moody's or BBB or higher by S&P, or the equivalent by another ratings
organization, or if unrated, determined by the Fund's advisers to be of
comparable quality.

FOREIGN DEBT SECURITIES. The Fund may invest in debt securities of foreign
governments and companies. The Fund may invest up to 30% of its total assets in
debt securities of issuers located in emerging market countries. An "emerging
market country" is any country considered to be such by the World Bank at the
time of investment. These countries generally include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand and most
countries located in Western Europe. The Fund's advisers anticipate that the

<PAGE>

majority of emerging market obligations in which the Fund will invest will
primarily be traded in international over-the-counter markets rather than in
the local markets. While the Fund intends to invest principally in U.S. dollar-
denominated securities, certain of the Fund's foreign securities may be
denominated and traded in foreign currencies.

The Fund will not invest more than 25% of its total assets in debt securities
of issuers located in a single country other than the United States. See
"Certain Investment Practices" and "Risk Factors."

HIGH YIELD SECURITIES. The Fund may invest in non- investment grade debt
securities or "high yield" fixed income securities, including high yield
convertible securities, commonly called "junk bonds," and preferred stocks.
High yield securities may be issued by U.S. companies as well as foreign
companies or governments. High yield securities will generally be rated in the
category Ba or lower by Moody's Investor's Service, Inc. ("Moody's") or BB or
lower by Standard and Poor's Corporation ("S&P"), or the equivalent by another
ratings organization, or will be unrated securities determined by the Fund's
advisers to be of comparable quality. Certain of the securities in which the
Fund may invest may be rated as low as C by Moody's or D by S&P or may be
considered comparable to securities having such ratings. For a description of
Moody's and S&P ratings, see Appendix A. While generally providing greater
income and opportunity for gain, non-investment grade securities may be subject
to greater risks than securities which have higher credit ratings, including a
greater risk of default, and their yields will fluctuate over time. In
selecting high yield securities, the Fund's advisers will consider factors
including those relating to the creditworthiness of issuers, the ratings and
performance of the securities, the protections afforded the securities and
diversity of the Fund.

----------------------------------

In making investment decisions for the Fund, its advisers consider many factors
in addition to current yield, including preservation of capital, maturity and
yield to maturity. They will adjust the Fund's investments in particular
securities or types of securities based upon their appraisal of changing
economic conditions and trends. Fundamental economic strength, earnings growth,
quality of management, industry growth, credit quality and interest rate trends
are some of the principal factors which may be considered by the Fund's
advisers in determining whether to increase or decrease the emphasis placed
upon a particular type of security, industry sector, country or currency. The
Fund's advisers may sell one security and purchase another security of
comparable quality and maturity to take advantage of what they believe to be
short-term differentials in market values or yield disparities.

There is no restriction on the maturity of the securities held by the Fund or
any individual portfolio security. The Fund's advisers may adjust the average
maturity of the

<PAGE>

Fund's portfolio based upon their assessment of the relative yields available
on securities of different maturities and their expectations of future changes
in interest rates.

The Fund may borrow, in an amount up to 10% of the value of the Fund's total
assets, for investment purposes, which involves certain risk considerations.
See "Certain Investment Practices."

For temporary defensive purposes, the Fund may invest without limitation in
high quality U.S. dollar-denominated money market instruments and repurchase
agreements, which generally carry lower yields than longer-term securities.

Instead of investing directly in underlying securities, the Fund is authorized
to seek to achieve its investment objective by investing all of its investable
assets in another investment company having substantially the same investment
objectives and policies.

The Fund is classified as a "diversified" fund under federal securities law.

WHO MAY WANT TO INVEST
This Fund may be most appropriate for investors who...
o Are seeking current income
o Are investing for mid- to long-term investment goals
o Own or plan to own other types of investments for diversification purposes
o Can assume bond market (i.e., interest rate) risk and the risks associated
with investing in below investment grade and foreign securities

This Fund may NOT be appropriate for investors who are unable to tolerate
frequent up and down price changes, are investing for shorter-term goals or who
are in need of high growth potential.

CERTAIN INVESTMENT PRACTICES

The Fund may also engage in the following investment practices, when consistent
with the Fund's overall objective and policies. These practices, and certain
associated risks, are more fully described in the SAI. Except as otherwise
indicated below, the Fund is not subject to any percentage limits with respect
to the practices described below.

SUPRANATIONAL AND ECU OBLIGATIONS. The Fund may invest in debt securities
issued by supranational organizations, which include organizations such as The
World Bank, the European Community, the European Coal and Steel Community and
the Asian Development Bank. The Fund may also invest in securities denominated
in the ECU, which is a "basket" consisting of specified amounts of the
currencies of certain member states of the European Community. These securities
are typically issued by European governments and supranational organizations.

<PAGE>

indebtedness. Brady Bonds do not have as long a payment history as other types
of sovereign debt obligations. In addition to Brady Bonds, the Fund may invest
in other emerging market governmental obligations which may be issued as a
result of other debt restructuring agreements. A substantial portion of the
Brady Bonds and other emerging market obligations in which the Fund may invest
are likely to be acquired at a significant discount and may exhibit volatility.

LOAN PARTICIPATIONS. The Fund may invest in participations in fixed and
floating rate loans arranged through private negotiations between a borrower
and one or more financial institutions. When investing in a participation, the
Fund will typically have the right to receive payments only from the lender,
and not from the borrower itself, to the extent the lender receives payments
from the borrower. Accordingly, the Fund may be subject to the credit risk of
both the borrower and the lender. Loan participations may be illiquid.

ZERO COUPON SECURITIES, PAYMENT-IN-KIND OBLIGATIONS AND STRIPPED
OBLIGATIONS. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying
obligation. The value of these instruments tends to fluctuate more in response
to changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer. Additionally, current federal tax law requires the holder
of certain zero coupon obligation and payment-in-kind obligations to accrue
income with respect to these securities prior to the receipt of cash payment.
To maintain its qualification as a regulated investment company and avoid
liability for federal income and excise taxes, the Fund may be required to
distribute income with respect to these securities and may have to dispose of
such securities under disadvantageous circumstances in order to generate cash
to satisfy these distribution requirements.

<PAGE>

of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the floating or variable
rate nature of these investments, the Fund's yield may decline and it may
forego the opportunity for capital appreciation during periods when interest
rates decline; however, during periods when interest rates increase, the Fund's
yield may increase and it may have reduced risk of capital depreciation. Demand
features on certain floating or variable rate securities may obligate the Fund
to pay a "tender fee" to a third party. Demand features provided by foreign
banks involve certain risks associated with foreign investments.

INVERSE FLOATERS AND INTEREST RATE CAPS. The Fund may invest in inverse floaters
and in securities with interest rate caps. Inverse floaters are instruments
whose interest rates bear an inverse relationship to the interest rate on
another security or the value of an index. The market value of an inverse
floater will vary inversely with changes in market interest rates, and will be
significantly more volatile in response to interest rates changes than that of a
fixed-rate obligation. Interest rate caps are financial instruments under which
payments occur if an interest rate index exceeds a certain predetermined
interest rate level, known as the cap rate, which is tied to a specific index.
These financial products will be more volatile in price than securities which do
not include such a structure.

MORTGAGE-RELATED SECURITIES. The Fund may invest in mortgage-related securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly, in effect "passing through" monthly payments made
by the individual borrowers on the residential mortgage loans which underlie the
securities. Early or late repayment of principal based on an expected repayment
schedule on mortgage pass-through securities held by the Fund (due to early or
late prepayments of principal on the underlying mortgage loans) may result in a
lower rate of return when the Fund reinvests such principal. In addition, as
with callable fixed-income securities generally, if the Fund purchased the
securities at a premium, sustained early repayment would limit the value of the
premium. When interest rates rise or decline, the value of a mortgage-related
security generally will decline or increase, but not as much as other
fixed-income, fixed-maturity securities which have no prepayment or call
features.

<PAGE>

insurance or guarantees, while other such securities may be backed only by the
underlying mortgage collateral.

The Fund may also invest in investment grade Collateralized Mortgage Obligations
("CMOs"), which are structured products backed by underlying pools of mortgage
pass-through securities. Similar to a bond, interest and prepaid principal on a
CMO are paid, in most cases, monthly. CMOs may be collateralized by whole
residential or commercial mortgage loans but are more typically collateralized
by portfolios of residential mortgage pass-through securities guaranteed by the
U.S. Government or its agencies or instrumentalities. CMOs are structured into
multiple classes, with each class having a different expected average life
and/or stated maturity. Monthly payments of principal, including prepayments,
are allocated to different classes in accordance with the terms of the
instruments, and changes in prepayment rates or assumptions may significantly
affect the expected average life and value of a particular class.

The Fund may invest in principal-only or interest-only stripped mortgage-backed
securities. Stripped mortgage-backed securities have greater volatility than
other types of mortgage-related securities. Stripped mortgage-backed securities
which are purchased at a substantial premium or discount generally are
extremely sensitive not only to changes in prevailing interest rates but also
to the rate of principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal payments may have a
material adverse effect on such securities' yield to maturity. In addition,
stripped mortgage securities may be illiquid.

The Fund expects that governmental, government-related or private entities may
create other mortgage-related securities in addition to those described above.
As new types of mortgage-related securities are developed and offered to
investors, the Fund will consider making investments in such securities.

COLLATERALIZED BOND OBLIGATIONS. The Fund may invest in collateralized bond
obligations ("CBOs"), which are structured products backed by a diversified
pool of higher yield, public or private fixed income securities. The pool of
high yield securities is typically separated into tranches representing
different degrees of credit quality. The top tranche of CBOs which represent
their highest credit quality, have the greatest collateralization and pay the
lowest interest rate. Lower CBO tranches represent lower degrees of credit
quality and pay higher interest rates to compensate for the attendant risks.
The bottom tranche specifically receives the residual interest payments (i.e.
money that is left over after the higher tiers have been paid) rather than a
fixed interest rate. The return on the bottom tranche of CBOs is especially
sensitive to the rate of defaults in the collateral pool.

ASSET-BACKED SECURITIES. The Fund may invest in asset-backed securities, which
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular

<PAGE>

assets, most often a pool of assets similar to one another, such as motor
vehicle receivables or credit card receivables, home equity loans, manufactured
housing loans or bank loan obligations.

STRUCTURED PRODUCTS. The Fund may invest in structured products. These include
interests in entities organized solely for the purpose of restructuring the
investment characteristics of certain other investments. These investments are
purchased by the entities, which then issue securities (the structured
products) backed by, or representing interests in, the underlying investments.
The cash flow on the underlying investments may be apportioned among the newly
issued structured products to create securities with different investment
characteristics such as varying maturities, payment priorities or interest rate
provisions, and the extent of the payments made with respect to structured
investments depends on the amount of the cash flow on the underlying
investments.

The Fund may also invest in indexed instruments which are linked to the
performance of certain securities, indices, interest rates or currency exchange
rates. The terms of such instruments may provide that their principal amounts
or just their coupon interest rates are adjusted upwards or downwards at
maturity or on established coupon payment dates to reflect movements in various
measures of underlying market or security while the obligation is outstanding.

Structured products are subject to the risks associated with the underlying
market or security, and may be subject to greater volatility than direct
investments in the underlying market or security. Structured products may
entail the risk of loss of principal and/or interest payments as a result of
movements in the underlying market or security.

MONEY MARKET INSTRUMENTS. The Fund may invest in cash or high-quality,
short-term money market instruments. These may include U.S. Government
securities, commercial paper of domestic and foreign issuers and obligations of
domestic and foreign banks. Investments in foreign money market instruments may
involve certain risks associated with foreign investment.

REPURCHASE AGREEMENTS, SECURITIES LOANS AND FORWARD AND STAND BY COMMITMENTS.
The Fund may enter into agreements to purchase and resell securities at an
agreed-upon price and time. The Fund also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income or to defray expenses. These transactions must be
fully collateralized at all times. The Fund may purchase securities for
delivery at a future date, which may increase its overall investment exposure
and involves a risk of loss if the value of the securities declines prior to
the settlement date.The Fund may enter into put transactions, including those
sometimes referred to as stand-by commitments, with respect to securities in
its portfolio. In these transactions, the Fund would acquire the right to sell
a security at an agreed upon price

<PAGE>

within a specified period prior to its maturity date. A put transaction will
increase the cost of the underlying security and consequently reduce the
available yield. Each of these transactions involves some risk to the Fund if
the other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral or completing the transaction.

BORROWINGS, REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. The Fund may
borrow money from banks for temporary or short term purposes. The Fund may also
borrow money from banks to buy additional securities. The practice of borrowing
money for additional investment purposes, known as "leveraging," is a
speculative investment technique which may subject the Fund to greater risks
and costs than funds that do not borrow. If the securities held by the Fund
should increase or decline in value while borrowings are outstanding, the net
asset value of the Fund's outstanding shares will increase or decline in value
by proportionately more than the increase or decline in value suffered by the
Fund's securities. The interest the Fund must pay on borrowed money will reduce
the amount of any potential gains or increase any losses. Under adverse market
conditions, the Fund might have to sell portfolio securities to meet interest
or principal payments at a time when investment considerations would not favor
such sales. The extent, if any, to which the Fund will borrow money and the
amount it may borrow depends on market conditions and interest rates. The Fund
will engage in leveraging techniques only when its advisers believe that
leveraging and the returns available to the Fund through leveraging will
provide a potentially higher return. The amount of money borrowed by the Fund,
for leverage, may not exceed 10% of the value of its total assets (including
the amount borrowed).

The Fund may at times enter into reverse repurchase agreements, another
investment technique which may involve leverage. Reverse repurchase agreements
generally involve the borrowing of money by selling and simultaneously
committing to repurchase the portfolio security at an agreed upon price and
time. Reverse repurchase agreements may therefore increase the Fund's overall
investment exposure and may result in losses. Reverse repurchase agreements
will be considered borrowings for purposes of the Fund's borrowing limitations
unless the Fund establishes a segregated account in which it maintains liquid
assets on a daily basis in an amount at least equal to the repurchase price
(including accrued interest).

The Fund may enter into mortgage "dollar rolls" in which the Fund sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar securities on a specified future
date. Dollar roll transactions may also involve leverage, increase the Fund's
overall investment exposure and result in losses. Dollar rolls will be
considered borrowings for purposes of the Fund's borrowing limitations unless
the fund establishes a segregated account in which it

<PAGE>

maintains liquid assets on a daily basis in an amount at least equal in value
to its obligations in respect of such dollar rolls.

CONVERTIBLE SECURITIES.
The Fund may invest in convertible securities, which are securities generally
offering fixed interest or dividend yields which may be converted either at a
stated price or stated rate for common or preferred stock. Although to a lesser
extent than with fixed-income securities generally, the market value of
convertible securities tends to decline as interest rates increase, and
increase as interest rates decline. Because of the conversion feature, the
market value of convertible securities also tends to vary with fluctuations in
the market value of the underlying common or preferred stock.

PREFERRED STOCK. Preferred Stocks are securities that represent an ownership
interest in a corporation and that give the owner a prior claim over common
stock on the corporation's earnings or assets. The Fund may invest up to 15% of
its total assets in preferred stock of U.S. and foreign issuers.

OTHER INVESTMENT COMPANIES. Apart from being able to invest all of its
investable assets in another investment company having substantially the same
investment objectives and policies, the Fund may invest up to 10% of its total
assets in shares of other investment companies, when consistent with its
investment objective and policies, subject to applicable regulatory
limitations. Additional fees may be charged by other investment companies.

DERIVATIVES AND RELATED INSTRUMENTS. The Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. The Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and
options on futures contracts; (iii) employ forward currency and interest rate
contracts; (iv) purchase and sell mortgage-backed and asset-backed securities;
and (v) purchase and sell structured products, which are instruments designed
to restructure or reflect the characteristics of certain other investments.

<PAGE>

strategies. Hedging strategies, while reducing risk of loss, can also reduce
the opportunity for gain. Derivatives transactions used for purposes other than
hedging, may have speculative characteristics, involve leverage and result in
losses that may exceed the original investment of the Fund in those
transactions. There can be no assurance that a liquid market will exist at a
time when the Fund seeks to close out a derivatives position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in derivatives markets. In certain instances, particularly those involving
over-the-counter transactions or forward contracts, there is a greater
potential that a counterparty or broker may default. In the event of a default,
the Fund may experience a loss. For additional information concerning
derivatives, related instruments and the associated risks, see the SAI.

PORTFOLIO TURNOVER. The frequency of the Fund's buy and sell transactions will
vary from year to year. The Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including dealer mark-ups and would make it more difficult to
qualify as a registered investment company under federal tax law.

LIMITING INVESTMENT RISKS

Specific investment restrictions help the Fund limit investment risks for the
Fund's shareholders. These restrictions prohibit the Fund from: (a) investing
more than 15% of its net assets in illiquid securities (which include
securities restricted as to resale unless they are determined to be readily
marketable in accordance with procedures established by the Board of Trustees);
or (b) investing more than 25% of its total assets in any one industry. A
complete description of these and other investment policies is included in the
SAI. Except for restriction (b) above and investment policies designated as
fundamental in the SAI, the Fund's investment policies (including its
investment objectives) are not fundamental. The Trustees may change any
non-fundamental investment policy without shareholder approval.

RISK FACTORS
The Fund does not constitute a balanced or complete investment program, and the
net asset value of its shares will fluctuate based on the value of securities
held by the Fund. The Fund is subject to the general risks and considerations
associated with the types of investments the Fund may make, as described above,
as well as the risks discussed herein.

The performance of the Fund depends in part on interest rate changes. As
interest rates increase, the value of the fixed income securities held by the
Fund tends to decrease. This effect may be more pronounced with respect to
investments by the Fund in certain types of debt securities, the value of which
are more sensitive to interest rate changes. There is no restriction on the
maturity of the securities held by the Fund or any individual portfolio
security, and to the extent the Fund invests in securities with longer
maturities, the volatility of the Fund

<PAGE>

in response to changes in interest rates can be expected to be greater than if
the Fund had invested in comparable securities with shorter maturities. The
performance of the Fund will also depend on the quality of its investments.

The secondary markets for certain of the securities in which the Fund may
invest are not as liquid as the secondary markets for investment grade U.S.
corporate and government bonds. The Fund may have difficulty disposing of some
of these securities due to a lower number of investors in those markets. A less
liquid secondary market may make it difficult to obtain accurate market
quotations when valuing the Fund's assets, and these quotations may not be the
actual prices available for a purchase or sale.

Risks of Non-Investment Grade Securities. The Fund may invest in high yield
securities. High yield securities are generally considered to be speculative
with respect to the capacity of the issuer to timely repay principal and pay
interest or dividends in accordance with the terms of the obligation, may have
more credit risk than higher rated securities. While such securities will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposure to adverse conditions.

The values of high yield securities often reflect individual corporate
developments and are more sensitive to economic changes than are higher rated
securities. In some cases, investors in high yield securities have a lower
degree of protection with respect to principal and interest or dividend
payments then do investors in higher rated securities.

High yield securities may be used to cover a situation where the issuer has
filed a bankruptcy petition but debt service payments are continued or where
the issuer is in default. An economic downturn, a substantial period of rising
interest rates or a recession could also disrupt the market for lower-rated
securities and adversely affect the value of outstanding securities, the Fund's
net asset value and the ability of the issuers to repay principal and interest.
If the issuer of a security held by the Fund defaulted, the Fund may not
receive full interest or dividend and principal payments due to it and could
incur additional expenses if it chose to seek recovery of its investment.

The high yield markets may react strongly to adverse news about an issuer or
the economy or adverse market or economic conditions unrelated to an issuer,
and may be affected by legislative and regulatory developments. These
developments could adversely affect the value and liquidity of outstanding high
yield securities and the Fund's net asset value.

The rating assigned by a rating agency evaluates the safety of a non-investment
grade security's principal and interest or dividend payments, but does not
address market value risk. Because such ratings may not always reflect current
conditions and events, in addition to using recognized rating agencies and
other sources, the Fund's advisers perform their own analysis of the issuers
whose non-investment grade securities the Fund holds. Because of this, the

<PAGE>

Fund's performance may depend more on subjective credit analysis than would
mutual funds investing in higher-rated securities.

Risks of Foreign Securities. The Fund may invest in foreign securities. As the
Fund invests a significant portion of its assets in securities of issuers
outside the United States, including the securities of emerging market issuers,
an investment in the Fund's shares involves a higher degree of risk than an
investment in a fund investing primarily in securities issued by U.S. issuers.
While the Fund intends to invest principally in U.S. dollar-denominated
securities, certain of the Fund's foreign securities may be denominated and
traded in foreign currencies and the values of these foreign investments may be
influenced by currency exchange rates and exchange control regulations. There
may be less information publicly available about foreign issuers than U.S.
issuers, and they may not be subject to accounting, auditing and financial
reporting standards and practices comparable to those in the U.S.

The securities markets of certain countries in which the Fund may invest are
smaller, less liquid and have more limited trading volume than those in the
United States. Such factors could cause the prices of foreign securities to be
erratic for reasons apart from factors that affect the quality of securities.
Foreign settlement procedures and trade regulations may involve certain
expenses and risks. One risk would be the delay in payment or delivery of
securities or in the recovery of the Fund's assets held abroad.

It is possible that nationalization or expropriation of assets, taxation by
withholding Fund assets, political or financial instability and diplomatic
developments could affect the value of the Fund's investments in certain
foreign countries.

Investments in securities of issuers based in emerging market countries entails
certain additional risks, including greater risks of expropriation, taxation by
withholding Fund assets, nationalization, and less social and economic
stability. The small size of market for securities of a number of issuers based
in these countries and a low volume of trading may result in a lack of
liquidity and in price volatility.

Certain national policies may impede the Fund's investment opportunities,
including restrictions on investing in issuers or industries deemed sensitive
to relevant national interests. Additionally, special tax considerations will
apply to foreign securities, such as the imposition of withholding taxes, and
there may be an absence of developed legal structure governing private
investment and private property.

On January 1, 1999, the European Monetary Union (EMU) plans to implement a new
currency unit, the Euro, which is expected to reshape financial markets, banking
systems and monetary policies in Europe and other parts of the world. The
countries initially expected to convert or tie their currencies to the Euro
include Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal and Spain. Implementation of this plan will mean that
financial transactions and market information, including share quotations and
company accounts, in participating countries will be denominated in Euros.
Participating governments will issue their bonds in Euros, and monetary policy
for participating countries will be uniformly managed by a new central bank, the
European Central bank.

Although it is not possible to predict the impact of the Euro implementation
plan on the Fund, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European markets. For
example, investors may begin to view those countries participating in the EMU as
a single entity, and the Funds' advisers may need to adapt their investment
strategies accordingly. The process of implementing the Euro also may adversely
affect financial markets worldwide and may result in changes in the relative
strength and value of the U.S. dollar or other major currencies, as well as
possible adverse tax consequences. The transition to the Euro is likely to have
a significant impact on fiscal and monetary policy in the participating
countries and may produce unpredictable effects on trade and commerce generally.
These resulting uncertainties could create increased volatility in financial
markets worldwide.

For a discussion of certain other risks associated with the Fund's additional
investment activities, see "Certain Investment Practices" above.

MANAGEMENT

THE FUND'S ADVISERS
The Chase Manhattan Bank ("Chase") is the Fund's investment adviser under an
Investment Advisory Agreement and has overall responsibility for investment
decisions of the Fund, subject to the oversight of the Board of Trustees. Chase
is a wholly-owned subsidiary of The Chase Manhattan Corporation, a bank holding

<PAGE>

company. Chase and its predecessors have over 100 years of money management
experience.

For its investment advisory services to the Fund, Chase is entitled to receive
an annual fee computed daily and paid monthly based at an annual rate equal to
0.50% of the Fund's average daily net assets. Chase is located at 270 Park
Avenue, New York, New York 10017.

Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is one of
the Fund's sub-investment advisers under a Sub-Investment Advisory Agreement
between CAM and Chase. CAM is a wholly-owned operating subsidiary of Chase. CAM
makes investment decisions for the Fund on a day-to-day basis. For these
services, CAM is entitled to receive a fee, payable by Chase from its advisory
fee, at an annual rate equal to 0.25% of the Fund's average daily net assets.
CAM provides discretionary investment advisory services to institutional
clients. The same individuals who serve as portfolio managers for Chase also
serve as portfolio managers for CAM. CAM is located at 1211 Avenue of the
Americas, New York, New York 10036.

State Street Research & Management Company ("SSR"), a registered investment
adviser, is one of the Fund's sub-investment advisers under a Sub-Investment
Advisory Agreement between SSR and Chase. SSR is a subsidiary of the
Metropolitan Life Insurance Company. SSR makes the investment decisions on a
day-to-day basis for that portion of the Fund allocated to lower quality, high
yield securities of U.S. issuers, including convertible securities and preferred
stock. For these services, SSR is entitled to receive a fee, payable by Chase
from its advisory fee, at an annual rate equal to 0.35% of the average daily net
assets managed by SSR. SSR also provides discretionary investment advisory
services to institutional and other clients. SSR traces its heritage back to
1924 and the founding of one of America's first mutual funds. Today the firm has
more than $49 billion in assets under management (as of August 31, 1998),
including more than $15 billion in mutual funds. SSR is located at One Financial
Center, Boston, Massachusetts 02111.

Like other mutual funds and financial and business organizations worldwide, the
Fund could be adversely affected if computer systems on which the Fund relies
are unable to distinguish between the year 1900 and the year 2000 (typically,
this is called the "Year 2000 Problem"). The Year 2000 Problem could have a
negative impact on handling securities trades, pricing and account services and
could otherwise have a material adverse effect on the Fund's business,
operations and/or investments. The Fund's advisers have commenced review of the
Year 2000 Problem as it may affect the Fund, both directly and through the
systems of the Fund's other service providers, and are taking steps reasonably
designed to address any Year 2000 Problems. In light of these remedial steps,
the Fund's advisers expect that their systems and the systems of the Fund's
other service providers will be adapted to deal with the Year 2000 Problem
before the beginning of the year 2000. There can be no assurance, however, that
the systems of the advisers or the Fund's other service providers will be
successfully adapted to deal with the Year 2000 Problem, or that interaction
with other third-party computer systems which are not prepared for the Year
2000 Problem will not impair their services at that time, or that the Year 2000
Problem will not have an adverse effect on companies whose securities are held
by the Fund or on global markets or economies generally.

PORTFOLIO MANAGERS.

Susan Huang, a Managing Director and the Head of U.S. Fixed Income Management
at Chase, and Craig Blessing, Head of Emerging Market Fixed Income at Chase,
have been responsible for the management of the Fund since its inception.

18
<PAGE>

Ms. Huang is also responsible for developing the asset allocation and risk
management strategies for fixed income portfolios. Prior to joining Chase in
June of 1995, Ms. Huang was Director of the Insurance Asset Management Group at
Hyperion Capital Management Inc. Prior to joining Hyperion, Ms. Huang was a
senior portfolio manager with CS First Boston. Prior to joining CS First Boston
in 1992, Ms. Huang spent 14 years at the Equitable, where she was head of the
U.S. fixed income management group at Equitable Capital Management. Ms. Huang
is also involved in the management of Bond Fund, Short-Term Bond Fund, U.S.
Government Securities Fund and U.S. Treasury Income Fund. Mr. Blessing joined
Chase in 1996. Prior to joining Chase, from 1992 to 1996, Mr. Blessing was
Director of the Fund Management Group and Portfolio Manager for emerging market
funds at Serfin Securities, Inc. From 1985 to 1992, Mr. Blessing was a Vice
President at Bank of America where he was a founding member and co-head of the
Emerging Market Debt Sales & Trading Group.

Bartlett R. Geer, a Senior Vice President of SSR, has been responsible for the
management of the Fund's lower quality, high yield securities of U.S. issuers,
including convertible securities and preferred stock, since the Fund's
inception. Mr. Geer joined SSR in 1981 and manages other institutional
accounts, including mutual funds, that invest in high yield and other
securities.

ABOUT YOUR INVESTMENT

CHOOSING A SHARE CLASS

CLASS A SHARES. An investor who purchases Class A shares pays a sales charge at
the time of purchase. As a result, Class A shares are not subject to any sales
charges when they are redeemed. Certain purchases of Class A shares qualify for
reduced sales charges. Class A shares have lower combined 12b-1 and service
fees than Class B and Class C shares. See "How to Buy, Sell and Exchange
Shares" and "Other Information Concerning the Fund."

CLASS B SHARES. Class B shares are sold without an initial sales charge, but
are subject to a contingent deferred sales charge ("CDSC") if redeemed within a
specified period after purchase. Class B shares provide an investor the benefit
of putting all of the investor's dollars to work from the time the investment
is made. Class B shares also have higher combined 12b-1 and service fees than
Class A shares.

Class B shares automatically convert into Class A shares, based on relative net
asset value, at the beginning of the ninth year after purchase. For more
information about the conversion of Class B shares, see the SAI. This
discussion will include information about how shares acquired through
reinvestment of distributions are treated for conversion purposes. Until
conversion, Class B shares will have a higher expense ratio and pay lower
dividends than Class A shares because of the higher combined 12b-1 and service
fees. See "How to Buy, Sell and Exchange Shares" and "Other Information
Concerning the Fund."

<PAGE>

CLASS C SHARES. Class C shares are sold without an initial sales charge, which
provides the investor the benefit of putting all of the investor's dollars to
work from the time the investment is made. If redeemed within one year after
purchase, Class C shares are subject to a CDSC equal to 1% of lesser of their
original cost or net asset value at the time of the redemption. If you hold
your shares for one year or more, you will receive the entire net asset value
of your shares upon redemption at the then-current share price. Class C shares,
like Class B shares, have higher combined 12b-1 and service fees than Class A
shares and, as a consequence, pay correspondingly lower dividends and may have
a lower net asset value than Class A shares. Unlike Class B shares, Class C
shares do not convert into any other class of shares of the Fund. See "How to
Buy, Sell and Exchange Shares" and "Other Information Concerning the Fund."

WHICH ARRANGEMENT IS BEST FOR YOU? The decision as to which class of shares
provides a more suitable investment for you depends on a number of factors,
including the amount and intended length of the investment. If you are making
an investment that qualifies for reduced sales charges you might consider Class
A shares. If you prefer not to pay an initial sales charge and anticipate
holding your shares for a number of years, you might consider Class B shares.
If you prefer not to pay an initial sales charge and you are uncertain as to
the intended length of your investment, you might consider Class C shares. In
almost all cases, if you are a long-term investor planning to purchase $250,000
or more of the Fund's shares you will pay lower aggregate charges and expenses
by purchasing Class A shares.

HOW TO BUY, SELL
AND EXCHANGE SHARES

HOW TO BUY SHARES
You can open a Fund account with as little as (i) $2,500 for regular accounts,
(ii) $1,000 for participating traditional and Roth IRAs, SEP-IRAs and the
Systematic Investment Plan, (iii) $500 for participating Education IRAs or (iv)
$25 for Simple IRAs. Additional investments can be made at any time with as
little as $100 (or for $25 for participating Simple IRAs). The minimum initial
investment may be waived in the Fund's discretion. You can buy Fund shares
three ways--through an investment representative, through the Fund's
distributor by completing an application and mailing it and your check in the
amount you wish to invest to the Chase Vista Funds Service Center or through
the Systematic Investment Plan.

All purchases made by check should be in U.S. dollars and made payable to the
Chase Vista Funds. Third party checks, credit cards and cash will not be
accepted. The Fund reserves the right to reject any purchase order or cease
offering shares for purchase at any time. When purchases are made by check,
redemptions will not be allowed until the purchase check clears, which may take
the 15 calendar days or longer. In addition, the redemption of shares purchased
through Automated Clearing House (ACH) will not be allowed until your payment
clears, which may take 7 business days or longer.

<PAGE>

BUYING SHARES THROUGH THE FUND'S DISTRIBUTOR. Complete and return the enclosed
application and your check in the amount you wish to invest to the Chase Vista
Funds Service Center.

BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular investments
of $100 or more per transaction through automatic periodic deduction from your
bank checking or savings account. Shareholders electing to start this
Systematic Investment Plan when opening an account should complete Section 8 of
the account application. Current shareholders may begin such a plan at any time
by sending a signed letter and a deposit slip or voided check to the Chase
Vista Funds Service Center. Call the Chase Vista Funds Service Center at
1-800-34-VISTA for complete instructions.

----------------------------------
Shares are purchased at the public offering price, which is based on the net
asset value next determined after the Chase Vista Funds Service Center receives
your order in proper form. In most cases, in order to receive that day's public
offering price, the Chase Vista Funds Service Center must receive your order in
proper form before the close of regular trading on the New York Stock Exchange.
If you buy shares through your investment representative, the representative
must receive your order before the close of regular trading on the New York
Stock Exchange to receive that day's public offering price. Orders are in
proper form only after funds are converted to federal funds.

If you are considering redeeming or exchanging shares or transferring shares to
another person shortly after purchase, you should pay for those shares with a
certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, the Fund will not
issue certificates for your Class A or Class C shares unless you request them.
Due to the conversion feature of Class B shares, certificates for Class B
shares will not be issued and all Class B shares will be held in book entry
form.

<PAGE>

Class A Shares

The public offering price of Class A shares is the net asset value plus a sales
charge that varies depending on the size of your purchase. The Fund receives
the net asset value. The sales charge is allocated between your broker-dealer
and the Fund's distributor as shown in the following table, except when the
Fund's distributor, in its discretion, allocates the entire amount to your
broker-dealer.

Sales charge as a
percentage of:
-------------------------
Amount of sales charge
Amount of transaction at Offering Net amount reallowed to dealers as a
offering price($) Price invested percentage of offering price
- ----------------------------- -------- ---------- ----------------------------
<S> <C> <C> <C>
Under 100,000 4.50 4.71 4.00
100,000 but under 250,000 3.75 3.90 3.25
250,000 but under 500,000 2.50 2.56 2.25
500,000 but under 1,000,000 2.00 2.04 1.75

</TABLE>

There is no initial sales charge on purchases of Class A shares of $1 million
or more.

The Fund's distributor pays broker-dealers commission on net sales of Class A
shares of $1 million or more based on an investor's cumulative purchases. Such
commissions are paid at the rate of 0.75% of the amount under $2.5 million,
0.50% of the next $7.5 million, 0.25% of the next $40 million and 0.15%
thereafter. The Fund's distributor may withhold such payments with respect to
short-term investments.

Class B Shares

Class B shares are sold without an initial sales charge, although a CDSC will
be imposed if you redeem shares within a specified period after purchase, as
shown in the table below. The following types of shares may be redeemed without
charge at any time: (i) shares acquired by reinvestment of distributions and
(ii) shares otherwise exempt from the CDSC, as described below. For other
shares, the amount of the charge is determined as a percentage of the lesser of
the current market value or the purchase price of shares being redeemed.

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year 1 2 3 4 5 6 7 8+
- ------ ---- ---- ---- ---- ---- ---- ---- ---
CDSC 5% 4% 3% 3% 2% 1% 0% 0%

</TABLE>

In determining whether a CDSC is payable on any redemption, the Fund will first
redeem shares not subject to any charge, and then shares held longest during
the CDSC period. When a share that has appreciated in value is redeemed during
the CDSC period, a CDSC is assessed only on its initial purchase price. For
information on how sales charges are calculated if you exchange your shares,
see "How to Exchange Your Shares." The Fund's distributor pays broker-dealers a
commission of 4.00% of the offering price on sales of Class B shares, and the
distributor receives the entire amount of any CDSC you pay.

Class C Shares

Class C shares are sold without an initial sales charge, although a CDSC will
be imposed if you redeem shares within one year after purchase. The following
types

<PAGE>

of shares may be redeemed without charge at any time: (i) shares acquired by
reinvestment of distribution and (ii) shares otherwise exempt from the CDSC, as
described below. For other shares, the amount of the charge is determined as
the lesser of the current market value or the purchase price of shares being
redeemed.

In determining whether a CDSC is payable on any redemption, the Fund will first
redeem shares not subject to any charge, and then shares held longest during
the CDSC period. When a share that has appreciated in value is redeemed during
the CDSC period, a CDSC is assessed only on its initial price. For information
on how sales charges are calculated if you exchange your shares, see "How to
Exchange Your Shares." The Fund's distributor pays broker-dealers a commission
of 1.00% of the offering price on sales of Class C shares, and the distributor
receives the entire amount of any CDSC payment.

GENERAL

You may be eligible to buy Class A shares at reduced sales charges. Consult
your investment representative or the Chase Vista Funds Service Center for
details about Chase Vista's combined purchase privilege, cumulative quantity
discount, statement of intention, group sales plan, employee benefit plans, and
other plans. Descriptions are also included in the enclosed application and in
the SAI. Sales charges are waived if you are using redemption proceeds received
within the prior ninety days from non-Chase Vista mutual funds to buy your
shares, and on which you paid a front-end or contingent deferred sales charge.

Some participant-directed employee benefit plans participate in a "multi-fund"
program which offers both Chase Vista and non-Chase Vista mutual funds. The
money that is invested in Chase Vista Funds may be combined with the other
mutual funds in the same program when determining the plan's eligibility to buy
Class A shares for purposes of the discount privileges and programs described
above.

No initial sales charge will apply to the purchase of the Fund's Class A shares
if (i) you are investing proceeds from a qualified retirement plan where a
portion of the plan was invested in the Chase Vista Funds, (ii) you are
investing through any qualified retirement plan with 50 or more participants or
(iii) you are a participant in certain qualified retirement plans and are
investing (or reinvesting) the proceeds from the repayment of a plan loan made
to you.

For purchases of the Fund's Class A shares made from January 1, 1998 through
December 31, 1998, no initial sales charge will be assessed if you are
investing through an IRA or qualified retirement plan for which The Chase
Manhattan Bank or its designee serves as trustee or custodian, and additional
investments in Class A shares of the Fund through such an IRA or qualified plan
made subsequent to 1998 will not be subject to initial sales charges for the
life of the Fund account.

Purchases of the Fund's Class A shares may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee
for its services.

Purchases of the Fund's Class A shares may be made with no initial sales
charge (i) by an investment

<PAGE>

adviser, broker or financial planner, provided arrangements are preapproved and
purchases are placed through an omnibus account with the Fund or (ii) by
clients of such investment adviser or financial planner who place trades for
their own accounts, if such accounts are linked to a master account of such
investment adviser or financial planner on the books and records of the broker
or agent. Such purchases may also be made for retirement and deferred
compensation plans and trusts used to fund those plans.

Purchases of the Fund's Class A shares may be made with no initial sales charge
in accounts opened by a bank, trust company or thrift institution which is
acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Chase Vista Funds
Service Center.

The Fund may sell Class A shares without an initial sales charge to the current
and retired Trustees (and their immediate families), current and retired
employees (and their immediate families) of Chase, the Fund's distributor and
transfer agent or any affiliates or subsidiaries thereof, registered
representatives and other employees (and their immediate families) of broker-
dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Chase Vista Fund shares) and financial institution trust departments
investing an aggregate of $1 million or more in the Chase Vista Funds.

Shareholders of record of any Chase Vista fund as of November 30, 1990 and
certain immediate family members may purchase the Fund's Class A shares with no
initial sales charge for as long as they continue to own Class A shares of any
Chase Vista fund, provided there is no change in account registration.

Shareholders of other Chase Vista Funds may be entitled to exchange their
shares for, or reinvest distributions from their funds in, shares of the Fund
at net asset value.

The CDSC will be waived on redemption of Class B or Class C shares arising out
of death or disability or in connection with certain withdrawals from IRA or
other retirement plans. Up to 12% of the value of Class B or Class C shares
subject to a systematic withdrawal plan may also be redeemed each year without
a CDSC, provided that the Class B or Class C account had a minimum balance of
$20,000 at the time the systematic withdrawal plan was established.

The Fund reserves the right to change any of these policies at any time and may
reject any request to purchase shares at a reduced sales charge. The SAI
contains additional information about purchasing the Fund's shares at reduced
sales charges.

Investors may incur a fee if they effect transactions through a broker or
agent.

For shareholders that bank with Chase, Chase may aggregate

<PAGE>

investments in the Chase Vista Funds with balances held in Chase bank accounts
for purposes of determining eligibility for certain bank privileges that are
based on specified minimum balance requirements, such as reduced or no fees for
certain banking services or preferred rates on loans and deposits. Chase and
certain broker-dealers and other shareholder servicing agents may, at their own
expense, provide gifts, such as computer software packages, guides and books
related to investment or additional Fund shares valued up to $250 to their
customers that invest in the Chase Vista Funds.

HOW TO SELL SHARES

You can sell your Fund shares any day the New York Stock Exchange is open,
either directly to the Fund or through your investment representative. The Fund
will only forward redemption payments on shares for which it has collected
payment of the purchase price.

SELLING SHARES DIRECTLY TO THE FUND. Send a signed letter of instruction to the
Chase Vista Funds Service Center, along with any certificates that represent
shares you want to sell. The price you will receive is the next net asset value
calculated after the Fund receives your request in proper form, less any
applicable CDSC. In order to receive that day's net asset value, the Chase
Vista Funds Service Center must receive your request before the close of
regular trading on the New York Stock Exchange.

If you sell shares having a net asset value of $100,000 or more, the signatures
of registered owners or their legal representatives must be guaranteed by a
bank, broker-dealer or certain other financial institutions. See the SAI for
more information about where to obtain a signature guarantee.

If you want your redemption proceeds sent to an address other than your address
as it appears on the Chase Vista Funds Service Center's records, a signature
guarantee is required. The Fund may require additional documentation for the
sale of shares by a corporation, partnership, agent or fiduciary, or a
surviving joint owner. Contact the Chase Vista Funds Service Center for
details.

DELIVERY OF PROCEEDS. The Fund generally sends you payment for your shares the
business day after your request is received in proper form, assuming the Fund
has collected payment of the purchase price of your shares. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law.

TELEPHONE REDEMPTIONS.
You may use Chase Vista's Telephone Redemption Privilege to redeem shares from
your account. Telephone redemption requests in excess of $25,000 will only be
made by wire or ACH transfer to a bank account on record with the Fund. There
is a $10.00 charge for each wire transaction. Unless an investor indicates
otherwise on the account application, the Fund will be authorized to act upon
redemption and transfer instructions received by telephone from a shareholder,
or any person claiming to act as his or her representative, who can provide the
Fund with his or her account

<PAGE>

registration and address as it appears on the Fund's records.

The Chase Vista Funds Service Center will employ these and other reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, the Fund may be liable for any
losses due to unauthorized or fraudulent instructions. An investor agrees,
however, that to the extent permitted by applicable law, neither the Fund nor
its agents will be liable for any loss, liability, cost or expense arising out
of any redemption request, including any fraudulent or unauthorized request.
For information, consult the Chase Vista Funds Service Center.

During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Chase Vista Funds Service Center by
telephone. In this event, you may wish to submit a written redemption request,
as described above, or contact your investment representative. The Telephone
Redemption Privilege is not available if you were issued certificates for
shares that remain outstanding. No redemption proceeds will be mailed to an
address which has been changed within the preceding 30 days. The Telephone
Redemption Privilege may be modified or terminated without notice.

SYSTEMATIC WITHDRAWAL. You can make regular withdrawals of $50 or more ($100
or more for Class B or Class C accounts) monthly, quarterly or semiannually. A
minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts. Call the Chase Vista Funds Service Center
at 1-800-34-VISTA for complete instructions.

SELLING SHARES THROUGH YOUR INVESTMENT REPRESENTATIVE. Your investment
representative must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Chase Vista Funds Service Center, and may charge you for
its services.

INVOLUNTARY REDEMPTION OF ACCOUNTS. The Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 due to redemptions or if you purchase through the
Systematic Investment Plan and fail to meet the Fund's investment minimum
within a twelve month period. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption. In the event the Fund
redeems Class B or Class C shares pursuant to this provision, no CDSC will be
imposed.

HOW TO EXCHANGE YOUR SHARES

You can exchange your shares for shares of the same class of certain other
Chase Vista Funds at net asset value beginning 15 days after purchase. Not all
Chase Vista Funds offer all classes of shares. The prospectus of the other
Chase Vista fund into which shares are being exchanged should be read carefully
and retained for future reference. If you exchange shares subject to a CDSC,
the transaction will not be

<PAGE>

subject to the CDSC. However, when you redeem the shares acquired through the
exchange, the redemption may be subject to the CDSC, depending upon when you
originally purchased the shares. The CDSC will be computed using the schedule
of any fund into or from which you have exchanged your shares that would result
in your paying the highest CDSC applicable to your class of shares. In
computing the CDSC, the length of time you have owned your shares will be
measured from the date of original purchase and will not be affected by any
exchange.

EXCHANGING TO MONEY MARKET FUNDS. An exchange of Class B or Class C shares into
any of the Chase Vista money market funds other than the Class B or Class C
shares of the Prime Money Market Fund will be treated as a redemption--and
therefore subject to the conditions of the CDSC--and a subsequent purchase.
Class B or Class C shares of any Chase Vista non-money market fund may be
exchanged into the Class B or Class C shares of the Prime Money Market Fund in
order to continue the aging of the initial purchase of such shares.

For federal income tax purposes, an exchange is treated as a sale of shares and
generally results in a capital gain or loss.

EXCHANGING BY PHONE. A Telephone Exchange Privilege is currently available.
Call the Chase Vista Funds Service Center for procedures for telephone
transactions. The Telephone Exchange Privilege is not available if you were
issued certificates for shares that remain outstanding. Ask your investment
representative or the Chase Vista Funds Service Center for prospectuses of
other Chase Vista Funds. Shares of certain Chase Vista Funds are not available
to residents of all states.

EXCHANGE PARAMETERS. The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In order to limit
excessive exchange activity and in other circumstances where Chase Vista
management or the Trustees believe doing so would be in the best interests of
the Fund, the Fund reserves the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges or reject any exchange. In
addition, any shareholder who makes more than ten exchanges of shares involving
the Fund in a year or three in a calendar quarter will be charged a $5.00
administration fee for each such exchange. Shareholders would be notified of
any such action to the extent required by law. Consult the Chase Vista Funds
Service Center before requesting an exchange. See the SAI to find out more
about the exchange privilege.

REINSTATEMENT PRIVILEGE. Upon written request, Class A shareholders have a one
time privilege of reinstating their investment in the Fund at net asset value
within 90 calendar days of the redemption. The reinstatement request must be
accompanied by payment for the shares (not in excess of the redemption), and
shares will be purchased at the next determined net asset value. Class B and
Class C shareholders who have redeemed their shares and paid a

<PAGE>

CDSC with such redemption may purchase Class A shares with no initial sales
charge (in an amount not in excess of their redemption proceeds) if the
purchase occurs within 90 days of the redemption of the Class B or Class C
shares.

HOW THE FUND
VALUES ITS SHARES

The net asset value of each class of the Fund's shares is determined once daily
based upon prices determined as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern time, however, options are priced
at 4:15 p.m., Eastern time), on each business day of the Fund, by dividing the
net assets of the Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Fund are
determined on the basis of their market or other fair value, as described in
the SAI.

HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION

The Fund declares dividends daily and distributes any net investment income at
least monthly. The Fund distributes any net realized capital gains at least
annually. Capital gains are distributed after deducting any available capital
loss carryovers. Distributions paid by the Fund with respect to Class A shares
will generally be greater than those paid with respect to Class B and Class C
shares because expenses attributable to Class B and Class C shares will
generally be higher.

DISTRIBUTION PAYMENT OPTION. You can choose from three distribution options:
(1) reinvest all distributions in additional Fund shares without sales charge;
(2) receive distributions from net investment income in cash or by ACH to a
pre-established bank account while reinvesting capital gains distributions in
additional shares without a sales charge; or (3) receive all distributions in
cash or by ACH. You can change your distribution option by notifying the Chase
Vista Funds Service Center in writing. If you do not select an option when you
open your account, all distributions will be reinvested. All distributions not
paid in cash or by ACH will be reinvested in shares of the same share class.
You will receive a statement confirming reinvestment of distributions in
additional Fund shares promptly following the quarter in which the reinvestment
occurs.

If a check representing a Fund distribution is not cashed within a specified
period, the Chase Vista Funds Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the Fund
or in an established account of another Chase Vista fund without a sales
charge. If the Chase Vista Funds Service Center does not receive your election,
the distribution will be reinvested in the Fund. Similarly, if the Fund or the
Chase Vista Funds Service Center sends you correspondence returned as
"undeliverable," distributions will automatically be reinvested in the Fund.

The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for
it to be relieved of

<PAGE>

federal taxes on income and gains it distributes to shareholders. The Fund
intends to distribute substantially all of its ordinary income and capital gain
net income on a current basis. If the Fund does not qualify as a regulated
investment company for any taxable year or does not make such distributions,
the Fund will be subject to tax on all of its income and gains.

TAXATION OF DISTRIBUTIONS. All Fund distributions of net investment income
(which term includes net short-term capital gain) will be taxable as ordinary
income. Any distributions of net capital gain which are designated as "capital
gain dividends" will be taxable as long-term capital gain at the currently
applicable 28% or 20% rate, regardless of how long you have held the shares.
The taxation of your distribution is the same whether received in cash or in
shares through the reinvestment of distributions.

You should carefully consider the tax implications of purchasing shares just
prior to a distribution. This is because you will be taxed on the entire amount
of the distribution received, even though the net asset value per share will be
higher on the date of such purchase as it will include the distribution amount.

Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.

The above is only a summary of certain federal income tax consequences of
investing in the Fund. You should consult your tax adviser to determine the
precise effect of an investment in the Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).

OTHER INFORMATION
CONCERNING THE FUND

DISTRIBUTION PLANS

The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted Rule 12b-1 distribution plans for Class A and Class B shares which
provide for the payment of distribution fees at annual rates of up to 0.25%,
0.75% and 0.75% of the average daily net assets attributable to Class A, Class
B and Class C shares of the Fund, respectively. Payments under the distribution
plans shall be used to compensate or reimburse the Fund's distributor and
broker-dealers for services provided and expenses incurred in connection with
the sale of Class A, Class B and Class C shares, and are not tied to the amount
of actual expenses incurred. Payments may be used to compensate broker-dealers
with trail or maintenance commissions at an annual rate of up to 0.25% of the
average daily net asset value of Class A or Class B shares or up to 0.75% of
the average daily net asset value of Class C shares, invested in the Fund by
customers of these broker-dealers. Trail or maintenance commissions are paid to
broker-dealers beginning the 13th month following the purchase of shares by
their customers. Promotional activities for the sale of Class A, Class B and
Class C shares will be conducted generally by the Chase Vista Funds, and
activities intended to promote the Fund's Class A, Class

<PAGE>

B or Class C shares may also benefit the Fund's other shares and other Chase
Vista funds.

VFD may provide promotional incentives to broker-dealers that meet specified
targets for one or more Chase Vista Funds. These incentives may include gifts
of up to $100 per person annually; an occasional meal, ticket to a sporting
event or theater for entertainment for broker dealers and their guests; and
payment or reimbursement for travel expenses, including lodging and meals, in
connection with attendance at training and educational meetings within and
outside the U.S.

VFD may from time to time, pursuant to objective criteria established by it,
pay additional compensation to qualifying authorized broker-dealers for certain
services or activities which are primarily intended to result in the sale of
shares of the Fund. In some instances, such compensation may be offered only to
certain broker-dealers who employ registered representatives who have sold or
may sell significant amounts of shares of the Fund and/or other Chase Vista
Funds during a specified period of time. Such compensation does not represent
an additional expense to the Fund or its shareholders, since it will be paid by
VFD out of compensation retained by it from the Fund or other sources available
to it.

SHAREHOLDER
SERVICING AGENTS

The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class A, Class B or Class C shares of the Fund.
These services include one or more of the following: assisting with purchase
and redemption transactions, maintaining shareholder accounts and records,
furnishing customer statements, transmitting shareholder reports and
communications to customers and other similar shareholder liaison services. For
performing these services, each shareholder servicing agent receives an annual
fee of up to 0.25% of the average daily net assets of Class A, Class B and
Class C shares of the Fund held by investors for whom the shareholder servicing
agent maintains a servicing relationship. Shareholder servicing agents may
subcontract with other parties for the provision of shareholder support
services.

Shareholder servicing agents may offer additional services to their customers,
such as pre-authorized or systematic purchase and redemption plans. Each
shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect
to such services. Certain shareholder servicing agents may (although they are
not required by the Trust to do so) credit to the accounts of their customers
from whom they are already receiving other fees an amount not exceeding such
other fees or the fees for their services as shareholder servicing agents.

Chase and/or VFD may from time to time, at their own expense out of
compensation retained by them from the Fund or other sources available to

<PAGE>

them, make additional payments to certain selected dealers or other shareholder
servicing agents for performing administrative services for their customers.
These services include maintaining account records, processing orders to
purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to an additional 0.10%
annually of the average net assets of the Fund attributable to shares of the
Fund held by customers of such shareholder servicing agents. Such compensation
does not represent an additional expense to the Fund or its shareholders, since
it will be paid by Chase and/or VFD.

Chase and its affiliates and the Chase Vista Funds, affiliates, agents, and
subagents may exchange among themselves and others certain information about
shareholders and their accounts, including information used to offer investment
products and insurance products to them, unless otherwise contractually
prohibited.

ADMINISTRATOR AND
SUB-ADMINISTRATOR

Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.

VFD provides certain sub-administrative services to the Fund pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets. VFD has agreed to use a portion of this fee to pay
for certain expenses incurred in connection with organizing new series of the
Trust and certain other ongoing expenses of the Trust. One Chase Manhattan
Plaza, 3rd Floor, New York, New York 10081.

CUSTODIAN

Chase acts as the custodian and fund accountant for the Fund and receives
compensation under an agreement with the Trust. Portfolio securities and cash
may be held by sub-custodian banks if such arrangements are reviewed and
approved by the Trustees.

EXPENSES

The Fund pays the expenses incurred in its operations, including its pro rata
share of expenses of the Trust. These expenses include investment advisory and
administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses for custody services,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of preparing and mailing reports to investors and to
government offices and commissions; expenses of meetings of investors; fees and
expenses of independent accountants, of legal counsel and of any transfer
agent, registrar or dividend disbursing agent of the Trust; insurance premiums;
and expenses of calculating the net asset value of, and the net income on,
shares of the Fund. Shareholder servicing and distribution fees are allocated
to specific classes of the Fund. In

<PAGE>

addition, the Fund may allocate transfer agency and certain other expenses by
class. Service providers to the Fund may, from time to time, voluntarily waive
all or a portion of any fees to which they are entitled.

ORGANIZATION AND
DESCRIPTION OF SHARES

The Fund is a portfolio of Mutual Fund Group, an open-end management investment
company organized as a Massachusetts business trust in 1987 (the "Trust"). The
Trust has reserved the right to create and issue additional series and classes.
Each share of a series or class represents an equal proportionate interest in
that series or class with each other share of that series or class. The shares
of each series or class participate equally in the earnings, dividends and
assets of the particular series or class. Shares have no preemptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth below. Shareholders are entitled to one vote for each whole share
held, and each fractional share shall be entitled to a proportionate fractional
vote, except that Trust shares held in the treasury of the Trust shall not be
voted. Shares of each class of the Fund generally vote together except when
required under federal securities laws to vote separately on matters that only
affect a particular class, such as the approval of distribution plans for a
particular class.

The Fund issues multiple classes of shares. This Prospectus relates only to
Class A, Class B and Class C shares of the Fund. The Fund offers Institutional
Class and Class M shares in addition to these classes and may determine not to
offer certain classes of shares. The categories of investors that are eligible
to purchase shares and minimum investment requirements may differ for each class
of Fund shares. In addition, other classes of Fund shares may be subject to
differences in sales charge arrangements, ongoing distribution and service fee
levels, and levels of certain other expenses, which will affect the relative
performance of the different classes. Investors may call 1-800-34-VISTA to
obtain additional information about other classes of shares of the Fund that are
offered. Any person entitled to receive compensation for selling or servicing
shares of the Fund may receive different levels of compensation with respect to
one class of shares over another.

The business and affairs of the Trust are managed under the general direction
and supervision of its Board of Trustees. The Trust is not required to hold
annual meetings of shareholders but will hold special meetings of shareholders
of all series or classes when in the judgment of the Trustees it is necessary
or desirable to submit matters for a shareholder vote. The Trustees will
promptly call a meeting of shareholders to remove a trustee(s) when requested
to do so in writing by record holders of not less than 10% of all outstanding
shares of the Trust.

Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

<PAGE>

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE

Unlike other mutual funds which directly acquire and manage their own portfolio
securities, the Fund is permitted to invest all of its investable assets in a
separate registered investment company (a "Portfolio"). In that event, a
shareholder's interest in the Fund's underlying investment securities would be
indirect. In addition to selling a beneficial interest to the Fund, a Portfolio
could also sell beneficial interests to other mutual funds or institutional
investors. Such investors would invest in such Portfolio on the same terms and
conditions and would pay a proportionate share of such Portfolio's expenses.
However, other investors investing in a Portfolio would not be required to sell
their shares at the same public offering prices as the Fund, and might bear
different levels of ongoing expenses than the Fund. Shareholders of the Fund
should be aware that these differences may result in differences in returns
experienced in the differing funds that invest in a Portfolio. Such differences
in returns are also experienced in other mutual fund structures.

Smaller funds investing in a Portfolio could be materially affected by the
actions of larger funds investing in a Portfolio. For example, if a large fund
were to withdraw from the Portfolio, the remaining funds might experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio could become less diverse, resulting in increased
portfolio risk. However, this possibility also exists for traditionally
structured funds which have large or institutional investors. Funds with a
greater pro rata ownership in a Portfolio could have effective voting control
of the operations of such Portfolio. Under this master/feeder investment
approach whenever the Trust is requested to vote on matters pertaining to a
Portfolio, the Trust would hold a meeting of shareholders of the Fund and would
cast all of its votes in the same proportion as did the Fund's shareholders.
Shares of the Fund for which no voting instructions had been received would be
voted in the same proportion as those shares for which voting instructions had
been received. Certain changes in a Portfolio's objective, policies or
restrictions may require the Trust to withdraw the Fund's interest in such
Portfolio. Any such withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution from such Portfolio).
The Fund could incur brokerage fees or other transaction costs in converting
such securities to cash. In addition, a distribution in kind could result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund.

The Fund will not adopt a master/feeder structure under which the disinterested
Trustees of the Trust are Trustees of the Portfolio unless the Trustees of the
Trust, including a majority of the disinterested Trustees, adopt procedures they
believe to be reasonably appropriate to deal with any conflict of interest up to
and including creating a separate Board of Trustees.

<PAGE>

contacting the Fund at 1-800-34-VISTA. In the event a Fund adopts a
master/feeder structure and invests all of its investable assets in a
Portfolio, shareholders of the Fund will be given at least 30 days' prior
written notice.

PERFORMANCE
INFORMATION

The Fund's investment performance may from time to time be included in
advertisements about the Fund. Performance is calculated separately for each
class of shares, in the manner described in the SAI. "Yield" for each class of
shares is calculated by dividing the annualized net investment income
calculated pursuant to federal rules per share during a recent 30-day period by
the maximum public offering price per share of such class on the last day of
that period.

"Total return" for the one-, five- and ten-year periods (or since inception, if
shorter) through the most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in the Fund invested at
the maximum public offering price (in the case of Class A shares) or reflecting
the deduction of any applicable contingent deferred sales charge (in the case
of Class B and Class C shares). Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge or contingent
deferred sales charge would be reduced if such sales charges were used.

All performance data is based on the Fund's past investment results and does
not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, the Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Fund's investment objectives and policies. These factors should be
considered when comparing the Fund's investment results to those of other
mutual funds and other investment vehicles. Quotation of investment performance
for any period when a fee waiver or expense limitation was in effect will be
greater than if the waiver or limitation had not been in effect. The Fund's
performance may be compared to other mutual funds, relevant indices and
rankings prepared by independent services. See the SAI.

<PAGE>

MAKE THE MOST OF YOUR CHASE VISTA PRIVILEGES

The following services are available to you as a Chase Vista Fund shareholder.
o SYSTEMATIC INVESTMENT PLAN--Invest as much as you wish ($100 or more) on or
about the day designated in your account application. The amount will be
automatically transferred from your checking or savings account.
o SYSTEMATIC WITHDRAWAL PLAN--Make regular withdrawals of $50 or more ($100 or
more for Class B and Class C accounts) monthly, quarterly or semiannually.
A minimum account balance of $5,000 is required to establish a systematic
withdrawal plan for Class A accounts.
o SYSTEMATIC EXCHANGE--Transfer assets automatically from one Chase Vista
account to another on a regular, prearranged basis. There is no additional
charge for this service.
o FREE EXCHANGE PRIVILEGE--Exchange money between Chase Vista funds in the same
class of shares without charge. The exchange privilege allows you to adjust
your investments as your objectives change.
Investors may not maintain, within the same fund, simultaneous plans for
systematic investment or exchange and systematic withdrawal or exchange.
o REINSTATEMENT PRIVILEGE--Class A shareholders have a one time privilege of
reinstating their investment in the Fund at net asset value next determined
subject to written request within 90 calendar days of the redemption,
accompanied by payment for the shares (not in excess of the redemption).

Class B and Class C shareholders who have redeemed their shares and paid a
CDSC with such redemption may purchase Class A shares with no initial sales
charge (in an amount not in excess of their redemption proceeds) if the
purchase occurs within 90 days of the redemption of the Class B and Class C
shares.

For more information about any of these services and privileges, call your
shareholder servicing agent, investment representative or the Chase Vista Funds
Service Center at 1-800-34-VISTA. These privileges are subject to change or
termination.

<PAGE>

APPENDIX A

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.
BOND RATINGS

Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.

Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
"high-grade" bonds. They are rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than those of
"Aaa" securities.

A: Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds rated "Baa" are considered medium grade obligations, that is, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.

Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.

B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.

Caa: Bonds rated "Caa" are of poor standing and may be in default or there may
be present elements of danger with respect to principal or interest.

Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.

C: Bonds rated "C" can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

<PAGE>

DESCRIPTION OF STANDARD & POOR'S BOND RATINGS

AAA: "AAA" is the highest rating assigned to a debt obligation and indicates an
extremely strong capacity to pay principal and interest.

AA: Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances
they differ from "AAA" issues only in small degree.

A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.

BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.

BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on balance,
as predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.

C, D: Bonds on which no interest is being paid are rated "C." Bonds rated "D"
are in default and payment of interest and/or repayment of principal is in
arrears.

<PAGE>

Chase Vista Funds

CHASE VISTA INTERNATIONAL EQUITY FUNDS
Latin American Equity Fund
Southeast Asian Fund
Japan Fund
European Fund
International Equity Fund
CHASE VISTA U.S. EQUITY FUNDS
Small Cap Opportunities Fund
Small Cap Equity Fund (closed to new investors)
The Growth Fund of Washington
Capital Growth Fund
Focus Fund
Growth and Income Fund
Large Cap Equity Fund
Balanced Fund
Equity Income Fund
CHASE VISTA FIXED INCOME FUNDS
Strategic Income Fund
Bond Fund
U.S. Government Securities Fund
U.S. Treasury Income Fund
Short-Term Bond Fund
CHASE VISTA TAX-FREE FUNDS(1)
New York Tax Free Income Fund
California Intermediate Tax Free Fund
Tax Free Income Fund
CHASE VISTA TAX-FREE MONEY MARKET FUNDS(1),(2)
New York Tax Free Money Market Fund
Connecticut Daily Tax Free Income Fund Select Shares(3)
New Jersey Daily Municipal Income Fund Select Shares(3)
Tax Free Money Market Fund
California Tax Free Money Market Fund
CHASE VISTA TAXABLE MONEY MARKET FUNDS(2)
Cash Management Money Market Fund
Federal Money Market Fund
100% U.S. Treasury Securities Money Market Fund
U.S. Government Money Market Fund
Treasury Plus Money Market Fund

For complete information on the Chase Vista Funds, including information about
fees and expenses, call your investment professional or 1-800-34-VISTA for a
prospectus. Please read it carefully before you invest or send money.

(1) Some income may be subject to certain state and local taxes. A portion of
the income may be subject to the federal alternative minimum tax for some
investors.

(2) An investment in a Money Market Fund is neither insured nor guaranteed by
the U.S. Government. Yields will fluctuate, and there can be no assurance that
the Fund will be able to maintain a stable net asset value of $1.00 per share.

(3) Vista Select Shares of these funds are not a part of, or affiliated with,
the Chase Vista Funds. Reich & Tang Distributors L.P. and New England Investment
Companies L.P., which are unaffiliated with Chase, are the funds' distributor
and investment adviser, respectively.

<PAGE>

(This Page Intentionally Left Blank)

<PAGE>

CHASE VISTA FUNDS SERVICE CENTER
P.O. Box 419392
Kansas City, MO 64141-6392

TRANSFER AGENT AND DIVIDEND PAYING AGENT
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105

LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
1177 Avenue of the Americas
New York, NY 10036

[CHASE VISTA FUNDS LOGO]
P.O. Box 419392
Kansas City, MO 64141-6392

<PAGE>

[CHASE VISTA FUNDS LOGO]

STRATEGIC INCOME FUND
INSTITUTIONAL SHARES

INVESTMENT STRATEGY: INCOME

October 30, 1998

This Prospectus explains concisely what you should know before investing. Please
read it carefully and keep it for future reference. You can find more detailed
information about the Fund in its October 30, 1998 Statement of Additional
Information, as amended periodically (the "SAI"). For a free copy of the SAI,
call the Chase Vista Funds Service Center at 1-800-622-4273. The SAI has been
filed with the Securities and Exchange Commission (the "Commission") and is
incorporated into this Prospectus by reference. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains the SAI, the Fund's
Annual Report to Shareholders and other information regarding the Fund which has
been electronically filed with the Commission.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary ........................................................... 4
The expenses you might pay on your Fund investment, including examples
Fund Objective ............................................................ 5
Investment Policies ....................................................... 5
The kinds of securities in which the Fund invests, investment policies and
techniques, and risks
Management ................................................................ 16
Chase Manhattan Bank, the Fund's adviser; Chase Asset Management,
the Fund's sub-adviser, and the individuals who manage the Fund
How to Purchase, Redeem and Exchange Shares ............................... 18
How the Fund Values Its Shares ............................................ 20
How Distributions Are Made; Tax Information ............................... 21
Other Information Concerning the Fund ..................................... 22
Performance Information ................................................... 26
Appendix A ................................................................ 27
</TABLE>

<PAGE>

EXPENSE SUMMARY

<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fee (after estimated waiver)* ......... 0.10%
12b-1 Fee ................................................. None
Shareholder Servicing Fee ................................. 0.25%
Other Expenses (after estimated waiver)* .................. 0.65%
-----
Total Fund Operating Expenses
(after waivers of fees)* ................................ 1.00%
=====

EXAMPLES
Your investment of $1,000 would
incur the following expenses,
assuming 5% annual return: ...................... 1 Year 3 Years
------ -------
Institutional Shares ............................ $10 $32

</TABLE>

* Reflects current waiver arrangements to maintain Total Fund Operating
Expenses at the levels indicated in the table above. Absent such
waivers, the Investment Advisory Fee, Other Expenses and the Total Fund
Operating Expenses would be 0.50%, 0.75% and 1.75%, respectively.

<PAGE>

FUND OBJECTIVE

The Fund seeks a high level of current income. The Fund is not intended to be a
complete investment program, and there is no assurance it will achieve its
objective.

INVESTMENT POLICIES

INVESTMENT APPROACH
The Fund will invest principally in a diversified portfolio of U.S. dollar-
denominated securities in the following three market sectors: (1) investment
grade debt securities of U.S. issuers (including the U.S. Government, its
agencies and U.S. companies), (2) debt securities of foreign issuers (including
foreign governments and companies), including up to 30% of its total assets in
issuers located in emerging market countries, and (3) lower-rated high yield
securities of U.S. issuers, including convertible securities and preferred
stock. Under normal market conditions, the Fund will invest between 25% and 40%
of its total assets in each of these three sectors. The Fund may invest without
limitation, however, in securities issued by the U.S. Government, its agencies
or instrumentalities.

All or a substantial portion of the Fund's investments in U.S. Government
securities may consist of mortgage-related securities. See "Certain Investment
Practices--Mortgage Related Securities."

<PAGE>

primarily be traded in international over-the-counter markets rather than in
the local markets. While the Fund intends to invest principally in U.S.
dollar-denominated securities, certain of the Fund's foreign securities may be
denominated and traded in foreign currencies.

----------------------------------

There is no restriction on the maturity of the securities held by the Fund or
any individual portfolio security. The Fund's advisers may adjust the average
maturity of the Fund's portfolio based upon their assessment of the relative
yields available on securities of different maturities and their expectations
of future changes in interest rates.

The Fund may borrow, in an amount up to 10% of the value of

<PAGE>

the Fund's total assets, for investment purposes, which involves certain risk
considerations. See "Certain Investment Practices."

The Fund is classified as a "diversified" fund under federal securities law.

This Fund may NOT be appropriate for investors who are unable to tolerate
frequent up and down price changes, are investing for shorter-term goals or who
are in need of high growth potential.

CERTAIN INVESTMENT PRACTICES
The Fund may also engage in the following investment practices, when consistent
with the Fund's overall objective and policies. These practices, and certain
associated risks, are more fully described in the SAI. Except as otherwise
indicated below, the Fund is not subject to any percentage limits with respect
to the practices described below.

BRADY BONDS AND EMERGING MARKET GOVERNMENT OBLIGATIONS. The Fund's debt
securities may include certain foreign governmental debt obligations commonly
referred to as Brady Bonds. Brady Bonds are debt securities, generally
denominated in U.S. dollars, issued under the framework of the "Brady Plan," a
program for debtor nations to restructure their outstanding external commercial
bank indebtedness. Brady Bonds do not have as long a payment history as other
types of sovereign debt obligations. In addition to Brady Bonds, the Fund may
invest in other emerging market governmental obligations which may be issued as
a result of other

<PAGE>

debt restructuring agreements. A substantial portion of the Brady Bonds and
other emerging market obligations in which the Fund may invest are likely to be
acquired at a significant discount and may exhibit volatility.

ZERO COUPON SECURITIES, PAYMENT-IN-KIND OBLIGATIONS AND STRIPPED
OBLIGATIONS. The Fund may invest in zero coupon securities issued by
governmental and private issuers. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. The Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying
obligation. The value of these instruments tends to fluctuate more in response
to changes in interest rates than the value of ordinary interest-paying debt
securities with similar maturities. The risk is greater when the period to
maturity is longer. Additionally, current federal tax law requires the holder
of certain zero coupon obligation and payment-in-kind obligations to accrue
income with respect to these securities prior to the receipt of cash payments.
To maintain its qualification as a regulated investment company and avoid
liability for federal income and excise taxes, the Fund may be required to
distribute income with respect to these securities and may have to dispose of
such securities under disadvantageous circumstances in order to generate cash
to satisfy these distribution requirements.

FLOATING AND VARIABLE RATE SECURITIES; PARTICIPATION CERTIFICATES. The Fund
may invest in floating rate securities, whose interest rates adjust
automatically whenever a specified interest rate changes, and variable rate
securities, whose interest rates are periodically adjusted. Certain of these
instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Fund may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the floating or variable
rate nature of these investments, the Fund's yield may decline and it may
forego the opportunity for capital appreciation during periods when interest
rates

<PAGE>

decline; however, during periods when interest rates increase, the Fund's yield
may increase and it may have reduced risk of capital depreciation. Demand
features on certain floating or variable rate securities may obligate the Fund
to pay a "tender fee" to a third party. Demand features provided by foreign
banks involve certain risks associated with foreign investments.

MORTGAGE-RELATED SECURITIES. The Fund may invest in mortgage-related securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly, in effect "passing through" monthly payments made
by the individual borrowers on the residential mortgage loans which underlie the
securities. Early or late repayment of principal based on an expected repayment
schedule on mortgage pass-through securities held by the Fund (due to early or
late prepayments of principal on the underlying mortgage loans) may result in a
lower rate of return when the Fund reinvests such principal. In addition, as
with callable fixed-income securities generally, if the Fund purchased the
securities at a premium, sustained early repayment would limit the value of the
premium. When interest rates rise or decline the value of a mortgage-related
security generally will decline or increase, but not as much as other
fixed-income, fixed-maturity securities which have no prepayment or call
features.

Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the
U.S. Government, or by agencies or instrumentalities of the U.S. Government
(which guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Certain mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees, while other such securities may be backed only by
the underlying mortgage collateral.

The Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs"), which are structured products

9
<PAGE>

backed by underlying pools of mortgage pass-through securities. Similar to a
bond, interest and prepaid principal on a CMO are paid, in most cases, monthly.
CMOs may be collateralized by whole residential or commercial mortgage loans but
are more typically collateralized by portfolios of residential mortgage
pass-through securities guaranteed by the U.S. Government or its agencies or
instrumentalities. CMOs are structured into multiple classes, with each class
having a different expected average life and/or stated maturity. Monthly
payments of principal, including prepayments, are allocated to different classes
in accordance with the terms of the instruments, and changes in prepayment rates
or assumptions may significantly affect the expected average life and value of a
particular class.

ASSET-BACKED SECURITIES. The Fund may invest in asset-backed securities, which
represent a participation in, or are secured by and payable from, a stream of
payments generated by particular assets, most often a pool of assets similar to
one another, such as motor vehicle receivables or credit card receivables, home
equity loans, manufactured housing loans or bank loan obligations.

<PAGE>

the Fund if the other party should default on its obligation and the Fund is
delayed or prevented from recovering the collateral or completing the
transaction.

<PAGE>

CONVERTIBLE SECURITIES. The Fund may invest in convertible securities, which are
securities generally offering fixed interest or dividend yields which may be
converted either at a stated price or stated rate for common or preferred stock.
Although to a lesser extent than with fixed-income securities generally, the
market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Because of the conversion
feature, the market value of convertible securities also tends to vary with
fluctuations in the market value of the underlying common or preferred stock.

<PAGE>

have speculative characteristics, involve leverage and result in losses that
may exceed the original investment of the Fund in those transactions. There can
be no assurance that a liquid market will exist at a time when the Fund seeks
to close out a derivatives position. Activities of large traders in the futures
and securities markets involving arbitrage, "program trading," and other
investment strategies may cause price distortions in derivatives markets. In
certain instances, particularly those involving over-the-counter transactions
or forward contracts, there is a greater potential that a counterparty or
broker may default. In the event of a default, the Fund may experience a loss.
For additional information concerning derivatives, related instruments and the
associated risks, see the SAI.

LIMITING INVESTMENT RISKS

RISK FACTORS

The Fund does not constitute a balanced or complete investment program, and the
net asset value of its shares will fluctuate based on the value of securities
held by the Fund. The Fund is subject to the general risks and considerations
associated with the types of investments the Fund may make, as described above,
as well as the risks discussed herein.

<PAGE>

depend on the quality of its investments.

<PAGE>

For a discussion of certain other risks associated with the Fund's additional
investment activities, see "Certain Investment Practices" above.

MANAGEMENT

<PAGE>

Corporation, a bank holding company. Chase and its predecessors have over 100
years of money management experience.

PORTFOLIO MANAGERS. Susan Huang, a Managing Director and the Head of U.S. Fixed
Income Management at Chase, and Craig Blessing, Head of Emerging Market Fixed
Income at Chase, have been responsible for the management of

<PAGE>

the Fund since its inception. Ms. Huang is also responsible for developing the
asset allocation and risk management strategies for fixed income portfolios.
Prior to joining Chase in June of 1995, Ms. Huang was Director of the Insurance
Asset Management Group at Hyperion Capital Management Inc. Prior to joining
Hyperion, Ms. Huang was a senior portfolio manager with CS First Boston. Prior
to joining CS First Boston in 1992, Ms. Huang spent 14 years at the Equitable,
where she was head of the U.S. fixed income management group at Equitable
Capital Management. Ms. Huang is also involved in the management of Bond Fund,
Short-Term Bond Fund, U.S. Government Securities Fund and U.S. Treasury Income
Fund. Mr. Blessing joined Chase in 1996. Prior to joining Chase, from 1992 to
1996, Mr. Blessing was Director of the Fund Management Group and Portfolio
Manager for emerging market funds at Serfin Securities, Inc. From 1985 to 1992,
Mr. Blessing was a Vice President at Bank of America where he was a founding
member and co-head of the Emerging Market Debt Sales & Trading Group.

HOW TO PURCHASE, REDEEM AND EXCHANGE SHARES

HOW TO PURCHASE SHARES

Institutional Shares may be purchased through selected financial service firms,
such as broker-dealer firms and banks ("Dealers") who have entered into a
selected dealer agreement with the Fund's distributor on each business day
during which the New York Stock Exchange is open for trading ("Fund Business
Day"). Qualified investors are defined as institutions, trusts, partnerships,
corporations, qualified and other retirement plans and fiduciary accounts
opened by a bank, trust company or thrift institution which exercises
investment authority over such accounts. The Fund reserves the right to reject
any purchase order or cease offering shares for purchase at any time.

Institutional Shares are purchased at their public offering price, which is
their next determined net asset value. Orders received by Dealers in proper
form prior to the New York Stock Exchange closing time are confirmed at that
day's net asset value, provided the order is received by the Chase Vista Funds
Service Center prior to its close of business. Dealers are responsible for
forwarding orders for the purchase of shares on a timely basis. Institutional
Shares will be maintained in book entry form and share certificates will not be
issued. Management reserves the right to refuse to sell shares of the Fund to
any institution.

Federal regulations require that each investor provide a certified Taxpayer

<PAGE>

Identification Number upon opening an account.

MINIMUM INVESTMENTS
The Fund has established a minimum initial investment amount of $1,000,000 for
the purchase of Institutional Shares. There is no minimum for subsequent
investments. Purchases of Institutional Shares offered by other non-money
market Chase Vista Funds may be aggregated with purchases of Institutional
Shares of the Fund to meet the $1,000,000 minimum initial investment amount
requirement. The minimum initial investment may be waived in the Fund's
discretion.

HOW TO REDEEM SHARES
You may redeem all or any portion of the shares in your account at any time at
the net asset value next determined after a redemption request in proper form
is furnished by you to your Dealer and transmitted to and received by the Chase
Vista Funds Service Center. A wire redemption may be requested by telephone to
the Chase Vista Funds Service Center. For telephone redemptions, call the Chase
Vista Funds Service Center at 1-800-622-4273.

In making redemption requests, the names of the registered shareholders on your
account and your account number must be supplied, along with any certificates
that represent shares you want to sell. The price you will receive is the next
net asset value calculated after the Fund receives your request in proper form.
In order to receive that day's net asset value, the Chase Vista Funds Service
Center must receive your request before the close of regular trading on the New
York Stock Exchange.

DELIVERY OF PROCEEDS. The Fund generally sends you payment for your shares by
wire in federal funds on the business day after your request is received in
proper form. Under unusual circumstances, the Fund may suspend redemptions, or
postpone payment for more than seven days, as permitted by federal securities
law.

TELEPHONE REDEMPTIONS. You may use Chase Vista's Telephone Redemption Privilege
to redeem shares from your account. Telephone redemption requests in excess of
$25,000 will only be made by wire or ACH transfer to a bank account on record
with the Fund. There is a $10.00 charge for each wire transaction. Unless an
investor indicates otherwise on the account application, the Fund will be
authorized to act upon redemption and transfer instructions received by
telephone from a shareholder, or any person claiming to act as his or her
representative, who can provide the Fund with his or her account registration
and address as it appears on the Fund's records.

<PAGE>

unauthorized request. For information, consult the Chase Vista Funds Service
Center.

During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Chase Vista Funds Service Center by
telephone. In this event, you may wish to submit a written redemption request,
as described above, or contact your investment representative. The Telephone
Redemption Privilege is not available if you were issued certificates for
shares that remain outstanding. No redemption proceeds will be mailed to an
address which has been changed in the preceding 30 days. The Telephone
Redemption Privilege may be modified or terminated without notice.

SELLING SHARES THROUGH YOUR DEALER. Your dealer must receive your request
before the close of regular trading on the New York Stock Exchange to receive
that day's net asset value. Your Dealer will be responsible for furnishing all
necessary documentation to the Chase Vista Funds Service Center, and may charge
you for its services.

INVOLUNTARY REDEMPTION ACCOUNTS. The Fund may involuntarily redeem your shares
if at such time the aggregate net asset value of the shares in your account is
less than $1,000,000 due to redemptions. In the event of any such redemption,
you will receive at least 60 days notice prior to the redemption.

HOW TO EXCHANGE YOUR SHARES
You can exchange your shares for Institutional Shares of certain other Chase
Vista Funds at net asset value beginning 15 days after purchase. Not all Chase
Vista Funds offer Institutional Shares. The prospectus of the other Chase Vista
fund into which shares are being exchanged should be read carefully and
retained for future reference. For federal income tax purposes, an exchange is
the treated as a sale of shares and generally results in a capital gain or
loss.

EXCHANGING BY PHONE. A Telephone Exchange Privilege is currently available.
Call the Chase Vista Funds Service Center for procedures for telephone
transactions. Ask your investment representative or the Chase Vista Funds
Service Center for prospectuses of other Chase Vista Funds. Shares of certain
Chase Vista Funds are not available to residents of all states.

<PAGE>

Chase Vista Funds Service Center before requesting an exchange. See the SAI to
find out more about the exchange privilege.

HOW THE FUND
VALUES ITS SHARES

HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION

The Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for
it to be relieved of federal taxes on income and gains it distributes to
shareholders. The Fund intends to distribute substantially all of its ordinary
income and capital gain net income on a current basis. If the Fund does not
qualify as a regulated investment company for any taxable year or does not make
such

<PAGE>

distributions, the Fund will be subject to tax on all of its income and gains.

Early in each calendar year the Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.

OTHER INFORMATION
CONCERNING THE FUND

SHAREHOLDER
SERVICING AGENTS

The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Institutional Shares of the Fund. These services
include one or more of the following: assisting with purchase and redemption
transactions, maintaining shareholder accounts and records, furnishing customer
statements, transmitting shareholder reports and communications to customers
and other similar shareholder liaison services. For performing these services,
each shareholder servicing agent receives an annual fee of up to 0.25% of the
average daily net assets of Institutional Shares of the Fund held by investors
for whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.

<PAGE>

servicing agents may (although they are not required by the Trust to do so)
credit to the accounts of their customers from whom they are already receiving
other fees an amount not exceeding such other fees or the fees for their
services as shareholder servicing agents.

Chase and/or VFD may from time to time, at their own expense out of
compensation retained by them from the Fund or other sources available to them,
make additional payments to certain selected dealers or other shareholder
servicing agents for performing administrative services for their customers.
These services include maintaining account records, processing orders to
purchase, redeem and exchange Fund shares and responding to certain customer
inquiries. The amount of such compensation may be up to an additional 0.10%
annually of the average net assets of the Fund attributable to shares of the
Fund held by customers of such shareholder servicing agents. Such compensation
does not represent an additional expense to the Fund or its shareholders, since
it will be paid by Chase and/or VFD.

ADMINISTRATOR AND
SUB-ADMINISTRATOR

Chase acts as the Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets.

CUSTODIAN

EXPENSES
The Fund pays the expenses incurred in its operations, including its pro rata
share of expenses of the Trust. These expenses include investment advisory and
administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses for custody services,
including safekeeping of funds and securities and maintaining required books
and accounts; expenses of preparing and mailing reports to investors and to
government offices

<PAGE>

and commissions; expenses of meetings of investors; fees and expenses of
independent accountants, of legal counsel and of any transfer agent, registrar
or dividend disbursing agent of the Trust; insurance premiums; and expenses of
calculating the net asset value of, and the net income on, shares of the Fund.
Shareholder servicing and distribution fees are allocated to specific classes
of the Fund. In addition, the Fund may allocate transfer agency and certain
other expenses by class. Service providers to the Fund may, from time to time,
voluntarily waive all or a portion of any fees to which they are entitled.

ORGANIZATION AND
DESCRIPTION OF SHARES

The Fund issues multiple classes of shares. This Prospectus relates only to
Institutional Shares of the Fund. The Fund offers Class A, B, C and Class M
shares in addition to this class and may determine not to offer certain classes
of shares. Institutional Shares may be purchased only by qualified investors
that make an initial investment of $1,000,000 or more. "Qualified investors" are
defined as institutions, trusts, partnerships, corporations, qualified and other
retirement plans and fiduciary accounts opened by a bank, trust company or
thrift institution which exercises investment authority over such accounts. The
Fund offers other classes of shares in addition to this class and may determine
not to offer certain classes of shares. The categories of investors that are
eligible to purchase shares and minimum investment requirements may differ for
each class of Fund shares. In addition, other classes of Fund shares may be
subject to differences in sales charge arrangements, ongoing distribution and
service fee levels, and levels of certain other expenses, which will affect the
relative performance of the different classes. Investors may call 1-800-34-VISTA
to obtain additional information about other classes of shares of the Fund that
are offered. Any person entitled to receive compensation for selling or
servicing shares of the Fund may receive different levels of compensation with
respect to one class of shares over another.

The business and affairs of the Trust are managed under the general direction
and supervision of its Board of Trustees. The Trust is not required to hold
annual meetings of

<PAGE>

shareholders but will hold special meetings of shareholders of all series or
classes when in the judgment of the Trustees it is necessary or desirable to
submit matters for a shareholder vote. The Trustees will promptly call a
meeting of shareholders to remove a trustee(s) when requested to do so in
writing by record holders of not less than 10% of all outstanding shares of the
Trust.

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE

<PAGE>

or other transaction costs in converting such securities to cash. In addition,
a distribution in kind could result in a less diversified portfolio of
investments or adversely affect the liquidity of the Fund.

If the Fund invests all of its investable assets in a Portfolio, investors in
the Fund will be able to obtain information about whether investment in the
Portfolio might be available through other Funds by contacting the Fund at
1-800-622-4273. In the event a Fund- adopts a master/feeder structure and
invests all of its investable assets in a Portfolio, shareholders of the Fund
will be given at least 30 days' prior written notice.

PERFORMANCE
INFORMATION

<PAGE>

APPENDIX A

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.
BOND RATINGS

Caa: Bonds rated "Caa" are of poor standing and may be in default or there may
be present elements of danger with respect to principal or interest.

Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.

C: Bonds rated "C" can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

27
<PAGE>

DESCRIPTION OF STANDARD & POOR'S BOND RATINGS

AAA: "AAA" is the highest rating assigned to a debt obligation and indicates an
extremely strong capacity to pay principal and interest.

A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.

C, D: Bonds on which no interest is being paid are rated "C." Bonds rated "D"
are in default and payment of interest and/or repayment of principal is in
arrears.

<PAGE>

Chase Vista Funds
CHASE VISTA INTERNATIONAL EQUITY FUNDS
Latin American Equity Fund
Southeast Asian Fund
Japan Fund
European Fund
International Equity Fund
CHASE VISTA U.S. EQUITY FUNDS
Small Cap Opportunities Fund
Small Cap Equity Fund (closed to new investors)
The Growth Fund of Washington
Capital Growth Fund
Focus Fund
Growth and Income Fund
Large Cap Equity Fund
Balanced Fund
Equity Income Fund
CHASE VISTA FIXED INCOME FUNDS
Strategic Income Fund
Bond Fund
U.S. Government Securities Fund
U.S. Treasury Income Fund
Short-Term Bond Fund
CHASE VISTA TAX-FREE FUNDS(1)
New York Tax Free Income Fund
California Intermediate Tax Free Fund
Tax Free Income Fund
CHASE VISTA TAX-FREE MONEY MARKET FUNDS(1),(2)
New York Tax Free Money Market Fund
Connecticut Daily Tax Free Income Fund Select Shares(3)
New Jersey Daily Municipal Income Fund Select Shares(3)
Tax Free Money Market Fund
California Tax Free Money Market Fund
CHASE VISTA TAXABLE MONEY MARKET FUNDS(2)
Cash Management Money Market Fund
Federal Money Market Fund
100% U.S. Treasury Securities Money Market Fund
U.S. Government Money Market Fund
Treasury Plus Money Market Fund

(1) Some income may be subject to certain state and local taxes. A portion of
the income may be subject to the federal alternative minimum tax for some
investors.

<PAGE>

(This Page Intentionally Left Blank)

<PAGE>

(This Page Intentionally Left Blank)

<PAGE>

CHASE VISTA FUNDS SERVICE CENTER
P.O. Box 419392
Kansas City, MO 64141-6392

TRANSFER AGENT AND DIVIDEND PAYING AGENT
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105

LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
1177 Avenue of the Americas
New York, NY 10036

[CHASE VISTA FUNDS LOGO]
P.O. Box 419392
Kansas City, MO 64141-6392

<PAGE>

CHASE VISTA FUNDS

PROSPECTUS

CHASE VISTA SHORT-TERM BOND FUND: INCOME
CHASE VISTA U.S. TREASURY INCOME FUND: INCOME
CHASE VISTA U.S. GOVERNMENT SECURITIES FUND: INCOME AND CAPITAL
APPRECIATION
CHASE VISTA BOND FUND: INCOME
CHASE VISTA STRATEGIC INCOME FUND: INCOME

CHASE VISTA BALANCED FUND: CAPITAL GROWTH PLUS CURRENT
INCOME
CHASE VISTA EQUITY INCOME FUND: CURRENT INCOME PLUS CAPITAL
GROWTH
CHASE VISTA GROWTH AND INCOME FUND: CAPITAL GROWTH PLUS
CURRENT INCOME
CHASE VISTA CAPITAL GROWTH FUND: CAPITAL GROWTH
- --------------------------------------------------------------------------------
CLASS M SHARES
- --------------------------------------------------------------------------------

October 30, 1998

This Prospectus explains concisely what you should know before investing in the
Short-Term Bond Fund, U.S. Treasury Income Fund, U.S. Government Securities
Fund, Bond Fund, Strategic Income Fund (the "Income Funds"), Balanced Fund,
Equity Income Fund, Growth and Income Fund or Capital Growth Fund (the "Equity
Funds") (each a "Fund" and together the "Funds"). Please read it carefully and
keep it for future reference. You can find more detailed information about the
Funds in their October 30, 1998 Statement of Additional Information, as amended
periodically (the "SAI"). For a free copy of the SAI, call the Chase Vista Funds
Service Center at 1-800-34-VISTA. The SAI has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated into this Prospectus
by reference. In addition, the Commission maintains a Web site
(http://www.sec.gov) that contains the SAI, the Funds' Annual Report to
Shareholders and other information regarding the Funds which has been
electronically filed with the Commission.

The Strategic Income Fund invests principally in a diversified portfolio of U.S.
dollar-denominated securities in the following three market sectors: (1)
investment grade debt securities of U.S. issuers, (2) debt securities of foreign
issuers and (3) lower-rated high yield securities of U.S. issuers.

The Strategic Income Fund may invest in non-investment grade securities of U.S.
and foreign issuers, commonly referred to as "junk bonds," which are considered
to be speculative and entail greater risks, including default risk, than those
found in higher rated securities. Investors should carefully consider the risks
before investing. See "Investment Policies-Fund Objective and Investment
Approach-Strategic Income Fund," "-Risk Factors" and
"-Other Investment Practices."

The Chase Vista Growth and Income Fund and the Chase Vista Capital Growth Fund,
unlike many other investment companies which manage their own portfolios of
securities, each seeks its investment objective by investing all of its
investable assets in Growth and Income Portfolio and Capital Growth Portfolio,
respectively. The Growth and Income Portfolio and Capital Growth Portfolio (each
a "Portfolio") are two open-end management investment companies with investment
objectives identical to those of the Chase Vista Growth and Income Fund and the
Chase Vista Capital Growth Fund, respectively. Investors should carefully
consider this

<PAGE>

investment approach. For additional information regarding this investment
structure, see "Unique Characteristics of Master/Feeder Fund Structure" on page
30.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
Investments in the Funds are not bank deposits or obligations of, or guaranteed
or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not
insured by the FDIC, the Federal Reserve Board or any other government agency.
Investments in mutual funds involve risk, including the possible loss of the
principal amount invested.
- --------------------------------------------------------------------------------

<PAGE>

EXPENSE SUMMARY

Expenses are one of several factors to consider when investing. The following
table summarizes your costs from investing in each of the Funds based on
estimated expenses for the current fiscal year. The examples show the cumulative
expenses attributable to a hypothetical $1,000 investment over specified
periods.

<TABLE>
<CAPTION>
Short- U.S. U.S. Growth
Term Treasury Government Strategic Equity and Capital
Bond Income Securities Bond Income Balanced Income Income Growth
Fund Fund Fund Fund Fund Fund Fund Fund Fund
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed on Purchases (as a
percentage of offering
price).................... 1.50% 3.25% 3.25% 3.25% 3.25% 3.50% 3.50% 3.50% 3.50%
Maximum Deferred Sales
Charge (as a percentage of
the lower of original
purchase price or
redemption proceeds)...... None None None None None None None None None
ANNUAL FUND
OPERATING EXPENSES
(as a percentage of average
net assets)
Investment Advisory Fee ...... .0% .10% .0% .0% .10% .50% .40% .40% .40%
12b-1 Fee**................... .35% .50% .50% .50% .50% .75% .75% .75% .75%
Shareholder Servicing Fee..... .25% .25% .25% .25% .25% .25% .25% .25% .25%
Other Expenses (after
estimated waivers and
reimbursements)*............ .65% .60% .70% .70% .80% .40% .40% .40% .40%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (after waivers of
fees and expense
reimbursements)*............ 1.25% 1.45% 1.45% 1.45% 1.65% 1.90% 1.80% 1.80% 1.80%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
EXAMPLES
<S> <C> <C> <C> <C>
Your investment of $1,000 would incur the
following expenses, assuming 5% annual return:
Short-Term Bond Fund....................................... $28 $54 $ 83 $164
U.S. Treasury Income Fund.................................. 44 74 107 198
U.S. Government Securities Fund............................ 44 74 107 198
Bond Fund.................................................. 44 74 107 198
Strategic Income Fund...................................... 46 80 117 220
Balanced Fund.............................................. 54 93 134 249
Equity Income Fund......................................... 53 90 129 239
Growth and Income Fund..................................... 53 90 129 239
Capital Growth Fund........................................ 53 90 129 239
</TABLE>

* Reflects current fee waiver and expense reimbursement arrangements to
maintain Total Fund Operating Expenses at the levels indicated in the
table above. Absent such arrangements, Investment Advisory Fees would be
.25%, .30%, .30%, .30% and .50% for Class M shares of Short-Term Bond
Fund, U.S. Treasury Income Fund, U.S. Government Securities Fund, Bond
Fund and Strategic Income Fund, respectively and Total Fund Operating
Expenses would be 1.60%, 1.65%, 1.75%, 1.85% and 2.15% for Class M shares
of the Short-Term Bond Fund, U.S. Treasury Income Fund, U.S. Government
Securities Fund, Bond Fund and Strategic Income Fund, respectively.

** Long-term shareholders in mutual funds with 12b-1 fees, such as Class M
shareholders of the Funds, may pay more than the economic equivalent of
the maximum front-end sales charge permitted by rules of the National
Association of Securities Dealers, Inc.

<PAGE>

The table is provided to help you understand the expenses of investing in the
Funds and your share of the operating expenses that a Fund incurs. The examples
should not be considered representations of past or future expenses or returns;
actual expenses and returns may be greater or less than shown.

Charges or credits, not reflected in the expense table above, may be incurred
directly by customers of financial institutions in connection with investments
in the Funds. The Funds understand that Shareholder Servicing Agents may credit
to the accounts of their customers from whom they are already receiving other
fees amounts not exceeding such other fees or the fees received by the
Shareholder Servicing Agent from the Funds with respect to those accounts. See
"Other Information Concerning the Funds."

<PAGE>

FUND OBJECTIVES AND INVESTMENT APPROACH

SHORT-TERM BOND FUND

Fund Objectives. The Short-Term Bond Fund seeks a high level of current income,
consistent with preservation of capital.

Investment Approach. The Fund will invest at least 65% of its total assets in
bonds which have a maturity of three years or less, and the dollar weighted
average maturity of its portfolio will not exceed three years. The Fund normally
will invest substantially all of its assets in investment-grade fixed-income
securities of all types. The maturity of securities with put features will be
measured based on the next put date, and the maturity of mortgage- and
asset-backed securities will be measured based upon their weighted average
lives. Investment- grade fixed-income securities are securities rated in the
category Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or
higher by Standard & Poor's Corporation ("S&P") or the equivalent by another
national rating organization, and unrated securities determined by the Fund's
advisers to be of comparable quality. The Fund may invest a substantial portion
of its total assets in investment-grade fixed income securities of foreign
issuers, which may include developing-country issuers located in developing
countries.

Fixed-income securities in the Fund's portfolio may include, in any proportion,
bonds, notes, mortgage-backed securities, asset-backed securities, government
and government agency and instrumentality obligations, zero coupon securities,
convertible securities and money market instruments, as discussed below.

The Fund is classified as a "diversified" fund under federal securities law.

U.S. TREASURY INCOME FUND

Fund Objectives. The U.S. Treasury Income Fund seeks to provide shareholders
with monthly dividends and to protect the value of their investment.

Investment Approach. Under normal circumstances, the Fund will invest at least
65% of its total assets in direct obligations of the U.S. Treasury, obligations
issued or guaranteed by U.S. government agencies or instrumentalities if such
obligations are backed by the "full faith and credit" of the U.S. Treasury, and
repurchase obligations collateralized by the foregoing obligations.

There is no restriction on the maturity of the Fund's portfolio or any
individual portfolio security. The Fund's advisers may adjust the average
maturity of the Fund's portfolio based upon their assessment of the relative
yields available on securities of different maturities and their expectations of
future changes in interest rates.

The Fund is classified as a "non-diversified" fund under federal securities law.

U.S. GOVERNMENT SECURITIES FUND

Fund Objectives. The U.S. Government Securities Fund seeks as high a level of
total return as is consistent with the preservation of capital. Total return
consists of income and capital appreciation.
<PAGE>

Investment Approach. Under normal market conditions, the Fund will invest at
least 65% of its total assets in securities issued or guaranteed by the U.S.
Governmental, its agencies or instrumentalities, and related repurchase
agreements. There is no restriction on the maturity of the Fund's portfolio or
any individual portfolio security, and the Fund's advisers are free to take
advantage of the entire range of maturities of securities eligible for the
Fund's portfolio. The Fund may invest extensively in mortgage-backed securities
issued or guaranteed by certain agencies of the U.S. Government, as described
below.

The Fund may invest in U.S. Treasury obligations, which are bills, notes and
bonds backed by the full faith and credit of the U.S. Government as to payment
of principal and interest which generally differ only in their interest rates
and maturities. The Fund also may invest in securities issued or guaranteed by
U.S. Government agencies and instrumentalities, including obligations that are
supported by the full faith and credit of the U.S. Treasury, the limited
authority of the issuer or guarantor to borrow from the U.S. Treasury, or only
the credit of the issuer or guarantor. In the case of obligations not backed by
the full faith and credit of the U.S. Treasury, the agency issuing or
guaranteeing the obligation is principally responsible for ultimate repayment.

The Fund's advisers may adjust the average maturity of the Fund's portfolio
based upon their assessment of the relative yields available on securities of
different maturities and their expectations of future changes in interest rates.
Since the Fund invests extensively in U.S. Government securities, certain of
which have less credit risk than that associated with other securities, the
level of income achieved by the Fund may not be as high as that of other funds
which invest in lower quality securities.

The Fund may invest the portion of its assets not invested in U.S. Governmental
securities and related repurchase agreements in nonconvertible corporate debt
securities of domestic and foreign issuers, such as bonds and debentures. These
securities must be rated, at the time of investment, at least in the category A
or the equivalent by Moody's, or S&P, or Fitch Investor's Service Inc., or
another national rating organization, or, if unrated, of comparable quality as
determined by the Fund's advisers.

The Fund is classified as a "diversified" fund under federal securities law.

The Fund may invest any portion of its assets not invested as described above in
high quality money market instruments and repurchase agreements.

BOND FUND

Fund Objectives. The Bond Fund seeks as high a level of income as is consistent
with reasonable risk.

Investment Approach. The Fund invests primarily in a broad range of
investment-grade corporate bonds as well as other fixed-income securities. Under
normal market conditions, the Fund invests at least 65% of its total assets in
debt obligations rated in the category A or higher by Moody's or S&P, and
unrated securities determined by the Fund's advisers to be of comparable
quality. The Fund may invest a substantial portion of its total assets in debt
obligations of foreign issuers, which may include issuers located in developing
countries, so long as all such foreign debt obligations meet the quality
requirements listed above.

<PAGE>

The Fund is classified as a "diversified" fund under federal securities law.

STRATEGIC INCOME FUND

Fund Objectives. The Strategic Income Fund seeks a high level of current income.

Investment Approach. The Fund will invest principally in a diversified portfolio
of U.S. dollar-denominated securities in the following three market sectors: (1)
investment grade debt securities of U.S. issuers (including the U.S. Government,
its agencies and U.S. companies), (2) debt securities of foreign issuers
(including foreign governments and companies), including up to 30% of its total
assets in issuers located in emerging markets countries, and (3) lower-rated
high yield securities of U.S. issuers, including convertible securities and
preferred stock. Under normal market conditions, the Fund will invest between
25% and 40% of its total assets in each of these three sectors. The Fund may
invest without limitation, however, in securities issued by the U.S. Government,
its agencies or instrumentalities.

Investment Grade U.S. Debt Securities. The Fund may invest in U.S. Treasury
obligations, which are bills, notes and bonds backed by the full faith and
credit of the U.S. Government as to payments of principal and interest which
generally differ only as to their interest rates and maturities. The Fund may
also invest in securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, including obligations that are supported by the
full faith and credit of the U.S. Treasury, the limited authority of the issuer
or guarantor to borrow from the U.S. Treasury, or only the credit of the issuer
or guarantor. In the case of obligations not backed by the full faith and credit
of the U.S. Government, the agency issuing or guaranteeing the obligation is
principally responsible for ultimate repayment.

All or a substantial portion of the Fund's investments in U.S. Government
securities may consist of mortgage- related securities. See "Other Investment
Practices--Mortgage Related Securities."

The Fund may also invest in investment grade debt securities of U.S. companies.
Investment grade debt securities are securities rated in the category Baa or
higher by Moody's or BBB or higher by S&P, or the equivalent by another ratings
organization, or, if unrated, determined by the Fund's advisers to be of
comparable quality.

Foreign Debt Securities. The Fund may invest in debt securities of foreign
governments and companies. The Fund may invest up to 30% of its total assets in
debt securities of issuers located in emerging market countries. An "emerging
market country" is any country considered to be such by the World Bank at the
time of investment. These countries generally include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand and most
countries located in Western Europe. The Fund's advisers anticipate that the
majority of emerging market obligations in which the Fund will invest will
primarily be traded in international over-the-counter markets rather than in the
local markets. While the Fund intends to invest principally in U.S.
dollar-denominated securities, certain of the Fund's foreign securities may be
denominated and traded in foreign currencies.

The Fund will not invest more than 25% of its total assets in debt securities of
issuers located in a single country other than the United States. See "Other
Investment Practices" and "Risk Factors."

High Yield Securities. The Fund may invest in non-investment grade debt
securities or "high yield" fixed income securities, including high yield
convertible securities, commonly called "junk bonds," and preferred stocks. High
yield securities may be issued by U.S. companies as well as foreign companies or
governments. High yield securities will generally be rated in the category Ba or
lower by Moody's or BB or lower by S&P, or

<PAGE>

the equivalent by another ratings organization, or will be unrated securities
determined by the Fund's advisers to be of comparable quality. Certain of the
securities in which the Fund may invest may be rated as low as C by Moody's or D
by S&P or may be considered comparable to securities having such ratings. For a
description of Moody's and S&P ratings, see Appendix A. While generally
providing greater income and opportunity for gain, non-investment grade
securities may be subject to greater risks than securities which have higher
credit ratings, including a greater risk of default, and their yields will
fluctuate over time. In selecting high yield securities, the Fund's advisers
will consider factors including those relating to the creditworthiness of
issuers, the ratings and performance of the securities, the protections afforded
the securities and diversity of the Fund.

In making investment decisions for the Fund, its advisers consider many factors
in addition to current yield, including preservation of capital, maturity and
yield to maturity. They will adjust the Fund's investments in particular
securities or types of securities based upon their appraisal of changing
economic conditions and trends. Fundamental economic strength, earnings growth,
quality of management, industry growth, credit quality and interest rate trends
are some of the principal factors which may be considered by the Fund's advisers
in determining whether to increase or decrease the emphasis placed upon a
particular type of security, industry sector, country or currency. The Fund's
advisers may sell one security and purchase another security of comparable
quality and maturity to take advantage of what they believe to be short-term
differentials in market values or yield disparities.

The Fund may borrow, in an amount up to 10% of the value of the Fund's total
assets, for investment purposes, which involves certain risk considerations. See
"Other Investment Practices."

The Fund is classified as a "diversified" fund under federal securities law.

BALANCED FUND

Fund Objectives. The Balanced Fund seeks to maximize total return through
long-term capital growth and current income.

Investment Approach. The Fund will invest in equity and debt securities. Under
normal market conditions, 35% to 70% of the Fund's total assets will be invested
in equity securities. The majority of the Fund's equity investments will be in
well-known, established companies with market capitalizations of at least $200
million at the time of purchase by the Fund which are traded on established
securities markets or over-the-counter. The equity securities in which the Fund
may invest include common stocks, preferred stocks and warrants to purchase
common stocks.

Under normal market conditions, at least 25% of the Fund's total assets will be
invested in investment grade fixed-income securities. The fixed income
securities in which the Fund may invest include non-convertible corporate debt
securities and U.S. Government obligations. Corporate debt securities in which
the fund invests will be rated at the time of purchase in the category Baa or
higher by Moody's, or BBB or higher by S&P or the equivalent by another national
rating organization, or, if unrated, determined by the Fund's advisers to be of
comparable quality.

The Fund's advisers may alter the relative portion of the Fund's assets invested
in equity and fixed income securities depending on their judgment as to general
market and economic conditions and trends, yields and interest rates and changes
in monetary policies. The average maturity of the Fund's fixed income
investments will vary based upon the advisers' assessment of the relative yields
available on securities of different maturities.

<PAGE>

The Fund may invest any portion of its assets not invested as described above in
high quality money market instruments and repurchase agreements. The Fund is
classified as a "diversified" fund under federal securities law.

EQUITY INCOME FUND

Fund Objective. The Equity Income Fund seeks to obtain income. The Fund pursues
this objective primarily by investing in income-producing equity securities.

Investment Approach. Under normal market conditions, the Fund will invest at
least 65% of its total assets in income-producing equity securities. Capital
appreciation is a secondary consideration. The income-producing equity
securities in which the Fund invests include common stocks, preferred stocks and
convertible securities. The Fund attempts to achieve a yield which exceeds the
composite yield on the securities comprising the Standard and Poor's 500 Stock
Price Index.

It is anticipated that the major portion of the Fund's assets will be invested
in common stocks traded on a national securities exchange or on NASDAQ. A
significant portion of the Fund's assets may be invested in convertible bonds or
convertible preferred stock.

The Fund is classified as a "diversified" fund under federal securities law.

The Fund may invest any portion of its assets not invested as described above in
investment grade debt securities, high quality money market instruments and
repurchase agreements.

GROWTH AND INCOME FUND

Fund Objective. The Growth and Income Fund seeks to provide long-term capital
appreciation and dividend income.

Investment Approach. The Fund seeks to achieve its objective by investing all of
its investable assets in Growth and Income Portfolio. Growth and Income
Portfolio invests in common stocks of issuers with a broad range of market
capitalizations. Under normal market conditions, Growth and Income Portfolio
will invest at least 80% of its total assets in common stocks. In addition,
Growth and Income Portfolio may invest up to 20% of its total assets in
convertible securities.

Growth and Income Portfolio's advisers intend to utilize both quantitative and
fundamental research to identify undervalued stocks with a catalyst for positive
change. The advisers believe that the market risk involved in seeking capital
appreciation will be moderated to an extent by the anticipated dividend returns
on the stocks in which Growth and Income Portfolio invests.

Growth and Income Portfolio is classified as a "non-diversified" fund under
federal securities law.

Growth and Income Portfolio may invest any portion of its assets not invested as
described above in high quality money market instruments and repurchase
agreements.

FUND STRUCTURE. The Growth and Income Fund invests all of its investable assets
in Growth and Income Portfolio. Growth and Income Portfolio has an objective
identical to that of the Fund. The Fund may withdraw its investment from the
Portfolio at any time if the Trustees determine that it is in the best interests
of the Fund to do so. Upon any such withdrawal, the Trustees would consider what
action might be taken, including investing all of the Fund's investable assets
in another pooled investment entity having substantially the same objective and
policies as the Fund or retaining an investment adviser to manage the Fund's
assets directly.

<PAGE>

CAPITAL GROWTH FUND

Fund Objective. The Capital Growth Fund seeks long-term capital growth.

Investment Approach. The Fund seeks to achieve its objective by investing all of
its investable assets in Capital Growth Portfolio. Capital Growth Portfolio will
invest primarily in a broad portfolio of common stocks. Under normal market
conditions, Capital Growth Portfolio will invest at least 80% of its total
assets in common stocks. Capital Growth Portfolio will seek to invest in stocks
of companies with capitalizations of $750 million to $4.0 billion at the time of
purchase by the Portfolio. Current income, if any, is a consideration incidental
to Capital Growth Portfolio's objective of long-term capital growth. Capital
Growth Portfolio's advisers intend to utilize both quantitative and fundamental
research to identify undervalued stocks with a catalyst for positive change.

Capital Growth Portfolio is classified as a "non-diversified" fund under federal
securities law.

Capital Growth Portfolio may invest any portion of its assets not invested in
common stocks in high quality money market instruments and repurchase
agreements.

FUND STRUCTURE. The Capital Growth Fund invests all of its investable assets in
Capital Growth Portfolio. Capital Growth Portfolio has an objective identical to
that of the Fund. The Fund may withdraw its investment from the Portfolio at any
time if the Trustees determine that it is in the best interests of the Fund to
do so. Upon any such withdrawal, the Trustees would consider what action might
be taken, including investing all of the Fund's investable assets in another
pooled investment entity having substantially the same objective and policies as
the Fund or retaining an investment adviser to manage the Fund's assets
directly.

COMMON INVESTMENT POLICIES

For temporary defensive purposes, each Fund may invest without limitation in
high quality money market instruments and repurchase agreements to the extent
permitted by its investment policies. At times when Growth and Income
Portfolio's or Capital Growth Portfolio's advisers deem it advisable to limit
such Portfolio's exposure to the equity markets, the Portfolio may invest up to
20% of its total assets in U.S. Government obligations (exclusive of any
investments in money market instruments). To the extent that a Fund departs from
its investment policies during temporary defensive periods, its investment
objective may not be achieved.

Instead of investing directly in underlying securities, each Fund other than the
Growth and Income Portfolio and Capital Growth Portfolio is authorized to seek
to achieve its objective by investing all of its investable assets in another
investment company having substantially the same investment objective and
policies.

OTHER INVESTMENT PRACTICES

Each Fund (which term shall include Growth and Income Portfolio and Capital
Growth Portfolio) may also engage in the following investment practices, when
consistent with each Fund's overall objective and policies. These practices, and
certain associated risks, are more fully described in the SAI. Except as
otherwise indicated herein, each Fund is not subject to any percentage limits
with respect to the practices described below.

None of the Funds is intended to be a complete investment program, and there is
no assurance that any Fund will achieve its objective.

FOREIGN SECURITIES. The Short-Term Bond Fund, Bond Fund and Strategic Income
Fund may invest a substantial portion of their assets in foreign securities. The
U.S. Government Securities Fund may invest in foreign obligations issued or
guaranteed by foreign governments and supranational entities, which are
described below, and in non-convertible corporate debt securities of foreign
issuers. The Balanced Fund, Equity Income

<PAGE>

Fund, Growth and Income Portfolio and Capital Growth Portfolio each may invest
up to 20% of their total assets in foreign securities, including Depositary
Receipts, which are described below.

Since foreign securities are normally denominated and traded in foreign
currencies, the values of the Funds' foreign investments may be influenced by
currency exchange rates and exchange control regulations. There may be less
information publicly available about foreign issuers than U.S. issuers, and
foreign issuers are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the U.S. Foreign
securities may be less liquid and more volatile than comparable U.S. securities.
Foreign settlement procedures and trade regulations may involve certain expenses
and risks. One risk would be the delay in payment or delivery of securities or
in the recovery of the Fund's assets held abroad.

The securities markets of certain countries in which the Funds may invest are
smaller, less liquid and have more limited trading volume than those in the
United States. Such factors could cause the prices of foreign securities to be
erratic for reasons apart from factors that affect the quality of securities.

It is possible that nationalization or expropriation of assets, imposition of
currency exchange controls, taxation by withholding Fund assets, political or
financial instability and diplomatic developments could affect the value of a
Fund's investments in certain foreign countries.

Investments in securities of issuers based in developing countries entail
certain additional risks, including greater risks of expropriation, taxation by
withholding Fund assets, nationalization, and less social and economic
stability. The small size of market for securities of issuers based in such
countries and the low or non-existent volume of trading may result in a lack of
liquidity and in price volatility.

Certain national policies may impede a Fund's investment opportunities,
including restrictions on investing in issuers or industries deemed sensitive to
relevant national interests. Additionally, special tax considerations will apply
to foreign securities, such as the imposition of withholding taxes, and there
may be an absence of developed legal structure governing private investment and
private property.

Although it is not possible to predict the impact of the Euro implementation
plan on the Funds, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European markets. For
example, investors may begin to view those countries participating in the EMU as
a single entity, and the Funds' advisers may need to adapt their investment
strategies accordingly. The process of implementing the Euro also may adversely
affect financial markets worldwide and may result in changes in the relative
strength and value of the U.S. dollar or other major currencies, as well as
possible adverse tax consequences. The transition to the Euro is likely to have
a significant impact on fiscal and monetary policy in the participating
countries and may produce unpredictable effects on trade and commerce generally.
These resulting uncertainties could create increased volatility in financial
markets worldwide.

The Balanced Fund, Equity Income Fund, Growth and Income Portfolio and Capital
Growth Portfolio may invest their assets in securities of foreign issuers in the
form of American Depositary Receipts, European Depositary Receipts, Global
Depositary Receipts or other similar securities representing securities of
foreign issuers (collectively, "Depositary Receipts"). Depositary Receipts are
treated as interests in the underlying securities for purposes of each Fund's
investment policies. Unsponsored Depositary Receipts may not carry comparable
voting rights to sponsored Depositary Receipts, and a purchaser of unsponsored
Depositary Receipts may not receive as much information about the issuer of the
underlying securities as with a sponsored Depositary Receipt.

To the extent that a Fund invests a significant portion of its assets in
securities of issuers outside the United States, including the securities of
emerging market issuers, an investment in the Fund's shares involves a higher
degree of risk than an investment in a fund investing primarily in securities
issued by U.S. issuers.

SUPRANATIONAL AND ECU OBLIGATIONS. The U.S. Government Securities Fund,
Strategic Income Fund, Balanced Fund, Equity Income Fund and Growth and Income
Portfolio may invest in debt securities issued by supranational organizations,
which include organizations such as The World Bank, the European Community, the
European Coal and Steel Community and the Asian Development Bank. The Strategic
Income Fund, Balanced Fund, Equity Income Fund and Growth and Income Portfolio
may also invest in securities denominated in the ECU, which is a "basket"
consisting of specified amounts of the currencies of certain member states of
the European Community. These securities are typically issued by European
governments and supranational organizations.

U.S. GOVERNMENT OBLIGATIONS. U.S. Government obligations are obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.

<PAGE>

MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENTS. To the extent permitted by
its investment policies, each Fund may invest in cash or high-quality, short
term money market instruments. These may include U.S. Government securities,
commercial paper of domestic and foreign issuers and obligations of domestic and
foreign banks. Investments in foreign money market instruments may involve
certain risks associated with foreign investment.

REPURCHASE AGREEMENTS, SECURITIES LOANS AND FORWARD AND STANDBY COMMITMENTS.
Each Fund may enter into agreements to purchase and resell securities at an
agreed-upon price and time. Each Fund also has the ability to lend portfolio
securities in an amount equal to not more than 30% of its total assets to
generate additional income or to defray expenses. These transactions must be
fully collateralized at all times. Each Fund may purchase securities for
delivery at a future date, which may increase its overall investment exposure
and involves a risk of loss if the value of the securities declines prior to the
settlement date. Each Fund may enter into put transactions, including those
sometimes referred to as stand-by commitments, with respect to securities in its
portfolio. In these transactions, the Fund would acquire the right to sell a
security at an agreed upon price within a specified period prior to its maturity
date. A put transaction will increase the cost of the underlying security and
consequently reduce the available yield. Each of these transaction involves some
risk to the Fund if the other party should default on its obligation and the
Fund is delayed or prevented from recovering the collateral or completing the
transaction.

BORROWING AND REVERSE REPURCHASE AGREEMENTS.
Funds other than Strategic Income Fund. Each Fund other than Strategic Income
Fund may borrow money from banks for temporary or short-term purposes. However,
each Fund will not borrow money to buy additional securities, known as
"leveraging." Each Fund may also enter into repurchase agreements where it sells
and simultaneously commits to repurchase a portfolio security at an agreed-upon
price and time. Each Fund may use this practice to generate cash for shareholder
redemptions without selling securities during unfavorable market conditions.
Whenever any Fund enters into a reverse repurchase agreement, it will establish
a segregated account in which it will maintain liquid assets on a daily basis in
an amount at least equal to the repurchase price (including accrued interest).
Each Fund would be required to pay interest on amounts obtained through reverse
repurchase agreements, which are considered borrowings under federal securities
laws.

The Strategic Income Fund. The Strategic Income Fund may borrow money from banks
for temporary or short term purposes. The Strategic Income Fund may also borrow
money from banks to buy additional securities. The practice of borrowing money
for additional investment purposes, known as "leveraging," is a speculative
investment technique which may subject the Fund to greater risks and costs than
funds that do not borrow. If the securities held by the Strategic Income Fund
should increase or decline in value while borrowings are outstanding, the net
asset value of the Fund's outstanding shares will increase or decline in value
by proportionately more than the increase or decline in value suffered by the
Strategic Income Fund's securities. The interest the Fund must pay on borrowed
money will reduce the amount of any potential gains or increase any losses.
Under adverse market conditions, the Fund might have to sell portfolio
securities to meet interest or principal payments at a time when investment
considerations would not favor such sales. The extent, if any, to which the
Strategic Income Fund will borrow money and the amount it may borrow depends on
market conditions and interest rates. The Strategic Income Fund will engage in
leveraging techniques only when its advisers believe that leveraging and the
returns available to the Strategic Income Fund through leveraging will provide a
potentially higher return. The Strategic Income Fund may also enter into
repurchase agreements where it sells and simultaneously commits to repurchase a
portfolio security at an agreed-upon price and time. The Fund may use this
practice to generate cash for shareholder redemptions without selling securities
during unfavorable market conditions. When the Strategic Income Fund enters into
a reverse repurchase agreement, it may establish a segregated account in which
it will maintain liquid assets on a daily basis in an amount at least equal to
the repurchase price (including accrued interest). The Fund would be required to
pay interest on amounts obtained through reverse repurchase agreements, which
are considered borrowings under federal securities laws. The amount of money
borrowed by the Strategic Income Fund, for leverage, may not exceed 10% of the
value of its total assets (including the amount borrowed).

<PAGE>

The Strategic Income Fund may at times enter into reverse repurchase agreements
for leverage purposes. Reverse repurchase agreements may therefore increase the
Strategic Income Fund's overall investment exposure and may result in losses.
Reverse repurchase agreements will be considered borrowings for purposes of the
Strategic Income Fund's borrowing limitations unless the Strategic Income Fund
establishes a segregated account in which it maintains liquid assets on a daily
basis in an amount at least equal to the repurchase price (including accrued
interest).

ZERO COUPON SECURITIES, PAYMENT-IN-KIND OBLIGATIONS AND STRIPPED OBLIGATIONS.
The Short-Term Bond Fund, U.S. Government Securities Fund, Bond Fund, Strategic
Income Fund and Balanced Fund may invest in zero coupon securities issued by
governmental and private issuers. U.S. Treasury Income Fund may invest in zero
coupon U.S. Government securities. Zero coupon securities are debt securities
that do not pay regular interest payments, and instead are sold at substantial
discounts from their value at maturity. The Short-Term Bond Fund, U.S.
Government Securities Fund, Bond Fund, Strategic Income Fund and Balanced Fund
may invest in Payment-in-Kind obligations. Payment-in-kind obligations are
obligations on which the interest is payable in additional securities rather
than cash. Current federal tax law requires the holder of certain zero coupon
obligation and payment-in-kind obligations to accrue income with respect to
these securities prior to the receipt of cash payments.

The Short-Term Bond Fund, U.S. Government Securities Fund, Bond Fund, Strategic
Income Fund and Balanced Fund may also invest in stripped obligations, which are
separately traded principal and interest components of an underlying obligation.
The Equity Income Fund, Growth and Income Portfolio and Capital Growth Portfolio
may invest up to 20% of their total assets and U.S. Treasury Income Fund may
invest without limitation in stripped obligations where the underlying
obligations are backed by the full faith and credit of the U.S. Government,
including instruments known as "STRIPS". The value of stripped obligations tends
to fluctuate more in response to changes in interest rates than the value of
ordinary interest-paying debt securities with similar maturities. The risk is
greater when the period to maturity is longer.

To maintain its qualification as a regulated investment company and avoid
liability for federal income and excise taxes, a Fund may be required to
distribute income with respect to these securities and may have to dispose of
such securities under disadvantageous circumstances in order to generate cash to
satisfy these distribution requirements.

FLOATING AND VARIABLE RATE SECURITIES; PARTICIPATION CERTIFICATES. The Short-
Term Bond Fund, U.S. Treasury Income Fund, U.S. Government Securities Fund, Bond
Fund and Strategic Income Fund and may invest in floating rate securities, whose
interest rates adjust automatically whenever a specified interest rate changes,
and variable rate securities, whose interest rates are periodically adjusted.
Certain of these instruments permit the holder to demand payment of principal
and accrued interest upon a specified number of days' notice from either the
issuer or a third party. The Short-Term Bond Fund, U.S. Government Securities
Fund, Bond Fund and Strategic Income Fund may invest in participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro-rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the floating or variable
rate nature of floating and variable rate securities and participation
certificates the yield of a Fund may decline and the Fund may forego the
opportunity for capital appreciation during periods when interest rates decline;
however, during periods when interest rates increase, a Fund's yield may
increase and it may have reduced risk of capital depreciation. Demand features
on certain floating or variable rate securities may obligate a Fund to pay a
"tender fee" to a third party. Demand features provided by foreign banks involve
certain risks associated with foreign investments.

INVERSE FLOATERS AND INTEREST RATE CAPS. The Short-Term Bond Fund, U.S.
Government Securities Fund, Bond Fund, Strategic Income Fund and Balanced Fund
may invest in inverse floaters and in securities with interest rate caps.
Inverse floaters are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an index.
The market value of an inverse floater will vary inversely with changes in
market interest rates, and will be significantly more volatile in response to
interest

<PAGE>

rates changes than that of a fixed-rate obligation. Interest rate caps are
financial instruments under which payments occur if an interest rate index
exceeds a certain predetermined interest rate level, known as the cap rate,
which is tied to a specific index. These financial products will be more
volatile in price than securities which do not include such a structure.

MORTGAGE-RELATED SECURITIES. The Short-Term Bond Fund, Bond Fund, Strategic
Income Fund and Balanced Fund may invest in mortgage-related securities. The
U.S. Government Securities Fund may invest in mortgage-related securities issued
or guaranteed by certain agencies of the U.S. Government. The U.S. Treasury
Income Fund may invest in mortgage-related U.S. Government Securities if such
obligations are backed by the "full faith and credit" of the U.S. Government.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly, in effect "passing through" monthly payments made
by the individual borrowers on the residential mortgage loans which underlie the
securities. Early or late repayment of principal based on an expected repayment
schedule on mortgage pass-through securities held by a Fund (due to early or
late prepayments of principal on the underlying mortgage loans) may result in a
lower rate of return when that Fund reinvests such principal. In addition, as
with callable fixed-income securities generally, if a Fund purchased the
securities at a premium, sustained early repayment would limit the value of the
premium. When interest rates rise or decline the value of a mortgage-related
security generally will decline or increase, but not as much as other
fixed-income, fixed-maturity securities which have no prepayment or call
features.

Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the U.S.
Government, or by agencies or instrumentalities of the U.S. Government (which
guarantees are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Certain mortgage pass-through
securities created by nongovernmental issuers may be supported by various forms
of insurance or guarantees, while other such securities may be backed only by
the underlying mortgage collateral. Payment of principal and interest on the
securities (but not the market value of the securities themselves) in which the
U.S. Treasury Income Fund invests are guaranteed by the U.S.
Government.

The Short-Term Bond Fund, U.S. Government Securities Fund, Bond Fund, Strategic
Income Fund and Balanced Fund may also invest in investment grade Collateralized
Mortgage Obligations ("CMOs"), which are structured products backed by
underlying pools of mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs
may be collateralized by whole residential or commercial mortgage loans but are
more typically collateralized by portfolios of residential mortgage pass-through
securities guaranteed by the U.S. Government or its agencies or
instrumentalities. CMOs are structured into multiple classes, with each class
having a different expected average life and/or stated maturity. Monthly
payments of principal, including prepayments, are allocated to different classes
in accordance with the terms of the instruments, and changes in prepayment rates
or assumptions may significantly affect the expected average life and value of a
particular class.

The Short-Term Bond Fund, U.S. Government Securities Fund, Bond Fund, Strategic
Income Fund and Balanced Fund and may invest in principal-only or interest-only
stripped mortgage-backed securities. Stripped mortgage-backed securities have
greater volatility than other types of mortgage-related securities. Stripped
mortgage-backed securities which are purchased at a substantial premium or
discount generally are extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on such securities' yield
to maturity. In addition, stripped mortgage securities may be illiquid.

The Funds expect that governmental, government-related or private entities may
create other mortgage-related securities in addition to those described above.
As new types of mortgage-related securities are developed and offered to
investors, the Short-Term Bond Fund, U.S. Government Securities Fund, Bond Fund,
Strategic Income Fund and Balanced Fund will consider making investments in such
securities.

<PAGE>

DOLLAR ROLLS. The Short-Term Bond Fund, U.S. Government Securities Fund, Bond
Fund, Strategic Income Fund, and Balanced Fund may enter into mortgage "dollar
rolls" in which a Fund sells mortgage-backed securities for delivery in the
current month and simultaneously contracts to repurchase substantially similar
(same type, coupon and maturity) securities on a specified future date. These
transactions involve some risk to a Fund if the other party should default on
its obligation and the Fund is delayed or prevented from completing the
transaction.

The Strategic Income Fund's dollar roll transactions may also involve leverage,
increase the Fund's overall investment exposure and result in losses. Dollar
rolls will be considered borrowings for purposes of the Strategic Income Fund's
borrowing limitations unless the Fund establishes a segregated account in which
it maintains liquid assets on a daily basis in an amount at least equal in value
to its obligations in respect of such dollar rolls.

ASSET-BACKED SECURITIES. The Short-Term Bond Fund, U.S. Government Securities
Fund, Bond Fund, Strategic Income Fund and Balanced Fund may invest in
asset-backed securities, which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool of assets similar to one another, such as motor vehicle receivables
or credit card receivables, home equity loans, manufactured housing loans or
bank loan obligations.

BRADY BONDS AND EMERGING MARKET GOVERNMENT OBLIGATIONS. The Strategic Income
Fund's debt securities may include certain foreign governmental debt obligations
commonly referred to as Brady Bonds. Brady Bonds are debt securities, generally
denominated in U.S. dollars, issued under the framework of the "Brady Plan," a
program for debtor nations to restructure their outstanding external commercial
bank indebtedness. Brady Bonds do not have as long a payment history as other
types of sovereign debt obligations. In addition to Brady Bonds, the Strategic
Income Fund may invest in other emerging market governmental obligations which
may be issued as a result of other debt restructuring agreements. A substantial
portion of the Brady Bonds and other emerging market obligations in which the
Strategic Income Fund may invest are likely to be acquired at a significant
discount and may exhibit volatility.

LOAN PARTICIPATIONS. The Strategic Income Fund may invest in participations in
fixed and floating rate loans arranged through private negotiations between a
borrower and one or more financial institutions. When investing in a
participation, the Strategic Income Fund will typically have the right to
receive payments only from the lender, and not from the borrower itself, to the
extent the lender receives payments from the borrower. Accordingly, the
Strategic Income Fund may be subject to the credit risk of both the borrower and
the lender. Loan participations may be illiquid.

COLLATERALIZED BOND OBLIGATIONS. The Strategic Income Fund may invest in
collateralized bond obligations ("CBOs"), which are structured products backed
by a diversified pool of higher yield, public or private fixed income
securities. The pool of high yield securities is typically separated into
tranches representing different degrees of credit quality. The top tranche of
CBOs which represent their highest credit quality, have the greatest
collateralization and pay the lowest interest rate. Lower CBO tranches represent
lower degrees of credit quality and pay higher interest rates to compensate for
the attendant risks. The bottom tranche specifically receives the residual
interest payments (i.e. money that is left over after the higher tiers have been
paid) rather than a fixed interest rate. The return on the bottom tranche of
CBOs is especially sensitive to the rate of defaults in the collateral pool.

OTHER INVESTMENT COMPANIES. Each Fund may invest all of its investable assets in
another investment company having substantially the same investment objectives
and policies. Capital Growth Fund and Growth and Income Fund invest all of their
assets in Capital Growth Portfolio and Growth and Income Portfolio,
respectively. Apart from this policy, each Fund may invest up to 10% of its
total assets in shares of other investment companies when consistent with its
investment objective and policies, subject to applicable regulatory limitations.
Additional fees will be charged by other investment companies.

<PAGE>

PREFERRED STOCK. Preferred Stocks are securities that represent an ownership
interest in a corporation and that give the owner a prior claim over common
stock on the corporation's earnings or assets.

CONVERTIBLE SECURITIES. The Strategic Income Fund, Balanced Fund and Equity
Income Fund may invest in convertible securities. Growth and Income Portfolio
and Capital Growth Portfolio may invest up to 20% of their net assets in
convertible securities. Convertible securities are securities generally offering
fixed interest or dividend yields which may be converted either at a stated
price or stated rate for common or preferred stock. Although to a lesser extent
than with fixed-income securities generally, the market value of convertible
securities tends to decline as interest rates increase, and increase as interest
rates decline. Because of the conversion feature, the market value of
convertible securities also tends to vary with fluctuations in the market value
of the underlying common or preferred stock.

REAL ESTATE INVESTMENT TRUSTS. Each Equity Fund may invest in shares of real
estate investment trusts ("REITs") which are pooled investment vehicles which
invest primarily in income-producing real estate ("equity trusts") or real
estate related loans or interests ("mortgage trusts"). The value of equity
trusts will depend upon the value of the underlying properties, and the value of
mortgage trusts will be sensitive to the value of the underlying loans or
interests. The value of REITS may decline when interest rates rise.

DERIVATIVES AND RELATED INSTRUMENTS. Each Fund may invest its assets in
derivative and related instruments to hedge various market risks or to increase
the Fund's income or gain. Some of these instruments will be subject to asset
segregation requirements to cover the Fund's obligations. Each Fund may (i)
purchase, write and exercise call and put options on securities and securities
indexes (including using options in combination with securities, other options
or derivative instruments); (ii) enter into swaps, futures contracts and options
on futures contracts; (iii) employ forward currency contracts; and (iv) purchase
and sell structured products, which are instruments designed to restructure or
reflect the characteristics of certain other investments. The Short-Term Bond
Fund, U.S. Treasury Income Fund, U.S. Government Securities Fund, Bond Fund and
Strategic Income Fund may also purchase and sell mortgage-backed and
asset-backed securities. The Short-Term Bond Fund, U.S. Treasury Income Fund,
U.S. Government Securities Fund, Bond Fund, Strategic Income Fund and Balanced
Fund may employ forward interest rate contracts.

There are a number of risks associated with the use of derivatives and related
instruments and no assurance can be given that any strategy will succeed. The
value of certain derivatives or related instruments in which a Fund invests may
be particularly sensitive to changes in prevailing economic conditions and
market value. The ability of the Fund to successfully utilize these instruments
may depend in part upon the ability of its advisers to forecast these factors
correctly. Inaccurate forecasts could expose the Fund to a risk of loss. There
can be no guarantee that there will be a correlation between price movements in
a hedging instrument and in the portfolio assets being hedged. A Fund is not
required to use any hedging strategies. Hedging strategies, while reducing risk
of loss, can also reduce the opportunity for gain. Derivatives transactions used
for purposes other than hedging may have speculative characteristics, involve
leverage and result in losses that may exceed the original investment of the
Fund in those transactions. There can be no assurance that a liquid market will
exist at a time when a Fund seeks to close out a derivatives position.
Activities of large traders in the futures and securities markets involving
arbitrage, "program trading," and other investment strategies may cause price
distortions in derivatives markets.

In certain instances, particularly those involving over-the-counter transactions
or forward contracts, there is a greater potential that a counterparty or broker
may default. In the event of a default, the Fund may experience a loss. For
additional information concerning derivatives, related instruments and the
associated risks, see the SAI.

STRUCTURED PRODUCTS. Structured products include interests in entities organized
solely for the purpose of restructuring the investment characteristics of
certain other investments. These investments are purchased by the entities,
which then issue securities (the structured products) backed by, or representing
interests in, the underlying investments. The cash flow on the underlying
investments may be apportioned among the newly issued structured products to
create securities with different investment characteristics such as varying
maturities,

<PAGE>

payment priorities or interest rate provisions, and the extent of the payments
made with respect to structured investments depends on the amount of the cash
flow on the underlying investments.

Indexed instruments are linked to the performance of certain securities,
indices, interest rates or currency exchange rates. The terms of such
instruments may provide that their principal amounts or just their coupon
interest rates are adjusted upwards or downwards at maturity or on established
coupon payment dates to reflect movements in various measures of underlying
market or security while the obligation is outstanding.

Structured products are subject to the risks associated with the underlying
market or security, and may be subject to greater volatility than direct
investments in the underlying market or security. Structured products may entail
the risk of loss of principal and/or interest payments as a result of movements
in the underlying market or security.

PORTFOLIO TURNOVER. The frequency of each Fund's buy and sell transactions will
vary from year to year. Each Fund's investment policies may lead to frequent
changes in investments, particularly in periods of rapidly changing market
conditions. High portfolio turnover rates would generally result in higher
transaction costs, including dealer mark-ups and, in the case of Balanced Fund,
Equity Income Fund, Growth and Income Portfolio and Capital Growth Portfolio,
brokerage commissions and would make it more difficult to qualify as a
registered investment company under federal tax law.

LIMITING INVESTMENT RISKS. Specific investment restrictions help each Fund limit
investment risks for its shareholders. These restrictions (a) prohibit each Fund
from investing more than 15% of its net assets in illiquid securities (which
include securities restricted as to resale unless they are determined to be
readily marketable in accordance with procedures established by the Board of
Trustees), and (b) prohibit each Fund except U.S. Treasury Income Fund from
investing more than 25% of its total assets in any one industry. Investment
restrictions prohibit each Fund other than the U.S. Treasury Income Fund,
Strategic Income Fund, Growth and Income Portfolio and Capital Growth Portfolio
from, with respect to 75% of its total assets, holding more than 10% of the
voting securities of any issuer or investing more than 5% of its total assets in
the securities of any one issuer (other than U.S. Government obligations). A
complete description of these and other investment policies is included in the
SAI.

Except for restriction (b) above, investment policies designated as fundamental
in the SAI and the investment objective of each of the Short-Term Bond Fund,
U.S. Treasury Income Fund, U.S. Government Securities Fund and Balanced Fund,
each Fund's investment policies (including its investment objective(s)) are not
fundamental. Shareholder approval is not required to change any non-fundamental
investment policy. In the case of the Bond Fund, Strategic Income Fund, Equity
Income Fund, Growth and Income Fund and Capital Growth Fund, in the event of a
change in the Fund's investment objective, shareholders will be given at least
30 days' prior written notice.

RISK FACTORS

None of the Funds constitute a complete investment program, and the net asset
value of each Fund's shares will fluctuate based on the value of the securities
in the Fund's portfolio. Each Fund is subject to the general risks and
considerations associated with the types of investments it may make, as
described above, as well as the risks discussed herein.

To the extent it invests in fixed income securities and/or convertible
securities, the performance of each Fund may depend in part on interest rate
changes. As interest rates increase, the value of the fixed income securities or
convertible securities held by certain of the Funds tends to decrease. This
effect will be more pronounced with respect to investments in mortgaged-related
securities and in certain types of debt securities, the value of which are more
sensitive to interest rate changes. For certain Funds, there is no restriction
on the maturity of the portfolio or any individual portfolio security. To the
extent any Fund invests in securities with longer maturities,

<PAGE>

the volatility of the Fund in response to changes in interest rates can be
expected to be greater than if the Fund had invested in comparable securities
with shorter maturities.

To the extent it invests in fixed income securities and/or convertible
securities, the performance of each Fund will also depend on the quality of its
investments. While securities issued or guaranteed by the U.S. Government
generally are of high quality, government securities that are not backed by the
full faith and credit of the U.S. Treasury may be affected by changes in the
creditworthiness of the agency that issued them. Guarantees of principal and
interest on obligations that may be purchased by a Fund are not guarantees of
the market value of such obligations, nor do they extend to the value of shares
of the Fund. Fixed income securities and non-U.S. Government securities in which
certain Funds may invest, while of investment-grade quality, and may be of
lesser credit quality than U.S. Government securities. Securities rated in the
category Baa by Moody's or BBB by S&P lack certain investment characteristics
and may have speculative characteristics.

The market value of convertible securities, which may be held by certain Funds,
tends to vary with fluctuations in the market value of the underlying common or
preferred stock.

The U.S. Treasury Income Fund, Growth and Income Portfolio and Capital Growth
Portfolio are "non-diversified." As a result the value of each such Fund's
shares is more susceptible to developments affecting issuers in which such Fund
invests.

To the extent a Fund invests in the securities of smaller companies, which often
trade less frequently and in lower volume, price changes may be more abrupt or
erratic than securities of larger, more established companies. Such companies
may have limited product lines, markets or financial resources, or may depend on
a limited management group.

Strategic Income Fund. The secondary markets for certain of the securities in
which Strategic Income Fund may invest are not as liquid as the secondary
markets for investment grade U.S. corporate and government bonds. Strategic
Income Fund may have difficulty disposing of some of these securities due to a
lower number of investors in those markets. A less liquid secondary market may
make it difficult to obtain accurate market quotations when valuing the Fund's
assets, and these quotations may not be the actual prices available for a
purchase or sale.

The Strategic Income Fund may invest in high yield securities. High yield
securities are generally considered to be speculative with respect to the
capacity of the issuer to timely repay principal and pay interest or dividends
in accordance with the terms of the obligation, may have more credit risk than
higher rated securities. While such securities will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposure to adverse conditions.

The values of high yield securities often reflect individual corporate
developments and are more sensitive to economic changes than are higher rated
securities. In some cases, investors in high yield securities have a lower
degree of protection with respect to principal and interest or dividend payments
than do investors in higher rated securities.

High yield securities may be used to cover a situation where the issuer has
filed a bankruptcy petition but debt service payments are continued or where the
issuer is in default. An economic downturn, a substantial period of rising
interest rates or a recession could also disrupt the market for lower-rated
securities and adversely affect the value of outstanding securities, the
Strategic Income Fund's net asset value and the ability of the issuers to repay
principal and interest. If the issuer of a security held by the Strategic Income
Fund defaulted, the Fund may not receive full interest or dividend and principal
payments due to it and could incur additional expenses if it chose to seek
recovery of its investment.

<PAGE>

These developments could adversely affect the value and liquidity of outstanding
high yield securities and Strategic Income Fund's net asset value.

The rating assigned by a rating agency evaluates the safety of a non-investment
grade security's principal and interest or dividend payments, but does not
address market value risk. Because such ratings may not always reflect current
conditions and events, in addition to using recognized rating agencies and other
sources, Strategic Income Fund's advisers perform their own analysis of the
issuers whose non-investment grade securities the Fund holds. Because of this,
Strategic Income Fund's performance may depend more on subjective credit
analysis than would mutual funds investing in higher-rated securities.

MANAGEMENT

THE FUNDS' ADVISERS

The Chase Manhattan Bank ("Chase") is each Fund's and each Portfolio's
investment adviser under an Investment Advisory Agreement and has overall
responsibility for investment decisions of the Funds and Portfolios, subject to
the oversight of the Board of Trustees. Chase is a wholly-owned subsidiary of
The Chase Manhattan Corporation, a bank holding company. Chase and its
predecessors have over 100 years of money management experience.

For its investment advisory services to the Funds and Portfolios, Chase is
entitled to receive an annual fee computed daily and paid monthly based on each
Fund's and Portfolio's average daily net assets at the annual rate set forth
below:

<TABLE>
<CAPTION>
Investment
Fund Advisory Fee
- ---- ------------
<S> <C>
Short-Term Bond Fund................................... .25%
U.S. Treasury Income Fund.............................. .30%
U.S. Government Securities Fund........................ .30%
Bond Fund.............................................. .30%
Strategic Income Fund.................................. .50%
Balanced Fund.......................................... .50%
Equity Income Fund..................................... .40%
Growth and Income Portfolio............................ .40%
Capital Growth Portfolio............................... .40%
</TABLE>

Chase is located at 270 Park Avenue, New York, New York 10017.

Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is the
sub-investment adviser to each Fund and each Portfolio under a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly-owned operating
subsidiary of Chase. CAM makes investment decisions for the Funds and Portfolios
on a day-to-day basis. For these services, CAM is entitled to receive a fee,
payable by Chase from its advisory fee, at the annual rate set forth below:

<PAGE>

<TABLE>
<CAPTION>
Fund Sub-Advisory Fee
- ---- ----------------
<S> <C>
Short-Term Bond Fund.............................. .10%
U.S. Treasury Income Fund......................... .10%
U.S. Government Securities Fund................... .15%
Bond Fund......................................... .15%
Strategic Income Fund............................. .25%
Balanced Fund..................................... .25%
Equity Income Fund................................ .20%
Growth and Income Portfolio....................... .20%
Capital Growth Portfolio.......................... .20%
</TABLE>

CAM provides discretionary investment advisory services to institutional
clients. The same individuals who serve as portfolio managers for Chase also
serve as portfolio managers for CAM. CAM is located at 1211 Avenue of the
Americas, New York, New York 10036.

State Street Research & Management Company ("SSR"), a registered investment
advisor, is one of the Strategic Income Fund's sub-investment advisers under a
Sub-Investment Advisory Agreement between SSR and Chase. SSR is a subsidiary of
the Metropolitan Life Insurance Company. SSR makes the investment decisions on a
day-to-day basis for that portion of the Strategic income Fund allocated to
lower quality, high yield securities of U.S. issuers, including convertible
securities and preferred stock. For these services, SSR is entitled to receive a
fee, payable by Chase from its advisory fee, at an annual rate equal to 0.35% of
the average daily net assets managed by SSR. SSR also provides discretionary
investment advisory services to institutional and other clients. SSR traces its
heritage back to 1924 and the founding of one of America's first mutual funds.
Today the firm has more than $49 billion in assets under management (as of
August 31, 1998), including more than $15 billion in mutual funds. SSR is
located at One Financial Center, Boston, Massachusetts 02111.

Like other mutual funds and financial and business organizations worldwide, each
Fund and Portfolio could be adversely affected if computer systems on which the
Fund relies are unable to distinguish between the year 1900 and the year 2000
(typically, this is called the "Year 2000 Problem"). The Year 2000 Problem could
have a negative impact on handling securities trades, pricing and account
services and could otherwise have a material adverse effect on each Fund's and
Portfolio's business, operations and/or investments. The Funds' and Portfolio's
advisers have commenced review of the Year 2000 Problem as it may affect the
Fund or Portfolio, both directly and through the systems of the Fund's and
Portfolio's other service providers, and are taking steps reasonably designed to
address any Year 2000 Problems. In light of these remedial steps, the Funds' and
Portfolios' advisers expect that their systems and the systems of the Fund's and
Portfolio's other service providers will be adapted to deal with the Year 2000
Problem before the beginning of the year 2000. There can be no assurance,
however, that the systems of the advisers or the Funds' and Portfolios' other
service providers will be successfully adapted to deal with the Year 2000
Problem, or that interaction with other third-party computer systems which are
not prepared for the Year 2000 Problem will not impair their services at that
time, or that the Year 2000 Problem will not have an adverse effect on companies
whose securities are held by the Fund or Portfolio or on global markets or
economies generally.

PORTFOLIO MANAGERS. Small Cap Equity Fund. Russell, a Vice President and
Portfolio Manager at Chase, and Susan Huang, a Managing Director and the Head of
U.S. Fixed Income Management at Chase, have been responsible for the day-to-day
management of the Short-Term Bond Fund's portfolio since June 1996. Since
joining Chase in 1990, Mr. Russell has held several positions within the U.S.
fixed income area, including portfolio analyst, taxable fixed-income trader and
assistant trader. Mr. Russell is a member of the U.S. fixed income area's
quantitative research team where he specializes in the analysis of asset-backed
securities. Mr. Russell is also a manager of the Bond Fund. Ms. Huang is
responsible for developing the asset allocation and risk management strategies
for fixed income portfolios. Prior to joining Chase in June of 1995, Ms. Huang
was Director of the Insurance Asset Management Group at Hyperion Capital
Management Inc. Prior to joining Hyperion, Ms. Huang was a senior portfolio
manager with CS First Boston. Prior to joining CS First Boston in 1992, Ms.
Huang spent 14 years at The Equitable, where she was head of the U.S. fixed
income management group at Equitable Capital Management. Ms. Huang is also a
manager of the U.S. Treasury Income Fund, U.S. Government Securities Fund, Bond
Fund, Strategic Income Fund and Balanced Fund.

A team of investment managers with Chase led by Ms. Huang, is responsible for
the management of the U.S. Treasury Income Fund.

Michael Bennis, a Vice President and Senior Portfolio Manager at Chase, and Ms.
Huang have been responsible for the day-to-day management of the U.S. Government
Securities Fund since December and June of 1996, respectively. Prior to joining
Chase in 1996, Mr. Bennis was a senior analyst/trader at Union Bank of

<PAGE>

Switzerland Asset Management. Prior to joining Union Bank of Switzerland, Mr.
Bennis was a fixed income analyst at Donaldson, Lufkin & Jenrette.

Ms. Huang and Mr. Russell have been responsible for the management of the Bond
Fund since May 1996 and May 1998, respectively.

Ms. Huang and Craig Blessing, Head of Emerging Market Fixed Income at Chase,
have been responsible for the management of the Strategic Income Fund since its
inception. Mr. Blessing joined Chase in 1996. Prior to joining Chase, from 1992
to 1996, Mr. Blessing was Director of the Fund Management Group and Portfolio
Manager for emerging market funds at Serfin Securities, Inc. From 1985 to 1992,
Mr. Blessing was a Vice President at Bank of America where he was a founding
member and co-head of the Emerging Market Debt Sales & Trading Group.

Greg Adams, a Vice President and Senior Portfolio Manager at Chase, has been
responsible for the management of the Balanced Fund's equity portfolio since its
inception in 1993. Mr. Adams joined Chase in 1987 and oversees the equity
trading of the Fund and is also a manager of Growth and Income Portfolio and the
Large Cap Equity Fund. Mr. Adams has also been responsible for overseeing the
proprietary computer model used in the U.S. equity selection process. A team of
Chase investment managers, led by Ms. Huang, is responsible for the management
of the Fund's fixed income portfolio.

Tony Gleason, a Vice President of Chase, has been responsible for the day-to-day
management of the Equity Income Fund's portfolio since September 1995. Mr.
Gleason is also a manager of Capital Growth Portfolio. Mr. Gleason joined Chase
in 1995 with 10 years of investment experience. Prior to joining Chase, Mr.
Gleason spent nine years as a Vice President and Portfolio Manager with
Prudential Equity Management. Bill Ellsworth, a Senior Research Analyst and
Associate Portfolio Manager at Chase, participates in the management of the
Fund. Mr. Ellsworth has been employed by Chase since 1992.

Mr. Adams and Diane Sobin, a Senior Portfolio Manager at Chase, are responsible
for the day-to-day management of the Growth and Income Portfolio. Ms. Sobin
joined Chase in 1997 and has been a manager of the Portfolio since July 1997.
Prior to joining Chase, Ms. Sobin was a senior portfolio manager at Oppenheimer
Funds Inc., where she managed mutual funds. Prior to 1995, Ms. Sobin was a
senior portfolio manager at Dean Witter Discover, where she managed several
mutual funds and other accounts.

David Klassen, Director, U.S. Funds Management and Equity Research at Chase, and
Mr. Gleason have been responsible for the management of the Capital Growth
Portfolio since September 1995. Mr. Klassen is responsible for asset allocation
and investment strategy for Chase's domestic equity portfolios. Mr. Klassen
joined Chase in March 1992. Prior to joining Chase, Mr. Klassen was a vice
president and portfolio manager at Dean Witter Reynolds, responsible for
managing several mutual funds and other accounts. Mr. Klassen is also a manager
of Small Cap Equity Fund.

Bartlett R. Geer, a Senior Vice President of SSR, has been responsible for the
management of the Strategic Income Fund's lower quality, high yield securities
of U.S. issuers, including convertible securities and preferred stock, since the
Strategic Income Fund's inception. Mr. Geer joined SSR in 1981 and manages
other institutional accounts, including mutual funds, that invest in high yield
and other securities

ABOUT YOUR INVESTMENT

CLASS M SHARES. An investor who purchases Class M shares pays a sales charge at
the time of purchase. As a result, Class M shares are not subject to any sales
charges when they are redeemed. Certain purchases of Class M shares qualify for
reduced sales charges. See "How to Buy, Sell and Exchange Shares" and "Other
Information Concerning the Funds."

HOW TO BUY, SELL AND EXCHANGE SHARES

HOW TO BUY SHARES

You can open a Fund account with as little as $2,500. Additional investments can
be made at any time with as little as $100. The minimum initial investment may
be waived in a Fund's discretion. You can buy Class M
<PAGE>

shares three ways--through an investment representative, through the Funds'
distributor by calling the Chase Vista Funds Service Center, or through the
Systematic Investment Plan.

All purchases made by check should be in U.S. dollars and made payable to the
Chase Vista Funds. Third party checks, credit cards and cash will not be
accepted. The Funds reserve the right to reject any purchase order or cease
offering shares for purchase at any time. When purchases are made by check,
redemptions will not be allowed until the check clears, which may take 15
calendar days or longer. In addition, the redemption of shares purchased through
Automated Clearing House (ACH) will not be allowed until your payment clears,
which may take 7 business days or longer.

BUYING SHARES THROUGH THE FUNDS' DISTRIBUTOR. Complete and return the enclosed
application and your check in the amount you wish to invest to the Chase Vista
Funds Service Center.

BUYING SHARES THROUGH SYSTEMATIC INVESTING. You can make regular investments of
$100 or more per transaction through automatic periodic deduction from your bank
checking or savings account. Shareholders electing to start this Systematic
Investment Plan when opening an account should complete Section 8 of the account
application. Current shareholders may begin such a plan at any time by sending a
signed letter and a deposit slip or voided check to the Chase Vista Funds
Service Center. Call the Chase Vista Funds Service Center at 1-800-34-VISTA for
complete instructions.

Shares are purchased at the public offering price, which is based on the net
asset value next determined after the Chase Vista Funds Service Center receives
your order in proper form. In most cases, in order to receive that day's public
offering price, the Chase Vista Funds Service Center must receive your order in
proper form before the close of regular trading on the New York Stock Exchange.
If you buy shares through your investment representative, the representative
must receive your order before the close of regular trading on the New York
Stock Exchange to receive that day's public offering price. Orders are in proper
form only after funds are converted to federal funds.

If you are considering redeeming or exchanging shares or transferring shares to
another person shortly after purchase, you should pay for those shares with a
certified check to avoid any delay in redemption, exchange or transfer.
Otherwise the Fund may delay payment until the purchase price of those shares
has been collected or, if you redeem by telephone, until 15 calendar days after
the purchase date. To eliminate the need for safekeeping, a Fund will not issue
certificates for your Class M shares unless you request them.

Class M Shares

The public offering price of Class M shares is the net asset value plus a sales
charge that varies depending on the size of your purchase. Each Fund receives
the net asset value. The sales charge is allocated between your broker-dealer
and the Funds' distributor as shown in the following table, except when the
Funds' distributor, in its discretion, allocates the entire amount to your
broker-dealer.

<PAGE>

Short-Term Bond Fund

<TABLE>
<CAPTION>
Amount of
Amount of transaction at Sales charge as a sales charge
offering price($) percentage of: reallowed to
- ---------------------------------------------------- ---------------------------- dealers as a
Offering Net amount percentage of
price invested offering price
--------- ---------- ---------------
<S> <C> <C> <C> <C>
Under 50,000......................................... 1.50 1.52 1.25
50,000 but under 100,000............................. 1.25 1.27 1.00
100,000 but under 250,000............................ 1.00 1.01 .75
250,000 but under 500,000............................ .50 .50 .50
Over 500,000......................................... 0 0 0
</TABLE>

Other Income Funds

Under 50,000......................................... 3.25 3.36 3.00
50,000 but under 100,000............................. 2.25 2.30 2.00
100,000 but under 250,000............................ 1.50 1.52 1.25
250,000 but under 500,000............................ 1.00 1.01 1.00
Over 500,000......................................... 0 0 0
</TABLE>

Equity Funds

<TABLE>
<CAPTION>
Amount of
Amount of transaction at Sales charge as a sales charge
offering price($) percentage of: reallowed to
- ---------------------------------------------------- ---------------------------- dealers as a
Offering Net amount percentage of
price invested offering price
--------- ---------- ---------------
<S> <C> <C> <C> <C>
Under 50,000.......................................... 3.50 3.63 3.25
50,000 but under 100,000.............................. 2.50 2.56 2.25
100,000 but under 250,000............................. 1.75 1.78 1.50
250,000 but under 500,000............................. 1.25 1.27 1.25
Over 500,000.......................................... 0 0 0
</TABLE>

There is no initial sales charge on purchases of Class M shares of $500,000 or
more.

GENERAL

You may be eligible to buy Class M shares at reduced sales charges. Consult your
investment representative or the Chase Vista Funds Service Center for details
about Chase Vista's combined purchase privilege, cumulative quantity discount,
statement of intention, group sales plan, employee benefit plans, and other
plans. Descriptions are also included in the enclosed application and in the
SAI. Sales charges are waived if you are using

<PAGE>

redemption proceeds received within the prior ninety days from non-Chase Vista
mutual funds to buy your shares, and on which you paid a front-end or contingent
deferred sales charge.

Some participant-directed employee benefit plans participate in a "multi-fund"
program which offers both Chase Vista and non-Chase Vista mutual funds. The
money that is invested in Chase Vista Funds may be combined with the other
mutual funds in the same program when determining the plan's eligibility to buy
Class M shares for purposes of the discount privileges and programs described
above.

No initial sales charge will apply to the purchase of a Fund's Class M shares if
(i) you are investing proceeds from a qualified retirement plan where a portion
of the plan was invested in the Chase Vista Funds, (ii) you are investing
through any qualified retirement plan with 50 or more participants or (iii) you
are a participant in certain qualified retirement plans and are investing (or
reinvesting) the proceeds from the repayment of a plan loan made to you.

For purchases of a Fund's Class M shares made through December 31, 1998, no
initial sales charge will be assessed if you are investing through an IRA or
qualified retirement plan for which The Chase Manhattan Bank or its designee
serves as trustee or custodian, and additional investments in Class M shares of
the Funds through such an IRA or qualified plan made subsequent to 1998 will not
be subject to initial sales charges for the life of the Fund account.

Purchases of a Fund's Class M shares may be made with no initial sales charge
through an investment adviser or financial planner that charges a fee for its
services.

Purchases of a Fund's Class M shares may be made with no initial sales charge
(i) by an investment adviser, broker or financial planner, provided arrangements
are preapproved and purchases are placed through an omnibus account with the
Fund or (ii) by clients of such investment adviser or financial planner who
place trades for their own accounts, if such accounts are linked to a master
account of such investment adviser or financial planner on the books and records
of the broker or agent. Such purchases may also be made for retirement and
deferred compensation plans and trusts used to fund those plans.

Purchases of a Fund's Class M shares may be made with no initial sales charge in
accounts opened by a bank, trust company or thrift institution which is acting
as a fiduciary exercising investment discretion, provided that appropriate
notification of such fiduciary relationship is reported at the time of the
investment to the Fund, the Fund's distributor or the Chase Vista Funds Service
Center.

Each Fund may sell Class M shares without an initial sales charge to the current
and retired Trustees (and their immediate families), current and retired
employees (and their immediate families) of Chase, the Fund's distributor and
transfer agent or any affiliates or subsidiaries thereof, registered
representatives and other employees (and their immediate families) of
broker-dealers having selected dealer agreements with the Fund's distributor,
employees (and their immediate families) of financial institutions having
selected dealer agreements with the Fund's distributor (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Chase Vista Fund shares) and financial institution trust departments
investing an aggregate of $1 million or more in the Chase Vista Funds.

Shareholders of other Chase Vista Funds may be entitled to exchange their shares
for, or reinvest distributions from their funds in, shares of the Funds at net
asset value.

The Funds reserve the right to change any of these policies at any time and may
reject any request to purchase shares at a reduced sales charge. The SAI
contains additional information about purchasing the Fund's shares at reduced
sales charges.

Investors may incur a fee if they effect transactions through a broker or agent.

<PAGE>

For shareholders that bank with Chase, Chase may aggregate investments in the
Chase Vista Funds with balances held in Chase bank accounts for purposes of
determining eligibility for certain bank privileges that are based on specified
minimum balance requirements, such as reduced or no fees for certain banking
services or preferred rates on loans and deposits. Chase and certain
broker-dealers and other shareholder servicing agents may, at their own expense,
provide gifts, such as computer software packages, guides and books related to
investment or additional Fund shares valued up to $250 to their customers that
invest in the Chase Vista Funds.

HOW TO SELL SHARES

You can sell your Fund shares any day the New York Stock Exchange is open,
either directly to a Fund or through your investment representative. A Fund will
only forward redemption payments on shares for which it has collected payment of
the purchase price.

SELLING SHARES DIRECTLY TO A FUND. Send a signed letter of instruction to the
Chase Vista Funds Service Center. The price you will receive is the next net
asset value calculated after the particular Fund receives your request in proper
form. In order to receive that day's net asset value, the Chase Vista Funds
Service Center must receive your request before the close of regular trading on
the New York Stock Exchange.

SIGNATURE GUARANTEES. If you sell shares having a net asset value of $100,000 or
more, the signatures of registered owners or their legal representatives must be
guaranteed with either (i) a medallion stamp of the Stock Transfer Agents
Medallion Program, or (ii) a medallion stamp of the NYSE Medallion Signature
Program.
See the SAI for more information about where to obtain a signature guarantee.

If you went your redemption proceeds sent to an address other than your address
as it appears on Vista's records, a signature guarantee is required. A Fund may
require additional documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner. Contact the Chase
Vista Funds Service Center for details.

DELIVERY OF PROCEEDS. A Fund generally sends you payment for your shares the
business day after your request is received in proper form, assuming the Fund
has collected payment of the purchase price of your shares. Under unusual
circumstances, the Funds may suspend redemptions, or postpone payment for more
than seven days, as permitted by federal securities law. No redemption proceeds
will be mailed to an address which has been changed within the preceding 30
days.

TELEPHONE REDEMPTIONS. You may use Vista's Telephone Redemption Privilege to
redeem shares from your account unless you have notified the Chase Vista Funds
Service Center of an address change within the preceding 30 days. Telephone
redemption requests in excess of $25,000 will only be made by wire to a bank
account on record with the Funds. There is a $10.00 charge for each wire
transaction. Unless an investor indicates otherwise on the account application,
the Funds will be authorized to act upon redemption and transfer instructions
received by telephone from a shareholder, or any person claiming to act as his
or her representative, who can provide the Funds with his or her account
registration and address as it appears on the Funds' records.

The Chase Vista Funds Service Center will employ these and other reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if it fails to employ reasonable procedures, a Fund may be liable for any losses
due to unauthorized or fraudulent instructions. An investor agrees, however,
that to the extent permitted by applicable law, neither a Fund nor its agents
will be liable for any loss, liability, cost or expense arising out of any
redemption request, including any fraudulent or unauthorized request. For
information, consult the Chase Vista Funds Service Center.

<PAGE>

The Telephone Redemption Privilege may be modified or terminated without notice.

SYSTEMATIC WITHDRAWAL. You can make regular withdrawals of $50 or more monthly,
quarterly or semiannually. A minimum account balance of $5,000 is required to
establish a systematic withdrawal plan for Class M accounts. Call the Chase
Vista Funds Service Center at 1-800-34-VISTA for complete instructions.

INVOLUNTARY REDEMPTION OF ACCOUNTS. Each Fund may involuntarily redeem your
shares if at such time the aggregate net asset value of the shares in your
account is less than $500 due to redemptions or if you purchase through the
Systematic Investment Plan and fail to meet that Fund's investment minimum
within a twelve month period. In the event of any such redemption, you will
receive at least 60 days notice prior to the redemption.

HOW TO EXCHANGE YOUR SHARES

You can exchange your shares for shares of the Class M shares of certain other
Chase Vista Funds at net asset value beginning 15 days after purchase. Not all
Chase Vista Funds offer all classes of shares. The prospectus of the other Chase
Vista Fund into which shares are being exchanged should be read carefully and
retained for future reference.

For federal income tax purposes, an exchange is treated as a sale of shares and
generally results in a capital gain or loss.

EXCHANGING BY PHONE. A Telephone Exchange Privilege is currently available. Call
the Chase Vista Funds Service Center for procedures for telephone transactions.
The Telephone Exchange Privilege is not available if you were issued
certificates for shares that remain outstanding. Ask your investment
representative or the Chase Vista Funds Service Center for prospectuses of other
Chase Vista funds. Shares of certain Chase Vista funds are not available to
residents of all states.

EXCHANGE PARAMETERS. The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In order to limit
excessive exchange activity and in other circumstances where Chase Vista
management or the Trustees believe doing so would be in the best interests of
the Funds, the Funds reserve the right to revise or terminate the exchange
privilege, limit the amount or number of exchanges or reject any exchange. In
addition, any shareholder who makes more than ten exchanges of shares involving
a Fund in a year or three in a calendar quarter will be charged a $5.00
administration fee for each such exchange. Shareholders would be notified of any
such action to the extent required by law. Consult the Chase Vista Funds Service
Center before requesting an exchange. See the SAI to find out more about the
exchange privilege.

REINSTATEMENT PRIVILEGE

Upon written request, Class M shareholders have a one time privilege of
reinstating their investment in a Fund at net asset value within 90 calendar
days of the redemption. The reinstatement request must be accompanied by payment
for the shares (not in excess of the redemption), and shares will be purchased
at the next determined net asset value.

<PAGE>

HOW THE FUNDS VALUE THEIR SHARES

The net asset value of each class of each Fund's shares is determined once daily
based upon prices determined as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern time, however, options are priced at
4:15 p.m., Eastern time), on each business day of the Funds, by dividing the net
assets of the particular Fund attributable to that class by the total number of
outstanding shares of that class. Values of assets held by the Funds are
determined on the basis of their market or other fair value, as described in the
SAI.

HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION

Each Income Fund declares dividends daily and distributes any net investment
income at least monthly. The Balanced Fund, Equity Income Fund and Growth and
Income Fund distribute any net investment income at least quarterly. The Capital
Growth Fund distributes any net investment income at least semiannually. Each
Fund distributes any net realized capital gains at least annually. Capital gains
are distributed after deducting any available capital loss carryovers.

DISTRIBUTION PAYMENT OPTION. You can choose from three distribution options: (1)
reinvest all distributions in additional Fund shares without a sales charge; (2)
receive distributions from net investment income in cash or by ACH to a
pre-established bank account while reinvesting capital gains distributions in
additional shares without a sales charge; or (3) receive all distributions in
cash or by ACH. You can change your distribution option by notifying the Chase
Vista Funds Service Center in writing. If you do not select an option when you
open your account, all distributions will be reinvested. All distributions not
paid in cash or by ACH will be reinvested in shares of the same share class. You
will receive a statement confirming reinvestment of distributions in additional
Fund shares promptly following the quarter in which the reinvestment occurs.

If a check representing a Fund distribution is not cashed within a specified
period, the Chase Vista Funds Service Center will notify you that you have the
option of requesting another check or reinvesting the distribution in the
applicable Fund or in an established account of another Chase Vista fund without
a sales charge. If the Chase Vista Funds Service Center does not receive your
election, the distribution will be reinvested in the particular Fund. Similarly,
if a Fund or the Chase Vista Funds Service Center sends you correspondence
returned as "undeliverable," distributions will automatically be reinvested in
such Fund.

Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. Each Fund intends to distribute substantially all of its ordinary
income and capital gain net income on a current basis. If a Fund does not
qualify as a regulated investment company for any taxable year or does not make
such distributions, the Fund will be subject to tax on all of its income and
gains.

TAXATION OF DISTRIBUTIONS. All Fund distributions of net investment income
(which term includes net short-term capital gain) will be taxable as ordinary
income. Any distributions of net capital gain which are designated as "capital
gain dividends" will be taxable as long-term capital gain at the currently
applicable 28% or 20% rate, regardless of how long you have held the shares. The
taxation of your distributions is the same whether received in cash or in shares
through the reinvestment of distributions.

Investment income received by the Funds from sources within foreign countries
may be subject to foreign taxes withheld at the source. Since more than 50% of
the value of the total assets of each Fund at the close of the Fund's taxable
year is anticipated to be stock or securities of foreign corporations, each Fund
may elect to "pass through" to its shareholders the amount of foreign taxes paid
by such Fund.
<PAGE>

Early in each calendar year each Fund will notify you of the amount and tax
status of distributions paid to you by the Fund for the preceding year.

The above is only a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation
(including possible liability for state and local taxes and, for foreign
shareholders, U.S. withholding taxes).

OTHER INFORMATION CONCERNING THE FUNDS

Each Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a
subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Trust
has adopted a Rule 12b-1 distribution plan for Class M shares, which provides
for the payment of distribution fees at an annual rate of up to .35% of the
average daily net assets attributable to Class M shares of the Short-Term Bond
Fund, .50% of the average daily net assets attributable to Class M shares of
each other Income Fund and .75% of the average daily net assets attributable to
Class M shares of each Equity Fund. Payments under the distribution plan shall
be used to compensate or reimburse the Funds' distributor and broker-dealers for
services provided and expenses incurred in connection with the sale of Class M
shares, and are not tied to the amount of actual expenses incurred. Payments may
be used to compensate broker-dealers with trail or maintenance commissions at an
annual rate of up to .35% in the case of the Short-Term Bond Fund, .50%, in the
case of the other Income Funds, or .75%, in the case of Equity Funds, of the
average daily net asset value of Class M shares invested in a Fund by customers
of these broker-dealers. Trail or maintenance commissions are paid to
broker-dealers following the purchase of shares by their customers. Promotional
activities for the sale of Class M shares will be conducted generally by the
Chase Vista Funds, and activities intended to promote a Fund's Class M shares
may also benefit the Fund's other shares and other Chase Vista funds.

VFD may provide promotional incentives to broker-dealers that meet specified
targets for one or more Chase Vista Funds. These incentives may include gifts of
up to $100 per person annually; an occasional meal, ticket to a sporting event
or theater for entertainment for broker-dealers and their guests; and payment or
reimbursement for travel expenses, including lodging and meals, in connection
with attendance at training and educational meetings within and outside the U.S.

VFD may from time to time, pursuant to objective criteria established by it, pay
additional compensation to qualifying authorized broker-dealers for certain
services or activities which are primarily intended to result in the sale of
shares of a Fund. In some instances, such compensation may be offered only to
certain broker-dealers who employ registered representatives who have sold or
may sell significant amounts of shares of a Fund and/or other Chase Vista Funds
during a specified period of time. Such compensation does not represent an
additional expense to a Fund or its shareholders, since it will be paid by VFD
out of compensation retained by it from a Fund or other sources available to it.

SHAREHOLDER SERVICING AGENTS

The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including Chase) under which the shareholder
servicing agents have agreed to provide certain support services to their
customers who beneficially own Class M shares of the Funds. These services
include one or more of the following: assisting with purchase and redemption
transactions, maintaining shareholder accounts and records, furnishing customer
statements, transmitting shareholder reports and communications to customers and
other similar shareholder liaison services. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of Class M shares of each Fund held by investors for

<PAGE>

whom the shareholder servicing agent maintains a servicing relationship.
Shareholder servicing agents may subcontract with other parties for the
provision of shareholder support services.

Shareholder servicing agents may offer additional services to their customers,
such as pre-authorized or systematic purchase and redemption plans. Each
shareholder servicing agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect to
such services. Certain shareholder servicing agents may (although they are not
required by the Trust to do so) credit to the accounts of their customers from
whom they are already receiving other fees an amount not exceeding such other
fees or the fees for their services as shareholder servicing agents.

Chase and/or VFD may from time to time, at their own expense out of compensation
retained by them from the Fund or other sources available to them, make
additional payments to certain selected dealers or other shareholder servicing
agents for performing administrative services for their customers. These
services include maintaining account records, processing orders to purchase,
redeem and exchange Fund shares and responding to certain customer inquiries.
The amount of such compensation may be up to an additional 0.10% annually of the
average net assets of the Fund attributable to shares of the Fund held by
customers of such shareholder servicing agents. Such compensation does not
represent an additional expense to the Fund or its shareholders, since it will
be paid by Chase and/or VFD.

ADMINISTRATOR AND SUB-ADMINISTRATOR

Chase acts as each Fund's administrator and is entitled to receive a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the average
daily net assets of each Fund other that the Growth and Income Fund and Capital
Growth Fund. Chase also acts as the administrator for the Growth and Income Fund
and Capital Growth Fund and for each Portfolio and is entitled to receive from
each of these Funds and each Portfolio a fee computed daily and paid monthly at
an annual rate equal to 0.05% of their respective average daily net assets.

VFD provides certain sub-administrative services to the Funds pursuant to a
distribution and sub-administration agreement and is entitled to receive a fee
for these services from each Fund at an annual rate equal to 0.05% of each
Fund's average daily net assets. VFD has agreed to use a portion of this fee to
pay for certain expenses incurred in connection with organizing new series of
the Trust and certain other ongoing expenses of the Trust. VFD is located at One
Chase Manhattan Plaza, 3rd Floor, New York, New York 10081.

CUSTODIAN

Chase acts as the custodian and fund accountant for each Fund and Portfolio and
receives compensation under separate agreements with the Trust and with each
Portfolio. Fund or Portfolio securities and cash may be held by sub-custodian
banks if such arrangements are reviewed and approved by the Trustees.

EXPENSES

Each Fund pays the expenses incurred in its operations, including each Fund's
pro rata share of expenses of the Trust, and in the case of Growth and Income
Fund and Capital Growth Fund, of the Portfolio. These expenses include
investment advisory and administrative fees; the compensation of the Trustees;
registration fees; interest charges; taxes; expenses connected with the
execution, recording and settlement of security transactions; fees and expenses
for custody services, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of the
Trust or Portfolio; insurance premiums; and expenses

<PAGE>

of calculating the net asset value of, and the net income on, shares of the
Funds. Shareholder servicing and distribution fees are allocated to specific
classes of each of the Funds. In addition, the Funds may allocate transfer
agency and certain other expenses by class. Service providers to a Fund or
Portfolio may, from time to time, voluntarily waive all or a portion of any fees
to which they are entitled.

ORGANIZATION AND DESCRIPTION OF SHARES

Each Fund is a portfolio of Mutual Fund Group, an open-end management investment
company organized as a Massachusetts business trust in 1987 (the "Trust"). The
Trust has reserved the right to create and issue additional series and classes.
Each share of a series or class represents an equal proportionate interest in
that series or class with each other share of that series or class. The shares
of each series or class participate equally in the earnings, dividends and
assets of the particular series or class. Shares have no preemptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth below. Shareholders are entitled to one vote for each whole share
held, and each fractional share shall be entitled to a proportionate fractional
vote, except that Trust shares held in the treasury of the Trust shall not be
voted. Shares of each class of a Fund generally vote together except when
required under federal securities laws to vote separately on matters that only
affect a particular class, such as the approval of distribution plans for a
particular class.

Each Fund issues multiple classes of shares. This Prospectus relates to Class M
shares of each Fund. The Funds may offer other classes of shares in addition to
this class and may determine not to offer certain classes of shares. The
categories of investors that are eligible to purchase shares and minimum
investment requirements may differ for each class of each Fund's shares. In
addition, other classes of Fund shares may be subject to differences in sales
charge arrangements, ongoing distribution and service fee levels, and levels of
certain other expenses, which would affect the relative performance of the
different classes. Investors may call 1-800-34-VISTA to obtain additional
information about other classes of shares of the Funds that are offered. Any
person entitled to receive compensation for selling or servicing shares of a
Fund may receive different levels of compensation with respect to one class of
shares over another.

The business and affairs of the Trust are managed under the general direction
and supervision of its Board of Trustees. The Trust is not required to hold
annual meetings of shareholders but will hold special meetings of shareholders
of all series or classes when in the judgment of the Trustees it is necessary or
desirable to submit matters for a shareholder vote. The Trustees will promptly
call a meeting of shareholders to remove a trustee(s) when requested to do so in
writing by record holders of not less than 10% of all outstanding shares of the
Trust.

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE

Unlike other mutual funds which directly acquire and manage their own portfolio
securities, Growth and Income Fund and Capital Growth Fund invests all of their
investable assets in a Portfolio, a separate registered investment company.
Therefore, a shareholder's interest in the Portfolio's securities is indirect.
In addition to selling a beneficial interest to a Fund, the Portfolio may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, other investors
investing in the Portfolio are not required to sell their shares at the same
public offering prices as a Fund, and may bear different levels of ongoing
expenses than a Fund. Shareholders of Growth and Income Fund and Capital Growth
Fund should be aware that these differences may result in differences in returns
experienced in the different funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures.

<PAGE>

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased Portfolio risk. However, this
possibility also exists for traditionally structured funds which have large or
institutional investors. Funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of each Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Shares of each Fund for which no voting instructions have been received will be
voted in the same proportion as those shares for which voting instructions are
received. Certain changes in the Portfolio's objective, policies or restrictions
may require the Trust to withdraw a Fund's interest in the Portfolio. Any
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). Each Fund could incur
brokerage fees or other transaction costs in converting such securities to cash.
In addition, a distribution in kind may result in a less diversified portfolio
of investments or adversely affect the liquidity of each Fund.

The same individuals who are disinterested Trustees of the Trust serve as
Trustees of the Portfolio. The Trustees of the Trust, including a majority of
the disinterested Trustees, have adopted procedures they believe are reasonably
appropriate to deal with any resulting conflicts of interest up to and including
creating a separate Board of Trustees.

Investors in the Fund may obtain information about whether an investment in the
Portfolio may be available through other funds by calling the Chase Vista Funds
Service Center at 1-800-34-VISTA.

PERFORMANCE INFORMATION

Each Fund's investment performance may from time to time be included in
advertisements about the Funds. Performance is calculated separately for each
class of shares, in the manner described in the SAI. "Yield" for each class of
shares is calculated by dividing the annualized net investment income per share
during a recent 30-day period by the maximum public offering price per share of
such class on the last day of that period.

"Total return" for the one-, five- and ten-year periods (or since inception, if
shorter) through the most recent calendar quarter represents the average annual
compounded rate of return on an investment of $1,000 in a Fund invested at the
maximum public offering price. Total return may also be presented for other
periods or without reflecting sales charges. Any quotation of investment
performance not reflecting the maximum initial sales charge would be reduced if
such sales charge was used.

All performance data is based on each Fund's past investment results and does
not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of each
Fund's portfolio, each Fund's operating expenses and which class of shares you
purchase. Investment performance also often reflects the risks associated with
the Funds' investment objectives and policies. These factors should be
considered when comparing each Fund's investment results to those of other
mutual funds and other investment vehicles. Quotation of investment performance
for any period when a fee waiver or expense limitation was in effect will be
greater than if the waiver or limitation had not been in effect. Each Fund's
performance may be compared to other mutual funds, relevant indices and rankings
prepared by independent services. See the SAI.

<PAGE>

MAKE THE MOST OF YOUR CHASE VISTA PRIVILEGES

The following services are available to you as a Chase Vista mutual fund
shareholder.

[bullet] SYSTEMATIC INVESTMENT PLAN--Invest as much as you wish ($100 or more)
on or about the day designated in your account application. The
amount will be automatically transferred from your checking or
savings account.

[bullet] SYSTEMATIC WITHDRAWAL PLAN--Make regular withdrawals of $50 or more
monthly, quarterly or semiannually. A minimum account balance of
$5,000 is required to establish a systematic withdrawal plan for
Class M accounts.

[bullet] SYSTEMATIC EXCHANGE--Transfer assets automatically from one Chase
Vista account to another on a regular, prearranged basis. There is no
additional charge for this service.

[bullet] FREE EXCHANGE PRIVILEGE--Exchange money between certain Chase Vista
funds in the same class of shares without charge. The exchange
privilege allows you to adjust your investments as your objectives
change. Investors may not maintain, within the same fund,
simultaneous plans for systematic investment or exchange and
systematic withdrawal or exchange.

[bullet] REINSTATEMENT PRIVILEGE--Class M shareholders have a one time
privilege of reinstating their investment in their Fund at net asset
value next determined subject to written request within 90 calendar
days of the redemption, accompanied by payment for the shares (not in
excess of the redemption).

<PAGE>

APPENDIX A

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. BOND RATINGS

Aaa--Bonds which are rated "Aaa" are judged to be the best quality and to carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, the changes that can be
expected are most unlikely to impair the fundamentally strong position of such
issues.

Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated "A" possess many favorable investment qualities and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa--Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba--Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.

Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

<PAGE>

DESCRIPTION OF STANDARD & POOR'S BOND RATINGS

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.

AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only in
small degree.

A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB--Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the "A" category.

BB-B-CCC-CC--Bonds rated "BB", "B", "CCC" and "CC" are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

C, D--Bonds on which no interest is being paid are rated "C". Bonds rated "D"
are in default and payment of interest and/or repayment of principal is in
arrears.

<PAGE>

CHASE VISTA FUNDS SERVICE CENTER
P.O. Box 419392
Kansas City, MO 64141-6392

TRANSFER AGENT AND DIVIDEND PAYING AGENT
DST Systems, Inc.
210 West 10th Street
Kansas City, MO 64105

LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
1177 Avenue of the Americas
New York, NY 10036

CHASE VISTA FUNDS
P.O. Box 419392
Kansas City, MO 64141-6392

<PAGE>

[CHASE VISTA LOGO]

CHASE VISTA FUNDS

STATEMENT OF
ADDITIONAL INFORMATION
OCTOBER 30, 1998
STRATEGIC INCOME FUND

One Chase Manhattan Plaza, Third Floor, New York, New York 10081

This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
Prospectuses offering Class A shares, Class B shares, Class C shares and
Institutional shares of the Fund. This Statement of Additional Information
should be read in conjunction with the Prospectuses offering such classes of
shares of the Strategic Income Fund. Any references to a "Prospectus" in this
Statement of Additional Information is a reference to one or more of the
foregoing Prospectuses, as the context requires. Copies of the Prospectuses may
be obtained by an investor without charge by contacting Vista Fund
Distributors, Inc. ("VFD"), the Fund's distributor (the "Distributor"), at the
above-listed address.

This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by an
effective prospectus.

For more information about your account, simply call or write the Chase Vista
Funds Service Center at:

1-800-34-VISTA
Chase Vista Funds Service Center
P.O. Box 419392
Kansas City, MO 64141

<PAGE>

<TABLE>
<S> <C>
Table of Contents Page
- ----------------------------------------------------------------------------------------------
The Fund ............................................................................. 3
Investment Policies and Restrictions ................................................. 3
Performance Information .............................................................. 19
Determination of Net Asset Value ..................................................... 21
Purchases, Redemptions and Exchanges ................................................. 22
Tax Matters .......................................................................... 24
Management of the Trust and the Fund ................................................. 28
Independent Accountants .............................................................. 37
Certain Regulatory Matters ........................................................... 37
General Information .................................................................. 38
Appendix A--Description of Certain Obligations Issued or Guaranteed by U.S. Government
Agencies or Instrumentalities ....................................................... A-1
Appendix B--Description of Ratings ................................................... B-1
</TABLE>

2
<PAGE>

THE FUND

Mutual Fund Group (the "Trust") is an open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 11, 1987. The Trust presently consists of
19 separate series (the "Funds"). Certain of the Funds are diversified and
other Funds are non-diversified, as such term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). The Class A, Class B, Class C
and Institutional Class shares of the Funds are collectively referred to in
this Statement of Additional Information as the "Shares."

The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. The Chase Manhattan Bank ("Chase") is
the investment adviser for the Funds. Chase also serves as the Trust's
administrator (the "Administrator") and supervises the overall administration
of the Trust, including the Funds. A majority of the Trustees of the Trust are
not affiliated with the investment adviser or sub-advisers to the Funds.

INVESTMENT POLICIES AND RESTRICTIONS

Investment Policies

The Prospectuses set forth the various investment policies of the Fund.
The following information supplements and should be read in conjunction with
the related sections of the Prospectus. For descriptions of the securities
ratings of Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see Appendix
B.

U.S. Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest rates,
maturities and times of issuance, including: U.S. Treasury bills (maturities of
one year or less), U.S. Treasury notes (maturities of one to ten years) and
U.S. Treasury bonds (generally maturities of greater than ten years); and (2)
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities which are supported by any of the following: (a) the full
faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow
any amount listed to a specific line of credit from the U.S. Treasury, (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the U.S. Government agency or instrumentality or (d) the credit of the
agency or instrumentality. Agencies and instrumentalities of the U.S.
Government include but are not limited to: Federal Land Banks, Federal
Financing Banks, Banks for Cooperatives, Federal Intermediate Credit Banks,
Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association, Student Loan Marketing
Association, United States Postal Service, Chrysler Corporate Loan Guarantee
Board, Small Business Administration, Tennessee Valley Authority and any other
enterprise established or sponsored by the U.S. Government. Certain U.S.
Government Securities, including U.S. Treasury bills, notes and bonds,
Government National Mortgage Association certificates and Federal Housing
Administration debentures, are supported by the full faith and credit of the
United States. Other U.S. Government Securities are issued or guaranteed by
federal agencies or government sponsored enterprises and are not supported by
the full faith and credit of the United States. These securities include
obligations that are supported by the right of the issuer to borrow from the
U.S. Treasury, such as obligations of the Federal Home Loan Banks, and
obligations that are supported by the creditworthiness of the particular
instrumentality, such as obligations of the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation. For a description of
certain obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, see Appendix A.

3
<PAGE>

related to government guarantees. While they may frequently offer attractive
yields, the limited-activity markets of many of these securities means that, if
the Fund were required to liquidate any of them, it might not be able to do so
advantageously; accordingly, if the Fund invests in such securities it would
normally hold such securities to maturity or pursuant to repurchase agreements,
and would treat such securities (including repurchase agreements maturing in
more than seven days) as illiquid for purposes of its limitation on investment
in illiquid securities.

Bank Obligations. Investments in bank obligations are limited to those of
U.S. banks (including their foreign branches) which have total assets at the
time of purchase in excess of $1 billion and the deposits of which are insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation, and foreign banks (including their
U.S. branches) having total assets in excess of $10 billion (or the equivalent
in other currencies), and such other U.S. and foreign commercial banks which
are judged by the advisers to meet comparable credit standing criteria.

Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank
by a borrower, usually in connection with an international commercial
transaction. The borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Fixed time deposits are obligations of branches of United States banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Although fixed time deposits do not have a market, there are no
contractual restrictions on the right to transfer a beneficial interest in the
deposit to a third party. Fixed time deposits subject to withdrawal penalties
and with respect to which the Fund cannot realize the proceeds thereon within
seven days are deemed "illiquid" for the purposes of its restriction on
investments in illiquid securities. Deposit notes are notes issued by
commercial banks which generally bear fixed rates of interest and typically
have original maturities ranging from eighteen months to five years.

Banks are subject to extensive governmental regulations that may limit
both the amounts and types of loans and other financial commitments that may be
made and the interest rates and fees that may be charged. The profitability of
this industry is largely dependent upon the availability and cost of capital
funds for the purpose of financing lending operations under prevailing money
market conditions. Also, general economic conditions play an important part in
the operations of this industry and exposure to credit losses arising from
possible financial difficulties of borrowers might affect a bank's ability to
meet its obligations. Bank obligations may be general obligations of the parent
bank or may be limited to the issuing branch by the terms of the specific
obligations or by government regulation. Investors should also be aware that
securities of foreign banks and foreign branches of United States banks may
involve foreign investment risks in addition to those relating to domestic bank
obligations.

Foreign Securities. For purposes of the Fund's investment policies, the
issuer of a security may be deemed to be located in a particular country if (i)
the principal trading market for the security is in such country, (ii) the
issuer is organized under the laws of such country or (iii) the issuer derives
at least 50% of its revenues or profits from such country or has at least 50%
of its assets situated in such country.

ECU Obligations. The specific amounts of currencies comprising the ECU may
be adjusted by the Council of Ministers of the European Community to reflect
changes in relative values of the underlying currencies. The Trustees do not
believe that such adjustments will adversely affect holders of ECU-denominated
securities or the marketability of such securities.

Supranational Obligations. Supranational organizations, include
organizations such as The World Bank, which was chartered to finance
development projects in developing member countries; the European Community,
which is a twelve-nation organization engaged in cooperative economic
activities; the European Coal and Steel Community, which is an economic union
of various European nations steel and coal industries; and the Asian
Development Bank, which is an international development bank established to
lend

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<PAGE>

funds, promote investment and provide technical assistance to member nations of
the Asian and Pacific regions.

Corporate Reorganizations. In general, securities that are the subject of
a tender or exchange offer or proposal sell at a premium to their historic
market price immediately prior to the announcement of the offer or proposal.
The increased market price of these securities may also discount what the
stated or appraised value of the security would be if the contemplated action
were approved or consummated. These investments may be advantageous when the
discount significantly overstates the risk of the contingencies involved;
significantly undervalues the securities, assets or cash to be received by
shareholders of the prospective portfolio company as a result of the
contemplated transaction; or fails adequately to recognize the possibility that
the offer or proposal may be replaced or superseded by an offer or proposal of
greater value. The evaluation of these contingencies requires unusually broad
knowledge and experience on the part of the advisers that must appraise not
only the value of the issuer and its component businesses as well as the assets
or securities to be received as a result of the contemplated transaction, but
also the financial resources and business motivation of the offeror as well as
the dynamics of the business climate when the offer or proposal is in progress.
Investments in reorganization securities may tend to increase the turnover
ratio of the Fund and increase its brokerage and other transaction expenses.

Warrants and Rights. Warrants basically are options to purchase equity
securities at a specified price for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying securities.
Rights are similar to warrants but normally have a shorter duration and are
distributed directly by the issuer to shareholders. Rights and warrants have no
voting rights, receive no dividends and have no rights with respect to the
assets of the issuer.

Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which
is a type of commercial paper) represents a direct borrowing arrangement
involving periodically fluctuating rates of interest under a letter agreement
between a commercial paper issuer and an institutional lender pursuant to which
the lender may determine to invest varying amounts.

Repurchase Agreements. The Fund will enter into repurchase agreements only
with member banks of the Federal Reserve System and securities dealers believed
creditworthy, and only if fully collateralized by securities in which the Fund
is permitted to invest. Under the terms of a typical repurchase agreement, the
Fund would acquire an underlying instrument for a relatively short period
(usually not more than one week) subject to an obligation of the seller to
repurchase the instrument and the Fund to resell the instrument at a fixed
price and time, thereby determining the yield during the Fund's holding period.
This procedure results in a fixed rate of return insulated from market
fluctuations during such period. A repurchase agreement is subject to the risk
that the seller may fail to repurchase the security. Repurchase agreements are
considered under the 1940 Act to be loans collateralized by the underlying
securities. All repurchase agreements entered into by the Fund will be fully
collateralized at all times during the period of the agreement in that the
value of the underlying security will be at least equal to 100% of the amount
of the loan, including the accrued interest thereon, and the Fund or its
custodian or sub-custodian will have possession of the collateral, which the
Board of Trustees believes will give it a valid, perfected security interest in
the collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established. This
might become an issue in the event of the bankruptcy of the other party to the
transaction. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities would not be
owned by the Fund, but would only constitute collateral for the seller's
obligation to pay the repurchase price. Therefore, the Fund may suffer time
delays and incur costs in connection with the disposition of the collateral.
The Board of Trustees believes that the collateral underlying repurchase
agreements may be more susceptible to claims of the seller's creditors than
would be the case with securities owned by the Fund. Repurchase agreements
maturing in more than seven days are treated as illiquid for purposes of the
Fund's restrictions on purchases of illiquid securities. Repurchase agreements
are also subject to the risks described below with respect to stand-by
commitments.

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<PAGE>

Forward Commitments. In order to invest the Fund's assets immediately,
while awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will
normally be purchased. When a commitment to purchase a security on a forward
commitment basis is made, procedures are established consistent with the
General Statement of Policy of the Securities and Exchange Commission
concerning such purchases. Since that policy currently recommends that an
amount of the Fund's assets equal to the amount of the purchase be held aside
or segregated to be used to pay for the commitment, a separate account of the
Fund consisting of cash or liquid securities equal to the amount of the Fund's
commitments securities will be established at the Fund's custodian bank. For
the purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market value. If the market value of
such securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by the Fund.

Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the Fund's portfolio are
subject to changes in value based upon the public's perception of the issuer
and changes, real or anticipated, in the level of interest rates. Purchasing
securities on a forward commitment basis can involve the risk that the yields
available in the market when the delivery takes place may actually be higher or
lower than those obtained in the transaction itself. On the settlement date of
the forward commitment transaction, the Fund will meet its obligations from
then available cash flow, sale of securities held in the separate account, sale
of other securities or, although it would not normally expect to do so, from
sale of the forward commitment securities themselves (which may have a value
greater or lesser than the Fund's payment obligations). The sale of securities
to meet such obligations may result in the realization of capital gains or
losses.

To the extent the Fund engages in forward commitment transactions, it will
do so for the purpose of acquiring securities consistent with its investment
objective and policies and not for the purpose of investment leverage, and
settlement of such transactions will be within 90 days from the trade date.

Floating and Variable Rate Securities; Participation Certificates. The
securities in which the Fund may be invested include participation certificates
issued by a bank, insurance company or other financial institution in
securities owned by such institutions or affiliated organizations
("Participation Certificates"). A Participation Certificate gives the Fund an
undivided interest in the security in the proportion that the Fund's
participation interest bears to the total principal amount of the security and
generally provides the demand feature described below. Each Participation
Certificate is backed by an irrevocable letter of credit or guaranty of a bank
(which may be the bank issuing the Participation Certificate, a bank issuing a
confirming letter of credit to that of the issuing bank, or a bank serving as
agent of the issuing bank with respect to the possible repurchase of the
Participation Certificate) or insurance policy of an insurance company that the
Board of Trustees of the Trust has determined meets the prescribed quality
standards for the Fund.

The Fund may have the right to sell the Participation Certificate back to
the institution and draw on the letter of credit or insurance on demand after
the prescribed notice period, for all or any part of the full principal amount
of the Fund's participation interest in the security, plus accrued interest.
The institutions issuing the Participation Certificates would retain a service
and letter of credit fee and a fee for providing the demand feature, in an
amount equal to the excess of the interest paid on the instruments over the
negotiated yield at which the Participation Certificates were purchased by the
Fund. The total fees would generally range from 5% to 15% of the applicable
prime rate or other short-term rate index. With respect to insurance, the Fund
will attempt to have the issuer of the participation certificate bear the cost
of any such insurance, although the Fund retains the option to purchase
insurance if deemed appropriate. Obligations that have a demand feature
permitting the Fund to tender the obligation to a foreign bank may involve
certain risks associated with foreign investment. The Fund's ability to receive
payment in such circumstances under the demand feature from such foreign banks
may involve certain risks such as future political and economic developments,
the possible establishments of laws or restrictions that might adversely affect
the payment

6
<PAGE>

of the bank's obligations under the demand feature and the difficulty of
obtaining or enforcing a judgment against the bank.

The advisers have been instructed by the Board of Trustees to monitor on
an ongoing basis the pricing, quality and liquidity of the floating and
variable rate securities held by the Fund, including Participation
Certificates, on the basis of published financial information and reports of
the rating agencies and other bank analytical services to which the Fund may
subscribe. Although these instruments may be sold by the Fund, it is intended
that they be held until maturity.

Past periods of high inflation, together with the fiscal measures adopted
to attempt to deal with it, have seen wide fluctuations in interest rates,
particularly "prime rates" charged by banks. While the value of the underlying
floating or variable rate securities may change with changes in interest rates
generally, the floating or variable rate nature of the underlying floating or
variable rate securities should minimize changes in value of the instruments.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation and the risk of potential capital depreciation is less than would
be the case with a portfolio of fixed rate securities. The Fund's portfolio may
contain floating or variable rate securities on which stated minimum or maximum
rates, or maximum rates set by state law, limit the degree to which interest on
such floating or variable rate securities may fluctuate; to the extent it does,
increases or decreases in value may be somewhat greater than would be the case
without such limits. Because the adjustment of interest rates on the floating
or variable rate securities is made in relation to movements of the applicable
banks' "prime rates" or other short-term rate adjustment indices, the floating
or variable rate securities are not comparable to long-term fixed rate
securities. Accordingly, interest rates on the floating or variable rate
securities may be higher or lower than current market rates for fixed rate
obligations of comparable quality with similar maturities.

The maturity of variable rate securities is deemed to be the longer of (i)
the notice period required before the Fund is entitled to receive payment of
the principal amount of the security upon demand or (ii) the period remaining
until the security's next interest rate adjustment.

Reverse Repurchase Agreements. Reverse repurchase agreements involve the
sale of securities held by the Fund with an agreement to repurchase the
securities at an agreed upon price and date. The repurchase price is generally
equal to the original sales price plus interest. Reverse repurchase agreements
are usually for seven days or less and cannot be repaid prior to their
expiration dates. Reverse repurchase agreements involve the risk that the
market value of the portfolio securities transferred may decline below the
price at which the Fund is obliged to purchase the securities.

Zero Coupon, Payment-in-Kind and Stripped Obligations. The principal and
interest components of United States Treasury bonds with remaining maturities
of longer than ten years are eligible to be traded independently under the
Separate Trading of Registered Interest and Principal of Securities ("STRIPS")
program. Under the STRIPS program, the principal and interest components are
separately issued by the United States Treasury at the request of depository
financial institutions, which then trade the component parts separately. The
interest component of STRIPS may be more volatile than that of United States
Treasury bills with comparable maturities.

Zero coupon obligations are sold at a substantial discount from their
value at maturity and, when held to maturity, their entire return, which
consists of the amortization of discount, comes from the difference between
their purchase price and maturity value. Because interest on a zero coupon
obligation is not distributed on a current basis, the obligation tends to be
subject to greater price fluctuations in response to changes in interest rates
than are ordinary interest-paying securities with similar maturities. The value
of zero coupon obligations appreciates more than such ordinary interest-paying
securities during periods of declining interest rates and depreciates more than
such ordinary interest-paying securities during periods of rising interest
rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as
amended, investments by the Fund in zero coupon obligations will result in the
accrual of interest income on such investments in advance of the receipt of the
cash corresponding to such income.

7
<PAGE>

by this security separately. Proprietary receipts, such as Certificates of
Accrual on Treasury Securities, Treasury Investment Growth Receipts and generic
Treasury Receipts, are examples of stripped U.S. Treasury securities separated
into their component parts through such custodial arrangements.

Payment-in-kind ("PIK") bonds are debt obligations which provide that the
issuer thereof may, at its option, pay interest on such bonds in cash or in the
form of additional debt obligations. Such investments benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. Such investments experience greater volatility in market value due to
changes in interest rates than debt obligations which provide for regular
payments of interest. The Fund will accrue income on such investments for tax
and accounting purposes, as required, which is distributable to shareholders
and which, because no cash is received at the time of accrual, may require the
liquidation of other portfolio securities to satisfy the Fund's distribution
obligations.

Illiquid Securities. For purposes of its limitation on investments in
illiquid securities, the Fund may elect to treat as liquid, in accordance with
procedures established by the Board of Trustees, certain investments in
restricted securities for which there may be a secondary market of qualified
institutional buyers as contemplated by Rule 144A under the Securities Act of
1933, as amended (the "Securities Act") and commercial obligations issued in
reliance on the so-called "private placement" exemption from registration
afforded by Section 4(2) of the Securities Act ("Section 4(2) paper"). Rule
144A provides an exemption from the registration requirements of the Securities
Act for the resale of certain restricted securities to qualified institutional
buyers. Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Fund who agree that they are purchasing the paper for investment and not with a
view to public distribution. Any resale of Section 4(2) paper by the purchaser
must be in an exempt transaction.

One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained.
The Trustees have adopted policies and procedures for the purpose of
determining whether securities that are eligible for resale under Rule 144A and
Section 4(2) paper are liquid or illiquid for purposes of the limitation on
investment in illiquid securities. Pursuant to those policies and procedures,
the Trustees have delegated to the advisers the determination as to whether a
particular instrument is liquid or illiquid, requiring that consideration be
given to, among other things, the frequency of trades and quotes for the
security, the number of dealers willing to sell the security and the number of
potential purchasers, dealer undertakings to make a market in the security, the
nature of the security and the time needed to dispose of the security. The
Trustees will periodically review the Fund's purchases and sales of Rule 144A
securities and Section 4(2) paper.

Stand-By Commitments. In a put transaction, the Fund acquires the right to
sell a security at an agreed upon price within a specified period prior to its
maturity date, and a stand-by commitment entitles the Fund to same-day
settlement and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise.
Stand-by commitments are subject to certain risks, which include the inability
of the issuer of the commitment to pay for the securities at the time the
commitment is exercised, the fact that the commitment is not marketable by the
Fund, and that the maturity of the underlying security will generally be
different from that of the commitment.

Securities Loans. To the extent specified in its Prospectus, the Fund is
permitted to lend its securities to broker-dealers and other institutional
investors in order to generate additional income. Such loans of portfolio
securities may not exceed 30% of the value of the Fund's total assets. In
connection with such loans, the Fund will receive collateral consisting of
cash, cash equivalents, U.S. Government securities or irrevocable letters of
credit issued by financial institutions. Such collateral will be maintained at
all times in an amount equal to at least 100% of the current market value plus
accrued interest of the securities loaned. The Fund can increase its income
through the investment of such collateral. The Fund continues to be entitled to
the interest payable or any dividend-equivalent payments received on a loaned
security and, in addition,

8
<PAGE>

to receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by the Fund on a loaned security from the borrower
will not qualify for the dividends-received deduction. Such loans will be
terminable at any time upon specified notice. The Fund might experience risk of
loss if the institutions with which it has engaged in portfolio loan
transactions breach their agreements with the Fund. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
experience financial difficulty. Loans will be made only to firms deemed by the
advisers to be of good standing and will not be made unless, in the judgment of
the advisers, the consideration to be earned from such loans justifies the
risk.

Additional Policies Regarding Derivative and Related Transactions

Introduction. As explained more fully below, the Fund may employ
derivative and related instruments as tools in the management of portfolio
assets. Put briefly, a "derivative" instrument may be considered a security or
other instrument which derives its value from the value or performance of other
instruments or assets, interest or currency exchange rates, or indexes. For
instance, derivatives include futures, options, forward contracts, structured
notes and various over-the-counter instruments.

Like other investment tools or techniques, the impact of using derivatives
strategies or similar instruments depends to a great extent on how they are
used. Derivatives are generally used by portfolio managers in three ways:
first, to reduce risk by hedging (offsetting) an investment position; second,
to substitute for another security particularly where it is quicker, easier and
less expensive to invest in derivatives; and lastly, to speculate or enhance
portfolio performance. When used prudently, derivatives can offer several
benefits, including easier and more effective hedging, lower transaction costs,
quicker investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks, thereby
leading to potentially greater losses for the Fund.

The Fund may invest its assets in derivative and related instruments
subject only to the Fund's investment objective and policies and the
requirement that the Fund maintain segregated accounts consisting of cash or
other liquid assets (or, as permitted by applicable regulation, enter into
certain offsetting positions) to cover its obligations under such instruments
with respect to positions where there is no underlying portfolio asset so as to
avoid leveraging the Fund.

The value of some derivative or similar instruments in which the Fund may
invest may be particularly sensitive to changes in prevailing interest rates or
other economic factors, and--like other investments of the Fund--the ability of
the Fund to successfully utilize these instruments may depend in part upon the
ability of the advisers to forecast interest rates and other economic factors
correctly. If the advisers inaccurately forecast such factors and has taken
positions in derivative or similar instruments contrary to prevailing market
trends, the Fund could be exposed to the risk of a loss. The Fund might not
employ any or all of the strategies described herein, and no assurance can be
given that any strategy used will succeed.

Set forth below is an explanation of the various derivatives strategies
and related instruments the Fund may employ along with risks or special
attributes associated with them. This discussion is intended to supplement the
Fund's current prospectus as well as provide useful information to prospective
investors.

9
<PAGE>

ing usually limits both potential losses as well as potential gains. Strategies
not involving hedging may increase the risk to the Fund. Certain strategies,
such as yield enhancement, can have speculative characteristics and may result
in more risk to the Fund than hedging strategies using the same instruments.
There can be no assurance that a liquid market will exist at a time when the
Fund seeks to close out an option, futures contract or other derivative or
related position. Many exchanges and boards of trade limit the amount of
fluctuation permitted in option or futures contract prices during a single day;
once the daily limit has been reached on particular contract, no trades may be
made that day at a price beyond that limit. In addition, certain instruments
are relatively new and without a significant trading history. As a result,
there is no assurance that an active secondary market will develop or continue
to exist. Finally, over-the-counter instruments typically do not have a liquid
market. Lack of a liquid market for any reason may prevent the Fund from
liquidating an unfavorable position. Activities of large traders in the futures
and securities markets involving arbitrage, "program trading," and other
investment strategies may cause price distortions in these markets. In certain
instances, particularly those involving over-the-counter transactions, forward
contracts there is a greater potential that a counterparty or broker may
default or be unable to perform on its commitments. In the event of such a
default, the Fund may experience a loss. In transactions involving currencies,
the value of the currency underlying an instrument may fluctuate due to many
factors, including economic conditions, interest rates, governmental policies
and market forces.

Specific Uses and Strategies. Set forth below are explanations of various
strategies involving derivatives and related instruments which may be used by
the Fund.

Options on Securities, Securities Indexes and Debt Instruments. The Fund
may PURCHASE, SELL or EXERCISE call and put options on (i) securities, (ii)
securities indexes, and (iii) debt instruments.

Although in most cases these options will be exchange-traded, the Fund may
also purchase, sell or exercise over-the-counter options. Over-the-counter
options differ from exchange-traded options in that they are two-party
contracts with price and other terms negotiated between buyer and seller. As
such, over-the-counter options generally have much less market liquidity and
carry the risk of default or nonperformance by the other party.

One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. The Fund may also
use combinations of options to minimize costs, gain exposure to markets or take
advantage of price disparities or market movements. For example, the Fund may
sell put or call options it has previously purchased or purchase put or call
options it has previously sold. These transactions may result in a net gain or
loss depending on whether the amount realized on the sale is more or less than
the premium and other transaction costs paid on the put or call option which is
sold. The Fund may write a call or put option in order to earn the related
premium from such transactions. Prior to exercise or expiration, an option may
be closed out by an offsetting purchase or sale of a similar option. The Fund
will not write uncovered options.

In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, the
Fund writing a covered call (i.e., where the underlying securities are held by
the Fund) has, in return for the premium on the option, given up the
opportunity to profit from a price increase in the underlying securities above
the exercise price, but has retained the risk of loss should the price of the
underlying securities decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price.

If a put or call option purchased by the Fund is not sold when it has
remaining value, and if the market price of the underlying security, in the
case of a put, remains equal to or greater than the exercise price or, in the
case of a call, remains less than or equal to the exercise price, the Fund will
lose its entire investment

10
<PAGE>

in the option. Also, where a put or call option on a particular security is
purchased to hedge against price movements in a related security, the price of
the put or call option may move more or less than the price of the related
security. There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options markets, the Fund may be
unable to close out a position.

Futures Contracts and Options on Futures Contracts. The Fund may purchase
or sell (i) interest-rate futures contracts, (ii) futures contracts on
specified instruments or indices, and (iii) options on these futures contracts
("futures options").

The futures contracts and futures options may be based on various
instruments or indices in which the Fund may invest such as foreign currencies,
certificates of deposit, Eurodollar time deposits, securities indices, economic
indices (such as the Consumer Price Indices compiled by the U.S. Department of
Labor).

Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
the Fund may sell a futures contract--or buy a futures option--to protect
against a decline in value, or reduce the duration, of portfolio holdings.
Likewise, these instruments may be used where the Fund intends to acquire an
instrument or enter into a position. For example, the Fund may purchase a
futures contract--or buy a futures option--to gain immediate exposure in a
market or otherwise offset increases in the purchase price of securities or
currencies to be acquired in the future. Futures options may also be written to
earn the related premiums.

When writing or purchasing options, the Fund may simultaneously enter into
other transactions involving futures contracts or futures options in order to
minimize costs, gain exposure to markets, or take advantage of price
disparities or market movements. Such strategies may entail additional risks in
certain instances. The Fund may engage in cross-hedging by purchasing or
selling futures or options on a security or currency different from the
security or currency position being hedged to take advantage of relationships
between the two securities or currencies.

Investments in futures contracts and options thereon involve risks similar
to those associated with options transactions discussed above. The Fund will
only enter into futures contracts or options on futures contracts which are
traded on a U.S. or foreign exchange or board of trade, or similar entity, or
quoted on an automated quotation system.

Forward Contracts. The Fund may use foreign currency and interest-rate
forward contracts for various purposes as described below.

Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. The Fund that may
invest in securities denominated in foreign currencies may, in addition to
buying and selling foreign currency futures contracts and options on foreign
currencies and foreign currency futures, enter into forward foreign currency
exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be a fixed number of days from the date of
the contract agreed upon by the parties, at a price set at the time of the
contract. By entering into a forward foreign currency contract, the Fund "locks
in" the exchange rate between the currency it will deliver and the currency it
will receive for the duration of the contract. As a result, the Fund reduces
its exposure to changes in the value of the currency it will deliver and
increases its exposure to changes in the value of the currency it will exchange
into. The effect on the value of the Fund is similar to selling securities
denominated in one currency and purchasing securities denominated in another.
Transactions that use two foreign currencies are sometimes referred to as
"cross-hedges."

The Fund may enter into these contracts for the purpose of hedging against
foreign exchange risk arising from the Fund's investments or anticipated
investments in securities denominated in foreign curren-

11
<PAGE>

cies. The Fund may also enter into these contracts for purposes of increasing
exposure to a foreign currency or to shift exposure to foreign currency
fluctuations from one country to another.

The Fund may also use forward contracts to hedge against changes in
interest rates, increase exposure to a market or otherwise take advantage of
such changes. An interest-rate forward contract involves the obligation to
purchase or sell a specific debt instrument at a fixed price at a future date.

Interest Rate and Currency Transactions. The Fund may employ currency and
interest rate management techniques, including transactions in options
(including yield curve options), futures, options on futures, forward foreign
currency exchange contracts, currency options and futures and currency and
interest rate swaps. The aggregate amount of the Fund's net currency exposure
will not exceed the total net asset value of its portfolio. However, to the
extent that the Fund is fully invested while also maintaining currency
positions, it may be exposed to greater combined risk.

The Fund will only enter into interest rate and currency swaps on a net
basis, i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. Interest
rate and currency swaps do not involve the delivery of securities, the
underlying currency, other underlying assets or principal. Accordingly, the
risk of loss with respect to interest rate and currency swaps is limited to the
net amount of interest or currency payments that the Fund is contractually
obligated to make. If the other party to an interest rate or currency swap
defaults, the Fund's risk of loss consists of the net amount of interest or
currency payments that the Fund is contractually entitled to receive. Since
interest rate and currency swaps are individually negotiated, the Fund expects
to achieve an acceptable degree of correlation between its portfolio
investments and its interest rate or currency swap positions.

The Fund may hold foreign currency received in connection with investments
in foreign securities when it would be beneficial to convert such currency into
U.S. dollars at a later date, based on anticipated changes in the relevant
exchange rate.

The Fund may purchase or sell without limitation as to a percentage of its
assets forward foreign currency exchange contracts when the advisers anticipate
that the foreign currency will appreciate or depreciate in value, but
securities denominated in that currency do not present attractive investment
opportunities and are not held by the Fund. In addition, the Fund may enter
into forward foreign currency exchange contracts in order to protect against
adverse changes in future foreign currency exchange rates. The Fund may engage
in cross-hedging by using forward contracts in one currency to hedge against
fluctuations in the value of securities denominated in a different currency if
its advisers believe that there is a pattern of correlation between the two
currencies. Forward contracts may reduce the potential gain from a positive
change in the relationship between the U.S. Dollar and foreign currencies.
Unanticipated changes in currency prices may result in poorer overall
performance for the Fund than if it had not entered into such contracts. The
use of foreign currency forward contracts will not eliminate fluctuations in
the underlying U.S. dollar equivalent value of the prices of or rates of return
on the Fund's foreign currency denominated portfolio securities and the use of
such techniques will subject the Fund to certain risks.

The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, the Fund may not always be able to enter into foreign currency
forward contracts at attractive prices, and this will limit the Fund's ability
to use such contract to hedge or cross-hedge its assets. Also, with regard to
the Fund's use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies relative to the
U.S. dollar will continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies underlying the Fund's
cross-hedges and the movements in the exchange rates of the foreign currencies
in which the Fund's assets that are the subject of such cross-hedges are
denominated.

The Fund may enter into interest rate and currency swaps to the maximum
allowed limits under applicable law. The Fund will typically use interest rate
swaps to shorten the effective duration of its portfolio. Inter-

12
<PAGE>

est rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest, such as an exchange of fixed
rate payments for floating rate payments. Currency swaps involve the exchange
of their respective rights to make or receive payments in specified currencies.

Mortgage-Related Securities. The Fund may purchase mortgage-backed
securities--i.e., securities representing an ownership interest in a pool of
mortgage loans issued by lenders such as mortgage bankers, commercial banks and
savings and loan associations. Mortgage loans included in the pool--but not the
security itself--may be insured by the Government National Mortgage Association
or the Federal Housing Administration or guaranteed by the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Veterans Administration. Mortgage-backed securities provide investors with
payments consisting of both interest and principal as the mortgages in the
underlying mortgage pools are paid off. Although providing the potential for
enhanced returns, mortgage-backed securities can also be volatile and result in
unanticipated losses.

The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of the
principal invested far in advance of the maturity of the mortgages in the pool.
The actual rate of return of a mortgage-backed security may be adversely
affected by the prepayment of mortgages included in the mortgage pool
underlying the security.

The Fund may also invest in securities representing interests in
collateralized mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs") and in pools of certain other asset-backed bonds and
mortgage pass-through securities. Like a bond, interest and prepaid principal
are paid, in most cases, monthly. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the U.S. Government, or U.S. Government-
related entities, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. Monthly payment of principal received from the
pool of underlying mortgages, including prepayments, are allocated to different
classes in accordance with the terms of the instruments, and changes in
prepayment rates or assumptions may significantly affect the expected average
life and value of a particular class.

REMICs include governmental and/or private entities that issue a fixed
pool of mortgages secured by an interest in real property. REMICs are similar
to CMOs in that they issue multiple classes of securities. REMICs issued by
private entities are not U.S. Government securities and are not directly
guaranteed by any government agency. They are secured by the underlying
collateral of the private issuer.

The advisers expect that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. The mortgages underlying these securities
may include alternative mortgage instruments, that is, mortgage instruments
whose principal or interest payments may vary or whose terms to maturity may
differ from customary long-term fixed-rate mortgages. The Fund may also invest
in debentures and other securities of real estate investment trusts. As new
types of mortgage-related securities are developed and offered to investors,
the Fund may consider making investments in such new types of mortgage-related
securities.

Dollar Rolls. Under a mortgage "dollar roll," the Fund sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar (same type, coupon and maturity)
securities on a specified future date. During the roll period, the Fund forgoes
principal and interest paid on the mortgage-backed securities. The Fund is
compensated by the difference between the current sales price and the lower
forward price for the future purchase (often referred to as the "drop") as well
as by the interest earned on the cash proceeds of the initial sale. The Fund
may only enter into covered rolls. A "covered roll" is a specific type of
dollar roll for which there is an offsetting cash position which matures

13
<PAGE>

on or before the forward settlement date of the dollar roll transaction. At the
time the Fund enters into a mortgage "dollar roll", it will establish a
segregated account with its custodian bank in which it will maintain cash or
liquid securities equal in value to its obligations in respect of dollar rolls,
and accordingly, such dollar rolls will not be considered borrowings. Mortgage
dollar rolls involve the risk that the market value of the securities the Fund
is obligated to repurchase under the agreement may decline below the repurchase
price. In the event the buyer of securities under a mortgage dollar roll files
for bankruptcy or becomes insolvent, the Fund's use of proceeds of the dollar
roll may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Fund's obligation to repurchase the
securities.

Asset-Backed Securities. The Fund may invest in asset-backed securities,
including conditional sales contracts, equipment lease certificates and
equipment trust certificates. The advisers expect that other asset-backed
securities (unrelated to mortgage loans) will be offered to investors in the
future. Several types of asset-backed securities already exist, including, for
example, "Certificates for Automobile Receivables(SM)" or "CARS(SM)" ("CARS").
CARS represent undivided fractional interests in a trust whose assets consist of
a pool of motor vehicle retail installment sales contracts and security
interests in the vehicles securing the contracts. Payments of principal and
interest on CARS are passed-through monthly to certificate holders, and are
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the trustee or
originator of the CARS trust. An investor's return on CARS may be affected by
early prepayment of principal on the underlying vehicle sales contracts. If the
letter of credit is exhausted, the CARS trust may be prevented from realizing
the full amount due on a sales contract because of state law requirements and
restrictions relating to foreclosure sales of vehicles and the obtaining of
deficiency judgments following such sales or because of depreciation, damage or
loss of a vehicle, the application of federal and state bankruptcy and
insolvency laws, the failure of servicers to take appropriate steps to perfect
the CARS trust's rights in the underlying loans and the servicer's sale of such
loans to bona fide purchasers, giving rise to interests in such loans superior
to those of the CARS trust, or other factors. As a result, certificate holders
may experience delays in payments or losses if the letter of credit is
exhausted. The Fund also may invest in other types of asset-backed securities.
In the selection of other asset-backed securities, the advisers will attempt to
assess the liquidity of the security giving consideration to the nature of the
security, the frequency of trading in the security, the number of dealers making
a market in the security and the overall nature of the marketplace for the
security.

Structured Products. The Fund may invest in interests in entities
organized and operated solely for the purpose of restructuring the investment
characteristics of certain other investments. This type of restructuring
involves the deposit with or purchase by an entity, such as a corporation or
trust, or specified instruments (such as commercial bank loans) and the
issuance by that entity of one or more classes of securities ("structured
products") backed by, or representing interests in, the underlying instruments.
The cash flow on the underlying instruments may be apportioned among the newly
issued structured products to create securities with different investment
characteristics such as varying maturities, payment priorities and interest
rate provisions, and the extent of the payments made with respect to structured
products is dependent on the extent of the cash flow on the underlying
instruments. The Fund may invest in structured products which represent derived
investment positions based on relationships among different markets or asset
classes.

The Fund may also invest in other types of structured products, including,
among others, inverse floaters, spread trades and notes linked by a formula to
the price of an underlying instrument. Inverse floaters have coupon rates that
vary inversely at a multiple of a designated floating rate (which typically is
determined by reference to an index rate, but may also be determined through a
dutch auction or a remarketing agent or by reference to another security) (the
"reference rate"). As an example, inverse floaters may constitute a class of
CMOs with a coupon rate that moves inversely to a designated index, such as
LIBOR (London Interbank Offered Rate) or the Cost of Funds Index. Any rise in
the reference rate of an inverse floater (as a consequence of an increase in
interest rates) causes a drop in the coupon rate while any drop in the
reference rate of an inverse floater causes an increase in the coupon rate. A
spread trade is an investment position relating to a difference in the prices
or interest rates of two securities where the value of the investment position
is determined by movements in the difference between the prices or interest
rates, as the case may

14
<PAGE>

be, of the respective securities. When the Fund invests in notes linked to the
price of an underlying instrument, the price of the underlying security is
determined by a multiple (based on a formula) of the price of such underlying
security. A structured product may be considered to be leveraged to the extent
its interest rate varies by a magnitude that exceeds the magnitude of the
change in the index rate of interest. Because they are linked to their
underlying markets or securities, investments in structured products generally
are subject to greater volatility than an investment directly in the underlying
market or security. Total return on the structured product is derived by
linking return to one or more characteristics of the underlying instrument.
Because certain structured products of the type in which the Fund may invest
may involve no credit enhancement, the credit risk of those structured products
generally would be equivalent to that of the underlying instruments. The Fund
may invest in a class of structured products that is either subordinated or
unsubordinated to the right of payment of another class. Subordinated
structured products typically have higher yields and present greater risks than
unsubordinated structured products. Although the Fund's purchase of
subordinated structured products would have similar economic effect to that of
borrowing against the underlying securities, the purchase will not be deemed to
be leverage for purposes of the Fund's fundamental investment limitation
related to borrowing and leverage.

Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, the Fund's investments in
these structured products may be limited by the restrictions contained in the
1940 Act. Structured products are typically sold in private placement
transactions, and there currently is no active trading market for structured
products. As a result, certain structured products in which the Fund invests
may be deemed illiquid and subject to its limitation on illiquid investments.

Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security. In
addition, because structured products are typically sold in private placement
transactions, there currently is no active trading market for structured
products.

Additional Restrictions on the Use of Futures and Option Contracts. The
Fund is not a "commodity pool" (i.e., a pooled investment vehicle which trades
in commodity futures contracts and options thereon and the operator of which is
registered with the CFTC) and futures contracts and futures options will be
purchased, sold or entered into only for bona fide hedging purposes, provided
that the Fund may enter into such transactions for purposes other than bona
fide hedging if, immediately thereafter, the sum of the amount of its initial
margin and premiums on open contracts and options would not exceed 5% of the
liquidation value of the Fund's portfolio, provided, further, that, in the case
of an option that is in-the-money, the in-the-money amount may be excluded in
calculating the 5% limitation.

When the Fund purchases a futures contract, an amount of cash or cash
equivalents or high quality debt securities will be deposited in a segregated
account with the Fund's custodian or sub-custodian so that the amount so
segregated, plus the initial deposit and variation margin held in the account
of its broker, will at all times equal the value of the futures contract,
thereby insuring that the use of such futures is unleveraged.

Investment Restrictions

The Fund has adopted the following investment restrictions which may not
be changed without approval by a "majority of the outstanding shares" of the
Fund which, as used in this Statement of Additional Information, means the vote
of the lesser of (i) 67% or more of the shares of the Fund present at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of the outstanding
shares of the Fund.

The Fund may not:

(2) make loans, except that the Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures or
other obligations and certificates of deposit, bankers'

15
<PAGE>

acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with
respect to portfolio securities; and (iii) lend portfolio securities with
a value not in excess of one-third of the value of its total assets;

(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry. Notwithstanding the foregoing, with respect to the Fund's
permissible futures and options transactions in U.S. Government
securities, positions in such options and futures shall not be subject to
this restriction;

(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent
the Fund from (i) purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities or (ii) engaging in forward purchases or sales of foreign
currencies or securities;

(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing insecurities or other instruments backed by real
estate or securities of companies engaged in the real estate business).
Investments by the Fund in securities backed by mortgages on real estate
or in marketable securities of companies engaged in such activities are
not hereby precluded;

(6) issue any senior security (as defined in the 1940 Act), except
that (a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order; (b)
the Fund may acquire other securities, the acquisition of which may result
in the issuance of a senior security, to the extent permitted under
applicable regulations or interpretations of the 1940 Act; and (c) subject
to the restrictions set forth above, the Fund may borrow money as
authorized by the 1940 Act. For purposes of this restriction, collateral
arrangements with respect to permissible options and futures transactions,
including deposits of initial and variation margin, are not considered to
be the issuance of a senior security; or

(7) underwrite securities issued by other persons except insofar as
the Fund may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security.

In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, the Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as the
Fund. For purposes of investment restriction (5) above, real estate includes
Real Estate Limited Partnerships.

For purposes of investment restriction (3) above, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as
an "industry." Investment restriction (3) above, however, is not applicable to
investments by the Fund in municipal obligations where the issuer is regarded
as a state, city, municipality or other public authority since such entities
are not members of an "industry." Supranational organizations are collectively
considered to be members of a single "industry" for purposes of restriction (3)
above.

In addition, the Fund is subject to the following nonfundamental
restrictions which may be changed without shareholder approval:

(1) The Fund may not, with respect to 75% of its assets, hold more
than 10% of the outstanding voting securities of any issuer or invest more
than 5% of its assets in the securities of any one issuer (other than
obligations of the U.S. Government, its agencies and instrumentalities).

(2) The Fund may not make short sales of securities, other than short
sales "against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio

16
<PAGE>

transactions, provided that this restriction will not be applied to limit
the use of options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of the Fund. The Fund does not have the current
intention of making short sales against the box.

(3) The Fund may not purchase or sell interests in oil, gas or
mineral leases.

(4) The Fund may not invest more than 15% of its net assets in
illiquid securities.

(5) The Fund may not write, purchase or sell any put or call option
or any combination thereof, provided that this shall not prevent (i) the
writing, purchasing or selling of puts, calls or combinations thereof with
respect to portfolio securities or (ii) with respect to the Fund's
permissible futures and options transactions, the writing, purchasing,
ownership, holding or selling of futures and options positions or of puts,
calls or combinations thereof with respect to futures.

(6) Except as specified above, the Fund may invest in the securities
of other investment companies to the extent permitted by applicable
Federal securities law; provided, however, that a Mauritius holding
company (a "Mauritius Portfolio Company") will not be considered an
investment company for this purpose.

For purposes of the Fund's investment restrictions, the issuer of a
tax-exempt security is deemed to be the entity (public or private) ultimately
responsible for the payment of the principal of and interest on the security.

In order to permit the sale of its shares in certain states and foreign
countries, the Fund may make commitments more restrictive than the investment
policies and limitations described above and in its Prospectus. Should the Fund
determine that any such commitment is no longer in its best interests, it will
revoke the commitment by terminating sales of its shares in the state or
country involved. In order to comply with certain regulatory policies, as a
matter of operating policy, the Fund will not: (i) borrow money in an amount
which would cause, at the time of such borrowing, the aggregate amount of
borrowing by the Fund to exceed 10% of the value of the Fund's total assets,
(ii) invest more than 10% of its total assets in the securities of any one
issuer (other than obligations of the U.S. Government, its agencies and
instrumentalities), (iii) acquire more than 10% of the outstanding shares of any
issuer and may not acquire more than 15% of the outstanding shares of any issuer
together with other mutual funds managed by The Chase Manhattan Bank, (iv)
invest more than 10% of its total assets in the securities of other investment
companies, except as they may be acquired as part of a merger, consolidation or
acquisition of assets, (v) invest more than 10% of its net assets in illiquid
securities (which include securities restricted as to resale unless they are
determined to be readily marketable in accordance with procedures established by
the Board of Trustees), (vi) grant privileges to purchase shares of the Fund to
shareholders or investors by issuing warrants, subscription rights or options,
or other similar rights and (vii) sell, purchase or loan securities (excluding
shares in the Fund) or grant or receive a loan or loans to or from the adviser,
corporate and domiciliary agent, or paying agent, the distributors and the
authorized agents or any of their directors, officers or employees or any of
their major shareholders (meaning a shareholder who holds, in his own or other
name (as well as a nominee's name), more than 10% of the total

17
<PAGE>

issued and outstanding shares of stock of such company) acting as principal, or
for their own account, unless the transaction is made within the other
restrictions set forth above and either (a) at a price determined by current
publicly available quotations, or (b) at competitive prices or interest rates
prevailing from time to time on internationally recognized securities markets
or internationally recognized money markets.

A Mauritius Portfolio Company is a special purpose company organized under
the laws of the Republic of Mauritius. The Fund may invest in India through a
Mauritius Portfolio Company, which is intended to allow the Fund to take
advantage of a favorable tax treaty between India and Mauritius.

If a percentage or rating restriction on investment or use of assets set
forth herein or in the Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by the Fund will not be considered a violation. If the value of the
Fund's holdings of illiquid securities at any time exceeds the percentage
limitation applicable at the time of acquisition due to subsequent fluctuations
in value or other reasons, the Board of Trustees will consider what actions, if
any, are appropriate to maintain adequate liquidity.

Portfolio Transactions and Brokerage Allocation

Specific decisions to purchase or sell securities for the Fund are made by
a portfolio manager who is an employee of the adviser or sub-adviser to the
Fund and who is appointed and supervised by senior officers of such adviser or
sub-adviser. Changes in the Fund's investments are reviewed by the Board of
Trustees of the Trust. The portfolio managers may serve other clients of the
advisers in a similar capacity.

The frequency of the Fund's portfolio transactions--the portfolio turnover
rate--will vary from year to year depending upon market conditions. Because a
high turnover rate may increase transaction costs and the possibility of
taxable short-term gains, the advisers will weigh the added costs of short-term
investment against anticipated gains. The Fund will engage in portfolio trading
if its advisers believe a transaction, net of costs (including custodian
charges), will help it achieve its investment objective. The Fund will apply
this policy with respect to both the equity and debt portions of its portfolio.

For the fiscal year ending October 31, 1998, the annual rate of portfolio
turnover for Strategic Income Fund is not expected to exceed 100%.

Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Fund. In assessing the best overall
terms available for any transaction, the adviser and sub-advisers consider all
factors they deem relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser
or sub-advisers, and the reasonableness of the commissions, if any, both for
the specific transaction and on a continuing basis. The adviser and sub-advisers
are not required to obtain the lowest commission or the best net price for the
Fund on any particular transaction, and are not required to execute any order
in a fashion either preferential to the Fund relative to other accounts they
manage or otherwise materially adverse to such other accounts.

Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to the Fund normally seeks to deal directly with the primary market
makers unless, in its opinion, best execution is available elsewhere. In the
case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the adviser or sub-adviser on the
tender of the Fund's portfolio securities in so-called tender or exchange
offers. Such soliciting dealer fees are in effect recaptured for the Fund by
the adviser and sub-advisers. At present, no other recapture arrangements are
in effect.

Under the advisory and sub-advisory agreements and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may
cause the Fund to pay a broker-dealer which provides

18
<PAGE>

brokerage and research services to the adviser or sub-advisers, the Fund and/or
other accounts for which they exercise investment discretion an amount of
commission for effecting a securities transaction for the Fund in excess of the
amount other broker-dealers would have charged for the transaction if they
determine in good faith that the greater commission is reasonable in relation
to the value of the brokerage and research services provided by the executing
broker-dealer viewed in terms of either a particular transaction or their
overall responsibilities to accounts over which they exercise investment
discretion. Not all of such services are useful or of value in advising the
Fund. The adviser and sub-advisers report to the Board of Trustees regarding
overall commissions paid by the Fund and their reasonableness in relation to
the benefits to the Fund. The term "brokerage and research services" includes
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or of
purchasers or sellers of securities, furnishing analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts, and effecting securities transactions and
performing functions incidental thereto such as clearance and settlement.

The management fees that the Fund pays to the adviser will not be reduced
as a consequence of the adviser's or sub-advisers' receipt of brokerage and
research services. To the extent the Fund's portfolio transactions are used to
obtain such services, the brokerage commissions paid by the Fund will exceed
those that might otherwise be paid by an amount which cannot be presently
determined. Such services generally would be useful and of value to the adviser
or sub-advisers in serving one or more of their other clients and, conversely,
such services obtained by the placement of brokerage business of other clients
generally would be useful to the adviser and sub-advisers in carrying out their
obligations to the Fund. While such services are not expected to reduce the
expenses of the adviser or sub-advisers, the advisers would, through use of the
services, avoid the additional expenses which would be incurred if they should
attempt to develop comparable information through their own staffs.

In certain instances, there may be securities that are suitable for the
Fund as well as one or more of the adviser's or sub-advisers' other clients.
Investment decisions for the Fund and for other clients are made with a view to
achieving their respective investment objectives. It may develop that the same
investment decision is made for more than one client or that a particular
security is bought or sold for only one client even though it might be held by,
or bought or sold for, other clients. Likewise, a particular security may be
bought for one or more clients when one or more clients are selling that same
security. Some simultaneous transactions are inevitable when several clients
receive investment advice from the same investment adviser, particularly when
the same security is suitable for the investment objectives of more than one
client. When the Fund and other clients are simultaneously engaged in the
purchase or sale of the same security, the securities are allocated among
clients in a manner believed to be equitable to each. It is recognized that in
some cases this system could have a detrimental effect on the price or volume
of the security as far as the Fund is concerned. However, it is believed that
the ability of the Fund to participate in volume transactions will generally
produce better executions for the Fund.

No portfolio transactions are executed with the advisers or a Shareholder
Servicing Agent, or with any affiliate of the advisers or a Shareholder
Servicing Agent, acting either as principal or as broker.

PERFORMANCE INFORMATION

From time to time, the Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Because such performance information is based
on past investment results, it should not be considered as an indication or
representation of the performance of any classes of the Fund in the future.
From time to time, the performance and yield of classes of the Fund may be
quoted and compared to those of other mutual funds with similar investment
objectives, unmanaged investment accounts, including savings accounts, or other
similar products and to stock or other relevant indices or to rankings prepared
by independent services or other financial or industry publications that
monitor the performance of mutual funds. For example, the performance of the
Fund or its classes may be compared to data prepared by Lipper Analytical
Services, Inc. or Morningstar

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<PAGE>

Mutual Funds on Disc, widely recognized independent services which monitor the
performance of mutual funds. Performance and yield data as reported in national
financial publications including, but not limited to, Money Magazine, Forbes,
Barron's, The Wall Street Journal and The New York Times, or in local or
regional publications, may also be used in comparing the performance and yield
of the Fund or its classes. The Fund's performance may be compared with indices
such as the Lehman Brothers Government/Corporate Bond Index, the Lehman
Brothers Government Bond Index, the Lehman Government Bond 1-3 Year Index and
the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow Jones Industrial
Average or any other commonly quoted index of common stock prices; and the
Russell 2000 Index and the NASDAQ Composite Index. Additionally, the Fund may,
with proper authorization, reprint articles written about the Fund and provide
them to prospective shareholders.

The Fund may provide period and average annual "total rates of return."
The "total rate of return" refers to the change in the value of an investment
in the Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
and Class C shares, the average annual total rate of return figures will assume
deduction of the applicable contingent deferred sales charge imposed on a total
redemption of shares held for the period. One-, five-, and ten-year periods
will be shown, unless the class has been in existence for a shorter period.

Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yields and the net asset values of the classes of
shares of the Fund will vary based on market conditions, the current market
value of the securities held by the Fund and changes in the Fund's expenses.
The advisers, Shareholder Servicing Agents, the Administrator, the Distributor
and other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of the
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of the Fund during the period such waivers
are in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of the
Fund to yields and total rates of return published for other investment
companies and other investment vehicles (including different classes of
shares). The Trust is advised that certain Shareholder Servicing Agents may
credit to the accounts of their customers from whom they are already receiving
other fees amounts not exceeding the Shareholder Servicing Agent fees received,
which will have the effect of increasing the net return on the investment of
customers of those Shareholder Servicing Agents. Such customers may be able to
obtain through their Shareholder Servicing Agents quotations reflecting such
increased return.

The Fund will present performance information for each class thereof since
the commencement of operations of the Fund, rather than the date such class was
introduced. Performance information for each class introduced after the
commencement of operations of the Fund will therefore be based on the
performance history of a predecessor class or classes. Performance information
is restated to reflect the current maximum front-end sales charge (in the case
of Class A Shares) or the maximum applicable contingent deferred sales charge
(in the case of Class B and Class C Shares) when presented inclusive of sales
charges. Additional performance information may be presented which does not
reflect the deduction of sales charges. Historical expenses reflected in
performance information are based upon the distribution, shareholder servicing
fees and other expenses actually incurred during the periods presented and have
not been restated, for periods during which the performance information for a
particular class is based upon the performance history of a predecessor class,
to reflect the ongoing expenses currently borne by the particular class.

Advertising or communications to shareholders may contain the views of the
advisers as to current market, economic, trade and interest rate trends, as
well as legislative, regulatory and monetary developments, and may include
investment strategies and related matters believed to be of relevance to the
Fund.

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<PAGE>

Advertisements for the Chase Vista Funds may include references to the
asset size of other financial products made available by Chase, such as the
offshore assets of other funds.

Total Rate of Return

The Fund's or class' total rate of return for any period will be
calculated by (a) dividing (i) the sum of the net asset value per share on the
last day of the period and the net asset value per share on the last day of the
period of shares purchasable with dividends and capital gains declared during
such period with respect to a share held at the beginning of such period and
with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. The average annual rate of
return quotation will be calculated by (x) adding 1 to the period total rate of
return quotation as calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting
1 from the result.

The Fund may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of
the Fund with other measures of investment return.

Yield Quotations

Any current "yield" quotation for a class of shares shall consist of an
annualized hypothetical yield, carried at least to the nearest hundredth of one
percent, based on a thirty calendar day period and shall be calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the Fund's net investment income earned during the period by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends and the maximum offering price per share on the last day
of the period, (b) subtracting 1 from the result, and (c) multiplying the
result by 2.

Non-Standardized Performance Results

The Fund may include in advertisements or other communications the net
change in the value of an assumed initial investment of $10,000 in each class
of shares in the Fund (excluding the effects of any applicable sale charges)
for the period from the commencement date of business for the Fund, with values
reflecting an assumption that capital gain distributions and income dividends,
if any, have been invested in additional shares of the same class. From time to
time, the Fund may provide these performance results in addition to the total
rate of return quotations required by the Securities and Exchange Commission.
As discussed more fully in the Prospectus, neither these performance results,
nor total rate of return quotations, should be considered as representative of
the performance of the Fund in the future. These factors and the possible
differences in the methods used to calculate performance results and total
rates of return should be considered when comparing such performance results
and total rate of return quotations of the Fund with those published for other
investment companies and other investment vehicles.

DETERMINATION OF NET ASSET VALUE

As of the date of this Statement of Additional Information, the New York
Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Martin Luther King Jr.'s Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

Equity securities in the Fund's portfolio are valued at the last sale
price on the exchange on which they are primarily traded or on the NASDAQ
National Market System, or at the last quoted bid price for securities in which
there were no sales during the day or for other unlisted (over-the-counter)
securities not reported on the NASDAQ National Market System. Bonds and other
fixed income securities (other than short-term obligations, but including
listed issues) in the Fund's portfolio are valued on the basis of valuations
furnished by a pricing service, the use of which has been approved by the Board
of Trustees. In making such valuations, the pricing service utilizes both
dealer-supplied valuations and electronic data processing techniques that take
into account appro-

21
<PAGE>

priate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon quoted
prices or exchange or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities.
Short-term obligations which mature in 60 days or less are valued at amortized
cost, which constitutes fair value as determined by the Board of Trustees.
Futures and option contracts that are traded on commodities or securities
exchanges are normally valued at the settlement price on the exchange on which
they are traded. Portfolio securities (other than short-term obligations) for
which there are no such quotations or valuations are valued at fair value as
determined in good faith by or at the direction of the Board of Trustees.

Interest income on long-term obligations in the Fund's portfolio is
determined on the basis of coupon interest accrued plus amortization of
discount (the difference between acquisition price and stated redemption price
at maturity) and premiums (the excess of purchase price over stated redemption
price at maturity). Interest income on short-term obligations is determined on
the basis of interest and discount accrued less amortization of premium.

PURCHASES, REDEMPTIONS AND EXCHANGES

The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Fund's Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectus are not available
until a completed and signed account application has been received by the
Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application.

Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, the Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service
options chosen by the shareholder or joint shareholders in his or their latest
account application or other written request for services, including
purchasing, exchanging, or redeeming shares of the Fund and depositing and
withdrawing monies from the bank account specified in the Bank Account
Registration section of the shareholder's latest account application or as
otherwise properly specified to the Fund in writing.

Subject to compliance with applicable regulations, the Fund has reserved
the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of readily marketable portfolio securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (approximately $250,000).

Investors in Class A shares may qualify for reduced initial sales charges
by signing a statement of intention (the "Statement"). This enables the
investor to aggregate purchases of Class A shares in the Fund with purchases of
Class A shares of any other Fund in the Trust (or if a Fund has only one class,
shares of such Fund), excluding shares of any Chase Vista money market fund,
during a 13-month period. The sales charge is based on the total amount to be
invested in Class A shares during the 13-month period. All Class A or other
qualifying shares of the Fund currently owned by the investor will be credited
as purchases (at their current offering prices on the date the Statement is
signed) toward completion of the Statement. A 90-day back-dating period can be
used to include earlier purchases at the investor's cost. The 13-month period
would then begin on the date of the first purchase during the 90-day period. No
retroactive adjustment will be made if purchases exceed the amount indicated in
the Statement. A shareholder must notify the Transfer Agent or Distributor
whenever a purchase is being made pursuant to a Statement.

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<PAGE>

The Statement is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in Class A shares (or if
a Fund has only one class and is subject to an initial sales charge, shares of
such Fund) registered in the shareholder's name in order to assure payment of
the proper sales charge. If total purchases pursuant to the Statement (less any
dispositions and exclusive of any distributions on such shares automatically
reinvested) are less than the amount specified, the investor will be requested
to remit to the Transfer Agent an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Reinvested dividend and
capital gain distributions are not counted toward satisfying the Statement.

Class A shares of the Fund may also be purchased by any person at a
reduced initial sales charge which is determined by (a) aggregating the dollar
amount of the new purchase and the greater of the purchaser's total (i) net
asset value or (ii) cost of any shares acquired and still held in the Fund, or
any other Vista fund excluding any Vista money market fund, and (b) applying
the initial sales charge applicable to such aggregate dollar value (the
"Cumulative Quantity Discount"). The privilege of the Cumulative Quality
Discount is subject to modification or discontinuance at any time with respect
to all Class A shares purchased thereafter.

An individual who is a member of a qualified group (as hereinafter
defined) may also purchase Class A shares of the Fund at the reduced sales
charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of Class A shares previously
purchased and still owned by the group plus the securities currently being
purchased and is determined as stated in the preceding paragraph. In order to
obtain such discount, the purchaser or investment dealer must provide the
Transfer Agent with sufficient information, including the purchaser's total
cost, at the time of purchase to permit verification that the purchaser
qualifies for a cumulative quantity discount, and confirmation of the order is
subject to such verification. Information concerning the current initial sales
charge applicable to a group may be obtained by contacting the Transfer Agent.

A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Class A shares at a
discount and (iii) satisfies uniform criteria which enables the Distributor to
realize economies of scale in its costs of distributing Class A shares. A
qualified group must have more than 10 members, must be available to arrange
for group meetings between representatives of the Fund and the members must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange for payroll deduction or other bulk transmission of
investments in the Fund. This privilege is subject to modification or
discontinuance at any time with respect to all Class A shares purchased
thereafter.

Under the Exchange Privilege, shares may be exchanged for shares of
another fund only if shares of the fund exchanged into are registered in the
state where the exchange is to be made. Shares of the Fund may only be
exchanged into another fund if the account registrations are identical. With
respect to exchanges from any Vista money market fund, shareholders must have
acquired their shares in such money market fund by exchange from one of the
Vista non-money market funds or the exchange will be done at relative net asset
value plus the appropriate sales charge. Any such exchange may create a gain or
loss to be recognized for federal income tax purposes. Normally, shares of the
fund to be acquired are purchased on the redemption rate, but such purchase may
be delayed by either fund for up to five business days if a fund determines
that it would be disadvantaged by an immediate transfer of the proceeds.

The contingent deferred sales charge for Class B and Class C shares will
be waived for certain exchanges and for redemptions in connection with the
Fund's systematic withdrawal plan, subject to the conditions described in the
Prospectus. In addition, subject to confirmation of a shareholder's status, the
contingent deferred sales charge will be waived for: (i) a total or partial
redemption made within one year of the

23
<PAGE>

shareholder's death or initial qualification for Social Security disability
payments; (ii) a redemption in connection with a Minimum Required Distribution
from an IRA, Keogh or custodial account under section 403(b) of the Internal
Revenue Code or a mandatory distribution from a qualified plan; (iii)
redemptions made from an IRA, Keogh or custodial account under section 403(b)
of the Internal Revenue Code through an established Systematic Redemption Plan;
(iv) a redemption resulting from an over-contribution to an IRA; (v)
distributions from a qualified plan upon retirement; and (vi) an involuntary
redemption of an account balance under $500.

Class B shares automatically convert to Class A shares (and thus are then
subject to the lower expenses borne by Class A shares) after a period of time
specified below has elapsed since the date of purchase (the "CDSC Period"),
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares attributable to the
Class B shares then converting. The conversion of Class B shares will be
effected at the relative net asset values per share of the two classes on the
first business day of the month following the eighth anniversary of the
original purchase. If any exchanges of Class B shares during the CDSC Period
occurred, the holding period for the shares exchanged will be counted toward
the CDSC Period. At the time of the conversion the net asset value per share of
the Class A shares may be higher or lower than the net asset value per share of
the Class B shares; as a result, depending on the relative net asset values per
share, a shareholder may receive fewer or more Class A shares than the number
of Class B shares converted.

The Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain other circumstances described
in the Prospectus. The Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.

TAX MATTERS

The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning.

Qualification as a Regulated Investment Company

The Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
a regulated investment company, the Fund is not subject to federal income tax
on the portion of its net investment income (i.e., its investment company
taxable income, as that term is defined in the Code, without regard to the
deduction for dividends paid ) and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) that it distributes to
shareholders, provided that it distributes at least 90% of its net investment
income for the taxable year (the "Distribution Requirement"), and satisfies
certain other requirements of the Code that are described below.

In addition to satisfying the Distribution Requirement for each taxable
year, a regulated investment company must: (1) derive at least 90% of its gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "Income Requirement").

In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter

24
<PAGE>

of the Fund's taxable year, at least 50% of the value of the Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
the Fund has not invested more than 5% of the value of the Fund's total assets
in securities of such issuer and as to which the Fund does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.

The Fund may engage in hedging or derivatives transactions involving
foreign currencies, forward contracts, options and futures contracts (including
options, futures and forward contracts on foreign currencies) and short sales.
See "Additional Policies Regarding Derivative and Related Transactions." Such
transactions will be subject to special provisions of the Code that, among
other things, may affect the character of gains and losses realized by the Fund
(that is, may affect whether gains or losses are ordinary or capital),
accelerate recognition of income of the Fund and defer recognition of certain
of the Fund's losses. These rules could therefore affect the character, amount
and timing of distributions to shareholders. In addition, these provisions (1)
will require the Fund to "mark-to-market" certain types of positions in its
portfolio (that is, treat them as if they were closed out) and (2) may cause
the Fund to recognize income without receiving cash with which to pay dividends
or make distributions in amounts necessary to satisfy the Distribution
Requirement and avoid the 4% excise tax (described below). The Fund intends to
monitor its transactions, will make the appropriate tax elections and will make
the appropriate entries in its books and records when it acquires any option,
futures contract, forward contract or hedged investment in order to mitigate
the effect of these rules.

The Fund may make investments that produce income that is not matched by a
corresponding cash distribution to the Fund such as investments in pay-in-kind
bonds or in obligations such as zero coupon securities having original issue
discount (i.e., an amount equal to the excess of the stated redemption price of
the security at maturity over its issue price), or market discount (i.e., an
amount equal to the excess of the stated redemption price of the security over
the basis of such bond immediately after it was acquired) if the Fund elects to
accrue market discount on a current basis. In addition, income may continue to
accrue for federal income tax purposes with respect to a non-performing
investment. Any such income would be treated as income earned by the Fund and
therefore would be subject to the distribution requirements of the Code.
Because such income may not be matched by a corresponding cash distribution to
the Fund, the Fund may be required to borrow money or dispose of other
securities to be able to make distributions to its investors. In addition, if
an election is not made to currently accrue market discount with respect to a
market discount bond, all or a portion of any deduction or any interest
expenses incurred to purchase or hold such bond may be deferred until such bond
is sold or otherwise disposed.

If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.

Excise Tax on Regulated Investment Companies

A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election").
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.

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<PAGE>

The Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.

Fund Distributions

The Fund anticipates distributing substantially all of its net investment
income for each taxable year. Such distributions will be taxable to
shareholders as ordinary income and treated as dividends for federal income tax
purposes, but they will qualify for the 70% dividends-received deduction for
corporations only to the extent discussed below. Dividends paid on Class A,
Class B and Class C shares are calculated at the same time. In general,
dividends on Class B and Class C shares are expected to be lower than those on
Class A shares due to the higher distribution expenses borne by the Class B and
Class C shares. Dividends may also differ between classes as a result of
differences in other class specific expenses.

The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a "capital gain
dividend," it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.

Under recently enacted legislation, the maximum rate of tax on long-term
capital gains of individuals will generally be reduced from 28% to 20% (10% for
gains otherwise taxed at 15%) for long-term capital gains realized after July
28, 1997 with respect to capital assets held for more than 18 months.
Additionally, beginning after December 31, 2000, the maximum tax rate for
capital assets with a holding period beginning after that date and held for
more than five years will be 18%. Under a literal reading of the legislation,
capital gain dividends paid by a regulated investment company would not appear
eligible for the reduced capital gain rates. However, the legislation
authorizes the Treasury Department to promulgate regulations that would apply
the new rates to capital gain dividends paid by a regulated investment company.

Conversely, if the Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.

Ordinary income dividends paid by the Fund with respect to a taxable year
will qualify for the 70% dividends-received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by
the Fund from domestic corporations for the taxable year. A dividend received
by the Fund will not be treated as a qualifying dividend (1) if it has been
received with respect to any share of stock that the Fund has held for less
than 46 days (91 days in the case of certain preferred stock) during the 90 day
period beginning on the date which is 45 days before the date on which such
share becomes ex-dividend with respect to such dividend (during the 180 day
period beginning 90 days before such date in the case of certain preferred
stock) under the Rules of the Code Section 246(c)(3) and (4); (2) to the extent
that the Fund is under an obligation (pursuant to a short sale or otherwise) to
make related payments with respect to positions in substantially similar or
related property; or (3) to the extent the stock on which the dividend is paid
is treated as debt-financed under the rules of Code Section 246A. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Fund.

26
<PAGE>

corporation's AMT. However, corporate shareholders will generally be required
to take the full amount of any dividend received from the Fund into account
(without a dividends-received deduction) in determining its adjusted current
earnings.

Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance
since the amount of the Fund's assets to be invested in various countries is
not known.

Distributions by the Fund that do not constitute ordinary income
dividends, or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.

Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net asset
value at the time a shareholder purchases shares of the Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions
of such amounts will be taxable to the shareholder in the manner described
above, although such distributions economically constitute a return of capital
to the shareholder.

Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However,
dividends declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.

The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is
a corporation or other "exempt recipient."

Sale or Redemption of Shares

A shareholder will recognize gain or loss on the sale or redemption of
shares of the Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of the Fund will be considered capital
gain or loss and will be long- term capital gain or loss if the shares were
held for longer than one year. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be disallowed to the
extent of the amount of exempt-interest dividends received on such shares and
(to the extent not disallowed) will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares.

Foreign Shareholders

Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the
Fund is "effectively connected" with a U.S. trade or business carried on by
such shareholder.

27
<PAGE>

If the income from the Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, dividends paid to a foreign
shareholder from net investment income will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the
dividend. Such a foreign shareholder would generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of the Fund and
capital gain dividends and amounts retained by the Fund that are designated as
undistributed capital gains.

If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.

In the case of foreign noncorporate shareholders, the Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.

The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Fund, including the applicability of foreign taxes.

State and Local Tax Matters

Depending on the residence of the shareholder for tax purposes,
distributions may also be subject to state and local taxes or withholding
taxes. Most states provide that a regulated investment company may pass through
(without restriction) to its shareholders state and local income tax exemptions
available to direct owners of certain types of U.S. government securities (such
as U.S. Treasury obligations). Thus, for residents of these states,
distributions derived from the Fund's investment in certain types of U.S.
government securities should be free from state and local income taxes to the
extent that the interest income from such investments would have been exempt
from state and local income taxes if such securities had been held directly by
the respective shareholders themselves. Certain states, however, do not allow a
regulated investment company to pass through to its shareholders the state and
local income tax exemptions available to direct owners of certain types of U.S.
government securities unless the regulated investment company holds at least a
required amount of U.S. government securities. Accordingly, for residents of
these states, distributions derived from the Fund's investment in certain types
of U.S. government securities may not be entitled to the exemptions from state
and local income taxes that would be available if the shareholders had
purchased U.S. government securities directly. Shareholders' dividends
attributable to the Fund's income from repurchase agreements generally are
subject to state and local income taxes, although states and regulations vary
in their treatment of such income. The exemption from state and local income
taxes does not preclude states from asserting other taxes on the ownership of
U.S. government securities. To the extent that the Fund invests to a
substantial degree in U.S. government securities which are subject to favorable
state and local tax treatment, shareholders of the Fund will be notified as to
the extent to which distributions from the Fund are attributable to interest on
such securities. Rules of state and local taxation of ordinary income dividends
and capital gain dividends from regulated investment companies may differ from
the rules for U.S. federal income taxation in other respects. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in the Fund.

Effect of Future Legislation

The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.

28
<PAGE>

MANAGEMENT OF THE TRUST AND THE FUND

Trustees and Officers

The Trustees and officers of the Trust and their principal occupations for
at least the past five years are set forth below. Their titles may have varied
during that period.

Fergus Reid, III--Chairman of the Trust. Chairman and Chief Executive
Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley
Funds. Age: 66. Address: 202 June Road, Stamford, CT 06903.

*H. Richard Vartabedian--Trustee and President of the Trust. Investment
Management Consultant; formerly, Senior Investment Officer, Division Executive
of the Investment Management Division of The Chase Manhattan Bank, N.A., 1980
through 1991. Age: 62. Address: P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.

William J. Armstrong--Trustee. Vice President and Treasurer,
Ingersoll-Rand Company. Age: 56. Address: 49 Aspen Way, Upper Saddle River, NJ
07458.

John R.H. Blum--Trustee. Attorney in private practice; formerly, partner
in the law firm of Richards, O'Neil & Allegaert; Commissioner of
Agriculture--State of Connecticut, 1992-1995. Age: 69. Address: 322 Main
Street, Lakeville, CT 06039.

Stuart W. Cragin, Jr.--Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Age: 65. Address: 108 Valley
Road, Cos Cob, CT 06807.

Roland R. Eppley, Jr.--Trustee. Retired; formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc. (1971-1988);
Director, Janel Hydraulics, Inc.; formerly Director of The Hanover Funds, Inc.
Age: 66. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418.

Joseph J. Harkins--Trustee. Retired; Commercial Sector Executive and
Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He was employed by Chase in numerous capacities and offices from 1954
through 1989. Director of Blessings Corporation, Jefferson Insurance Company of
New York, Monticello Insurance Company and National. Age: 67. Address: 257
Plantation Circle South, Ponte Vedra Beach, FL 32082.

*Sarah E. Jones--Trustee. President and Chief Operating Officer of Chase
Mutual Funds Corp.; formerly Managing Director for the Global Asset Management
and Private Banking Division of The Chase Manhattan Bank. Age: 47. Address: One
Chase Manhattan Plaza, Third Floor, New York, NY 10081.

W.D. MacCallan--Trustee. Director of The Adams Express Co. and Petroleum &
Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of
The Adams Express Co. and Petroleum & Resources Corp.; formerly Director of The
Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 71. Address:
624 East 45th Street, Savannah, GA 31405.

W. Perry Neff--Trustee. Independent Financial Consultant; Director of
North America Life Assurance Co., Petroleum & Resources Corp. and The Adams
Express Co.; formerly Director and Chairman of The Hanover Funds, Inc.;
formerly Director, Chairman and President of The Hanover Investment Funds, Inc.
Age: 71. Address: RR 1 Box 102, Weston, VT 05181.

*Leonard M. Spalding, Jr.--Trustee. Chief Executive Officer of Chase
Mutual Funds Corp.; formerly President and Chief Executive Officer of Vista
Capital Management and formerly Chief Investment Executive of The Chase
Manhattan Private Bank. Age: 63. Address: One Chase Manhattan Plaza, Third
Floor, New York, NY 10081.

29
<PAGE>

Richard E. Ten Haken--Trustee; Chairman of the Audit Committee. Formerly
District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New
York; Chairman of the Board and President, New York State Teachers' Retirement
System. Age: 64. Address: 4 Barnfield Road, Pittsford, NY 14534.

Irving L. Thode--Trustee. Retired; formerly Vice President of Quotron
Systems. He has previously served in a number of executive positions with
Control Data Corp., including President of its Latin American Operations, and
General Manager of its Data Services business. Age: 67. Address: 80 Perkins
Road, Greenwich, CT 06830.

Martin R. Dean--Treasurer. Associate Director, Accounting Services, BISYS
Fund Services; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Age: 34.
Address: 3435 Stelzer Road, Columbus, OH 43219.

Richard Baxt--Secretary. Senior vice President, Client Services, BISYS
Fund Services; formerly General Manager of Investment and Insurance, First
Fidelity Bank, President of First Fidelity Brokers, and President of Citicorp
Investment Services. Age: 45. Address: 125 W. 55th Street, New York, NY 10019.

Vicky M. Hayes--Assistant Secretary. Vice President and Global Marketing
Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President,
Alliance Capital Management and held various positions with J. & W. Seligman &
Co. Age: 36. Address: One Chase Manhattan Plaza, 3rd Fl., New York, NY 10081.

Alaina Metz--Assistant Secretary. Chief Administrative Officer, BISYS Fund
Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management
L.P. Age: 31. Address: 3435 Stelzer Road, Columbus, OH 43219.

Lee Schultheis--Assistant Treasurer and Assistant Secretary. President,
BISYS Fund Distributors; formerly Managing Director, Forum Financial Group.
Age: 41. Address: One Chase Manhattan Plaza, 3rd Fl., New York, New York 10081.

- ----------
* Asterisks indicate those Trustees that are "interested persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an interested
person of the Trust solely by reason of being Chairman of the Trust.

The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong,
Eppley, MacCallan and Thode. The function of the Audit Committee is to
recommend independent auditors and monitor accounting and financial matters.
The Audit Committee met two times during the fiscal year ended October 31,
1997.

The Board of Trustees of the Trust has established an Investment
Committee. The members of the Investment Committee are Messrs. Vartabedian
(President), Reid and Spalding. The function of the Investment Committee is to
review the investment management process of the Trust.

The Trustees and officers of the Trust appearing in the table above also
serve in the same capacities with respect to Mutual Fund Trust, Mutual Fund
Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust,
Capital Growth Portfolio, Growth and Income Portfolio and International Equity
Portfolio (these entities, together with the Trust, are referred to below as
the "Chase Vista Funds").

Remuneration of Trustees and Certain Executive Officers:

Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisers is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the advisers. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component.

30
<PAGE>

Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1997 for each Trustee of the Trust:

<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Accrued from
by the Fund Complex(1) "Fund Complex"(2)
------------------------ ------------------
<S> <C> <C>
Fergus Reid, III, Trustee $56,368 $129,500
H. Richard Vartabedian, Trustee 47,622 102,750
William J. Armstrong, Trustee 38,372 67,000
John R.H. Blum, Trustee 41,363 73,000
Stuart W. Cragin, Jr., Trustee 34,965 68,500
Ronald R. Eppley, Jr., Trustee 53,267 68,500
Joseph J. Harkins, Trustee 52,508 71,500
Sarah E. Jones, Trustee -- --
W.D. MacCallan, Trustee 66,323 68,500
W. Perry Neff, Trustee 66,323 71,500
Leonard M. Spalding, Jr., Trustee -- --
Richard E. Ten Haken, Trustee 31,463 68,500
Irving L. Thode, Trustee 41,876 68,500
</TABLE>

- ----------
(1) Data reflects total benefits accrued by the Trust, Mutual Fund Select
Group, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio for the fiscal year ended October 31, 1997,
and by Mutual Fund Trust, Mutual Fund Select Trust and Mutual Fund
Variable Annuity Trust for the fiscal year ended August 31, 1997.

(2) Data reflects total compensation earned during the period January 1, 1997
to December 31, 1997 for service as a Trustee to the Trust, Mutual Fund
Trust, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group,
Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income
Portfolio and International Equity Portfolio.

As of October 30, 1998, the Trustees and officers as a group owned less
than 1% of the Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 1997, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$9,200, which amount was then apportioned among the Funds comprising the Trust.

Chase Vista Funds Retirement Plan for Eligible Trustees

Effective August 21, 1995, the Trustees also instituted a Retirement Plan
for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not
an employee of any of the Chase Vista Funds, the advisers, administrator or
distributor or any of their affiliates) may be entitled to certain benefits
upon retirement from the Board of Trustees. Pursuant to the Plan, the normal
retirement date is the date on which the eligible Trustee has attained age 65
and has completed at least five years of continuous service with one or more of
the investment companies advised by the adviser (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an
annual benefit commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to the sum of (i) 8% of the
highest annual compensation received from the Covered Funds multiplied by the
number of such Trustee's years of service (not in excess of 10 years) completed
with respect to any of the Covered Funds and (ii) 4% of the highest annual
compensation received from the Covered Funds for each year of service in excess
of 10 years, provided that no Trustee's annual benefit will exceed the highest
annual compensation received by that Trustee from the Covered Funds. Such
benefit is payable to each eligible Trustee in monthly installments for the
life of the Trustee.

31
<PAGE>

Set forth below in the table are the estimated annual benefits payable to
an eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of October 30, 1998, the estimated credited years
of service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley,
Harkins, MacCallan, Neff, Spalding, Ten Haken and Thode and for Ms. Jones are
13, 6, 10, 13, 5, 9, 8, 8, 14, 0, 13, 5 and 1, respectively.

<TABLE>
<CAPTION>
Highest Annual Compensation Paid by All Chase Vista Funds
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$60,000 $80,000 $100,000 $120,000 $140,000
Years of
Service Estimated Annual Benefits upon Retirement
---- --------------------------------------------------------------------
14 $57,600 $76,800 $ 96,000 $115,200 $134,400
12 52,800 70,400 88,000 105,600 123,200
10 48,000 64,000 80,000 96,000 112,000
8 38,400 51,200 64,000 76,800 89,600
6 28,800 38,400 48,000 57,600 67,200
4 19,200 25,600 32,000 38,400 44,800
</TABLE>

Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which
each Trustee (who is not an employee of any of the Funds, the advisers,
administrator or distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustee's fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are invested in shares of Chase Vista Funds
selected by the Trustee. The deferred amounts are paid out in a lump sum or
over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be
distributed to the Trustee's designated beneficiary in a single lump sum
payment as soon as practicable after such deferring Trustee's death.

Messrs. Eppley, Ten Haken, Thode and Vartabedian each executed a deferred
compensation agreement for the 1998 calendar year and as of September 30, 1998
they had contributed $40,400, $20,200, $45,450 and $77,250, respectively.

The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust or its shareholders, it is finally
adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or
with respect to any matter unless it is finally adjudicated that they did not
act in good faith in the reasonable belief that their actions were in the best
interest of the Trust. In the case of settlement, such indemnification will not
be provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination based
upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that
such officers or Trustees have not engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.

Adviser and Sub-Adviser

Chase acts as investment adviser to the Fund pursuant to an Investment
Advisory Agreement, dated as of May 6, 1996 (the "Advisory Agreement"). Subject
to such policies as the Board of Trustees may determine, Chase is responsible
for investment decisions for the Fund. Pursuant to the terms of the Advisory
Agreement, Chase provides the Fund with such investment advice and supervision
as it deems necessary for the proper supervision of the Fund's investments. The
advisers continuously provide investment programs and determine from time to
time what securities shall be purchased, sold or exchanged and what portion of
the Fund's assets shall be held uninvested. The advisers to the Fund furnish,
at their own expense, all services, facilities and personnel necessary in
connection with managing the investments and effecting portfolio transactions
for the Fund. The Advisory Agreement for the Fund will continue in effect from
year to year

32
<PAGE>

only if such continuance is specifically approved at least annually by the
Board of Trustees or by vote of a majority of the Fund's outstanding voting
securities and by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on such Advisory Agreement.

Under the Advisory Agreement, the adviser may utilize the specialized
portfolio skills of all its various affiliates, thereby providing the Fund with
greater opportunities and flexibility in accessing investment expertise.

Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without
penalty by the Trust on behalf of the Fund on not more than 60 days', nor less
than 30 days', written notice when authorized either by a majority vote of the
Fund's shareholders or by a vote of a majority of the Board of Trustees of the
Trust, or by the adviser or sub-adviser on not more than 60 days', nor less
than 30 days', written notice, and will automatically terminate in the event of
its "assignment" (as defined in the 1940 Act). The advisory agreements provide
that the adviser or sub-adviser under such agreement shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio
transactions for the respective Fund, except for wilful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder.

In the event the operating expenses of the Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of the Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the adviser shall
reduce its advisory fee (which fee is described below) to the extent of its
share of such excess expenses. The amount of any such reduction to be borne by
the adviser shall be deducted from the monthly advisory fee otherwise payable
with respect to the Fund during such fiscal year; and if such amounts should
exceed the monthly fee, the adviser shall pay to the Fund its share of such
excess expenses no later than the last day of the first month of the next
succeeding fiscal year.

Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement provides
that Chase may render services through its own employees or the employees of
one or more affiliated companies that are qualified to act as an investment
adviser of the Fund and are under the common control of Chase as long as all
such persons are functioning as part of an organized group of persons, managed
by authorized officers of Chase.

Chase, on behalf of the Fund, has entered into investment sub-advisory
agreements dated as of October 20, 1998 with Chase Asset Management, Inc.
("CAM") and State Street Research & Management Company ("State Street"). With
respect to the day-to-day management of the Fund, under the sub-advisory
agreements, the sub-advisers make decisions concerning, and place all orders
for, purchases and sales of securities and help maintain the records relating to
such purchases and sales. The sub-advisers may, in their discretion, provide
such services through their own employees or the employees of one or more
affiliated companies that are qualified to act as an investment adviser to the
Company under applicable laws and are under the common control of Chase;
provided that (i) all persons, when providing services under the sub-advisory
agreement, are functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by authorized officers
of the sub-advisers. This arrangement will not result in the payment of
additional fees by the Fund.

Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a
registered bank holding company, is a commercial bank offering a wide range of
banking and investment services to customers throughout the United States and
around the world. Also included among Chase's accounts are commingled trust
funds and a broad spectrum of individual trust and investment management
portfolios. These accounts have varying investment objectives.

33
<PAGE>

to institutional clients, and the same individuals who serve as portfolio
managers for CAM also serve as portfolio managers for Chase.

State Street is a subsidiary of the Metropolitan Life Insurance Company.
State Street is registered with the Securities and Exchange Commission as an
investment adviser and provides discretionary investment advisory services to
institutional and other clients.

In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from the Fund an
investment advisory fee computed daily and paid monthly based on a rate equal
to a percentage of the Fund's average daily net assets specified in the
Prospectus. However, the adviser may voluntarily agree to waive a portion of the
fees payable to it on a month-to-month basis. For its services under its
sub-advisory agreement, each of CAM and State Street will be entitled to
receive, with respect to the Fund, such compensation, payable by the adviser out
of its advisory fee, as is described in the Prospectus.

Administrator

Pursuant to an Administration Agreement (the "Administration Agreement"),
Chase is the administrator of the Fund. Chase provides certain administrative
services to the Fund, including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Fund's independent contractors and agents; preparation for
signature by an officer of the Trust of all documents required to be filed for
compliance by the Trust with applicable laws and regulations excluding those of
the securities laws of various states; arranging for the computation of
performance data, including net asset value and yield; responding to
shareholder inquiries; and arranging for the maintenance of books and records
of the Fund and providing, at its own expense, office facilities, equipment and
personnel necessary to carry out its duties. Chase in its capacity as
administrator does not have any responsibility or authority for the management
of the Fund, the determination of investment policy, or for any matter
pertaining to the distribution of Fund shares.

Under the Administration Agreement Chase is permitted to render
administrative services to others. The Administration Agreement will continue
in effect from year to year with respect to the Fund only if such continuance
is specifically approved at least annually by the Board of Trustees of the
Trust or by vote of a majority of the Fund's outstanding voting securities and,
in either case, by a majority of the Trustees who are not parties to the
Administration Agreement or "interested persons" (as defined in the 1940 Act)
of any such party. The Administration Agreement is terminable without penalty
by the Trust on behalf of the Fund on 60 days' written notice when authorized
either by a majority vote of the Fund's shareholders or by vote of a majority
of the Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust, or by Chase on
60 days' written notice, and will automatically terminate in the event of their
"assignment" (as defined in the 1940 Act). The Administration Agreement also
provides that neither Chase or its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the administration of
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its or their duties or by reason of reckless disregard of its or
their obligations and duties under the Administration Agreement.

In addition, the Administration Agreement provides that, in the event the
operating expenses of any Fund, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for
any fiscal year exceed the most restrictive expense limitation applicable to
that Fund imposed by the securities laws or regulations thereunder of any state
in which the shares of the Fund are qualified for sale, as such limitations may
be raised or lowered from time to time, Chase shall reduce its administration
fee (which fee is described below) to the extent of its share of such excess
expenses. The amount of any such reduction to be borne by Chase shall be
deducted from the monthly administration fee otherwise payable to Chase during
such fiscal year, and if such amounts should exceed the monthly fee, Chase
shall pay to the Fund its share of such excess expenses no later than the last
day of the first month of the next succeeding fiscal year.

In consideration of the services provided by Chase pursuant to the
Administration Agreements, Chase receives from the Fund a fee computed daily
and paid monthly at an annual rate equal to 0.10% of each of the Fund's average
daily net assets, on an annualized basis for the Fund's then-current fiscal
year. Chase may voluntarily waive a portion of the fees payable to it with
respect to the Fund on a month-to-month basis.

34
<PAGE>

Distribution Plans

The Trust has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of certain classes
of shares of the Fund as described in the Prospectus, which provide such
classes of the Fund shall pay for distribution services a distribution fee (the
"Distribution Fee"), including payments to the Distributor, at annual rates not
to exceed the amounts set forth in the Prospectus. The Distributor may use all
or any portion of such Distribution Fee to pay for Fund expenses of printing
prospectuses and reports used for sales purposes, expenses of the preparation
and printing of sales literature and other such distribution-related expenses.

Class B and Class C shares pay a Distribution Fee of up to 0.75% of
average daily net assets. The Distributor currently expects to pay sales
commissions to a dealer at the time of sale of Class B and Class C shares of up
to 4.00% and 1.00%, respectively, of the purchase price of the shares sold by
such dealer. The Distributor will use its own funds (which may be borrowed or
otherwise financed) to pay such amounts. Because the Distributor will receive a
maximum Distribution Fee of 0.75% of average daily net assets with respect to
Class B shares, it will take the Distributor several years to recoup the sales
commissions paid to dealers and other sales expenses.

Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset values of Class A shares, or 0.25%
annualized of the average net asset value of the Class B shares, or 0.75%
annualized of the average net asset value of the Class C shares, maintained in
the Fund by such broker-dealers' customers. Trail or maintenance commissions on
Class B and Class C shares will be paid to broker-dealers beginning the 13th
month following the purchase of such Class B or Class C shares. Since the
distribution fees are not directly tied to expenses, the amount of distribution
fees paid by the Fund during any year may be more or less than actual expenses
incurred pursuant to the Distribution Plans. For this reason, this type of
distribution fee arrangement is characterized by the staff of the Securities
and Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses). With respect to Class B and Class C shares, because of
the 0.75% annual limitation on the compensation paid to the Distributor during
a fiscal year, compensation relating to a large portion of the commissions
attributable to sales of Class B or Class C shares in any one year will be
accrued and paid by the Fund to the Distributor in fiscal years subsequent
thereto. In determining whether to purchase Class B or Class C shares,
investors should consider that compensation payments could continue until the
Distributor has been fully reimbursed for the commissions paid on sales of
Class B and Class C shares. However, the Shares are not liable for any
distribution expenses incurred in excess of the Distribution Fee paid.

Each class of shares is entitled to exclusive voting rights with respect
to matters concerning its Distribution Plan.

Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by a
vote of both a majority of the Trustees and a majority of the Trustees who are
not "interested persons" (as defined in the 1940 Act) of the Trust and who have
no direct or indirect financial interest in the operation of the Distribution
Plans or in any agreement related to such Plan ("Qualified Trustees"). The
continuance of each Distribution Plan was most recently approved on October 28,
1998. Each Distribution Plan requires that the Trust shall provide to the Board
of Trustees, and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended (and the purposes therefor) under the
Distribution Plan. Each Distribution Plan further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of the
disinterested Trustees (as defined in the 1940 Act) then in office. Each
Distribution Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or, with respect to a particular Fund, by vote of a majority
of the outstanding voting Shares of the class of the Fund to which it applies
(as defined in the 1940 Act). Each Distribution Plan may not be amended to
increase materially the amount of permitted expenses thereunder without the
approval of shareholders and

35
<PAGE>

may not be materially amended in any case without a vote of the majority of
both the Trustees and the Qualified Trustees. The Fund will preserve copies of
any plan, agreement or report made pursuant to a Distribution Plan for a period
of not less than six years from the date of the Distribution Plan, and for the
first two years such copies will be preserved in an easily accessible place.

Distribution and Sub-Administration Agreement

The Trust has entered into a Distribution and Sub-Administration Agreement
dated August 24, 1995 (the "Distribution Agreement") with the Distributor,
pursuant to which the Distributor acts as the Fund's exclusive underwriter,
provides certain administration services and promotes and arranges for the sale
of each class of Shares. The Distributor is a wholly-owned subsidiary of BISYS
Fund Services, Inc. The Distribution Agreement provides that the Distributor
will bear the expenses of printing, distributing and filing prospectuses and
statements of additional information and reports used for sales purposes, and
of preparing and printing sales literature and advertisements not paid for by
the Distribution Plan. The Trust pays for all of the expenses for qualification
of the shares of the Fund for sale in connection with the public offering of
such shares, and all legal expenses in connection therewith. In addition,
pursuant to the Distribution Agreement, the Distributor provides certain
sub-administration services to the Trust, including providing officers,
clerical staff and office space.

The Distribution Agreement is currently in effect and will continue in
effect with respect to the Fund only if such continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
the Fund's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Distribution Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Distribution
Agreement is terminable without penalty by the Trust on behalf of the Fund on
60 days' written notice when authorized either by a majority vote of the Fund's
shareholders or by vote of a majority of the Board of Trustees of the Trust,
including a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust, or by the Distributor on 60 days'
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.

In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations
thereunder of any state in which the shares of the Fund are qualified for sale,
as such limitations may be raised or lowered from time to time, the Distributor
shall reduce its sub-administration fee with respect to the Fund (which fee is
described below) to the extent of its share of such excess expenses. The amount
of any such reduction to be borne by the Distributor shall be deducted from the
monthly sub-administration fee otherwise payable with respect to the Fund
during such fiscal year; and if such amounts should exceed the monthly fee, the
Distributor shall pay to the Fund its share of such excess expenses no later
than the last day of the first month of the next succeeding fiscal year.

Shareholder Servicing Agents, Transfer Agent and Custodian

36
<PAGE>

account designations and addresses; provide necessary personnel and facilities
to establish and maintain shareholder accounts and records; assist in
processing purchase and redemption transactions; arrange for the wiring of
funds; transmit and receive funds in connection with customer orders to
purchase or redeem shares; verify and guarantee shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnish (either separately or on an integrated
basis with other reports sent to a shareholder by a Shareholder Servicing
Agent) quarterly and year-end statements and confirmations of purchases and
redemptions; transmit, on behalf of the Fund, proxy statements, annual reports,
updated prospectuses and other communications to shareholders of the Fund;
receive, tabulate and transmit to the Fund proxies executed by shareholders
with respect to meetings of shareholders of the Fund; and provide such other
related services as the Fund or a shareholder may request. Shareholder
servicing agents may be required to register pursuant to state securities law.

Each Shareholder Servicing Agent may voluntarily agree from time to time
to waive a portion of the fees payable to it under its Servicing Agreement with
respect to the Fund on a month-to-month basis.

The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the
Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.

Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the Fund and receives such compensation as is from time to time
agreed upon by the Trust and Chase. As custodian, Chase provides oversight and
record keeping for the assets held in the portfolios of the Fund. Chase also
provides fund accounting services for the income, expenses and shares
outstanding for the Fund. Chase is located at 3 Metrotech Center, Brooklyn, NY
11245.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York
10036, independent accountants of the Fund, provides the Fund with audit
services, tax return preparation and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.

CERTAIN REGULATORY MATTERS

Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in the Prospectus and this Statement of Additional Information
without violating such laws. If future changes in these laws or interpretations
required Chase to alter or discontinue any of these services, it is expected
that the Board of Trustees would recommend alternative arrangements and that
investors would not suffer adverse financial consequences. State securities
laws may differ from the interpretations of banking law described above and
banks may be required to register as dealers pursuant to state law.

Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of any
of the Fund, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Fund's distributor or affiliates of the distributor. Chase
will not invest any Fund assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate,
although under certain circumstances

37
<PAGE>

such securities may be purchased from other members of an underwriting
syndicate in which Chase or an affiliate is a non-principal member. This
restriction my limit the amount or type of U.S. Government obligations,
municipal obligations or commercial paper available to be purchased by any
Fund. Chase has informed the Fund that in making its investment decision, it
does not obtain or use material inside information in the possession of any
other division or department of Chase, including the division that performs
services for the Trust as custodian, or in the possession of any affiliate of
Chase. Shareholders of the Fund should be aware that, subject to applicable
legal or regulatory restrictions, Chase and its affiliates may exchange among
themselves certain information about the shareholder and his account.
Transactions with affiliated broker-dealers will only be executed on an agency
basis in accordance with applicable federal regulations.

GENERAL INFORMATION

Description of Shares, Voting Rights and Liabilities

Mutual Fund Group is an open-end, non-diversified management investment
company organized as Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. The Trust currently consists of 19
series of shares of beneficial interest, par value $.001 per share. With
respect to the Fund, the Trust may offer more than one class of shares. The
Trust has reserved the right to create and issue additional series or classes.
Each share of a series or class represents an equal proportionate interest in
that series or class with each other share of that series or class. The shares
of each series or class participate equally in the earnings, dividends and
assets of the particular series or class. Expenses of the Trust which are not
attributable to a specific series or class are allocated amount all the series
in a manner believed by management of the Trust to be fair and equitable.
Shares have no pre-emptive or conversion rights. Shares when issued are fully
paid and non-assessable, except as set forth below. Shareholders are entitled
to one vote for each share held. Shares of each series or class generally vote
together, except when required under federal securities laws to vote separately
on matters that only affect a particular class, such as the approval of
distribution plans for a particular class. With respect to shares purchased
through a Shareholder Servicing Agent and, in the event written proxy
instructions are not received by the Fund or its designated agent prior to a
shareholder meeting at which a proxy is to be voted and the shareholder does
not attend the meeting in person, the Shareholder Servicing Agent for such
shareholder will be authorized pursuant to an applicable agreement with the
shareholder to vote the shareholder's outstanding shares in the same proportion
as the votes cast by other Fund shareholders represented at the meeting in
person or by proxy.

The Fund offers Class A, Class B, Class C, Class M and Insitutional Class
shares. The classes of shares have several different attributes relating to
sales charges and expenses, as described herein and in the Prospectuses. In
addition to such differences, expenses borne by each class of the Fund may
differ slightly because of the allocation of other class-specific expenses. For
example, a higher transfer agency fee may be imposed on Class B shares than on
Class A shares. The relative impact of initial sales charges, contingent
deferred sales charges, and ongoing annual expenses will depend on the length
of time a share is held.

Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of shares rather than another.

38
<PAGE>

and which are not represented in person or by proxy at the meeting,
proportionately in accordance with the votes cast by holders of all shares of
that portfolio otherwise represented at the meeting in person or by proxy as to
which such Shareholder Servicing Agent is the agent of record. Any shares so
voted by a Shareholder Servicing Agent will be deemed represented at the
meeting for purposes of quorum requirements. Shares have no preemptive or
conversion rights. Shares, when issued, are fully paid and non-assessable,
except as set forth below. Any series or class may be terminated (i) upon the
merger or consolidation with, or the sale or disposition of all or
substantially all of its assets to, another entity, if approved by the vote of
the holders of two-thirds of its outstanding shares, except that if the Board
of Trustees recommends such merger, consolidation or sale or disposition of
assets, the approval by vote of the holders of a majority of the series' or
class' outstanding shares will be sufficient, or (ii) by the vote of the
holders of a majority of its outstanding shares, or (iii) by the Board of
Trustees by written notice to the series' or class' shareholders. Unless each
series and class is so terminated, the Trust will continue indefinitely.

Stock certificates are issued only upon the written request of a
shareholder, subject to the policies of the investor's Shareholder Servicing
Agent, but the Trust will not issue a stock certificate with respect to shares
that may be redeemed through expedited or automated procedures established by a
Shareholder Servicing Agent. No certificates are issued for Class B shares due
to their conversion feature. No certificates are issued for Institutional
Shares.

Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust also provides that the Trust shall
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

The Board of Trustees has adopted a code of ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The code has been designated to address potential conflicts of
interest that can arise in connection with personal trading activities of such
persons. Persons subject to the code are generally permitted to engage in
personal securities transactions, subject to certain prohibitions,
pre-clearance requirements and blackout periods.

39
<PAGE>

Principal Holders

As of September 30, 1998, no person owned of record 5% or more of the
outstanding shares of any class of the Fund.

Specimen Computations of Offering Prices Per Share

Strategic Income Fund

<TABLE>
<S> <C>
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share ...................................................... $ 10.00
Maximum Offering Price per Share (an assumed net value of $10.00 per share divided by
.9525) (reduced on purchases of $100,000 or more) .................................... $ 10.50

B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share ...................................................... $ 10.00

C Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share ...................................................... $ 10.00
</TABLE>

40
<PAGE>

APPENDIX A

DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES

Federal Farm Credit System Notes and Bonds--are bonds issued by a
cooperatively owned nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
These bonds are not guaranteed by the U.S. Government.

Maritime Administration Bonds--are bonds issued and provided by the
Department of Transportation of the U.S. Government are guaranteed by the U.S.
Government.

FNMA Bonds--are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.

FHA Debentures--are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S.
Government.

FHA Insured Notes--are bonds issued by the Farmers Home Administration of
the U.S. Government and are guaranteed by the U.S. Government.

GNMA Certificates--are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such
as mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. Government. As a consequence of the fees paid to GNMA
and the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or
FHA-insured mortgages underlying the Certificates. The average life of a GNMA
Certificate is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures may result in the return of the greater
part of principal invested far in advance of the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee. As the prepayment rate of individual mortgage pools will vary
widely, it is not possible to accurately predict the average life of a
particular issue of GNMA Certificates. The yield which will be earned on GNMA
Certificates may vary from their coupon rates for the following reasons: (i)
Certificates may be issued at a premium or discount, rather than at par; (ii)
Certificates may trade in the secondary market at a premium or discount after
issuance; (iii) interest is earned and compounded monthly which has the effect
of raising the effective yield earned on the Certificates; and (iv) the actual
yield of each Certificate is affected by the prepayment of mortgages included
in the mortgage pool underlying the Certificates. Principal which is so prepaid
will be reinvested although possibly at a lower rate. In addition, prepayment
of mortgages included in the mortgage pool underlying a GNMA Certificate
purchased at a premium could result in a loss to the Fund. Due to the large
amount of GNMA Certificates outstanding and active participation in the
secondary market by securities dealers and investors, GNMA Certificates are
highly liquid instruments. Prices of GNMA Certificates are readily available
from securities dealers and depend on, among other things, the level of market
rates, the Certificate's coupon rate and the prepayment experience of the pool
of mortgages backing each Certificate. If agency securities are purchased at a
premium above principal, the premium is not guaranteed by the issuing agency
and a decline in the market value to par may result in a loss of the premium,
which may be particularly likely in the event of a prepayment. When and if
available, U.S. Government obligations may be purchased at a discount from face
value.

FHLMC Certificates and FNMA Certificates--are mortgage-backed bonds issued
by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association, respectively, and are guaranteed by the U.S. Government.

GSA Participation Certificates--are participation certificates issued by
the General Services Administration of the U.S. Government and are guaranteed
by the U.S. Government.

A-1
<PAGE>

New Communities Debentures--are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.

Public Housing Bonds--are bonds issued by public housing and urban renewal
agencies in connection with programs administered by the Department of Housing
and Urban Development of the U.S. Government, the payment of which is secured
by the U.S. Government.

Penn Central Transportation Certificates--are certificates issued by Penn
Central Transportation and guaranteed by the U.S. Government.

SBA Debentures--are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.

Washington Metropolitan Area Transit Authority Bonds--are bonds issued by
the Washington Metropolitan Area Transit Authority. Some of the bonds issued
prior to 1993 are guaranteed by the U.S. Government.

FHLMC Bonds--are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. Government.

Federal Home Loan Bank Notes and Bonds--are notes and bonds issued by the
Federal Home Loan Bank System and are not guaranteed by the U.S. Government.

Student Loan Marketing Association ("Sallie Mae") Notes and bonds--are
notes and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. Government.

D.C. Armory Board Bonds--are bonds issued by the District of Columbia
Armory Board and are guaranteed by the U.S. Government.

Export-Import Bank Certificates--are certificates of beneficial interest
and participation certificates issued and guaranteed by the Export-Import Bank
of the U.S. and are guaranteed by the U.S. Government.

In the case of securities not backed by the "full faith and credit" of the
U.S. Government, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the U.S. Government itself in the event the agency or
instrumentality does not meet its commitments.

Investments may also be made in obligations of U.S. Government agencies or
instrumentalities other than those listed above.

A-2
<PAGE>

APPENDIX B
DESCRIPTION OF RATINGS

A description of the rating policies of Moody's, S&P and Fitch with respect to
bonds and commercial paper appears below. Moody's Investors Service's Corporate
Bond Ratings Aaa--Bonds which are rated "Aaa" are judged to be of the best
quality and carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A--Bonds which are rated "A" possess many favorable investment qualities and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree.

Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Moody's applies numerical modifiers "1", "2", and "3" to certain of its rating
classifications. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.

Standard & Poor's Ratings Group Corporate Bond Ratings

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and
pay interest.

AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only
in small degree.

B-1
<PAGE>

A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated categories.

BBB--Bonds rated "BBB" are regarded as having an adequate capacity to repay
principal and pay interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for higher rated categories.

BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

CI--Bonds rated "CI" are income bonds on which no interest is being paid.

D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

Moody's Investors Service's Commercial Paper Ratings

Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.

Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.

Standard & Poor's Ratings Group Commercial Paper Ratings

A S&P commercial paper rating is current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded in several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest. The four categories are as follows:

A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

B-2
<PAGE>

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.

C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D--Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.

Fitch Bond Ratings

AAA--Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA--Bonds rated AA by Fitch are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated F-1+ by Fitch.

A--Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB--Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings. Plus and minus signs are used by Fitch to indicate
the relative position of a credit within a rating category. Plus and minus
signs, however, are not used in the AAA category.

Fitch Short-Term Ratings

Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

Fitch's short-term ratings are as follows:

F-1+--Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.

F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.

B-3
<PAGE>

F-3--Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term adverse
changes could cause these securities to be rated below investment grade.

LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

Like higher rated bonds, bonds rated in the Baa or BBB categories are
considered to have adequate capacity to pay principal and interest. However,
such bonds may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade bonds.

After purchase by the Fund, a security may cease to be rated or its rating may
be reduced below the minimum required for purchase by the Fund. Neither event
will require a sale of such security by the Fund. However, the Fund's
investment manager will consider such event in its determination of whether the
Fund should continue to hold the security. To the extent the ratings given by
Moody's, S&P or Fitch may change as a result of changes in such organizations
or their rating systems, the Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in this Prospectus and in the Statement of Additional Information.

B-4

<PAGE>

[CHASE LOGO]

CHASE VISTA FUNDS

STATEMENT OF
ADDITIONAL INFORMATION
OCTOBER 30, 1998
BALANCED FUND
BOND FUND
CAPITAL GROWTH FUND
EQUITY INCOME FUND
GROWTH AND INCOME FUND
SHORT TERM BOND FUND
STRATEGIC INCOME FUND
U.S. GOVERNMENT SECURITIES FUND
U.S. TREASURY INCOME FUND

One Chase Manhattan Plaza, Third Floor, New York, New York 10081

This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
Prospectuses offering Class M shares of the Funds. This Statement of Additional
Information should be read in conjunction with the Prospectuses offering Class
M shares of U.S. Government Securities Fund, U.S. Treasury Income Fund, Bond
Fund, Short-Term Bond Fund and Strategic Income Fund (collectively, the "Income
Funds"), and Balanced Fund, Equity Income Fund, Growth and Income Fund, and
Capital Growth Fund (collectively, the "Equity Funds"). Any references to a
"Prospectus" in this Statement of Additional Information is a reference to one
or more of the foregoing Prospectuses, as the context requires. Copies of each
Prospectus may be obtained by an investor without charge by contacting Vista
Fund Distributors, Inc. ("VFD"), the Funds' distributor (the "Distributor"), at
the above-listed address.

This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by an
effective prospectus.

For more information about your account, simply call or write the Chase Vista
Funds Service Center at:

1-800-34-VISTA
Chase Vista Funds Service Center
P.O. Box 419392
Kansas City, MO 64141
MFG-SAI

<PAGE>

<TABLE>
<S> <C>
Table of Contents Page
- ------------------------------------------------------------------------------------------------
The Funds ............................................................................ 3
Investment Policies and Restrictions ................................................. 3
Performance Information .............................................................. 22
Determination of Net Asset Value ..................................................... 27
Purchases, Redemptions and Exchanges ................................................. 28
Tax Matters .......................................................................... 30
Management of the Trust and the Funds or Portfolios .................................. 35
Independent Accountants .............................................................. 45
Certain Regulatory Matters ........................................................... 45
General Information .................................................................. 46
Appendix A--Description of Certain Obligations Issued or Guaranteed by U.S. Government
Agencies or Instrumentalities ....................................................... A-1
Appendix B--Description of Ratings ................................................... B-1
</TABLE>

2
<PAGE>

THE FUNDS

Mutual Fund Group (the "Trust") is an open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 11, 1987. The Trust presently consists of
19 separate series. Certain of the Funds are diversified and other Funds are
non-diversified, as such term is defined in the Investment Company Act of 1940,
as amended (the "1940 Act"). The Class M shares of the Funds are collectively
referred to in this Statement of Additional Information as the "Shares."

The Growth and Income Fund and Capital Growth Fund converted to a master
fund/feeder fund structure in December 1993. Under this structure, each of
these Funds seeks to achieve its investment objective by investing all of its
investable assets in an open-end management investment company which has the
same investment objective as that Fund. The Growth and Income Fund invests in
the Growth and Income Portfolio and the Capital Growth Fund invests in the
Capital Growth Portfolio (collectively the "Portfolios"). Each of the
Portfolios is a New York trust with its principal office in New York. Certain
qualified investors, in addition to a Fund, may invest in a Portfolio. For
purposes of this Statement of Additional Information, any information or
references to either or both of the Portfolios refer to the operations and
activities after implementation of the master fund/feeder fund structure.

On May 3, 1996, The Hanover Short-Term Bond Fund merged into the Class A
shares of Short-Term Bond Fund and The Hanover U.S. Government Securities Fund
merged into the Institutional Shares of U.S. Government Securities Fund. The
foregoing mergers are referred to herein as the "Hanover Reorganization."

Effective as of May 6, 1996, U.S. Government Income Fund changed its name
to U.S. Treasury Income Fund.

The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. In the case of the Portfolios,
separate Boards of Trustees, the same members as the Board of Trustees of the
Trust, provide broad supervision. The Chase Manhattan Bank ("Chase") is the
investment adviser for the Funds (other than the Growth and Income Fund and
Capital Growth Fund, which do not have their own advisers) and the two
Portfolios. Chase also serves as the Trust's administrator (the
"Administrator") and supervises the overall administration of the Trust,
including the Funds, and is the administrator of the Portfolios. A majority of
the Trustees of the Trust are not affiliated with the investment adviser or
sub-advisers. Similarly, a majority of the Trustees of the Portfolios are not
affiliated with the investment adviser or sub-advisers.

INVESTMENT POLICIES AND RESTRICTIONS

Investment Policies

The Prospectuses set forth the various investment policies of each Fund
and Portfolio. The following information supplements and should be read in
conjunction with the related sections of each Prospectus. For descriptions of
the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see
Appendix B.

3
<PAGE>

dent Loan Marketing Association, United States Postal Service, Chrysler
Corporate Loan Guarantee Board, Small Business Administration, Tennessee Valley
Authority and any other enterprise established or sponsored by the U.S.
Government. Certain U.S. Government Securities, including U.S. Treasury bills,
notes and bonds, Government National Mortgage Association certificates and
Federal Housing Administration debentures, are supported by the full faith and
credit of the United States. Other U.S. Government Securities are issued or
guaranteed by federal agencies or government sponsored enterprises and are not
supported by the full faith and credit of the United States. These securities
include obligations that are supported by the right of the issuer to borrow
from the U.S. Treasury, such as obligations of the Federal Home Loan Banks, and
obligations that are supported by the creditworthiness of the particular
instrumentality, such as obligations of the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation. For a description of
certain obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, see Appendix A.

In addition, certain U.S. Government agencies and instrumentalities issue
specialized types of securities, such as guaranteed notes of the Small Business
Administration, Federal Aviation Administration, Department of Defense, Bureau
of Indian Affairs and Private Export Funding Corporation, which often provide
higher yields than are available from the more common types of
government-backed instruments. However, such specialized instruments may only
be available from a few sources, in limited amounts, or only in very large
denominations; they may also require specialized capability in portfolio
servicing and in legal matters related to government guarantees. While they may
frequently offer attractive yields, the limited-activity markets of many of
these securities means that, if a Fund or Portfolio were required to liquidate
any of them, it might not be able to do so advantageously; accordingly, each
Fund and Portfolio investing in such securities normally would hold such
securities to maturity or pursuant to repurchase agreements, and would treat
such securities (including repurchase agreements maturing in more than seven
days) as illiquid for purposes of its limitation on investment in illiquid
securities.

Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank
by a borrower, usually in connection with an international commercial
transaction. The borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Fixed time deposits are obligations of branches of United States banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Although fixed time deposits do not have a market, there are no
contractual restrictions on the right to transfer a beneficial interest in the
deposit to a third party. Fixed time deposits subject to withdrawal penalties
and with respect to which a Fund or Portfolio cannot realize the proceeds
thereon within seven days are deemed "illiquid" for the purposes of its
restriction on investments in illiquid securities. Deposit notes are notes
issued by commercial banks which generally bear fixed rates of interest and
typically have original maturities ranging from eighteen months to five years.

4
<PAGE>

gations may be general obligations of the parent bank or may be limited to the
issuing branch by the terms of the specific obligations or by government
regulation. Investors should also be aware that securities of foreign banks and
foreign branches of United States banks may involve foreign investment risks in
addition to those relating to domestic bank obligations.

Foreign Securities. For purposes of a Fund's investment policies, the
issuer of a security may be deemed to be located in a particular country if (i)
the principal trading market for the security is in such country, (ii) the
issuer is organized under the laws of such country or (iii) the issuer derives
at least 50% of its revenues or profits from such country or has at least 50%
of its assets situated in such country.

Corporate Reorganizations. In general, securities that are the subject of
a tender or exchange offer or proposal sell at a premium to their historic
market price immediately prior to the announcement of the offer or proposal.
The increased market price of these securities may also discount what the
stated or appraised value of the security would be if the contemplated action
were approved or consummated. These investments may be advantageous when the
discount significantly overstates the risk of the contingencies involved;
significantly undervalues the securities, assets or cash to be received by
shareholders of the prospective portfolio company as a result of the
contemplated transaction; or fails adequately to recognize the possibility that
the offer or proposal may be replaced or superseded by an offer or proposal of
greater value. The evaluation of these contingencies requires unusually broad
knowledge and experience on the part of the advisers that must appraise not
only the value of the issuer and its component businesses as well as the assets
or securities to be received as a result of the contemplated transaction, but
also the financial resources and business motivation of the offeror as well as
the dynamics of the business climate when the offer or proposal is in progress.
Investments in reorganization securities may tend to increase the turnover
ratio of a Fund and increase its brokerage and other transaction expenses.

Repurchase Agreements. A Fund or Portfolio will enter into repurchase
agreements only with member banks of the Federal Reserve System and securities
dealers believed creditworthy, and only if fully collateralized by securities
in which such Fund or Portfolio is permitted to invest. Under the terms of a
typical repurchase agreement, a Fund or Portfolio would acquire an underlying
instrument for a relatively short

5
<PAGE>

period (usually not more than one week) subject to an obligation of the seller
to repurchase the instrument and the Fund or Portfolio to resell the instrument
at a fixed price and time, thereby determining the yield during the Fund's or
Portfolio's holding period. This procedure results in a fixed rate of return
insulated from market fluctuations during such period. A repurchase agreement
is subject to the risk that the seller may fail to repurchase the security.
Repurchase agreements are considered under the 1940 Act to be loans
collateralized by the underlying securities. All repurchase agreements entered
into by a Fund or Portfolio will be fully collateralized at all times during
the period of the agreement in that the value of the underlying security will
be at least equal to 100% of the amount of the loan, including the accrued
interest thereon, and the Fund or Portfolio or its custodian or sub-custodian
will have possession of the collateral, which the Board of Trustees believes
will give it a valid, perfected security interest in the collateral. Whether a
repurchase agreement is the purchase and sale of a security or a collateralized
loan has not been conclusively established. This might become an issue in the
event of the bankruptcy of the other party to the transaction. In the event of
default by the seller under a repurchase agreement construed to be a
collateralized loan, the underlying securities would not be owned by the Fund
or Portfolio, but would only constitute collateral for the seller's obligation
to pay the repurchase price. Therefore, a Fund or Portfolio may suffer time
delays and incur costs in connection with the disposition of the collateral.
The Board of Trustees believes that the collateral underlying repurchase
agreements may be more susceptible to claims of the seller's creditors than
would be the case with securities owned by a Fund or Portfolio. Repurchase
agreements maturing in more than seven days are treated as illiquid for
purposes of the Funds' and Portfolios' restrictions on purchases of illiquid
securities. Repurchase agreements are also subject to the risks described below
with respect to stand-by commitments.

Forward Commitments. In order to invest a Fund's assets immediately, while
awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will
normally be purchased. When a commitment to purchase a security on a forward
commitment basis is made, procedures are established consistent with the
General Statement of Policy of the Securities and Exchange Commission
concerning such purchases. Since that policy currently recommends that an
amount of the respective Fund's or Portfolio's assets equal to the amount of
the purchase be held aside or segregated to be used to pay for the commitment,
a separate account of such Fund or Portfolio consisting of cash or liquid
securities equal to the amount of such Fund's or Portfolio's commitments
securities will be established at such Fund's or Portfolio's custodian bank.
For the purpose of determining the adequacy of the securities in the account,
the deposited securities will be valued at market value. If the market value of
such securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by the respective Fund or Portfolio.

Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the respective Fund's or
Portfolio's portfolio are subject to changes in value based upon the public's
perception of the issuer and changes, real or anticipated, in the level of
interest rates. Purchasing securities on a forward commitment basis can involve
the risk that the yields available in the market when the delivery takes place
may actually be higher or lower than those obtained in the transaction itself.
On the settlement date of the forward commitment transaction, the respective
Fund or Portfolio will meet its obligations from then available cash flow, sale
of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the forward
commitment securities themselves (which may have a value greater or lesser than
such Fund's or Portfolio's payment obligations). The sale of securities to meet
such obligations may result in the realization of capital gains or losses.

To the extent a Fund or Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of
investment leverage, and settlement of such transactions will be within 90 days
from the trade date.

Floating and Variable Rate Securities; Participation Certificates. The
securities in which certain Funds and Portfolios may be invested include
participation certificates issued by a bank, insurance company

6
<PAGE>

or other financial institution in securities owned by such institutions or
affiliated organizations ("Participation Certificates"). A Participation
Certificate gives a Fund or Portfolio an undivided interest in the security in
the proportion that the Fund's or Portfolio's participation interest bears to
the total principal amount of the security and generally provides the demand
feature described below. Each Participation Certificate is backed by an
irrevocable letter of credit or guaranty of a bank (which may be the bank
issuing the Participation Certificate, a bank issuing a confirming letter of
credit to that of the issuing bank, or a bank serving as agent of the issuing
bank with respect to the possible repurchase of the Participation Certificate)
or insurance policy of an insurance company that the Board of Trustees of the
Trust has determined meets the prescribed quality standards for a particular
Fund or Portfolio.

A Fund or Portfolio may have the right to sell the Participation
Certificate back to the institution and draw on the letter of credit or
insurance on demand after the prescribed notice period, for all or any part of
the full principal amount of the Fund's or Portfolio's participation interest
in the security, plus accrued interest. The institutions issuing the
Participation Certificates would retain a service and letter of credit fee and
a fee for providing the demand feature, in an amount equal to the excess of the
interest paid on the instruments over the negotiated yield at which the
Participation Certificates were purchased by a Fund or Portfolio. The total
fees would generally range from 5% to 15% of the applicable prime rate or other
short-term rate index. With respect to insurance, a Fund or Portfolio will
attempt to have the issuer of the participation certificate bear the cost of
any such insurance, although the Funds and Portfolios retain the option to
purchase insurance if deemed appropriate. Obligations that have a demand
feature permitting a Fund or Portfolio to tender the obligation to a foreign
bank may involve certain risks associated with foreign investment. A Fund's or
Portfolio's ability to receive payment in such circumstances under the demand
feature from such foreign banks may involve certain risks such as future
political and economic developments, the possible establishments of laws or
restrictions that might adversely affect the payment of the bank's obligations
under the demand feature and the difficulty of obtaining or enforcing a
judgment against the bank.

The advisers have been instructed by the Board of Trustees to monitor on
an ongoing basis the pricing, quality and liquidity of the floating and
variable rate securities held by the Funds and Portfolios, including
Participation Certificates, on the basis of published financial information and
reports of the rating agencies and other bank analytical services to which the
Funds and Portfolios may subscribe. Although these instruments may be sold by a
Fund or Portfolio, it is intended that they be held until maturity.

Past periods of high inflation, together with the fiscal measures adopted
to attempt to deal with it, have seen wide fluctuations in interest rates,
particularly "prime rates" charged by banks. While the value of the underlying
floating or variable rate securities may change with changes in interest rates
generally, the floating or variable rate nature of the underlying floating or
variable rate securities should minimize changes in value of the instruments.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation and the risk of potential capital depreciation is less than would
be the case with a portfolio of fixed rate securities. A Fund's or Portfolio's
portfolio may contain floating or variable rate securities on which stated
minimum or maximum rates, or maximum rates set by state law, limit the degree
to which interest on such floating or variable rate securities may fluctuate;
to the extent it does, increases or decreases in value may be somewhat greater
than would be the case without such limits. Because the adjustment of interest
rates on the floating or variable rate securities is made in relation to
movements of the applicable banks' "prime rates" or other short-term rate
adjustment indices, the floating or variable rate securities are not comparable
to long-term fixed rate securities. Accordingly, interest rates on the floating
or variable rate securities may be higher or lower than current market rates
for fixed rate obligations of comparable quality with similar maturities.

The maturity of variable rate securities is deemed to be the longer of (i)
the notice period required before a Fund or Portfolio is entitled to receive
payment of the principal amount of the security upon demand or (ii) the period
remaining until the security's next interest rate adjustment.

Reverse Repurchase Agreements. Reverse repurchase agreements involve the
sale of securities held by a Fund or Portfolio with an agreement to repurchase
the securities at an agreed upon price and date.

7
<PAGE>

The repurchase price is generally equal to the original sales price plus
interest. Reverse repurchase agreements are usually for seven days or less and
cannot be repaid prior to their expiration dates. Reverse repurchase agreements
involve the risk that the market value of the portfolio securities transferred
may decline below the price at which the Fund or Portfolio is obliged to
purchase the securities.

Zero coupon obligations are sold at a substantial discount from their
value at maturity and, when held to maturity, their entire return, which
consists of the amortization of discount, comes from the difference between
their purchase price and maturity value. Because interest on a zero coupon
obligation is not distributed on a current basis, the obligation tends to be
subject to greater price fluctuations in response to changes in interest rates
than are ordinary interest-paying securities with similar maturities. The value
of zero coupon obligations appreciates more than such ordinary interest-paying
securities during periods of declining interest rates and depreciates more than
such ordinary interest-paying securities during periods of rising interest
rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as
amended, investments by a Fund or Portfolio in zero coupon obligations will
result in the accrual of interest income on such investments in advance of the
receipt of the cash corresponding to such income.

Zero coupon securities may be created when a dealer deposits a U.S.
Treasury or federal agency security with a custodian and then sells the coupon
payments and principal payment that will be generated by this security
separately. Proprietary receipts, such as Certificates of Accrual on Treasury
Securities, Treasury Investment Growth Receipts and generic Treasury Receipts,
are examples of stripped U.S. Treasury securities separated into their
component parts through such custodial arrangements.

Payment-in-kind ("PIK") bonds are debt obligations which provide that the
issuer thereof may, at its option, pay interest on such bonds in cash or in the
form of additional debt obligations. Such investments benefit the issuer by
mitigating its need for cash to meet debt service, but also require a higher
rate of return to attract investors who are willing to defer receipt of such
cash. Such investments experience greater volatility in market value due to
changes in interest rates than debt obligations which provide for regular
payments of interest. A Fund or Portfolio will accrue income on such
investments for tax and accounting purposes, as required, which is
distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities to
satisfy the Fund's or Portfolio's distribution obligations.

Illiquid Securities. For purposes of its limitation on investments in
illiquid securities, each Fund and Portfolio may elect to treat as liquid, in
accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary market
of qualified institutional buyers as contemplated by Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act ("Section 4(2)
paper"). Rule 144A provides an exemption from the registration requirements of
the Securities Act for the resale of certain restricted securities to qualified
institutional buyers. Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional investors
such as a Fund or Portfolio who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale of Section
4(2) paper by the purchaser must be in an exempt transaction.

8
<PAGE>

securities that are eligible for resale under Rule 144A and Section 4(2) paper
are liquid or illiquid for purposes of the limitation on investment in illiquid
securities. Pursuant to those policies and procedures, the Trustees have
delegated to the advisers the determination as to whether a particular
instrument is liquid or illiquid, requiring that consideration be given to,
among other things, the frequency of trades and quotes for the security, the
number of dealers willing to sell the security and the number of potential
purchasers, dealer undertakings to make a market in the security, the nature of
the security and the time needed to dispose of the security. The Trustees will
periodically review the Funds' and Portfolios' purchases and sales of Rule 144A
securities and Section 4(2) paper.

Stand-By Commitments. In a put transaction, a Fund or Portfolio acquires
the right to sell a security at an agreed upon price within a specified period
prior to its maturity date, and a stand-by commitment entitles a Fund or
Portfolio to same-day settlement and to receive an exercise price equal to the
amortized cost of the underlying security plus accrued interest, if any, at the
time of exercise. Stand-by commitments are subject to certain risks, which
include the inability of the issuer of the commitment to pay for the securities
at the time the commitment is exercised, the fact that the commitment is not
marketable by a Fund or Portfolio, and that the maturity of the underlying
security will generally be different from that of the commitment.

Securities Loans. To the extent specified in its Prospectus, each Fund and
Portfolio is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
portfolio securities may not exceed 30% of the value of a Fund's or Portfolio's
total assets. In connection with such loans, a Fund or Portfolio will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 100% of the
current market value plus accrued interest of the securities loaned. A Fund or
Portfolio can increase its income through the investment of such collateral. A
Fund or Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Fund or Portfolio on a loaned security from
the borrower will not qualify for the dividends-received deduction. Such loans
will be terminable at any time upon specified notice. A Fund or Portfolio might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund or
Portfolio. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower experience financial difficulty. Loans will
be made only to firms deemed by the advisers to be of good standing and will
not be made unless, in the judgment of the advisers, the consideration to be
earned from such loans justifies the risk.

Real Estate Investment Trusts. Certain Funds may invest in shares of real
estate investment trusts ("REITs"), which are pooled investment vehicles which
invest primarily in income-producing real estate or real estate related loans
or interests. REITs are generally classified as equity REITs or mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. The value of equity
trusts will depend upon the value of the underlying properties, and the value
of mortgage trusts will be sensitive to the value of the underlying loans or
interests.

Additional Policies Regarding Derivative and Related Transactions

Introduction. As explained more fully below, the Funds and Portfolios may
employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be considered a
security or other instrument which derives its value from the value or
performance of other instruments or assets, interest or currency exchange
rates, or indexes. For instance, derivatives include futures, options, forward
contracts, structured notes and various over-the-counter instruments.

9
<PAGE>

in three ways: first, to reduce risk by hedging (offsetting) an investment
position; second, to substitute for another security particularly where it is
quicker, easier and less expensive to invest in derivatives; and lastly, to
speculate or enhance portfolio performance. When used prudently, derivatives
can offer several benefits, including easier and more effective hedging, lower
transaction costs, quicker investment and more profitable use of portfolio
assets. However, derivatives also have the potential to significantly magnify
risks, thereby leading to potentially greater losses for a Fund or Portfolio.

Each Fund and Portfolio may invest its assets in derivative and related
instruments subject only to the Fund's or Portfolio's investment objective and
policies and the requirement that the Fund or Portfolio maintain segregated
accounts consisting of cash or other liquid assets (or, as permitted by
applicable regulation, enter into certain offsetting positions) to cover its
obligations under such instruments with respect to positions where there is no
underlying portfolio asset so as to avoid leveraging the Fund or Portfolio.

The value of some derivative or similar instruments in which the Funds or
Portfolios may invest may be particularly sensitive to changes in prevailing
interest rates or other economic factors, and--like other investments of the
Funds and Portfolios--the ability of a Fund or Portfolio to successfully
utilize these instruments may depend in part upon the ability of the advisers
to forecast interest rates and other economic factors correctly. If the
advisers inaccurately forecast such factors and has taken positions in
derivative or similar instruments contrary to prevailing market trends, a Fund
or Portfolio could be exposed to the risk of a loss. The Funds and Portfolios
might not employ any or all of the strategies described herein, and no
assurance can be given that any strategy used will succeed.

Set forth below is an explanation of the various derivatives strategies
and related instruments the Funds or Portfolios may employ along with risks or
special attributes associated with them. This discussion is intended to
supplement the Funds' current prospectuses as well as provide useful
information to prospective investors.

Risk Factors. As explained more fully below and in the discussions of
particular strategies or instruments, there are a number of risks associated
with the use of derivatives and related instruments. There can be no guarantee
that there will be a correlation between price movements in a hedging vehicle
and in the portfolio assets being hedged. An incorrect correlation could result
in a loss on both the hedged assets in a Fund or Portfolio and the hedging
vehicle so that the portfolio return might have been greater had hedging not
been attempted. This risk is particularly acute in the case of "cross-hedges"
between currencies. The advisers may inaccurately forecast interest rates,
market values or other economic factors in utilizing a derivatives strategy. In
such a case, a Fund or Portfolio may have been in a better position had it not
entered into such strategy. Hedging strategies, while reducing risk of loss,
can also reduce the opportunity for gain. In other words, hedging usually
limits both potential losses as well as potential gains. Strategies not
involving hedging may increase the risk to a Fund or Portfolio. Certain
strategies, such as yield enhancement, can have speculative characteristics and
may result in more risk to a Fund or Portfolio than hedging strategies using
the same instruments. There can be no assurance that a liquid market will exist
at a time when a Fund or Portfolio seeks to close out an option, futures
contract or other derivative or related position. Many exchanges and boards of
trade limit the amount of fluctuation permitted in option or futures contract
prices during a single day; once the daily limit has been reached on particular
contract, no trades may be made that day at a price beyond that limit. In
addition, certain instruments are relatively new and without a significant
trading history. As a result, there is no assurance that an active secondary
market will develop or continue to exist. Finally, over-the-counter instruments
typically do not have a liquid market. Lack of a liquid market for any reason
may prevent a Fund from liquidating an unfavorable position. Activities of
large traders in the futures and securities markets involving arbitrage,
"program trading," and other investment strategies may cause price distortions
in these markets. In certain instances, particularly those involving
over-the-counter transactions, forward contracts there is a greater potential
that a counterparty or broker may default or be unable to perform on its
commitments. In the event of such a default, a Fund or Portfolio may experience
a loss. In transactions involving currencies, the value of the currency
underlying an instrument may fluctuate due to many factors, including economic
conditions, interest rates, governmental policies and market forces.

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<PAGE>

Specific Uses and Strategies. Set forth below are explanations of various
strategies involving derivatives and related instruments which may be used by a
Fund or Portfolio.

Options on Securities, Securities Indexes and Debt Instruments. A Fund or
Portfolio may PURCHASE, SELL or EXERCISE call and put options on (i)
securities, (ii) securities indexes, and (iii) debt instruments.

Although in most cases these options will be exchange-traded, the Funds
and Portfolios may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller. As such, over-the-counter options generally have much less market
liquidity and carry the risk of default or nonperformance by the other party.

One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. A Fund or Portfolio
may also use combinations of options to minimize costs, gain exposure to
markets or take advantage of price disparities or market movements. For
example, a Fund or Portfolio may sell put or call options it has previously
purchased or purchase put or call options it has previously sold. These
transactions may result in a net gain or loss depending on whether the amount
realized on the sale is more or less than the premium and other transaction
costs paid on the put or call option which is sold. A Fund or Portfolio may
write a call or put option in order to earn the related premium from such
transactions. Prior to exercise or expiration, an option may be closed out by
an offsetting purchase or sale of a similar option. The Funds will not write
uncovered options.

In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, a
Fund or Portfolio writing a covered call (i.e., where the underlying securities
are held by the Fund or Portfolio) has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but has retained the risk of
loss should the price of the underlying securities decline. The writer of an
option has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying
securities at the exercise price.

If a put or call option purchased by a Fund or Portfolio is not sold when
it has remaining value, and if the market price of the underlying security, in
the case of a put, remains equal to or greater than the exercise price or, in
the case of a call, remains less than or equal to the exercise price, such Fund
or Portfolio will lose its entire investment in the option. Also, where a put
or call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund or Portfolio seeks to close out an
option position. Furthermore, if trading restrictions or suspensions are
imposed on the options markets, a Fund or Portfolio may be unable to close out
a position.

Futures Contracts and Options on Futures Contracts. A Fund or Portfolio
may purchase or sell (i) interest-rate futures contracts, (ii) futures
contracts on specified instruments or indices, and (iii) options on these
futures contracts ("futures options").

The futures contracts and futures options may be based on various
instruments or indices in which the Funds and Portfolios may invest such as
foreign currencies, certificates of deposit, Eurodollar time deposits,
securities indices, economic indices (such as the Consumer Price Indices
compiled by the U.S. Department of Labor).

Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
a Fund or Portfolio may sell a futures contract--or buy a futures option--to
protect against a decline in value, or reduce the duration, of portfolio
holdings. Likewise,

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<PAGE>

these instruments may be used where a Fund or Portfolio intends to acquire an
instrument or enter into a position. For example, a Fund or Portfolio may
purchase a futures contract--or buy a futures option--to gain immediate
exposure in a market or otherwise offset increases in the purchase price of
securities or currencies to be acquired in the future. Futures options may also
be written to earn the related premiums.

When writing or purchasing options, the Funds and Portfolios may
simultaneously enter into other transactions involving futures contracts or
futures options in order to minimize costs, gain exposure to markets, or take
advantage of price disparities or market movements. Such strategies may entail
additional risks in certain instances. The Funds and Portfolios may engage in
cross-hedging by purchasing or selling futures or options on a security or
currency different from the security or currency position being hedged to take
advantage of relationships between the two securities or currencies.

Investments in futures contracts and options thereon involve risks similar
to those associated with options transactions discussed above. The Funds and
Portfolios will only enter into futures contracts or options on futures
contracts which are traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system.

Forward Contracts. A Fund and Portfolio may use foreign currency and
interest-rate forward contracts for various purposes as described below.

Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. A Fund or Portfolio
that may invest in securities denominated in foreign currencies may, in
addition to buying and selling foreign currency futures contracts and options
on foreign currencies and foreign currency futures, enter into forward foreign
currency exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be a fixed number of days from the date of
the contract agreed upon by the parties, at a price set at the time of the
contract. By entering into a forward foreign currency contract, a Fund or
Portfolio "locks in" the exchange rate between the currency it will deliver and
the currency it will receive for the duration of the contract. As a result, a
Fund or Portfolio reduces its exposure to changes in the value of the currency
it will deliver and increases its exposure to changes in the value of the
currency it will exchange into. The effect on the value of a Fund or Portfolio
is similar to selling securities denominated in one currency and purchasing
securities denominated in another. Transactions that use two foreign currencies
are sometimes referred to as "cross-hedges."

A Fund or Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from the Fund's or Portfolio'
investments or anticipated investments in securities denominated in foreign
currencies. A Fund or Portfolio may also enter into these contracts for
purposes of increasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one country to another.

A Fund or Portfolio may also use forward contracts to hedge against
changes in interest rates, increase exposure to a market or otherwise take
advantage of such changes. An interest-rate forward contract involves the
obligation to purchase or sell a specific debt instrument at a fixed price at a
future date.

Interest Rate and Currency Transactions. A Fund or Portfolio may employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The aggregate amount of a Fund's or Portfolio's net
currency exposure will not exceed the total net asset value of its portfolio.
However, to the extent that a Fund or Portfolio is fully invested while also
maintaining currency positions, it may be exposed to greater combined risk.

The Funds and Portfolios will only enter into interest rate and currency
swaps on a net basis, i.e., the two payment streams are netted out, with the
Fund or Portfolio receiving or paying, as the case may be, only

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<PAGE>

the net amount of the two payments. Interest rate and currency swaps do not
involve the delivery of securities, the underlying currency, other underlying
assets or principal. Accordingly, the risk of loss with respect to interest
rate and currency swaps is limited to the net amount of interest or currency
payments that a Fund or Portfolio is contractually obligated to make. If the
other party to an interest rate or currency swap defaults, a Fund's or
Portfolio's risk of loss consists of the net amount of interest or currency
payments that the Fund or Portfolio is contractually entitled to receive. Since
interest rate and currency swaps are individually negotiated, the Funds and
Portfolios expect to achieve an acceptable degree of correlation between their
portfolio investments and their interest rate or currency swap positions.

A Fund or Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert such
currency into U.S. dollars at a later date, based on anticipated changes in the
relevant exchange rate.

A Fund or Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when the
advisers anticipate that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by such Fund or Portfolio. In
addition, a Fund or Portfolio may enter into forward foreign currency exchange
contracts in order to protect against adverse changes in future foreign
currency exchange rates. A Fund or Portfolio may engage in cross-hedging by
using forward contracts in one currency to hedge against fluctuations in the
value of securities denominated in a different currency if its advisers believe
that there is a pattern of correlation between the two currencies. Forward
contracts may reduce the potential gain from a positive change in the
relationship between the U.S. Dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for a Fund
or Portfolio than if it had not entered into such contracts. The use of foreign
currency forward contracts will not eliminate fluctuations in the underlying
U.S. dollar equivalent value of the prices of or rates of return on a Fund's or
Portfolio's foreign currency denominated portfolio securities and the use of
such techniques will subject the Fund or Portfolio to certain risks.

The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund or Portfolio may not always be able to enter into foreign
currency forward contracts at attractive prices, and this will limit a Fund's
or Portfolio's ability to use such contract to hedge or cross-hedge its assets.
Also, with regard to a Fund's or Portfolio's use of cross-hedges, there can be
no assurance that historical correlations between the movement of certain
foreign currencies relative to the U.S. dollar will continue. Thus, at any time
poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying a Fund's or Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in which the Fund's
or Portfolio's assets that are the subject of such cross-hedges are
denominated.

A Fund or Portfolio may enter into interest rate and currency swaps to the
maximum allowed limits under applicable law. A Fund or Portfolio will typically
use interest rate swaps to shorten the effective duration of its portfolio.
Interest rate swaps involve the exchange by a Fund or Portfolio with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of their respective rights to make or receive payments in
specified currencies.

Mortgage-Related Securities. A Fund or Portfolio may purchase mortgage-
backed securities--i.e., securities representing an ownership interest in a pool
of mortgage loans issued by lenders such as mortgage bankers, commercial banks
and savings and loan associations. Mortgage loans included in the pool--but not
the security itself--may be insured by the Government National Mortgage
Association or the Federal Housing Administration or guaranteed by the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Veterans Administration. Mortgage-backed securities provide investors with
payments consisting of both interest and principal as the mortgages in the
underlying mortgage pools are

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<PAGE>

paid off. Although providing the potential for enhanced returns,
mortgage-backed securities can also be volatile and result in unanticipated
losses.

A Fund or Portfolio may also invest in securities representing interests
in collateralized mortgage obligations ("CMOs"), real estate mortgage
investment conduits ("REMICs") and in pools of certain other asset-backed bonds
and mortgage pass-through securities. Like a bond, interest and prepaid
principal are paid, in most cases, monthly. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by the U.S. Government, or U.S.
Government-related entities, and their income streams.

The advisers expect that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. The mortgages underlying these securities
may include alternative mortgage instruments, that is, mortgage instruments
whose principal or interest payments may vary or whose terms to maturity may
differ from customary long-term fixed-rate mortgages. A Fund or Portfolio may
also invest in debentures and other securities of real estate investment
trusts. As new types of mortgage-related securities are developed and offered
to investors, the Funds and Portfolios may consider making investments in such
new types of mortgage-related securities.

Dollar Rolls. Under a mortgage "dollar roll," a Fund sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period, a Fund forgoes principal and
interest paid on the mortgage-backed securities. A Fund is compensated by the
difference between the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. A Fund may only enter into
covered rolls. A "covered roll" is a specific type of dollar roll for which
there is an offsetting cash position which matures on or before the forward
settlement date of the dollar roll transaction. At the time a Fund enters into
a mortgage "dollar roll", it will establish a segregated account with its
custodian bank in which it will maintain cash or liquid securities equal in
value to its obligations in respect of dollar rolls, and accordingly, such
dollar rolls will not be considered borrowings. Mortgage dollar rolls involve
the risk that the market value of the securities the Fund is obligated to
repurchase under the agreement may decline below the repurchase price. In the
event the buyer of securities under a mortgage dollar roll files for bankruptcy
or becomes insolvent, the Fund's use of proceeds of the dollar roll may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the
securities.

Asset-Backed Securities. A Fund or Portfolio may invest in asset-backed
securities, including conditional sales contracts, equipment lease certificates
and equipment trust certificates. The advisers expect

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<PAGE>

that other asset-backed securities (unrelated to mortgage loans) will be
offered to investors in the future. Several types of asset-backed securities
already exist, including, for example, "Certificates for Automobile
ReceivablesSM" or "CARSSM" ("CARS"). CARS represent undivided fractional
interests in a trust whose assets consist of a pool of motor vehicle retail
installment sales contracts and security interests in the vehicles securing the
contracts. Payments of principal and interest on CARS are passed-through
monthly to certificate holders, and are guaranteed up to certain amounts and
for a certain time period by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the CARS trust. An
investor's return on CARS may be affected by early prepayment of principal on
the underlying vehicle sales contracts. If the letter of credit is exhausted,
the CARS trust may be prevented from realizing the full amount due on a sales
contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the obtaining of deficiency judgments
following such sales or because of depreciation, damage or loss of a vehicle,
the application of federal and state bankruptcy and insolvency laws, the
failure of servicers to take appropriate steps to perfect the CARS trust's
rights in the underlying loans and the servicer's sale of such loans to bona
fide purchasers, giving rise to interests in such loans superior to those of
the CARS trust, or other factors. As a result, certificate holders may
experience delays in payments or losses if the letter of credit is exhausted. A
Fund or Portfolio also may invest in other types of asset-backed securities. In
the selection of other asset-backed securities, the advisers will attempt to
assess the liquidity of the security giving consideration to the nature of the
security, the frequency of trading in the security, the number of dealers
making a market in the security and the overall nature of the marketplace for
the security.

Structured Products. A Fund or Portfolio may invest in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of certain other investments. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, or specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("structured products") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured products to create securities with different
investment characteristics such as varying maturities, payment priorities and
interest rate provisions, and the extent of the payments made with respect to
structured products is dependent on the extent of the cash flow on the
underlying instruments. A Fund or Portfolio may invest in structured products
which represent derived investment positions based on relationships among
different markets or asset classes.

A Fund or Portfolio may also invest in other types of structured products,
including, among others, inverse floaters, spread trades and notes linked by a
formula to the price of an underlying instrument. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remarketing agent or by reference to
another security) (the "reference rate"). As an example, inverse floaters may
constitute a class of CMOs with a coupon rate that moves inversely to a
designated index, such as LIBOR (London Interbank Offered Rate) or the Cost of
Funds Index. Any rise in the reference rate of an inverse floater (as a
consequence of an increase in interest rates) causes a drop in the coupon rate
while any drop in the reference rate of an inverse floater causes an increase
in the coupon rate. A spread trade is an investment position relating to a
difference in the prices or interest rates of two securities where the value of
the investment position is determined by movements in the difference between
the prices or interest rates, as the case may be, of the respective securities.
When a Fund or Portfolio invests in notes linked to the price of an underlying
instrument, the price of the underlying security is determined by a multiple
(based on a formula) of the price of such underlying security. A structured
product may be considered to be leveraged to the extent its interest rate
varies by a magnitude that exceeds the magnitude of the change in the index
rate of interest. Because they are linked to their underlying markets or
securities, investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security.
Total return on the structured product is derived by linking return to one or
more characteristics of the underlying instrument. Because certain structured
products of the type in which a Fund or Portfolio may invest may involve no
credit enhancement, the credit risk of those structured products generally
would be equivalent

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<PAGE>

to that of the underlying instruments. A Fund or Portfolio may invest in a
class of structured products that is either subordinated or unsubordinated to
the right of payment of another class. Subordinated structured products
typically have higher yields and present greater risks than unsubordinated
structured products. Although a Fund's or Portfolio's purchase of subordinated
structured products would have similar economic effect to that of borrowing
against the underlying securities, the purchase will not be deemed to be
leverage for purposes of a Fund's or Portfolio' fundamental investment
limitation related to borrowing and leverage.

Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investments in
these structured products may be limited by the restrictions contained in the
1940 Act. Structured products are typically sold in private placement
transactions, and there currently is no active trading market for structured
products. As a result, certain structured products in which a Fund or Portfolio
invests may be deemed illiquid and subject to its limitation on illiquid
investments.

Additional Restrictions on the Use of Futures and Option Contracts. None
of the Funds is a "commodity pool" (i.e., a pooled investment vehicle which
trades in commodity futures contracts and options thereon and the operator of
which is registered with the CFTC) and futures contracts and futures options
will be purchased, sold or entered into only for bona fide hedging purposes,
provided that a Fund may enter into such transactions for purposes other than
bona fide hedging if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open contracts and options would not exceed 5%
of the liquidation value of the Fund's portfolio, provided, further, that, in
the case of an option that is in-the-money, the in-the-money amount may be
excluded in calculating the 5% limitation.

When a Fund or Portfolio purchases a futures contract, an amount of cash
or cash equivalents or high quality debt securities will be deposited in a
segregated account with such Fund's or Portfolio's custodian or sub-custodian
so that the amount so segregated, plus the initial deposit and variation margin
held in the account of its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.

Investment Restrictions

The Funds and Portfolios have adopted the following investment
restrictions which may not be changed without approval by a "majority of the
outstanding shares" of a Fund or Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more of the
shares of a Fund or total beneficial interests of a Portfolio present at a
meeting, if the holders of more than 50% of the outstanding shares of a Fund or
total beneficial interests of a Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding shares of a Fund or total beneficial
interests of a Portfolio.

Whenever the Trust is requested to vote on a fundamental policy of a
Portfolio, the Trust will hold a meeting of shareholders of the Fund that
invests in such Portfolio and will cast its votes as instructed by the
shareholders of such Fund.

With respect to the Growth and Income Fund and the Capital Growth Fund, it
is a fundamental policy of each Fund that when the Fund holds no portfolio
securities except interests in the Portfolio in which it invests, the Fund's
investment objective and policies shall be identical to the Portfolio's
investment objective and policies, except for the following: a Fund (1) may
invest more than 10% of its net assets in the securities of a registered
investment company, (2) may hold more than 10% of the voting securities of a
registered investment company, and (3) will concentrate its investments in the
investment company. It is a fundamental investment policy of each such Fund
that when the Fund holds only portfolio securities other than interests in the
Portfolio, the Fund's investment objective and policies shall be identical to
the investment objective and policies of the Portfolio at the time the assets
of the Fund were withdrawn from the Portfolio.

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<PAGE>

Each Fund and Portfolio may not:

(1) borrow money in an amount exceeding 331/3% of the value of its
total assets at the time when the loan is made and may pledge, mortgage or
hypothecate no more than 1/3 of its net assets to secure such borrowings.
Each Fund and Portfolio other than Strategic Income Fund may borrow money
only for temporary or emergency purposes, or by engaging in reverse
repurchase transactions. Any borrowings representing more than 5% of a
Fund's or Portfolio's total assets, for each Fund or Portfolio other than
Strategic Income Fund, must be repaid before the Fund or Portfolio may
make additional investments;

(2) make loans, except that each Fund and Portfolio may: (i) purchase
and hold debt instruments (including without limitation, bonds, notes,
debentures or other obligations and certificates of deposit, bankers'
acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with
respect to portfolio securities; and (iii) lend portfolio securities with
a value not in excess of one-third of the value of its total assets;

(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's or Portfolio's total assets would be
invested in the securities of companies whose principal business
activities are in the same industry. Notwithstanding the foregoing, with
respect to a Fund's or Portfolio's permissible futures and options
transactions in U.S. Government securities, positions in such options and
futures shall not be subject to this restriction;

(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent
a Fund or Portfolio from (i) purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities or (ii) engaging in forward purchases or sales of
foreign currencies or securities;

(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund or Portfolio from investing insecurities or other instruments backed
by real estate or securities of companies engaged in the real estate
business). Investments by a Fund or Portfolio in securities backed by
mortgages on real estate or in marketable securities of companies engaged
in such activities are not hereby precluded;

(6) issue any senior security (as defined in the 1940 Act), except
that (a) a Fund or Portfolio may engage in transactions that may result in
the issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order; (b)
a Fund or Portfolio may acquire other securities, the acquisition of which
may result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; and (c)
subject to the restrictions set forth above, a Fund or Portfolio may
borrow money as authorized by the 1940 Act. For purposes of this
restriction, collateral arrangements with respect to permissible options
and futures transactions, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security; or

(7) underwrite securities issued by other persons except insofar as a
Fund or Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security.

In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, each Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as the
Fund. For purposes of investment restriction (5) above, real estate includes
Real Estate Limited Partnerships.

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<PAGE>

Fund or Portfolio in municipal obligations where the issuer is regarded as a
state, city, municipality or other public authority since such entities are not
members of an "industry." Supranational organizations are collectively
considered to be members of a single "industry" for purposes of restriction (3)
above.

In addition, each Fund and Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder approval:

(1) Each Fund other than the Capital Growth Fund, Growth and Income
Fund and U.S. Treasury Income Fund may not, with respect to 75% of its
assets, hold more than 10% of the outstanding voting securities of any
issuer or invest more than 5% of its assets in the securities of any one
issuer (other than obligations of the U.S. Government, its agencies and
instrumentalities); Each Portfolio and each of the Capital Growth Fund,
Growth and Income Fund and U.S. Treasury Income Fund may not, with respect
to 50% of its assets, hold more than 10% of the outstanding voting
securities of any issuer.

(2) Each Fund and Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase securities on margin
except for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to limit
the use of options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of a Fund or Portfolio. No Fund or Portfolio has the
current intention of making short sales against the box.

(3) Each Fund and Portfolio may not purchase or sell interests in
oil, gas or mineral leases.

(4) Each Fund and Portfolio may not invest more than 15% of its net
assets in illiquid securities.

(5) Each Fund and Portfolio may not write, purchase or sell any put
or call option or any combination thereof, provided that this shall not
prevent (i) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities or (ii) with
respect to a Fund's or Portfolio's permissible futures and options
transactions, the writing, purchasing, ownership, holding or selling of
futures and options positions or of puts, calls or combinations thereof
with respect to futures.

(6) Except as specified above, each Fund and Portfolio may invest in
the securities of other investment companies to the extent permitted by
applicable Federal securities law; provided, however, that a Mauritius
holding company (a "Mauritius Portfolio Company") will not be considered
an investment company for this purpose.

For purposes of the Funds' and Portfolios' investment restrictions,
the issuer of a tax-exempt security is deemed to be the entity (public or
private) ultimately responsible for the payment of the principal of and
interest on the security.

In order to permit the sale of its shares in certain states and foreign
countries, a Fund or Portfolio may make commitments more restrictive than the
investment policies and limitations described above and in its Prospectus.
Should a Fund or Portfolio determine that any such commitment is no longer in
its best interests, it will revoke the commitment by terminating sales of its
shares in the state or country involved. In order to comply with certain
regulatory policies, as a matter of operating policy, each Fund and Portfolio
will not:

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<PAGE>

(i) borrow money in an amount which would cause, at the time of such borrowing,
the aggregate amount of borrowing by the Fund to exceed 10% of the value of the
Fund's total assets, (ii) invest more than 10% of its total assets in the
securities of any one issuer (other than obligations of the U.S. Government, its
agencies and instrumentalities), (iii) acquire more than 10% of the outstanding
shares of any issuer and may not acquire more than 15% of the outstanding shares
of any issuer together with other mutual funds managed by The Chase Manhattan
Bank, (iv) invest more than 10% of its total assets in the securities of other
investment companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets, (v) invest more than 10% of its net
assets in illiquid securities (which include securities restricted as to resale
unless they are determined to be readily marketable in accordance with
procedures established by the Board of Trustees), (vi) grant privileges to
purchase shares of the Fund to shareholders or investors by issuing warrants,
subscription rights or options, or other similar rights or (vii) sell, purchase
or loan securities (excluding shares in the Fund) or grant or receive a loan or
loans to or from the adviser, corporate and domiciliary agent, or paying agent,
the distributors and the authorized agents or any of their directors, officers
or employees or any of their major shareholders (meaning a shareholder who
holds, in his own or other name (as well as a nominee's name), more than 10% of
the total issued and outstanding shares of stock of such company) acting as
principal, or for their own account, unless the transaction is made within the
other restrictions set forth above and either (a) at a price determined by
current publicly available quotations, or (b) at competitive prices or interest
rates prevailing from time to time on internationally recognized securities
markets or internationally recognized money markets.

A Mauritius Portfolio Company is a special purpose company organized under
the laws of the Republic of Mauritius. The Fund may invest in India through a
Mauritius Portfolio Company, which is intended to allow a Fund to take
advantage of a favorable tax treaty between India and Mauritius.

If a percentage or rating restriction on investment or use of assets set
forth herein or in a Prospectus is adhered to at the time a transaction is
effected, later changes in percentage resulting from any cause other than
actions by a Fund or Portfolio will not be considered a violation. If the value
of a Fund's or Portfolio's holdings of illiquid securities at any time exceeds
the percentage limitation applicable at the time of acquisition due to
subsequent fluctuations in value or other reasons, the Board of Trustees will
consider what actions, if any, are appropriate to maintain adequate liquidity.

Portfolio Transactions and Brokerage Allocation

Specific decisions to purchase or sell securities for a Fund or Portfolio
are made by a portfolio manager who is an employee of the adviser or
sub-adviser to such Fund or Portfolio and who is appointed and supervised by
senior officers of such adviser or sub-adviser. Changes in a Fund's or
Portfolio's investments are reviewed by the Board of Trustees of the Trust or
Portfolio. The portfolio managers may serve other clients of the advisers in a
similar capacity.

The frequency of a Fund's or Portfolio's portfolio transactions--the
portfolio turnover rate--will vary from year to year depending upon market
conditions. Because a high turnover rate may increase transaction costs and the
possibility of taxable short-term gains, the advisers will weigh the added
costs of short-term investment against anticipated gains. Each Fund or
Portfolio will engage in portfolio trading if its advisers believe a
transaction, net of costs (including custodian charges), will help it achieve
its investment objective. Funds investing in both equity and debt securities
apply this policy with respect to both the equity and debt portions of their
portfolios.

19
<PAGE>

For the fiscal years ended October 31, 1995, 1996 and 1997, the annual
rates of portfolio turnover for the following Funds were as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Balanced Fund 68% 149% 136%
U.S. Treasury Income Fund 164% 103% 179%
Growth and Income Fund * * *
Capital Growth Fund * * *
Equity Income Fund 91% 114% 75%
Bond Fund 30% 122% 823%
Short-Term Bond Fund 62% 158% 471%
U.S. Government Securities Fund -- -- 569%
</TABLE>

- ----------
* The Growth and Income Fund and the Capital Growth Fund invest all of their
investable assets in their respective Portfolio and do not invest directly
in a portfolio of assets, and therefore do not have reportable portfolio
turnover rates. The portfolio turnover rates for the Growth and Income
Portfolio and the Capital Growth Portfolio for the fiscal year ended October
31, 1995 were 71% and 86%, respectively, for the fiscal year ended October
31, 1996, the portfolio turnover rates were 62% and 90%, respectively and
for the fiscal year ended October 31, 1997, the portfolio turnover rates
were 65% and 67%, respectively.

For the fiscal period December 1, 1995 through October 31, 1996, the
annual portfolio turnover rate for the U.S. Government Securities Fund was
101%.

For the fiscal year ended October 31, 1998, the annual rate of portfolio
turnover for Strategic Income Fund is not expected to exceed 100%.

Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds and Portfolios. In assessing the
best overall terms available for any transaction, the adviser and sub-advisers
consider all factors they deem relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser
or sub-advisers, and the reasonableness of the commissions, if any, both for
the specific transaction and on a continuing basis. The adviser and
sub-advisers are not required to obtain the lowest commission or the best net
price for any Fund or Portfolio on any particular transaction, and are not
required to execute any order in a fashion either preferential to any Fund or
Portfolio relative to other accounts they manage or otherwise materially
adverse to such other accounts.

Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to a Fund or Portfolio normally seeks to deal directly with the
primary market makers unless, in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
adviser or sub-adviser on the tender of a Fund's or Portfolio's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for a Funds and Portfolios by the adviser and
sub-advisers. At present, no other recapture arrangements are in effect.

Under the advisory and sub-advisory agreements and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may
cause the Funds and Portfolios to pay a broker-dealer which provides brokerage
and research services to the adviser or sub-advisers, the Funds or Portfolios
and/or other accounts for which they exercise investment discretion an amount
of commission for effecting a securities transaction for a Fund or Portfolio in
excess of the amount other broker-dealers would have

20
<PAGE>

charged for the transaction if they determine in good faith that the greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of either a
particular transaction or their overall responsibilities to accounts over which
they exercise investment discretion. Not all of such services are useful or of
value in advising the Funds and Portfolios. The adviser and sub-advisers report
to the Board of Trustees regarding overall commissions paid by the Funds and
Portfolios and their reasonableness in relation to the benefits to the Funds
and Portfolios. The term "brokerage and research services" includes advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or of purchasers or
sellers of securities, furnishing analyses and reports concerning issues,
industries, securities, economic factors and trends, portfolio strategy and the
performance of accounts, and effecting securities transactions and performing
functions incidental thereto such as clearance and settlement.

The management fees that the Funds and Portfolios pay to the adviser will
not be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Funds' or Portfolios'
portfolio transactions are used to obtain such services, the brokerage
commissions paid by the Funds or Portfolios will exceed those that might
otherwise be paid by an amount which cannot be presently determined. Such
services generally would be useful and of value to the adviser or sub-advisers
in serving one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients generally
would be useful to the adviser and sub-advisers in carrying out their
obligations to the Funds and Portfolios. While such services are not expected
to reduce the expenses of the adviser or sub-advisers, the advisers would,
through use of the services, avoid the additional expenses which would be
incurred if they should attempt to develop comparable information through their
own staffs.

In certain instances, there may be securities that are suitable for one or
more of the Funds and Portfolios as well as one or more of the adviser's or
sub-advisers' other clients. Investment decisions for the Funds and Portfolios
and for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision is made
for more than one client or that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable
for the investment objectives of more than one client. When two or more Funds
or Portfolios or other clients are simultaneously engaged in the purchase or
sale of the same security, the securities are allocated among clients in a
manner believed to be equitable to each. It is recognized that in some cases
this system could have a detrimental effect on the price or volume of the
security as far as the Funds or Portfolios are concerned. However, it is
believed that the ability of the Funds and Portfolios to participate in volume
transactions will generally produce better executions for the Funds and
Portfolios.

For the fiscal years ended October 31, 1995, 1996 and 1997, the Capital
Growth Portfolio paid aggregate brokerage commissions of $2,311,291, $1,618,640
and $2,240,823, respectively. For the fiscal years ended October 31, 1995, 1996
and 1997, the Growth and Income Portfolio paid aggregate brokerage commissions
of $2,352,596, $1,304,272 and $3,456,823, respectively.

For the fiscal years ended October 31, 1995, 1996 and 1997, the Balanced
Fund paid aggregate brokerage commissions of $27,315, $62,036 and $62,342,
respectively.

For the fiscal years ended October 31, 1995, 1996 and 1997, the Equity
Income Fund paid aggregate brokerage commissions of $23,824, $44,136 and
$75,090, respectively.

21
<PAGE>

PERFORMANCE INFORMATION

From time to time, a Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Because such performance information is based
on past investment results, it should not be considered as an indication or
representation of the performance of any classes of a Fund in the future. From
time to time, the performance and yield of classes of a Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of a Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the
performance and yield of a Fund or its classes. A Fund's performance may be
compared with indices such as the Lehman Brothers Government/Corporate Bond
Index, the Lehman Brothers Government Bond Index, the Lehman Government Bond
1-3 Year Index and the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow
Jones Industrial Average or any other commonly quoted index of common stock
prices; and the Russell 2000 Index and the NASDAQ Composite Index.
Additionally, a Fund may, with proper authorization, reprint articles written
about such Fund and provide them to prospective shareholders.

A Fund may provide period and average annual "total rates of return." The
"total rate of return" refers to the change in the value of an investment in a
Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class M shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. One-, five-,
and ten-year periods will be shown, unless the class has been in existence for
a shorter-period.

Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yields and the net asset values of the classes of
shares of a Fund will vary based on market conditions, the current market value
of the securities held by the Fund and changes in the Fund's expenses. The
advisers, Shareholder Servicing Agents, the Administrator, the Distributor and
other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of a
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of the Fund during the period such waivers
are in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of a
Fund to yields and total rates of return published for other investment
companies and other investment vehicles (including different classes of
shares). The Trust is advised that certain Shareholder Servicing Agents may
credit to the accounts of their customers from whom they are already receiving
other fees amounts not exceeding the Shareholder Servicing Agent fees received,
which will have the effect of increasing the net return on the investment of
customers of those Shareholder Servicing Agents. Such customers may be able to
obtain through their Shareholder Servicing Agents quotations reflecting such
increased return.

Each Fund presents performance information for the Class M Shares since
the commencement of operations of that Fund (or the related predecessor fund,
as described below), rather than the date such class was introduced.
Performance information for the Class M Shares is therefore based on the
performance history of a predecessor class or classes. Performance information
is restated to reflect the current maximum front-end sales charge when
presented inclusive of sales charges. Additional performance information may be
presented which does not reflect the deduction of sales charges. Historical
expenses reflected in per-

22
<PAGE>

formance information are based upon the distribution, shareholder servicing
fees and other expenses actually incurred during the periods presented and have
not been restated, for periods during which the performance information for the
Class M Shares is based upon the performance history of a predecessor class, to
reflect the ongoing expenses currently borne by the Class M Shares.

In connection with the Hanover Reorganization, the U.S. Government
Securities Fund was established to receive the assets of The Hanover U.S.
Government Securities Fund. Performance results presented for the Class M
Shares of the U.S. Government Securities Fund include the performance of The
Hanover U.S. Government Securities Fund for periods prior to the consummation
of the Hanover Organization.

Advertisements for the Chase Vista Funds may include references to the
asset size of other financial products made available by Chase, such as the
offshore assets of other funds.

Total Rate of Return

A Fund's or class' total rate of return for any period will be calculated
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day of the period of
shares purchasable with dividends and capital gains declared during such period
with respect to a share held at the beginning of such period and with respect
to shares purchased with such dividends and capital gains distributions, by
(ii) the public offering price per share on the first day of such period, and
(b) subtracting 1 from the result. The average annual rate of return quotation
will be calculated by (x) adding 1 to the period total rate of return quotation
as calculated above, (y) raising such sum to a power which is equal to 365
divided by the number of days in such period, and (z) subtracting 1 from the
result.
Average Annual Total Returns*
(excluding sales charges)

The average annual total rate of return figures for the following Funds,
reflecting the initial investment and assuming the reinvestment of all
distributions (but excluding the effects of any applicable sales charges) for
the one and five year periods ended October 31, 1997 and for the period from
commencement of business operations of each such Fund to October 31, 1997 were
as follows:

<TABLE>
<CAPTION>
Since Date of Date of
One Five Ten Fund Fund Class
Fund Year Years Years Inception Inception Introduction
- ----------------------------------- ------ ------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Income Fund ......... 9/8/87
M Shares+ ........................ 7.35% 6.20% 8.21% 8.80% 10/30/98
Balanced Fund ..................... 11/4/92
M Shares+ ........................ 21.48% -- -- 14.86% 10/30/98
Equity Income Fund ................ 7/15/93
M Shares+ ........................ 33.66% -- -- 19.34% 10/30/98
Growth and Income Fund ............ 9/23/87
M Shares+ ........................ 28.84% 16.96% 23.48% 23.21% 10/30/98
Capital Growth Fund ............... 9/23/87
M Shares+ ........................ 26.47% 18.29% 21.27% 21.02% 10/30/98
Bond Fund ......................... 11/30/90
Class M Shares*** ................ 9.45% 7.38% -- 8.50% 10/30/98
Short-Term Bond Fund .............. 11/30/90
Class M Shares*** ................ 5.91% 5.22% -- 5.82% 10/30/98
</TABLE>

23
<PAGE>

<TABLE>
<CAPTION>
Since Date of Date of
One Five Ten Fund Fund Class
Fund Year Years Years Inception Inception Introduction
- ------------------- ------ ------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government
Securities Fund** 2/19/93
M Shares*** 7.61% -- -- 5.73% 10/30/98
</TABLE>

- ----------

* As indicated above, the performance information for the Class M Shares is
based on the performance history of a predecessor class or classes and
historical expenses have not been restated, for periods during which the
performance information for the Class M Shares is based upon the
performance history of a predecessor class, to reflect the ongoing expenses
currently borne by the Class M Shares. Accordingly, the performance
information presented in the table above and in each table that follows may
be used in assessing each Fund's performance history but does not reflect
how the Class M Shares would have performed prior to their introduction,
which would require an adjustment to the ongoing expenses. The performance
quoted reflects fee waivers that subsidize and reduce the total operating
expenses of certain Funds. Returns on these Funds would have been lower if
there were not such waivers. With respect to certain Funds, Chase and/or
other service providers are obligated to waive certain fees and/or
reimburse certain expenses for a stated period of time. In other instances,
there is no obligation to waive fees or to reimburse expenses. Each Fund's
Prospectus discloses the extent of any agreements to waive fees and/or
reimburse expenses.

** Performance information presented in the table above and in each table that
follows for the Class M Shares of these Funds includes the performance of
their respective predecessor funds for periods prior to the consummation of
the Hanover Reorganization. Performance information presented for the Class
M Shares of each of these Funds is based on the historical expenses and
performance of a single class of shares of its predecessor fund and does
not reflect the current distribution, service and/or other expenses that an
investor would incur as a holder of such class of such Fund. Date of Fund
inception shown for these Funds is the date of inception of their
respective predecessor funds. These Funds commenced operations as part of
the Trust on May 6, 1996.

*** Performance information presented in the table above and in each table that
follows for the Class M Shares of this Fund prior to the date the class was
introduced is based on the performance of predecessor classes and for the
period prior to May 6, 1996 does not reflect shareholder servicing and
distribution fees and certain other expenses borne by the Class M Shares
which, if reflected, would reduce the performance quoted.

+ Performance information presented in the table above and in each table that
follows for the Class M Shares of this Fund prior to the date this class
was introduced is based on the performance of predecessor classes and for
the period prior to November 5, 1993 (May 7, 1996 in the case of the Equity
Income Fund) does not reflect the distribution fees and other expenses
borne by the Class M Shares which, if reflected, would reduce the
performance quoted.

24
<PAGE>

Average Annual Total Returns*

(including sales charges)

With the current maximum sales charge for Class M shares (1.50% for the
Short-Term Bond Fund, 3.25% for the U.S. Treasury Income Fund, Balanced Fund,
Equity Income Fund, Bond Fund and U.S. Government Securities Fund and 3.50% for
the Growth and Income Fund and Capital Growth Fund) reflected the average
annual total rate of return figures for the same periods would be as follows:

<TABLE>
<CAPTION>
Since
One Five Ten Fund
Fund Year Years Years Inception
- ---------------------------------- ------ ------- ------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury Income Fund
M Shares 2.52% 5.23% 7.71% 8.31%
Balanced Fund
M Shares 16.02% -- -- 13.81%
Equity Income Fund
M Shares 27.65% -- -- 18.07%
Growth and Income Fund
M Shares 22.72% 15.83% 22.88% 22.62%
Capital Growth Fund
M Shares 20.46% 17.15% 20.68% 20.44%
Bond Fund
Class M Shares 4.53% 6.40% -- 7.78%
Short-Term Bond Fund
Class M Shares 4.32% 4.90% -- 5.59%
U.S. Government Securities Fund**
M Shares 2.77% -- -- 4.69%
</TABLE>

- ----------
*See the notes to the preceding table.

The Funds may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of
a Fund with other measures of investment return.

Yield Quotations

The yields of the shares of the Funds for the thirty-day period ended
October 31, 1997 were as follows:

<TABLE>
<CAPTION>
Class M Shares
---------------
<S> <C>
Balanced Fund 2.55%
Bond Fund 5.52%
Capital Growth Fund 0%
Equity Income Fund 1.51%
Growth and Income Fund 0.21%
Short-Term Bond Fund 5.52%
U.S. Government Securities Fund 5.16%
U.S. Treasury Income Fund 5.12%
</TABLE>

25
<PAGE>

Advertisements for the Funds may include references to the asset size of
other financial products made available by Chase, such as the offshore assets
of other funds advised by Chase.

Non-Standardized Performance Results*

(excluding sales charges)

The table below reflects the net change in the value of an assumed initial
investment of $10,000 in Class M Shares in the following Funds (excluding the
effects of any applicable sale charges) for the period from the commencement
date of business for each such Fund through October 31, 1997. The values
reflect an assumption that capital gain distributions and income dividends, if
any, have been invested in additional Class M. Shares. From time to time, the
Funds may provide these performance results in addition to the total rate of
return quotations required by the Securities and Exchange Commission. As
discussed more fully in the Prospectuses, neither these performance results,
nor total rate of return quotations, should be considered as representative of
the performance of the Funds in the future. These factors and the possible
differences in the methods used to calculate performance results and total
rates of return should be considered when comparing such performance results
and total rate of return quotations of the Funds with those published for other
investment companies and other investment vehicles.

<TABLE>
<CAPTION>
Value of Value of
Initial Capital Value of Fund
$10,000 Gains Reinvested Inception
Investment Distributions Dividends Total Value Date
------------ --------------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Income Fund 9/8/87
M Shares $11,260 $ 1,184 $11,104 $23,548
Balanced Fund 11/4/92
M Shares $15,410 $ 1,975 $ 2,601 $19,987
Equity Income Fund 7/15/92
Class M $14,627 $ 5,329 $ 1,427 $21,383
Growth and Income Fund 9/23/87
Class M $46,210 $26,680 $ 9,672 $82,562
Capital Growth Fund 9/23/87
Class M $46,760 $17,674 $ 4,453 $68,887
Bond Fund 11/1/90
Class M Shares $10,820 $ 398 $ 6,371 $17,589
Short-Term Bond Fund 11/30/90
Class M Shares $10,100 $ 18 $ 4,676 $14,794
U.S. Government Securities Fund 2/19/93
M Shares $10,060 $ 129 $ 2,801 $12,990
</TABLE>

- ----------
* See the notes to the table captioned "Average Annual Total Return (excluding
sales charges)" above. The table above assumes an initial investment of
$10,000 the Class M Shares of a Fund for the period from the Fund's
commencement of operations, although the Class M Shares were introduced at a
subsequent date. As indicated above, performance information for the Class M
Shares is based on the performance history of a predecessor class or
classes, and historical expenses have not been restated, for periods during
which the performance information for the Class M Shares is based upon the
performance history of a predecessor class, to reflect the ongoing expenses
currently borne by the Class M Shares.

26
<PAGE>

Non-Standardized Performance Results*
(includes sales charges)

With the current maximum sales charge for Class M shares (3.00% for the
Short-Term Bond Fund, U.S. Treasury Income Fund, Balanced Fund, Equity Income
Fund, Bond Fund and U.S. Government Securities Fund and 3.50% for Growth and
Income Fund and Capital Growth Fund) reflected the performance figures for the
same periods would be as follows:

<TABLE>
<CAPTION>
Value of Value of
Initial Capital Value of
Period Ended $10,000 Gains Reinvested
October 31, 1997 Investment Distribution Dividends Total Value
- -------------------------------- ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. Treasury Income Fund
M Shares $10,753 $ 1,131 $10,604 $22,488
Balanced Fund
M Shares $14,717 $ 1,887 $ 2,484 $19,087
Equity Income Fund
Class M $13,369 $ 5,089 $ 1,363 $20,421
Growth and Income Fund
Class M $44,015 $25,413 $ 9,213 $78,641
Capital Growth Fund
Class B $44,539 $16,835 $ 4,241 $65,615
Bond Fund
Class M Shares $10,333 $ 380 $ 6,085 $16,797
Short-Term Bond Fund
Class M Shares $ 9,949 $ 18 $ 4,606 $14,572
U.S. Government Securities Fund
M Shares $ 9,607 $ 123 $ 2,675 $12,406
</TABLE>

- ----------
* See the notes to the table captioned "Average Annual Total Return (excluding
sales charges)" above. The table above assumes an initial investment of
$10,000 in Class M Shares of a Fund for the period from the Fund's
commencement of operations, although the Class M Shares were introduced at a
subsequent date. As indicated above, performance information is based on the
performance history of a predecessor class or classes, and historical
expenses have not been restated, for periods during which the performance
information for the Class M Shares is based upon the performance history of
a predecessor class, to reflect the ongoing expenses currently borne by the
Class M Shares.

DETERMINATION OF NET ASSET VALUE

Equity securities in a Fund's or Portfolio's portfolio are valued at the
last sale price on the exchange on which they are primarily traded or on the
NASDAQ National Market System, or at the last quoted bid price for securities
in which there were no sales during the day or for other unlisted
(over-the-counter) securities not reported on the NASDAQ National Market
System. Bonds and other fixed income securities (other than short-term
obligations, but including listed issues) in a Fund's or Portfolio's portfolio
are valued on the basis of valuations furnished by a pricing service, the use
of which has been approved by the Board of Trustees. In making such valuations,
the pricing service utilizes both dealer-supplied valuations and electronic
data processing techniques that take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, since such

27
<PAGE>

valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations which mature in 60 days or less are valued
at amortized cost, which constitutes fair value as determined by the Board of
Trustees. Futures and option contracts that are traded on commodities or
securities exchanges are normally valued at the settlement price on the
exchange on which they are traded. Portfolio securities (other than short-term
obligations) for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Board of
Trustees.

Interest income on long-term obligations in a Fund's or Portfolio's
portfolio is determined on the basis of coupon interest accrued plus
amortization of discount (the difference between acquisition price and stated
redemption price at maturity) and premiums (the excess of purchase price over
stated redemption price at maturity). Interest income on short-term obligations
is determined on the basis of interest and discount accrued less amortization
of premium.

PURCHASES, REDEMPTIONS AND EXCHANGES

The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Funds' Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectuses are not
available until a completed and signed account application has been received by
the Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application.

Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, a Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service
options chosen by the shareholder or joint shareholders in his or their latest
account application or other written request for services, including
purchasing, exchanging, or redeeming shares of such Fund and depositing and
withdrawing monies from the bank account specified in the Bank Account
Registration section of the shareholder's latest account application or as
otherwise properly specified to such Fund in writing.

Subject to compliance with applicable regulations, each Fund has reserved
the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of readily marketable portfolio securities
(instead of cash). The securities so distributed would be valued at the same
amount as that assigned to them in calculating the net asset value for the
shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (approximately $250,000).

With respect to the Growth and Income Fund and Capital Growth Fund, the
Trust will redeem Fund shares in kind only if it has received a redemption in
kind from the corresponding Portfolio and therefore shareholders of the Fund
that receive redemptions in kind will receive portfolio securities of such
Portfolio and in no case will they receive a security issued by the Portfolio.
Each Portfolio has advised the Trust that the Portfolio will not redeem in kind
except in circumstances in which the corresponding Fund is permitted to redeem
in kind or unless requested by the corresponding Fund.

Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day that the New York Stock
Exchange is open for business. Once each such day, based upon prices determined
as of the close of regular trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time, however, options are priced at 4:15 p.m., Eastern
time) the value of each investor's interest in a Portfolio will be determined
by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or reductions which are to be effected on that day
will then be effected. The investor's percentage of the aggregate

28
<PAGE>

beneficial interests in a Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of such time on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio effected on such day and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
such time on such day plus or minus, as the case may be, the amount of net
additions to or reductions in the aggregate investments in the Portfolio by all
investors in the Portfolio. The percentage so determined will then be applied
to determine the value of the investor's interest in the Portfolio as of such
time on the following day the New York Stock Exchange is open for trading.

Investors in Class M shares may qualify for reduced initial sales charges
by signing a statement of intention (the "Statement"). This enables the
investor to aggregate purchases of Class M shares in the Fund with purchases of
Class M shares of any other Fund in the Trust excluding shares of any Chase
Vista money market fund, during a 13-month period. The sales charge is based on
the total amount to be invested in Class M shares during the 13-month period.
All Class M or other qualifying shares of these Funds currently owned by the
investor will be credited as purchases (at their current offering prices on the
date the Statement is signed) toward completion of the Statement. A 90-day
back-dating period can be used to include earlier purchases at the investor's
cost. The 13-month period would then begin on the date of the first purchase
during the 90-day period. No retroactive adjustment will be made if purchases
exceed the amount indicated in the Statement. A shareholder must notify the
Transfer Agent or Distributor whenever a purchase is being made pursuant to a
Statement.

The Statement is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in Class M shares
registered in the shareholder's name in order to assure payment of the proper
sales charge. If total purchases pursuant to the Statement (less any
dispositions and exclusive of any distributions on such shares automatically
reinvested) are less than the amount specified, the investor will be requested
to remit to the Transfer Agent an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Reinvested dividend and
capital gain distributions are not counted toward satisfying the Statement.

Class M shares of a Fund may also be purchased by any person at a reduced
initial sales charge which is determined by (a) aggregating the dollar amount
of the new purchase and the greater of the purchaser's total (i) net asset
value or (ii) cost of any shares acquired and still held in the Fund, or any
other Vista fund excluding any Vista money market fund, and (b) applying the
initial sales charge applicable to such aggregate dollar value (the "Cumulative
Quantity Discount"). The privilege of the Cumulative Quality Discount is
subject to modification or discontinuance at any time with respect to all Class
M shares purchased thereafter.

An individual who is a member of a qualified group (as hereinafter
defined) may also purchase Class M shares of a Fund at the reduced sales charge
applicable to the group taken as a whole. The reduced initial sales charge is
based upon the aggregate dollar value of Class M shares previously purchased
and still owned by the group plus the securities currently being purchased and
is determined as stated in the preceding paragraph. In order to obtain such
discount, the purchaser or investment dealer must provide the Transfer Agent
with sufficient information, including the purchaser's total cost, at the time
of purchase to permit verification that the purchaser qualifies for a
cumulative quantity discount, and confirmation of the order is subject to such
verification. Information concerning the current initial sales charge
applicable to a group may be obtained by contacting the Transfer Agent.

A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Class M shares at a
discount and (iii) satisfies uniform criteria which enables the Dis-

29
<PAGE>

tributor to realize economies of scale in its costs of distributing Class M
shares. A qualified group must have more than 10 members, must be available to
arrange for group meetings between representatives of the Fund and the members
must agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange for payroll deduction or other bulk transmission of
investments in the Fund. This privilege is subject to modification or
discontinuance at any time with respect to all Class M shares purchased
thereafter.

Under the Exchange Privilege, shares may be exchanged for shares of
another fund only if shares of the fund exchanged into are registered in the
state where the exchange is to be made. Shares of a Fund may only be exchanged
into another fund if the account registrations are identical. With respect to
exchanges from any Vista money market fund, shareholders must have acquired
their shares in such money market fund by exchange from one of the Vista
non-money market funds or the exchange will be done at relative net asset value
plus the appropriate sales charge. Any such exchange may create a gain or loss
to be recognized for federal income tax purposes. Normally, shares of the fund
to be acquired are purchased on the redemption rate, but such purchase may be
delayed by either fund for up to five business days if a fund determines that
it would be disadvantaged by an immediate transfer of the proceeds.

A Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain other circumstances described
in the Prospectuses. A Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.

TAX MATTERS

The following is only a summary of certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the respective Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in each Fund's Prospectus are not intended as substitutes
for careful tax planning.

Qualification as a Regulated Investment Company

Each Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
a regulated investment company, each Fund is not subject to federal income tax
on the portion of its net investment income (i.e., its investment company
taxable income, as that term is defined in the Code, without regard to the
deduction for dividends paid ) and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) that it distributes to
shareholders, provided that it distributes at least 90% of its net investment
income for the taxable year (the "Distribution Requirement"), and satisfies
certain other requirements of the Code that are described below. Because
certain Funds invest all of their assets in Portfolios which will be classified
as partnerships for federal income tax purposes, such Funds will be deemed to
own a proportionate share of the income of the Portfolio into which each
contributes all of its assets for purposes of determining whether such Funds
satisfy the Distribution Requirement and the other requirements necessary to
qualify as a regulated investment company (e.g., Income Requirement
(hereinafter defined), etc.).

30
<PAGE>

In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the
value of its total assets may be invested in the securities of any one issuer
(other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.

Each Fund may engage in hedging or derivatives transactions involving
foreign currencies, forward contracts, options and futures contracts (including
options, futures and forward contracts on foreign currencies) and short sales.
See "Additional Policies Regarding Derivative and Related Transactions." Such
transactions will be subject to special provisions of the Code that, among
other things, may affect the character of gains and losses realized by the Fund
(that is, may affect whether gains or losses are ordinary or capital),
accelerate recognition of income of the Fund and defer recognition of certain
of the Fund's losses. These rules could therefore affect the character, amount
and timing of distributions to shareholders. In addition, these provisions (1)
will require a Fund to "mark-to-market" certain types of positions in its
portfolio (that is, treat them as if they were closed out) and (2) may cause a
Fund to recognize income without receiving cash with which to pay dividends or
make distributions in amounts necessary to satisfy the Distribution Requirement
and avoid the 4% excise tax (described below). Each Fund intends to monitor its
transactions, will make the appropriate tax elections and will make the
appropriate entries in its books and records when it acquires any option,
futures contract, forward contract or hedged investment in order to mitigate
the effect of these rules.

A Fund may make investments that produce income that is not matched by a
corresponding cash distribution to the Fund such as investments in pay-in-kind
bonds or in obligations such as zero coupon securities having original issue
discount (i.e., an amount equal to the excess of the stated redemption price of
the security at maturity over its issue price), or market discount (i.e., an
amount equal to the excess of the stated redemption price of the security over
the basis of such bond immediately after it was acquired) if the Fund elects to
accrue market discount on a current basis. In addition, income may continue to
accrue for federal income tax purposes with respect to a non-performing
investment. Any such income would be treated as income earned by a Fund and
therefore would be subject to the distribution requirements of the Code.
Because such income may not be matched by a corresponding cash distribution to
a Fund, the Fund may be required to borrow money or dispose of other securities
to be able to make distributions to its investors. In addition, if an election
is not made to currently accrue market discount with respect to a market
discount bond, all or a portion of any deduction or any interest expenses
incurred to purchase or hold such bond may be deferred until such bond is sold
or otherwise disposed.

If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.

Excise Tax on Regulated Investment Companies

31
<PAGE>

calendar year. For the foregoing purposes, a regulated investment company is
treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year.

Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that a Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions

Each Fund anticipates distributing substantially all of its net investment
income for each taxable year. Such distributions will be taxable to
shareholders as ordinary income and treated as dividends for federal income tax
purposes, but they will qualify for the 70% dividends-received deduction for
corporations only to the extent discussed below. Dividends may differ between
different classes of the same Fund as a result of differences in class specific
expenses.

A Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. Each Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a "capital gain
dividend," it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.

Conversely, if a Fund elects to retain its net capital gain, the Fund will
be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro-rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.

Ordinary income dividends paid by a Fund with respect to a taxable year
will qualify for the 70% dividends-received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by a
Fund from domestic corporations for the taxable year. A dividend received by a
Fund will not be treated as a qualifying dividend (1) if it has been received
with respect to any share of stock that the Fund has held for less than 46 days
(91 days in the case of certain preferred stock) during the 90 day period
beginning on the date which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend (during the 180 day period
beginning 90 days before such date in the case of certain preferred stock)
under the Rules of the Code Section 246(c)(3) and (4); (2) to the extent that a
Fund is under an obligation (pursuant to a short sale or otherwise) to make
related payments with respect to positions in substantially similar or related
property; or (3) to the extent the stock on which the dividend is paid is
treated as debt-financed under the rules of Code Section 246A. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of a Fund. In the case where a Fund
invests all of its assets in a Portfolio and the Fund satisfies the holding
period rules pursuant to Code Section 246(c) as to its interest in the
Portfolio, a corporate shareholder which satisfies the foregoing requirements
with respect to its shares of the Fund should receive the dividends-received
deduction.

32
<PAGE>

For purposes of the Corporate AMT, the corporate dividends-received
deduction is not itself an item of tax preference that must be added back to
taxable income or is otherwise disallowed in determining a corporation's AMT.
However, corporate shareholders will generally be required to take the full
amount of any dividend received from a Fund into account (without a
dividends-received deduction) in determining its adjusted current earnings.

Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties with many foreign
countries which entitle any such Fund to a reduced rate of, or exemption from,
taxes on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of any such Fund's assets to be
invested in various countries is not known.

Distributions by a Fund that do not constitute ordinary income dividends,
or capital gain dividends will be treated as a return of capital to the extent
of (and in reduction of) the shareholder's tax basis in his shares; any excess
will be treated as gain from the sale of his shares, as discussed below.

Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net asset
value at the time a shareholder purchases shares of a Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions
of such amounts will be taxable to the shareholder in the manner described
above, although such distributions economically constitute a return of capital
to the shareholder.

Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.

A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is a corporation
or other "exempt recipient."

Sale or Redemption of Shares

A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital
gain or loss and will be long- term capital gain or loss if the shares were
held for longer than one year. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be disallowed to the
extent of the amount of exempt-interest dividends received on such shares and
(to the extent not disallowed) will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares.

Foreign Shareholders

Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from a Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.

33
<PAGE>

If the income from a Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, dividends paid to a foreign
shareholder from net investment income will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the
dividend. Such a foreign shareholder would generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of the Fund and
capital gain dividends and amounts retained by the Fund that are designated as
undistributed capital gains.

If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.

In the case of foreign noncorporate shareholders, a Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.

The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.

State and Local Tax Matters

Depending on the residence of the shareholder for tax purposes,
distributions may also be subject to state and local taxes or withholding
taxes. Most states provide that a regulated investment company may pass through
(without restriction) to its shareholders state and local income tax exemptions
available to direct owners of certain types of U.S. government securities (such
as U.S. Treasury obligations). Thus, for residents of these states,
distributions derived from a Fund's investment in certain types of U.S.
government securities should be free from state and local income taxes to the
extent that the interest income from such investments would have been exempt
from state and local income taxes if such securities had been held directly by
the respective shareholders themselves. Certain states, however, do not allow a
regulated investment company to pass through to its shareholders the state and
local income tax exemptions available to direct owners of certain types of U.S.
government securities unless the regulated investment company holds at least a
required amount of U.S. government securities. Accordingly, for residents of
these states, distributions derived from a Fund's investment in certain types
of U.S. government securities may not be entitled to the exemptions from state
and local income taxes that would be available if the shareholders had
purchased U.S. government securities directly. Shareholders' dividends
attributable to a Fund's income from repurchase agreements generally are
subject to state and local income taxes, although states and regulations vary
in their treatment of such income. The exemption from state and local income
taxes does not preclude states from asserting other taxes on the ownership of
U.S. government securities. To the extent that a Fund invests to a substantial
degree in U.S. government securities which are subject to favorable state and
local tax treatment, shareholders of such Fund will be notified as to the
extent to which distributions from the Fund are attributable to interest on
such securities. Rules of state and local taxation of ordinary income dividends
and capital gain dividends from regulated investment companies may differ from
the rules for U.S. federal income taxation in other respects. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in a Fund.

Effect of Future Legislation

34
<PAGE>

MANAGEMENT OF THE TRUST AND THE FUNDS OR PORTFOLIOS

Trustees and Officers

The Trustees and officers of the Trust and their principal occupations for
at least the past five years are set forth below. Their titles may have varied
during that period.

William J. Armstrong--Trustee. Vice President and Treasurer,
Ingersoll-Rand Company. Age: 56. Address: 49 Aspen Way, Upper Saddle River, NJ
07458.

35
<PAGE>

- ----------
* Asterisks indicate those Trustees that are "interested persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an
interested person of the Trust solely by reason of being Chairman of the
Trust.

Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisers is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the advisers. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component.

36
<PAGE>

Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1997 for each Trustee of the Trust:

<TABLE>
<CAPTION>
Capital Equity Growth and
Balanced Bond Growth Income Income
Fund Fund Fund Fund Fund
------------ ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $ 407.61 $ 117.00 $ 3,165.53 $ 153.79 $ 5,960.37
H. Richard Vartabedian, Trustee 335.03 96.52 2,635.42 121.78 4,933.97
William J. Armstrong, Trustee 213.68 61.73 1,679.21 77.82 3,144.65
John R.H. Blum, Trustee 236.31 68.42 1,860.74 85.63 3,485.89
Stuart W. Cragin, Jr., Trustee 223.36 64.34 1,756.93 81.20 3,289.30
Ronald R. Eppley, Jr., Trustee 223.36 64.34 1,756.93 81.20 3,289.30
Joseph J. Harkins, Trustee 231.97 67.05 1,827.03 84.03 3,420.83
Sarah E. Jones, Trustee -- -- -- -- --
W.D. MacCallan, Trustee 223.36 64.34 1,756.93 81.20 3,289.30
W. Perry Neff, Trustee 231.97 67.05 1,827.03 84.03 3,420.83
Leonard M. Spalding, Jr.,
Trustee -- -- -- -- --
Richard E. Ten Haken, Trustee $ 223.36 $ 64.34 $ 1,756.93 $ 81.20 $ 3,289.30
Irving L. Thode, Trustee 223.36 64.34 1,756.93 81.20 3,289.30
</TABLE>

<TABLE>
<CAPTION>
Short-Term U.S. Treasury U.S. Gov't
Bond Income Securities
Fund Fund Fund
------------ --------------- -----------
<S> <C> <C> <C>
Fergus Reid, III, Trustee $ 251.04 $ 78.90 $ 348.37
H. Richard Vartabedian, Trustee 211.11 484.54 292.85
William J. Armstrong, Trustee 134.11 307.89 185.94
John R.H. Blum, Trustee 149.42 341.99 206.87
Stuart W. Cragin, Jr., Trustee 140.74 323.03 195.23
Ronald R. Eppley, Jr., Trustee 140.74 323.03 195.23
Joseph J. Harkins, Trustee 146.66 335.77 203.03
Sarah E. Jones, Trustee -- -- --
W.D. MacCallan, Trustee 140.74 323.03 195.23
W. Perry Neff, Trustee 146.88 335.77 203.03
Leonard M. Spalding, Jr., Trustee -- -- --
Richard E. Ten Haken, Trustee 140.74 323.03 195.23
Irving L. Thode, Trustee 140.74 323.03 195.23
</TABLE>

37
<PAGE>

<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Accrued from
by the Fund Complex(1) "Fund Complex"(2)
------------------------ ------------------
<S> <C> <C>
John R.H. Blum, Trustee 41,363 73,000
Stuart W. Cragin, Jr., Trustee 34,965 68,500
Ronald R. Eppley, Jr., Trustee 53,267 68,500
Joseph J. Harkins, Trustee 52,508 71,500
Sarah E. Jones, Trustee -- --
W.D. MacCallan, Trustee 66,323 68,500
W. Perry Neff, Trustee 66,323 71,500
Leonard M. Spalding, Jr., Trustee -- --
Richard E. Ten Haken, Trustee 31,463 68,500
Irving L. Thode, Trustee 41,876 68,500
</TABLE>

As of December 31, 1997, the Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 1997, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$9,200, which amount was then apportioned among the Funds comprising the Trust.

Chase Vista Funds Retirement Plan for Eligible Trustees

Set forth below in the table are the estimated annual benefits payable to
an eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of September 30, 1998, the estimated credited years
of service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley,
Harkins, MacCallan, Neff, Spalding, Ten Haken and Thode and for Ms. Jones are
13, 6, 10, 13, 5, 9, 8, 8, 14, 0, 13, 5 and 1, respectively.

<TABLE>
<CAPTION>
Highest Annual Compensation Paid by All Chase Vista Funds 00,000
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
$60,000 $80,000 $100,000 $120,000 $140,000
</TABLE>

38
<PAGE>

<TABLE>
<CAPTION>
Years of
Service Estimated Annual Benefits upon Retirement
- --------- ----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14 $57,600 $76,800 $96,000 $115,200 $134,400
12 52,800 70,400 88,000 105,600 123,200
10 48,000 64,000 80,000 96,000 112,000
8 38,400 51,200 64,000 76,800 89,600
6 28,800 38,400 48,000 57,600 67,200
4 19,200 25,600 32,000 38,400 44,80
</TABLE>

Messrs. Eppley, Ten Haken, Thode and Vartabedian each executed a deferred
compensation agreement for the 1997 calendar year and as of October 31, 1997
they had contributed $55,334, $27,669, $49,803 and $83,000, respectively.

Adviser and Sub-Adviser

Chase acts as investment adviser to the Funds or Portfolios pursuant to an
Investment Advisory Agreement, dated as of May 6, 1996 (the "Advisory
Agreement"). Subject to such policies as the Board of Trustees may determine,
Chase is responsible for investment decisions for the Funds or Portfolios.
Pursuant to the terms of the Advisory Agreement, Chase provides the Funds or
Portfolios with such investment advice and supervision as it deems necessary
for the proper supervision of the Funds' or Portfolios' investments. The
advisers continuously provide investment programs and determine from time to
time what securities shall be purchased, sold or exchanged and what portion of
the Funds' or Portfolios' assets shall be held uninvested. The advisers to the
Funds or Portfolios furnish, at their own expense, all services, facilities and
personnel necessary in connection with managing the investments and effecting
portfolio transactions for the Funds or Portfolios. The Advisory Agreement for
the Funds or Portfolios will continue in effect from year to year only if such
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of a Fund's or Portfolio's outstanding voting
securities and by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on such Advisory Agreement.

Under the Advisory Agreement, the adviser may utilize the specialized
portfolio skills of all its various affiliates, thereby providing the Funds and
Portfolios with greater opportunities and flexibility in accessing investment
expertise.

39
<PAGE>

Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without
penalty by the Trust on behalf of the Funds on not more than 60 days', nor less
than 30 days', written notice when authorized either by a majority vote of a
Fund's shareholders or by a vote of a majority of the Board of Trustees of the
Trust, or by the adviser or sub-adviser on not more than 60 days', nor less
than 30 days', written notice, and will automatically terminate in the event of
its "assignment" (as defined in the 1940 Act). The advisory agreements provide
that the adviser or sub-adviser under such agreement shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio
transactions for the respective Fund, except for wilful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder.

With respect to the Equity Funds or Equity Portfolios, the equity research
team of the adviser looks for two key variables when analyzing stocks for
potential investment by equity portfolios: value and momentum. To uncover these
qualities, the team uses a combination of quantitative analysis, fundamental
research and computer technology to help identify undervalued stocks.

In the event the operating expenses of the Funds, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Funds imposed by the securities laws or regulations
thereunder of any state in which the shares of the Funds are qualified for
sale, as such limitations may be raised or lowered from time to time, the
adviser shall reduce its advisory fee (which fee is described below) to the
extent of its share of such excess expenses. The amount of any such reduction
to be borne by the adviser shall be deducted from the monthly advisory fee
otherwise payable with respect to the Funds during such fiscal year; and if
such amounts should exceed the monthly fee, the adviser shall pay to a Fund its
share of such excess expenses no later than the last day of the first month of
the next succeeding fiscal year.

Chase, on behalf of the Funds (other than Strategic Income Fund), or
Portfolios has entered into an investment sub-advisory agreement dated as of May
6, 1996 with Chase Asset Management, Inc. ("CAM"). With respect to the Strategic
Income Fund, Chase has entered into investment sub-advisory agreements, dated
October 30, 1998, with each of CAM and State Street Research & Management
Company ("State Street"). With respect to the day-to-day management of the Funds
or Portfolios, under the sub-advisory agreements, the sub-advisers make
decisions concerning, and place all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and sales.
The sub-advisers may, in their discretion, provide such services through their
own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of Chase; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the sub-advisers. This
arrangement will not result in the payment of additional fees by the Funds.

CAM is a wholly-owned operating subsidiary of the Adviser. CAM is
registered with the Securities and Exchange Commission as an investment adviser
and provides discretionary investment advisory services to institutional
clients, and the same individuals who serve as portfolio managers for CAM also
serve as portfolio managers for Chase.

40
<PAGE>

In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from each Fund or
Portfolio an investment advisory fee computed daily and paid monthly based on a
rate equal to a percentage of such Fund's or Portfolio's average daily net
assets specified in the relevant Prospectuses. However, the adviser may
voluntarily agree to waive a portion of the fees payable to it on a
month-to-month basis. For its services under its sub-advisory agreement, CAM
(or VDH in the case of American Value Fund) will be entitled to receive, with
respect to each such Fund or Portfolio, such compensation, payable by the
adviser out of its advisory fee, as is described in the relevant Prospectuses.

For the fiscal years ended October 31, 1995, 1996 and 1997, Chase was paid
or accrued the following investment advisory fees with respect to the following
Funds and Portfolios, and voluntarily waived the amounts in parentheses
following such fees with respect to each such period:

<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
------------------------------------------------------------------------------------------
1995 1996 1997
Fund paid/accrued waived paid/accrued waived paid/accrued waived
- --------------------------------- -------------- -------------- -------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $145,295 $(145,295) 253,986 (125,808) 419,971 (19,663)
Bond Fund 162,618 (162,618) 143,017 (143,017) 74,105 (74,105)
Capital Growth Fund * -- * -- * --
Equity Income Fund $ 44,277 $ (35,433) $ 54,769 $ (53,342) 142,666 (14,010)
Growth and Income Fund * -- * -- * --
Short-Term Bond Fund 85,353 (85,353) 105,509 (105,509) 120,146 (120,146)
U.S. Government Securities Fund -- -- 288,582 (17,569)# 195,014 --
U.S. Treasury Income Fund 319,705 (220,998) 331,915 (137,440) 329,197 (78,607)
</TABLE>

- ----------
* On November 23, 1993, these Funds changed their structure to a Master/Feeder
Fund Structure and do not have an investment adviser because the Trust seeks
to achieve the investment objective of the Funds by investing all of the
investable assets of each respective Fund in each respective Portfolio. The
Portfolios' investment adviser is Chase. With respect to the Growth and
Income Portfolio and the Capital Growth Portfolio, for the period November
23, 1993 to October 31, 1994, Chase was paid or accrued the following
investment advisory fees, and voluntarily waived the amounts in parentheses
following such fees: $4,805,067 ($0.00) and $1,649,889 ($0.00),
respectively. For the fiscal year ended October 31, 1995, Chase was paid or
accrued the following investment advisory fees, and voluntarily waived the
amounts in parentheses following such fees: $6,815,197 ($0.00) and
$3,563,194 ($0.00), respectively, with respect to such Portfolios. For the
year ended October 31, 1996, Chase was paid or accrued investment advisory
fees of $8,101,188 and $4,226,466, respectively, with respect to such
Portfolios. For the year ended October 31, 1997, Chase was paid or accrued
investment advisory fees of $9,877,868 and $4,971,835, respectively, with
respect to such Portfolios.

# Fees paid or accrued for the period from December 1, 1995 through October 31,
1996.

Administrator

Pursuant to separate Administration Agreements (the "Administration
Agreements"), Chase is the administrator of the Funds and the administrator of
each Portfolio. Chase provides certain administrative services to the Funds and
Portfolios, including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Funds' and Portfolios' independent contractors and agents;
preparation for signature by an officer of the Trust and Portfolios of all
documents required to be filed for compliance by the Trust and Portfolios with
applicable laws and regulations excluding those of the securities laws of
various states; arranging for the computation of performance data, including
net asset value and yield; responding to shareholder inquiries; and arranging
for the maintenance of books and records of the Funds and Portfolios and
providing, at its own expense, office facilities, equipment and personnel
necessary to carry out its duties. Chase in its capacity as administrator does
not have any respon-

41
<PAGE>

sibility or authority for the management of the Funds or Portfolios, the
determination of investment policy, or for any matter pertaining to the
distribution of Fund shares.

Under the Administration Agreements Chase is permitted to render
administrative services to others. The Administration Agreements will continue
in effect from year to year with respect to each Fund or Portfolio only if such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or Portfolio or by vote of a majority of such Fund's or
Portfolio's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Administration Agreements or
"interested persons" (as defined in the 1940 Act) of any such party. The
Administration Agreements are terminable without penalty by the Trust on behalf
of each Fund or by a Portfolio on 60 days' written notice when authorized
either by a majority vote of such Fund's or Portfolio shareholders or by vote
of a majority of the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined in the 1940 Act) of the Trust or
Portfolios, or by Chase on 60 days' written notice, and will automatically
terminate in the event of their "assignment" (as defined in the 1940 Act). The
Administration Agreements also provide that neither Chase or its personnel
shall be liable for any error of judgment or mistake of law or for any act or
omission in the administration of the Funds or Portfolios, except for willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of reckless disregard of its or their obligations and
duties under the Administration Agreements.

In addition, the Administration Agreements provide that, in the event the
operating expenses of any Fund or Portfolio, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for
any fiscal year exceed the most restrictive expense limitation applicable to
that Fund imposed by the securities laws or regulations thereunder of any state
in which the shares of such Fund are qualified for sale, as such limitations
may be raised or lowered from time to time, Chase shall reduce its
administration fee (which fee is described below) to the extent of its share of
such excess expenses. The amount of any such reduction to be borne by Chase
shall be deducted from the monthly administration fee otherwise payable to
Chase during such fiscal year, and if such amounts should exceed the monthly
fee, Chase shall pay to such Fund or Portfolio its share of such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year.

In consideration of the services provided by Chase pursuant to the
Administration Agreements, Chase receives from each Fund a fee computed daily
and paid monthly at an annual rate equal to 0.10% of each of the Fund's average
daily net assets, on an annualized basis for the Fund's then-current fiscal
year, except that with respect to the Growth and Income Fund and Capital Growth
Fund, Chase receives from each of the Funds and the Portfolios a fee computed
daily and paid monthly at an annual rate equal to 0.05% of their respective
average daily net assets. Chase may voluntarily waive a portion of the fees
payable to it with respect to each Fund on a month-to-month basis.

For the fiscal years ended October 31, 1995, 1996 and 1997, Chase was paid
or accrued the following administration fees and voluntarily waived the amounts
in parentheses following such fees:

<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
-----------------------------------------------------------------------------------------------
1995 1996 1997
Fund paid/accrued waived paid/accrued waived paid/accrued waived
- --------------------------- -------------- ------------- -------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 29,053 $ (29,053) 50,797 (14,689) 83,940 None
Bond Fund 54,206 (54,206) 47,715 (47,715) 24,703 (24,703)
Capital Growth Fund* 435,695 (116,282) 526,852 None 619,816 None
Equity Income Fund 11,069 (8,855) 13,692 (13,293) 35,929 (1,560)
Growth and Income Fund* 830,077 (252,586) 971,251 None 1,169,015 None
Short-Term Bond Fund 34,141 (34,141) 42,171 (42,171) 48,058 (48,058)
U.S. Government Securities
Fund -- -- 63,984 (26,354) ** 65,005 None
U.S. Treasury Income Fund 106,559 (76,094) 110,678 (23,372) 109,732 None
</TABLE>

42
<PAGE>

- ----------
*On November 23, 1993, these Funds changed their structure to a Master/Feeder
Structure. The Portfolios' administrator is Chase. With respect to the Growth
and Income Portfolio and the Capital Growth Portfolio, for the fiscal year
ended October 31, 1995, Chase was paid or accrued administration fees of
$851,900 and $445,399, respectively. For the fiscal year ended October 31,
1996, Chase was paid or accrued administration fees of $1,012,648 and
$528,308, respectively. For the fiscal year ended October 31, 1997, Chase was
paid or accrued administration fees of $1,234,733 and $621,480, respectively.
**Fees paid or accrued for the period from December 1, 1995 through October 31,
1996.
Distribution Plans

The Trust has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of certain classes
of shares of certain Funds as described in the Prospectuses, which provide such
classes of such Funds shall pay for distribution services a distribution fee
(the "Distribution Fee"), including payments to the Distributor, at annual
rates not to exceed the amounts set forth in their respective Prospectuses. The
Distributor may use all or any portion of such Distribution Fee to pay for Fund
expenses of printing prospectuses and reports used for sales purposes, expenses
of the preparation and printing of sales literature and other such
distribution-related expenses.

Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset values of Class M shares maintained
in a Fund by such broker-dealers' customers. Since the distribution fees are
not directly tied to expenses, the amount of distribution fees paid by a Fund
during any year may be more or less than actual expenses incurred pursuant to
the Distribution Plans. For this reason, this type of distribution fee
arrangement is characterized by the staff of the Securities and Exchange
Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses).

Each class of shares is entitled to exclusive voting rights with respect
to matters concerning its Distribution Plan.

Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by
a vote of both a majority of the Trustees and a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any agreement related to such Plan ("Qualified
Trustees"). The Distribution Plan for Class M Shares was approved on October 28,
1998. Each Distribution Plan requires that the Trust shall provide to the Board
of Trustees, and the Board of Trustees shall review, at least quarterly, a
written report of the amounts expended (and the purposes therefor) under the
Distribution Plan. Each Distribution Plan further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of
the disinterested Trustees (as defined in the 1940 Act) then in office. Each
Distribution Plan may be terminated at any time by a vote of a majority of the
Qualified Trustees or, with respect to a particular Fund, by vote of a majority
of the outstanding voting Shares of the class of such Fund to which it applies
(as defined in the 1940 Act). Each Distribution Plan may not be amended to
increase materially the amount of permitted expenses thereunder without the
approval of shareholders and may not be materially amended in any case without
a vote of the majority of both the Trustees and the Qualified Trustees. Each of
the Funds will preserve copies of any plan, agreement or report made pursuant
to a Distribution Plan for a period of not less than six years from the date of
the Distribution Plan, and for the first two years such copies will be
preserved in an easily accessible place.

Distribution and Sub-Administration Agreement

43
<PAGE>

The Distributor is a wholly-owned subsidiary of BISYS Fund Services, Inc. The
Distribution Agreement provides that the Distributor will bear the expenses of
printing, distributing and filing prospectuses and statements of additional
information and reports used for sales purposes, and of preparing and printing
sales literature and advertisements not paid for by the Distribution Plan. The
Trust pays for all of the expenses for qualification of the shares of each Fund
for sale in connection with the public offering of such shares, and all legal
expenses in connection therewith. In addition, pursuant to the Distribution
Agreement, the Distributor provides certain sub-administration services to the
Trust, including providing officers, clerical staff and office space.

The Distribution Agreement is currently in effect and will continue in
effect with respect to each Fund only if such continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
such Fund's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Distribution Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Distribution
Agreement is terminable without penalty by the Trust on behalf of each Fund on
60 days' written notice when authorized either by a majority vote of such
Fund's shareholders or by vote of a majority of the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days'
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.

In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations
thereunder of any state in which the shares of such Fund are qualified for
sale, as such limitations may be raised or lowered from time to time, the
Distributor shall reduce its sub-administration fee with respect to such Fund
(which fee is described below) to the extent of its share of such excess
expenses. The amount of any such reduction to be borne by the Distributor shall
be deducted from the monthly sub-administration fee otherwise payable with
respect to such Fund during such fiscal year; and if such amounts should exceed
the monthly fee, the Distributor shall pay to such Fund its share of such
excess expenses no later than the last day of the first month of the next
succeeding fiscal year.

In consideration of the sub-administration services provided by the
Distributor pursuant to the Distribution Agreement, the Distributor receives an
annual fee, payable monthly, of 0.05% of the net assets of each Fund. However,
the Distributor has voluntarily agreed to waive a portion of the fees payable
to it under the Distribution Agreement with respect to each Fund on a
month-to-month basis. For the fiscal years ended October 31, 1995, 1996 and
1997 the Distributor was paid or accrued the following sub-administration fees
under the Distribution Agreement, and voluntarily waived the amounts in
parentheses following such fees:

<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
-----------------------------------------------------------------------------------
1995 1996 1997
Fund payable waived payable waived payable waived
- --------------------------- ---------- ------------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $14,527 $ (14,527) 25,399 $(1,680) 41,997 None
Bond Fund 27,103 None 23,793 None 12,350 $ (6,968)
Capital Growth Fund 435,488 None 526,852 None 619,911 None
Equity Income Fund 5,535 None 6,846 None 17,963 None
Growth and Income Fund 830,077 None 971,201 None 1,169,014 None
Short-Term Bond Fund 17,071 None 21,085 None 24,030 (5,836)
U.S. Government Securities
Fund -- -- 18,814 None * 32,502 (15,205)
U.S. Treasury Income Fund 53,284 None 53,339 None 54,866 None
</TABLE>

- ----------
* Fees paid or accrued for the period from December 1, 1995 through October 31,
1996.
** Fees paid or accrued for the period from May 6, 1996 through October 31,
1996.

44
<PAGE>

Shareholder Servicing Agents, Transfer Agent and Custodian

The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent to provide certain services
including but not limited to the following: answer customer inquiries regarding
account status and history, the manner in which purchases and redemptions of
shares may be effected for the Fund as to which the Shareholder Servicing Agent
is so acting and certain other matters pertaining to the Fund; assist
shareholders in designating and changing dividend options, account designations
and addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and receive
funds in connection with customer orders to purchase or redeem shares; verify
and guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts; furnish (either
separately or on an integrated basis with other reports sent to a shareholder
by a Shareholder Servicing Agent) quarterly and year-end statements and
confirmations of purchases and redemptions; transmit, on behalf of the Fund,
proxy statements, annual reports, updated prospectuses and other communications
to shareholders of the Fund; receive, tabulate and transmit to the Fund proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder servicing agents may be required to register pursuant to
state securities law.

Each Shareholder Servicing Agent may voluntarily agree from time to time
to waive a portion of the fees payable to it under its Servicing Agreement with
respect to each Fund on a month-to-month basis.

Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of each Fund and receives such compensation as is from time to time
agreed upon by the Trust and Chase. As custodian, Chase provides oversight and
record keeping for the assets held in the portfolios of each Fund. Chase also
provides fund accounting services for the income, expenses and shares
outstanding for such Funds. Chase is located at 3 Metrotech Center, Brooklyn,
NY 11245.

INDEPENDENT ACCOUNTANTS

The financial statements incorporated herein by reference from the Trust's
Annual Reports to Shareholders for the fiscal year ended October 31, 1997, and
the related financial highlights which appear in the Prospectuses, have been
incorporated herein and included in the Prospectuses in reliance on the reports
of Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036,
independent accountants of the Funds, given on the authority of said firm as
experts in accounting and auditing. Price Waterhouse LLP provides the Funds
with audit services, tax return preparation and assistance and consultation
with respect to the preparation of filings with the Securities and Exchange
Commission.

CERTAIN REGULATORY MATTERS

45
<PAGE>

this Statement of Additional Information without violating such laws. If future
changes in these laws or interpretations required Chase to alter or discontinue
any of these services, it is expected that the Board of Trustees would
recommend alternative arrangements and that investors would not suffer adverse
financial consequences. State securities laws may differ from the
interpretations of banking law described above and banks may be required to
register as dealers pursuant to state law.

Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of any
of the Funds, including outstanding loans to such issuers which may be repaid
in whole or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Funds' distributor or affiliates of the distributor. Chase
will not invest any Fund assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate,
although under certain circumstances such securities may be purchased from
other members of an underwriting syndicate in which Chase or an affiliate is a
non-principal member. This restriction my limit the amount or type of U.S.
Government obligations, municipal obligations or commercial paper available to
be purchased by any Fund. Chase has informed the Funds that in making its
investment decision, it does not obtain or use material inside information in
the possession of any other division or department of Chase, including the
division that performs services for the Trust as custodian, or in the
possession of any affiliate of Chase. Shareholders of the Funds should be aware
that, subject to applicable legal or regulatory restrictions, Chase and its
affiliates may exchange among themselves certain information about the
shareholder and his account. Transactions with affiliated broker-dealers will
only be executed on an agency basis in accordance with applicable federal
regulations.
GENERAL INFORMATION

Description of Shares, Voting Rights and Liabilities

Mutual Fund Group is an open-end, non-diversified management investment
company organized as Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. The Trust currently consists of 19
series of shares of beneficial interest, par value $.001 per share. With
respect to certain Funds, the Trust may offer more than one class of shares.
The Trust has reserved the right to create and issue additional series or
classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Expenses of the Trust
which are not attributable to a specific series or class are allocated among
all the series in a manner believed by management of the Trust to be fair and
equitable. Shares have no pre-emptive or conversion rights. Shares when issued
are fully paid and non-assessable, except as set forth below. Shareholders are
entitled to one vote for each share held. Shares of each series or class
generally vote together, except when required under federal securities laws to
vote separately on matters that only affect a particular class, such as the
approval of distribution plans for a particular class. With respect to shares
purchased through a Shareholder Servicing Agent and, in the event written proxy
instructions are not received by a Fund or its designated agent prior to a
shareholder meeting at which a proxy is to be voted and the shareholder does
not attend the meeting in person, the Shareholder Servicing Agent for such
shareholder will be authorized pursuant to an applicable agreement with the
shareholder to vote the shareholder's outstanding shares in the same proportion
as the votes cast by other Fund shareholders represented at the meeting in
person or by proxy.

Certain Funds offer Class A, Class B, Class C and Class M shares. The
classes of shares have several different attributes relating to sales charges
and expenses, as described herein and in the Prospectuses. In addition to such
differences, expenses borne by each class of a Fund may differ slightly because
of the allocation of other class-specific expenses. For example, a higher
transfer agency fee may be imposed on Class B shares than on Class A shares.
The relative impact of initial sales charges, contingent deferred sales
charges, and ongoing annual expenses will depend on the length of time a share
is held.

46
<PAGE>

Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of shares rather than another.

The Trust is not required to hold annual meetings of shareholders but will
hold special meetings of shareholders of a series or class when, in the
judgment of the Trustees, it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have, under certain circumstances, the right to
communicate with other shareholders in connection with requesting a meeting of
shareholders for the purpose of removing one or more Trustees. Shareholders
also have, in certain circumstances, the right to remove one or more Trustees
without a meeting. No material amendment may be made to the Trust's Declaration
of Trust without the affirmative vote of the holders of a majority of the
outstanding shares of each portfolio affected by the amendment. The Trust's
Declaration of Trust provides that, at any meeting of shareholders of the Trust
or of any series or class, a Shareholder Servicing Agent may vote any shares as
to which such Shareholder Servicing Agent is the agent of record and which are
not represented in person or by proxy at the meeting, proportionately in
accordance with the votes cast by holders of all shares of that portfolio
otherwise represented at the meeting in person or by proxy as to which such
Shareholder Servicing Agent is the agent of record. Any shares so voted by a
Shareholder Servicing Agent will be deemed represented at the meeting for
purposes of quorum requirements. Shares have no preemptive or conversion
rights. Shares, when issued, are fully paid and non-assessable, except as set
forth below. Any series or class may be terminated (i) upon the merger or
consolidation with, or the sale or disposition of all or substantially all of
its assets to, another entity, if approved by the vote of the holders of
two-thirds of its outstanding shares, except that if the Board of Trustees
recommends such merger, consolidation or sale or disposition of assets, the
approval by vote of the holders of a majority of the series' or class'
outstanding shares will be sufficient, or (ii) by the vote of the holders of a
majority of its outstanding shares, or (iii) by the Board of Trustees by
written notice to the series' or class' shareholders. Unless each series and
class is so terminated, the Trust will continue indefinitely.

Principal Holders

As of October 30, 1998, no person owned of record 5% or more of the
outstanding Class M shares of any Fund:

47
<PAGE>

Financial Statements

The 1997 Annual Report to Shareholders of each Fund, including the reports
of independent accounts, financial highlights and financial statements for the
fiscal year ended October 31, 1997 contained therein, are incorporated herein
by reference.

<TABLE>
<CAPTION>
Specimen Computations of Offering Prices Per Share
<S> <C>
Balanced Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at October 30, 1998 .. $10.00
Maximum Offering Price per Share ($10.00 divided by .965) (reduced on purchases of
$100,000 or more).......................................................................... $10.36

Bond Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 30, 1998 .............................................................. $10.00
Maximum Offering Price per Share ($10.00 divided by .97) (reduced on purchases of
$100,000 or more).......................................................................... $10.31

Capital Growth Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 30, 1998 .............................................................. $10.00
Maximum Offering Price per Share ($10.00 divided by .965)
(reduced on purchases of $100,000 or more) ................................................ $10.36

Equity Income Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial
Interest at October 30, 1998 .............................................................. $10.00
Maximum Offering Price per Share ($10.00 divided by .965)
(reduced on purchases of $100,000 or more) ................................................ $10.36

Growth and Income Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at October 30, 1998 .. $10.00
Maximum Offering Price per Share ($10.00 divided by .965) (reduced on purchases of
$100,000 or more) ......................................................................... $10.36
</TABLE>

48
<PAGE>

<TABLE>
<CAPTION>
Short-Term Bond Fund (specimen computations)
<S> <C>
M Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at October 30, 1998 .. $10.00
Maximum Offering Price per Share ($10.00 divided by .97) (reduced on purchases of
$100,000 or more) ......................................................................... $10.31

Strategic Income Fund (specimen computations)

M Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at October 30, 1998 .. $10.00
Maximum Offering Price per Share ($10.00 divided by .97) (reduced on purchases of
$100,000 or more) ......................................................................... $10.31

U.S. Government Securities Fund (specimen computations)

U.S. Treasury Income Fund (specimen computations)

49
<PAGE>

APPENDIX A

DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES

Maritime Administration Bonds--are bonds issued and provided by the
Department of Transportation of the U.S. Government are guaranteed by the U.S.
Government.

FNMA Bonds--are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.

FHA Debentures--are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S.
Government.

FHA Insured Notes--are bonds issued by the Farmers Home Administration of
the U.S. Government and are guaranteed by the U.S. Government.

GNMA Certificates--are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such
as mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. Government. As a consequence of the fees paid to GNMA
and the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or
FHA-insured mortgages underlying the Certificates. The average life of a GNMA
Certificate is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures may result in the return of the greater
part of principal invested far in advance of the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee. As the prepayment rate of individual mortgage pools will vary
widely, it is not possible to accurately predict the average life of a
particular issue of GNMA Certificates. The yield which will be earned on GNMA
Certificates may vary from their coupon rates for the following reasons: (i)
Certificates may be issued at a premium or discount, rather than at par; (ii)
Certificates may trade in the secondary market at a premium or discount after
issuance; (iii) interest is earned and compounded monthly which has the effect
of raising the effective yield earned on the Certificates; and (iv) the actual
yield of each Certificate is affected by the prepayment of mortgages included
in the mortgage pool underlying the Certificates. Principal which is so prepaid
will be reinvested although possibly at a lower rate. In addition, prepayment
of mortgages included in the mortgage pool underlying a GNMA Certificate
purchased at a premium could result in a loss to a Fund. Due to the large
amount of GNMA Certificates outstanding and active participation in the
secondary market by securities dealers and investors, GNMA Certificates are
highly liquid instruments. Prices of GNMA Certificates are readily available
from securities dealers and depend on, among other things, the level of market
rates, the Certificate's coupon rate and the prepayment experience of the pool
of mortgages backing each Certificate. If agency securities are purchased at a
premium above principal, the premium is not guaranteed by the issuing agency
and a decline in the market value to par may result in a loss of the premium,
which may be particularly likely in the event of a prepayment. When and if
available, U.S. Government obligations may be purchased at a discount from face
value.

A-1
<PAGE>

GSA Participation Certificates--are participation certificates issued by
the General Services Administration of the U.S. Government and are guaranteed
by the U.S. Government.

Penn Central Transportation Certificates--are certificates issued by Penn
Central Transportation and guaranteed by the U.S. Government.

SBA Debentures--are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.

FHLMC Bonds--are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. Government.

Federal Home Loan Bank Notes and Bonds--are notes and bonds issued by the
Federal Home Loan Bank System and are not guaranteed by the U.S. Government.

Student Loan Marketing Association ("Sallie Mae") Notes and bonds--are
notes and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. Government.

D. C. Armory Board Bonds--are bonds issued by the District of Columbia
Armory Board and are guaranteed by the U.S. Government.

Investments may also be made in obligations of U.S. Government agencies or
instrumentalities other than those listed above.

A-2
<PAGE>

APPENDIX B

DESCRIPTION OF RATINGS

A description of the rating policies of Moody's, S&P and Fitch with
respect to bonds and commercial paper appears below.

Moody's Investors Service's Corporate Bond Ratings

Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.

Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A--Bonds which are rated "A" possess many favorable investment qualities and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree.

Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and
pay interest.

B-1
<PAGE>

AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only
in small degree.

CI--Bonds rated "CI" are income bonds on which no interest is being paid.

The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

Moody's Investors Service's Commercial Paper Ratings

Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.

Standard & Poor's Ratings Group Commercial Paper Ratings

B-2
<PAGE>

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.

C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

Fitch Bond Ratings

Fitch Short-Term Ratings

The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

Fitch's short-term ratings are as follows:

F-1+--Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.

B-3
<PAGE>

F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.

F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.

LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.

After purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by such Fund. Neither event
will require a sale of such security by a Fund. However, a Fund's investment
manager will consider such event in its determination of whether such Fund
should continue to hold the security. To the extent the ratings given by
Moody's, S&P or Fitch may change as a result of changes in such organizations
or their rating systems, a Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in this Prospectus and in the Statement of Additional Information.

B-4

<PAGE>

PART C

MUTUAL FUND GROUP
PART C. OTHER INFORMATION

ITEM 24. Financial Statements and Exhibits

(a) Financial statements

In Part A: Financial Highlights

In Part B: Financial Statements and the Reports
thereon for the Funds filed herein are
incorporated by reference into Part B
as part of the 1997 Annual Reports to
Shareholders for such Funds as filed with the
Securities and Exchange Commission by Mutual
Fund Group on Form N-30D on January 7, 1998,
accession number 0000950146-98-000027, which
are incorporated into Part B by reference.

In Part C: None.

(b) Exhibits:

Exhibit
Number
- -------
1(a) Declaration of Trust, as amended. (1)
1(b) Certificate of Amendment to Declaration of Trust dated December 14,
1995.(6)
1(c) Certificate of Amendment to Declaration of Trust dated October 19,
1995.(6)
1(d) Certificate of Amendment to Declaration of Trust dated July 25,
1993.(6)
1(e) Certificate of Amendment to Declaration of Trust dated
November 1997.(10)
1(f) Certificate of Amendment to Declaration of Trust dated June 5,
1998.(12)
2 By-laws, as amended. (1)
3 None.
4 Specimen share certificate. (1)
5(a) Form of Proposed Investment Advisory Agreement.(6)
5(b) Form of Proposed Sub-Advisory Agreement between The Chase Manhattan
Bank and Chase Asset Management, Inc.(6)
6(a) Distribution and Sub-Administration Agreement dated August 21,
1995.(6)
7(a) Retirement Plan for Eligible Trustees.(6)
7(b) Deferred Compensation Plan for Eligible Trustees.(6)
8(a) Custodian Agreement. (1)
8(b) Sub-Custodian Agreement. (1)
9(a) Transfer Agency Agreement. (1)
9(b) Administrative Services Plan. (1)
9(c) Shareholder Servicing Agreement of Vista Mutual Funds. (1)
9(d) Form of Shareholder Servicing Agreement of Vista Premier Funds.(1)
9(e) Form of Shareholder Servicing Agreement. (6)

C-1
<PAGE>

9(f) Agreement and Plan of Reorganization and Liquidation.(6)
9(g) Form of Administration Agreement.(6)

10 Opinion re: Legality of Securities being Registered.(1)

11 Consent of Price Waterhouse LLP.(11)

12 None.
13 Not Applicable

14 None.

15(a) Rule 12b-1 Distribution Plan of Mutual Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
15(b) Rule 12b-1 Distribution Plan of Premier Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
15(c) Rule 12b-1 Distribution Plan for each of Bond Fund,
Short-Term Bond Fund, Equity Fund and U.S. Government
Money Market Fund including Selected Dealer Agreement and
Shareholder Service Agreement.(2)
15(d) Form of Rule 12b-1 Distribution Plan for Class B shares of the
Prime Money Market Fund.(3)
15(e) Form of Rule 12b-1 Distribution Plan for Small Cap Equity
Fund.(4)
15(g) Rule 12b-1 Distribution Plan - Class B Shares (including forms of
Selected Dealer Agreement and Shareholder Servicing Agreement).(6)
15(h) Form of Rule 12b-1 Distribution Plan - Class C Shares (including
forms of Shareholder Servicing Agreements).(9)
16 Schedule for Computation for Each Performance Quotation.(5)

17 Financial Data Schedule.(11)

18 Form of Rule 18f-3 Multi-Class Plan.(6)
99(a) Powers of Attorney for: Fergus Reid, III, H. Richard Vartabedian,
William J. Armstrong, John R.H. Blum, Stuart W. Cragin, Jr., Roland
R. Eppley, Jr., Joseph J. Harkins, W.D. MacCallan, W. Perry Neff,
Richard E. Ten Haken, Irving L. Thode.(8)
99(b) Powers of Attorney for: Sarah E. Jones and Leonard M. Spalding,
Jr.(9)

- --------------------
(1) Filed as an exhibit to Amendment No. 6 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on March 23, 1990.
(2) Filed as an exhibit to Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on October 30, 1992.
(3) Filed as an Exhibit to Amendment No. 26 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on June 30, 1994.
(4) Filed as an Exhibit to Amendment No. 27 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on October 3, 1994.
(5) Filed as an Exhibit to Amendment No. 31 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on November 13, 1995.
(6) Filed as an Exhibit to Amendment No. 32 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on December 28, 1995.
(7) Filed as an Exhibit to Amendment No. 42 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on February 28, 1997.
(8) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of Mutual Fund Trust (File No.
33-75250) as filed with the Securities and Exchange Commission on September
6, 1996.
(9) Filed as an Exhibit to Amendment No. 45 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) filed on October 28, 1997.

(10) Filed as an Exhibit to Amendment No. 46 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) filed on December 1, 1997.

(11) Filed as an Exhibit to Amendment No. 50 to the Registration Statement on
Form N-1A on February 27, 1998.

(12) Filed as an Exhibit to Amendment No. 53 to the Registration Statement on
Form N-1A on June 29, 1998.

ITEM 25. Persons Controlled by or Under Common
Control with Registrant

Not applicable

C-2
<PAGE>

ITEM 26. Number of Holders of Securities

<TABLE>
<CAPTION>
Number of Record Holders
Mutual Fund Group as of May 31, 1998
- ----------------- -------------------------------------
A B C Institutional
Shares Shares Shares Shares
------ ------ ------ -------------
<S> <C> <C> <C> <C>

U.S. Treasury Income Fund 2,177 669 n/a n/a
U.S. Government Securities Fund 109 n/a n/a 71
Balanced Fund 2,701 1,276 n/a n/a
Short-Term Bond Fund 328 n/a n/a 54
Bond Fund 502 238 n/a 55
Large Cap Equity Fund 1,258 506 n/a 212
Equity Income Fund 3,731 1,593 194 n/a
Small Cap Equity Fund 7,813 6,754 n/a 10
Growth and Income Fund 70,643 28,958 262 8
Capital Growth Fund 34,162 25,476 159 13
International Equity Fund 1,932 1,081 n/a n/a
Southeast Asian Fund 385 217 n/a n/a
European Fund 1,357 770 n/a n/a
Japan Fund 115 56 n/a n/a
Select Growth and Income Fund n/a n/a n/a 18
Latin American Equity Fund 39 18 n/a n/a
Small Cap Opportunities Fund 6,437 5,642 245 n/a
</TABLE>

ITEM 27. Indemnification

Reference is hereby made to Article V of the Registrant's Declaration
of Trust.

The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.

Under the terms of the Registrant's Declaration of Trust, the
Registrant may indemnify any person who was or is a Trustee, officer or employee
of the Registrant to the maximum extent permitted by law; provided, however,
that any such indemnification (unless ordered by a court) shall be made by the
Registrant only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who are neither in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the proceeding, or (ii) if the required
quorum is not obtainable or, if a quorum of such Trustees so directs, by
independent legal counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.

Insofar as the conditional advancing of indemnification monies for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Registrant by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable

C-3

<PAGE>

insurance or an equivalent form of security which assures that any repayments
may be obtained by the Registrant without delay or litigation, which bond,
insurance or other form of security must be provided by the recipient of the
advance, or (b) a majority of a quorum of the Registrant's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.

Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of it counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

ITEM 28(a). Business and Other Connections of Investment Adviser

The Chase Manhattan Bank (the "Adviser") is a commercial bank
providing a wide range of banking and investment services.

To the knowledge of the Registrant, none of the Directors or
executive officers of the Adviser, except those described below, are or have
been, at any time during the past two years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
Directors and executive officers of the Adviser also hold or have held various
positions with bank and non-bank affiliates of the Adviser, including its
parent, The Chase Manhattan Corporation. Each Director listed below is also a
Director of The Chase Manhattan Corporation.

<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ------------- -----------------------------
<S> <C> <C>

Thomas G. Labreque President and Chief Operating Officer Chairman, Chief Executive Officer
and Director and a Director of The Chase
Manhattan Corporation and a Director
of AMAX, Inc.

M. Anthony Burns Director Chairman of the Board, President
and Chief Executive Officer of
Ryder System, Inc.

</TABLE>

C-4

<PAGE>

H. Laurance Fuller Director Chairman, President, Chief
Executive Officer and Director of
Amoco Corporation and Director of
Abbott Laboratories

Henry B. Schacht Director Chairman and Chief Executive
Officer of Cummins Engine
Company, Inc. and a Director of
each of American Telephone and
Telegraph Company and CBS Inc.
</TABLE>

C-5

<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
James L. Ferguson Director Retired Chairman and Chief
Executive Officer of General Foods
Corporation

William H. Gray III Director President and Chief Executive
Officer of the United Negro College
Fund, Inc.

Frank A. Bennack, Jr. Director President and Chief Executive Officer
The Hearst Corporation

Susan V. Berresford Director President, The Ford Foundation

Melvin R. Goodes Director Chairman of the Board and Chief Executive
Officer, The Warner-Lambert Company

George V. Grune Director Retired Chairman and Chief Executive
Officer, The Reader's Digest Association,
Inc.; Chairman, The DeWitt Wallace-
Reader's Digest Fund; The Lila-Wallace
Reader's Digest Fund

William B. Harrison, Jr. Vice Chairman of the Board

Harold S. Hook Director Chairman and Chief Executive Officer,
General Corporation

Helen L. Kaplan Director Of Counsel, Skadden, Arps, Slate, Meagher
& Flom

Walter V. Shipley Chairman of the Board and
Chief Executive Officer

Andrew C. Sigler Director Chairman of the Board and Chief
Executive Officer, Champion International
Corporation

John R. Stafford Director Chairman, President and Chief Executive
Officer, American Home Products
Corporation

Marina v. N. Whitman Director Professor of Business Administration and
Public Policy, University of Michigan

</TABLE>

C-6
<PAGE>

Item 28(b)

Chase Asset Management ("CAM") is an Investment Advisor providing investment
services to institutional clients.

To the knowledge of the Registrant, none of the Directors or executive
officers of the CAM, except those described below, are or have been, at any time
during the past two years, engaged in any other business, profession, vocation
or employment of a substantial nature, except that certain Directors and
executive officers of the CAM also hold or have held various positions with bank
and non-bank affiliates of the Advisor, including its parent, The Chase
Manhattan Corporation.

<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Sub-Advisor Nature During Past Two Years
- ---- --------------- ----------------------------
<S> <C> <C>
James Zeigon Chairman and Director Director of Chase
Asset Management
(London) Limited

Steven Prostano Executive Vice President Chief Operating Officer
and Chief Operating Officer and Director of Chase
Asset Management
(London) Limited

Mark Richardson President and Chief Chief Investment Officer
Investment Officer and Director of Chase
Asset Management
(London) Limited
</TABLE>

Item 28(c)

Chase Asset Management (London) Limited ("CAM London") is an Investment
Advisor providing investment services to institutional clients.

To the knowledge of the Registrant, none of the Directors or executive
officers of CAM London, except those described below, are or have been, at any
time during the past two years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain Directors
and executive officers of CAM London also hold or have held various positions
with bank and non-bank affiliates of the Advisor, including its parent, The
Chase Manhattan Corporation.

<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Sub-Advisor Nature During Past Two Years
- ---- --------------- ----------------------------
<S> <C> <C>
Michael Browne Director Fund Manager, The Chase Manhattan
Bank, N.A.; Fund Manager, BZW
Investment Management

David Gordon Ross Director Head of Global Fixed Income
Management, Chase Asset Management,
Inc.; Vice President, The Chase
Manhattan Bank, N.A.

Brian Harte Director Investment Manager, The Chase
Manhattan Bank, N.A.

Cornelia L. Kiley Director

James Zeigon Director Chairman and Director of Chase
Asset Management, Inc.

Mark Richardson Chief Investment Director, President and Chief
Officer and Director Operating Officer of Chase Asset
Management, Inc.

Steve Prostano Chief Operating Director, Executive Vice President
Officer and and Chief Operating Officer of Chase
Director Asset Management, Inc.
</TABLE>

C-7
<PAGE>

ITEM 29. Principal Underwriters

(a) Vista Fund Distributors, Inc., a wholly-owned subsidiary of
The BISYS Group, Inc. is the underwriter for Mutual Fund Group, Mutual Fund
Trust and Mutual Fund Select Trust.

(b) The following are the Directors and officers of Vista Fund
Distributors, Inc. The principal business address of each of these persons, is
listed below.

<TABLE>
<CAPTION>
Position and Offices Position and Offices
Name and Address with Distributor with the Registrant
- ---------------- -------------------- --------------------
<S> <C> <C>

Lynn J. Mangum Chairman None
150 Clove Street
Little Falls, NJ 07424

Robert J. McMullan Director and Exec. Vice President None
150 Clove Street
Little Falls, NJ 07424

Lee W. Schultheis President None
101 Park Avenue, 16th Floor
New York, NY 10178

George O. Martinez Senior Vice President None
3435 Stelzer Road
Columbus, OH 43219

Irimga McKay Vice President None
1230 Columbia Street
5th Floor, Suite 500
San Diego, CA 92101

Michael Burns Vice President/Compliance None
3435 Stelzer Road
Columbus, OH 43219

William Blundin Vice President None
125 West 55th Avenue
11th Floor
New York, NY 10019

Dennis Sheehan Vice President None
150 Clove Street
Little Falls, NJ 07424

Annamaria Porcaro Assistant Secretary None
150 Clove Street
Little Falls, NJ 97424

Robert Tuch Assistant Secretary None
3435 Stelzer Road
Columbus, OH 43219

Stephen Mintos Executive Vice President/COO None
3435 Stelzer Road
Columbus, OH 43219

Dale Smith Vice President/CFO None
3435 Stelzer Road
Columbus, OH 43219

William J. Tomko Vice President None
3435 Stelzer Road
Columbus, OH 43219
</TABLE>

C-8

<PAGE>

ITEM 30. Location of Accounts and Records

The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:

<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Vista Fund Distributors, Inc. One Chase Manhattan Plaza, 3rd Floor
New York, NY 10081

DST Systems, Inc. 210 W. 10th Street,
Kansas City, MO 64105

The Chase Manhattan Bank 270 Park Avenue,
New York, NY 10017

Chase Asset Mangement, Inc. 1211 Avenue of the
Americas,
New York, NY 10036

Chase Asset Management, Ltd. (London) Colvile House
32 Curzon Street
London, England W1Y8AL

The Chase Manhattan Bank One Chase Square,
Rochester, NY 14363
</TABLE>

ITEM 31. Management Services

Not applicable

ITEM 32. Undertakings

(1) Registrant undertakes that its trustees shall promptly
call a meeting of shareholders of the Trust for the purpose of voting upon the
question of removal of any such trustee or trustees when requested in writing so
to do by the record holders of not less than 10 per centum of the outstanding
shares of the Trust. In addition, the Registrant shall, in certain
circumstances, give such shareholders assistance in communicating with other
shareholders of a fund as required by Section 16(c) of the Investment Company
Act of 1940.

(2) The Registrant, on behalf of the Funds, undertakes,
provided the information required by Item 5A is contained in the latest annual
report to shareholders, to furnish to each person to whom a prospectus has been
delivered, upon their request and without charge, a copy of the Registrant's
latest annual report to shareholders.

(4) Registrant undertakes to file a post-effective amendment,
using reasonably current financial statements which need not be certified,
within four to six months from the effective date of the post-effective
amendment to the registration statement relating to Focus Fund and Strategic
Income Fund except as is otherwise permitted by the Staff of the Securities and
Exchange Commission.

C-9
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has certified that it meets all of the
requirements for effectiveness pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of New York and the State of New York on the 28th
day of October, 1998.

MUTUAL FUND GROUP

By /s/ H. Richard Vartabedian
--------------------------
H. Richard Vartabedian
President

Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

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<S> <C> <C>
* Chairman and Trustee October 28, 1998
- -------------------------------
Fergus Reid, III

/s/ H. Richard Vartabedian President October 28, 1998
- ------------------------------- and Trustee
H. Richard Vartabedian

* Trustee October 28, 1998
- -------------------------------
William J. Armstrong

* Trustee October 28, 1998
- -------------------------------
John R.H. Blum

* Trustee October 28, 1998
- -------------------------------
Stuart W. Cragin, Jr.

*
- ------------------------------- Trustee October 28, 1998
Roland R. Eppley, Jr.

* Trustee October 28, 1998
- -------------------------------
Joseph J. Harkins

* Trustee October 28, 1998
- -------------------------------
Sarah E. Jones

*
- ------------------------------- Trustee October 28, 1998
W.D. MacCallan

*
- ------------------------------- Trustee October 28, 1998
W. Perry Neff

* Trustee October 28, 1998
- -------------------------------
Leonard M. Spalding, Jr.

* Trustee October 28, 1998
- -------------------------------
Irv Thode

* Trustee October 28, 1998
- -------------------------------
Richard E. Ten Haken

/s/ Martin R. Dean Treasurer and October 28, 1998
- ------------------------------- Principal Financial
Martin R. Dean Officer

/s/ H. Richard Vartabedian Attorney in October 28, 1998
- ------------------------------- Fact
H. Richard Vartabedian
</TABLE>