[sidebar on cover]
FIXED INCOME FUNDS
ANNUAL
REPORT
-----------------------------------
Vista. Setting the Global Standard.
VISTA U.S. TREASURY INCOME FUND
VISTA U.S. GOVERNMENT SECURITIES FUND
VISTA BOND FUND
VISTA SHORT-TERM BOND FUND
[Vista Logo]
VISTA
FAMILY OF MUTUAL FUNDS
MANAGED BY CHASE MANHATTAN
October 31, 1997
<PAGE>
HIGHLIGHTS
Over the reporting year, the fixed income markets exhibited significant
volatility as investors reacted to changing perception of U.S. economic
strength.
[bullet] During the reporting period, the yield on the 30-year U.S. Treasury
bond fell from 6.65% to 6.15%
[bullet] The yield on the 30-year bond peaked at 7.17% on April 11, 1997,
shortly after the Federal Reserve Board did indeed act on March 25th,
but then began moving down with occasional interruptions for the
remainder of the reporting year as inflation remained muted.
CONTENTS
Chairman's Letter 3
Vista U.S. Treasury Income Fund
Fund Commentary [bullet] Portfolio of Investments 4
Vista U.S. Government Securities Fund
Fund Commentary [bullet] Portfolio of Investments 9
Vista Bond Fund
Fund Commentary [bullet] Portfolio of Investments 15
Vista Short-Term Bond Fund
Fund Commentary [bullet] Portfolio of Investments 24
Financial Statements 32
Notes to Financial Statements 35
Financial Highlights 43
Report of Independent Accountants 47
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY, THE
CHASE MANHATTAN BANK, AND THE SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN MUTUAL FUNDS
INVOLVE RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
Unaudited
Vista Family of Mutual Fund
CHAIRMAN'S LETTER
December 10, 1997
Dear Shareholder:
We are pleased to present this Annual Report for the following Vista Fixed
Income Funds for the year ended October 31, 1997:
<TABLE>
<S> <C>
[bullet] U.S. Treasury Income Fund [bullet] Bond Fund
[bullet] U.S. Government Securities Fund [bullet] Short-Term Bond Fund
</TABLE>
Economic Growth Reports Drive Fixed Income Markets
Over the reporting year, the yield on the 30-year U.S. Treasury bond fell from
6.65% to 6.15%, while the yield on the two-year Treasury note declined from
5.74% to 5.61%. Behind this generally positive backdrop, however, the fixed
income markets exhibited significant volatility as investors reacted to a
changing perception of U.S. economic strength.
Specifically, fixed income investors were concerned that the high levels of
economic growth would lead to a resurgence of inflation, a sensitivity that
caused investors to react -- and at times overreact -- to each new economic
report. Volatility levels peaked in late February when reports of unexpectedly
strong economic growth created the expectation that the Federal Reserve Board
would raise short term interest rates. The yield on the 30-year bond peaked at
7.17% on April 11, 1997, shortly after the Fed did indeed act on March 25th, but
then began moving down with occasional interruptions for the remainder of the
reporting year as inflation remained muted.
U.S. Treasuries: Safe Haven Amid Asian Crisis
As the reporting year ended, U.S. fixed income markets were in the midst of a
strong rally as global investors sought a safe haven in U.S. Treasury
securities in light of worldwide stock market volatility. The rally was
reinforced by the general belief that the Asian economic difficulties would
cause a slowing of U.S. exports to that region while also adding to Asian
imports to the U.S., both of which were expected to dampen inflation.
The recent equity market volatility serves as a timely reminder of the
important role fixed income securities play in any diversified portfolio. All
of us at Vista encourage you to maintain your investing discipline in the
months and years ahead. If you have any questions, please call your investment
professional or 1-800-34-VISTA.
Sincerely yours,
/s/Fergus Reid
Fergus Reid
Chairman
3
<PAGE>
Unaudited
About Your Fund
VISTA U.S. TREASURY INCOME FUND
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
Objective: Income
Primary investments: High-quality
U.S. Treasury Bonds
Suggested investment Mid- to Long-Term
time frame:
Market benchmark: Lehman Treasury Bond Index
Lipper Funds category: General U.S. Government Funds
Average
Class A Class B
--------------- --------------
Inception date: 9/8/87 11/4/93
Newspaper symbol: US Treas not listed
As of October 31, 1997
Net assets: $85.1 million $10.6 million
Average maturity: 9.0 years 9.0 years
Average duration: 5.2 years 5.2 years
Average quality: AAA AAA
4
<PAGE>
Unaudited
About Your Fund
VISTA U.S. TREASURY INCOME FUND
PERFORMANCE
Vista U.S. Treasury Income Fund, which seeks to provide income through a
portfolio of high-quality U.S. Treasury Bonds, had a total return of 7.35%
(Class A shares, without sales charges) for the year ended October 31, 1997.
STRATEGY
The Fund's management team began the reporting year maintaining a slightly-long
portfolio duration. In February, when rates began rising, the management team
reduced the Fund's duration to neutral and adopted a barbell maturity strategy,
which involved investments at the short and long ends of the yield curve while
avoiding bonds with medium-term maturities. This strategy helped the Fund
perform well in March's rising interest rate environment.
When reports of a slowing economy and low inflation led to a late-spring market
rally, the management team became gradually more aggressive. By the end of June,
they had re-extended to a slightly-long duration, emphasizing long-term
securities to take advantage of an expected flattening of the yield curve. This
stance proved beneficial as the yield curve did indeed flatten and the market
rallied through the end of the reporting period.
OUTLOOK
Moving forward, the management team believes that U.S. economic growth will
moderate and that inflation will be further dampened by the events in Asia.
5
<PAGE>
Unaudited
About Your Fund
VISTA U.S. TREASURY INCOME FUND
VISTA U.S. TREASURY INCOME FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[Tabular representation of pie chart]
Cash/Other 2.1%
Bonds 97.9%
VISTA U.S. TREASURY INCOME FUND
COMPOSITION OF MARKET VALUE OF PORTFOLIO AS OF 10/31/97
[Tabular representation of pie chart]
U.S. Treasury Note 73.61%
U.S. Treasury Bonds 22.03%
U.S. Government Agency Obligations 4.25%
Other 0.11%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
- --------------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 7.35% 2.52%
Five Years 6.20% 5.23%
Ten Years 8.21% 7.71%
Since Inception (9/8/87) 8.80% 8.31%
Without With
Class B Shares CDSC CDSC*
One Year 6.56% 1.56%
Five Years+ 5.63% 3.70%
Ten Years+ 7.92% 7.92%
Since Inception (9/8/87)+ 8.51% 8.51%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
* Assumes 5% CDSC for the one year period, a 2% CDSC for the five year period
and 0% CDSC for the period since inception.
+ The Fund commenced operations on 9/8/87. Class B Shares were introduced on
11/4/93. Investors should note that the information presented for Class B prior
to their introduction is based on historical expenses of the predecessor Class A
Shares, which are lower than the actual expenses of the Class B Shares.
Additionally, annualized figures have been reinstated to reflect the maximum 5%
contingent deferred sales charge that applies to the Fund's B Shares.
6
<PAGE>
Unaudited
About Your Fund
VISTA U.S. TREASURY INCOME FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA U.S. TREASURY INCOME FUND -- CLASS A
AND ITS KEY BENCHMARKS
U.S. Treasury Lipper Gen. U.S. Govt. Lehman Treasury
Income Fund Funds Avg. Bond Index
10/87 9550 10000 10000
10571 10996 10963
10/89 11802 12088 12302
12474 12747 13009
10/91 14229 14596 14900
15566 15879 16448
10/93 17489 17788 18610
16513 16735 17781
10/95 18922 19187 20515
19596 19950 21555
10/31/97 21036 21552 23411
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
shares of Vista U.S. Treasury Income Fund, the Lipper General U.S. Government
Funds Average and the Lehman Treasury Bond Index from October 31, 1987 to
October 31, 1997. The performance of the Fund assumes the reinvestment of all
dividends and capital gains and includes a 4.50% sales charge. The performance
of the average and the index do not include a sales charge and have been
adjusted to reflect reinvestment of all dividends and capital gains on the
securities included in the benchmark.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper General U.S. Government Funds Average represents the average
performance of a universe of 194 actively managed U.S. government income funds.
Lipper is an independent mutual fund performance monitor whose results are
based on total return and do not reflect a sales charge.
The Lehman Treasury Bond Index is a replica (or model) of the U.S. government
treasury securities market. This index reflects the reinvestment of dividends.
An individual cannot invest in the index.
7
<PAGE>
Vista U.S. Treasury Income Fund
Portfolio of Investments October 31, 1997
<TABLE>
<CAPTION>
Principal
Amount Issuer Value
- ------------- ------------------------------------- ------------
<S> <C> <C>
Long-Term Investments -- 94.1%
- ----------------------------------------------------------------
U. S. Treasury Securities -- 94.1%
-------------------------------------
U.S. Treasury Notes -- 72.4%
$ 7,500,000 7.00%, 04/15/99 $ 7,642,950
9,200,000 9.13%, 05/15/99 9,664,324
5,000,000 6.75%, 06/30/99 5,087,500
13,000,000 7.88%, 08/15/01 13,920,140
6,000,000 6.50%, 05/31/02 6,171,540
13,000,000 8.50%, 02/15/20 16,536,390
10,000,000 6.38%, 08/15/27 10,306,200
-----------
69,329,044
-----------
U.S. Treasury Bonds -- 21.7%
6,000,000 7.75%, 01/31/00 6,257,820
8,000,000 11.75%, 08/15/01 9,428,720
3,900,000 10.75%, 08/15/05 5,063,916
-----------
20,750,456
============ ===================================== ===========
Total Long-Term Investments 90,079,500
(Cost $89,348,933)
- ----------------------------------------------------------------
Short-Term Investments -- 4.3%
- ----------------------------------------------------------------
U.S. Government Agency Obligations -- 4.2%
--------------------------------------------------
4,000,000 Federal Home Loan Mortgage Corp.,
Discount Note, 5.65%, 11/03/97 3,998,744
U.S. Treasury Securities -- 0.1%
-------------------------------------
100,000 U.S. Treasury Bill, 5.33%, 11/20/97 99,731
============ ===================================== ===========
Total Short-Term Investments 4,098,475
(Cost $4,098,475)
===================================== ===========
Total Investments--98.4% $94,177,975
(Cost $93,447,408)
===================================== ===========
</TABLE>
See notes to financial statements.
8
<PAGE>
Unaudited
About Your Fund
VISTA U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
Objective: Income
Primary investments: High-quality U.S. Government,
Agency and Corporate Bonds
Suggested investment
time frame: Mid- to Long-Term
Market benchmark: Merrill Lynch Government Bond
Index
Merrill Lynch 50% Govt./50% Mtg.
Index
Lipper Funds category: General U.S. Government Funds Average
Class A Class I
-------------- --------------
Inception date: 5/6/96 2/19/93
Newspaper symbol: not listed US Govt
As of October 31, 1997
Net assets: $2.3 million $52.9 million
Average maturity: 15.9 years 15.9 years
Average duration: 3.9 years 3.9 years
Average quality: AAA AAA
9
<PAGE>
Unaudited
About Your Fund
VISTA U.S. GOVERNMENT SECURITIES FUND
PERFORMANCE
Vista U.S. Government Securities Fund, which seeks income by investing in a
portfolio of high-quality, U.S. government, agency and corporate bonds,
provided shareholders with a total return of 7.61% (Class A shares, without
sales charges) for the year ended October 31, 1997.
STRATEGY
Using a relative value analysis, the Fund's management team began the reporting
year by emphasizing mortgage-backed securities. This helped the Fund outperform
as sector spreads tightened in response to a trading range rate environment and
low market volatility. In early 1997, as rates began a moderate uptrend in
February, the management team reduced duration to neutral and adopted a barbell
strategy that sought to take advantage of stronger relative values at the short
and long ends of the yield curve.
The management team retained its mortgage overweight as rates began trending
downward during the summer, but shifted its emphasis from pass-through
securities, which have higher pre-payment risk, to better-structured
collateralized mortgage obligations (CMOs). As the reporting period ended, the
Fund had increased its allocation to Treasury securities and had a
slightly-longer than benchmark duration. Both of these strategies proved highly
beneficial as global investors sought the safe haven of Treasury bonds during
the October volatility.
OUTLOOK
The management team believes that, by the first quarter of 1998, U.S. economic
growth will moderate and that inflation will be further dampened by the events
in Asia. With the expectation that rates will decline, after the first quarter,
the management team expects to shift to a longer-than-benchmark duration,
underweight U.S. Treasury securities and overweight mortgage-backed securities.
10
<PAGE>
Unaudited
About Your Fund
VISTA U.S. GOVERNMENT SECURITIES FUND
VISTA U.S. GOVERNMENT SECURITIES FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[Tabular representation of pie chart]
Cash/Other 25.9%
Bonds 74.1%
VISTA U.S. GOVERNMENT SECURITIES FUND
COMPOSITION OF MARKET VALUE OF PORTFOLIO AS OF 10/31/97
[Tabular representation of pie chart]
U.S. Treasury Securities 42.60%
Mortgage Backed Securities 41.52%
U.S. Government Agency Obligations 15.88%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
- --------------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 7.61% 2.77%
Five Years N/A N/A
Since Inception (2/19/93)+ 5.73% 4.69%
Class I Shares
One Year 7.78%
Five Years N/A
Since Inception (2/19/93) 5.82%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. the voluntary waiver may be
modified or terminated at any time, which would reduce performance.
+ The Fund commenced operations on 2/19/93. Class A Shares were introduced on
5/6/96. Investors should note that the information presented for Class A Shares
prior to their introduction is based on historical expenses of the predecessor
Class I Shares, which are lower than the actual expenses of the Class A Shares.
Additionally, annualized figures have been restated to reflect the initial
4.50% sales charge that applies to the Fund's Class A shares. Class I shares
have a $1,000,000 minimum initial deposit and carry no sales charge.
11
<PAGE>
Unaudited
About Your Fund
VISTA U.S. GOVERNMENT SECURITIES FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA U.S. GOVERNMENT SECURITIES FUND -- CLASS I
AND ITS KEY BENCHMARKS
Vista U.S. Lipper Merrill Lynch Merrill Lynch
Government Gen. U.S. Government 50% Govt./
Securities Gov't. Bond 50% Mtg.
Fund Funds Avg. Index Index
2/93 10000 10000 10000 10000
10/93 10636 10540 10768 10550
10/94 10112 10223 10302 10252
10/95 11556 11758 11890 11523
10/96 12015 12429 12490 11911
10/31/97 12949 12915 13573 12971
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
This chart illustrates comparative performance for $10,000 invested in Class I
Shares of Vista U.S. Government Securities Fund, the Lipper General U.S.
Government Funds Average, the Merrill Lynch Government Bond Index and a
composite of the Merrill Lynch Government and Mortgage Master Index from
February 19, 1993 to October 31, 1997. The performance of the Fund assumes the
reinvestment of all dividends and capital gains and does not include a sales
charge. The performance of the average and the indexes do not include a sales
charge and have been adjusted to reflect reinvestment of all dividends and
capital gains on the securities included in the benchmark. The Fund commenced
operations on 2/19/93. Class A Shares were introduced on 5/6/96. Investors
should note that the information presented for Class A Shares prior to their
introduction is based on historical expenses of the predecessor Class I Shares,
which are lower than the actual expenses of the Class A Shares. Additionally,
annualized figures have been restated to reflect the initial 4.50% sales charge
that applies to the Fund's Class A shares. Class I shares have a $1,000,000
minimum initial deposit and carry no sales charge.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper General U.S. Government Funds Average represents the average
performance of a universe of 194 actively managed U.S. government income funds.
Lipper is an independent mutual fund performance monitor whose results are
based on total return and do not reflect a sales charge.
The Merrill Lynch (ML) Government Index consists of bonds with a maturity
greater than or equal to one year. The Merrill Lynch (ML) Mortgage Master Index
consists of fixed-rate corporate interest-bearing bonds. The indexes are
unmanaged and reflect reinvestment of dividends. An individual cannot invest in
an index.
12
<PAGE>
Vista U.S. Government Securities Fund
Portfolio of Investments October 31, 1997
<TABLE>
<CAPTION>
Principal
Amount Issuer Value
- ----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- 86.8%
- ----------------------------------------------------------------
U.S. Treasury Securities -- 41.4%
---------------------------------
U.S. Treasury Notes & Bonds,
$ 2,600,000 5.75%, 10/31/00 $ 2,601,612
2,300,000 5.88%, 11/30/01 2,308,625
4,000,000 5.88%, 09/30/02 4,020,640
3,250,000 6.25%, 06/30/02 3,311,945
1,850,000 6.25%, 05/31/99 1,866,761
5,000,000 6.38%, 08/15/27 5,153,100
1,400,000 6.50%, 10/15/06 1,456,224
2,000,000 6.63%, 05/15/07 2,105,940
-----------
Total U.S. Treasury Securities 22,824,847
(Cost $22,555,377) -----------
U.S. Government Agency Obligations -- 5.0%
--------------------------------------------------
2,750,000 Federal National Mortgage
Association, 7.00%, 11/13/27 2,762,100
(Cost $2,748,710) -----------
Mortgage Backed Securities -- 40.4%
-----------------------------------
Mortgage Pass-Through Securities -- 23.3%
2,195,880 Federal Home Loan Mortgage Corp.,
Pool #E00491, 6.50%, 06/01/12 2,195,177
Federal National Mortgage
Association,
1,431,345 Pool #100154, 12.00%, 06/01/27 1,701,288
1,541,165 Pool #100160, 13.00%, 07/30/27 1,887,204
1,576,041 Pool #313549, 9.00%, 09/01/22 1,701,115
1,171,168 Pool #313748, 13.00%, 10/01/15 1,413,517
1,704,481 Pool #373926, 8.50%, 12/01/24 1,791,563
2,039,004 Government National Mortgage
Association, Pool #780508, 8.00%,
11/15/24 2,128,190
-----------
12,818,054
-----------
Collateralized Mortgage Obligations -- 17.1%
Federal Home Loan Mortgage Corp.,
2,800,000 Ser. 1761, Class G, 8.00%,
06/15/21 2,965,368
</TABLE>
See notes to financial statements.
13
<PAGE>
Vista U.S. Government Securities Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount Issuer Value
- -----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
$ 2,169,800 Ser. 1937, Class G, 7.50%,
01/15/26 $ 2,179,971
4,300,000 Federal National Mortgage Corp., Ser.
1999, Class PA, 6.00%, 10/15/10 4,281,188
-----------
9,426,527
-----------
Total Mortgage Backed Securities 22,244,581
(Cost $21,957,692)
============ ===================================== ===========
Total Long-Term Investments 47,831,528
(Cost $47,261,779)
- -----------------------------------------------------------------
Short-Term Investments -- 10.4%
- -----------------------------------------------------------------
U.S. Government Agency Obligations -- 10.4%
---------------------------------------------------
5,746,000 Federal Home Loan Mortgage Corp.,
Discount Note 5.65%, 11/03/97 5,744,196
(Cost $5,744,196)
============ ===================================== ===========
Total Investments -- 97.2% $53,575,724
(Cost $53,005,975)
============ ===================================== ===========
</TABLE>
See notes to financial statements.
14
<PAGE>
Unaudited
About Your Fund
VISTA BOND FUND
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
Objective: Income
Primary investments: High-quality Government, Agency,
Asset-Backed and Corporate Bonds
Suggested investment
time frame: Mid- to Long-Term
Market benchmark: Lehman Aggregate Bond Index
Lipper Funds averages: Corporate Debt BBB-Rated Funds Average
Corporate Debt A-Rated Funds Average
Class A Class B Class I
--------------- -------------- -------------
Inception date: 5/6/96 5/6/96 11/30/90
Newspaper symbol: not listed not listed Bond
As of October 31, 1997
Net assets: $26.4 million $1.5 million 18.1 million
Average maturity: 13.4 years 13.4 years 13.4 years
Average duration: 4.6 years 4.6 years 4.6 years
Average quality: AAA AAA AAA
15
<PAGE>
Unaudited
About Your Fund
VISTA BOND FUND
PERFORMANCE
Vista Bond Fund, which seeks to provide a high level of current income through
a portfolio of investment-grade government, agency, asset-backed and corporate
bonds, had a total return of 9.45% (Class A shares, without sales charges) for
the year ended October 31, 1997.
STRATEGY
Using a relative value analysis, the Fund's management team began the reporting
year by emphasizing mortgage-backed and selected corporate securities. This
helped the Fund outperform, as did reports of accelerating economic growth which
drove rates higher, and spreads tighter, in the first quarter of 1997. The Fund
had a relatively-neutral sector allocation during the volatility associated with
the Federal Reserve Board's raising of short-term interest rates on March 25th.
However, when the market subsequently exhibited signs of settling into an
interest rate trading range, the management team once again took an overweight
stance in mortgage-backed and corporate securities, given their higher yields.
By the summer, the management team became concerned about the very small yield
differential between securities of different quality. Believing there was not
much yield incentive for the extra risk associated with lower-quality bonds,
they sharply reduced their BBB-rated foreign-issued Yankee securities. This
move proved beneficial as these bonds fell sharply during the Asian volatility.
At the end of the reporting period, the Fund had a more neutral duration
strategy, was overweight in U.S. Treasuries and maintained neutral allocations
to mortgage-backed and corporate securities.
OUTLOOK
The management team believes that, by the first quarter of 1998, U.S. economic
growth will moderate and that inflation will be further dampened by the events
in Asia. With the expectation that rates will decline after the first quarter,
the management team expects to shift to a longer-than-benchmark duration,
underweight U.S. Treasury securities, and overweight mortgage-backed and
corporate securities. Within the corporate sector, the Fund intends to
emphasize high-quality bonds of companies with little foreign exposure.
16
<PAGE>
Unaudited
About Your Fund
VISTA BOND FUND
VISTA BOND FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[Tabular representation of pie chart]
Cash/Other 14.41%
Bonds 85.59%
VISTA BOND FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[Tabular representation of pie chart]
U.S. Treasury Securities 27.64%
U.S. Government Agency Obligations 25.03%
Corporate Notes & Bonds 23.08%
Mortgage Backed Securities 14.61%
Commercial Mortgage Backed Securities 6.10%
Asset Backed Securities 3.49%
Other 3.32%
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
- --------------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 9.45% 4.53%
Five Years+ 7.38% 6.40%
Since Inception (11/30/90)+ 8.50% 7.78%
Without With
Class B Shares CDSC CDSC*
One Year 8.32% 3.32%
Five Years+ 7.19% 5.19%
Since Inception (11/30/90)+ 8.36% 8.36%
Class I Shares
One Year 9.93%
Five Years 7.56%
Since Inception (11/30/90) 8.63%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
* Assumes 5% CDSC for the one year period, a 2% CDSC for the five year period
and 0% CDSC for the period since inception.
+ The Fund commenced operations on 11/30/90. Class A and B Shares were
introduced on 5/6/96. Investors should note that the information presented for
Class A and B Shares prior to their introduction is based on historical
expenses of the predecessor Class I Shares, which are lower than the actual
expenses of the Class A and B Shares. Additionally, annualized figures have
been restated to reflect the maximum 4.50% front-end sales charge (A shares)
and 5% contingent deferred sales charge (B Shares). Class I shares have a
$1,000,000 minimum initial deposit and carry no sales charge.
17
<PAGE>
Unaudited
About Your Fund
VISTA BOND FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA BOND FUND -- CLASS I
AND ITS KEY BENCHMARKS
Vista Lipper Corp. Lipper Corp.
Bond Debt. BBB-Rated Debt. A-Rated
Fund Funds Avg. Funds Avg.
11/90 10000 10000 10000
11537 11356 11336
10/92 12825 12526 12452
14973 14290 1393
10/94 14129 13453 13419
16519 15532 15519
10/96 17432 16277 16424
10/31/97 17732 19051 17653
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
This chart illustrates comparative performance for $10,000 invested in Class I
Shares of Vista Bond Fund, the Lipper Corporate Debt BBB-Rated Funds Average,
the Lipper Corporate Debt A-Rated Funds Average and the Lehman Aggregate Bond
Index from November 30, 1990 to October 31, 1997. The performance of the Fund
assumes the reinvestment of all dividends and capital gains and does not include
a sales charge. The performance of the averages and the index do not include a
sales charge and have been adjusted to reflect reinvestment of all dividends and
capital gains on the securities included in the benchmark. The Fund commenced
operations on 11/30/90. Class A and B Shares were introduced on 5/6/96.
Investors should note that the information presented for Class A and B Shares
prior to their introduction is based on historical expenses of the predecessor
Class I Shares, which are lower than the actual expenses of the Class A and B
Shares. Additionally, annualized figures have been restated to reflect the
maximum 4.50% front-end sales charge (A shares) and 5% contingent deferred sales
charge (B Shares). Class I shares have a $1,000,000 minimum initial deposit and
carry no sales charge.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper Corporate Debt BBB-Rated Funds Average represents the average
performance of a universe of 119 actively managed corporate debt BBB-rated
funds. Lipper is an independent mutual fund performance monitor whose results
are based on total return and do not reflect a sales charge.
The Lipper A-Rated Funds Average represents the average performance of a
universe of 140 actively managed corporate debt A-rated or better funds. Lipper
is an independent mutual fund performance monitor whose results are based on
total return and do not reflect a sales charge.
The Lehman Aggregate Bond Index is composed of the Lehman Government/Corporate
Index and the Mortgage-Backed Securities Index and includes U.S. treasury
issues, agency issues, corporate bond issues and mortgage-backed securities.
The index is unmanaged and reflects reinvestment of dividends. An individual
cannot invest in the index.
18
<PAGE>
Vista Bond Fund
Portfolio of Investments October 31, 1997
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- ----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- 91.7%
- ----------------------------------------------------------------
U.S. Treasury Securities -- 28.9%
-----------------------------------
U.S. Treasury Notes & Bonds,
$ 1,000,000 8.25%, 07/15/98 $ 1,018,440
1,000,000 6.38%, 05/15/00 1,015,940
1,000,000 6.00%, 08/15/00 1,007,970
325,000 8.50%, 11/15/00 349,729
700,000 6.25%, 04/30/01 710,828
700,000 6.50%, 05/31/02 720,013
2,000,000 6.25%, 08/31/02 2,039,060
1,050,000 10.75%, 02/15/03 1,283,300
5,000,000 6.38%, 08/15/27+ 5,153,100
-----------
Total U.S. Treasury Securities 13,298,380
(Cost $13,180,035) -----------
U.S. Government Agency Obligations -- 13.1%
--------------------------------------------------
Federal National Mortgage
Association,
1,250,000 7.17%, 06/26/07 1,272,650
4,750,000 7.00%, 11/13/27 4,770,900
-----------
Total U.S. Government Agency
Obligations 6,043,550
(Cost $6,017,254) -----------
Corporate Notes & Bonds -- 24.3%
-----------------------------------
Airlines -- 2.7%
272,492 American Airlines, 9.71%,
01/30/07# 311,954
486,053 Continental Airlines, Inc., 10.22%,
07/02/14 599,207
250,000 Delta Air Lines, 10.06%, 01/02/16 311,585
-----------
1,222,746
-----------
Banking -- 9.8%
250,000 Banco Latinoamerican (Panama),
7.20%, 05/28/02 255,862
1,000,000 BankAmerica Corp., 10.00%,
02/01/03 1,158,130
</TABLE>
See notes to financial statements.
19
<PAGE>
Vista Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- -----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
$ 400,000 Bankers Trust Capital Trust, Ser. B,
7.90%, 01/15/27 $ 407,500
1,000,000 Comerica Bank, 7.25%, 06/15/07 1,041,040
280,000 Corp Andina de Fomento, Yankee
(Venezuela), 7.38%, 07/21/00 285,457
1,000,000 Key Bank of Washington, 7.13%,
08/15/06 1,045,990
300,000 Societe Generale (New York), 7.40%,
06/01/06 311,937
------------
4,505,916
------------
Broadcasting -- 0.7%
250,000 Time Warner, Inc., 9.15%, 02/01/23 300,482
------------
Computers/Computer Hardware -- 1.3%
600,000 International Business Machines
Corp., 7.13%, 12/01/2096 607,500
------------
Consumer Products -- 0.9%
400,000 Philip Morris Corp., 9.25%,
12/01/97+ 400,944
------------
Financial Services -- 4.7%
1,100,000 Donaldson Lufkin & Jenrette, Inc.,
6.90%, 10/01/07 1,102,750
1,000,000 Lehman Brothers Inc., 7.38%,
01/15/07 1,035,150
------------
2,137,900
------------
Oil & Gas -- 1.2%
375,000 Petroleum Geo-Services ASA, Yankee,
(Norway), 7.50%, 03/31/07 394,811
153,092 YPF Sociedad Anonima, Yankee,
(Argentina), 7.50%, 10/26/02 155,006
------------
549,817
------------
Project Finance -- 2.5%
375,282 Hero Asia BVI Co., Ltd., Yankee,
(China), 9.11%, 10/15/01 393,334
400,000 Ras Laffan Liquefied Natural Gas,
(Qatar), 8.29%, 03/15/14 419,162
</TABLE>
See notes to financial statements.
20
<PAGE>
Vista Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- -----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
$ 300,000 Zhuhai Highway Co., Ltd., Ser. A,
Yankee (China), # 9.13%,
07/01/06 $ 316,161
------------
1,128,657
------------
Real Estate Investment Trust -- 0.5%
250,000 Simon Debartolo Group, 7.13%,
09/20/07 253,357
------------
Total Corporate Notes & Bonds 11,107,319
(Cost $10,924,980) ------------
Mortgage Backed Securities -- 15.3%
----------------------------------------------------
Mortgage-Backed Pass Thru Securities -- 12.5%
293,831 Federal Home Loan Mortgage Corp.,
Gold, Pool #A01717, 12.00%,
06/01/17 344,838
Federal National Mortgage
Association,
981,277 TBA, 10.50%, 06/01/27 1,105,470
457,516 Pool #100156, 12.50%, 06/01/27 550,092
650,000 Pool #100177, 12.50%, 10/01/27 782,945
662,178 Pool #313549, 9.00%, 09/01/22 714,729
341,591 Pool #313748, 13.00%, 10/01/15 412,276
Government National Mortgage
Association,
1,128,904 Pool #370957, 6.50%, 12/15/23 1,119,726
217,985 Pool #780325, 8.50%, 11/15/09 228,067
494,681 Pool #780412, 7.50%, 08/15/26 506,118
------------
5,764,261
------------
Collateralized Mortgage Obligations -- 2.8%
Federal Home Loan Mortgage Corp.,
250,000 Ser. 1343, Class H, 7.50%,
05/15/19 256,875
500,000 Ser. 1761, Class G, 8.00%,
06/15/21 529,530
</TABLE>
See notes to financial statements.
21
<PAGE>
Vista Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- -------------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- -------------------------------------------------------------------
$ 500,000 Ser. 1985, Class PB, 6.25%,
08/17/12 $ 500,765
------------
1,287,170
------------
Total Mortgage Backed Securities 7,051,431
(Cost $6,951,293) ------------
Commercial Mortgage Backed Securities -- 6.4%
------------------------------------------------------
1,000,000 Asset Securitization Corp., Ser. 1997-
D5, Class A1C, 6.75%, 02/14/41 1,015,938
750,000 DLJ Mortgage Acceptance Corp., Ser.
1997-CF2, Class A1B, 6.82%,
09/15/07 765,469
300,000 GS Mortgage Securities Corp. II, Ser.
1997-GL, Class A2D, 6.94%,
07/13/30 314,531
300,000 JP Morgan Commercial Mortgage
Finance Corp., Ser. 1997-C5, Class
A3, 7.09%, 09/15/29 311,203
350,000 Norwest Asset Securities Corp., Ser.
1997-14, Class A11, 7.25%,
10/25/27 354,266
172,698 Wells Fargo Capital Markets
Apartments Financing, Ser. APT,
Class A, 6.56%, 12/29/05 173,859
------------
Total Commercial Mortgage Backed
Securities 2,935,266
(Cost $2,898,893) ------------
Asset Backed Securities -- 3.7%
--------------------------------------
250,000 American Express Credit Account
Master Trust, Ser. 1997-1, Class A,
6.40%, 04/15/05 254,130
250,000 Green Tree Financial Corp., Ser.
1995-9, Class A6, 7.30%,
01/15/27 256,170
241,664 Mid-State Trust, Ser. 6, Class A4,
7.79%, 07/01/35 251,821
</TABLE>
See notes to financial statements.
22
<PAGE>
Vista Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- -------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- -------------------------------------------------------------
$ 500,000 Nomura CBO, Ltd., 6.67%, Ser.
1997-1, Class A2, 6.67%,
05/15/07# $ 540,625
373,777 The Money Store Home Equity
Trust, Ser. 1994-B, Class A3,
7.10%, 11/15/16 378,326
------------
Total Asset Backed Securities 1,681,072
(Cost $1,631,478)
=========== ================================= ============
Total Long-Term Investments 42,117,018
(Cost $41,603,933)
- -------------------------------------------------------------
Short-Term Investments -- 13.0%
- -------------------------------------------------------------
U.S. Government Agency Obligations -- 13.0%
------------------------------------------------
6,000,000 Federal Home Loan Mortgage Corp.,
Discount Note, 5.65%, 11/03/97 5,998,117
(Cost $5,998,117)
=========== ================================= ============
Total Investments -- 104.7% $ 48,115,135
(Cost $47,602,050)
=========== ================================= ============
</TABLE>
See notes to financial statements.
23
<PAGE>
Unaudited
About Your Fund
VISTA SHORT-TERM BOND FUND
- --------------------------------------------------------------------------------
FUND FACTS
- --------------------------------------------------------------------------------
Objective: Current Income
Primary investments: Investment-grade fixed-income
securities with maturities of three years or less.
Suggested investment
time frame: Short-Term
Market benchmark: Lehman 1-3 Year Government
Bond Index
Lipper Funds average: Short-Term Investment Grade
Debt Funds Average
Class A Class I
-------------- --------------
Inception date: 5/6/96 11/30/90
Newspaper symbol: ST Bond ST Bond
As of October 31, 1997
Net assets: $9.9 million $37.8 million
Average maturity: 2.4 years 2.4 years
Average duration: 1.7 years 1.7 years
Average quality: AAA AAA
24
<PAGE>
Unaudited
About Your Fund
VISTA SHORT-TERM BOND FUND
PERFORMANCE
Vista Short-Term Bond Fund, which seeks current income by investing in a
portfolio of short-term investment grade fixed income securities, had a total
return of 5.91% (Class A shares, without sales charges) for the year ended
October 31, 1997.
STRATEGY
Using a relative value analysis, the Fund's management team began the reporting
year by emphasizing mortgage-backed and selected corporate securities. This
helped the Fund outperform, as did reports of accelerating economic growth which
drove rates higher, and spreads tighter, in the first quarter of 1997. The Fund
had a relatively-neutral sector allocation during the volatility associated with
the Federal Reserve Board's raising of short-term interest rates on March 25th.
However, when the market subsequently exhibited signs of settling into an
interest rate trading range, the management team once again took an overweight
stance in mortgage-backed and corporate securities, given their higher yields.
By the summer, the management team became concerned about the very small yield
differential between securities of different quality. Believing there was not
much yield incentive for the extra risk associated with lower-quality bonds,
they sharply reduced their BBB-rated foreign-issued Yankee securities. This
move proved beneficial as these bonds fell sharply during the Asian volatility.
At the end of the reporting period, the Fund had a more neutral duration
strategy, was overweight in U.S. Treasuries and maintained neutral allocations
to mortgage-backed and corporate securities.
OUTLOOK
The management team believes that, by the first quarter of 1998, U.S. economic
growth will moderate and that inflation will be further dampened by the events
in Asia. With the expectation that rates will decline after the first quarter,
the management team expects to shift to a longer-than-benchmark duration,
underweight U.S. Treasury securities, and overweight mortgage-backed and
corporate securities. Within the corporate sector, the Fund intends to
emphasize high-quality bonds of companies with little foreign exposure.
25
<PAGE>
Unaudited
About Your Fund
VISTA SHORT-TERM BOND FUND
VISTA SHORT-TERM BOND FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[Tabular representation of pie chart]
Cash/Other 3.16%
Bonds 96.84%
VISTA SHORT-TERM BOND FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[Tabular representation of pie chart]
Mortgage-Backed Securities 26.49%
U.S. Treasury Securities 21.86%
U.S. Government Agency Obligations 18.33%
Corporate Notes & Bonds 14.80%
Asset Backed Securities 10.84%
State & Municipal Obligations 3.87%
Commercial Mortgage Backed Securities 3.81%
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
- --------------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 5.91% 4.32%
Five Years+ 5.22% 4.90%
Since Inception (11/30/90)+ 5.82% 5.59%
Class I Shares
One Year 6.23%
Five Years 5.35%
Since Inception (11/30/90) 5.91%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
+ The Fund commenced operations on 11/30/90. Class A Shares were introduced on
5/6/96. Investors should note that the information presented for Class A Shares
prior to their introduction is based on historical expenses of the predecessor
Class I Shares, which are lower than the actual expenses of the A Shares.
Additionally, annualized figures have been restated to reflect the
maximum 1.50% front-end sales charge that applies to the Fund's A Shares. Class
I Shares have a $1,000,000 minimum initial deposit and carry no sales charge.
26
<PAGE>
Unaudited
About Your Fund
VISTA SHORT-TERM BOND FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA SHORT-TERM BOND FUND -- CLASS I
AND ITS KEY BENCHMARKS
Short-Term Lipper Short Inv. Lehman
Bond Grade Debt 1-3 Year
Fund Funds Avg. Govt. Bond Index
11/90 10000 10000 10000
10/91 10782 11016 11024
11469 11912 11815
10/93 12012 12601 12562
12297 12747 12663
10/95 13204 13872 13683
14009 14703 14423
10/31/97 14882 15655 15297
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost. This chart illustrates comparative performance for $10,000
invested in Class I Shares of Vista Short-Term Bond Fund, the Lipper Short
Investment Grade Debt Funds Average and the
Lehman Brothers 1-3 year Government Bond Index from November 30, 1990 to
October 31, 1997. The performance of the Fund assumes reinvestment of all
dividends and capital gains and does not include a sales charge. The
performance of the average and the index do not include a sales charge and have
been adjusted to reflect the reinvestment of all dividends and capital gains on
the securities included in the benchmark. The Fund commenced operations on
11/30/90. Class A Shares were introduced on 5/6/96. Investors should note that
the information presented for Class A Shares prior to their introduction is
based on historical expenses of the predecessor Class I Shares, which are lower
than the actual expenses of the A Shares. Additionally, annualized figures have
been restated to reflect the maximum 1.50% front-end sales charge that applies
to the Fund's A Shares. Class I Shares have a $1,000,000 minimum initial
deposit and carry no sales charge.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper Short-Term Investment Grade Debt Funds Average represents the
average performance of a universe of 107 actively managed short-term investment
grade debt funds. Lipper is an independent mutual fund performance monitor
whose results are based on total return and do not reflect a sales charge.
The Lehman 1-3 Year Government Bond Index is composed of bonds covered by the
Government Bond Index with maturities of one to three years. The index is
unmanaged and reflects the reinvestment of dividends. An individual cannot
invest directly in the index.
27
<PAGE>
Vista Short-Term Bond Fund
Portfolio of Investments October 31, 1997
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- ----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- 93.1%
- ----------------------------------------------------------------
U.S. Treasury Securities -- 22.1%
-----------------------------------
U. S. Treasury Notes,
$ 8,500,000 5.88%, 07/31/99 $ 8,530,515
2,000,000 6.00%, 08/15/00 2,015,940
-----------
Total U.S. Treasury Notes 10,546,455
(Cost $10,528,661) -----------
U.S. Government Agency Obligations -- 10.4%
--------------------------------------------------
Federal National Mortgage
Association,
1,000,000 7.00%, 11/13/27 1,004,400
1,850,000 MTN, 6.03%, 10/23/00 1,858,954
2,000,000 Government National Mortgage
Association Corp., 8.40%, 10/15/99 2,084,280
-----------
U.S. Government Agency
Obligations -- (Cost $4,923,286) 4,947,634
-----------
State & Municipal Obligations -- 3.9%
--------------------------------------------------
1,850,000 New York City, New York, GO,
Taxable, Ser. I, 6.85%, 04/15/99+ 1,868,500
(Cost $1,850,000) ----------
Corporate Notes & Bonds -- 15.0%
-----------------------------------
Banking -- 2.2%
1,000,000 Corp Andina de Fomento, Yankee
(Venezuela), 7.38%, 07/21/00 1,019,490
-----------
Broadcasting -- 2.6%
1,250,000 Cox Enterprises, Inc., Class A,
6.25%, 08/26/99 1,252,050
-----------
Financial Services -- 7.6%
1,750,000 Associated Corp., Pass-thru Asset
Trust Securities (PATS), # 6.45%,
09/15/00 1,761,900
1,850,000 Lehman Brothers Holdings, 6.33%,
08/01/00 1,845,930
-----------
3,607,830
-----------
</TABLE>
See notes to financial statements.
28
<PAGE>
Vista Short-Term Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- ---------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Oil & Gas -- 1.6%
$ 765,461 YPF Sociedad Anonima, Yankee
(Argentina), 7.50%, 10/26/02 $ 775,030
-----------
Project Finance -- 1.0%
458,679 Hero Asia BVI Co., Ltd., Yankee,
(China), 9.11%, 10/15/01# 480,741
-----------
Total Corporate Notes & Bonds 7,135,141
(Cost $7,115,174) -----------
Mortgage Backed Securities -- 26.8%
--------------------------------------------------
Mortgage-Backed Pass Thru Securities -- 13.4%
1,690,727 Federal Home Loan Mortgage Corp.,
ARM, Pool #846416, 7.91%,
06/01/28 1,783,717
Federal National Mortgage
Association,
1,605,702 ARM, Pool #377930, 5.50%,
04/01/27 1,648,350
1,131,262 Pool #100160, 13.00%, 07/30/27 1,385,266
650,000 Pool #100176, 12.00%, 02/15/16 777,055
650,000 Pool #100177, 12.50%, 10/15/15 782,945
-----------
6,377,333
-----------
Collateralized Mortgage Obligations -- 13.4%
1,900,000 Federal Home Loan Mortgage Corp.,
Ser. 1311, Class G, 7.50%,
05/15/19 1,932,642
955,529 Federal National Mortgage
Association, Ser. 1997-54, Class
VA, 6.50%, 08/18/02 961,202
1,500,000 GE Capital Mortgage Services, Inc.,
Ser. 1997-9, Class 1A8, 7.00%,
05/25/04 1,515,937
</TABLE>
See notes to financial statements.
29
<PAGE>
Vista Short-Term Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- ----------------------------------------------------------------
<S> <C> <C>
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
$ 2,000,000 Ser. 1994-8, Class A3, 6.00%,
02/25/24 $ 1,993,120
-----------
6,402,901
-----------
Total Mortgage Backed Securities 12,780,234
(Cost $12,693,863) -----------
Commercial Mortgage Backed Securities -- 3.9%
--------------------------------------------------
469,587 Blackrock Capital Finance L.P., Ser.
1996-C2, Class A, # 7.64%,
11/15/26 473,842
1,355,645 Kidder Peabody Acceptance Corp.,
Ser. 1993-M1, Class A1, 7.15%,
04/25/25 1,365,389
-----------
Total Commercial Mortgage Backed
Securities 1,839,231
(Cost $1,834,357) -----------
Asset Backed Securities -- 11.0%
------------------------------------
1,850,000 Contimortgage Home Equity Loan
Trust, Ser. 1997-4, Class A3,
6.26%, 07/15/12 1,852,891
1,850,000 EQCC Home Equity Loan Trust, Ser.
1997-1, Class A2, 6.61%,
06/15/06 1,869,018
1,488,663 The Money Store Home Equity
Trust, Ser. 1994-B, Class A3,
7.10%, 11/15/16 1,506,780
-----------
Total Asset Backed Securities 5,228,689
(Cost $5,215,224)
============ ==================================== ===========
Total Long-Term Investments 44,345,884
(Cost $44,160,565)
============ ==================================== ===========
</TABLE>
See notes to financial statements.
30
<PAGE>
Vista Short-Term Bond Fund
Portfolio of Investments October 31, 1997 (continued)
<TABLE>
<CAPTION>
Principal
Amount
(USD) Issuer Value
- -------------------------------------------------------------
<S> <C> <C>
Short-Term Investments -- 8.2%
- -------------------------------------------------------------
U.S. Government Agency Obligations -- 8.2%
-----------------------------------------------
$3,896,000 Federal Home Loan Mortgage Corp.,
Discount Note, 5.65%, 11/03/97 $ 3,894,777
(Cost $3,894,777)
=============================================================
Total Investments -- 101.3% $48,240,661
(Cost $48,055,342)
=============================================================
</TABLE>
Index
# -- Security may only be sold to qualified institutional buyers.
TBA -- To Be Announced.
ARM -- Adjustable Rate Mortgage.
MTN -- Medium Term Note.
GO -- General Obligation.
+ -- All or a portion of this security is pledged to cover TBA's.
See notes to financial statements.
31
<PAGE>
Vista Mutual Funds
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
U.S. Treasury U.S. Government Vista Vista
Income Securities Bond Short-Term
Fund Fund Fund Bond Fund
--------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value
(Note 1) ........................ $ 94,177,975 $53,575,724 $48,115,135 $ 48,240,661
Cash .............................. 339,997 3,087 90,826 --
Receivables:
Investment securities sold ...... -- 18,200,836 7,426,783 1,025,000
Interest ........................ 1,679,962 504,973 552,029 389,109
Fund shares sold ............... 35,789 16,529 32,821 111,454
Other ........................... 2,308 1,522 3,362 50,045
------------ ----------- ----------- ------------
Total assets .................. 96,236,031 72,302,671 56,220,956 49,816,269
------------ ----------- ----------- ------------
LIABILITIES:
Payable for investment securities
purchased ........................ -- 16,788,901 10,120,314 2,027,021
Payable for Fund shares redeemed 135,881 62,977 15,674 9,651
Payable to custodian ............ -- -- -- 6,439
Dividends payable ............... 193,501 226,790 95,460 76,081
Accrued liabilities: (Note 2)
Administration fees ............ 12,295 4,679 -- --
Distribution fees ............... 24,993 -- 5,739 1,196
Investment advisory fees ......... 18,853 14,036 -- --
Shareholder servicing fees ...... 2,980 9,873 294 4,425
Custodian ........................ 10,272 5,406 7,395 7,956
Other ........................... 101,133 65,398 30,578 48,653
------------ ----------- ----------- ------------
Total Liabilities ............ 499,908 17,178,060 10,275,454 2,181,422
------------ ----------- ----------- ------------
NET ASSETS:
Paid in capital .................. 100,914,290 55,181,708 44,894,678 48,499,974
Accumulated undistributed net
investment income ............... (33,415) (39,224) (29,741) (46,718)
Accumulated undistributed net
realized gain (loss) on
investment transactions ......... (5,875,319) (587,622) 567,480 (1,003,728)
Net unrealized appreciation of
investments ..................... 730,567 569,749 513,085 185,319
------------ ----------- ----------- ------------
Net Assets: ........................ $ 95,736,123 $55,124,611 $45,945,502 $ 47,634,847
============ =========== =========== ============
Class A Shares .................. $ 85,132,796 $ 2,276,688 $26,401,736 $ 9,846,980
Class B Shares .................. $ 10,603,327 -- $ 1,447,119 --
Institutional Shares ............ -- $52,847,923 $18,096,647 $ 37,787,867
Shares of beneficial interest
outstanding ($.001 par value;
unlimited number of shares
authorized):
Class A Shares .................. 7,559,031 226,246 2,439,485 974,852
Class B Shares .................. 942,506 -- 133,128 --
Institutional Shares ............ -- 5,261,389 1,673,144 3,736,185
Class A Shares:
Net asset value and redemption
price per share* ............... $ 11.26 $ 10.06 $ 10.82 $ 10.10
Maximum offering price per share
(net asset value per share/
95.5%, 95.5%, 95.5% and
98.5%) ........................... $ 11.79 $ 10.53 $ 11.33 $ 10.25
Class B Shares:
Net asset value and offering price
per share* ..................... $ 11.25 -- $ 10.87 --
Institutional Shares:
Net asset value, redemption and
offering price per share* ...... -- $ 10.04 $ 10.82 $ 10.11
============ =========== =========== ============
Cost of Investments ............... $ 93,447,408 $53,005,975 $47,602,050 $ 48,055,342
============ =========== =========== ============
</TABLE>
- --------------
* Net assets/shares outstanding.
See notes to financial statements.
32
<PAGE>
Vista Mutual Funds
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
U.S. Treasury U.S. Government Vista Vista
Income Securities Bond Short-Term
Fund Fund Fund Bond Fund
--------------- ----------------- ------------ --------------
<S> <C> <C> <C> <C>
INTEREST INCOME .................. $7,541,495 $4,310,099 $1,714,622 $3,126,150
---------- ---------- ---------- ----------
EXPENSES: (Note 2)
Administration fees ............ 164,598 97,507 37,053 72,088
Distribution fees ............... 326,768 7,685 21,818 21,379
Investment Advisory fees ...... 329,197 195,014 74,105 120,146
Shareholder servicing fees ...... 274,331 162,511 61,754 120,146
Custodian fees .................. 60,433 41,802 37,645 36,712
Printing and postage ............ 24,197 10,181 4,257 9,996
Professional fees ............... 25,498 33,154 16,432 21,431
Registration costs ............ 13,734 25,018 39,246 37,090
Transfer agent fees ............ 153,625 32,245 60,444 35,583
Trustees fees .................. 5,487 3,250 1,235 2,403
Other ........................... 4,333 2,680 2,823 4,736
---------- ---------- ---------- ----------
Total expenses ............... 1,382,201 611,047 356,812 481,710
---------- ---------- ---------- ----------
Less amounts waived (Note 2E) ... 316,987 52,454 164,540 250,537
Less expenses borne by the
Distributor ..................... -- -- 34,448 --
---------- ---------- ---------- ----------
Net expenses .................. 1,065,214 558,593 157,824 231,173
---------- ---------- ---------- ----------
Net investment income ......... 6,476,281 3,751,506 1,556,798 2,894,977
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments ..................... 353,518 321,514 554,916 94,100
Futures transactions ............ (60,486) -- -- --
Change in net unrealized
appreciation/depreciation on:
Investments .................. 841,259 559,124 250,147 (126,661)
---------- ---------- ---------- ----------
Net realized and unrealized gain
(loss) on investments ......... 1,134,291 880,638 805,063 (32,561)
---------- ---------- ---------- ----------
Net increase in net assets from
operations ..................... $7,610,572 $4,632,144 $2,361,861 $2,862,416
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
33
<PAGE>
Vista Mutual Funds
Statement of Changes in Net Assets For the periods indicated
<TABLE>
<CAPTION>
Vista Vista
U.S. Treasury U.S. Government
Income Securities
Fund Fund
--------------------------------- ---------------------------------
Year 12/01/95*
Year Ended Ended Through
10/31/97 10/31/96 10/31/97 10/31/96
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .............................. $ 6,476,281 $ 6,434,044 $ 3,751,506 $ 4,024,721
Net realized gain (loss) on investments and
futures transactions .............................. 293,032 355,910 321,514 244,616
Change in net unrealized appreciation/
depreciation on investments ..................... 841,259 (3,055,305) 559,124 (2,729,970)
------------- ------------ ------------- -------------
Increase in net assets from operations ............ 7,610,572 3,734,649 4,632,144 1,539,367
------------- ------------ ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM: (Note 1I)
Net investment income .............................. (6,429,569) (6,438,189) (3,892,375) (3,934,393)
Net realized gain on investment transactions ...... -- -- -- --
------------- ------------ ------------- -------------
Total dividends and distributions .................. (6,429,569) (6,438,189) (3,892,375) (3,934,393)
------------- ------------ ------------- -------------
Increase/(decrease) from capital share transactions
(Note 5) .......................................... (21,930,528) 9,427,327 (16,928,627) (11,088,402)
------------- ------------ ------------- -------------
Total increase (decrease) in net assets ......... (20,749,525) 6,723,787 (16,188,858) (13,483,428)
NET ASSETS:
Beginning of period .............................. 116,485,648 109,761,861 71,313,469 84,796,897
------------- ------------ ------------- -------------
End of period .................................... $ 95,736,123 $116,485,648 $ 55,124,611 $ 71,313,469
============= ============ ============= =============
Undistributed Net Investment Income ............... $ (33,415) $ (80,127) $ (39,224) $ 101,645
<CAPTION>
Vista Vista
Bond Short-Term Bond
Fund Fund
-------------------------------- ------------------------------
Year Ended Year Ended
10/31/97 10/31/96 10/31/97 10/31/96
--------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .............................. $ 1,556,798 $ 2,954,280 $ 2,894,977 $ 2,340,613
Net realized gain (loss) on investments and
futures transactions .............................. 554,916 406,668 94,100 (12,737)
Change in net unrealized appreciation/
depreciation on investments ..................... 250,147 (2,461,517) (126,661) 147,029
------------ ------------- ------------ ------------
Increase in net assets from operations ............ 2,361,861 899,431 2,862,416 2,474,905
------------ ------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM: (Note 1I)
Net investment income .............................. (1,565,376) (2,951,527) (2,916,272) (2,319,533)
Net realized gain on investment transactions ...... (421,167) (293,787) -- --
------------ ------------- ------------ ------------
Total dividends and distributions .................. (1,986,543) (3,245,314) (2,916,272) (2,319,533)
------------ ------------- ------------ ------------
Increase/(decrease) from capital share transactions
(Note 5) .......................................... 25,984,244 (35,353,068) (4,969,789) 16,257,372
------------ ------------- ------------ ------------
Total increase (decrease) in net assets ......... 26,359,562 (37,698,951) (5,023,645) 16,412,744
NET ASSETS:
Beginning of period .............................. 19,585,940 57,284,891 52,658,492 36,245,748
------------ ------------- ------------ ------------
End of period .................................... $ 45,945,502 $ 19,585,940 $ 47,634,847 $52,658,492
============ ============= ============ ============
Undistributed Net Investment Income ............... $ (29,741) $ 9,653 $ (46,718) $ 62,777
</TABLE>
- -------
* In 1996, the Fund changed its fiscal year end from November 30 to October 31.
See notes to financial statements.
34
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Mutual Fund Group (the
"Trust") was organized on May 11, 1987 as a Massachusetts Business Trust, and
is registered under the Investment Company Act of 1940, as amended, (the "1940
Act") as an open-end management investment company. Vista U.S. Treasury Income
Fund ("VUSTI") (formerly the Vista U.S. Government Income Fund), Vista U.S.
Government Securities Fund ("VUSGS"), Vista Bond Fund ("VBF"), and Vista
Short-Term Bond Fund ("VSTBF"), collectively, the "Funds", are four separate
portfolios of The Trust.
The Funds offer various classes of shares as follows:
Fund Classes Offered
- ------- --------------------------------
VUSTI Class A, Class B
VUSGS Class A, Institutional
VBF Class A, Class B, Institutional
VSTBF Class A, Institutional
Class A shares generally provide for a front-end sales charge while Class B
shares provide for a contingent deferred sales charge. No sales charges are
assessed with respect to the Institutional Class ("Class I"). All classes of
shares have equal rights as to earnings, assets and voting privileges except
that each class may bear different distribution fees and each class has
exclusive voting rights with respect to its distribution plan.
The following is a summary of significant accounting policies followed by the
Funds:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
A. Valuation of investments -- Bonds and other fixed income securities
(other than short-term obligations), including listed issues, are valued on
the basis of valuations supplied by pricing services or by matrix pricing
systems of a major dealer in bonds. Short-term debt securities with 61 days
or more to maturity at time of purchase are valued, through the 61st day
prior to maturity, at market value based on quotations obtained from market
makers or other appropriate sources; thereafter, the value on the 61st day
is amortized on a straight-line basis over the remaining number of days to
maturity. Short-term investments with 60 days or less to maturity at time
of purchase are valued at amortized cost, which approximates market.
Portfolio securities 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 Trustees.
B. Repurchase agreements -- It is the Trust's policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government Agency
securities. All collateral is held by the Trust's custodian bank,
subcustodian, or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book Entry
System. In connection with transactions in repurchase agreements, if the
seller defaults and the value of the collateral declines, or if the seller
enters an insolvency proceeding, realization of the collateral by the Trust
may be delayed or limited.
C. Futures contracts -- When a Fund enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in cash or
liquid securities. Thereafter, the futures contract is marked to market and
the Fund makes (or receives) additional cash payments daily to the broker.
Changes in the value of the contract are recorded as unrealized
appreciation/depreciation until the contract is closed or settled.
The Funds may enter into futures contracts only on exchanges or boards of
trade. The exchange or board of trade acts as the counterparty to each
futures transaction, therefore, the Fund's credit risk is limited to
failure of the exchange or board of trade.
As of October 31, 1997, the Funds had no outstanding futures contracts.
35
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
D. Written options -- When a Fund writes an option an amount equal to the
premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability is adjusted daily to reflect the current market value of the
written options and the change is recorded in a corresponding unrealized
gain or loss account. When a written option expires on its stipulated
expiration date, or when a closing transaction is entered into, the related
liability is extinguished and the Fund realizes a gain (or loss if the cost
of the closing transaction exceeds the premium received when the option was
written).
The VUSTI writes options on U.S. Treasury futures. These options are
settled for cash and subject the Fund to market risk in excess of the
amounts that are reflected in the Statement of Assets and Liabilities. The
Fund, however, is not subject to credit risk on written options as the
counterparty has already performed its obligation by paying a premium at
the inception of the contract.
As of October 31, 1997, VUSTI had no outstanding written options.
E. Security transactions and investment income -- Investment transactions
are accounted for on the trade date (the date the order to buy or sell is
executed). Securities gains and losses are calculated on the identified
cost basis. Interest income is determined on the basis of coupon interest
accrued adjusted for amortization of premiums, except VUSTI, and accretion
of discounts.
F. Expenses -- Expenses directly attributable to a Fund are charged to that
Fund; other expenses of the Trust are allocated proportionately among each
of the Funds within the Trust in relation to the net assets of each Fund or
on another reasonable basis. Expenses directly attributable to a particular
class are charged directly to such class. In calculating net asset value
per share of each class, investment income, realized and unrealized gains
and losses and expenses other than class specific expenses are
allocated daily to each class of shares based upon the proportion of net
assets of each class at the beginning of each day.
G. Organization costs -- Organization and initial registration costs
incurred in connection with establishing the Funds have been deferred and
are being amortized on a straight-line basis over a sixty month period
beginning at the commencement of operations of each Fund.
H. Federal income taxes -- Each Fund is treated as a separate taxable
entity for Federal income tax purposes. The Trust's policy is to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute to shareholders all of its
distributable net investment income, and net realized gain on investments.
In addition, the Trust intends to make distributions as required to avoid
excise taxes. Accordingly, no provision for Federal income or excise tax is
necessary.
The reclassifications for the funds are as follows: VBF accumulated
undistributed net investment income was decreased by $30,816 and
undistributed net realized gain/loss was increased by $30,816; VSTBF paid
in capital was increased by $1,249, accumulated undistributed net
investment income was decreased by $80,200 and undistributed net realized
gain/loss was increased by $86,951.
I. Distributions to shareholders -- Dividends and distributions paid to
shareholders are recorded on the ex-dividend date. The amount of dividends
and distributions from net investment income and net realized capital gains
is determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles. To the extent these
"book/tax" differences are permanent in nature, (i.e., that they result
from other than timing of recognition --"temporary differences") such
amounts are reclassified within the capital accounts based on their Federal
tax-basis treatment. Dividends and distributions which exceed net
investment income or net realized capital gains for financial reporting
purposes but not for tax purposes are reported as distributions in excess
of net investment income or net realized capital gains.
36
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
J. Dollar rolls -- The funds (with the exception of VUSTI) enter into
dollar rolls in which the Funds sell mortgage-backed securities for
delivery in the current month and simultaneously contract to repurchase
substantially similar (same type, coupon and maturity) securities on a
specified future date. During the roll period, the Funds forgo principal
and interest paid on the securities. The Funds are compensated by the
interest earned on the cash proceeds of the initial sale and a fee earned
for entering into the roll transaction. The fee is amortized into income
over the duration of the roll transaction.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank ("Chase" or the "Adviser") acts as the
Investment Adviser to the Funds. Chase is a direct wholly-owned subsidiary
of The Chase Manhattan Corporation. As Investment Adviser, Chase supervises
the investments of the Funds and for such services is paid a fee. The fee
is computed daily and paid monthly at an annual rate equal to 0.30%, 0.30%,
0.30% and 0.25% of the average daily net assets for VUSTI, VUSGS, VBF and
VSTBF, respectively. The Adviser, voluntarily waived all or a portion of
its fees as outlined in Note 2.E. below.
Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is
the sub-investment adviser to each Fund pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly owned subsidiary
of Chase and is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.15% for VUSTI, VUSGS and VBF,
and 0.10% for VSTBF of average daily net assets.
B. Shareholder servicing fees -- The Trust has adopted an Administrative
Services Plan which, among other things, provides that the Trust on behalf of
the Funds may obtain the services of one or more Shareholder Servicing
Agents. For its services, the Shareholder Servicing Agent will receive a fee.
The fee is computed daily and paid monthly at an annual rate equal to 0.25%
of the average daily net assets of the Funds.
Since inception of the Funds, Chase, and certain affiliates have been the
only Shareholder Servicing Agents of the Funds. The Shareholder Servicing
Agents have voluntarily waived all or a portion of their fees as outlined
in Note 2.E. below.
C. Distribution and sub-administration fees -- Pursuant to a Distribution
and Sub-Administration Agreement, Vista Fund Distributors, Inc. (the
"Distributor"), a wholly owned subsidiary of The BISYS Group, Inc., acts as
the Trust's exclusive underwriter and promotes and arranges for the sale of
each Fund's shares. In addition, the Distributor provides certain
sub-administration services to the Trust, including providing officers,
clerical staff and office space for an annual fee of 0.05% of the average
daily net assets of each Fund.
The Trustees have adopted Distribution Plans (the "Distribution Plans") for
Class A and B for the Funds in accordance with Rule 12b-1 under the 1940
Act. The Class A Distribution Plans provide that each Fund shall pay
distributions fees, including payments to the Distributor, at annual rates
not to exceed 0.25% of the average daily net assets of the Class A Shares
of each Fund for distribution services. The Class B Distribution Plan
provides that each Fund shall pay distribution fees, including payments to
the Distributor, at an annual rate not to exceed 0.75% of the average
annual net assets of the Class B Shares for its distribution services.
The Distributor voluntarily waived all or a portion of distribution fees as
outlined in Note 2.E below.
D. Administration fee -- Pursuant to an Administration Agreement, Chase
(the "Administrator") provides certain administration services to the
Trust. For these services and facilities, the Administrator receives from
each Fund a fee computed at the annual rate equal to 0.10% of the
respective Fund's average daily net assets. The Administrator voluntarily
waived all or a portion of the administration fees as outlined in Note 2.E.
below.
37
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
E. Waivers of fees -- For the year ended October 31, 1997, the Investment
Adviser, Shareholder Servicing Agent, Administrator and Distributor
voluntarily waived fees for each of the Funds as follows:
<TABLE>
<CAPTION>
Fee VUSTI VUSGS VBF VSTBF
- --------------------------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Administration .................. -- $15,205 $ 31,671 $ 53,894
Distribution .................. -- 7,685 -- 8,902
Investment Advisory ............ $ 78,607 -- 74,105 120,146
Shareholder Servicing ......... 238,380 29,564 58,764 67,595
-------- ------- -------- --------
Total ........................... $316,987 $52,454 $164,540 $250,537
-------- ------- -------- --------
Distributor Reimbursement ...... -- -- $ 34,448 --
======== ======= ======== ========
</TABLE>
F. Other -- Certain officers of the Trust are officers of Vista Fund
Distributors, Inc. or of its parent corporation, BISYS.
Chase provides portfolio accounting and custody services for the Funds.
Compensation for such services is presented in the Statement of Operations
as custodian fees.
3. Investment Transactions -- For the year ended October 31, 1997, purchases
and sales of investments (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
VUSTI VUSGS VBF VSTBF
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Purchases (excluding
U.S. Government) ...... -- $ 3,422,074 $ 31,195,119 $ 43,069,497
Sales (excluding
U.S. Government) ...... -- 17,069,486 24,766,854 40,635,675
Purchases of
U.S. Government ....... $188,541,825 328,521,382 183,898,127 175,176,017
Sales of
U.S. Government ....... 213,640,695 329,722,049 164,497,976 180,152,182
</TABLE>
4. Federal Income Tax Matters -- For Federal income tax purposes, the cost and
unrealized appreciation (depreciation) in value of the investment securities at
October 31, 1997 are as follows:
<TABLE>
<CAPTION>
VUSTI VUSGS VBF VSTBF
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Aggregate cost ...... $93,616,964 $53,048,682 $47,602,050 $48,149,293
----------- ----------- ----------- -----------
Gross unrealized
appreciation ...... $ 1,432,999 $ 571,093 $ 517,960 $ 193,602
Gross unrealized
depreciation ...... (702,432) (1,344) (4,875) (8,283)
----------- ----------- ----------- -----------
Net unrealized
appreciation ...... $ 730,567 $ 569,749 $ 513,085 $ 185,319
=========== =========== =========== ===========
</TABLE>
At October 31, 1997, the VUSTI, had a net capital loss carryover of
approximately $5,706,000, which will be available to offset capital gains
arising through October 31, 2002 and 2003. During the current year, the VUSTI
utilized approximately $429,000 of loss carryovers. At October 31, 1997, the
VUSGS had a net capital loss carryover of approximately $545,000, which will be
available to offset capital gains arising through October 31, 2004. During the
current year, the VUSGS utilized approximately $364,000 of loss carryovers. The
VSTBF had a net capital loss carryover of approximately $999,000 which will be
available to offset capital gains arising through October 31, 2002. During the
current year, the VSTBF utilized approximately $168,000 of loss carryovers. To
the extent that any net capital loss carryovers are used to offset future
capital gains, it is probable that the gains so offset will not be distributed
to shareholders.
38
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
5. Transactions in Shares of Beneficial Interest -- Transactions in Shares of
Beneficial Interest were as follows:
<TABLE>
<CAPTION>
Vista U.S. Treasury Income Fund#
-----------------------------------------------------------------
Year Ended October 31,
-----------------------------------------------------------------
1997 1996
-------------------------------- --------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 17,269,062 1,559,726 $ 33,787,054 3,035,946
Shares issued in reinvestment
of distributions ............... 3,401,952 307,858 3,763,710 337,488
Shares redeemed .................. (42,298,156) (3,808,141) (28,490,015) (2,565,254)
------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ (21,627,142) (1,940,557) $ 9,060,749 808,180
============= ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista U.S. Treasury Income Fund#
-----------------------------------------------------------------
Year Ended October 31,
-----------------------------------------------------------------
1997 1996
------------------------------- -------------------------------
Amount Shares Amount Shares
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Class B
Shares sold ..................... $ 3,269,722 297,277 $ 4,293,818 385,579
Shares issued in reinvestment
of distributions ............... 398,315 36,079 431,500 38,790
Shares redeemed .................. (3,971,423) (360,294) (4,358,740) (391,659)
------------ -------- ------------ --------
Net increase (decrease) in
Trust shares outstanding ...... $ (303,386) (26,938) $ 366,578 32,710
============ ======== ============ ========
</TABLE>
<TABLE>
<CAPTION>
Vista U.S. Government Securities Fund
---------------------------------------------------------------
05/06/96
Year Ended through
10/31/97 10/31/96**
------------------------------- -----------------------------
Amount Shares Amount Shares
--------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 549,982 55,802 $3,347,216 348,260
Shares issued in reinvestment
of distributions ............... 171,581 17,393 69,915 7,191
Shares redeemed .................. (1,815,693) (183,713) (181,268) (18,687)
------------ -------- ---------- -------
Net increase (decrease) in
Trust shares outstanding ...... $ (1,094,130) (110,518) $3,235,863 336,764
============ ======== ========== =======
</TABLE>
39
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista U.S. Government Securities Fund*
-----------------------------------------------------------------
12/01/95
Year Ended through
10/31/97 10/31/96**
-------------------------------- --------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares
Shares sold ..................... $ 14,832,339 1,501,089 $ 16,871,922 1,703,494
Shares issued in reinvestment
of distributions ............... 359,775 36,601 249,093 25,455
Shares redeemed .................. (31,026,611) (3,153,376) (31,445,280) (3,182,479)
------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ (15,834,497) (1,615,686) $ (14,324,265) (1,453,530)
============= ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Bond Fund
--------------------------------------------------------------
05/06/96
Year Ended through
10/31/97 10/31/96**
------------------------------- ----------------------------
Amount Shares Amount Shares
--------------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 26,602,921 2,486,484 $1,019,597 97,355
Shares issued in reinvestment
of distributions ............... 117,182 11,037 6,269 593
Shares redeemed .................. (1,593,402) (150,272) (59,799) (5,712)
------------ --------- ---------- ------
Net increase (decrease) in
Trust shares outstanding ...... $ 25,126,701 2,347,249 $ 966,067 92,236
============ ========= ========== ======
</TABLE>
<TABLE>
<CAPTION>
Vista Bond Fund
-------------------------------------------------------------
05/06/96
Year Ended through
10/31/97 10/31/96**
----------------------------- -----------------------------
Amount Shares Amount Shares
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Class B
Shares sold ..................... $1,489,103 139,177 $1,149,672 109,737
Shares issued in reinvestment
of distributions ............... 72,014 6,801 9,106 862
Shares redeemed .................. (951,913) (89,193) (362,816) (34,256)
---------- ------- ---------- -------
Net increase (decrease) in
Trust shares outstanding ...... $ 609,204 56,785 $ 795,962 76,343
========== ======= ========== =======
</TABLE>
40
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Bond Fund
--------------------------------------------------------------------
Year Ended October 31,
1997 1996
------------------------------- ----------------------------------
Amount Shares Amount Shares
--------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares
Shares sold ..................... $ 6,196,592 584,008 $ 7,747,917 718,508
Shares issued in reinvestment
of distributions ............... 1,353,464 128,627 3,072,283 286,096
Shares redeemed .................. (7,301,717) (699,075) (47,935,297) (4,597,662)
------------ -------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ 248,339 13,560 $ (37,115,097) (3,593,058)
============ ======== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Short-Term Bond Fund
-----------------------------------------------------------------
05/06/96
Year Ended through
10/31/97 10/31/96**
-------------------------------- --------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 24,856,342 2,467,419 $ 9,842,672 980,691
Shares issued in reinvestment
of distributions ............... 414,005 41,121 180,407 17,971
Acquisition from Hanover
Merger ........................ -- -- 9,525,310 944,428
Shares redeemed .................. (24,816,324) (2,466,062) (10,152,955) (1,010,716)
------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ 454,023 42,478 $ 9,395,434 932,374
============= ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Short-term Bond Fund
-----------------------------------------------------------------
Years Ended October 31,
1997 1996
-------------------------------- --------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares
Shares sold ..................... $ 12,347,482 1,223,232 $ 23,871,765 2,370,072
Shares issued in reinvestment
of distributions ............... 1,921,759 190,597 1,898,858 188,565
Shares redeemed .................. (19,693,053) (1,951,222) (18,908,685) (1,880,725)
------------ ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... ($ 5,423,812) (537,393) $ 6,861,938 677,912
============ ========== ============= ==========
</TABLE>
- --------------
* In 1996, the Fund changed its fiscal year end from November 30 to October 31.
The period shown is December 1, 1995 through October 31, 1996.
# Formerly known as the Vista U.S. Government Income Fund.
** Commencement of offering class of shares.
6. Retirement Plan -- The Funds have adopted an unfunded noncontributory
defined benefit pension plan covering all independent trustees of the Funds who
will have served as an independent trustee for at least five years at the time
of retirement. Benefits under this plan are based on compensation and years of
service. Pension expenses for the year ended October 31, 1997, included in
Trustees Fees in the Statement of Operations, and accrued pension liability
included in other accrued liabilities, in the Statement of Assets and
Liabilities were as follows:
41
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Accrued
Pension Pension
Expenses Liability
---------- ----------
VUSTI ...... $2,308 $5,524
VUSGS ...... 1,522 3,011
VBF ......... 426 1,272
VSTBF ...... 1,052 2,265
7. Acquisition -- On May 6, 1996, The Vista U.S. Government Securities Fund
acquired the net assets of the Hanover U.S. Government Fund in a tax-free
reorganization. At the time of the reorganization, the acquired Fund had
approximately $81 million in net assets. The Vista Fund had no assets and no
activity prior to the acquisition. The information included in the financial
statements for VUSGS for the period prior to May 6, 1996 relates to the
predecessor Hanover Fund.
Also on May 6, 1996, the Vista Short-Term Bond Fund acquired all the net assets
(approximately $9.5 million) of the Hanover Short Term U.S. Government Fund
pursuant to a plan of reorganization approved by Hanover Fund shareholders in
April of 1996. The acquisition was accomplished by a tax-free exchange of
shares, whereby the Hanover Shareholders surrendered 976,558 shares (net assets
of $9.5 million) of the Hanover Short Term U.S. Government Fund in exchange for
944,428 shares of the Vista Short-Term Bond Fund. The post-merger net assets of
the combined Fund were approximately $46,118,000.
42
<PAGE>
Vista Mutual Funds
Financial Highlights Throughout each period indicated
<TABLE>
<CAPTION>
Vista U.S. Treasury Income Fund**
---------------------------------------------------------------------
Class A
---------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
------------- ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 11.13 $ 11.40 $ 10.60 $ 12.10 $ 11.68
--------- -------- --------- --------- ---------
Income from Investment Operations:
Net Investment Income ................................. 0.662 0.655 0.699 0.646 0.666
Net Gain or (Losses) in Securities (both realized and
unrealized) .......................................... 0.126 ( 0.268) 0.798 ( 1.297) 0.699
---------- --------- ---------- ---------- ----------
Total from Investment Operations ..................... 0.788 0.387 1.497 ( 0.651) 1.365
---------- --------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income .................. 0.657 0.656 0.697 0.646 0.667
Distributions from Capital Gains ..................... -- -- -- 0.203 0.287
---------- --------- ---------- ---------- ----------
Total Distributions ................................. 0.657 0.656 0.697 0.849 0.954
---------- --------- ---------- ---------- ----------
Net Asset Value, End of Period ........................ $ 11.26 $ 11.13 $ 11.40 $ 10.60 $ 12.10
========== ========= ========== ========== ==========
Total Return (1) 7.35% 3.56% 14.59% ( 5.58%) 12.35%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 85,133 $ 111,482 $ 99,109 $ 99,524 $ 92,039
Ratio of Expenses to Average Net Assets # ............ 0.90% 0.90% 0.87% 0.76% 0.75%
Ratio of Net Investment Income to Average Net Assets # 5.97% 5.89% 6.37% 5.74% 5.61%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 1.21% 1.29% 1.40% 1.28% 1.14%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ........................... 5.66% 5.50% 5.84% 5.22% 5.22%
Portfolio Turnover Rate ................................. 179% 103% 164% 163% 296%
<CAPTION>
Class B
-------------------------------------------------------
Year Ended
---------------------------------------- 11/04/93*
Through
10/31/97 10/31/96 10/31/95 10/31/94
------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 11.11 $ 11.37 $ 10.59 $ 11.98
--------- -------- --------- ---------
Income from Investment Operations:
Net Investment Income ................................. 0.580 0.571 0.621 0.592
Net Gain or (Losses) in Securities (both realized and
unrealized) .......................................... 0.125 ( 0.265) 0.797 ( 1.187)
--------- -------- --------- ---------
Total from Investment Operations ..................... 0.705 0.306 1.418 ( 0.595)
--------- --------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income .................. 0.565 0.566 0.638 0.592
Distributions from Capital Gains ..................... -- -- -- 0.203
---------- --------- ---------- ----------
Total Distributions ................................. 0.565 0.566 0.638 0.795
---------- --------- ---------- ----------
Net Asset Value, End of Period ........................$ 11.25 $ 11.11 $ 11.37 $ 10.59
========== ========= ========= =========
Total Return (1) 6.56% 2.82% 13.80% ( 5.18%)
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 10,603 $ 10,764 $ 10,652 $ 5,184
Ratio of Expenses to Average Net Assets # ............ 1.64% 1.64% 1.62% 1.50%
Ratio of Net Investment Income to Average Net Assets # 5.24% 5.12% 5.53% 5.28%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 1.71% 1.79% 1.89% 1.78%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ........................... 5.17% 4.97% 5.26% 5.00%
Portfolio Turnover Rate ................................. 179% 103% 164% 163%
</TABLE>
- -------
(1) Total return figures do not include the effect of any sales load.
* Commencement of offering class of shares.
# Short periods have been annualized.
** Formerly known as the Vista U.S. Government Income Fund.
See notes to financial statements.
43
<PAGE>
Vista Mutual Funds
Financial Highlights
See notes to financial statements.
<TABLE>
<CAPTION>
Vista U.S. Government Securities Fund
--------------------------------------
Class A Class I
------------------------- ------------
Year 05/06/96** Year
Ended Through Ended
10/31/97 10/31/96 10/31/97
------------ ------------ ------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................... $ 9.90 $ 9.62 $ 9.89
---------- -------- --------
Income from Investment Operations:
Net Investment Income .......................................... 0.580 0.259 0.590
Net Gains or Losses in Securities (both realized and unrealized) 0.146 0.255 0.152
---------- -------- --------
Total from Investment Operations .............................. 0.726 0.514 0.742
---------- -------- --------
Less Distributions:
Dividends from Net Investment Income ........................... 0.566 0.234 0.591
Distributions from Capital Gains .............................. -- --
---------- --------
Total Distributions .......................................... 0.566 0.234 0.591
---------- -------- --------
Net Asset Value, End of Period ................................. $ 10.06 $ 9.90 $ 10.04
========== ======== ========
Total Return (1) ................................................ 7.61% 5.41% 7.78%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................ $ 2,277 $ 3,333 $ 52,848
Ratio of Expenses to Average Net Assets # ..................... 1.05% 1.05% 0.85%
Ratio of Net Investment Income to Average Net Assets # ......... 5.61% 5.30% 5.78%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # .............................. 1.57% 1.55% 0.91%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .................................... 5.09% 5.00% 5.72%
Portfolio Turnover Rate .......................................... 569% 101% 569%
<CAPTION>
Year Ended
12/01/95(2) ------------------------- 02/19/93*
Through Through
10/31/96 11/30/95 11/30/94 11/30/93
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ........................... $ 10.18 $ 9.23 $ 10.27 $ 10.00
--------- --------- -------- ---------
Income from Investment Operations:
Net Investment Income .......................................... 0.501 0.560 0.500 0.340
Net Gains or Losses in Securities (both realized and unrealized) ( 0.302) 0.950 ( 0.940) 0.270
--------- --------- -------- ---------
Total from Investment Operations .............................. 0.199 1.510 ( 0.440) 0.610
--------- --------- -------- ---------
Less Distributions:
Dividends from Net Investment Income ........................... 0.489 0.560 0.500 0.340
Distributions from Capital Gains .............................. -- -- 0.100 --
--------- --------- -------- ---------
Total Distributions .......................................... 0.489 0.560 0.600 0.340
--------- --------- -------- ---------
Net Asset Value, End of Period ................................. $ 9.89 $ 10.18 $ 9.23 $ 10.27
========= ========= ======== =========
Total Return (1) ................................................ 2.09% 16.82% 4.41% 6.16%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................ $ 67,980 $ 83,304 $ 83,649 $ 86,089
Ratio of Expenses to Average Net Assets # ..................... 0.85% 0.85% 0.85% 0.85%
Ratio of Net Investment Income to Average Net Assets # ......... 5.55% 5.78% 5.15% 4.26%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # .............................. 1.04% 1.11% 1.04% 1.04%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .................................... 5.36% 5.52% 4.96% 4.07%
Portfolio Turnover Rate .......................................... 101% 220% 134% 37%
</TABLE>
- -------
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
(2) In 1996, the Fund changed its fiscal year end from November 30 to October
31.
See notes to financial statements.
44
<PAGE>
Vista Mutual Funds
Financial Highlights
<TABLE>
<CAPTION>
Vista Bond Fund
---------------------------
Class A
---------------------------
Year 05/06/96**
Ended Through
10/31/97 10/31/96
------------- -------------
<S> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.71 $ 10.39
--------- ---------
Income from Investment Operations:
Net Investment Income .......................................... 0.629 0.288
Net Gains or Losses in Securities (both realized and unrealized) 0.330 0.310
--------- ----------
Total from Investment Operations ................................. 0.959 0.598
--------- ----------
Less Distributions:
Dividends from Net Investment Income ........................... 0.638 0.278
Distributions from Capital Gains ................................. 0.210 --
--------- ----------
Total Distributions ............................................. 0.848 0.278
--------- ----------
Net Asset Value, End of Period .................................... $ 10.82 $ 10.71
========= ==========
Total Return (1) ................................................... 9.45% 5.95%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 26,402 $ 988
Ratio of Expenses to Average Net Assets # ........................ 0.92% 0.90%
Ratio of Net Investment Income to Average Net Assets # ............ 6.11% 5.75%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 1.61% 2.39%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 5.42% 4.26%
Portfolio Turnover Rate .......................................... 823% 122%
<CAPTION>
Class B Class I
--------------------------- --------------------------
Year 05/06/96** Year Ended
Ended Through --------------------------
10/31/97 10/31/96 10/31/97 10/31/96
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.76 $ 10.319 $ 10.71 $ 10.91
--------- --------- --------- --------
Income from Investment Operations:
Net Investment Income .......................................... 0.578 0.233 0.680 0.665
Net Gains or Losses in Securities (both realized and unrealized) 0.323 0.368 0.324 ( 0.148)
--------- --------- --------- --------
Total from Investment Operations ................................. 0.901 0.601 1.004 0.517
--------- --------- --------- --------
Less Distributions:
Dividends from Net Investment Income ........................... 0.580 0.231 0.684 0.662
Distributions from Capital Gains ................................. 0.210 -- 0.210 0.055
--------- --------- --------- --------
Total Distributions ............................................. 0.790 0.231 0.894 0.717
--------- --------- --------- --------
Net Asset Value, End of Period .................................... $ 10.87 $ 10.76 $ 10.82 $ 10.71
========= ========= ========= ========
Total Return (1) ................................................... 8.32% 6.12% 9.93% 4.90%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 1,447 $ 821 $ 18,097 $ 17,777
Ratio of Expenses to Average Net Assets # ........................ 1.64% 1.65% 0.50% 0.36%
Ratio of Net Investment Income to Average Net Assets # ............ 5.26% 4.97% 6.42% 6.23%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 2.07% 2.93% 1.17% 0.87%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 4.83% 3.69% 5.75% 5.72%
Portfolio Turnover Rate .......................................... 823% 122% 823% 122%
<CAPTION>
Class I
--------------------------------------------
Year Ended
--------------------------------------------
10/31/95 10/31/94 10/31/94
------------- -------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.08 $ 11.30 $ 10.76
--------- --------- ---------
Income from Investment Operations:
Net Investment Income .......................................... 0.687 0.667 0.622
Net Gains or Losses in Securities (both realized and unrealized) 0.854 ( 1.140) 0.679
--------- --------- ---------
Total from Investment Operations ................................. 1.541 ( 0.473) 1.251
--------- --------- ---------
Less Distributions:
Dividends from Net Investment Income ........................... 0.687 0.667 0.684
Distributions from Capital Gains ................................. 0.024 0.081 0.026
--------- --------- ---------
Total Distributions ............................................. 0.711 0.748 0.710
--------- --------- ---------
Net Asset Value, End of Period .................................... $ 10.91 $ 10.08 $ 11.30
========= ========= =========
Total Return (1) ................................................... 15.83% ( 4.30%) 12.63%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 57,285 $ 52,439 $ 61,155
Ratio of Expenses to Average Net Assets # ........................ 0.31% 0.31% 0.31%
Ratio of Net Investment Income to Average Net Assets # ............ 6.56% 6.27% 6.15%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 0.87% 0.92% 0.82%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 6.00% 5.66% 5.64%
Portfolio Turnover Rate .......................................... 30% 17% 20%
</TABLE>
- -------
** Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
45
<PAGE>
Vista Mutual Funds
Financial Highlights
<TABLE>
<CAPTION>
Vista Short-Term Bond Fund
--------------------------
Class A
--------------------------
Year 05/06/96**
Ended Through
<S> <C> <C>
10/31/97 10/31/96
------------ -------------
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.10 $ 10.03
-------- ---------
Income from Investment Operations:
Net Investment Income .......................................... 0.580 0.262
Net Gains or Losses in Securities (both realized and unrealized) (0.001) 0.072
--------- ----------
Total from Investment Operations ................................. 0.579 0.334
--------- ----------
Less Distributions:
Dividends from Net Investment Income ........................... 0.579 0.264
Distributions from Capital Gains ................................. -- --
--------- ----------
Total Distributions ............................................. 0.579 0.264
--------- ----------
Net Asset Value, End of Period .................................... $ 10.10 $ 10.10
--------- ----------
Total Return (1) ................................................... 5.91% 3.41%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 9,847 $ 9,416
Ratio of Expenses to Average Net Assets # ........................ 0.75% 0.75%
Ratio of Net Investment Income to Average Net Assets # ............ 5.76% 5.28%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 1.31% 1.45%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 5.20% 4.58%
Portfolio Turnover Rate .......................................... 471% 158%
<CAPTION>
Institutional Class
-----------------------------------------------------
Year Ended
-----------------------------------------------------
<S> <C> <C> <C> <C>
10/31/97 10/31/96 10/31/95 10/31/94
-------- -------- -------- --------
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.12 $ 10.08 $ 9.91 $ 10.14
--------- ---------- ---------- ---------
Income from Investment Operations:
Net Investment Income .......................................... 0.616 0.561 0.542 0.465
Net Gains or Losses in Securities (both realized and unrealized) (0.005) 0.035 0.168 (0.230)
--------- ---------- ---------- ---------
Total from Investment Operations ................................. 0.611 0.596 0.710 0.235
--------- ---------- ---------- ---------
Less Distributions:
Dividends from Net Investment Income ........................... 0.621 0556 0.542 0.465
Distributions from Capital Gains ................................. -- -- -- --
--------- ---------- ---------- ---------
Total Distributions ............................................. 0.621 0.556 0.542 0.465
--------- ---------- ---------- ---------
Net Asset Value, End of Period .................................... $ 10.11 $ 10.12 $ 10.08 $ 9.91
--------- ---------- ---------- ---------
Total Return (1) ................................................... 6.23% 6.10% 7.37% 2.38%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 37,788 $ 43,242 $ 36,246 $ 35,987
Ratio of Expenses to Average Net Assets # ........................ 0.42% 0.35% 0.37% 0.31%
Ratio of Net Investment Income to Average Net Assets # ............ 6.08% 5.59% 5.41% 4.59%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 0.93% 0.89% 0.90% 0.86%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 5.57% 5.05% 4.83% 4.05%
Portfolio Turnover Rate .......................................... 471% 158% 62% 44%
<CAPTION>
<S> <C>
10/31/93
--------
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 10.26
---------
Income from Investment Operations:
Net Investment Income .......................................... 0.489
Net Gains or Losses in Securities (both realized and unrealized) ( 0.073)
---------
Total from Investment Operations ................................. 0.416
---------
Less Distributions:
Dividends from Net Investment Income ........................... 0.536
Distributions from Capital Gains ................................. --
---------
Total Distributions ............................................. 0.536
---------
Net Asset Value, End of Period .................................... $ 10.14
---------
Total Return (1) ................................................... 4.73%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 70,963
Ratio of Expenses to Average Net Assets # ........................ 0.31%
Ratio of Net Investment Income to Average Net Assets # ............ 5.25%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 0.70%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 4.80%
Portfolio Turnover Rate .......................................... 17%
</TABLE>
- -------
** Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
46
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Mutual Fund Group
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Vista U.S. Treasury Income Fund,
Vista U.S. Government Securities Fund, Vista Bond Fund and Vista Short-Term Bond
Fund (separate portfolios of Mutual Fund Group, hereafter referred to as the
"Trust") at October 31, 1997, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended (for the year then ended and the period December
1, 1995 through October 31, 1996 for Vista U.S. Government Securities Fund) and
the financial highlights for each of the periods presented (for the year ended
October 31, 1997 and the period December 1, 1995 through October 31, 1996 for
Vista U.S. Government Securities Fund), in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above. The financial statements of Vista U.S.
Government Securities Fund for each of the two years in the period ended
November 30, 1995 and the period February 19, 1993 (commencement of operations)
through November 30, 1993 were audited by other independent accountants whose
report dated January 19, 1996 expressed an unqualified opinion on those
financial statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
47
<PAGE>
Unaudited
Vista U.S. Treasury Income Fund
Vista U.S. Government Securities Fund
Vista Bond Fund
Vista Short-Term Bond Fund
Certain tax information regarding the Vista Mutual Funds is required to be
provided to shareholders based upon the Funds' income and distributions for the
taxable year ended October 31, 1997. The information and distributions reported
in this letter may differ from the information and distributions taxable to the
shareholders for the calendar year ending December 31, 1997. The information
necessary to complete your income tax returns for the calendar year ending
December 31, 1997 will be received under separate cover.
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997.
The following represents the source and percentage of income earned from
government obligations and the long-term capital gains distributed per share by
the Funds:
<TABLE>
<CAPTION>
Government
U.S. Treasury National Mortgage Federal Home
Vista Fund Obligations Association Loan Bank
- ---------------------------- --------------- ------------------- --------------
<S> <C> <C> <C>
Vista U.S. Treasury Income 94.76% -- 0.23%
U.S. Government Securities 42.91% 13.07% --
Bond 25.22% 6.29% --
Short-Term Bond 23.45% 9.34% 0.26%
<CAPTION>
Long-Term
Federal Home Federal National Student Loan Capital Gains
Loan Mortgage Mortgage Marketing Distribution
Vista Fund Corporation Association Association Per Share
- ---------------------------- --------------- ------------------ -------------- --------------
<S> <C> <C> <C> <C>
Vista U.S. Treasury Income 0.03% 0.58% 0.04% --
U.S. Government Securities 10.11% 23.03% -- --
Bond 10.24% 9.05% -- $0.21
Short-Term Bond 11.14% 12.76% 0.11% --
</TABLE>
48
<PAGE>
(back cover)
Vista Service Center
P.O. BOX 419392
Kansas City, MO 64179
Investment Adviser, Administrator,
Shareholder and Fund Servicing Agent
and Custodian
The Chase Manhattan Bank
Distributor
Vista Fund Distributors, Inc.
Transfer Agent
DST Systems, Inc.
Legal Counsel
Simpson Thacher & Bartlett
Independent Accountants
Price Waterhouse LLP
Vista Mutual Funds are distributed by Vista Fund Distributors, Inc. which is
unaffiliated with The Chase Manhattan Bank. Chase and its respective affiliates
receive compensation from the Vista Funds for providing investment advisory and
other services.
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
funds unless preceded or accompanied by a prospectus.
To obtain a prospectus for any of the Vista Funds, call 1-800-34-VISTA. The
prospectus contains more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
VBND-2-1297
<PAGE>
ANNUAL REPORT
VISTA AMERICAN VALUE FUND
October 31, 1997
<PAGE>
Vista Family of Mutual Funds
CHAIRMAN'S LETTER
Dear Shareholder:
We are pleased to present this Annual Report for the Vista American Value Fund
for the year ended October 31, 1997.
Growing Economy, Low Inflation Drive Equities Higher
The U.S. economy, in one of the longest expansions in history, set the stage for
solid stock market gains during the reporting period. The market benefited from
corporate profit growth, low inflation, and continuing inflows from both U.S.
and overseas investors. Although the U.S. stocks showed slightly higher gains
than small- and mid-capitalization issues, smaller issues close the gap later in
the year a investors focused on compelling valuations and earnings. While U.S.
stocks were not immune to October's global correction caused by economic and
currency instability in Asia, prices recovered as investors recognized the
enduring strength of U.S. economic fundamentals.
U.S. Bond Markets Become Safe Haven
U.S. bond markets were driven by an acute sensitivity to whether the high levels
of economic growth would lead to a resurgence of inflation. While this caused
bond investors to react to each economic report, inflation remained muted. As
the year ended. U.S. bond markets rallied as global investors turned to U.S.
Treasury securities in light of global stock market instability.
After a three year period in which U.S. stock prices doubled, the October
volatility served a reminder that equity markets are inherently volatile over
the short term. It's important for you to understand the potential risks and
returns in an investment program based on your time horizon and risk tolerance.
All of us at Vista look forward to continuing to help you work toward your
financial goals.
Sincerely yours,
/s/ Fergus Reid
Fergus Reid
Chairman
<PAGE>
Vista American Value Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
==============================================================================
Common Stock - 89.0%
- ------------------------------------------------------------------------------
Aerospace - 2.3%
5,000 Raytheon Co. $271,250
--------
Agricultural Production / Services - 2.4%
12,600 Archer-Daniels-Midland Co. 280,350
-------
Automotive - 1.9%
7,000 Genuine Parts Co. 219,187
-------
Banking - 6.8%
4,270 Banc One Corp. 222,574
2,800 BankAmerica Corp. 200,200
4,000 H. F. Ahmanson & Co 236,000
1,200 J. P. Morgan & Company Inc. 131,700
-------
790,474
-------
Computer Software - 2.0%
6,000 Electronic Data Systems Corp. 232,125
-------
Computers / Computer Hardware - 1.1%
2,000 Hewlett-Packard Co. 123,375
-------
Consumer Products - 2.0%
7,500 Fleetwood Enterprises, Inc. 227,344
-------
Diversified - 4.7%
3,400 Cognizant Corp. 133,237
4,500 Fluor Corp. 185,063
5,000 Tenneco Inc. 224,688
-------
542,988
-------
Electronics / Electrical Equipment - 5.7%
10,000 EG&G, Inc. 206,875
4,000 Motorola, Inc. 247,000
4,000 Tecumseh Products Co., Class A 207,500
-------
661,375
-------
Environmental Services - 1.4%
7,000 Waste Management Inc. 163,625
-------
Financial Services - 2.7%
6,400 Federal National Mortgage Association 310,000
-------
See notes to financial statements.
- --------------------------------------------------------------------------------
1
<PAGE>
Vista American Value Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
================================================================================
Health Care / Health Care Services - 1.1%
4,400 Bard (C.R.), Inc. $122,100
--------
Insurance - 5.5%
5,000 Allstate Corp. 414,687
4,800 Safeco Corp. 228,600
-------
643,287
-------
Manufacturing - 3.7%
6,500 ITT Industries, Inc. 205,156
8,200 Zero Corp. 220,375
-------
425,531
-------
Metals / Mining - 1.3%
7,400 Cyprus Amax Minerals Co. 154,937
-------
Oil & Gas - 10.3%
2,400 Atlantic Richfield Co. (ARCO) 197,550
10,000 Enron Oil & Gas Co. 210,625
9,500 Occidental Petroleum Corp. 264,813
5,600 Phillips Petroleum Co. 270,900
10,000 Union Pacific Resources Group, Inc. 246,250
-------
1,190,138
-------
Paper / Forest Products - 8.9%
11,500 Longview Fibre Co. 182,563
15,000 Louisiana-Pacific Corp. 315,000
5,000 Potlatch Corp. 249,375
3,000 St. Joe Paper Co. 285,750
-------
1,032,688
-------
Pharmaceuticals - 2.3%
3,000 Merck & Company, Inc. 267,750
-------
Printing & Publishing - 1.9%
4,000 Tribune Co. 220,500
-------
Real Estate Investment Trust - 2.3%
9,674 BRE Properties, Inc., Class A 265,430
-------
Retailing - 9.1%
7,000 Albertson's, Inc. 258,125
4,000 Dayton-Hudson Corp. 251,250
4,600 Dillards Inc., Class A 176,525
10,000 SUPERVALU, Inc. 366,250
-------
1,052,150
-------
See notes to financial statements.
- --------------------------------------------------------------------------------
2
<PAGE>
Vista American Value Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
================================================================================
Shipping / Transportation - 1.7%
6,000 Norfolk Southern Corp. $192,750
--------
Telecommunications - 2.5%
6,000 AT&T Corp. 293,625
-------
Tire & Rubber - 2.2%
4,000 Goodyear Tire & Rubber, Inc. 250,500
-------
Utilities - 1.5%
8,000 Central & South West Corp. 172,500
-------
Wholesaling - 1.7%
7,200 Reliance Steel & Aluminum Co. 197,550
- --------------------------------------------------------------------------------
Total Common Stock 10,303,529
(Cost $7,731,397)
- --------------------------------------------------------------------------------
Principal
Amount
================================================================================
Corporate Notes & Bonds FRN - 3.2%
- --------------------------------------------------------------------------------
Financial Services - 3.2%
$370,500 Ford Motor Credit Corp., 5.50%, 11/04/97 370,330
(Cost $370,330)
================================================================================
Total Long-Term Investments 10,673,859
(Cost $8,101,727)
================================================================================
Short-Term Investments - 8.3%
================================================================================
Commercial Paper - 3.2%
368,400 General Electric Capital Corp., 5.52%, 11/12/97 367,779
-------
U.S. Treasury Securities - 5.1%
U.S. Treasury Bills,
263,000 4.53%, 11/20/97 262,371
13,000 4.60%, 11/20/97 12,968
48,000 4.75%, 11/20/97 47,880
273,000 4.77%, 11/20/97 272,313
-------
595,532
- --------------------------------------------------------------------------------
Total Short-Term Investments 963,311
(Cost $963,311)
================================================================================
Total Investments 100.5% $11,637,170
(Cost $9,065,038)
================================================================================
FRN = Floating Rate Notes: the maturity date shown is the next interest reset
date; the rate shown is the rate in effect at October 31, 1997
See notes to financial statements.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
Vista American Value Fund
Statement of Assets and Liabilities October 31, 1997
ASSETS:
Investment securities, at value (Note 1) $11,637,170
Cash 575
Receivables:
Interest and dividends 10,687
Fund shares sold 10,000
Other assets 203
-------------
Total assets 11,658,635
-------------
LIABILITIES:
Accrued liabilities: (Note 2)
Administration fees 1,533
Distribution fees 102
Investment advisory fees 1,022
Shareholder servicing fees 920
Custodian 7,264
Other 70,367
-------------
Total Liabilities 81,208
-------------
NET ASSETS:
Paid in capital 7,566,673
Accumulated undistributed net investment income 143,569
Accumulated undistributed net realized gain
on investment transactions 1,295,053
Net unrealized appreciation of investments 2,572,132
-------------
Net Assets: $11,577,427
=============
Shares of beneficial interest outstanding ($.001 par
value; unlimited number of shares authorized): 737,783
Net asset value, maximum offering price
and redemption price per share* $15.69
------
Cost of Investments $9,065,038
-------------
* Net assets/shares outstanding
See notes to financial statements.
- --------------------------------------------------------------------------------
4
<PAGE>
Vista American Value Fund
Statement of Operations
For the year ended October 31, 1997
INVESTMENT INCOME:
Dividend $238,493
Interest 64,864
-----------
Total investment income 303,357
-----------
EXPENSES: (Note 2)
Administration fees 16,153
Distribution fees 26,921
Investment Advisory fees 75,380
Shareholder servicing fees 26,921
Custodian fees 16,895
Printing and postage 6,059
Professional fees 18,602
Registration costs 40,624
Transfer agent fees 23,373
Trustees fees and expenses 538
Other 12,480
-----------
Total expenses 263,946
Less amounts waived (Note 2) 121,801
-----------
Net expenses 142,145
-----------
Net investment income 161,212
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 1,299,496
Change in net unrealized appreciation on investments 600,844
-----------
Net realized and unrealized gain on investments 1,900,340
-----------
Net increase in net assets from operations $2,061,552
===========
See notes to financial statements.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
Vista American Value Fund
Statements of Changes in Net Assets
For the periods indicated
----------------------------
Year 12/01/95*
Ended Through
10/31/97 10/31/96
----------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $161,212 $106,948
Net realized gain on investments 1,299,496 500,892
Change in net unrealized appreciation
on investments 600,844 716,130
--------------------------
Increase in net assets from operations 2,061,552 1,323,970
--------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1):
Net investment income (72,761) (137,004)
Net realized gain on investment transactions (378,357) (184,857)
--------------------------
Total dividends and distributions (451,118) (321,861)
--------------------------
Increase from capital share
transactions (Note 5) 357,593 208,701
--------------------------
Total increase in net assets 1,968,027 1,210,810
NET ASSETS:
Beginning of period 9,609,400 8,398,590
--------------------------
End of period $11,577,427 $9,609,400
==========================
* In 1996, the fund changed its fiscal year end from November 30 to October 31.
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
VISTA AMERICAN VALUE FUND
1. Organization and Significant Accounting Policies - Mutual Fund Group ( the
"Trust" ) was organized on May 11, 1987 as a Massachusetts Business Trust, and
is registered under the Investment Company Act of 1940, as amended, the ("1940
Act") as an open-end management investment company. Vista American Value Fund,
the "Fund", is a separate series of The Trust. The Fund offers one class of
shares only.
The Chase Manhattan Corporation has entered into an agreement whereby it will
sell its 50% interest in Van Deventer & Hoch to Crestline Capital Partners L.P.
Subject to shareholder approval and the satisfaction of certain other
conditions, the Fund will be reorganized into a new mutual fund portfolio
managed by Van Deventer & Hoch. It is anticipated that this reorganization will
be consummated in early 1998.
The following is a summary of significant accounting policies followed by the
Fund:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
1. Valuation of investments - Equity securities are valued at the last sale
price on the exchange on which they are primarily traded, including the NASDAQ
National Market. Securities for which sale prices are not available and other
over-the-counter securities are valued at the last quoted bid price. Bonds and
other fixed income securities, other than short-term obligations, including
listed issues, are valued on the basis of valuations supplied by pricing
services or by matrix pricing systems of a major dealer in bonds. Short-term
debt securities with 61 days or more to maturity at time of purchase are valued,
through the 61st day prior to maturity, at market value based on quotations
obtained from market makers or other appropriate sources; thereafter, the value
on the 61st day is amortized on a straight-line basis over the remaining number
of days to maturity. Short-term investments with 60 days or less to maturity at
time of purchase are valued at amortized cost, which approximates market.
Portfolio securities 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
Trustees.
2. Repurchase agreements -- It is the Trust's policy that repurchase agreements
are fully collateralized by U.S. Treasury and Government Agency securities. All
collateral is held by the Trust's custodian bank, subcustodian, or a bank with
which the custodian bank has entered into a subcustodian agreement, or is
segregated in the Federal Reserve Book Entry System. In connection with
transactions in repurchase agreements, if the seller defaults and the value of
the collateral declines, or if the seller enters an insolvency proceeding,
realization of the collateral by the Trust may be delayed or limited.
7
<PAGE>
3. Security transactions and investment income - Investment transactions are
accounted for on the trade date (the date the order to buy or sell is executed).
Securities gains and losses are calculated on the identified cost basis.
Interest income is accrued as earned. Dividend income is recorded on the
ex-dividend date.
4. Federal income taxes - The Fund is treated as a separate taxable entity for
Federal income tax purposes. The Trust's policy is to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders all of its distributable net investment income, and
net realized gain on investments. In addition, the Trust intends to make
distributions as required to avoid excise taxes. Accordingly, no provision for
Federal income or excise tax is necessary.
5. Distributions to shareholders - Dividends and distributions paid to
shareholders are recorded on the ex-dividend date. The amount of dividends and
distributions from net investment income and net realized capital gains is
determined in accordance with Federal income tax regulations, which may differ
from generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature, (i.e., that they result from other than
timing of recognition-"temporary differences") such amounts are reclassified
within the capital accounts based on their Federal tax-basis treatment. The
adjustments for the Fund relate primarily to the character for tax purposes of
certain short-term gains or losses. Dividends and distributions which exceed net
investment income or net realized capital gains for financial reporting purposes
but not for tax purposes are reported as distributions in excess of net
investment income or net realized capital gains.
6. Expenses - Expenses directly attributable to a Fund are charged to that Fund;
other expenses are allocated proportionately among each Fund within the Trust in
relation to the net assets of each Fund or on another reasonable basis.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to an investment advisory agreement, The
Chase Manhattan Bank, ( "Chase" or the "Advisor" ) acts as the Investment
Advisor to the Fund. Chase is a direct wholly owned subsidiary of The Chase
Manhattan Corporation. As Investment Advisor, Chase supervises the investments
of the Fund and for such services is paid a fee. The fee is computed daily and
paid monthly at an annual rate equal to 0.70% of the Fund's average daily net
assets. For the year ended October 31, 1997, the Advisor voluntarily waived
$66,883 of its fees.
VanDeventer and Hoch, a registered investment advisor is the sub-investment
advisor for the Fund pursuant to a Sub-lnvestment Advisory Agreement with Chase
and is paid a fee by Chase at an annual rate equal to 0.35% of the Fund's
average daily net assets.
8
<PAGE>
B. Shareholder servicing fees - The Trust has adopted an Administrative Services
Plan which, among other things, provides that the Trust on behalf of the Fund
may obtain the services of one or more Shareholder Servicing Agents. For its
services, the Shareholder Servicing Agents receive a fee that is computed daily
and paid monthly at an annual rate equal to 0.25% of the average daily net
assets of the Fund. Chase is the sole shareholder serving agent of the Fund.
For the year ended October 31, 1997, the Shareholder Servicing Agents have
voluntarily waived $23,326 of their fees.
C. Distribution and sub-administration fees - Pursuant to a Distribution and
Sub-Administration Agreement, Vista Fund Distributors, Inc., (the "Distributor")
a wholly owned subsidiary of The BISYS Group, Inc., acts as the Trust's
exclusive underwriter and promotes and arranges for the sale of the Fund's
shares. In addition, the Distributor provides certain sub-administration
services to the Trust, including providing officers, clerical staff, and office
space for an annual fee of 0.05% of the average daily net assets of the Fund.
The Trustees have adopted a Distribution Plan ( the "Distribution Plan" ) for
the Fund in accordance with Rule 12b-1 under the 1940 Act. The Distribution Plan
provides that the Fund shall pay distribution fees, including payments to the
Distributor, at annual rates not to exceed 0.25% of the average daily net assets
of the Fund.
For the year ended October 31, 1997, the Distributor voluntarily waived $26,921
of distribution fees.
D. Administration fee--Pursuant to an Administration Agreement, Chase, ( the
"Administrator") provides certain administration services to the Trust. For
these services and facilities, the Administrator receives from the Fund a fee
computed at the annual rate equal to 0.10% of the Fund's average daily net
assets. The Administrator voluntarily waived $ 4,671 of the administration fees.
E. Other - Certain officers of the Trust are officers of Vista Fund
Distributors, Inc., or of its parent corporation, BISYS.
Chase provides portfolio accounting and custody services for the Fund.
Compensation for such services is presented in the Statement of Operations as
custodian fees.
3. Investment Transactions--For the year ended October 31, 1997, purchases and
sales of investments, (excluding short-term investments), were as follows:
Purchases (excluding U.S. Government) $3,548,974
Sales (excluding U.S. Government) 3,933,511
9
<PAGE>
4. Federal Income Tax Matters- For Federal income tax purposes, the cost and
unrealized appreciation (depreciation) in value of the investment securities at
October 31, 1997, are as follows:
Aggregate cost $9,065,038
===========
Gross unrealized appreciation $2,808,640
Gross unrealized depreciation (236,508)
-----------
Net unrealized appreciation $2,572,132
===========
5. Transactions in Shares of Beneficial Interest - Transactions in Shares of
Beneficial Interest were as follows:
- --------------------------------------------------------------------------------
Year Ended 12/01/95 through
October 31, 1997 10/31/96 #
Amount Shares Amount Shares
- -------------------------------------------------------------------------------
Shares sold $1,184,581 81,628 $1,539,038 122,851
Shares issued in
reinvestment of 441,671 32,814 316,992 25,852
distributions.
Shares redeemed (1,268,659) (89,019) (1,647,329) (130,112)
--------------------------------------------------------
Net increase
(decrease) in Trust
shares outstanding $357,593 25,423 $208,701 18,591
=========================================================
- --------------------------------------------------------------------------------
# - In 1996, the Fund changed its fiscal year end to October 31.
6. Retirement Plan--The Trust has adopted an unfunded noncontributory defined
benefit pension plan covering all independent trustees of the Trust who will
have served as an independent trustee for at least five years at the time of
retirement. Benefits under this plan are based on compensation and years of
service. Pension expenses for the year ended October 31, 1997, included in
Trustees Fees and Expenses in the Statement of Operations and accrued pension
liability included in other accrued liabilities in the Statement of Assets and
Liabilities were $203 and $588, respectively.
7. Mergers--On May 6, 1996, The Vista American Value Fund acquired the net
assets of the Hanover American Value Fund in a tax-free reorganization. At the
time of the reorganization, the acquired Fund had approximately $8.4 million in
net assets. The Vista Fund had no assets and no activity prior to the
acquisition. The information included in the financial statements for the Fund
for the period prior to May 6, 1996 relates to the predecessor Hanover Fund.
10
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
Vista American Value Fund
-------- -------- --------
Year 12/1/95## 2/3/95*
Ended Through Through
10/31/97 10/31/96 11/30/95
-------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, Beginning of Period $13.49 $12.11 $10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.218 0.152 0.180
Net gains or losses in securities
(both realized and unrealized) 2.602 1.694 2.000
------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 2.820 1.846 2.180
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income 0.100 0.196 0.070
Distributions from capital gains 0.520 0.270 --
------- ------- -------
TOTAL DISTRIBUTIONS 0.620 0.466 0.070
------- ------- -------
NET ASSET VALUE, END OF PERIOD $15.69 $13.49 $12.11
======= ======= =======
TOTAL RETURN 21.67% 15.76% 21.80%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000 omitted) $11,577 $ 9,609 $ 8,399
Ratios to Average Net Assets:#
Ratio of Expenses 1.32% 1.37% 1.23%
Ratio of Net Investment Income 1.50% 1.38% 1.97%
Ratio of expenses without waivers and
assumption of expenses 2.45% 2.52% 2.03%
Ratio of net investment income without
waivers and assumption of expenses 0.37% 0.23% 1.17%
Portfolio Turnover Rate 37% 25% 11%
Average commission rate per share $0.0664 $0.0793 $0.0000
* Commencement of operations.
# Short periods have been annualized
## In 1996, the Fund changed its fiscal year end from November 30 to
October 31.
See notes to financial statements.
11
<PAGE>
To the Trustees and Shareholders of
Mutual Fund Group
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Vista American Value Fund (a
separate portfolio of Mutual Fund Group, hereafter referred to as the "Trust")
at October 31, 1997, the results of its operations for the year then ended, the
changes in its net assets for the year then ended and for the period December 1,
1995 through October 31, 1996 and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1997 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
12
<PAGE>
(Unaudited)
Certain tax information regarding the Vista Mutual Funds is required to be
provided to shareholders based upon the Funds' income and distributions for the
taxable year ended October 31, 1997. The information and distributions reported
in this letter may differ from the information and distributions taxable to the
shareholders for the calendar year ending December 31, 1997. The information
necessary to complete your income tax returns for the year ending December 31,
1997 will be received under separate cover.
FOR THE FISCAL YEAR ENDING OCTOBER 31, 1997.
The following represents the source and percentage of income earned from
government obligations, the percentage of distributions eligible for the
dividends received deduction and the Long-Term capital gains distribution per
share by the Fund:
Vista Fund U.S. Treasury Obligations Dividends Received Deduction
------------------------- ----------------------------
American Value ............. 8.19 % 100.00%
13
<PAGE>
EQUITY FUNDS
[background graphic of hills and trees]
ANNUAL
REPORT
-----------------------------------
Vista. Setting the Global Standard.
VISTA SMALL CAP EQUITY FUND
VISTA LARGE CAP EQUITY FUND
VISTA BALANCED FUND
[Vista logo]
VISTA
FAMILY OF MUTUAL FUNDS
MANAGED BY CHASE MANHATTAN
October 31, 1997
<PAGE>
[background graphic of hills]
HIGHLIGHTS
Economic expansion in the U.S. set the stage for solid stock market gains during
the reporting period.
[bullet] The stock market benefited from corporate profit growth, low inflation
and continuing inflows from U.S. and overseas investors.
[bullet] Bond markets, while sensitive to whether the high levels of economic
growth would lead to a resurgence of inflation, rallied as global
investors turned to U.S. Treasury securities in light of global stock
market instability.
CONTENTS
Chairman's Letter 3
Vista Small Cap Equity Fund
Fund Commentary [bullet] Portfolio of Investments 4
Vista Large Cap Equity Fund
Fund Commentary [bullet] Portfolio of Investments 16
Vista Balanced Fund
Fund Commentary [bullet] Portfolio of Investments 25
Financial Statements 40
Notes to Financial Statements 43
Financial Highlights 51
Report of Independent Accountants 54
[boxed text]
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY, THE
CHASE MANHATTAN BANK, AND THE SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN MUTUAL FUNDS
INVOLVE RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
Vista Family of Mutual Funds
CHAIRMAN'S LETTER
December 10, 1997
Dear Shareholder:
We are pleased to present this Annual Report for the following Vista U.S. Equity
Funds for the year ended October 31, 1997:
[bullet] Small Cap Equity Fund
[bullet] Large Cap Equity Fund
[bullet] Balanced Fund
Growing Economy, Low Inflation Drive Equities Higher
The U.S. economy, in one of the longest expansions in history, set the stage for
solid stock market gains during the reporting period. The market benefited from
corporate profit growth, low inflation and continuing inflows from both U.S. and
overseas investors. Although the largest U.S. stocks showed slightly higher
gains than small- and mid-capitalization issues, smaller issues closed the gap
later in the year as investors focused on compelling valuations and earnings.
While U.S. stocks were not immune to October's global correction caused by
economic and currency instability in Asia, prices recovered as investors
recognized the enduring strength of U.S. economic fundamentals.
U.S. Bond Markets Become Safe Haven
U.S. bond markets were driven by an acute sensitivity to whether the high levels
of economic growth would lead to a resurgence of inflation. While this caused
bond investors to react to each economic report, inflation remained muted. As
the year ended, U.S. bond markets rallied as global investors turned to U.S.
Treasury securities in light of global stock market instability.
After a three-year period in which U.S. stock prices doubled, the October
volatility served as a reminder that equity markets are inherently volatile over
the short term. It's important for you to understand the potential risks and
returns in an investment program based on your time horizon and risk tolerance.
All of us at Vista look forward to continuing to help you work toward your
financial goals.
Sincerely yours,
/s/Fergus Reid
Fergus Reid
Chairman
3
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP EQUITY FUND
FUND FACTS
Objective: Capital Growth
Primary investments: Small Cap Common Stocks
Suggested investment
time frame: Long-Term
Market benchmark: Russell 2000 Index
Lipper Funds category: Small Company Growth Funds Average
Class A Class B Class I
---------------- ---------------- ---------------
Inception date: 12/20/94 3/28/95 5/7/96
Newspaper symbol: Sm Cap Sm Cap Sm Cap
As of October 31, 1997
Net assets: $174.0 million $100.3 million $307.1 million
PERFORMANCE
Vista Small Cap Equity Fund, which seeks to provide capital growth by investing
in small-cap common stocks, had a total return of 24.61% (Class A shares,
without sales charges) for the year ended October 31, 1997.
STRATEGY
For small cap stocks, the year can be broken into two distinct periods. The
first, lasting through April of 1997, was one of underperformance and slim
returns as investors favored larger-company stocks, especially during the time
around the March 25th interest rate hike. The management team took advantage of
falling stock prices to purchase what it believed were high-quality stocks at
attractive prices, particularly within the technology and health care sectors.
The second period starting in May, was one of small cap leadership, proving this
buying to be beneficial as the Fund's technology holdings performed well. As
many technology companies reached their price targets, the investment team sold
them and began shifting assets into consumer services and health care, which
trailed during the small cap rally. This stance left the Fund well positioned
for the October correction since technology stocks were the hardest hit among
all major industry sectors.
4
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP EQUITY FUND
OUTLOOK
A key aspect of the small cap turnaround has been the improving earnings of
small caps relative to their larger peers. This combined with attractive
valuations, leads the investment team to expect that small caps will remain the
most attractive segment of the U.S. stock market over the next 12 to 18 months.
Given the belief that economic growth will slow, it expects to emphasize
companies which, in its view, are undervalued and can maintain their earnings
growth in a slower-growth environment.
VISTA SMALL CAP EQUITY FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 99.61%
Cash/Other 0.39%
VISTA SMALL CAP EQUITY FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[pie chart]
Advertising 2.31%
Automotive 2.07%
Banking 8.77%
Business Services 6.87%
Computer Software 7.64%
Construction Materials 3.72%
Electronics/Electrical Equipment 9.72%
Financial Services 4.06%
Food/Beverages Products 2.24%
Health Care/Health Care Services 8.59%
Insurance 3.47%
Machinery & Engineering Equipment 2.43%
Manufacturing 2.90%
Oil & Gas 3.91%
Real Estate Investment Trusts 2.31%
Retailing 5.66%
US Government Agency Obligations 4.23%
Other 19.10%
5
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP EQUITY FUND
TOP 10 HOLDINGS AS OF 10/31/97
Company
- -------------------------------------------------------------------------------
Deutsche Bank AG (US) 4.05%
Federal National Mortgage
Association, Discount Notes 3.39%
Newpark Res Inc. 1.62%
Hyperion Software Corp. 1.58%
Camco Intl. Inc. 1.43%
Universal Health Svc. Cl. B 1.43%
Outdoor Systems Inc. 1.38%
Cort Business Svc Corp. 1.36%
American Bankers Ins.
Group Inc. 1.34%
Waters Corp. 1.34%
Top 10 holdings comprised 18.92% of Fund's market value of investments. Fund
holdings are subject to change at any time.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
One Year 24.61% 18.69%
Five Years N/A N/A
Since Inception (12/20/94) 36.33% 34.03%
Class B Shares Without CDSC With CDSC*
One Year 23.84% 18.84%
Five Years N/A N/A
Since Inception (12/20/94)+ 35.44% 32.44%
Class I Shares
One Year 25.15%
Five Years N/A
Since Inception (12/20/94)+ 36.61%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
* Assumes 5% CDSC for the one year period and a 3% CDSC for the period since
inception.
+ The Fund commenced operations on 12/20/94. Class B Shares and Class I Shares
were introduced on 3/28/95 and 5/7/96, respectively. Investors should note that
the information presented for Class B and Class I Shares prior to their
introduction is based on historical expenses of the predecessor Class A Shares,
which are lower than the actual expenses of the Class B Shares and higher than
Class I Shares. Additionally, annualized figures have been restated to reflect
the maximum 5% contingent deferred sales charge that applies to the Fund's B
Shares.
6
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP EQUITY FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA SMALL CAP EQUITY FUND - CLASS A
AND ITS KEY BENCHMARKS
Vista Small Cap Lipper Small Company
Equity Fund Growth Funds Avg. Russell 2000 Index
12/94 9525 10000 10000
10/95 13869 12451 12011
10/96 17899 15125 14008
10/31/97 23169 19152 18118
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
shares of Vista Small Cap Equity Fund, the Lipper Small Company Growth Funds
Average and the Russell 2000 Index from December 20, 1994 to October 31, 1997.
The performance of the Fund assumes the reinvestment of all dividends and
capital gains and includes a 4.75% sales charge. The performance of the average
and the index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark.
The Lipper Small Company Growth Funds Average represents the average performance
of a universe of 543 actively managed small company funds. Lipper is an
independent mutual fund performance monitor whose results are based on total
return and do not reflect a sales charge.
The Russell 2000 Index tracks the shares of 2,000 small-capitalization
companies. The index is unmanaged and reflects the reinvestment of dividends.
An individual cannot invest directly in the index.
Small capitalization funds typically carry more risk than stock funds investing
in well-established "blue-chip" companies since smaller companies generally have
a higher risk of failure. Historically, smaller companies' stock has experienced
a greater degree of market volatility than the average stock.
7
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- 89.5%
- ------------------------------------------------------------------
Common Stock -- 89.4%
---------------------
Advertising -- 2.3%
264,375 Outdoor Systems, Inc. $ 8,129,531
130,000 Universal Outdoor Holdings, Inc. 5,492,500
------------
13,622,031
------------
Aerospace -- 1.1%
113,500 Precision Castparts Corp. 6,675,219
------------
Airlines -- 0.6%
75,000 Continental Airlines, Inc., Class B* 3,243,750
------------
Automotive -- 2.1%
190,500 Dura Automotive Systems, Inc. 5,905,500
150,000 Tower Automotive, Inc. 6,281,250
------------
12,186,750
------------
Banking -- 4.8%
115,000 Cullen/Frost Bankers, Inc. 5,807,500
155,000 North Fork Bancorporation, Inc. 4,562,812
115,000 Peoples Heritage Financial Group,
Inc. 4,528,125
120,373 TCF Financial Corp. 6,846,214
156,125 Zions Bancorporation 6,069,359
------------
27,814,010
------------
Broadcasting -- 1.4%
400,000 Groupe AB, SA ADR (France) 2,975,000
80,000 Heftel Broadcasting Corp. 5,320,000
------------
8,295,000
------------
Business Services -- 7.0%
75,000 CORESTAFF, Inc.* 1,856,250
220,000 CORT Business Services Corp. 8,002,500
70,000 DeVRY, Inc. 1,846,250
30,300 Fair Issac & Company, Inc. 1,316,156
125,000 Fiserv, Inc. 5,593,750
263,000 Interim Services, Inc. 6,887,313
107,500 ITT Educational Services, Inc.* 2,593,437
160,000 Lason Holdings, Inc. 4,130,000
117,500 NCO Group, Inc. 4,230,000
250,000 PMT Services, Inc. 4,031,250
------------
40,486,906
------------
See notes to financial statements.
8
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------------
Chemicals -- 0.7%
110,000 OM Group, Inc. $ 4,152,500
------------
Computer Software -- 7.7%
135,000 American Management Systems, Inc. 2,919,375
96,700 Aspen Technologies, Inc.* 3,638,338
100,000 AXENT Technologies, Inc. 2,337,500
170,000 Datastream Systems, Inc.* 5,185,000
245,000 Hyperion Software Corp. 9,340,625
203,500 Integrated Systems, Inc. 3,586,688
135,000 Mastech Corp. 4,471,875
50,000 Memco Software Ltd. (Israel) 1,262,500
55,000 Remedy Corp. 2,585,000
125,000 Tecnomatix Technologies, Ltd. 3,859,375
151,875 Wind River Systems 5,828,203
------------
45,014,479
------------
Computers/Computer Hardware -- 0.6%
75,000 Micros Systems, Inc.* 3,375,000
------------
Construction Materials -- 3.8%
300,000 Apogee Enterprises, Inc. 7,162,500
66,000 Barnett, Inc.* 1,361,250
100,000 NCI Building Systems, Inc. 3,643,750
82,400 Southdown, Inc. 4,562,900
198,500 Wilmar Industries, Inc. 5,210,625
------------
21,941,025
------------
Consumer Products -- 1.4%
120,000 Equity Corp. 2,445,000
175,000 Furniture Brands International, Inc. 2,931,250
100,000 Interface, Inc. Class A* 2,887,500
------------
8,263,750
------------
Distribution -- 0.7%
150,000 Applied Industrial Technology, Inc. 4,359,375
------------
Diversified -- 0.5%
175,000 Griffon Corp. 2,767,188
------------
Electronics/Electrical Equipment -- 9.8%
100,000 ANADIGICS, Inc.* 3,700,000
47,400 Berg Electronics Corp.* 1,107,975
80,000 BMC Industries, Inc. 2,575,000
See notes to financial statements.
9
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
70,000 Credence Systems Corp. $ 2,065,000
60,000 Etec Systems, Inc.* 2,677,500
50,000 KLA-Tencor Corp. 2,196,875
25,700 Lernout & Hauspie Speech Products
N.V. (Belgium)* 1,246,450
47,000 Microchip Technology, Inc.* 1,874,125
200,000 MRV Communications Inc. 5,850,000
125,000 Perceptron Inc. 3,015,625
100,000 PMC -- Sierra, Inc.* 2,637,500
75,000 QLogic Corp. 2,437,500
25,000 Sawtek, Inc. 850,000
200,000 Sipex Corp. 6,575,000
50,000 Stoneridge Inc.* 812,500
188,000 Teleflex, Inc. 7,003,000
70,000 Veeco Instruments Inc. 2,773,750
180,000 Waters Corp. 7,920,000
------------
57,317,800
------------
Entertainment/Leisure -- 0.8%
33,000 Anchor Gaming* 2,590,500
67,500 Family Golf Centers, Inc.* 1,805,625
------------
4,396,125
------------
Environmental Services -- 1.9%
229,600 Newpark Resources, Inc. 9,528,400
57,000 Superior Services, Inc. 1,524,750
------------
11,053,150
------------
Financial Services -- 0.7%
116,000 Healthcare Financial Partners, Inc. 4,002,000
------------
Food/Beverage Products -- 2.3%
120,000 Fine Host Corp. 3,360,000
150,000 Morningstar Group, Inc. 6,412,500
180,000 Twinlab Corp. 3,420,000
------------
13,192,500
------------
Health Care/Health Care Services -- 8.6%
105,000 Alternative Living Services, Inc. 2,572,500
210,000 Assisted Living Concepts* 4,305,000
150,000 Conceptus, Inc. 1,087,500
125,000 Cytyc Corp.* 2,968,750
See notes to financial statements.
10
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
177,500 ESC Medical Systems Ltd.,
ADR (Israel) $ 6,966,875
95,800 Henry Schein, Inc. 3,149,425
100,000 Nitinol Medical Technologies 1,400,000
32,500 Novoste Corp. 621,562
50,000 Pediatrix Medical Group, Inc. 2,112,500
80,000 Perclose, Inc. 1,960,000
300,000 Pharmaceutical Product Development,
Inc. 5,325,000
122,500 Physio-Control International Corp. 1,952,344
50,000 Sierra Health Services, Inc. 1,846,875
100,000 Sunrise Assisted Living, Inc. 3,712,500
191,000 Universal Health Services, Inc.,
Class B* 8,415,937
100,000 Ventana Medical Systems, Inc. 1,550,000
------------
49,946,768
------------
Home Building Construction -- 0.2%
65,000 Pacific Greystone Corp. 1,202,500
------------
Hotels/Other Lodging -- 0.5%
175,000 Homestead Village, Inc. 2,800,000
------------
Insurance -- 3.5%
212,000 American Bankers Insurance Group,
Inc. 7,923,500
121,000 CMAC Investment Corp. 6,617,188
470,000 Reliance Group Holdings, Inc. 5,933,750
------------
20,474,438
------------
Machinery & Engineering
Equipment -- 2.9%
73,800 Allied Products Corp. 1,946,475
122,000 Applied Power, Inc., Class A 7,548,750
180,000 Rental Service Corp. 4,815,000
101,000 U.S. Rentals, Inc. 2,461,875
------------
16,772,100
------------
Manufacturing -- 3.0%
68,000 Chart Industries, Inc. 1,462,000
175,000 Pentair, Inc. 6,759,375
95,750 The Carbide/Graphite Group, Inc. 3,411,094
See notes to financial statements.
11
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------------
210,000 United Dominion Industries, Ltd. $ 5,486,250
------------
17,118,719
------------
Metals/Mining -- 0.3%
83,000 Valmont Industries 1,898,625
------------
Multi-Media -- 1.6%
45,455 Chancelor Media Corp. 2,494,343
170,000 Cinar Films, Inc., Class B* 6,608,750
------------
9,103,093
------------
Office/Business Equipment -- 0.7%
150,000 Knoll, Inc. 4,162,500
------------
Oil & Gas -- 4.0%
117,000 Camco International, Inc. 8,453,250
170,000 Mitchell Energy & Development,
Class B 4,250,000
80,000 Smith International* 6,100,000
95,000 UTI Energy Corp.* 4,239,375
------------
23,042,625
------------
Pharmaceuticals -- 0.3%
40,000 Andrx Corp.* 1,540,000
------------
Pipelines -- 0.4%
100,000 Tubos de Acero de Mexico SA, ADR*
(Mexico) 2,018,750
------------
Printing & Publishing -- 0.1%
60,000 Golden Books Family Entertainment,
Inc. 600,000
------------
Real Estate Investment Trusts -- 2.3%
122,000 Arden Realty Group, Inc. 3,721,000
60,000 Boston Properties, Inc.* 1,920,000
57,000 Duke Realty Investments, Inc. 1,282,500
125,000 Innkeepers USA Trust 2,085,937
77,000 Manufactured Home Communities,
Inc. 1,925,000
70,000 Storage USA, Inc. 2,655,625
------------
13,590,062
------------
Restaurants/Food Services -- 0.2%
33,750 Papa John's International, Inc. 997,734
------------
See notes to financial statements.
12
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------------
Retailing -- 5.7%
132,000 99 Cents Only Stores* $ 4,958,250
80,000 Cole National Corp., Class A 3,390,000
280,000 Hollywood Entertainment Corp. 3,430,000
245,000 Petco Animal Supplies, Inc. 7,533,750
60,000 Quality Food Centers, Inc. 2,857,500
180,000 Stage Stores, Inc. 6,570,000
115,000 Williams-Sonoma, Inc. 4,614,375
------------
33,353,875
------------
Shipping/Transportation -- 1.8%
220,000 Coach USA, Inc.* 6,545,000
105,000 Hub Group, Inc., Class A 3,202,500
25,000 Mark VII, Inc.* 765,625
------------
10,513,125
------------
Telecommunications -- 1.6%
200,000 Aspect Telecommunications Corp.* 4,800,000
70,000 Metromedia Fiber Network, Inc.,
Class A* 1,680,000
125,000 Omnipoint Corp. 2,898,438
------------
9,378,438
------------
Utilities -- 1.5%
170,000 Sierra Pacific Resources 5,174,375
140,000 TNP Enterprises, Inc. 3,552,500
------------
8,726,875
------------
Total Common Stock 519,398,785
(Cost $391,860,821) ------------
Principal
Amount
(USD)
Convertible Corporate Notes & Bonds -- 0.1%
-------------------------------------------
Health Care/Health Care Services -- 0.1%
$ 250,000 Assisted Living Concepts, 7.00%,
07/31/05 683,328
(Cost $250,000)
- --------------------------------------------------------------------
Total Long-Term Investments 520,082,113
(Cost $392,110,821)
- --------------------------------------------------------------------
See notes to financial statements.
13
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- ---------------------------------------------------------------
Short-Term Investments -- 11.9%
- ---------------------------------------------------------------
U.S. Government Agency Obligations -- 4.3%
------------------------------------------
$ 5,000,000 Federal Home Loan Mortgage Corp.,
Discount Note, 5.45%, 12/04/97 $ 4,975,021
Federal National Mortgage
Association, Discount Notes,+
5,000,000 5.38%, 11/10/97 4,993,275
5,000,000 5.42%, 11/10/97 4,993,225
5,000,000 5.45%, 12/09/97 4,971,236
5,000,000 5.46%, 11/25/97 4,981,800
------------
Total U.S. Government Agency 24,914,557
Obligations (Cost $24,914,557) ------------
U.S. Government Securities -- 0.1%
----------------------------------
U.S. Treasury Bills,+
60,000 4.90%, 01/15/98 59,387
400,000 4.93%, 01/02/98 396,604
70,000 4.95%, 01/22/98 69,211
65,000 4.99%, 12/04/97 64,703
20,000 5.14%, 11/06/97 19,986
------------
Total U.S. Government Securities 609,891
(Cost $609,891) ------------
Commercial Paper -- 3.4%
------------------------
5,000,000 American Express Credit Corp.,
5.48%, 11/18/97+ 4,987,061
5,000,000 Ford Motor Credit Corp., 5.51%,
11/24/97 4,982,399
5,000,000 General Electric Capital Corp.,
5.50%, 11/13/97+ 4,990,833
5,000,000 Household Credit Card Trust, Ser.
1990-1, Class A, 5.49%, 11/13/97 4,990,850
------------
Total Commercial Paper 19,951,143
(Cost $19,951,143) ------------
See notes to financial statements.
14
<PAGE>
Vista Small Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- --------------------------------------------------------------
Short-Term Investments -- (continued)
- --------------------------------------------------------------
Time Deposit -- 4.1%
--------------------
$23,856,000 Deutsche Bank AG (United States),
5.66%, 11/03/97 $ 23,856,000
(Cost $23,856,000)
- --------------------------------------------------------------
Total Short-Term Investments 69,331,591
(Cost $69,331,591)
- --------------------------------------------------------------
Total Investments -- 101.4% $589,413,704
(Cost $461,442,412)
- --------------------------------------------------------------
Purchased Index Futures Outstanding
- -----------------------------------
Original Nominal
Expiration Number of Nominal Value at Unrealized
Description Date Contracts Value 10/31/97 Depreciation
- --------------------------------------------------------------------------------
Russell 2000 Dec 97 100 $22,393,307 $21,812,500 ($ 580,807)
- --------------------------------------------------------------------------------
See notes to financial statements.
15
<PAGE>
Unaudited
About Your Fund
VISTA LARGE CAP EQUITY FUND
FUND FACTS
Objective: Capital Growth
Primary investments: Large Cap Common Stocks
Suggested investment
time frame: Mid- to Long-Term
Market benchmark: S&P 500 Index
Lipper Funds category: Growth Funds Average
Class A Class B Class I
-------- ------- -------
Inception date: 5/8/96 5/7/96 11/30/90
Newspaper symbol: Not listed Not listed Lrg Cap
As of October 31, 1997
Net assets: $43.5 million $5.3 million $107.0 million
PERFORMANCE
Vista Large Cap Equity Fund, which seeks to provide capital growth through a
portfolio of large cap common stocks, provided shareholders with a total return
of 30.69% (Class A shares, without sales charges) for the year ended October 31,
1997.
STRATEGY
In the first half of the reporting year, as large caps outpaced small- and
mid-caps, the investment team avoided what it believed were over-valued stocks,
providing shareholders with the returns inherent in large caps without the added
valuation risks. When earnings difficulties at several blue chip companies were
announced during the summer and early fall, therefore, the Fund was well
positioned.
The Fund benefited from overweight positions in financial and technology stocks
in late 1996, but financial positions were later reduced based on the assumption
that economic growth would accelerate in early 1997. After the spring market
volatility surrounding the March 25th interest rate hike, the Fund aggressively
added to select technology holdings, which proved beneficial. By the end of the
period, the Fund was focused on companies at the low end of the large cap range
helping it to maintain value during the October correction.
16
<PAGE>
Unaudited
About Your Fund
VISTA LARGE CAP EQUITY FUND
OUTLOOK
Believing that economic growth will slow, the investment team expects to
emphasize companies which, in its opinion, can maintain earnings in a
slower-growth environment as well as those which can benefit from the expected
lower interest rates. After reducing exposure to economically sensitive
cyclicals, the management team has taken an overweight position in the
more-conservative utilities sector and expects to avoid aggressive investments
in technology until the sector's earnings picture clears.
VISTA LARGE CAP EQUITY FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 99.28%
Cash/Other 0.72%
VISTA LARGE CAP EQUITY FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[pie chart]
Banking 16.63%
Broadcasting 1.89%
Chemicals 2.59%
Computer Software 2.56%
Computers/Computer Hardware 4.91%
Consumer Products 3.14%
Diversified 2.74%
Electronics/Electrical Equipment 2.19%
Entertainment/Leisure 3.01%
Financial Services 2.89%
Food/Beverages Products 4.88%
Health Care/Health Care Services 2.74%
Insurance 2.81%
Manufacturing 2.62%
Oil & Gas 10.78%
Pharmaceuticals 6.02%
Retailing 7.84%
Telecommunications 5.74%
Utilities 1.92%
Other 12.10%
17
<PAGE>
Unaudited
About Your Fund
VISTA LARGE CAP EQUITY FUND
TOP 10 HOLDINGS AS OF 10/31/97
Company
- --------------------------------------------------------------------------------
Deutsche Bank AG (US) 9.72%
Computer Associates Intl. Inc. 1.67%
Halliburton Holdings Corp. 1.64%
Dow Chemical Co. 1.57%
Allstate Corp. 1.54%
EMC Corp. Mass. 1.50%
Texaco Inc. 1.46%
Carnival Corp. Cl. A. 1.46%
Kroger Co. 1.42%
HEALTHSOUTH Corp. 1.39%
Top 10 holdings comprised 23.37% of Fund's market value of investments. Fund
holdings are subject to change at any time.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
One Year 30.69% 24.48%
Five Years+ 18.07% 16.93%
Since Inception (11/30/90)+ 17.93% 17.10%
Class B Shares Without CDSC With CDSC*
One Year 30.15% 25.15%
Five Years+ 17.93% 15.93%
Since Inception (11/30/90)+ 17.83% 17.83%
Class I Shares
One Year 31.50%
Five Years 18.32%
Since Inception (11/30/90) 18.11%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. The voluntary waiver may be modified
or terminated at any time, which would reduce performance.
* Assumes a 5% CDSC for the one year period, a 2% CDSC for the five year period
and a 0% CDSC for the period since inception.
+ The Fund commenced operations on 11/30/90. Class A Shares and Class B Shares
were introduced on 5/8/96 and 5/7/96, respectively. Investors should note that
the information presented for Class A and B Shares prior to their introduction
is based on historical expenses of the predecessor Class I Shares, which are
lower than the actual expenses of the Class A and B Shares. Additionally,
annualized figures have been restated to reflect the initial 4.75% front-end
sales charge (Class A Shares) and 5% contingent deferred sales charge (Class B
Shares).
18
<PAGE>
Unaudited
About Your Fund
VISTA LARGE CAP EQUITY FUND
[line chart]
Vista Large Cap Lipper Growth
Equity Fund Funds Avg. S&P 500 Index
11/90 10000 10000 10000
10/91 12499 13262 12533
13645 14384 13779
10/93 15245 16945 16808
15911 17277 17457
10/95 19158 21146 22064
24071 25116 27372
10/31/97 31653 31914 36153
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class I
Shares of Vista Large Cap Equity Fund, the Lipper Growth Funds Average and the
Standard and Poor's 500 Index from November 30, 1990 to October 31, 1997. The
performance of the Fund assumes the reinvestment of all dividends and capital
gains and does not include a sales charge. The performance of the average and
the index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark. The fund commenced operations on 11/30/90. Class A Shares and
Class B Shares were introduced on 5/8/96 and 5/7/96, respectively. Investors
should note that information presented for Class A and Class B Shares prior to
their introduction is based on historical expenses of the predecessor Class I
Shares, which are lower than the actual expenses of the Class A and Class B
Shares. Additionally, annualized figures have been restated to reflect the
initial 4.75% front-end sales charge (Class A Shares) and 5% contingent deferred
sales charge (Class B Shares).
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper Growth Funds Average represents the average performance of a universe
of 933 actively managed growth funds. Lipper is an independent mutual fund
performance monitor whose results are based on total return and do not reflect a
sales charge.
The Standard & Poor's 500 Index is a broad-based index that is generally
considered representative of the U.S. stock market. The index is unmanaged and
reflects reinvestment of dividends. An individual cannot invest in the index.
19
<PAGE>
Vista Large Cap Equity Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- --------------------------------------------------------------
Long-Term Investments -- 90.7%
- --------------------------------------------------------------
Common Stock -- 90.7%
---------------------
Aerospace -- 1.3%
16,000 Allied-Signal, Inc. $ 576,000
20,000 United Technologies, Corp. 1,400,000
------------
1,976,000
------------
Agricultural Production/Services -- 1.5%
29,000 Case Corp. 1,734,562
12,700 Deere & Co. 668,338
------------
2,402,900
------------
Airlines -- 0.9%
12,500 AMR Corp.* 1,455,469
------------
Automotive -- 0.9%
23,000 General Motors 1,476,313
------------
Banking -- 6.9%
25,000 BankAmerica Corp. 1,787,500
19,000 Comerica, Inc. 1,502,187
20
29,000 First Union Corp. 1,422,813
29,000 NationsBank Corp. 1,736,375
30,000 Norwest Corp. 961,875
14,000 U.S. Bancorp 1,423,625
29,000 Washington Mutual Savings Bank 1,984,687
------------
10,819,062
------------
Broadcasting -- 1.9%
70,000 Comcast Corp., Special Class A 1,925,000
45,000 Tele-Communications, TCI Group,
Class A* 1,032,187
------------
2,957,187
------------
Chemicals -- 2.6%
27,000 Dow Chemical Co. 2,450,250
15,000 duPont (EI) deNemours 853,125
16,500 Union Carbide Corp. 753,844
------------
4,057,219
------------
Computer Software -- 2.6%
17,000 Cisco Systems, Inc.* 1,394,531
35,075 Computer Associates International 2,615,280
------------
4,009,811
------------
See notes to financial statements.
20
<PAGE>
Vista Large Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Computers/Computer Hardware -- 4.9%
21,000 Compaq Computer Corp.* $ 1,338,750
22,000 Digital Equipment Corp.* 1,101,375
42,000 EMC Corp.* 2,352,000
19,000 International Business Machines
Corp. 1,863,187
30,000 Sun Microsystems, Inc.* 1,027,500
------------
7,682,812
------------
Construction Machinery -- 0.7%
20,000 Caterpillar Tractor, Inc. 1,025,000
------------
Consumer Products -- 3.2%
20,000 Avon Products, Inc. 1,310,000
25,000 Colgate-Palmolive Co. 1,618,750
50,000 Philip Morris Companies, Inc. 1,981,250
------------
4,910,000
------------
Diversified -- 2.8%
70,000 Canadian Pacific, Ltd. 2,086,875
12,600 Dover Corp. 850,500
36,000 Tyco International Ltd. 1,359,000
------------
4,296,375
------------
Electronics/Electrical Equipment -- 2.2%
27,000 Adaptec, Inc.* 1,307,812
15,000 Intel Corp. 1,155,000
9,000 Texas Instruments 960,188
------------
3,423,000
------------
Entertainment/Leisure -- 3.0%
47,000 Carnival Corp., Class A 2,279,500
29,000 Time Warner, Inc. 1,672,937
25,000 Viacom, Inc. Class B* 756,250
------------
4,708,687
------------
Financial Services -- 2.9%
10,000 American Express Co. 780,000
12,000 Associates First Capital Corp. 763,500
40,000 Federal Home Loan Mortgage Corp. 1,515,000
30,000 Morgan Stanley, Dean Witter,
Discover and Co. 1,470,000
------------
4,528,500
------------
See notes to financial statements.
21
<PAGE>
Vista Large Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Food/Beverage Products -- 4.9%
22,000 Campbell Soup Co. $ 1,134,375
30,000 Coca-Cola Enterprises, Inc. 843,750
55,000 PepsiCo., Inc. 2,024,687
16,800 Ralston-Purina Group 1,507,800
40,000 Unilever NV, ADR (Netherlands) 2,135,000
------------
7,645,612
------------
Health Care/Health Care Services -- 2.8%
40,000 Columbia/HCA Healthcare Corp. 1,130,000
85,000 HEALTHSOUTH Corp.* 2,172,813
32,500 Tenet Healthcare Corp.* 993,281
------------
4,296,094
------------
Insurance -- 2.8%
29,000 Allstate Corp. 2,405,187
7,800 American International Group 796,087
29,000 Equitable Companies, Inc. 1,194,438
------------
4,395,712
------------
Manufacturing -- 2.6%
14,000 Honeywell, Inc. 952,875
30,000 Ingersoll-Rand Co. 1,168,125
23,000 Johnson Controls 1,032,125
22,500 Parker Hannifin Corp. 940,781
------------
4,093,906
------------
Media/Advertising -- 0.7%
15,000 Omnicom Group, Inc. 1,059,375
------------
Metals/Mining -- 1.0%
22,000 Aluminum Co. of America
(ALCOA) 1,606,000
------------
Office/Business Equipment -- 1.3%
25,000 Xerox Corp. 1,982,813
------------
Oil & Gas -- 10.8%
29,000 Apache Corp. 1,218,000
23,000 British Petroleum PLC, ADR
(United Kingdom) 2,018,250
29,000 Coastal Corp. 1,743,625
35,000 Dresser Industries, Inc. 1,474,375
43,000 Halliburton Company 2,563,875
See notes to financial statements.
22
<PAGE>
Vista Large Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
22,000 Mobil Corp. $ 1,601,875
25,000 Santa Fe International Corp. 1,229,688
14,000 Sonat, Inc. 643,125
40,000 Texaco, Inc. 2,277,500
29,000 USX-Marathon Group 1,036,750
21,050 Williams Companies, Inc. 1,072,234
------------
16,879,297
------------
Paper/Forest Products -- 0.9%
40,000 Willamette Industries, Inc. 1,322,500
------------
Pharmaceuticals -- 6.0%
23,000 Bristol-Myers Squibb Co. 2,018,250
20,000 Johnson & Johnson 1,147,500
12,000 Merck & Company, Inc. 1,071,000
25,000 Pfizer, Inc. 1,768,750
40,000 Pharmacia & Upjohn, Inc. 1,270,000
45,000 SmithKline Beecham PLC, ADR
(United Kingdom) 2,143,125
------------
9,418,625
------------
Printing & Publishing -- 1.0%
29,000 New York Times Company,
Class A 1,587,750
------------
Real Estate Investment Trust -- 0.8%
40,000 Security Capital Group Incorp.,
Class B* 1,280,000
------------
Restaurants -- 0.5%
24,300 Tricon Global Restaurants, Inc.* 736,594
------------
Retailing -- 7.9%
28,800 American Stores Co. 739,800
50,000 Costco Companies, Inc.* 1,925,000
20,000 CVS Corp. 1,226,250
19,000 Dayton-Hudson Corp. 1,193,438
49,000 Federated Department Stores* 2,156,000
68,000 Kroger Co.* 2,218,500
19,000 Safeway, Inc.* 1,104,375
25,000 Tandy Corp. 859,375
25,000 Toys "R" Us, Inc.* 851,562
------------
12,274,300
------------
See notes to financial statements.
23
<PAGE>
Vista Large Cap Equity Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- --------------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------------
Telecommunications -- 5.8%
25,000 Airtouch Communications, Inc.* $ 965,625
23,200 Bell Atlantic Corp. 1,853,100
43,000 BellSouth Corp. 2,034,438
20,000 GTE Corp. 848,750
8,139 Lucent Technologies, Inc. 670,959
18,000 Sprint Corp. 936,000
50,000 WorldCom, Inc.* 1,681,250
------------
8,990,122
------------
Textiles -- 0.7%
20,000 Liz Claiborne, Inc. 1,013,750
------------
Utilities -- 1.9%
30,000 CMS Energy Corp. 1,095,000
37,000 FPL Group Inc. 1,912,438
------------
3,007,438
------------
Total Common Stock 141,318,223
(Cost $112,736,955)
====================================================================
Principal
Amount
(USD)
- --------------------------------------------------------------------
Short-Term Investments -- 9.8%
- --------------------------------------------------------------------
Time Deposits -- 9.8%
---------------------
$15,210,000 Deutsche Bank AG (United States),
5.66%, 11/03/97 15,210,000
(Cost $15,210,000)
====================================================================
Total Investments -- 100.5% $156,528,223
(Cost $127,946,955)
====================================================================
See notes to financial statements.
24
<PAGE>
Unaudited
About Your Fund
VISTA BALANCED FUND
- ---------------------------------------------------------------------
FUND FACTS
- ---------------------------------------------------------------------
Objective: Capital Growth Plus Current Income
Primary investments: Stocks, Bonds and Convertibles
Suggested investment Mid- to Long-Term
time frame:
Market benchmarks: S&P 500 Index
Lehman Aggregate Bond Index
Lipper Funds category: Balanced Funds Average
Class A Class B
------- -------
Inception date: 11/4/92 11/4/93
Newspaper symbol: Balance Not listed
As of October 31, 1997
Net assets: $92.9 million $15.5 million
- ---------------------------------------------------------------------
PERFORMANCE
Vista Balanced Fund, which seeks to provide capital growth plus current income
in a portfolio of high-quality stocks, bonds and convertible securities, had a
total return of 21.48% (Class A shares, without sales charges) for the year
ended October 31, 1997.
STRATEGY
Throughout the reporting period, Fund management shifted to capitalize on the
relative values of stocks, bonds and cash. At the end of the reporting year,
52.0% of the Fund's assets was in stocks, 47.1% was in bonds and 0.9% was in
cash.
On the equity side, the Fund began with overweight positions in technology and
financials but later reduced financial exposure in favor of more economically
sensitive sectors. By early summer, Fund management adopted a sector-neutral
approach favoring stronger valuations at the lower end of the large cap range
and in mid-caps. On the fixed income side, the Fund utilized a relative value
analysis to shift among corporate, government and mortgage-backed securities. At
the end of the reporting period, the fixed income portion of the Fund had a
slightly-long duration relative to its benchmark and was emphasizing U.S.
Treasury securities.
25
<PAGE>
Unaudited
About Your Fund
VISTA BALANCED FUND
OUTLOOK
On the equity side, the management team is looking for companies it believes can
maintain earnings in a slower economy, as well as those that may benefit from
expected lower interest rates. On the fixed income side, the management team
expects to maintain a longer-than-benchmark duration, overweight U.S. Treasury
securities, underweight mortgage-backed securities and keep a neutral weighting
in corporate securities.
VISTA BALANCED FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Cash/Other 0.93%
Investments 99.07%
VISTA BALANCED FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[pie chart]
Airlines 2.74%
Banking 14.09%
Computer Software 1.78%
Computer/Computer Hardware 3.98%
Financial Services 6.93%
Food/Beverages Products 2.36%
Health Care/Health Care Services 3.64%
Insurance 2.63%
Mortgage Backed Securities 8.94%
Oil & Gas 6.72%
Pharmaceuticals 2.92%
Retailing 2.96%
Telecommunications 4.17%
US Treasury Securities 8.36%
Utilities 4.15%
Other 23.63%
26
<PAGE>
Unaudited
About Your Fund
VISTA BALANCED FUND
- --------------------------------------------------
TOP 10 HOLDINGS AS OF 10/31/97
- --------------------------------------------------
Company
------------------------------------------------
Deutsche Bank AG (US) 9.87%
U.S. Treasury Notes & Bonds 8.36%
Federal Home Loan Mortgage Corp. 6.88%
Federal National Mortgage
Association Pool 2.55%
Texas Utilities Electric,
Capital V 1.98%
Termoemcali Funding Corp. 1.96%
Centra Bas (Colombia) 1.47%
International Business
Machines, Corp. 1.03%
Nomura Asset Securities Corp.,
Ser. 1996-MD5, Class A 0.98%
Lehman Brothers Inc. 0.96%
- --------------------------------------------------
Top 10 holdings comprised 36.04% of Fund's market
value of investments. Fund holdings are subject to
change at any time.
- -------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
- -------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 21.48% 16.02%
Five Years N/A N/A
Since Inception (11/4/92) 14.86% 13.81%
Class B Shares Without CDSC With CDSC*
One Year 20.55% 15.55%
Five Years N/A N/A
Since Inception (11/4/92)+ 14.17% 11.17%
- -------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not
indicative of future results. Investment return and principal value
will fluctuate with market conditions. When shares are redeemed,
they may be worth more or less than their original cost.
The Fund is currently waiving certain fees. This voluntary waiver
may be modified or terminated at any time, which would reduce
performance.
* Assumes 5% CDSC for the one year period, a 3% CDSC for the period
since inception.
+ The Fund commenced operations on 11/4/92. Class B Shares were
introduced on 11/4/93. Investors should note that the information
presented for Class B prior to their introduction is based on
historical expenses of the predecessor Class A Shares, which are
lower than the actual expenses of the Class B Shares. Additionally,
annualized figures have been restated to reflect the initial 5%
contingent deferred sales charge that applies to the Fund's B
Shares.
27
<PAGE>
Unaudited
About Your Fund
VISTA BALANCED FUND
[line chart]
- --------------------------------------------------------------------------------
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA BALANCED FUND - CLASS A
AND ITS KEY BENCHMARKS
- --------------------------------------------------------------------------------
Vista Balanced Lipper Balanced S&P 500 Lehman Aggregate
Fund Funds Avg. Index Bond Index
11/92 9550 10000 10000 10000
10/93 11244 11489 11493 11187
10/94 11420 11394 11936 10776
10/95 13441 13455 15087 12463
10/96 15712 15443 18716 13190
10/97 19087 18447 24719 14364
- --------------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Balanced Fund, the Lipper Balanced Funds Average, the S&P 500
Index and the Lehman Aggregate Bond Index from November 4, 1992 to October 31,
1997. The performance of the Fund assumes the reinvestment of all dividends and
capital gains and includes a 4.50% sales charge. The performance of the average
and the index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark.
The Fund is currently waiving fees. This voluntary waiver may be modified or
terminated at any time, which would reduce performance.
The Lipper Balanced Funds Average represents the average performance of a
universe of 382 actively managed balanced funds. Lipper is an independent mutual
fund performance monitor whose results are based on total return and do not
reflect a sales charge.
The Standard & Poor's 500 Index is a broad-based index that is generally
considered representative of the U.S. stock market. The index is unmanaged and
reflects reinvestment of dividends. An individual cannot invest in the index.
The Lehman Aggregate Bond Index is composed of the Lehman Government/Corporate
Index and the Mortgage-backed Securities Index and includes U.S. Treasury and
agency issues and corporate and mortgage-backed bonds. The index is unmanaged
and reflects reinvestment of dividends. An individual cannot invest in the
index.
28
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- 89.6%
- ----------------------------------------------------------------
Common Stock -- 50.6%
---------------------
Aerospace -- 1.2%
8,100 Precision Castparts Corp. $ 476,381
5,700 Sundstrand Corp. 309,937
7,300 United Technologies, Corp. 511,000
------------
1,297,318
------------
Agricultural Production/Services -- 0.5%
8,900 Case Corp. 532,331
------------
Airlines -- 0.8%
4,000 AMR Corp.* 465,750
10,000 Continental Airlines, Inc., Class B* 432,500
------------
898,250
------------
Automotive -- 0.8%
5,500 General Motors 353,031
10,200 Lear Corp.* 490,237
------------
843,268
------------
Banking -- 3.7%
10,900 BankAmerica Corp. 779,350
6,500 CitFed Bancorp., Inc. 320,125
6,600 Cullen/Frost Bankers, Inc. 333,300
9,400 First Union Corp. 461,188
6,000 NationsBank Corp. 359,250
8,000 Southwest Bancorp of Texas* 240,000
5,500 U.S. Bancorp 559,281
9,500 Washington Mutual Savings Bank 650,156
6,800 Zions Bancorporation 264,350
------------
3,967,000
------------
Broadcasting -- 0.8%
8,250 Tele-Communications, Inc., Liberty
Media Group, Class A* 287,203
24,000 Tele-Communications, TCI Group,
Class A* 550,500
------------
837,703
------------
Chemicals -- 1.3%
6,600 Dow Chemical Co. 598,950
9,800 duPont (EI) deNemours 557,375
5,100 Union Carbide Corp. 233,006
------------
1,389,331
------------
See notes to financial statements.
29
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Computer Software -- 1.6%
6,300 Cisco Systems, Inc.* $ 516,797
12,425 Computer Associates International 926,439
4,800 McAfee Associates, Inc.* 238,800
53 Netscape Communications Corp.* 1,742
------------
1,683,778
------------
Computers/Computer Hardware -- 2.5%
8,500 Compaq Computer Corp.* 541,875
15,500 EMC Corp.* 868,000
7,200 International Business Machines
Corp. 706,050
18,900 Sun Microsystems, Inc.* 647,325
------------
2,763,250
------------
Construction Machinery -- 0.5%*
10,000 Caterpillar Tractor, Inc. 512,500
------------
Consumer Products -- 1.5%
7,000 Avon Products, Inc. 458,500
7,600 Colgate-Palmolive Co. 492,100
16,800 Philip Morris Companies, Inc. 665,700
------------
1,616,300
------------
Diversified -- 1.2%
14,000 Canadian Pacific, Ltd. 417,375
14,200 Tyco International Ltd. 536,050
13,765 Westinghouse Electric Corp. 363,912
------------
1,317,337
------------
Electronics/Electrical Equipment -- 1.6%
8,600 Adaptec, Inc.* 416,563
8,500 Intel Corp. 654,500
7,000 Teleflex, Inc. 260,750
3,600 Texas Instruments 384,075
------------
1,715,888
------------
Entertainment/Leisure -- 1.4%
7,000 At Home Corp., Ser. A* 168,875
17,700 Carnival Corp., Class A 858,450
9,400 Time Warner, Inc. 542,262
------------
1,569,587
------------
See notes to financial statements.
30
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Financial Services -- 1.1%
14,600 Federal Home Loan Mortgage Corp. $ 552,975
13,000 Morgan Stanley, Dean Witter,
Discover and Co. 637,000
------------
1,189,975
------------
Food/Beverage Products -- 2.3%
6,000 Campbell Soup Co. 309,375
14,000 Coca-Cola Enterprises, Inc. 393,750
12,600 ConAgra, Inc. 379,575
19,500 PepsiCo., Inc. 717,844
4,300 Ralston-Purina Group 385,925
6,800 Unilever NV, ADR (Netherlands) 362,950
------------
2,549,419
------------
Health Care/Health Care Services -- 2.4%
9,000 Alternative Living Services, Inc.* 220,500
5,500 Beckman Instruments, Inc. 216,563
15,000 Columbia/HCA Healthcare Corp. 423,750
29,000 HEALTHSOUTH Corp.* 741,313
8,000 PhyCor, Inc.* 184,500
14,200 Tenet Healthcare Corp.* 433,987
7,700 Universal Health Services, Inc.,
Class B* 339,281
------------
2,559,894
------------
Insurance -- 2.5%
8,700 Allstate Corp. 721,556
9,100 American Bankers Insurance Group,
Inc. 340,113
3,975 American International Group 405,698
15,300 Equitable Companies, Inc. 630,169
19,000 Nationwide Financial Services, Inc.,
Class A 578,312
------------
2,675,848
------------
Manufacturing -- 1.9%
17,000 Ingersoll-Rand Co. 661,938
10,000 Johnson Controls 448,750
5,800 Kennametal Inc. 281,300
10,500 Parker Hannifin Corp. 439,031
See notes to financial statements.
31
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
5,600 Pentair, Inc. $ 216,300
------------
2,047,319
------------
Media/Advertising -- 0.3%
5,300 Omnicom Group, Inc. 374,312
------------
Metals/Mining -- 0.6%
9,500 Aluminum Co. of America (ALCOA) 693,500
------------
Office/Business Equipment -- 0.5%
6,800 Xerox Corp. 539,325
------------
Oil & Gas -- 5.1%
4,700 BJ Services Co.* 398,325
6,300 British Petroleum PLC, ADR
(United Kingdom) 552,825
9,600 Coastal Corp. 577,200
8,000 Dresser Industries, Inc. 337,000
9,000 Exxon Corp. 552,938
15,100 Halliburton Company 900,338
8,700 Mobil Corp. 633,469
5,000 Sonat, Inc. 229,688
10,800 Texaco, Inc. 614,925
14,250 Williams Companies, Inc. 725,859
------------
5,522,567
------------
Paper/Forest Products -- 0.4%
12,200 Willamette Industries, Inc. 403,362
------------
Pharmaceuticals -- 2.9%
9,500 Bristol-Myers Squibb Co. 833,625
5,000 Eli Lilly & Co. 334,375
7,300 Johnson & Johnson 418,837
10,000 Pharmacia & Upjohn, Inc. 317,500
9,400 Schering-Plough Corp. 526,988
15,000 SmithKline Beecham PLC, ADR
(United Kingdom) 714,375
------------
3,145,700
------------
Printing & Publishing -- 0.7%
14,200 New York Times Company, Class A 777,450
------------
Real Estate Investment Trusts -- 1.7%
4,000 Bay Apartment Communities, Inc. 156,500
4,600 Beacon Properties Corp. 193,775
See notes to financial statements.
32
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
15,000 Boston Properties, Inc.* $ 480,000
6,500 Equity Office Properties Trust 198,656
15,000 Kilroy Realty Corp. 397,500
10,000 Spieker Properties, Inc. 391,250
------------
1,817,681
------------
Restaurants -- 0.1%
1,950 Tricon Global Restaurants, Inc.* 59,109
------------
Retailing -- 2.9%
17,700 Costco Companies, Inc.* 681,450
10,900 CVS Corp. 668,306
16,000 Federated Department Stores* 704,000
19,700 Kroger Co.* 642,713
8,600 Safeway, Inc.* 499,875
------------
3,196,344
------------
Steel -- 0.3%
15,000 Ispat International NV, Class A,
New York Registered Shares,
ADR (Netherlands)* 379,688
------------
Telecommunications -- 4.1%
5,600 Bell Atlantic Corp. 447,300
12,500 BellSouth Corp. 591,406
10,000 Compania Anonima Nacional
Telefonos de Venezuela (CANTV),
ADR (Venezuela) 437,500
6,100 GTE Corp. 258,869
3,504 Lucent Technologies, Inc. 288,861
25,000 NEXTLINK Communications, Inc.,
Class A* 565,625
10,000 Qwest Communications
International Inc.* 617,500
10,584 Sprint Corp. 550,368
6,000 Telefonaktiebolaget LM Ericsson,
Sp, ADR (Sweden) 265,500
14,000 WorldCom, Inc.* 470,750
------------
4,493,679
------------
Textiles -- 0.2%
4,300 Liz Claiborne, Inc. 217,956
------------
See notes to financial statements.
33
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Utilities -- 1.2%
4,600 CMS Energy Corp. $ 167,900
10,100 FPL Group Inc. 522,044
10,000 Pinnacle West Capital Corp. 348,125
8,000 Sierra Pacific Resources 243,500
------------
1,281,569
------------
Total Common Stock 54,868,538
(Cost $42,654,258) ------------
Convertible Preferred Stock -- 1.5%
-----------------------------------
Aerospace -- 0.1%
1,500 Loral Space & Communications, Inc.,
6.00%, 11/01/06, # 91,637
------------
Financial Services -- 0.7%
2,000 American General Delaware, $3.00,
12/31/49, Ser. A 133,000
5,000 St. Paul Capital Corp., LLC, 6.00%,
5/31/25 350,000
7,000 Sunamerica Inc., $3.188, 10/31/99 307,563
------------
790,563
------------
Insurance -- 0.1%
2,000 American Bankers Insurance Group,
$3.13, 12/31/49, Ser. B 158,000
------------
Oil & Gas -- 0.1%
6,500 Enron Corp., 6.25% Exchange Notes,
12/13/98, ACES 140,156
------------
Utilities -- 0.5%
4,000 Calenergy Capital Trust II, 6.25%,
02/25/12 205,188
6,000 Houston Industries, Inc., 7.00%,
07/01/00 328,500
------------
533,688
------------
Total Convertible Preferred Stock 1,714,044
(Cost $1,404,500) ------------
See notes to financial statements.
34
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Corporate Notes & Bonds -- 14.5%
--------------------------------
Aerospace -- 0.5%
$ 500,000 Lockheed Martin 7.45%, 06/15/04 $ 527,760
------------
Airlines -- 1.9%
454,153 American Airlines, # 9.71%,
01/30/07 519,923
486,053 Continental Airlines, Inc., 10.22%,
07/02/14 599,207
750,000 Delta Air Lines, 10.06%, 01/02/16 934,755
------------
2,053,885
------------
Banking -- 0.5%
500,000 BankAmerica Corp., 10.00%,
02/01/03 579,065
------------
Broadcasting -- 0.4%
400,000 Time Warner, Inc., 9.15%, 02/01/23 473,000
------------
Computers/Computer Hardware -- 1.0%
1,100,000 International Business Machines
Corp., 7.13%, 12/01/2096 1,113,750
------------
Construction/Transportation -- 0.6%
600,000 Zhuhai Highway Co., Ltd., Yankee,
Ser. A, # (China), 9.13%,
07/01/06 632,322
------------
Financial Services -- 5.1%
250,000 Lehman Brothers Holding, Inc.,
8.80%, 03/01/15 291,250
1,000,000 Bankers Trust Capital Trust, Ser. B,
7.90%, 01/15/27 1,018,750
120,000 Corp Andina de Fomento
(Venezuela), 7.38%, 07/21/00 122,339
400,000 Ford Capital BV, Yankee
(Netherlands), 9.00%, 08/15/98 409,448
1,000,000 Lehman Brothers Inc., 7.38%,
01/15/07 1,035,150
500,000 Simon Debartolo Group, 7.13%,
09/20/07 506,715
See notes to financial statements.
35
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- ---------------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------------
$ 2,000,000 Termoemcali Funding Corp., #
10.13%, 12/15/14 $ 2,116,360
------------
5,500,012
------------
Oil & Gas -- 1.5%
1,447,902 CentraGas, # (Colombia), 10.65%,
12/01/10 1,584,671
------------
Paper/Forest Products -- 0.5%
500,000 Georgia-Pacific Corp., 8.63%, 04/30/25 541,910
------------
Utilities -- 2.5%
500,000 Ras Laffan Liquefied Natural Gas, #
(Qatar), 8.29%, 03/15/14 523,953
2,000,000 Texas Utilities Electric, Capital V,
8.18%, 01/30/37 2,132,660
------------
2,656,613
------------
Total Corporate Notes & Bonds 15,662,988
(Cost $15,439,538) ------------
Convertible Corporate Notes & Bonds -- 2.2%
-------------------------------------------
Computer Software -- 0.2%
250,000 Tecnomatix Technologies, Ltd., #
(Israel), 5.25%, 08/15/04 240,625
------------
Computers/Computer Hardware -- 0.4%
100,000 EMC Corp., #
3.25%, 03/15/02 137,250
150,000 SCI Systems Inc., #
5.00%, 05/11/06 281,184
------------
418,434
------------
Environmental Service -- 0.2%
250,000 USA Waste Services Inc.,
4.00%, 02/01/02 266,563
------------
Health Care/Health Care Services -- 1.3%
250,000 Alternative Living Services, #
7.00%, 06/01/04 330,000
Assisted Living Concepts,
400,000 6.00%, 11/01/02 432,000
See notes to financial statements.
36
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
$ 150,000 7.00%, 07/31/05 $ 409,997
150,000 Sterling House, 6.75%, 06/30/06 201,000
------------
1,372,997
------------
Manufacturing -- 0.1%
150,000 Tower Automotive, Inc., #
5.00%, 08/01/04 155,250
------------
Total Convertible Corporate
Notes and Bonds 2,453,869
------------
(Cost $1,850,000)
U.S. Government Agency Obligations -- 1.9%
------------------------------------------
2,000,000 Federal Home Loan Mortgage Corp.,
8.00%, 04/09/07 2,017,820
------------
(Cost $2,000,000)
Mortgage Backed Securities -- 8.9%
----------------------------------
Mortgage Backed Pass Thru
Securities -- 4.4%
733,630 Federal Home Loan Mortgage Corp.,
Gold, Pool #A01717, 12.00%,
06/01/17 860,983
1,109,609 Federal Home Loan Mortgage Corp.,
Gold, Pool #G10597, 6.50%,
11/01/11 1,113,348
690,415 Federal National Mortgage
Association, Pool #100156,
12.50%, 06/01/27 830,116
1,160,902 Federal National Mortgage
Association, Pool #313549, 9.00%,
09/01/22 1,253,031
679,668 Government National Mortgage
Association, Pool #780508, 8.00%,
11/15/24 709,397
------------
4,766,875
------------
See notes to financial statements.
37
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
Collateralized Mortgage Obligations -- 4.5%
$ 750,000 DLJ Mortgage Acceptance Corp., Ser.
1997-CF2, Class A1B, 6.82%,
09/15/07 $ 765,469
1,828,737 Federal Home Loan Mortgage Corp.,
Ser. 77, Class G, 8.50%, 01/15/20 1,912,731
1,000,000 Federal Home Loan Mortgage Corp.,
Ser. 1759, Class BC, 7.60%,
04/15/16 1,021,250
500,000 Federal Home Loan Mortgage Corp.,
Ser. 1985, Class PB, 6.25%,
08/17/12 500,765
666,402 Federal National Mortgage
Association, Ser. 1997-17, Class A,
7.25%, 03/31/04 672,741
------------
4,872,956
------------
Total Mortgage Backed Securities 9,639,831
(Cost $9,537,356) ------------
Asset Backed Securities -- 1.7%
-------------------------------
234,793 Blackrock Capital Finance L.P., Ser.
1996-C2, Class A, #7.64%,
11/15/26 236,921
483,327 Mid-State Trust, Ser. 6, Class A4,
7.79%, 07/01/35 503,642
1,000,000 Nomura Asset Securities Corp., Ser.
1996-MD5, Class A1B, 7.12%,
04/13/36 1,055,625
------------
Total Asset Backed Securities 1,796,188
(Cost $1,742,515) ------------
U.S. Treasury Securities -- 8.3%
--------------------------------
U.S. Treasury Bonds and Notes,
3,000,000 6.38%, 08/15/27 3,091,860
800,000 6.50%, 05/31/02 822,872
3,000,000 6.63%, 02/15/27 3,180,930
250,000 7.13%, 02/15/23 278,243
See notes to financial statements.
38
<PAGE>
Vista Balanced Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- --------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------
$ 700,000 7.75%, 11/30/99 $ 728,329
700,000 8.75%, 08/15/20 913,388
------------
Total U.S. Treasury Securities 9,015,622
(Cost $8,766,006)
==============================================================
Total Long-Term Investments 97,168,900
(Cost $83,394,173)
==============================================================
Short-Term Investments -- 9.8%
- --------------------------------------------------------------
Time Deposit -- 9.8%
--------------------
$10,641,000 Deutsche Bank AG (United States),
5.66%, 11/03/97 $ 10,641,000
(Cost $10,641,000)
==============================================================
Total Investments -- 99.4% $107,809,900
(Cost $94,035,173)
==============================================================
Index
* -- Non-income producing security.
# -- Security may only be sold to qualified institutional buyers.
+ -- All or a portion of this security is pledged to cover financial futures
contracts
ADR -- American Depository Receipt.
ACES -- Automatic Common Exchange Securities.
See notes to financial statements.
39
<PAGE>
Vista Mutual Funds
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
Small Cap Large Cap Vista
Equity Equity Balanced
Fund Fund Fund
--------- --------- --------
<S> <C> <C> <C>
ASSETS:
Investment securities, at value (Note 1) $589,413,704 $156,528,223 $107,809,900
Cash ................................. 19,308 -- 89,701
Receivables:
Investment securities sold ............ 1,383,815 -- 61,252
Variation margin ..................... 462,500 -- --
Interest and dividends ............... 129,496 114,726 606,577
Fund shares sold ..................... 290,476 1,010,698 234,155
Expense reimbursement due from
Distributor ........................ -- -- 13,746
Other assets ........................... 21,209 2,102 1,377
------------ ------------ ------------
Total Assets ........................ 591,720,508 157,655,749 108,816,708
------------ ------------ ------------
LIABILITIES:
Payable for investment securities
purchased ........................... 8,996,491 1,520,112 --
Payable for Fund shares redeemed ...... 322,143 69,906 55,852
Payable to custodian .................. -- 23,407 89,023
Accrued liabilities: (Note 2)
Administration fees .................. 77,539 6,330 13,924
Distribution fees ..................... 105,950 10,771 29,832
Investment advisory fees ............ 332,125 -- 46,413
Shareholder servicing fees ............ 214,211 55,448 23,212
Custodian ........................... 47,913 16,925 14,159
Other ................................. 163,206 120,123 132,053
------------ ------------ ------------
Total Liabilities .................. 10,259,578 1,823,022 404,468
------------ ------------ ------------
NET ASSETS:
Paid in capital ........................ 437,729,485 109,583,757 87,652,737
Accumulated undistributed net
investment income (loss) ............ 5,570 178,323 177,230
Accumulated undistributed net
realized gain (loss) on investment
transactions ........................ 16,335,390 17,489,379 6,807,546
Net unrealized appreciation of
investments and futures ............... 127,390,485 28,581,268 13,774,727
------------ ------------ ------------
Net Assets: ........................... $581,460,930 $155,832,727 $108,412,240
============ ============ ============
Class A Shares ........................ $174,017,053 $ 43,490,893 $ 92,941,545
Class B Shares ........................ $100,340,582 $ 5,333,949 $ 15,470,695
Institutional Class .................. $307,103,295 $107,007,885 --
Shares of beneficial interest outstanding
($.001 par value; unlimited number of
shares authorized):
Class A Shares ........................ 7,381,503 2,932,664 6,031,106
Class B Shares ........................ 4,327,501 361,400 1,017,169
Institutional Class .................. 12,952,212 7,204,483
Class A Shares:
Net asset value and redemption price
per share* ........................... $ 23.57 $ 14.83 $ 15.41
Maximum offering price per share
(net asset value per share/95.25%,
for VSCEF and VLCEF, 95.5% for
VBAL) ................................. $ 24.75 $ 15.57 $ 16.14
Class B Shares:
Net asset value offering and
redemption price per share* ......... $ 23.19 $ 14.76 $ 15.21
Institutional Shares:
Net asset value, offering and
redemption price per share* ......... $ 23.71 $ 14.85 --
============ ============ ============
Cost of Investments .................. $461,442,412 $127,946,955 $ 94,035,173
============ ============ ============
</TABLE>
- --------------
* Net assets/shares outstanding
See notes to financial statements.
40
<PAGE>
Vista Mutual Funds
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
Small Cap Large Cap Vista
Equity Equity Balanced
Fund Fund Fund
--------- --------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend ................................. $ 2,011,382 $ 1,680,011 $ 724,837
Interest ................................. 3,881,966 486,394 2,782,276
Foreign taxes withheld .................. (1,600) (14,597) (3,449)
------------ ----------- -----------
Total investment income .................. 5,891,748 2,151,808 3,503,664
------------ ----------- -----------
EXPENSES: (Note 2)
Administration fees ..................... 720,547 178,841 125,937
Distribution fees ........................ 1,087,582 58,953 270,826
Investment Advisory fees .................. 3,122,539 476,896 419,971
Shareholder servicing fees ............... 859,137 298,059 209,851
Custodian fees ........................... 197,709 78,970 75,201
Printing and postage ..................... 45,004 15,406 13,747
Professional fees ........................ 41,904 35,561 25,757
Registration costs ........................ 50,889 58,379 39,603
Transfer agent fees ..................... 726,519 93,507 148,129
Trustees fees and expenses ............... 24,019 5,961 4,197
Other .................................... 37,054 17,248 6,656
------------ ----------- -----------
Total expenses ........................ 6,912,903 1,317,781 1,339,875
------------ ----------- -----------
Less amounts waived (Note 2E) ............... 90,765 596,120 199,161
------------ ----------- -----------
Net expenses .............................. 6,822,138 721,661 1,140,714
------------ ----------- -----------
Net investment income (loss) ............ (930,390) 1,430,147 2,362,950
------------ ----------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain on:
Investments .............................. 11,414,784 17,625,501 6,918,152
Futures transactions ..................... 5,453,475 -- --
Change in net unrealized appreciation/
depreciation on:
Investments .............................. 88,990,000 11,620,756 6,945,972
Futures transactions ..................... (766,992) -- --
------------ ----------- -----------
Net realized and unrealized gain on
investments and futures transactions ...... 105,091,267 29,246,257 13,864,124
------------ ----------- -----------
Net increase in net assets from
operations ................................. $104,160,877 $30,676,404 $16,227,074
============ =========== ===========
</TABLE>
See notes to financial statements.
41
<PAGE>
- --------------------------------------------------------------------------------
Vista Mutual Funds
Statement of Changes in Net Assets For the year ending October 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Small Cap
Equity Fund
--------------------------------
1997 1996
------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ........................... $ (930,390) $ (230,176)
Net realized gain on investments and futures transactions 16,868,259 3,988,463
Change in net unrealized appreciation on investments and
futures ................................................ 88,223,008 32,569,137
------------ ------------
Increase in net assets from operations .................. 104,160,877 36,327,424
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1I):
Net investment income .................................... (742) (112,777)
Net realized gain on investments and future transactions (4,228,732) (926,492)
------------ ------------
Total dividends and distributions ........................ (4,229,474) (1,039,269)
------------ ------------
Increase from capital share transactions (Note 5) ...... 212,503,094 168,374,984
------------ ------------
Total increase in net assets ........................... 312,434,497 203,663,139
NET ASSETS:
Beginning of period .................................... 269,026,433 65,363,294
------------ ------------
End of period .......................................... $581,460,930 $269,026,433
============ ============
Undistributed net investment income (loss) ............... $ 5,570 $ (4,378)
------------ ------------
<CAPTION>
Vista Large Cap Vista
Equity Fund* Balanced Fund
------------------------------- ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ........................... $ 1,430,147 $ 1,529,482 $ 2,362,950 $ 1,448,498
Net realized gain on investments and futures transactions 17,625,501 15,140,787 6,918,152 3,950,647
Change in net unrealized appreciation on investments and
futures ................................................ 11,620,756 6,075,061 6,945,972 4,273,241
------------- ------------ ------------ ------------
Increase in net assets from operations .................. 30,676,404 22,745,330 16,227,074 9,672,386
------------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1I):
Net investment income .................................... (1,448,243) (1,487,894) (2,286,310) (1,328,956)
Net realized gain on investments and future transactions (15,240,116) (6,908,375) (3,997,114) (1,045,527)
------------- ------------ ------------ ------------
Total dividends and distributions ........................ (16,688,359) (8,396,269) (6,283,424) (2,374,483)
------------- ------------ ------------ ------------
Increase from capital share transactions (Note 5) ...... 34,165,364 37,913,034 33,498,944 17,603,211
------------- ------------ ------------ ------------
Total increase in net assets ........................... 48,153,409 52,262,095 43,442,594 24,901,114
NET ASSETS:
Beginning of period .................................... 107,679,318 55,417,223 64,969,646 40,068,532
------------- ------------ ------------ ------------
End of period .......................................... $155,832,727 $107,679,318 $108,412,240 $ 64,969,646
============= ============ ============ ============
Undistributed net investment income (loss) ............... $ 178,323 $ 196,419 $ 177,230 $ 119,542
------------- ------------ ------------ ------------
</TABLE>
- -------
* Previously the Vista Equity Fund
See notes to financial statements.
42
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Mutual Fund Group (the
"Trust") was organized on May 11, 1987 as a Massachusetts Business Trust, and is
registered under the Investment Company Act of 1940, as amended, (the "1940
Act") as an open-end management investment company. Vista Small Cap Equity Fund
("VSCEF"), Vista Large Cap Equity Fund ("VLCEF") (formerly Vista Equity Fund)
and Vista Balanced Fund ("VBAL"), collectively, the "Funds", are separate series
of The Trust. The Funds offer various classes of shares as follows:
Fund Classes Offered
- ---- ---------------
VSCEF Class A, Class B, Institutional
VLCEF Class A, Class B, Institutional
VBAL Class A, Class B
Class A shares generally provide for a front-end sales charge while Class B
shares provide for a contingent deferred sales charge. All classes of shares
have equal rights as to earnings, assets and voting privileges except that each
class may bear different distribution fees and each class has exclusive voting
rights with respect to its distribution plan. No sales charges are assessed with
respect to the Institutional Class ("Class I").
The following is a summary of significant accounting policies followed by the
Funds:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. Valuation of investments -- Equity securities, purchased options and
futures are valued at the last sale price on the exchange on which they are
primarily traded, including the NASDAQ National Market. Securities for which
sale prices are not available and other over-the-counter securities are
valued at the last quoted bid price. Bonds and other fixed income securities
(other than short-term obligations), including listed issues, are valued on
the basis of the valuations supplied by pricing services or by matrix pricing
systems of a major dealer in bonds. Short-term debt securities with 61 days
or more to maturity at a time of purchase are valued, through the 61st day
prior to maturity, at market value based on quotations obtained from market
makers or other appropriate sources; thereafter, the value on the 61st day is
amortized on a straight-line basis over the remaining number of days to
maturity. Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market. Portfolio
securities 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
Trustees.
B. Repurchase agreements -- It is the Trust's policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government Agency
securities. All collateral is held by the Trust's custodian bank,
subcustodian, or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book Entry
System. In connection with transactions in repurchase agreements, if the
seller defaults and the value of the collateral declines or if the seller
enters an insolvency proceeding, realization of the collateral by the Trust
may be delayed or limited.
C. Futures contracts -- When a Fund enters into a futures contract, it makes
an initial margin deposit in a segregated account, either in cash or liquid
securities. Thereafter, the futures contract is marked to market and the fund
makes (or receives) additional cash payments daily to the broker. Changes in
the value of the contract are recorded as unrealized
appreciation/depreciation until the contract is closed or settled.
The Funds invest in stock index futures contracts for the purpose of hedging
the Fund against share price volatility, which purpose may or may not be
achieved. When the
43
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
Fund is not fully invested in the securities market, it may enter into "long"
positions in futures or options contracts in order to gain rapid market
exposure that may in part or entirely offset increases in the cost of
securities intended for purchase. Use of long futures contracts subject the
Fund to risk of loss in excess of amounts shown on the Statement of Assets
and Liabilities, up to the amount of the value of the futures contracts as
shown in the Portfolio of Investments at October 31, 1997.
The Fund may enter into futures contracts only on exchanges or boards of
trade. The exchange or board of trade acts as the counterparty to each
futures transaction, therefore, the Fund's credit risk is limited to failure
of the exchange or board of trade.
D. Written options -- When a Fund writes an option on a futures contract, an
amount equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset and corresponding liability.
The amount of the liability is adjusted daily to reflect the current market
value of the written options and the change is recorded in a corresponding
unrealized gain or loss account. When a written option expires on its
stipulated expiration date, or when a closing transaction is entered into,
the related liability is extinguished and the Fund realizes a gain (or loss
if the cost of the closing transaction exceeds the premium received when the
option was written).
The VSCEF writes options on stock index securities futures. These options are
settled for cash and subject the Fund to market risk in excess of the amounts
that are reflected in the Statement of Assets and Liabilities. The Fund,
however, is not subject to credit risk on written options as the counterparty
has already performed its obligation by paying a premium at the Inception of
the contract.
As of October 31, 1997 the Funds had no outstanding written options.
E. Security transactions and investment income -- Investment transactions are
accounted for on the trade date (the date the order to buy or sell is
executed). Securities gains and losses are calculated on the identified cost
basis. Interest income is accrued as earned. Dividend income is recorded on
the ex-dividend date.
F. Dollar rolls -- VBAL enters into dollar rolls in which 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 securities. The
Fund is compensated by the interest earned on the cash proceeds of the
initial sale and a fee earned for entering into the roll transaction. Income
is recognized over the duration of the roll transaction.
G. Organization costs -- Organization and initial registration costs incurred
in connection with establishing the Funds have been deferred and are being
amortized on a straight-line basis over a sixty month period beginning at the
commencement of operations of each Fund.
H. Federal income taxes -- Each Fund is treated as a separate taxable entity
for Federal income tax purposes. The Trust's policy is to comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute to shareholders all of its distributable net
investment income, and net realized gain on investments. In addition, the
Trust intends to make distributions as required to avoid excise taxes.
Accordingly, no provision for Federal income or excise tax is necessary.
I. Distributions to shareholders -- Dividends and distributions paid to
shareholders are recorded on the ex-dividend date. The amount of dividends
and distributions from net investment income and net realized capital gains
is determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles. To the extent these
"book/tax" differences are permanent in nature, (i.e., that they result from
other than timing of recognition --
44
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
"temporary differences") such amounts are reclassified within the capital
accounts based on their Federal tax-basis treatment. The reclassifications
for the funds are as follows: VSCEF paid in capital was decreased by
$929,490, accumulated undistributed net investment income was increased by
$941,080 and undistributed net realized gain/loss was decreased by $11,590;
VBAL paid in capital was increased by $33,151, accumulated undistributed net
investment income was decreased by $18,952 and undistributed net realized
gain/loss was decreased by $14,199. The adjustments for the Funds relate
primarily to the character for tax purposes of certain short-term gains or
losses. Dividends and distributions which exceed net investment income or net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment income or
net realized capital gains.
J. Expenses -- Expenses directly attributable to a Fund are charged to that
Fund; other expenses are allocated proportionately among each Fund within the
Trust in relation to the net assets of each Fund or on another reasonable
basis. In calculating the net asset value per share of each class, investment
income, realized and unrealized gains and losses and expenses other than
class specific expenses, are allocated daily to each class of shares based
upon the proportion of net assets of each class at the beginning of each day.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank, ("Chase" or the "Advisor") acts as the
Investment Advisor to the VSCEF, VLCEF, and VBAL. Chase is a direct
wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment
Advisor, Chase supervises the investments of the Funds and for such services
is paid a fee. The fee is computed daily and paid monthly at an annual rate
equal to 0.50% for VBAL, 0.65% for VSCEF and 0.40% for VLCEF of the average
daily net assets. The Advisor voluntarily waived all or a portion of its fees
as outlined in Note 2.E below.
Chase Asset Management Inc. ("CAM"), a registered investment adviser, is the
sub-investment adviser to each Fund pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly owned subsidiary of Chase
and is entitled to receive a fee, payable by Chase from its advisory fee, at
an annual rate equal to 0.20% of VLCEF; 0.25% of VBAL; and 0.30% of VSCEF's
of average daily net assets.
B. Shareholder servicing fees -- The Trust has adopted an Administrative
Services Plan which, among other things, provides that the Trust on behalf of
the Funds may obtain the services of one or more Shareholder Servicing
Agents. For its services, the Shareholder Servicing Agents receive a fee that
is computed daily and paid monthly at an annual rate equal to 0.25% of the
average daily net assets of each of the classes of the funds with the
exception of the Class A Shares of the VSCEF. The VSCEF is charged a fee from
non-affiliated shareholder servicing agents not to exceed 0.25% of the net
assets of the Class. For the year ended October 31, 1997, Chase's Shareholder
Servicing charges amounted to: VSCEF: $768,372, VLCEF: $295,118 and VBAL:
$12,271.
The Shareholder Servicing Agents have voluntarily waived all or a portion of
their fees as outlined in Note 2.E. below.
C. Distribution and sub-administration fees -- Pursuant to a Distribution
and Sub- Administration Agreement, Vista Fund Distributors, Inc. (the
"Distributor"), a wholly owned subsidiary of The BISYS Group, Inc., acts as
the Trust's exclusive underwriter and promotes and arranges for the sale of
each Fund's shares. In addition, the Distributor provides certain
sub-administration services to the Trust, including
45
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
providing officers, clerical staff and office space for an annual fee of
0.05% of the average daily net assets of each Fund.
The Trustees have adopted Distribution Plans (the "Distribution Plans") for
Class A and B for the VSCEF, VLCEF, and VBAL in accordance with Rule 12b-1
under the 1940 Act. There is no Distribution Plan for the Institutional
Classes. The Class A Distribution Plans provide that each Fund shall pay
distribution fees, including payments to the Distributor, at annual rates not
to exceed 0.25% of the average daily net assets of the Class A Shares of each
Fund for distribution services. The Class B Distribution Plan provides that
each Fund shall pay distribution fees, including payments to the Distributor,
at an annual rate not to exceed 0.75% of the average annual net assets of the
Class B Shares for distribution services.
D. Administration fee -- Pursuant to an Administration Agreement, Chase (the
"Administrator") provides certain administration services to the Trust. For
these services and facilities, the Administrator receives from VSCEF, VLCEF
and VBAL a fee computed at the annual rate equal to 0.10% of the respective
Fund's average daily net assets.
E. Waivers of fees -- For the year ended October 31, 1997, the Investment
Adviser and Shareholder Servicing Agent voluntarily waived fees for each of
the Funds as follows:
Fee VSCEF VLCEF VBAL
- --- ------- -------- --------
Investment Advisory ......... -- $476,885 $ 19,663
Shareholder servicing ...... $90,765 119,235 179,498
------- -------- --------
Total ..................... $90,765 $596,120 $199,161
------- -------- --------
F. Other -- Certain officers of the Trust are officers of Vista Fund
Distributors, Inc. or of its parent corporation, BISYS.
Chase provides portfolio accounting and custody services for the Funds.
Compensation for such services is presented in the Statement of Operations as
custodian fees.
3. Investment Transactions -- For the year ended October 31, 1997, purchases and
sales of investments (excluding short-term investments) were as follows:
VSCEF VLCEF VBAL
------------ ----------- -----------
Purchases (excluding
U.S. Government) ............... $418,083,666 $95,151,151 $67,908,383
Sales (excluding
U.S. Government) ............... 224,112,017 79,528,038 49,884,695
Purchases of U.S.Government ...... -- -- 50,520,690
Sales of U.S. Government ......... -- -- 41,441,557
4. Federal Income Tax Matters -- For Federal income tax purposes, the cost and
unrealized appreciation (depreciation) in value of the investment securities at
October 31, 1997 are as follows.
VSCEF VLCEF VBAL
------------ ------------ -----------
Aggregate cost ................... $461,442,412 $127,946,955 $94,035,173
------------ ------------ -----------
Gross unrealized appreciation .... $141,184,009 $ 30,681,520 $14,765,412
Gross unrealized depreciation .... (13,212,717) (2,100,252) (990,685)
------------ ------------ -----------
Net unrealized appreciation ....... $127,971,292 $ 28,581,268 $13,774,727
============ ============ ===========
46
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
5. Transactions in Shares of Beneficial Interest -- Transactions in Shares of
Beneficial Interest were as follows:
<TABLE>
<CAPTION>
Vista Small Cap Equity Fund
---------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
--------------------------- --------------------------
Amount Shares Amount Shares
-------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 105,674,550 5,216,718 $ 138,067,616 7,720,099
Shares issued in reinvestment
of distributions ............... 1,890,293 94,657 686,496 43,642
Shares redeemed ............... (112,944,625) (5,475,143) (65,215,259) (3,588,493)
Hanover acquisition ............ -- -- 7,769,538 467,812
-------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ (5,379,782) (163,768) $ 81,308,391 4,643,060
============== ========== ============= ==========
<CAPTION>
Vista Small Cap Equity Fund
-----------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------- ------------------------
Amount Shares Amount Shares
------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Class B
Shares sold ..................... $ 25,800,141 1,293,773 $ 48,475,336 2,773,564
Shares issued in reinvestment
of distributions ............... 1,168,830 59,121 306,606 19,554
Shares redeemed ............... (16,936,060) (851,909) (7,189,827) (407,340)
Hanover acquisition ............ -- -- -- --
------------- --------- ------------ ---------
Net increase (decrease) in
Trust shares outstanding ...... $ 10,032,911 500,985 $ 41,592,115 2,385,778
============= ========= ============ =========
<CAPTION>
Vista Small Cap Equity Fund
--------------------------------------------------------
Year Ended 5/07/96* Through
October 31, 1997 October 31, 1996
-------------------------- ---------------------------
Amount Shares Amount Shares
------------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Institutional Class
Shares sold ..................... $ 219,344,013 10,818,892 $ 7,753,068 409,919
Shares issued in reinvestment
of distributions ............... 803,425 40,111 -- --
Shares redeemed ............... (12,297,473) (587,990) (3,601) (186)
Hanover acquisition ............ -- -- 37,725,011 2,271,466
------------- ---------- ------------- ------------
Net increase (decrease) in
Trust shares outstanding ...... $ 207,849,965 10,271,013 $45,474,478 2,681,199
============= ========== ============= ============
</TABLE>
- --------------
* Commencement of offering class of shares.
47
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Large Cap Equity Fund#
------------------------------------------------
Year Ended 5/08/96* Through
October 31, 1997 October 31, 1996
------------------------ ---------------------
Amount Shares Amount Shares
------------ --------- ---------- -------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 38,863,393 2,628,815 $8,241,907 674,653
Shares issued in reinvestment
of distributions ............... 1,310,830 109,871 40,764 3,227
Shares redeemed ............... (6,429,036) (436,066) (606,869) (47,836)
Hanover acquisition ............ -- -- -- --
------------ --------- ---------- -------
Net increase (decrease) in
Trust shares outstanding ...... $ 33,745,187 2,302,620 $7,675,802 630,044
============ ========= ========== =======
<CAPTION>
Vista Large Cap Equity Fund#
-----------------------------------------
Year Ended 5/07/96* Through
October 31, 1997 October 31, 1996
-------------------- -----------------
Amount Shares Amount Shares
---------- ------- -------- ------
<S> <C> <C> <C> <C>
Class B
Shares sold ..................... $5,035,390 384,285 $294,905 23,070
Shares issued in reinvestment
of distributions ............... 79,437 6,640 500 38
Shares redeemed ............... (720,413) (52,633) -- --
Hanover acquisition ............ -- -- -- --
---------- ------- -------- ------
Net increase (decrease) in
Trust shares outstanding ...... $4,394,414 338,292 $295,405 23,108
========== ======= ======== ======
<CAPTION>
Vista Large Cap Equity Fund#
---------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
--------------------------- ---------------------------
Amount Shares Amount Shares
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Institutional Class
Shares sold ..................... $ 20,757,456 1,535,702 $ 13,383,049 1,087,973
Shares issued in reinvestment
of distributions ............... 7,345,048 617,358 7,388,210 646,401
Shares redeemed ............... (32,076,741) (2,409,324) (45,574,669) (3,792,063)
Hanover acquisition ............ -- -- 54,745,237 4,989,990
------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ (3,974,237) (256,264) $ 29,941,827 2,932,301
============= ========== ============= ==========
</TABLE>
- --------------
# Previously the Vista Equity Fund.
* Commencement of offering class of shares.
48
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Balanced Fund
------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
-------------------------------- -------------------------------
Amount Shares Amount Shares
---------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold ..................... $ 36,446,654 2,510,736 $ 11,377,412 866,348
Shares issued in reinvestment
of distributions ............... 5,327,049 390,365 1,999,265 154,306
Shares redeemed ............... (12,603,017) (863,052) (7,725,832) (587,614)
IEEE merger ..................... -- -- 9,380,999 849,658
------------- --------- ------------ --------
Net increase (decrease) in
Trust shares outstanding ...... $ 29,170,686 2,038,049 $ 15,031,844 1,282,698
============= ========= ============ =========
<CAPTION>
Vista Balanced Fund
----------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------------- ------------------------------
Amount Shares Amount Shares
--------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Class B
Shares sold ..................... $ 5,622,984 394,960 $ 3,442,067 264,808
Shares issued in reinvestment
of distributions ............... 826,755 61,505 330,884 25,817
Shares redeemed ............... (2,121,481) (150,183) (1,201,584) (92,310)
------------ -------- ------------ -------
Net increase (decrease) in
Trust shares outstanding ...... $ 4,328,258 306,282 $ 2,571,367 198,315
============ ======== ============ =======
</TABLE>
6. Retirement Plan -- The funds have adopted an unfunded noncontributory defined
benefit pension plan covering all independent trustees of the Funds who will
have served as an independent trustee for at least five years at the time of
retirement. Benefits under this plan are based on compensation and years of
service. Pension expenses for the year ended October 31, 1997, included in
Trustees fees and expenses in the Statement of Operations, and accrued pension
liability included in Other Accrued liabilities in the Statement of Assets and
Liabilities were as follows:
Accrued
Pension Pension
Expenses Liability
-------- ---------
VSCEF ...... $5,648 $27,858
VLCEF ...... 2,102 6,810
VBAL ...... 1,377 4,835
49
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
7. Mergers -- On May 6, 1996, The Vista Large Cap Equity Fund and the Vista
Small Cap Equity Fund acquired all of the net assets of the Hanover Blue Chip
Growth Fund and the Hanover Small Capitalization Growth Fund, respectively,
pursuant to a plan of reorganization approved by Hanover Fund shareholders in
April of 1996. The acquisition was accomplished by a tax-free exchange of shares
as shown in the table below.
On June 10, 1996, the Vista Balanced Fund acquired all the net assets of the
IEEE Balanced Fund pursuant to a plan of reorganization approved by the IEEE
Balanced Fund shareholders in April of 1996. The acquisition was accomplished by
a tax-free exchange of shares as shown in the table below.
The Blue The Small
Chip Growth Capitalization
Fund Growth Fund IEEE
Acquired Funds ------------- --------------- ---------
Shares Exchanged ............... 5,277,621 4,587,887 955,190
Net Assets (in millions) ...... $ 60.4 $ 50.4 $ 11.3
Vista Vista Vista
Large Cap Small Cap Balanced
Equity Fund Equity Fund Fund
Vista Funds -------------- -------------- ------------
Vista Shares Issued ...... 4,989,990 2,739,278 849,658
Aggregate Net Assets After
Acquisition ............ $118,556,169 $194,143,252 $58,491,280
50
<PAGE>
Vista Mutual Funds
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Small Cap Equity Fund
----------------------------------------
Class A
----------------------------------------
12/20/94*
Through
Year Ended 10/31/95
10/31/97 10/31/96 10/31/95
--------- -------- ---------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 19.19 $ 15.07 $ 10.00
--------- -------- ---------
Income from Investment Operations:
Net Investment Income ............................................. (0.051) 0.005 0.060
Net Gain or (Losses) in Securities (both realized and unrealized) 4.720 4.328 5.056
--------- -------- ---------
Total from Investment Operations ................................. 4.669 4.333 $ 5.116
--------- -------- ---------
Less Distributions:
Dividends from Net Investment Income .............................. -- 0.033 0.042
Distributions from Capital Gains ................................. 0.290 0.180 0.004
--------- -------- ---------
Total Distributions ............................................. 0.290 0.213 0.046
--------- -------- ---------
Net Asset Value, End of Period .................................... $ 23.57 $ 19.19 $ 15.07
========= ======== =========
Total Return (1) 24.61% 29.06% 51.25%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 174,017 $144,763 $ 43,739
Ratio of Expenses to Average Net Assets # ........................ 1.45% 1.50% 1.51%
Ratio of Net Investment Income to Average Net Assets # ............ (0.23%) 0.03% 0.52%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 1.45% 1.52% 2.67%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... (0.23%) 0.01% (0.64%)
Portfolio Turnover Rate ............................................. 55% 78% 75%
Average Commission Rate Paid per share .............................. $ 0.06001 $ 0.0595 --
<CAPTION>
Class B
---------------------------------------
03/28/95**
through
Year Ended 10/31/95
10/31/97 10/31/96 10/31/95
--------- -------- --------
<S> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 19.00 $ 15.01 $ 11.39
--------- -------- --------
Income from Investment Operations:
Net Investment Income ............................................. (0.270) (0.074) (0.018)
Net Gain or (Losses) in Securities (both realized and unrealized) 4.754 4.248 3.669
--------- -------- --------
Total from Investment Operations ................................. 4.484 4.174 3.651
--------- -------- --------
Less Distributions:
Dividends from Net Investment Income .............................. -- -- 0.027
Distributions from Capital Gains ................................. 0.290 0.180 0.004
--------- -------- --------
Total Distributions ............................................. 0.290 0.180 0.031
--------- -------- --------
Net Asset Value, End of Period .................................... $ 23.19 $ 19.00 $ 15.01
========= ======== ========
Total Return (1) 23.84% 28.04% 32.09%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 100,341 $ 72,722 $ 21,624
Ratio of Expenses to Average Net Assets # ........................ 2.16% 2.22% 2.24%
Ratio of Net Investment Income to Average Net Assets # ............ (0.94%) (0.68%) (0.25%)
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 2.16% 2.25% 3.23%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... (0.94%) (0.71)% (1.24%)
Portfolio Turnover Rate ............................................. 55% 78% 75%
Average Commission Rate Paid per share .............................. $ 0.06001 $ 0.0595 --
<CAPTION>
Institutional
--------------------------
05/07/96**
Through
Year Ended 10/31/96
10/31/97 10/31/96
--------- --------
<S> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .............................. $ 19.22 $ 18.44
--------- --------
Income from Investment Operations:
Net Investment Income ............................................. 0.027 0.023
Net Gain or (Losses) in Securities (both realized and unrealized) 4.753 0.757
--------- --------
Total from Investment Operations ................................. 4.780 0.780
--------- --------
Less Distributions:
Dividends from Net Investment Income .............................. -- --
Distributions from Capital Gains ................................. 0.290 --
--------- --------
Total Distributions ............................................. 0.290 --
--------- --------
Net Asset Value, End of Period .................................... $ 23.71 $ 19.22
========= ========
Total Return (1) 25.15% 4.23%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ........................... $ 307,103 $ 51,542
Ratio of Expenses to Average Net Assets # ........................ 1.10% 1.10%
Ratio of Net Investment Income to Average Net Assets # ............ 0.13% 0.27%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ................................. 1.14% 1.27%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ....................................... 0.09% 0.10%
Portfolio Turnover Rate ............................................. 55% 78%
Average Commission Rate Paid per share .............................. $ 0.06001 $ 0.0595
</TABLE>
- -------
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
51
<PAGE>
Vista Mutual Funds
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Large Cap Equity Fund*
---------------------------------------------------
Class A Class B
-------------------------- ------------------------
Year 05/08/96** Year 05/07/96**
Ended Through Ended Through
10/31/97 10/31/96 10/31/97 10/31/96
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $ 13.25 $ 12.06 $ 13.22 $ 12.06
--------- -------- --------- --------
Income from Investment Operations:
Net Investment Income ................................. 0.108 0.050 0.067 0.050
Net Gains or (Losses) In Securities (both realized and
unrealized) .......................................... 3.456 1.209 3.423 1.187
--------- -------- --------- --------
Total from Investment Operations ..................... 3.564 1.259 3.490 1.237
--------- -------- --------- --------
Less Distributions:
Dividends from Net Investment Income .................. 0.094 0.069 0.061 0.077
Distributions from Capital Gains ..................... 1.890 -- 1.890 --
--------- -------- --------- --------
Total Distributions .................................... 1.984 0.069 1.951 0.077
--------- -------- --------- --------
Net Asset Value, End of Period ........................... $ 14.83 $ 13.25 $ 14.76 $ 13.22
========= ======== ========= ========
Total Return (1) ....................................... 30.69% 10.84% 30.15% 6.66%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 43,491 $ 8,349 $ 5,334 $ 305
Ratio of Expenses to Average Net Assets # ............... 1.13% 1.38% 1.59% 1.88%
Ratio of Net Investment Income to Average Net Assets # 0.61% 0.84% 0.15% 0.14%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 1.63% 1.87% 2.09% 2.38%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .............................. 0.11% 0.35% (0.35%) (0.36%)
Portfolio Turnover Rate ................................. 72% 89% 72% 89%
Average Commission Rate Paid per share .................. $ 0.05993 $ 0.0598 $ 0.05993 $ 0.0598
<CAPTION>
Institutional Class
---------------------------------------------------------------------
Year Ended
---------------------------------------------------------------------
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $ 13.27 $ 12.24 $ 13.16 $ 13.65 $ 12.56
--------- -------- -------- -------- ---------
Income from Investment Operations:
Net Investment Income ................................. 0.182 0.227 0.277 0.298 0.302
Net Gains or (Losses) In Securities (both realized and
unrealized) .......................................... 3.470 2.597 1.744 0.263 1.153
--------- -------- -------- -------- ---------
Total from Investment Operations ..................... 3.652 2.824 2.021 0.561 1.455
--------- -------- -------- -------- ---------
Less Distributions:
Dividends from Net Investment Income .................. 0.182 0.224 0.282 0.290 0.304
Distributions from Capital Gains ..................... 1.890 1.570 2.659 0.761 0.062
--------- -------- -------- -------- ---------
Total Distributions .................................... 2.072 1.794 2.941 1.051 0.366
--------- -------- -------- -------- ---------
Net Asset Value, End of Period ........................... $ 14.85 $ 13.27 $ 12.24 $ 13.16 $ 13.65
========= ======== ======== ======== =========
Total Return (1) ....................................... 31.50% 25.65% 20.41% 4.37% 11.73%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 107,008 $ 99,025 $ 55,417 $ 67,818 $ 120,635
Ratio of Expenses to Average Net Assets # ............... 0.50% 0.40% 0.31% 0.31% 0.31%
Ratio of Net Investment Income to Average Net Assets # 1.32% 1.86% 2.41% 2.30% 2.30%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 1.00% 0.96% 0.90% 0.95% 0.88%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .............................. 0.82% 1.30% 1.82% 1.66% 1.73%
Portfolio Turnover Rate ................................. 72% 89% 45% 53% 33%
Average Commission Rate Paid per share .................. $ 0.05993 $ 0.0598 -- -- --
</TABLE>
- -------
* Formerly Vista Equity Fund.
** Commencement of offering of class of shares
# Short periods have been annualized.
(1) Total returns figures do not include the effect of any sales load. (2) In
1992, the Fund's fiscal year end was changed from June 30 to October 31.
See notes to financial statements.
52
<PAGE>
Vista Mutual Funds
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Balanced Fund
--------------------------------------------------------------------
Class A
--------------------------------------------------------------------
Year Ended
---------------------------------------------------- 11/04/92*
Through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $ 13.83 $ 12.45 $ 11.09 $ 11.38 $ 10.00
--------- -------- -------- -------- -------
Income from Investment Operations:
Net Investment Income ................................. 0.392 0.353 0.382 0.356 0.410
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... 2.393 1.692 1.517 (0.187) 1.344
--------- -------- -------- -------- -------
Total from Investment Operations ..................... 2.785 2.045 1.899 0.169 1.754
--------- -------- -------- -------- -------
Less Distributions:
Dividends from Net Investment Income ............... 0.395 0.345 0.408 0.359 0.375
Distributions from Capital Gains ..................... 0.810 0.320 0.131 0.100 --
--------- -------- -------- -------- -------
Total Distributions ................................. 1.205 0.665 0.539 0.459 0.375
--------- -------- -------- -------- -------
Net Asset Value, End of Period ........................... $ 15.41 $ 13.83 $ 12.45 $ 11.09 $ 11.38
========= ======== ======== ======== =======
Total Return (1) ....................................... 21.48% 16.89% 17.70% 1.56% 17.74%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 92,941 $ 55,233 $ 33,733 $ 21,705 $13,920
Ratio of Expenses to Average Net Assets # ............... 1.25% 1.25% 1.06% 0.58% --
Ratio of Net Investment Income to Average Net Assets # 2.91% 2.97% 3.48% 3.21% 3.87%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 1.52% 1.78% 2.20% 2.20% 3.07%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .............................. 2.64% 2.44% 2.34% 1.59% 0.80%
Portfolio Turnover Rate ................................. 136% 149% 68% 77% 65%
Average Commission Rate Paid per share .................. $ 0.05516 $ 0.0598 -- -- --
<CAPTION>
Vista Mutual Funds
Financial Highlights
Class B
--------------------------------------------------
Year Ended
------------------------------------ 11/04/93**
Through
10/31/97 10/31/96 10/31/95 10/31/94
--------- -------- ------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ..................... $ 13.70 $ 12.36 $ 11.03 $ 11.22
--------- -------- ------- --------
Income from Investment Operations:
Net Investment Income ................................. 0.319 0.283 0.309 0.345
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... 2.326 1.656 1.502 (0.117)
--------- -------- ------- --------
Total from Investment Operations ..................... 2.645 1.939 1.811 0.228
--------- -------- ------- --------
Less Distributions:
Dividends from Net Investment Income ............... 0.325 0.279 0.131 0.318
Distributions from Capital Gains ..................... 0.810 0.320 0.350 0.100
--------- -------- ------- --------
Total Distributions ................................. 1.135 0.599 0.481 0.418
--------- -------- ------- --------
Net Asset Value, End of Period ........................... $ 15.21 $ 13.70 $ 12.36 $ 11.03
========= ======== ======= ========
Total Return (1) ....................................... 20.55% 16.10% 16.93% 2.17%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 15.471 $ 9,737 $ 6,336 $ 3,543
Ratio of Expenses to Average Net Assets # ............... 2.04% 2.00% 1.82% 1.50%
Ratio of Net Investment Income to Average Net Assets # 2.26% 2.21% 2.68% 2.46%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 2.06% 2.29% 2.72% 2.69%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # .............................. 2.24% 1.92% 1.78% 1.24%
Portfolio Turnover Rate ................................. 136% 149% 68% 77%
Average Commission Rate Paid per share .................. $ 0.05516 $ 0.0598 -- --
</TABLE>
- --------
* Commencement of operations.
** Commencement of offering of class of shares
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
53
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Mutual Fund Group
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Vista Small Cap Equity Fund, Vista
Large Cap Equity Fund and Vista Balanced Fund (separate portfolios of Mutual
Fund Group, hereafter referred to as the "Trust") at October 31, 1997, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
54
54
<PAGE>
Vista Small Cap Equity Fund
Vista Large Cap Equity Fund
Vista Balanced Fund
Unaudited
- --------------------------------------------------------------------------------
Certain tax information regarding the Vista Mutual Funds is required to be
provided to shareholders based upon the Funds' income and distributions for the
taxable year ended October 31, 1997. The information and distributions reported
in this letter may differ from the information and distributions taxable to the
shareholders for the calendar year ending December 31, 1997. The information
necessary to complete your income tax returns for the calendar year ending
December 31, 1997 will be received under separate cover.
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997.
The following represents the source and percentage of income earned from
government obligations, the percentage of distributions eligible for the
dividends received deduction and the long-term capital gains distributed per
share by the Funds:
Government
National Federal Federal Home
U.S. Treasury Mortgage Farm Credit Loan Mortgage
Vista Fund Obligations Association Bank Corporation
- --------------------------------------------------------------------------------
Small Cap Equity 0.52% -- 6.06% 5.82%
Large Cap Equity -- -- 0.16% --
Balanced 12.02% 5.18% 2.02% 9.61%
Long-Term
Federal National Student Loan Dividends Capital Gains
Mortgage Marketing Received Distribution
Vista Fund Association Association Deduction Per Share
- --------------------------------------------------------------------------------
Small Cap Equity 4.86% 0.13% 6.49% $0.14
Large Cap Equity -- -- 34.32% $1.49
Balanced 3.50% -- 16.98% $0.46
55
<PAGE>
Vista Service Center
P.O. Box 419392
Kansas City, MO64179
Investment Adviser, Administrator,
Shareholder and Fund Servicing Agent
and Custodian
The Chase Manhattan Bank
Distributor
Vista Fund Distributors, Inc.
Transfer Agent
DST Systems, Inc.
Legal Counsel
Simpson Thacher & Bartlett
Independent Accountants
Price Waterhouse LLP
Vista Mutual Funds are distributed by Vista Fund Distributors, Inc. which is
unaffiliated with The Chase Manhattan Bank. Chase and its respective affiliates
receive compensation from the Vista Funds for providing investment advisory and
other services.
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by a prospectus.
To obtain a prospectus for any of the Vista Funds, call 1-800-34-VISTA. The
prospectus contains more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
<PAGE>
(in sidebar on front cover)
EQUITY FUNDS
[BACKGROUND GRAPHIC OF HILLS AND TREES]
ANNUAL
REPORT
-----------------------------------
Vista. Setting the Global Standard.
VISTA GROWTH AND INCOME FUND
VISTA CAPITAL GROWTH FUND
VISTA EQUITY INCOME FUND
VISTA SMALL CAP OPPORTUNITIES FUND
[logo]
VISTA
FAMILY OF MUTUAL FUNDS
MANAGED BY CHASE MANHATTAN
October 31, 1997
<PAGE>
HIGHLIGHTS
Economic expansion in the U.S. set the stage for solid stock market gains during
the reporting period.
[bullet] The stock market benefited from corporate profit growth, low inflation
and continuing inflows from U.S. and overseas investors.
[bullet] Bond markets, while sensitive to whether the high levels of economic
growth would lead to a resurgence of inflation, rallied as global
investors turned to U.S. Treasury securities in light of global stock
market instability.
CONTENTS
Chairman's Letter 3
Vista Growth and Income Fund
Fund Commentary 4
Vista Capital Growth Fund
Fund Commentary 8
Vista Equity Income Fund
Fund Commentary 12
Vista Small Cap Opportunities Fund
Fund Commentary 16
Fund Financial Statements 19
Portfolio Financial Statements 45
[BOXED TEXT]
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY, THE
CHASE MANHATTAN BANK, AND THE SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENTS IN MUTUAL FUNDS
INVOLVE RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
Vista Family of Mutual Funds
CHAIRMAN'S LETTER
December 10, 1997
Dear Shareholder:
We are pleased to present this Annual Report for the following Vista U.S.
Equity Funds for the year ended October 31, 1997:
[bullet] Growth and Income Fund [bullet] Capital Growth Fund
[bullet] Equity Income Fund [bullet] Small Cap Opportunities Fund
Growing Economy, Low Inflation Drive Equities Higher
The U.S. economy, in one of the longest expansions in history, set the stage for
solid stock market gains during the reporting period. The market benefited from
corporate profit growth, low inflation and continuing inflows from both U.S. and
overseas investors. Although the largest U.S. stocks showed slightly higher
gains than small- and mid-capitalization issues, smaller issues closed the gap
later in the year as investors focused on compelling valuations and earnings.
While U.S. stocks were not immune to October's global correction caused by
economic and currency instability in Asia, prices recovered as investors
recognized the enduring strength of U.S. economic fundamentals.
U.S. Bond Markets Become Safe Haven
U.S. bond markets were driven by an acute sensitivity to whether the high
levels of economic growth would lead to a resurgence of inflation. While this
caused bond investors to react to each economic report, inflation remained
muted. As the year ended, U.S. bond markets rallied as global investors turned
to U.S. Treasury securities in light of global stock market instability.
After a three-year period in which U.S. stock prices doubled, the October
volatility served as a reminder that equity markets are inherently volatile
over the short term. It's important for you to understand the potential risks
and returns in an investment program based on your time horizon and risk
tolerance. All of us at Vista look forward to continuing to help you work
toward your financial goals.
Sincerely yours,
/s/ Fergus Reid
Fergus Reid
Chairman
3
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Unaudited
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VISTA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
FUND FACTS
Objective: Capital Growth Plus Current Income
Primary investments: Common Stocks
Suggested investment
time frame: Mid- to Long-Term
Market benchmark: S&P 500 Index
Lipper Funds category: Growth & Income Funds Average
<TABLE>
<CAPTION>
Class A Class B Class I
------------------ ---------------- ---------------
<S> <C> <C> <C>
Inception date: 9/23/87 11/4/93 1/25/96
Newspaper symbol: Gro Inc Gro Inc Gro Inc
As of October 31, 1997
Net assets: $1,496.7 million $489.1 million $522.3 million
</TABLE>
PERFORMANCE
Vista Growth and Income Fund, which seeks capital appreciation and current
income by investing primarily in common stocks, had a total return of 28.84%
(Class A shares, without sales charges) for the year ended October 31, 1997.
STRATEGY
The Fund benefited from overweight positions in financial stocks as interest
rates fell in response to moderating economic growth in late 1996. Anticipating
that the economy would pick up in early 1997, the management team cut financial
exposure but maintained an overweight stance in technology while adding to
sectors, such as capital goods, which historically tend to do well in a growing
economy.
During the period of volatility following the March 25th interest rate hike,
the management team turned to technology and health care companies whose
stocks, in its opinion, had been battered. By early summer, the management team
took a sector-neutral approach and began moving towards stronger valuations at
the lower end of the large cap range and in mid-cap companies.
4
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VISTA GROWTH AND INCOME FUND
OUTLOOK
The Fund's management team is looking for companies it believes will maintain
earnings in a slower economy, as well as those that may benefit from expected
lower interest rates. The Fund expects to maintain its overweight stance in
mid-cap insurers, but is avoiding aggressive investments in technology until
the earnings picture of companies in the sector clears.
VISTA GROWTH AND INCOME FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 99.91%
Cash/Other 0.09%
GROWTH AND INCOME PORTFOLIO
COMPOSITION OF TOTAL MARKET VALUE AS OF 10/31/97
[pie chart]
Agriculture Production Services 1.78%
Banking 6.36%
Chemicals 2.07%
Computer Software 2.07%
Computers/Computer Hardware 5.13%
Consumer Products 2.25%
Diversified 4.18%
Electronics/Electrical Equipment 2.17%
Entertainment/Leisure 4.74%
Financial Services 5.86%
Food/Beverage Production 3.15%
Health Care/Health Care Services 3.71%
Insurance 5.15%
Manufacturing 3.56%
Markets/Mining 1.86%
Oil & Gas 8.55%
Pharmaceuticals 4.38%
Real Estate Investment Trust 2.97%
Retailing 7.04%
Telecommunications 5.05%
U.S. Treasury Securities 2.40%
Utility 2.81%
Other 12.76%
5
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VISTA GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO'S TOP 10 HOLDINGS AS OF 10/31/97
Household Finance Corp. 2.56%
U.S. Treasury Securities 2.40%
HEALTHSOUTH Corporation 1.68%
Carnival Corporation Cl. A 1.64%
Computer Associates Intl. Inc. 1.54%
Dow Chemical Co. 1.54%
Smithkline Beecham PLC, ADR 1.52%
Halliburton Hldgs. Co. 1.44%
Kroger Co. 1.42%
New York Times Co., Cl. A 1.39%
Top 10 holdings comprised 17.13% of the Portfolio's market value of
investments. Fund holdings are subject to change at any time.
FUND'S AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
One Year 28.84% 22.72%
Five Years 16.96% 15.83%
Ten Years 23.48% 22.88%
Since Inception (9/23/87) 23.21% 22.62%
Class B Shares Without CDSC With CDSC*
One Year 28.20% 23.20%
Five Years+ 16.49% 14.49%
Ten Years+ 23.23% 23.23%
Since Inception (9/23/87)+ 22.96% 22.96%
Class I Shares
One Year 29.37%
Five Years+ 17.14%
Ten Years+ 23.57%
Since Inception (9/23/87)+ 23.30%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
* Assumes 5% CDSC for the one year period and a 0% CDSC for the period since
inception.
+ The Fund commenced operations on 9/23/87. Class B Shares and Class I Shares
were introduced on 11/4/93 and 1/25/96, respectively. Investors should note that
the information presented for Class B and Class I Shares prior to their
introduction is based on historical expenses of the predecessor Class A Shares,
which are lower than the actual expenses of the Class B Shares and higher than
Class I Shares. Additionally, annualized figures have been restated to reflect
the maximum 5% contingent deferred sales charge that applies to the Fund's B
Shares.
6
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VISTA GROWTH AND INCOME FUND
[line chart]
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA GROWTH AND INCOME FUND -- CLASS A
AND ITS KEY BENCHMARKS
Vista Growth and Lipper Growth & Income
Income Fund Funds Avg. S&P 500 Index
10/87 9525 10000 10000
13608 11588 11477
10/89 19650 13971 14502
19659 12622 13419
10/91 31966 16780 17901
35910 18304 19682
10/93 43262 21354 22619
43325 21942 23492
10/95 51033 26379 29693
61035 31989 36836
10/31/97 78640 40993 48652
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Growth & Income Fund, the Lipper Growth & Income Funds Average
and the Standard & Poor's 500 Index from October 31, 1987 to October 31, 1997.
The performance of the Fund assumes the reinvestment of all dividends and
capital gains and includes a 4.75% sales charge. The performance of the average
and the index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark.
The Lipper Growth & Income Funds Average represents the average performance of
a universe of 689 actively managed growth and income funds. Lipper is an
independent mutual fund performance monitor whose results are based on total
return and do not reflect a sales charge.
The Standard and Poor's 500 Index is a broad-based index that is generally
considered representative of the U.S. stock market. The index is unmanaged and
reflects the reinvestment of dividends. An individual cannot invest in the
index.
7
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Unaudited
About Your Fund
VISTA CAPITAL GROWTH FUND
FUND FACTS
Objective: Capital Growth
Primary investments: Mid-Size Common Stocks
Suggested investment
time frame: Long-Term
Market benchmark: Russell 2000 Index
Lipper Funds category: Mid-Cap Funds Average
<TABLE>
<CAPTION>
Class A Class B Class I
---------------- ---------------- --------------
<S> <C> <C> <C>
Inception date: 9/23/87 11/4/93 1/25/96
Newspaper symbol: Cap Gro Cap Gro Cap Gro
As of October 31, 1997
Net assets: $839.4 million $421.6 million $52.3 million
</TABLE>
PERFORMANCE
Vista Capital Growth Fund, which seeks to provide capital growth through a
portfolio of common stocks of mid-sized companies, had a total return of 26.47%
(Class A shares, without sales charges) for the year ended October 31, 1997.
STRATEGY
Anticipating slow economic growth in 1996, the Fund began the reporting period
strongly due to overweight positions in the financial and technology sectors.
As 1996 ended, the management team took profits in technology and reduced the
financial overweight given its expectation that economic growth would
accelerate, repositioning these assets in cyclical sectors which historically
tend to do well in a growing economy.
To the extent that mid-cap stocks were particularly hard hit during the sell-off
that accompanied the March 25th interest rate hike, the Fund's returns also
suffered. However, the management team took advantage of falling stock prices
during this period to purchase what it believed were high-quality stocks at
attractive prices, particularly within the technology sector. As mid-caps began
performing strongly in the spring and summer of 1997, many of the positions
taken during the sell-off appreciated. By the second half of the period, the
Fund had begun taking aggressive positions in insurance companies and these
holdings subsequently began to pay off in light of industry consolidation and
compelling valuations.
8
<PAGE>
Unaudited
About Your Fund
VISTA CAPITAL GROWTH FUND
OUTLOOK
The management team expects to emphasize companies which it believes will
maintain earnings in a slower-growth environment as well as those that may
benefit from the expected lower interest rates. They expect to maintain an
overweight stance in mid-cap insurers, but they expect to limit technology
until the earnings picture of companies in the sector clears.
VISTA CAPITAL GROWTH FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 99.86%
Cash/Other 0.14%
CAPITAL GROWTH PORTFOLIO
COMPOSITION OF TOTAL MARKET VALUE AS OF 10/31/97
[pie chart]
Aerospace 3.45%
Automotive 2.49%
Banking 5.26%
Broadcasting 3.91%
Business Services 6.61%
Chemicals 3.42%
Computer Software 2.14%
Computers/Computer Hardware 4.75%
Electronics/Electrical Equipment 3.61%
Entertainment/Leisure 4.23%
Financial Services 5.91%
Health Care/Health Care Services 9.48%
Insurance 9.40%
Manufacturing 4.76%
Oil & Gas 3.00%
Real Estate Investment Trust 3.10%
Retailing 4.58%
Textiles 2.74%
Other 17.16%
9
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Unaudited
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VISTA CAPITAL GROWTH FUND
PORTFOLIO'S TOP 10 HOLDINGS AS OF 10/31/97
Tenet Healthcare Corp. 2.33%
Carnival Corp. Cl. A 2.24%
EMC Corp. Mass 2.15%
Precision Castparts Corp. 2.09%
GTECH Hldgs. Corp. 2.08%
Household Finance Corp. 2.03%
Tele Communications Inc. Liberty
Media Group Class A 1.88%
Unifi Inc. 1.86%
Lear Corp. 1.85%
Comast Corp. Cl. A 1.69%
Top 10 holdings comprised 20.2% of the Portfolio's market value of the
investments. Fund holdings are subject to change at any time.
FUND'S AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
One Year 26.47% 20.46%
Five Years 18.29% 17.15%
Ten Years 21.27% 20.68%
Since Inception (9/23/87) 21.02% 20.44%
Class B Shares Without CDSC With CDSC*
One Year 25.85% 20.85%
Five Years+ 17.84% 15.84%
Ten Years+ 21.03% 21.03%
Since Inception (9/23/87)+ 20.79% 20.79%
Class I Shares
One Year 26.98%
Five Years+ 18.46%
Ten Years+ 21.35%
Since Inception (9/23/87)+ 21.10%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
* Assumes a 5% CDSC for the one year period and a 0% CDSC for the period since
inception.
+ The Fund commenced operations on 9/23/87. Class B Shares and Class I Shares
were introduced on 11/4/93 and 1/25/96, respectively. Investors should note
that the information presented for Class B and Class I Shares prior to their
introduction is based on historical expenses of the predecessor Class A Shares,
which are lower than the actual expenses of the Class B Shares and higher than
Class I Shares. Additionally, annualized figures have been restated to reflect
the maximum 5% contingent deferred sales charge that applies to the Fund's B
Shares.
10
<PAGE>
Unaudited
About Your Fund
VISTA CAPITAL GROWTH FUND
[line chart]
<TABLE>
<CAPTION>
Vista Capital Growth Fund Lipper Mid-Cap Funds Avg. Russell 2000 Index
<S> <C> <C> <C>
10/87 9525 10000 10000
11063 11954 12722
10/89 16829 15181 14709
13782 12994 10695
10/91 24802 20681 16964
28314 22325 18577
10/93 36543 27680 24592
37501 28349 24507
10/95 42708 34956 29006
51883 41199 33837
10/31/97 65615 50870 43765
</TABLE>
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Capital Growth Fund, the Lipper Mid-Cap Funds Average and the
Russell 2000 Index from October 31, 1987 to October 31, 1997. The performance of
the Fund assumes the reinvestment of all dividends and capital gains and
includes a 4.75% sales charge. The performance of the average and the index does
not include a sales charge and has been adjusted to reflect reinvestment of all
dividends and capital gains on the securities included in the benchmark.
The Lipper Mid-Cap Funds Average represents the average performance of a
universe of 275 actively managed mid-cap funds. Lipper is an independent mutual
fund performance monitor whose results are based on total return and do not
reflect a sales charge.
The Russell 2000 Index tracks the shares of 2,000 small-capitalization
companies. The index is unmanaged and reflects the reinvestment of dividends.
An individual cannot invest directly in the index.
11
<PAGE>
Unaudited
About Your Fund
VISTA EQUITY INCOME FUND
FUND FACTS
Objective: Current Income Plus Capital Growth
Primary investments: Common Stocks
Suggested investment Mid- to Long-Term
time frame:
Market benchmark: S&P 500 Index
Lipper Funds category: Equity Income Funds Average
Class A Class B
--------------- --------------
Inception date: 7/15/93 5/7/96
Newspaper symbol: Eq Inc Not listed
As of October 31, 1997
Net assets: $47.4 million $14.8 million
PERFORMANCE
Vista Equity Income Fund, which seeks to provide current income plus
opportunities for capital growth by investing primarily in income-producing
securities, had a total return of 33.66% (Class A shares, without sales
charges) for the year ended October 31, 1997.
STRATEGY
The Fund began the reporting year with an overweight position in real estate
investment trusts (REITs). Anticipating economic growth, the investment team
subsequently cut exposure to REITs and other interest-rate sensitive companies
in favor of sectors which historically perform better in a stronger economy.
After building a large cash position after the March 25th interest rate hike,
the Fund began aggressively buying, adding REITs and mid-cap insurance
companies, as the market rallied in April and May.
The REIT and insurance positions proved beneficial in the second half of the
year, and the Fund was further aided by the decision to sell technology
holdings which had reached their price targets prior to the October correction.
By the end of the year, the Fund had built substantial holdings in cable/media
and European restructuring companies, where company managers are increasingly
focused on shareholder return.
12
<PAGE>
Unaudited
About Your Fund
VISTA EQUITY INCOME FUND
OUTLOOK
The Fund continues to pursue a barbell strategy, investing in securities with
high dividend yields as well as those believed to offer the potential for
capital appreciation. Anticipating slowing economic growth, the management team
expects to emphasize companies it believes are capable of maintaining earnings,
as well as those that may benefit from the expected lower interest rates.
VISTA EQUITY INCOME FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 98.73%
Cash/Other 1.27%
VISTA EQUITY INCOME FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[pie chart]
Aerospace 2.10%
Automotive 2.35%
Banking 18.62%
Business Services 1.49%
Chemicals 2.56%
Consumer Products 1.68%
Entertainment/Leisure 1.64%
Financial Services 4.42%
Food/Beverage Products 1.37%
Insurance 5.16%
Oil & Gas 7.81%
Pharmaceuticals 3.96%
Real Estate Investment Trust 14.79%
Telecommunications 4.56%
Utilities 4.45%
Other 13.27%
13
<PAGE>
Unaudited
About Your Fund
VISTA EQUITY INCOME FUND
TOP 10 HOLDINGS AS OF 10/31/97
Deutsche Bank AG (US) 12.06%
U.S. Treasury Securities 9.77%
Dow Chem Co. 2.19%
Viacom International
(TCI Pacific) Class A 1.91%
Federated Dept. Stores 1.75%
Equity Residential Properties Trust 1.71%
Federal Home Loan Mortgage Corp. 1.69%
FPL Group Inc. 1.66%
Carnival Corp. Class A 1.64%
Assisted Living Concepts 1.48%
Top 10 holdings comprised 35.86% of Fund's market value of investments. Fund
holdings are subject to change at any time.
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
One Year 33.66% 27.65%
Five Years N/A N/A
Since Inception (7/15/93) 19.34% 18.07%
Class B Shares Without CDSC With CDSC*
One Year 32.87% 27.87%
Five Years+ N/A N/A
Since Inception (7/15/93)+ 19.06% 15.66%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
Certain fees on the Fund were waived during the periods shown. Had they not
been waived, returns would have been lower.
* Assumes 5% CDSC for the one year period, a 4% CDSC for the period since
inception.
+ The Fund commenced operations on 7/15/93. Class B Shares were introduced on
5/7/96. Investors should note that the information presented for Class B prior
to their introduction is based on historical expenses of the predecessor Class
A Shares, which are lower than the actual expenses of the Class B Shares.
Additionally, annualized figures have been restated to reflect the maximum 5%
contingent deferred sales charge that applies to the Fund's B Shares.
14
<PAGE>
Unaudited
About Your Fund
VISTA EQUITY INCOME FUND
[line graph]
<TABLE>
<CAPTION>
Vista Equity Income Fund Lipper Equity Income Funds Avg. S&P 500 Index
<S> <C> <C> <C>
7/93 9550 10000 10000
10/93 10115 10585 10470
10/94 9978 10692 10874
10/95 11771 12633 13745
10/96 15278 15273 17051
10/31/97 20421 19410 22520
</TABLE>
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Equity Income Fund, the Lipper Equity Income Funds Average and
the S&P 500 Index from July 15, 1993 to October 31, 1997. The performance of the
Fund assumes the reinvestment of all dividends and capital gains and includes a
4.50% sales charge. The performance of the average and the index does not
include a sales charge and has been adjusted to reflect reinvestment of all
dividends and capital gains on the securities included in the benchmark.
Certain fees on the Fund were waived during the periods shown. Had they not
been waived, returns would have been lower.
The Lipper Equity Income Funds Average represents the average performance of a
universe of 203 actively managed equity income funds. Lipper is an independent
mutual fund performance monitor whose results are based on total return and do
not reflect a sales charge.
The Standard & Poor's 500 Index is a broad-based index that is generally
considered representative of the U.S. stock market. The index is unmanaged and
reflects reinvestment of dividends. An individual cannot invest in the index.
15
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP OPPORTUNITIES FUND
FUND FACTS
Objective: Capital Growth
Primary investments: Small Cap Common Stocks
Suggested investment Long-Term
time frame:
Market benchmark: Russell 2000 Index
Lipper Funds category: Small Company Growth Funds Average
Class A Class B
--------------- --------------
Inception date: 5/19/97 5/19/97
Newspaper symbol: SCapOp SCapOp
As of October 31, 1997
Net assets: $42.6 million $38.1 million
PERFORMANCE
Vista Small Cap Opportunities Fund, which seeks to provide capital growth by
investing in small-cap common stocks, had a cumulative total return of 38.50%
(Class A shares, without sales charges) from its inception on May 19, 1997
through October 31, 1997.
STRATEGY
The timing of the Fund's introduction proved to be quite good as it occurred in
conjunction with renewed investor interest in small caps after three years of
small-cap underperformance. It also benefited from the fact that the
fast-growing smaller companies were among the most beaten-up and undervalued.
Before the October correction, the Fund was particularly supported by the
performance of its individual holdings in technology and health-care. Although
fast-growing technology companies were the hardest hit during the correction,
the Fund held up much better than its peers.
16
<PAGE>
Unaudited
About Your Fund
VISTA SMALL CAP OPPORTUNITIES FUND
OUTLOOK
A key aspect of the small cap turnaround has been the improving earnings of
small caps relative to their larger peers. This combined with attractive
valuations, leads the investment team to expect that small caps will remain the
most attractive segment of the U.S. stock market over the next 12 to 18 months.
VISTA SMALL CAP OPPORTUNITIES FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[pie chart]
Investments 97.31%
Cash/Other 2.69%
VISTA SMALL CAP OPPORTUNITIES FUND
COMPOSITION OF TOTAL MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[pie chart]
Advertising 3.28%
Business Services 10.70%
Banking 6.15%
Computer Software 8.62%
Electronics/Electrical Equipment 7.65%
Entertainment/Leisure 4.11%
Environmental Services 2.23%
Health Care/Health Care Services 19.59%
Insurance 5.02%
Oil & Gas 2.45%
Retailing 5.27%
Shipping/Transportation 4.29%
Telecommunications 2.08%
Wholesaling 3.09%
Other 15.47%
17
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Unaudited
About Your Fund
VISTA SMALL CAP OPPORTUNITIES FUND
TOP 10 HOLDINGS AS OF 10/31/97
Deutsche Bank AG (US) 5.13%
Assisted Living Concepts 2.08%
Petco Animal Supplies, Inc. 1.92%
Universal Health Services Inc., Class B 1.92%
Healthcare Financial Partners, Financial Services 1.88%
ESC Medical Systems Ltd 1.87%
Penn-Amer Group, Inc. 1.85%
Suburban Ostomy Supply Co. 1.76%
AXENT Technologies Inc. 1.76%
Universal Outdoor Holdings, Inc. 1.67%
Top 10 holdings comprised 21.84% of Fund's market value of investments. Fund
holdings are subject to change at any time.
CUMULATIVE TOTAL RETURNS AS OF 10/31/97+
Without With
Class A Shares Sales Charge Sales Charge
Since Inception (5/19/97) 38.50% 31.92%
Class B Shares Without CDSC With CDSC*
Since Inception (5/19/97) 38.10% 33.10%
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
* Assumes 5% CDSC for the period since inception.
+ The Fund commenced operations on 5/19/97. Class A and B Shares were
introduced on 5/19/97. The Fund is currently waiving certain fees. This
voluntary waiver may be modified or terminated at any time, which would reduce
performance.
Small capitalization funds typically carry more risk than stock funds investing
in well-established "blue chip" companies since smaller companies generally
have a higher risk of failure. Historically, smaller companies' stock has
experienced a greater degree of market volatility than the average stock.
18
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- 87.8%
- -------------------------------------------------------------
Common Stock -- 68.3%
---------------------
Aerospace -- 1.8%
12,500 Precision Castparts Corp. $ 735,156
7,200 Sundstrand Corp. 391,500
------------
1,126,656
------------
Automotive -- 2.4%
21,000 Chrysler Corp. 740,250
15,000 Lear Corp.* 720,938
------------
1,461,188
------------
Banking -- 6.6%
7,000 BankAmerica Corp. 500,500
6,000 Cullen/Frost Bankers, Inc. 303,000
4,500 NationsBank Corp. 269,437
9,000 Signet Banking Corp. 484,313
10,000 Southtrust Corp. 480,000
15,000 Southwest Bancorp of Texas* 450,000
5,000 U.S. Bancorp 508,437
7,000 Washington Mutual Savings Bank 479,062
15,517 Zions Bancorporation 603,223
------------
4,077,972
------------
Broadcasting -- 1.2%
20,500 Tele-Communications, Inc., Liberty
Media Group, Class A* 713,656
------------
Business Services -- 1.5%
18,900 GTECH Holdings Corp.* 609,525
13,175 ServiceMaster L.P. 315,377
------------
924,902
------------
Chemicals -- 2.6%
7,000 BOX Group PLC, ADR (United
Kingdom) 231,000
15,000 Dow Chemical Co. 1,361,250
------------
1,592,250
------------
Computers/Computer Hardware -- 1.3%
8,200 International Business Machines
Corp. 804,113
------------
See notes to financial statements.
19
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Consumer Products -- 1.7%
13,550 Philip Morris Companies, Inc. $ 536,919
16,000 RJR Nabisco Holdings Corp. 507,000
------------
1,043,919
------------
Diversified -- 1.1%
30,000 BTR PLC, ADR (United Kingdom) 408,993
10,000 Canadian Pacific, Ltd. 298,125
------------
707,118
------------
Entertainment/Leisure -- 1.6%
21,000 Carnival Corp., Class A 1,018,500
------------
Financial Services -- 4.0%
9,500 American Express Co. 741,000
27,700 Federal Home Loan Mortgage Corp. 1,049,138
15,000 Lehman Brothers Holding, Inc. 705,937
------------
2,496,075
------------
Food/Beverage Products -- 1.4%
16,000 Unilever NV, ADR (Netherlands) 854,000
------------
Health Care/Health Care Services -- 0.3%
6,000 Tenet Healthcare Corp.* 183,375
------------
Hotels/Other Lodging -- 0.3%
13,469 Homestead Village, Inc.* 215,504
------------
Insurance -- 4.1%
7,600 Allstate Corp. 630,325
1,350 American International Group 137,784
12,500 Equitable Companies, Inc. 514,844
5,000 Loews Corp. 558,437
10,700 Nationwide Financial Services, Inc.,
Class A 325,681
32,000 Reliance Group Holdings, Inc. 404,000
------------
2,571,071
------------
Metals/Mining -- 1.2%
10,200 Aluminum Co. of America (ALCOA) 744,600
------------
See notes to financial statements.
20
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Oil & Gas -- 7.8%
9,348 British Petroleum PLC, ADR
(United Kingdom) $ 820,287
10,000 Elf Aquitaine SA, ADR (France) 617,500
7,500 ENI SPA, ADR (Italy) 422,813
15,500 Enterprise Oil PLC, ADR
(United Kingdom) 515,375
11,000 Exxon Corp. 675,813
7,400 Mobil Corp. 538,812
15,000 Occidental Petroleum Corp. 418,125
9,200 Royal Dutch Petroleum Co., New
York Registered Shares, ADR
(Netherlands) 484,150
7,050 Williams Companies, Inc. 359,109
------------
4,851,984
------------
Paper/Forest Products -- 0.9%
12,000 Weyerhaeuser Co. 573,000
------------
Pharmaceuticals -- 4.0%
6,000 American Home Products Corp. 444,750
6,000 Bristol-Myers Squibb Co. 526,500
13,700 Pharmacia & Upjohn, Inc. 434,975
12,000 Schering-Plough Corp. 672,750
8,000 SmithKline Beecham PLC, ADR
(United Kingdom) 381,000
------------
2,459,975
------------
Real Estate Investment Trust -- 14.8%
19,200 Beacon Properties Corp. 808,800
13,000 Boston Properties, Inc.* 416,000
12,500 Cali Realty Corp. 506,250
9,378 Chateau Properties, Inc. 278,996
39,600 Duke Realty Investments, Inc. 891,000
20,000 Equity Office Properties Trust 611,250
21,000 Equity Residential Properties Trust 1,060,500
12,000 FelCor Suite Hotels, Inc. 439,500
13,000 Manufactured Home Communities,
Inc. 325,000
20,000 Patriot American Hospitality, Inc. 660,000
See notes to financial statements.
21
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------
20,000 Security Capital Group Incorp.,
Class B* $ 640,000
27,272 Security Capital Industrial Trust 669,868
39,285 Security Capital Pacific Trust 879,002
13,000 Spieker Properties, Inc. 508,625
13,000 Storage USA, Inc. 493,187
-----------
9,187,978
-----------
Shipping/Transportation -- 0.7%
8,000 Canadian Natural Railway Co.
(Canada) 431,500
-----------
Telecommunications -- 2.6%
6,500 Bell Atlantic Corp. 519,188
12,000 BellSouth Corp. 567,750
4,500 SBC Communications, Inc. 286,312
2,700 Telecomunicacoes Brasileiras SA,
ADR (Brazil) 274,050
-----------
1,647,300
-----------
Utilities -- 4.4%
6,000 Centrais Electricas Brasileiras
SA-Electrobras, ADR (Brazil) 130,618
20,000 Companhia Paranaense de Energia-
Copel, ADR (Brazil) 246,722
30,000 Edison International 768,750
20,000 FPL Group Inc. 1,033,750
30,000 Public Service Co. of New Mexico 583,125
-----------
2,762,965
-----------
Total Common Stock 42,449,601
(Cost $36,628,768) -----------
Warrants --
-----------
Financial Services -- 0.0%
3,338 Security Capital Group, Ser. B,
$28.00, Expires 09/18/98 16,062
(Cost $0) -----------
See notes to financial statements.
22
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -----------------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------------
Convertible Preferred Stock -- 4.5%
-----------------------------------
Aerospace -- 0.3%
3,000 Loral Space & Communications, Inc.,
6.00%, 11/01/06# $ 183,273
-----------
Airlines -- 0.9%
6,000 Continental Air Finance Trust,
8.50%, 12/01/20 567,342
-----------
Financial Services -- 0.4%
1,000 Calenergy Capital Trust, 6.25%,
03/10/16 63,625
3,500 Golden Books Financial Trust, 8.75%,
08/20/16# 182,875
-----------
246,500
-----------
Insurance -- 1.0%
8,000 American Bankers Insurance Group,
$3.13, 12/31/49, Ser. B 632,000
-----------
Telecommunications -- 1.9%
8,500 Viacom International (TCI Pacific),
Class A, 5.0%, 7/31/06 1,184,688
-----------
Total Convertible Preferred Stock 2,813,803
(Cost $2,197,260) -----------
Principal
Amount
(USD)
Convertible Corporate Notes & Bonds -- 5.3%
-------------------------------------------
Computers/Computer Hardware -- 0.9%
$ 450,000 Solectron Corp.#, 6.00%, 03/01/06 584,595
-----------
Environmental Service -- 0.6%
350,000 USA Waste Services Inc., 4.00%,
02/01/02 373,188
-----------
Health Care/Health Care Services -- 2.0%
250,000 Alternative Living Services,# 7.00%,
06/01/04 330,000
Assisted Living Concepts,
600,000 6.00%, 11/01/02 648,000
100,000 7.00%, 07/31/05 273,331
-----------
1,251,331
-----------
See notes to financial statements.
23
<PAGE>
Vista Equity Income Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Retailing -- 1.8%
$ 800,000 Federated Department Stores, 5.00%,
10/01/03 $ 1,090,000
-----------
Total Convertible Corporate 3,299,114
-----------
Notes & Bonds
(Cost $2,785,915)
U.S. Treasury Securities -- 9.7%
--------------------------------
5,000,000 U.S. Treasury Bond, 7.25%,
08/15/22 5,636,700
350,000 U.S. Treasury Note, 6.88%,
05/15/06 372,369
-----------
Total U.S. Treasury Securities 6,009,069
(Cost $5,603,222)
- ---------------------------------------------------------------
Total Long-Term Investments 54,587,649
(Cost $47,215,165)
- ---------------------------------------------------------------
Short-Term Investments -- 12.2%
- ---------------------------------------------------------------
U.S. Treasury Securities -- 0.1%
--------------------------------
60,000 U.S. Treasury Bill, 5.24%, 11/20/97 59,838
(Cost $59,838) -----------
Time Deposit -- 12.1%
---------------------
7,494,000 Deutsche Bank AG (United States),
5.66%, 11/03/97 7,494,000
(Cost $7,494,000)
- ---------------------------------------------------------------
Total Short-Term Investments 7,553,838
(Cost $7,553,838)
- ---------------------------------------------------------------
Total Investments -- 100.0% $62,141,487
(Cost $54,769,003)
- ---------------------------------------------------------------
See notes to financial statements.
24
<PAGE>
Vista Small Cap Opportunities Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- 93.7%
- ----------------------------------------------------------------
Common Stock -- 93.7%
---------------------
Advertising -- 3.2%
41,700 Outdoor Systems, Inc.* $ 1,282,275
31,600 Universal Outdoor Holdings, Inc.* 1,335,100
------------
2,617,375
------------
Airlines -- 0.3%
10,000 Ryanair Holdings PLC, ADR
(United Kingdom)* 250,000
------------
Banking -- 1.0%
15,000 First International Bancorp, Inc. 243,750
30,000 Prime Bancshares, Texas
Commerce, Inc.* 571,875
------------
815,625
------------
Biotechnology -- 1.6%
21,900 BioReliance Corp.* 487,275
47,500 Pharmaceutical Product
Development, Inc.* 843,125
------------
1,330,400
------------
Broadcasting -- 1.2%
14,600 Heftel Broadcasting Corp., Class A* 970,900
------------
Business Services -- 10.6%
34,100 CORT Business Services Corp.* 1,240,388
31,000 Diamond Technology Partners Inc.,
Class A* 480,500
40,000 Hagler Bailly, Inc.* 810,000
40,000 Hall Kinion & Associates, Inc.* 625,000
10,000 Lamalie Associates, Inc.* 200,000
47,500 Maximus, Inc.* 1,330,000
20,000 National Research Corp.* 405,000
32,100 NCO Group, Inc.* 1,155,600
37,900 Pierce Leahy Corp.* 1,061,200
76,200 PMT Services, Inc.* 1,228,725
------------
8,536,413
------------
Computer Software -- 8.5%
40,000 Advantage Learning Systems, Inc.* 1,010,000
22,500 Aspen Technologies, Inc.* 846,563
60,000 AXENT Technologies, Inc.* 1,402,500
See notes to financial statements.
25
<PAGE>
Vista Small Cap Opportunities Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
2,500 Great Plains Software, Inc.* $ 59,688
33,000 Memco Software Ltd. (Israel)* 833,250
60,200 New Era of Networks, Inc.* 752,500
75,000 TSI International Software Ltd.* 815,625
30,300 Wind River Systems* 1,162,763
------------
6,882,889
------------
Computers/Computer Hardware -- 0.6%
30,000 Box Hill Systems Corp.* 465,000
------------
Construction -- 0.9%
30,000 TransCoastal Marine Services, Inc.* 746,250
------------
Construction Materials -- 1.4%
43,600 Wilmar Industries, Inc.* 1,144,500
------------
Consumer Products -- 0.8%
37,500 Carriage Services, Inc., Class A 628,125
------------
Electronics/Electrical Equipment -- 7.6%
22,700 ANADIGICS, Inc.* 839,900
30,200 Credence Systems Corp. 890,900
10,000 Galileo Technology Ltd.* 343,750
41,600 MRV Communications Inc.* 1,216,800
27,200 Sipex Corp.* 894,200
16,500 Veeco Instruments Inc.* 653,812
28,800 Waters Corp.* 1,267,200
------------
6,106,562
------------
Entertainment/Leisure -- 4.1%
12,000 Anchor Gaming* 942,000
28,000 Cinar Films, Inc., Class B* 1,088,500
30,000 Family Golf Centers, Inc.* 802,500
20,000 Silicon Gaming, Inc.* 335,000
5,000 Travel Services International, Inc.* 111,875
------------
3,279,875
------------
Environmental Services -- 2.2%
30,300 Newpark Resources, Inc.* 1,257,450
18,000 Superior Services, Inc.* 481,500
2,000 Waste Industries, Inc.* 42,250
------------
1,781,200
------------
See notes to financial statements.
26
<PAGE>
Vista Small Cap Opportunities Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Financial Services -- 1.8%
43,400 Healthcare Financial Partners, Inc.* $ 1,497,300
-----------
Food/Beverage Services -- 1.4%
39,400 Fine Host Corp.* 1,103,200
-----------
Health Care/Health Care Services -- 19.3%
52,200 Alternative Living Services, Inc.* 1,278,900
49,000 Ameripath, Inc.* 808,500
81,100 Assisted Living Concepts* 1,662,550
45,000 Cytyc Corp.* 1,068,750
38,000 ESC Medical Systems Ltd. (Israel)* 1,491,500
60,000 Hooper Holmes, Inc. 885,000
34,300 National Surgery Centers, Inc.* 857,500
87,500 Nitinol Medical Technologies* 1,225,000
25,200 Pediatrix Medical Group, Inc.* 1,064,700
29,000 Perclose, Inc.* 710,500
32,500 PhyCor, Inc.* 749,531
27,700 Sunrise Assisted Living, Inc.* 1,028,362
34,700 Universal Health Services, Inc.,
Class B* 1,528,969
82,000 Ventana Medical Systems, Inc.* 1,271,000
-----------
15,630,762
-----------
Insurance -- 5.0%
59,500 ARM Financial Group Inc., Class A 1,286,687
80,000 Penn-America Group, Inc.* 1,475,000
42,200 Triad Guaranty, Inc.* 1,244,900
-----------
4,006,587
-----------
Machinery & Engineering Equipment -- 1.3%
38,200 Rental Service Corp.* 1,021,850
-----------
Multi-Media -- 1.4%
20,000 Chancelor Media Corp.* 1,097,500
-----------
Oil & Gas -- 2.4%
8,000 Friede Goldman International Inc. 318,500
12,500 Nuevo Energy Co.* 517,969
25,000 UTI Energy Corp.* 1,115,625
-----------
1,952,094
-----------
Oil & Gas Machinery -- 0.4%
10,000 Dril-Quip, Inc.* 358,750
-----------
See notes to financial statements.
27
<PAGE>
Vista Small Cap Opportunities Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- --------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------
Pharmaceuticals -- 1.5%
32,800 Parexel International Corp.* $ 1,184,900
-----------
Real Estate Investment Trust -- 0.7%
15,000 LaSalle Partners, Inc.* 548,437
-----------
Retailing -- 5.2%
45,000 Hollywood Entertainment Corp. 551,250
49,800 Petco Animal Supplies, Inc.* 1,531,350
15,400 Quality Food Centers, Inc.* 733,425
25,000 White Cap Industries, Inc.* 475,000
26,000 Wild Oats Markets, Inc.* 916,500
-----------
4,207,525
-----------
Shipping/Transportation -- 4.2%
42,500 Coach USA, Inc.* 1,264,375
20,000 C.H. Robinson Worldwide, Inc.* 440,000
30,000 Hub Group, Inc., Class A* 915,000
70,000 Trailer Bridge, Inc.* 805,000
-----------
3,424,375
-----------
Telecommunications -- 2.0%
20,600 Aspect Telecommunications Corp.* 494,400
50,000 Corsair Communications, Inc.* 1,162,500
-----------
1,656,900
-----------
Wholesaling -- 3.1%
129,000 Suburban Ostomy Supply Co.* 1,402,875
34,100 US Office Products Co.* 1,065,625
-----------
2,468,500
-----------
Total Common Stock 75,713,794
(Cost $66,851,374) -----------
See notes to financial statements.
28
<PAGE>
Vista Small Cap Opportunities Fund
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- -------------------------------------------------------------
Short-Term Investments -- 5.1%
- -------------------------------------------------------------
Time Deposit -- 5.1%
--------------------
$4,094,000 Deutsche Bank AG (United States),
5.66%, 11/03/97 $ 4,094,000
(Cost $4,094,000)
- -------------------------------------------------------------
Total Investments -- 98.8% $79,807,794
(Cost $70,945,374)
- -------------------------------------------------------------
Index
* -- Non income producing security.
# -- Security may only be sold to qualified institutional buyers.
ADR -- American Depository Receipt.
See notes to financial statements.
29
<PAGE>
Vista Mutual Funds
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista Vista Vista
Growth & Capital Equity Small Cap
Income Growth Income Opportunities
Fund Fund Fund Fund
---------------- ------------------ ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1) $2,510,796,282 $1,315,472,847 $62,141,487 $79,807,794
Cash .............................. -- -- -- 825
Receivables:
Investment securities sold ...... -- -- 272,776 --
Interest and dividends ......... -- -- 200,806 643
Fund shares sold ............... 2,312,276 1,823,009 327,563 2,117,576
Other assets ..................... 43,168 66,592 395 85,944
-------------- --------------- ----------- ------------
Total assets .................. 2,513,151,726 1,317,362,448 62,943,027 82,012,782
-------------- --------------- ----------- ------------
LIABILITIES:
Payable for investment
securities purchased ............ -- -- 470,611 955,750
Payable for Fund shares
redeemed ........................ 2,343,973 2,385,584 14,493 89,456
Payable to custodian ............ -- -- 87,513 --
Dividends payable ............... 36,525 -- 395 --
Accrued liabilities: (Note 2)
Administration fees ............ 222,459 127,513 7,556 9,625
Distribution fees ............... 655,682 470,657 18,793 30,193
Investment advisory fees ......... -- -- 20,149 12,833
Shareholder servicing fees ...... 556,139 290,787 12,593 7,777
Custodian ........................ -- -- 13,398 34,533
Other ........................... 1,163,191 838,985 125,910 95,362
-------------- --------------- ----------- ------------
Total Liabilities ............ 4,977,969 4,113,526 771,411 1,235,529
-------------- --------------- ----------- ------------
NET ASSETS:
Paid in capital .................. 1,582,032,956 850,499,727 50,320,324 72,585,777
Accumulated undistributed net
investment income (loss) ......... 820,439 (21,521) 187,870 --
Accumulated undistributed net
realized gain (loss) on
investment transactions ......... 350,381,838 138,711,002 4,290,938 (670,944)
Net unrealized appreciation of
investments and futures ......... 574,938,524 324,059,714 7,372,484 8,862,420
-------------- --------------- ----------- ------------
Net Assets: ..................... $2,508,173,757 $1,313,248,922 $62,171,616 $80,777,253
============== =============== =========== ============
Class A Shares .................. $1,496,738,066 $ 839,354,531 $47,372,587 $42,634,852
Class B Shares .................. $ 489,099,853 $ 421,644,825 $14,799,029 $38,142,401
Institutional Shares ............ $ 522,335,838 $ 52,249,566 -- --
Shares of beneficial interest
outstanding ($.001 par value;
unlimited number of shares
authorized):
Class A Shares .................. 32,388,511 17,951,115 2,463,933 3,078,320
Class B Shares .................. 10,641,792 9,144,705 775,416 2,761,581
Institutional Shares ............ 11,269,117 1,113,964 -- --
Class A Shares:
Net asset value and redemption
price per share* ............... $ 46.21 $ 46.76 $ 19.32 $ 13.85
Maximum offering price per
share (net asset value per
share/95.25%) .................. $ 48.51 $ 49.09 $ 20.19 $ 14.54
Class B Shares:
Net asset value and offering
and redemption price per
share* ........................... $ 45.96 $ 46.11 $ 19.09 $ 13.81
Institutional Shares:
Net asset value, offering and
redemption price per share* .$ 46.35 $ 46.90 -- --
============== =============== =========== ============
Cost of Investments ............... $54,769,003 $70,945,374
=========== ============
</TABLE>
- --------------
* Net assets/shares outstanding
See notes to financial statements.
30
<PAGE>
Vista Mutual Funds
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista Vista Vista
Growth & Capital Equity Small Cap
Income Growth Income Opportunities
Fund Fund Fund Fund*
--------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .............................. -- -- $ 777,193 $ 2,882
Interest .............................. -- -- 369,239 57,428
Investment income from Portfolio ...... $ 49,013,827 $ 15,857,294 -- --
Foreign taxes withheld ............... (216,159) (315,234) (11,653) --
Expenses from Portfolio ............... (10,997,692) (5,962,726) -- --
------------ ------------ ------------- -----------
Total investment income ............... 37,799,976 9,579,334 1,134,779 60,310
------------ ------------ ------------- -----------
EXPENSES: (Note 2)
Administration fees .................. 2,338,029 1,239,727 53,892 28,360
Distribution fees ..................... 7,022,351 4,915,663 124,250 87,414
Investment Advisory fees ............... -- -- 142,666 123,519
Custody fees ........................... -- -- 38,856 34,533
Shareholder servicing fees ............ 5,845,072 3,099,317 84,582 47,149
Printing and postage .................. 155,289 99,999 5,329 6,028
Professional fees ..................... 125,453 85,361 26,121 27,533
Registration costs ..................... 2,521 2,521 44,343 41,671
Transfer agent fees .................. 3,441,739 2,468,611 109,298 73,139
Trustees fees and expenses ............ 46,761 24,794 1,796 943
Other ................................. 265,638 74,929 9,346 21,429
-------------- -------------- ------------- -----------
Total expenses ..................... 19,242,853 12,010,922 640,479 491,718
-------------- -------------- ------------- -----------
Less amounts waived ..................... -- -- 59,208 148,954
-------------- -------------- ------------- -----------
Net Expenses ........................... 19,242,853 12,010,922 581,271 342,764
-------------- -------------- ------------- -----------
Net investment income (loss) ......... 18,557,123 (2,431,588) 553,508 (282,454)
-------------- -------------- ------------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments ........................... 341,373,700 141,820,003 4,368,696 (670,944)
Futures transactions .................. 9,130,840 -- (62,983) --
Change in net unrealized
appreciation on
investments and futures
transactions ........................ 215,670,013 146,710,037 4,681,346 8,862,420
-------------- -------------- ------------- -----------
Net realized and unrealized gain on
investments and futures
transactions ........................ 566,174,553 288,530,040 8,987,059 8,191,476
-------------- -------------- ------------- -----------
Net increase in net assets from
operations ........................... $584,731,676 $286,098,452 $9,540,567 $7,909,022
============== ============== ============= ===========
</TABLE>
- --------------
* Fund commenced operations 5/19/97.
See notes to financial statements.
31
<PAGE>
Vista Mutual Funds
Statement of Changes in Net Assets Years Ended October 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Growth & Vista Capital
Income Growth
Fund Fund
----------------------------------- -------------------------------------
1997 1996 1997 1996
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ........................ $ 18,557,123 $ 26,779,537 $ (2,431,588) $ 1,701,257
Net realized gain (loss) on investments and futures
transactions ....................................... 350,504,540 159,662,609 141,820,003 132,727,253
Change in net unrealized appreciation on investments
and futures ....................................... 215,670,013 154,859,839 146,710,037 71,516,843
-------------- -------------- -------------- --------------
Increase in net assets from operations ............ 584,731,676 341,301,985 286,098,452 205,945,353
-------------- -------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
(Note 1):
Net investment income .............................. (19,159,664) (27,278,466) -- (2,370,914)
Net realized gain on investment transactions ...... (157,923,667) (90,504,699) (132,881,092) (37,648,366)
-------------- -------------- -------------- --------------
Total dividends and distributions .................. (177,083,331) (117,783,165) (132,881,092) (40,019,280)
-------------- -------------- -------------- --------------
Increase (decrease) from capital share transactions
(Note 5) .......................................... 111,162,161 (29,330,249) 26,775,600 (40,621,092)
-------------- -------------- -------------- --------------
Total increase in net assets ..................... 518,810,506 194,188,571 179,992,960 125,304,981
NET ASSETS:
Beginning of period ................................. 1,989,363,251 1,795,174,680 1,133,255,962 1,007,950,981
-------------- -------------- -------------- --------------
End of period ....................................... $2,508,173,757 $1,989,363,251 $1,313,248,922 $1,133,255,962
============== ============== ============== ==============
Undistributed net investment income .................. $ 820,439 $ 1,422,980 $ (21,521) $ (9,884)
-------------- -------------- -------------- --------------
<CAPTION>
Vista Vista
Equity Small Cap
Income Opportunities
Fund Fund*
------------------------------- --------------
1997 1996 1997
--------------- --------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) ........................ $ 553,508 $ 329,159 $ (282,454)
Net realized gain (loss) on investments and futures
transactions ....................................... 4,305,713 1,828,111 (670,944)
Change in net unrealized appreciation on investments
and futures ....................................... 4,681,346 1,356,617 8,862,420
------------ ------------ -----------
Increase in net assets from operations ............ 9,540,567 3,513,887 7,909,022
------------ ------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
(Note 1):
Net investment income .............................. (408,650) (305,452) --
Net realized gain on investment transactions ...... (1,849,469) (736,935) --
------------ ------------ -------------
Total dividends and distributions .................. (2,258,119) (1,042,387) --
------------ ------------ -------------
Increase (decrease) from capital share transactions
(Note 5) .......................................... 36,836,769 3,843,734 72,868,231
------------ ------------ -------------
Total increase in net assets ..................... 44,119,217 6,315,234 80,777,253
NET ASSETS:
Beginning of period ................................. 18,052,399 11,737,165 --
------------ ------------ -------------
End of period ....................................... $ 62,171,616 $ 18,052,399 $80,777,253
============ ============ =============
Undistributed net investment income .................. $ 187,870 $ 50,342 $ --
------------ ------------ -------------
</TABLE>
- -------
* Fund commenced operations 5/19/97.
See notes to financial statements.
32
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Mutual Fund Group (the
"Trust") was organized on May 11, 1987 as a Massachusetts Business Trust, and
is registered under the Investment Company Act of 1940, as amended, (the "1940
Act") as an open-end management investment company. Vista Growth and Income
Fund ("VGIF"), Vista Capital Growth Fund ("VCGF"), Vista Equity Income Fund
("VEIF") and Vista Small Cap Opportunities Fund ("VSCOF") collectively, the
"Funds", are separate series of The Trust. The Funds offer various classes of
shares as follows:
Fund Classes Offered
- ------- --------------------------------
VGIF Class A, Class B, Institutional
VCGF Class A, Class B, Institutional
VEIF Class A, Class B
VSCOF Class A, Class B
Class A shares generally provide for a front-end sales charge while Class B
shares provide for a contingent deferred sales charge. All classes of shares
have equal rights as to earnings, assets and voting privileges except that each
class may bear different distribution fees and each class has exclusive voting
rights with respect to its distribution plan. No sales charges are assessed
with respect to the Institutional Class.
The following is a summary of significant accounting policies followed by the
Funds:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
A. VGIF and VCGF
Effective November 29, 1993, VGIF and VCGF adopted the Master Feeder Fund
structure through the contribution of their investment assets to their
respective portfolios in exchange for beneficial interests in such
portfolios of an equal value. Prior thereto each Fund owned individual
investment securities. VGIF and VCGF seek to achieve their investment
objective by investing all of their investable assets in the Growth and
Income Portfolio and the Capital Growth Portfolio respectively (the
"Portfolios") which like the Funds, are open-end management investment
companies having the same investment objectives as the Funds. As of October
31, 1997 VGIF and VCGF owned 94.27% and 99.99% of the net assets of the
Growth and Income Portfolio, and of the Capital Growth Portfolio,
respectively. The financial statements of each Portfolio, including the
portfolio of investments, are included elsewhere in this report and should
be read in conjunction with the financial statements of the Funds.
1. Valuation of investments -- VGIF and VCGF record their investments in
their respective Portfolios at value. Securities of the Portfolios are
recorded at value as more fully discussed in the notes to those
financial statements.
2. Investment income and expenses -- VGIF and VCGF record daily their
pro-rata share of the respective Portfolio's income, expenses, and
realized and unrealized gains and losses. In addition, the Funds accrue
their own expenses daily as incurred. Realized gains/losses and changes
in unrealized appreciation/depreciation represent the Fund's share of
such elements allocated from the Portfolio.
B. VSCOF and VEIF
1. Valuation of investments -- Equity securities, purchased options and
futures are valued at the last sale price on the exchange on which they
are primarily traded, including the NASDAQ National Market. Securities
for which sale prices are not available and other over-the-counter
securities are valued at the last quoted bid price. Bonds and other
fixed income securities (other than short-term obligations), including
listed issues, are valued on the basis of the valuations supplied by
pricing services or by matrix pricing systems of a major dealer in
33
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
bonds. Short-term debt securities with 61 days or more to maturity at
time of purchase are valued, through the 61st day prior to maturity, at
market value based on quotations obtained from market makers or other
appropriate sources; thereafter, the value on the 61st day is amortized
on a straight-line basis over the remaining number of days to maturity.
Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market.
Portfolio securities 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 Trustees.
2. Repurchase agreements -- It is the Trust's policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government
Agency securities. All collateral is held by the Trust's custodian bank,
subcustodian, or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book
Entry System. In connection with transactions in repurchase agreements,
if the seller defaults and the value of the collateral declines, or if
the seller enters an insolvency proceeding, realization of the
collateral by the Trust may be delayed or limited.
3. Futures contracts -- When a Fund enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in cash
or liquid securities. Thereafter, the futures contract is marked to
market and the fund makes (or receives) additional cash payments daily
to the broker. Changes in the value of the contract are recorded as
unrealized appreciation/depreciation until the contract is closed or
settled.
The Funds invest in stock index futures contracts for the purpose of
hedging the Fund against share price volatility, which purpose may or may
not be achieved. When the Fund is not fully invested in the securities
market, it may enter into "long" positions in futures or options
contracts in order to gain rapid market exposure that may in part or
entirely offset increases in the cost of securities intended for
purchase. Use of long futures contracts subject the Fund to risk of loss
in excess of amounts shown on the Statement of Assets and Liabilities, up
to the amount of the value of the futures contracts.
The Fund may enter into futures contracts only on exchanges or boards of
trade. The exchange or board of trade acts as the counterparty to each
futures transaction, therefore, the Fund's credit risk is limited to
failure of the exchange or board of trade. As of October 31, 1997 the
funds had no outstanding futures contracts.
4. Written options -- When a Fund writes an option on a futures
contract, an amount equal to the premium received by the Fund is
included in the Fund's Statement of Assets and Liabilities as an asset
and corresponding liability. The amount of the liability is adjusted
daily to reflect the current market value of the written options and the
change is recorded in a corresponding unrealized gain or loss account.
When a written option expires on its stipulated expiration date, or when
a closing transaction is entered into, the related liability is
extinguished and the Fund realizes a gain (or loss if the cost of the
closing transaction exceeds the premium received when the option was
written).
The VSCOF writes options on stock index securities futures. These
options are settled for cash and subject the Fund to market risk in
excess of the amounts that are reflected in the Statement of Assets and
Liabilities. The Fund, however, is not subject to credit risk on written
options as the counterparty has already performed its obligation by
paying a premium at the inception of the contract.
As of October 31, 1997 the Funds had no outstanding written options.
5. Security transactions and investment income -- Investment
transactions are accounted for on the trade date (the date the order to
buy or sell is executed).
34
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
Securities gains and losses are calculated on the identified cost basis.
Interest income is accrued as earned. Dividend income is recorded on the
ex-dividend date.
C. General Policies
1. Organization costs -- Organization and initial registration costs
incurred in connection with establishing the Funds have been deferred
and are being amortized on a straight-line basis over a sixty month
period beginning at the commencement of operations of each Fund.
2. Federal income taxes -- Each Fund is treated as a separate taxable
entity for Federal income tax purposes. Each Fund's policy is to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute to shareholders all of its
distributable net investment income, and net realized gain on
investments. In addition, each Fund intends to make distributions as
required to avoid excise taxes. Accordingly, no provision for Federal
income or excise tax is necessary.
3. Distributions to shareholders -- Dividends and distributions paid to
shareholders are recorded on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains is determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting
principles. To the extent these "book/tax" differences are permanent in
nature, (i.e., that they result from other than timing of recognition --
"temporary differences") such amounts are reclassified within the capital
accounts based on their Federal tax-basis treatment. The
reclassifications for the funds are as follows: VGIF paid in capital was
increased by $101,014 and accumulated undistributed net realized gain was
decreased by $101,014; VCGF paid in capital was decreased by $12,124,
accumulated undistributed net investment loss was reduced by $6,022,228
and undistributed net realized gain was decreased by $6,010,104; VEIF
accumulated undistributed net investment income was decreased by $7,330
and undistributed net realized gain/loss was increased by $7,332; VSCOF
paid in capital was decreased by $282,454 and accumulated undistributed
net realized gain/loss was increased by $282,454. The adjustments for the
Funds relate primarily to the character for tax purposes of certain
short-term gains or losses. Dividends and distributions which exceed net
investment income or net realized capital gains for financial reporting
purposes but not for tax purposes are reported as distributions in excess
of net investment income or net realized capital gains.
4. Expenses -- Expenses directly attributable to a Fund are charged to
that Fund; other expenses are allocated proportionately among each Fund
within the Trust in relation to the net assets of each Fund or on
another reasonable basis. In calculating the net asset value per share
of each class, investment income, realized and unrealized gains and
losses and expenses other than class specific expenses, are allocated
daily to each class of shares based upon the proportion of net assets of
each class at the beginning of each day.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank, ("Chase" or the "Advisor") acts as
the Investment Advisor to the VSCOF and VEIF. Chase is a direct
wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment
Advisor, Chase supervises the investments of the Funds and for such
services is paid a fee. The fee is computed daily and paid monthly at an
annual rate equal to 0.65% for VSCOF and 0.40% for VEIF of the average
daily net assets. The Advisor, voluntarily waived all or a portion of its
fees as outlined in Note 2.E. below.
35
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
Chase Asset Management, Inc. ("CAM"), a registered investment advisor, is
the sub-investment advisor to each Fund pursuant to a Sub-Investment
Advisory Agreement between CAM and Chase. CAM is a wholly owned subsidiary
of Chase and is entitled to receive a fee, payable by Chase from its
advisory fee, at an annual rate equal to 0.20% of VEIF and 0.30% of VSCOF's
average daily net assets.
B. Shareholder servicing fees -- The Trust has adopted an Administrative
Services Plan which, among other things, provides that the Trust on behalf
of the Funds may obtain the services of one or more Shareholder Servicing
Agents. For its services, the Shareholder Servicing Agents receive a fee
that is computed daily and paid monthly at an annual rate equal to 0.25% of
the average daily net assets of each of the classes of the funds. For the
year ended October 31, 1997, Chase's Shareholder Servicing charges amounted
to: VGIF: $5,018,073, VCGF: $2,277,575, VSCOF: $19,553, and VEIF: $34,428.
The Shareholder Servicing Agents have voluntarily waived all or a portion
of their fees as outlined in Note 2.E. below.
C. Distribution and sub-administration fees -- Pursuant to a Distribution
and Sub-Administration Agreement, Vista Fund Distributors, Inc. (the
"Distributor"), a wholly owned subsidiary of The BISYS Group, Inc., acts as
the Trust's exclusive underwriter and promotes and arranges for the sale of
each Fund's shares. In addition, the Distributor provides certain
sub-administration services to the Trust, including providing officers,
clerical staff and office space for an annual fee of 0.05% of the average
daily net assets of each Fund.
The Trustees have adopted Distribution Plans (the "Distribution Plans") for
Class A and B for the VGIF, VCGF, VSCOF and VEIF in accordance with Rule
12b-1 under the 1940 Act. There is no Distribution Plan for the Institutional
Classes. The Class A Distribution Plans provide that each Fund shall pay
distribution fees, including payments to the Distributor, at annual rates not
to exceed 0.25% of the average daily net assets of the Class A Shares of each
Fund with the exception of VGIF and VCGF which pay 0.20% for distribution
services. The Class B Distribution Plan provides that each Fund shall pay
distribution fees, including payments to the Distributor, at an annual rate
not to exceed 0.75% of the average annual net assets of the Class B Shares
for distribution services.
Under Class A Distribution Plans for VGIF and VCGF, the Class A shares are
also permitted to pay an additional fee at an annual rate not to exceed
0.05% of its average daily net assets in anticipation of, or as
reimbursement for, expenses incurred in connection with print or electronic
media advertising in connection with the sale of Fund shares. The maximum
compensation paid by the Class A shares under the Class A Distribution Plan
would be at an annual rate of 0.25% of its average daily net assets.
The Distributor voluntarily waived all or a portion of distribution fees and
sub-administration fees as outlined in Note 2.E. below.
D. Administration fee -- Pursuant to an Administration Agreement, Chase
(the "Administrator") provides certain administration services to the
Trust. For these services and facilities, the Administrator receives from
VSCOF and VEIF a fee computed at the annual rate equal to 0.10% of the
respective Fund's average daily net assets and from VGIF and VCGF, a fee
computed at the annual rate equal to 0.05% of the respective Fund's average
daily net assets. The Administrator voluntarily waived all or a portion of
the administration fees as outlined in Note 2.E. below.
E. Waivers of fees -- For the year ended October 31, 1997, the Administrator
and Distributor, Investment Adviser, Shareholder Servicing Agent, and
Sub-Administrator voluntarily waived fees for each of the Funds as follows:
36
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
Fee VEIF VSCOF
- -------------------------------- --------- ---------
Administration ............ $ 1,560 $ 11,674
Investment Advisory ......... 14,010 110,695
Shareholder servicing ...... 43,638 26,585
------- --------
Total ..................... $59,208 $148,954
======= ========
F. Other -- Certain officers of the Trust are officers of Vista Fund
Distributors, Inc. or of its parent corporation, BISYS.
Chase provides portfolio accounting and custody services for VSCOF and
VEIF. Compensation for such services is presented in the Statement of
Operations as custodian fees.
3. Investment Transactions -- For the year ended October 31, 1997, purchases
and sales of investments (excluding short-term investments) were as follows:
VEIF VSCOF*
------------- ------------
Purchases (excluding U.S. Government) ...... $48,878,379 $70,025,718
Sales (excluding U.S. Government) ......... 24,584,302 2,503,400
Purchases of U.S. Government ............... 5,253,750 --
Sales of U.S. Government .................. 364,810 --
- --------------
*Fund commenced operations May 19, 1997.
4. Federal Income Tax Matters -- For Federal income tax purposes, the cost and
unrealized appreciation (depreciation) in value of the investment securities at
October 31, 1997 are as follows.
VEIF VSCOF
--------------- ---------------
Aggregate cost ..................... $54,769,003 $ 70,945,374
----------- ------------
Gross unrealized appreciation ...... 8,294,874 11,177,305
Gross unrealized depreciation ...... (922,390) (2,314,885)
----------- ------------
Net unrealized appreciation ......... $ 7,372,484 $ 8,862,420
=========== ============
5. Transactions in Shares of Beneficial Interest -- Transactions in Shares of
Beneficial Interest were as follows:
<TABLE>
<CAPTION>
Vista Growth and Income Fund
---------------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------------------ ------------------------------------
Amount Shares Amount Shares
----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......... $ 227,685,739 5,475,599 $ 306,503,072 8,420,913
Shares issued in
reinvestment of
distributions ...... 129,043,670 3,389,044 92,236,921 2,484,259
Shares redeemed ...... (685,048,191) (17,046,486) (513,091,350) (13,861,216)
-------------- ----------- -------------- -----------
Net increase (decrease)
in Trust shares
outstanding ......... $ (328,318,782) (8,181,843) $ (114,351,357) (2,956,044)
============== =========== ============== ===========
</TABLE>
37
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Growth and Income Fund
-----------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
---------------------------------- ----------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class B
Shares sold ......... $ 72,705,744 1,733,138 $ 79,219,484 2,192,200
Shares issued in
reinvestment of
distributions ...... 30,201,645 801,403 16,665,854 458,019
Shares redeemed ...... (58,550,825) (1,388,230) (37,163,821) (1,018,127)
------------- ---------- ------------- ----------
Net increase (decrease)
in Trust shares
outstanding ......... $ 44,356,564 1,146,311 $ 58,721,517 1,632,092
============= ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Growth and Income Fund
-----------------------------------------------------------------
01/25/96*
Year Ended Through
October 31, 1997 October 31, 1996
------------------------------- -------------------------------
Amount Shares Amount Shares
---------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
Institutional Shares
Shares sold ......... $ 422,932,946 11,192,183 $ 33,434,619 905,660
Shares issued in
reinvestment of
distributions ...... 5,964,007 145,389 332,694 8,842
Shares redeemed ...... (33,772,574) (781,013) (7,467,722) (201,945)
------------- ---------- ------------ --------
Net increase (decrease)
in Trust shares
outstanding ......... $ 395,124,379 10,556,559 $ 26,299,591 712,557
============= ========== ============ ========
</TABLE>
<TABLE>
<CAPTION>
Vista Capital Growth Fund
-----------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
---------------------------------- ------------------------------------
Amount Shares Amount Shares
----------------- ---------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......... $ 791,649,767 18,969,340 $ 1,071,881,119 28,226,297
Shares issued in
reinvestment of
distributions ...... 82,591,535 2,084,634 28,044,019 781,770
Shares redeemed ...... (902,994,337) (21,565,852) (1,195,855,101) (31,513,482)
-------------- ----------- ---------------- -----------
Net increase (decrease)
in Trust shares
outstanding ......... $ (28,753,035) (511,878) $ (95,929,963) (2,505,415)
============== =========== ================ ===========
</TABLE>
38
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Capital Growth Fund
-----------------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
---------------------------------- ----------------------------------
Amount Shares Amount Shares
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class B
Shares sold ......... $ 73,425,620 1,775,731 $ 77,108,472 2,040,428
Shares issued in
reinvestment of
distributions ...... 38,681,174 987,096 9,795,148 275,885
Shares redeemed ...... (71,081,380) (1,717,714) (59,845,813) (1,574,692)
------------- ---------- ------------- ----------
Net increase (decrease)
in Trust shares
outstanding ......... $ 41,025,414 1,045,113 $ 27,057,807 741,621
============= ========== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Capital Growth Fund
------------------------------------------------------------------
01/25/96*
Year Ended Through
October 31, 1997 October 31, 1996
-------------------------------- -------------------------------
Amount Shares Amount Shares
---------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Institutional Shares
Shares sold ......... $ 25,872,504 619,791 $ 32,122,751 857,195
Shares issued in
reinvestment of
distributions ...... 4,367,828 110,013 85,889 2,222
Shares redeemed ...... (15,737,111) (373,095) (3,957,576) (101,705)
------------- -------- ------------ --------
Net increase (decrease)
in Trust shares
outstanding ......... $ 14,503,221 356,709 $ 28,251,064 757,712
============= ======== ============ ========
</TABLE>
<TABLE>
<CAPTION>
Vista Equity Income Fund
-----------------------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------------- -------------------------------
Amount Shares Amount Shares
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold ......... $ 26,803,768 1,501,526 $ 5,415,420 357,907
Shares issued in
reinvestment of
distributions ...... 1,906,482 122,039 878,167 63,521
Shares redeemed ...... (4,432,663) (255,045) (2,986,103) (202,972)
------------ --------- ------------ --------
Net increase (decrease)
in Trust shares
outstanding ......... $ 24,277,587 1,368,520 $ 3,307,484 218,456
============ ========= ============ ========
</TABLE>
39
<PAGE>
Vista Mutual Funds
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Equity Income Fund
---------------------------------------------------------
05/07/96*
Year Ended Through
October 31, 1997 October 31, 1996
------------------------------ ------------------------
Amount Shares Amount Shares
--------------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Class B
Shares sold ......... $13,283,431 780,048 $ 546,464 35,836
Shares issued in
reinvestment of
distributions ...... 129,708 8,101 1,831 120
Shares redeemed ...... (853,957) (47,203) (12,045) (792)
----------- ------- --------- ------
Net increase (decrease)
in Trust shares
outstanding ......... $12,559,182 740,946 $ 536,250 35,164
=========== ======= ========= ======
</TABLE>
<TABLE>
<CAPTION>
Vista Small Cap Opportunities
Fund
-------------------------------
5/19/97** Through
October 31, 1997
-------------------------------
Amount Shares
Class A --------------- -------------
<S> <C> <C>
Shares sold ........................... $40,269,785 3,270,589
Shares issued in reinvestment of
distributions ..................... -- --
Shares redeemed ..................... (2,618,211) (192,269)
----------- ----------
Net increase (decrease) in Trust shares
outstanding ........................ $37,651,574 3,078,320
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Vista Small Cap Opportunities
Fund
------------------------------
5/19/97** Through
October 31, 1997
------------------------------
Amount Shares
Class B --------------- ------------
<S> <C> <C>
Shares sold ........................... $36,272,912 2,840,285
Shares issued in reinvestment of
distributions ..................... -- --
Shares redeemed ..................... (1,056,255) (78,704)
----------- ----------
Net increase (decrease) in Trust shares
outstanding ........................ $35,216,657 2,761,581
=========== ==========
</TABLE>
- --------------
*Commencement of offering class of shares.
**Fund commenced operations.
6. Retirement Plan -- The Funds have adopted an unfunded noncontributory
defined benefit pension plan covering all independent trustees of the Funds who
will have served as an independent trustee for at least five years at the time
of retirement. Benefits under this plan are based on compensation and years of
service. Pension expenses for the year ended October 31, 1997, included in
Trustees Fees and Expenses in the Statement of Operations, and accrued pension
liability included in other accrued liabilities in the Statement of Assets and
Liabilities were as follows:
Accrued
Pension Pension
Expenses Liability
---------- ----------
VGIF ...... $20,528 $64,467
VCGF ...... 11,638 33,216
VEIF ...... 395 2,448
40
<PAGE>
Vista Mutual Funds
Financial Highlights throughout each period indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Growth & Income Fund
-------------------------------------------------------------------------
Class A
-------------------------------------------------------------------------
Year Ended
-------------------------------------------------------------------------
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ... $ 39.21 $ 34.96 $ 30.26 $ 30.99 $ 26.60
---------- ---------- ---------- ---------- ---------
Income From Investment Operations:
Net Investment Income .................. 0.347@ 0.599 0.614 0.466 0.341
Net Gains or Losses in Securities
(both realized and unrealized) ......... 10.180 5.960 4.710 ( 0.429) 5.007
---------- ---------- ---------- ---------- ---------
Total from Investment Operations ...... 10.527 6.559 5.324 0.037 5.348
---------- ---------- ---------- ---------- ---------
Less Distributions:
Dividends from Net Investment Income ... 0.379 0.549 0.621 0.422 0.338
Distributions from Capital Gains ......... 3.150 1.762 -- 0.345 0.620
---------- ---------- ----------- ---------- ---------
Total Distributions ..................... 3.529 2.311 0.621 0.767 0.958
---------- ---------- ----------- ---------- ---------
Net Asset Value, End of Period ......... $ 46.21 $ 39.21 $ 34.96 $ 30.26 $ 30.99
========== ========== ========== ========== =========
Total Return (1) ........................ 28.84% 19.60% 17.79% 0.15% 20.47%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) $1,496,738 $1,590,893 $1,521,489 $1,413,899 $ 949,465
Ratio of Expenses to Average Net
Assets # .............................. 1.27% 1.32% 1.43% 1.40% 1.39%
Ratio of Net Investment Income to
Average Net Assets # .................. 0.82% 1.46% 1.93% 1.60% 1.07%
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average
Net Assets # ........................... 1.27% 1.32% 1.45% 1.40% 1.39%
Ratio of Net Investment Income
Without Waivers and Assumptions of
Expenses # ........................... 0.82% 1.46% 1.91% 1.60% 1.07%
Portfolio Turnover Rate .................. 41%
<CAPTION>
Class B Institutional Shares
------------------------------------------------------- ---------------------------
Year Ended
----------------------------------------- 11/04/93* Year 01/25/96**
Through Ended Through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/97 10/31/96
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ... $ 39.02 $ 34.81 $ 30.12 $ 30.39 $ 39.26 $ 34.80
---------- ---------- ---------- ---------- ---------- --------
Income From Investment Operations:
Net Investment Income .................. 0.132@ 0.366 0.463 0.336 0.518@ 0.467
Net Gains or Losses in Securities
(both realized and unrealized) ......... 10.130 5.984 4.700 0.109 10.200 4.459
---------- ---------- ---------- ---------- ---------- --------
Total from Investment Operations ...... 10.262 6.350 5.163 0.445 10.718 4.926
---------- ---------- ---------- ---------- ---------- --------
Less Distributions:
Dividends from Net Investment Income ... 0.173 0.379 0.470 0.370 0.483 0.471
Distributions from Capital Gains ......... 3.150 1.762 -- 0.345 3.150 --
---------- ---------- ---------- ---------- ---------- --------
Total Distributions ..................... 3.323 2.141 0.470 0.715 3.633 0.471
---------- ---------- ---------- ---------- ---------- --------
Net Asset Value, End of Period ......... $ 45.96 $ 39.02 $ 34.81 $ 30.12 $ 46.35 $ 39.26
========== ========== ========== ========== ========== ========
Total Return (1) ........................ 28.20% 19.02% 17.21% 1.55% 29.37% 13.39%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) $ 489,100 $ 370,496 $273,685 $ 160,375 $ 522,336 $27,974
Ratio of Expenses to Average Net
Assets # .............................. 1.77% 1.81% 1.93% 1.89% 0.86% 1.24%
Ratio of Net Investment Income to
Average Net Assets # .................. 0.31% 0.95% 1.38% 1.21% 1.21% 1.73%
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average
Net Assets # ........................... 1.77% 1.81% 1.94% 1.89% 0.86% 1.24%
Ratio of Net Investment Income
Without Waivers and Assumptions of
Expenses # ........................... 0.31% 0.95% 1.37% 1.21% 1.21% 1.73%
Portfolio Turnover Rate ..................
</TABLE>
- -------
* Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
@ Calculated based upon average shares outstanding.
See notes to financial statements.
41
<PAGE>
Vista Mutual Funds
Financial Highlights throughout each period indicated
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Capital Growth Fund
-----------------------------------------------------------------------
Class A
-----------------------------------------------------------------------
Year Ended
-----------------------------------------------------------------------
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
--------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ... $ 41.60 $ 35.65 $ 32.17 $ 32.01 $ 25.12
---------- --------- --------- --------- ---------
Income From Investment Operations:
Net Investment Income .................. (0.022)@ 0.147 0.189 0.099@ 0.064
Net Gains or Losses in Securities
(both realized and unrealized) ......... 10.130 7.270 4.160 0.719 7.173
----------- ---------- ---------- ---------- ----------
Total from Investment Operations ...... 10.108 7.417 4.349 0.818 7.237
----------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Investment Income ... 0.144 0.117 0.189 0.027 0.093
Distributions from Capital Gains ......... 4.800 1.355 0.676 0.631 0.257
----------- ---------- ---------- ---------- ----------
Total Distributions ..................... 4.944 1.472 0.865 0.658 0.350
----------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ......... $ 46.76 $ 41.60 $ 35.65 $ 32.17 $ 32.01
=========== ========== ========== ========== ==========
Total Return (1) ........................ 26.47% 21.48% 13.89% 2.62% 29.06%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) $ 839,354 $ 767,998 $ 747,575 $ 549,411 $ 225,235
Ratio of Expenses to Average Net
Assets # .............................. 1.31% 1.37% 1.51% 1.49% 1.49%
Ratio of Net Investment Income to
Average Net Assets # .................. ( 0.05%) 0.39% 0.54% 0.33% 0.12%
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average
Net Assets # ........................... 1.31% 1.37% 1.53% 1.50% 1.49%
Ratio of Net Investment Income
Without Waivers and Assumptions of
Expenses # ........................... ( 0.05%) 0.39% 0.52% 0.32% 0.12%
Portfolio Turnover Rate .................. 43%
<CAPTION>
Class B Institutional Shares
---------------------------------------------------------- ---------------------------
Year Ended
-------------------------------------------- 11/04/93* Year 01/25/96**
Through Ended Through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/97 10/31/96
--------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ... $ 41.21 $ 35.39 $ 32.03 $ 31.38 $ 41.65 $ 35.26
----------- --------- ---------- ---------- ---------- --------
Income From Investment Operations:
Net Investment Income .................. (0.236)@ ( 0.076) 0.044 0.011@ 0.133@ 0.172
Net Gains or Losses in Securities
(both realized and unrealized) ......... 10.010 7.246 4.100 1.296 10.164 6.336
----------- --------- ---------- ---------- ---------- --------
Total from Investment Operations ...... 9.774 7.170 4.144 1.307 10.297 6.508
----------- --------- ---------- ---------- ---------- --------
Less Distributions:
Dividends from Net Investment Income ... 0.078 -- 0.111 0.026 0.248 0.122
Distributions from Capital Gains ......... 4.800 1.355 0.676 0.631 4.800 --
----------- --------- ---------- ---------- ---------- --------
Total Distributions ..................... 4.878 1.355 0.787 0.657 5.048 0.122
----------- --------- ---------- ---------- ---------- --------
Net Asset Value, End of Period ......... $ 46.11 $ 41.21 $ 35.39 $ 32.03 $ 46.90 $ 41.65
=========== ========= ========== ========== ========== ========
Total Return (1) ........................ 25.85% 20.88% 13.34% 4.19% 26.98% 18.13%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) $ 421,645 $333,703 $ 260,376 $ 124,223 $ 52,250 $31,556
Ratio of Expenses to Average Net
Assets # .............................. 1.81% 1.87% 2.01% 2.00% 0.91% 1.25%
Ratio of Net Investment Income to
Average Net Assets # .................. (0.56%) (0.21%) 0.02% (0.09%) 0.31% 0.81%
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average
Net Assets # ........................... 1.81% 1.87% 2.02% 2.02% 0.92% 1.25%
Ratio of Net Investment Income
Without Waivers and Assumptions of
Expenses # ........................... (0.56%) (0.21%) 0.01% (0.11%) 0.31% 0.81%
Portfolio Turnover Rate ..................
</TABLE>
- -------
* Commencement of offering of class of shares.
# Short periods have been annualized.
@ Calculated based upon average shares outstanding.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
42
<PAGE>
Vista Mutual Funds
Financial Highlights throughout each period indicated
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Equity Income Fund
----------------------------------------------------------------------
Class A
----------------------------------------------------------------------
Year Ended
-------------------------------------------------------- 07/15/92*
Through
10/31/97 10/31/96 10/31/95 10/31/94 10/31/93
------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ............ $ 15.98 $ 13.39 $ 12.12 $ 13.84 $ 13.14
--------- --------- ------- ------- --------
Income From Investment Operations:
Net Investment Income ........................... 0.260 0.348 0.347 0.290 0.078
Net Gains or Losses in Securities
(both realized and unrealized) ............... 4.709 3.434 1.698 (0.477) 0.700
--------- --------- ------- ------- --------
Total from Investment Operations ............... 4.969 3.782 2.045 (0.187) 0.778
--------- --------- ------- ------- --------
Less Distributions:
Dividends from Net Investment Income ............ 0.228 0.329 0.366 0.258 0.078
Distributions from Capital Gains ............... 1.490 0.863 0.410 1.275 --
--------- --------- ------- ------- --------
Total Distributions ........................... 1.718 1.192 0.776 1.533 0.078
--------- --------- ------- ------- --------
Net Asset Value, End of Period .................. $ 19.23 $ 15.98 $ 13.39 $ 12.12 $ 13.84
========= ========= ======= ======= ========
Total Return (1) ................................. 33.66% 29.79% 17.97% (1.35%) 5.91%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ......... $ 47,373 $ 17,493 $11,737 $11,409 $15,321
Ratio of Expenses to Average Net Assets # ...... 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of Net Investment Income to Average
Net Assets # ................................. 1.65% 2.41% 2.81% 2.31% 1.72%
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average Net Assets # 1.70% 2.32% 2.19% 2.02% 2.40%
Ratio of Net Investment Income Without Waivers
and Assumptions of Expenses # .................. 1.45% 1.59% 2.12% 1.79% 0.82%
Portfolio Turnover Rate ........................ 75% 114% 91% 75% 54%
Average Commission Rate Paid per share ......... $ 0.0599 $ 0.0587 -- -- --
<CAPTION>
Vista Small Cap
Opportunities Fund
Class B Class A Class B
--------------------------- -------------- --------------
Year 05/07/96**
Ended Through
10/31/97 10/31/96 5/19/97*-12/31/97
------------- ------------- -----------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ............ $ 15.92 $ 14.56 $ 10.00 $ 10.00
-------- ------- ------- -------
Income From Investment Operations:
Net Investment Income ........................... 0.220 0.134 (0.041) (0.057)
Net Gains or Losses in Securities
(both realized and unrealized) ............... 4.615 1.376 3.891 3.867
--------- ------- ------- -------
Total from Investment Operations ............... 4.835 1.510 3.850 3.810
--------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income ............ 0.175 0.151 -- --
Distributions from Capital Gains ............... 1.490 -- -- --
--------- -------- -------- --------
Total Distributions ........................... 1.665 0.151 -- --
--------- -------- -------- --------
Net Asset Value, End of Period .................. $ 19.09 $ 15.92 $ 13.85 $ 13.81
========= ======== ======== ========
Total Return (1) ................................. 32.87% 10.43% 38.50% 38.10%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ......... $ 14,799 $ 560 $42,635 $38,142
Ratio of Expenses to Average Net Assets # ...... 2.11% 2.25% 1.49% 2.24%
Ratio of Net Investment Income to Average
Net Assets # ................................. 1.06% 1.75% (1.16%) (1.93%)
Ratio of Expenses Without Waivers and
Assumption of Expenses to Average Net Assets # 2.13% 2.75% 2.38% 2.88%
Ratio of Net Investment Income Without Waivers
and Assumptions of Expenses # .................. 1.05% 1.25% (2.05%) (2.57%)
Portfolio Turnover Rate ........................ 75% 114% 7% 7%
Average Commission Rate Paid per share ......... $ 0.0599 $0.0587 $0.0623 $0.0623
</TABLE>
- -------
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
(1) Total return figures do not include the effect of any sales load.
See notes to financial statements.
43
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Mutual Fund Group
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Vista Growth and Income Fund,
Vista Capital Growth Fund, Vista Equity Income Fund and Vista Small Cap
Opportunities Fund (separate portfolios of Mutual Fund Group, hereafter
referred to as the "Trust") at October 31, 1997, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended (for the period May 19, 1997
(commencement of operations) through October 31, 1997 for the Vista Small Cap
Opportunities Fund) and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at October 31, 1997 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
44
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ------------------------------------------------------------
Long-Term Investments -- 96.4%
- ------------------------------------------------------------
Common Stock -- 89.1%
---------------------
Aerospace -- 0.8%
300,000 United Technologies, Corp. $ 21,000,000
------------
Agricultural Production/Services -- 1.8%
250,000 AGCO Corp. 7,250,000
450,000 Case Corp. 26,915,625
250,000 Deere & Co. 13,156,250
------------
47,321,875
------------
Airlines -- 1.3%
300,001 AMR Corp., Delaware* 34,931,366
------------
Automotive -- 1.3%
245,000 General Motors 15,725,938
401,000 Lear Corp.* 19,273,063
------------
34,999,001
------------
Banking -- 6.4%
450,000 BankAmerica Corp. 32,175,000
325,000 Comerica, Inc. 25,695,313
410,000 First Union Corp. 20,115,625
325,000 NationsBank Corp. 19,459,375
500,000 Norwest Corp. 16,031,250
65,000 Signet Banking Corp. 3,497,813
175,000 U.S. Bancorp 17,795,312
500,000 Washington Mutual Inc. 34,218,750
------------
168,988,438
------------
Broadcasting -- 1.6%
206,000 Clear Channel Communications,
Inc.* 13,596,000
500,000 Comast Corp., Special Class A 13,750,000
645,341 Tele-Communications, TCI Group,
Class A* 14,802,509
------------
42,148,509
------------
Business Services -- 0.5%
450,000 Equifax, Inc. 13,978,125
------------
Chemicals -- 2.1%
450,000 Dow Chemical Co. 40,837,500
250,000 duPont (EI) deNemours 14,218,750
------------
55,056,250
------------
See notes to financial statements.
45
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Computer Software -- 2.1%
150,000 Cisco Systems, Inc.* $ 12,304,680
550,000 Computer Associates International 41,009,375
35,000 McAfee Associates, Inc.* 1,741,250
------------
55,055,305
------------
Computers/Computer Hardware -- 4.9%
387,500 Compaq Computer Corp.* 24,703,125
650,000 EMC Corp., Mass.* 36,400,000
338,000 International Business Machines
Corp. 33,145,125
280,000 Storage Technology Corp.* 16,432,500
600,000 Sun Microsystems, Inc.* 20,550,000
------------
131,230,750
------------
Construction Machinery -- 0.8%
400,000 Caterpillar, Inc. 20,500,000
------------
Consumer Products -- 2.2%
275,000 Avon Products, Inc. 18,012,500
200,000 Colgate-Palmolive Co. 12,950,000
725,000 Philip Morris Companies, Inc. 28,728,125
------------
59,690,625
------------
Diversified -- 4.2%
95,500 American Standard Companies, Inc.* 3,414,125
1,200,000 BTR Ltd. PLC, ADR (United
Kingdom) 16,359,600
1,000,000 Canadian Pacific, Ltd. 29,812,500
930,000 Tyco International Ltd. 35,107,500
1,000,000 Westinghouse Electric Corp. 26,437,500
------------
111,131,225
------------
Electronics/Electrical Equipment -- 1.9%
400,000 Adaptec, Inc.* 19,375,000
200,000 Intel Corp. 15,400,000
150,000 Texas Instruments 16,003,125
------------
50,778,125
------------
Entertainment/Leisure -- 4.4%
900,000 Carnival Corp., Class A 43,650,000
549,700 GTECH Holdings Corp.* 17,727,825
269,000 MGM Grand, Inc.* 11,802,375
See notes to financial statements.
46
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
254,659 Tele-Communications TCI Ventures
Group, Ser. A* $ 5,873,072
400,000 Time Warner, Inc. 23,075,000
500,000 Viacom, Inc. Class B* 15,125,000
------------
117,253,272
------------
Financial Services -- 2.5%
650,000 Federal Home Loan Mortgage Corp. 24,618,750
350,000 Lehman Brothers Holding, Inc. 16,471,875
550,000 Morgan Stanley, Dean Witter,
Discover and Co. 26,950,000
------------
68,040,625
------------
Food/Beverage Products -- 3.1%
850,000 ConAgra, Inc. 25,606,250
1,000,000 PepsiCo., Inc. 36,812,500
400,000 Unilever NV, ADR (Netherlands) 21,350,000
------------
83,768,750
------------
Health Care/Health Care Services -- 3.2%
401,000 Columbia/HCA Healthcare Corp. 11,328,250
1,750,000 HEALTHSOUTH Corp.* 44,734,375
500,000 Tenet Healthcare Corp.* 15,281,250
530,000 Vencor, Inc.* 14,310,000
------------
85,653,875
------------
Insurance -- 4.9%
400,000 Allstate Corp. 33,175,000
215,750 American International Group 22,019,984
330,000 Equitable Companies, Inc. 13,591,875
190,000 Loews Corp. 21,220,625
240,000 NAC Re Corp. 10,680,000
400,000 Reliastar Financial Corp. 14,950,000
225,000 Travelers Group, Inc. 15,750,000
------------
131,387,484
------------
Manufacturing -- 3.6%
190,100 Honeywell, Inc. 12,938,681
637,500 Ingersoll-Rand Co. 24,822,656
490,000 Johnson Controls 21,988,750
300,000 Kennametal Inc. 14,550,000
100,000 McDermott International 3,631,250
See notes to financial statements.
47
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -----------------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------------
400,000 Parker Hannifin Corp. $ 16,725,000
------------
94,656,337
------------
Metals/Mining -- 1.9%
500,000 Aluminum Co. of America (ALCOA) 36,500,000
370,000 Newmont Mining Corp. 12,950,000
------------
49,450,000
------------
Office/Business Equipment -- 1.2%
400,000 Xerox Corp. 31,725,000
------------
Oil & Gas -- 8.5%
600,000 Apache Corp. 25,200,000
250,000 British Petroleum PLC, ADR
(United Kingdom) 21,937,500
500,000 Coastal Corp. 30,062,500
400,000 Dresser Industries, Inc. 16,850,000
640,000 Halliburton Company 38,160,000
470,000 Mobil Corp. 34,221,875
525,000 Oryx Energy Co.* 14,470,313
580,000 Texaco, Inc. 33,023,750
364,900 USX-Marathon Group 13,045,175
------------
226,971,113
------------
Paper/Forest Products -- 0.7%
600,000 Willamette Industries, Inc. 19,837,500
------------
Pharmaceuticals -- 4.4%
350,000 Bristol-Myers Squibb Co. 30,712,500
575,000 Pharmacia & Upjohn, Inc. 18,256,250
480,000 Schering-Plough Corp. 26,910,000
850,000 SmithKline Beecham PLC, ADR
(United Kingdom) 40,481,250
------------
116,360,000
------------
Pipelines -- 0.0%
25,000 Tubos de Acero de Mexico SA, ADR
(Mexico)* 504,688
------------
Printing & Publishing -- 1.4%
675,000 New York Times Company, Class A 36,956,250
------------
Real Estate Investment Trust -- 3.0%
345,000 Beacon Properties Corp. 14,533,125
100,000 Boston Properties, Inc.* 3,200,000
See notes to financial statements.
48
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
190,000 Cali Realty Corp. $ 7,695,000
655,800 Duke Realty Investments, Inc. 14,755,500
200,000 Equity Office Properties Trust 6,112,500
280,000 Equity Residential Properties Trust 14,140,000
338,181 Security Capital Industrial Trust 8,306,571
720,000 Security Capital US Realty, ADR
(Luxemburg)* 10,152,000
------------
78,894,696
------------
Retailing -- 6.5%
640,000 American Stores Co. 16,440,000
520,000 CVS Corp. 31,882,500
450,000 Dayton-Hudson Corp. 28,265,625
525,000 Federated Department Stores* 23,100,000
1,155,000 Kroger Co.* 37,681,875
350,000 Office Depot, Inc.* 7,218,750
300,000 Safeway, Inc.* 17,437,500
300,000 Tandy Corp. 10,312,500
------------
172,338,750
------------
Telecommunications -- 4.2%
450,000 Bell Atlantic Corp. 35,943,750
650,000 BellSouth Corp. 30,753,125
400,000 Sprint Corp. 20,800,000
700,000 WorldCom, Inc. 23,537,500
------------
111,034,375
------------
Textiles -- 1.1%
300,000 Liz Claiborne, Inc. 15,206,250
400,000 Unifi, Inc. 15,375,000
------------
30,581,250
------------
Utilities -- 2.6%
250,000 Centrais Electricas Brasileiras
SA-Electrobras, ADR (Brazil) 5,442,400
425,000 CINergy Corp. 14,025,000
50,000 Consolidated Edison Co. of New
York, Inc. 1,712,500
555,000 FPL Group Inc. 28,686,563
550,000 Pinnacle West Capital Corp. 19,146,875
------------
69,013,338
------------
See notes to financial statements.
49
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------------
Total Common Stock $2,371,236,897
(Cost $1,780,499,636) --------------
Convertible Preferred Stock -- 2.3%
-----------------------------------
Airlines -- 0.4%
Continentail Air Finance Trust,
10,000 8.50%, 12/01/20 945,570
90,000 8.50%, 12/01/20# 8,510,130
--------------
9,455,700
--------------
Aerospace -- 0.1%
48,000 Loral Space & Communications,
Inc., 6.00%, 11/01/06# 2,932,368
--------------
Alternate Energy -- 0.2%
86,000 Calenergy Capital Trust II, 6.25%,
02/25/12# 4,411,542
25,000 Calenergy Capital Trust III, 6.50%# 1,213,675
--------------
5,625,217
--------------
Entertainment/Leisure -- 0.3%
150,000 Time Warner Financing Trust,
Hasbro, $1.24 6,487,500
--------------
Insurance -- 0.2%
67,000 American Bankers Insurance Group,
6.25%, Ser. B 5,293,000
--------------
Multi-Media -- 0.1%
60,000 Echostar Communications Corp.
Ser. C, 6.75% 12/31/49 3,000,000
--------------
Paper/Forest Products -- 0.2%
125,000 International Paper Capital Corp.,
5.25%# 6,136,750
--------------
Telecommunications -- 0.6%
50,000 AirTouch Communications, 4.25%,
08/16/16 3,000,000
100,000 TCI Pacific Communications Inc.,
Class A, 5.0%, 7/31/06 13,937,500
--------------
16,937,500
--------------
See notes to financial statements.
50
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------------
Utilities -- 0.2%
102,000 Houston Industries, Inc., 7.00%,
07/01/00 $ 5,584,500
-----------
Total Convertible Preferred Stock 61,452,535
(Cost $49,766,002) -----------
Warrants -- 0.0%
----------------
Real Estate Investment Trust -- 0.0%
15,742 Security Capital Group, Class B,
09/18/98 75,758
(Cost $0) -----------
Principal
Amount
Convertible Corporate Notes & Bonds -- 2.7%
-------------------------------------------
Automotive -- 0.2%
$4,500,000 Magna International Inc., 5.0%,
10/15/02 5,723,460
-----------
Computers/Computer Hardware -- 0.2%
3,600,000 EMC Corp., 3.25%, 03/15/02# 4,937,220
-----------
Electronics -- 0.3%
7,000,000 Xilinx Inc., 5.25%, 11/01/02# 6,905,500
-----------
Entertainment /Leisure -- 0.1%
2,250,000 Family Golf Centers, Inc.# 5.75%,
10/15/04 2,149,695
-----------
Environmental Service -- 0.0%
1,000,000 USA Waste Services Inc., 4.00%,
02/01/02 1,066,250
-----------
Government Issue -- 0.2%
5,000,000 Republic of Italy, 5.0%, 06/28/01 5,300,000
-----------
Health Care/Health Care Services -- 0.5%
3,000,000 Alternative Living Services, 7.0%,
06/01/04# 3,960,000
5,000,000 Atria Communities, Inc., 5.0%,
10/15/02# 5,039,050
3,500,000 Carematrix Corp., 6.25%, 08/15/04# 3,749,760
-----------
12,748,810
-----------
See notes to financial statements.
51
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Hotels/Other Lodging -- 0.2%
$ 5,000,000 Hilton Hotels Corp.,
5.0%, 05/15/06 $ 5,575,000
--------------
Paper/Forest Products -- 0.2%
6,600,000 South African Pulp & Paper
Industries, BVI Finance Ltd.,
7.5%, 08/01/02 6,187,500
--------------
Retailing -- 0.6%
4,000,000 Federated Department Stores,
5.0%, 10/01/03 5,520,000
8,500,000 Rite Aide Corp., 5.25%,
09/15/02# 9,144,130
--------------
14,664,130
--------------
Telecommunications -- 0.2%
2,500,000 Telefonica Europe BV,
(Netherlands), 2.0%,
07/15/02# 2,537,500
3,500,000 Tel-Save Holdings Inc., 4.5%,
09/15/02# 3,701,285
--------------
6,238,785
--------------
Total Convertible Corporate 71,496,350
Notes & Bonds --------------
(Cost $65,157,500)
U.S. Treasury Securities -- 2.3%
--------------------------------
55,000,000 U.S. Treasury Bond, 7.25%,
08/15/22 62,011,950
(Cost $60,980,313)
- ---------------------------------------------------------------
Total Long-Term Investments 2,566,273,490
(Cost $1,956,403,451)
- ---------------------------------------------------------------
See notes to financial statements.
52
<PAGE>
Growth & Income Portfolio
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount Issuer Value
- --------------------------------------------------------------
Short-Term Investments -- 3.3%
- --------------------------------------------------------------
U.S. Treasury Securities -- 0.0%
--------------------------------
$ 1,500,000 U.S. Treasury Bill, 11/20/97 $ 1,495,951
(Cost $1,495,951) --------------
Commercial Paper -- 1.5%
------------------------
20,000,000 General Electric Capital Corp.,
5.53%, 12/03/97 19,901,689
20,000,000 Household Finance Corp., 5.5%,
11/04/97 19,990,833
--------------
Total Commercial Paper 39,892,522
(Cost $39,892,522) --------------
Time Deposit -- 1.8%
--------------------
Deutsche Bank, AG
(United States)
47,969,000 5.66%, 11/03/97 47,969,000
(Cost $47,969,000)
- --------------------------------------------------------------
Total Short-Term Investments 89,357,473
(Cost $89,357,473)
- --------------------------------------------------------------
Total Investments -- 99.7% $2,655,630,963
(Cost $2,045,760,924)
- --------------------------------------------------------------
See notes to financial statements.
53
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997
Shares Issuer Value
- -------------------------------------------------------------------
Long-Term Investments -- 95.3%
- -------------------------------------------------------------------
Common Stock -- 94.9%
---------------------
Aerospace -- 3.4%
462,500 Precision Castparts Corp. $ 27,200,781
325,000 Sundstrand Corp. 17,671,875
---------------
44,872,656
---------------
Agricultural Production/Services -- 1.7%
460,000 AGCO Corp. 13,340,000
153,500 Case Corp. 9,181,219
---------------
22,521,219
---------------
Airlines -- 1.0%
299,000 Continental Airlines, Inc., Class B* 12,931,750
---------------
Automotive -- 2.5%
500,000 Lear Corp.* 24,031,250
200,000 Tower Automotive, Inc.* 8,375,000
---------------
32,406,250
---------------
Banking -- 5.2%
150,000 Cullen/Frost Bankers, Inc. 7,575,000
300,000 Southtrust Corp. 14,400,000
155,320 TCF Financial Corp. 8,833,825
250,000 Washington Mutual Inc. 17,109,375
527,000 Zions Bancorporation 20,487,125
---------------
68,405,325
---------------
Broadcasting -- 3.9%
800,000 Comcast Corp., Special Class A 22,000,000
600,000 Groupe AB, SA, ADR (France)* 4,462,500
700,000 Tele-Communications, Inc., Liberty
Media Group, Ser. A* 24,368,750
---------------
50,831,250
---------------
Business Services -- 6.5%
234,800 CDI Corp.* 9,215,900
575,000 Equifax, Inc. 17,860,938
300,000 Fiserv, Inc.* 13,425,000
840,000 GTECH Holdings Corp.* 27,090,000
700,000 Interim Services, Inc.* 18,331,250
---------------
85,923,088
---------------
See notes to financial statements.
54
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- --------------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------------
Chemicals -- 3.4%
435,000 Cytec Industries, Inc.* $ 21,206,250
195,000 OM Group, Inc. 7,361,250
150,000 Rohm & Haas Co. 12,496,875
94,250 The Carbide/Graphite Group, Inc.* 3,357,656
---------------
44,422,031
---------------
Computer Software -- 2.1%
505,000 American Business Information, Inc.,
Class A* 5,302,500
505,000 American Business Information, Inc.,
Class B* 6,565,000
584,000 American Management Systems, Inc. 12,629,000
65,000 McAfee Associates, Inc.* 3,233,750
2,500 Netscape Communications Corp.* 82,188
---------------
27,812,438
---------------
Computers/Computer Hardware -- 4.7%
500,000 EMC Corp., Mass.* 28,000,000
200,000 Quantum Corp.* 6,325,000
400,000 Solectron Corp.* 15,700,000
198,500 Storage Technology Corp.* 11,649,469
---------------
61,674,469
---------------
Distribution -- 0.9%
418,000 Applied Industrial Technologies, Inc. 12,148,125
---------------
Diversified -- 0.7%
114,500 American Standard Companies, Inc.* 4,093,375
125,000 Harnischfeger Industries, Inc. 4,921,875
---------------
9,015,250
---------------
Electronics/Electrical Equipment -- 3.2%
400,000 Adaptec, Inc.* 19,375,000
238,000 Teleflex, Inc. 8,865,500
250,000 Teradyne Inc.* 9,359,375
25,300 UCAR International, Inc.* 948,750
100,000 Xilinx, Inc.* 3,412,500
---------------
41,961,125
---------------
Entertainment/Leisure -- 4.2%
600,000 Carnival Corp., Class A 29,100,000
443,000 MGM Grand, Inc.* 19,436,625
See notes to financial statements.
55
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------------
155,000 TCA Cable TV, Inc. $ 6,393,750
---------------
54,930,375
---------------
Environmental Services -- 0.6%
215,000 U.S.A. Waste Services, Inc.* 7,955,000
---------------
Financial Services -- 3.8%
300,000 Bear Stearns Companies, Inc. 11,906,250
300,000 Finova Group, Inc. 13,181,250
410,000 Lehman Brothers Holding, Inc. 19,295,625
99,500 The PMI Group, Inc.* 6,013,531
---------------
50,396,656
---------------
Health Care/Health Care Services -- 9.4%
150,000 Beckman Instruments, Inc. 5,906,250
499,000 Beverly Enterprises, Inc.* 7,453,813
309,500 Health Care & Retirement Corp.* 11,702,969
798,500 HEALTHSOUTH Corp.* 20,411,656
150,000 Lincare Holdings, Inc.* 8,043,750
500,000 Sun Healthcare Group, Inc.* 9,937,500
275,000 Sybron International Corp.,
Wisconsin* 11,034,375
990,000 Tenet Healthcare Corp.* 30,256,875
419,000 Universal Health Services, Inc.,
Class B* 18,462,188
---------------
123,209,376
---------------
Insurance -- 9.3%
125,000 ACE, Ltd.# 11,617,188
390,000 American Bankers Insurance Group,
Inc. 14,576,250
150,000 CMAC Investment Corp. 8,203,125
200,000 Equitable Companies, Inc. 8,237,500
200,000 MGIC Investment Corp. 12,062,500
350,000 Nationwide Financial Services, Inc.,
Class A* 10,653,125
950,000 Reliance Group Holdings, Inc. 11,993,750
550,000 Reliastar Financial Corp. 20,556,250
299,250 SunAmerica, Inc. 10,754,297
195,000 Transatlantic Holdings, Inc. 13,491,563
---------------
122,145,548
---------------
See notes to financial statements.
56
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- (continued)
- ------------------------------------------------------------------
Machinery & Engineering Equipment -- 0.9%
200,000 Applied Power, Inc., Class A $ 12,375,000
---------------
Manufacturing -- 4.7%
129,000 Dexter Corp. 5,063,250
170,000 Johnson Controls, Inc. 7,628,750
250,000 Kennametal Inc. 12,125,000
300,000 Parker Hannifin Corp. 12,543,750
297,500 Pentair, Inc. 11,490,938
500,000 United Dominion Industries, Ltd. 13,062,500
---------------
61,914,188
---------------
Media/Advertising -- 1.1%
200,000 Omnicom Group, Inc. 14,125,000
---------------
Office/Business Equipment -- 1.2%
150,000 Avery Dennison Corp. 5,971,875
500,000 Office Depot, Inc.* 10,312,500
---------------
16,284,375
---------------
Oil & Gas -- 3.0%
600,000 Noble Drilling Corp.* 21,337,511
100,000 Sonat, Inc. 4,593,750
198,500 Tidewater, Inc. 13,038,969
---------------
38,970,230
---------------
Packaging -- 0.5%
300,000 NV Koninklijke KNP BT, ADR
(Netherlands) 6,832,470
---------------
Paper/Forest Products -- 1.2%
300,000 Boise Cascade Corp. 10,387,500
150,000 Willamette Industries, Inc. 4,959,375
---------------
15,346,875
---------------
Pipelines -- 1.6%
299,500 Columbia Gas System, Inc. 21,638,875
---------------
Power Conversion -- 0.8%
397,500 American Power Conversion Corp.* 10,831,875
---------------
Real Estate Investment Trust -- 3.1%
280,000 Beacon Properties Corp. 11,795,000
120,000 Duke Realty Investments, Inc. 2,700,000
200,000 Equity Residential Properties Trust 10,100,000
See notes to financial statements.
57
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
275,000 FelCor Suite Hotels, Inc. $ 10,071,875
400,000 Security Capital US Realty, ADR
(Luxembourg)* 5,640,000
--------------
40,306,875
--------------
Retailing -- 4.5%
220,000 CVS Corp. 13,488,750
250,000 Woolworth Corp. 4,750,000
200,000 General Nutrition Companies, Inc.* 6,300,000
300,000 Kroger Co.* 9,787,500
500,000 Neiman-Marcus Group, Inc. 16,593,750
300,000 Proffitt's, Inc.* 8,606,250
--------------
59,526,250
--------------
Telecommunications -- 1.5%
510,000 Aspect Telecommunications
Corp.* 12,240,000
300,000 Nextel Communications
Inc., Class A* 7,875,000
--------------
20,115,000
--------------
Textiles -- 2.7%
224,500 Liz Claiborne, Inc. 11,379,340
630,000 Unifi, Inc. 24,215,624
--------------
35,594,964
--------------
Utilities -- 1.6%
290,000 Calenergy Co., Inc.* 9,932,500
300,000 Pinnacle West Capital Corp. 10,443,750
--------------
20,376,250
--------------
Total Common Stock 1,247,800,158
(Cost $923,704,163) --------------
See notes to financial statements.
58
<PAGE>
Capital Growth Portfolio
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount Issuer Value
- --------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------
Corporate Notes & Bonds -- 0.4%
-------------------------------
Electronics -- 0.4%
$ 5,000,000 Xilinx Inc. 5.25%, 11/01/02 $ 4,932,500
(Cost $5,000,000) --------------
U.S. Government Obligation -- 0.0%
----------------------------------
565,000 U.S. Treasury Note, 6.88%,
05/15/06 601,019
(Cost $569,800)
- --------------------------------------------------------------
Total Long-Term Investments 1,253,333,677
(Cost $929,273,963)
- --------------------------------------------------------------
Short-Term Investments -- 3.5%
- --------------------------------------------------------------
Commercial Paper -- 1.5%
------------------------
20,000,000 Ford Motor Credit Co., Discount
Note, 5.50%, 11/04/97 19,990,833
(Cost $19,990,833) --------------
Time Deposit -- 2.0%
---------------------
26,430,000 Deutsche Bank AG, (United
States) 5.66%, 11/03/97 26,430,000
(Cost $26,430,000)
- --------------------------------------------------------------
Total Short-Term Investments 46,420,833
(Cost $46,420,833)
- --------------------------------------------------------------
Total Investments -- 98.8% $1,299,754,510
(Cost $975,694,796)
- --------------------------------------------------------------
Index
* -- Non income producing security.
# -- Security may only be sold to qualified institutional buyers.
ADR -- American Depository Receipt.
See notes to financial statements.
59
<PAGE>
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth & Capital
Income Growth
Portfolio Portfolio
---------------- ---------------
<S> <C> <C>
ASSETS:
Investment securities, at value (Note 1) $2,655,630,963 $1,299,754,510
Cash ............................................. 2,918 881
Receivables:
Investment securities sold ..................... 18,219,400 20,338,534
Interest and dividends ........................... 5,747,296 462,960
Other assets .................................... 47,197 51,558
-------------- --------------
Total assets .................................... 2,679,647,774 1,320,608,443
-------------- --------------
LIABILITIES:
Payable for investment securities purchased ...... 15,041,996 4,413,524
Accrued liabilities: (Note 2)
Administration fees .............................. 118,145 58,859
Investment advisory fees ........................ 944,161 470,864
Custodian ....................................... 36,504 20,624
Other .......................................... 196,542 171,725
-------------- --------------
Total Liabilities .............................. 16,337,348 5,135,596
-------------- --------------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTERESTS .............................. $2,663,310,426 $1,315,472,847
============== ==============
Cost of Investments ................................. $2,045,760,924 $ 975,694,796
============== ==============
</TABLE>
See notes to financial statements.
60
<PAGE>
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth & Capital
Income Growth
Portfolio Portfolio
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend .......................................... $ 38,535,143 $ 11,201,524
Interest .......................................... 13,181,160 4,663,619
Foreign taxes withheld ........................... (227,963) (315,627)
------------ ------------
Total investment income ........................ 51,488,340 15,549,516
------------ ------------
EXPENSES: (Note 2)
Investment Advisory fees ........................ 9,877,868 4,971,835
Administration fees .............................. 1,234,733 621,480
Custodian fees .................................... 163,385 98,945
Amortization of organization costs (Note 1) ...... 7,990 7,990
Professional fees ................................. 102,521 102,519
Trustees fees and expenses ........................ 49,389 24,859
Other ............................................. 170,609 138,574
------------ ------------
Total expenses ................................. 11,606,495 5,966,202
------------ ------------
Net investment income ........................... 39,881,845 9,583,314
------------ ------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain (loss) on:
Investments ....................................... 355,973,872 141,951,607
Futures transactions .............................. 9,654,862 --
Change in net unrealized
appreciation/depreciation on investments ......... 231,319,779 146,677,178
------------ -------------
Net realized and unrealized gain on
investments .................................... 596,948,513 288,628,785
------------ -------------
Net increase in net assets from operations ...... $636,830,358 $298,212,099
============ =============
</TABLE>
See notes to financial statements.
61
<PAGE>
Statement of Changes in Net Assets For the Years Ended October 31,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth &
Income
Portfolio
-----------------------------------
1997 1996
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ...................................................... $ 39,881,845 $ 46,623,872
Net realized gain on investments and futures transactions .................. 365,628,734 163,677,802
Change in net unrealized appreciation/depreciation on investments and futures 231,319,779 163,237,283
-------------- --------------
Increase in net assets from operations ....................................... 636,830,358 373,538,957
-------------- --------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions ............................................................... 788,831,006 470,616,913
Withdrawals .................................................................. (854,698,879) (605,973,572)
-------------- --------------
Net increase (decrease) from transactions in investors' beneficial interests (65,867,873) (135,356,659)
-------------- --------------
Net increase in net assets ................................................... 570,962,485 238,182,298
NET ASSETS:
Beginning of period ......................................................... 2,092,347,941 1,854,165,643
-------------- --------------
End of period ............................................................... $2,663,310,426 $2,092,347,941
============== ==============
<CAPTION>
Capital
Growth
Portfolio
---------------------------------------
1997 1996
------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ...................................................... $ 9,583,314 $ 12,451,547
Net realized gain on investments and futures transactions .................. 141,951,607 132,963,967
Change in net unrealized appreciation/depreciation on investments and futures 146,677,178 71,608,504
---------------- ----------------
Increase in net assets from operations ....................................... 298,212,099 217,024,018
---------------- ----------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions ............................................................... 936,937,099 1,114,082,444
Withdrawals .................................................................. (1,009,808,684) (1,260,399,848)
---------------- ----------------
Net increase (decrease) from transactions in investors' beneficial interests (72,871,585) (146,317,404)
---------------- ----------------
Net increase in net assets ................................................... 225,340,514 70,706,614
NET ASSETS:
Beginning of period ......................................................... 1,090,132,333 1,019,425,719
---------------- ----------------
End of period ............................................................... $ 1,315,472,847 $ 1,090,132,333
================ ================
</TABLE>
See notes to financial statements.
62
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Growth and Income
Portfolio ("GIP") and Capital Growth Portfolio ("CGP"), (the "Portfolios") are
separately registered under the Investment Company Act of 1940, as amended, as
non-diversified, open end management investment companies organized as trusts
under the laws of the State of New York. Each declaration of trust permits the
Trustees to issue beneficial interests in the respective Portfolios. The GIP
and the CGP commenced operations on November 19, 1993.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Portfolios:
A. Valuation of investments -- Equity securities, purchased options and
futures are valued at the last sale price on the exchange on which they are
primarily traded, including the NASDAQ National Market. Securities for which
sale prices are not available and other over-the-counter securities are
valued at the last quoted bid price. Bonds and other fixed income securities
(other than short-term obligations), including listed issues, are valued on
the basis of valuations supplied by pricing services or by matrix pricing
systems of a major dealer in bonds. Short-term debt securities with 61 days
or more to maturity at time of purchase are valued, through the 61st day
prior to maturity, at market value based on quotations obtained from market
makers or other appropriate sources; thereafter, the value on the 61st day is
amortized on a straight-line basis over the remaining number of days to
maturity. Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market. Portfolio
securities 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
Trustees.
B. Repurchase agreements -- It is the Portfolios' policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government Agency
securities. All collateral is held by the Trusts' custodian bank,
subcustodian, or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book Entry
System. In connection with transactions in repurchase agreements, if the
seller defaults and the value of the collateral declines, or if the seller
enters an insolvency proceeding, realization of the collateral by the
Trusts may be delayed or limited.
C. Futures contracts -- When a Portfolio enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in cash or
liquid securities. Thereafter, the futures contract is marked to market and
the portfolio makes (or receives) additional cash payments daily to the
broker. Changes in the value of the contract are recorded as unrealized
appreciation/depreciation until the contract is closed or settled.
The GIP invested a portion of its liquid assets in long stock index futures
contracts to more fully participate in the market. Use of long futures
contracts subject the Portfolio to risk of loss up to the amount of the
value of the contract.
The Portfolios may enter into futures contracts only on exchanges or boards
of trade. The exchange or board of trade acts as the counterparty to each
futures transaction, therefore, the Portfolio's credit risk is limited to
failure of the exchange or board of trade.
As of October 31, 1997, the Portfolios had no outstanding futures contracts.
D. Written options -- When a Portfolio writes an option on a futures
contract, an amount equal to the premium received by the Portfolio is
included in the Portfolio's Statement of Assets and Liabilities as an asset
and corresponding liability. The amount
63
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
of the liability is adjusted daily to reflect the current market value of
the written options and the change is recorded in a corresponding
unrealized gain or loss account. When a written option expires on its
stipulated expiration date, or when a closing transaction is entered into,
the related liability is extinguished and the Portfolio realizes a gain (or
loss if the cost of the closing transaction exceeds the premium received
when the option was written).
The GIP writes options on stock index securities futures. These options are
settled for cash and subject the Portfolio to market risk in excess of the
amounts that are reflected in the Statement of Assets and Liabilities. The
Portfolio, however, is not subject to credit risk on written options as the
counterparty has already performed its obligation by paying a premium at
the inception of the contract.
As of October 31, 1997 the Portfolios had no outstanding written options.
E. Security transactions and investment income -- Investment transactions
are accounted for on the trade date (the date the order to buy or sell is
executed). Securities gains and losses are calculated on the identified
cost basis. Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
F. Organization costs -- Organization and initial registration costs
incurred in connection with establishing the Portfolios have been deferred
and are being amortized on a straight-line basis over a sixty month period
beginning at the commencement of operations of each Portfolio.
G. Federal income taxes -- The Portfolios intend to continue to qualify as
partnerships and therefore net investment income and net realized gains are
taxed to the partners. Accordingly, no tax provisions are recorded by the
Portfolios. The investors in the Portfolios must take into account their
proportionate share of the Portfolios' income, gains, losses, deductions,
credits and tax preference items in computing their federal income tax
liability, without regard to whether they have received any cash
distributions from the Portfolio. The Portfolios do not intend to distribute
to investors their net investment income or their net realized gains, if any.
It is intended that the Portfolios will be managed in such a way that
investors in the Portfolio will be able to satisfy the requirements of
subchapter M of the Internal Revenue Code to be taxed as regulated investment
companies.
H. Expenses -- Expenses directly attributable to a Portfolio are charged to
that Portfolio; other expenses are allocated on another reasonable basis.
2. Fees and Other Transactions with Affiliates
A. Investment advisory fee -- Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor") acts as the
Investment Advisor to the Portfolios. Chase is a direct wholly-owned
subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase
supervises the investments of the Portfolios and for such services is paid
a fee.
The fee is computed daily and paid monthly at an annual rate equal to 0.40%
of the Portfolios' average daily net assets.
Chase Asset Management, Inc. ("CAM"), a registered investment advisor, is
the sub-investment advisor to each of the Portfolios pursuant to a
Sub-Investment Advisory Agreement between CAM and Chase. CAM is a wholly
owned subsidiary of Chase and is entitled to receive a fee, payable by
Chase from its advisory fee, at an annual rate equal to 0.20% of each
Portfolio's average daily net assets.
B. Custodial fees -- Chase, as Custodian provides safekeeping services for
the Portfolios' securities. Compensation for such services are presented in
the Statement of Operations as custodian fees.
C. Administration fee -- Pursuant to an Administration Agreement, Chase
(the "Administrator") provides certain administration services to the
Trusts. For these
64
<PAGE>
Notes to Financial Statements October 31, 1997 (continued)
- --------------------------------------------------------------------------------
services and facilities, the Administrator receives from each Portfolio a
fee computed at the annual rate equal to 0.05% of the respective
Portfolio's average daily net assets.
3. Investment Transactions -- For the year ended October 31, 1997, purchases
and sales of investments (excluding short-term investments) were as follows:
GIP CGP
---------------- -------------
Purchases (excluding U.S. Government) ...... $1,781,972,894 $863,031,652
Sales (excluding U.S. Government) ......... 1,474,324,449 771,903,060
Purchases of U.S. Government ............... 60,980,313 --
Sales of U.S. Government .................. -- --
The portfolio turnover rates of GIP and CGP for the year ended were 65% and 67%
respectively. The average commission rates paid per share were $.05990 and
$.0587 for GIP and CGP, respectively.
4. Retirement Plan -- The Portfolios have adopted an unfunded noncontributory
defined benefit pension plan covering all independent trustees of the
Portfolios who will have served as an independent trustee for at least five
years at the time of retirement. Benefits under this plan are based on
compensation and years of service. Pension expenses for the year ended October
31, 1997, included in Trustees Fees and Expenses in the Statement of
Operations, and accrued pension liability included in other accrued
liabilities, respectively, in the Statement of Assets and Liabilities were as
follows:
Accrued
Pension Pension
Expenses Liability
---------- ----------
GIP ...... $21,526 $68,330
CGP ...... 11,661 33,265
65
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Beneficial
Interest Holders of Growth and Income
Portfolio and Capital Growth Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets present fairly, in all material respects, the financial
position of Growth and Income Portfolio and Capital Growth Portfolio (the
"Portfolios") at October 31, 1997, the results of each of their operations for
the year then ended, and the changes in each of their net assets for each of
the two years in the period then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Portfolios' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe the our audits, which included
confirmation of securities at October 31, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
66
<PAGE>
Unaudited
Vista Growth and Income Fund
Vista Capital Growth Fund
Vista Equity Income Fund
Vista Small Cap Opportunities Fund
- --------------------------------------------------------------------------------
Certain tax information regarding the Vista Mutual Funds is required to be
provided to shareholders based upon the Funds' income and distributions for the
taxable year ended October 31, 1997. The information and distributions reported
in this letter may differ from the information and distributions taxable to the
shareholders for the calendar year ending December 31, 1997. The information
necessary to complete your income tax returns for the calendar year ending
December 31, 1997 will be received under separate cover.
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997.
The following represents the source and percentage of income earned from
government obligations, the percentage of distributions eligible for the
dividends received deduction and the long-term capital gains distributed per
share by the Funds:
<TABLE>
<CAPTION>
Federal Home Federal National Dividends Long-Term Capital
U.S. Treasury Federal Home Loan Mortgage Mortgage Received Gains Distribution
Vista Fund Obligations Loan Bank Corporation Association Deduction Per Share
- ------------------------- --------------- -------------- --------------- ------------------ ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income 0.30% 2.92% 1.45% 1.22% 80.63% $2.89
Capital Growth 0.25% 2.56% 3.37% 4.69% 37.49% $3.53
Equity Income 13.55% 0.07% 0.76% -- 39.57% $0.93
Small Cap Opportunities -- -- -- -- -- --
</TABLE>
67
<PAGE>
(back cover)
Vista Service Center
P.O. Box 419392
Kansas City, MO 64179
Investment Adviser, Administrator,
Shareholder and Fund Servicing Agent
and Custodian
The Chase Manhattan Bank
Distributor
Vista Fund Distributors, Inc.
Transfer Agent
DST Systems, Inc.
Legal Counsel
Simpson Thacher & Bartlett
Independent Accountants
Price Waterhouse LLP
Vista Mutual Funds are distributed by Vista Fund Distributors, Inc. which is
unaffiliated with The Chase Manhattan Bank. Chase and its respective affiliates
receive compensation from the Vista Funds for providing investment advisory and
other services.
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
funds unless preceded or accompanied by a prospectus.
To obtain a prospectus for any of the Vista Funds, call 1-800-34-VISTA. The
prospectus contains more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
VEQTY-2-1297
<PAGE>
[In sidebar on cover:]
INTERNATIONAL EQUITY FUNDS
[Background Graphic: Hills and Trees]
ANNUAL
REPORT
---------------
Vista, Setting the Global Standard.
VISTA EUROPEAN FUND
VISTA SOUTHEAST ASIAN FUND
VISTA JAPAN FUND
VISTA INTERNATIONAL EQUITY FUND
[VISTA LOGO]
Vista
FAMILY OF MUTUAL FUND
MANAGED BY CHASE MANHATTAN
October 31, 1997
<PAGE>
HIGHLIGHTS
During the reporting year, markets in Europe and Latin America showed largely
positive returns while those in Japan and Southeast Asia were off sharply.
[bullet] The most volatile international trading occurred at the
end of October, when a sharp fall in Hong Kong share
prices sparked a global sell off that extended to Wall Street.
[bullet] Although markets in the U.S. and Europe have since
recovered, investors have remained cautious about the
prospects for Japan, the emerging markets of Asia and, to
a lesser extent, Latin America.
-----------------------------------------------------------------------------
CONTENTS
-----------------------------------------------------------------------------
Chairman's Letter 3
Visa European Fund
Fund Commentary [bullet] Portfolio of Investments 4
Vista Southeast Asia Fund
Fund Commentary [bullet] Portfolio of Investments 13
Vista Japan Fund
Fund Commentary [bullet] Portfolio of Investments 21
Vista International Equity Fund
Fund Commentary 28
Fund Financial Statements 32
Portfolio Financial Statements 48
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY,
THE CHASE MANHATTAN BANK, AND THE SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY, INVESTMENTS IN MUTUAL FUNDS
INVOLVE RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
-----------------------------------------------------------------------------
<PAGE>
Vista Family of Mutual Funds
CHAIRMAN'S LETTER
December 10, 1997
Dear Shareholder:
We are pleased to present this Annual Report for the following Vista
International Equity Funds for the year ended October 31, 1997:
[bullet] Vista European Fund [bullet] Vista Southeast Asian Fund
[bullet] Vista Japan Fund [bullet] Vista International Equity Fund
International Market Performance Mixed During Reporting Year
In the past couple of years, certain investment analysts have predicted that
globalization would cause world equity markets to move in tandem, reducing the
positive effects of a diversified portfolio. Contrary to these predictions,
however, the benefits of diversification were alive and well during the
reporting year as markets in Europe and Latin America showed largely positive
returns while those in Japan and Southeast Asia were off sharply.
The most volatile international trading occurred at the end of October, when a
sharp fall in Hong Kong share prices sparked a global sell off that extended to
Wall Street. Although markets in the U.S. and Europe have since recovered,
investors have remained cautious about the prospects for Japan, the emerging
markets of Asia and, to a lesser extent, Latin America.
Long-term View Vital Moving Forward
Although unsettling, the recent turmoil may potentially have a cleansing effect
that may lead to more efficient and transparent capital markets. It's important
to remember that, behind the headlines, the long-term prospects for many of the
hardest-hit markets remain outstanding. That's why all of us at Vista encourage
you, as an international investor, to maintain a long-term perspective and
understand that periods of volatility are a natural part of international stock
market investing. We thank you for your business and look forward to continuing
to serve your investment needs for many years to come.
Sincerely yours,
/s/ Fergus Reid
- -------------------
Fergus Reid
Chairman
3
<PAGE>
Unaudited
About Your Fund
VISTA EUROPEAN FUND
--------------------------------------------------------------------------
FUND FACTS
--------------------------------------------------------------------------
Objective: Capital Growth
Primary investments: Common Stocks of Established
Companies
in Western Europe
Suggested investment
time frame: Long-Term
Market benchmark: MSCI Europe Index
Lipper funds category: European Funds Average
Class A Class B
------- -------
Inception date: 11/2/95 11/3/95
Newspaper symbol: Not listed Not listed
As of October 31, 1997
Net assets: $13.0 million $2.2 million
--------------------------------------------------------------------------
PERFORMANCE
Vista European Fund, which seeks long-term growth of capital by investing
primarily in the common stocks of established companies in Western Europe,
provided shareholders with a total return of 28.19% (Class A shares, without
sales charges) for the year ended October 31, 1997.
STRATEGY
For several years, the Fund's strategy has been based on the belief that the
common European currency, the Euro, will in fact be introduced at the beginning
of 1999 with broad participation among European Union member countries.
Additionally, the Fund's management team believes that the best investments in
a consolidating Europe are the stocks of companies who have undertaken an
ongoing process of restructuring.
Therefore, throughout the reporting year, the Fund invested in companies whose
managements, it believes, are committed to increasing shareholder value through
enhanced productivity, a sharp product focus and the elimination of
non-profitable business lines. As the year progressed and signs of economic
growth began to appear on the continent, the management team shifted its
emphasis slightly from interest-rate sensitive stocks to those of companies who
have positioned themselves to benefit from higher levels of growth, including
small- and mid-capitalization issues.
4
<PAGE>
Unaudited
About Your Fund
VISTA EUROPEAN FUND
OUTLOOK
Moving forward, the Fund's management team expects the period leading to the
introduction of the Euro to present a variety of challenges and opportunities,
with the key factor in overall European performance being the resumption of
strong economic growth in Germany, the Continent's largest market. In this
environment, the management team is focusing on identifying the stocks of
companies throughout Europe whose operating efficiencies, it believes, may
allow the revenues that come from stronger economic growth to flow to the
bottom line. On a comparative global basis Fund management believes that the
markets of Europe look particularly appealing.
VISTA EUROPEAN FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[PIE CHART]
[CHART PLOT POINTS]
Cash/Other 10.27%
Investments 89.73%
VISTA EUROPEAN FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[PIE CHART]
[CHART PLOT POINTS]
Austria 3.6%
Finland 2.6%
France 13.4%
Germany 11.9%
Ireland 3.5%
Italy 7.5%
Netherlands 8.0%
Portugal 2.1%
Spain 2.9%
Switzerland 8.2%
United Kingdom 33.3%
Other 3.0%
5
<PAGE>
Unaudited
About Your Fund
VISTA EUROPEAN FUND
----------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 10/31/97
----------------------------------------------------------------------------
Roche Holding AG 5.29%
France Telecom, SA 4.19%
Shell Transprt & Trading PL C 4.08%
Baan Company, NV 3.60%
Legal & General Group PLC 3.29%
Saipem SPA 3.00%
Brunel International NV 2.91%
Dresdner Bank AG 2.80%
Cap Gemini Sogeti SA 2.70%
Nokia AB-A Shares 2.64%
---------------------------------------------------------------------------
Top 10 holdings comprised 34.50% of Fund's market value of investments. Fund
holdings are subject to change at any time.
---------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97
---------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 28.19% 22.10%
Five Years N/A N/A
Since Inception (11/2/95) 24.43% 21.44%
Without With
Class B Shares CDSC CDSC*
One Year 27.25% 22.25%
Five Years N/A N/A
Since Inception (11/3/95) 23.57% 21.94%
---------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with
market conditions. When shares are redeemed, they may be worth more or less
than their original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
* Assumes 5% CDSC for the one year period and a 4% CDSC for the period since
inception.
6
<PAGE>
Unaudited
About Your Fund
VISTA EUROPEAN FUND
---------------------------------------------------------------------------
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA EUROPEAN FUND--CLASS A
AND ITS KEY BENCHMARKS
---------------------------------------------------------------------------
[LINE CHART]
[LINE CHART PLOT POINTS]
European Fund Lipper European Funds Average MSCI Europe Index
11/95 9,525 10,000 10,000
10/96 11,504 11,792 11,796
10/31/97 14,747 14,221 14,910
---------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista European Fund, the Lipper European Funds Average and the MSCI
Europe Indexfrom November 2, 1995 to October 31, 1997. The performance of the
Fund assumes the reinvestment of all dividends and capital gains and includes a
4.75% sales charge. The performance of the average and the index does not
include a sales charge and has been adjusted to reflect reinvestment of all
dividends and capital gains on the securities included in the benchmark.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper European Funds Average represents the average performance of a
universe of 79 actively managed mutual funds that invest in European stocks.
Lipper is an independent mutual fund performance monitor whose results are
based on total return and do not reflect a sales charge.
The MSCI Europe Index is a replica (or model) of the performance of the
European markets. The index is unmanaged and reflects the reinvestment of
dividends. An individual cannot invest in the index.
International investing involves a greater degree of risk and increased
volatility. Changes in currency and exchange rates and differences in
accounting and taxation policies outside the U.S. can raise or lower returns.
Also, some overseas markets may not be as politically and economically stable
as the United States and other nations.
7
<PAGE>
Vista European Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value (USD)
- ------------------------------------------------------------------
Long-Term Investments -- %
- ------------------------------------------------------------------
Common Stock -- 91.9%
---------------------
Austria -- 3.3%
Oil & Gas -- 2.2%
1,326 OMV AG $ 188,819
1,277 Schoeller-Bleckmann Oilfield
Equipment AG* 151,271
Steel -- 1.1%
2,255 Boehler -- Uddeholm AG, 161,950
-----------
Total Austria 502,040
-----------
Finland -- 2.5%
Electronics/Electrical Equipment -- 2.5%
4,270 Nokia AB, A Shares 373,512
-----------
France -- 12.5%
Automotive -- 0.8%
703 Equipements et Composants pour
l'Industries Automobile 116,637
Banking -- 2.4%
5,000 Banque Nationale de Paris 221,507
2,600 Credit Commercial de France 147,615
Computer Software -- 2.5%
4,800 Cap Gemini Sogeti SA 381,929
Consumer Products -- 1.1%
7,200 Moulinex* 162,612
Oil & Gas -- 1.8%
2,150 Elf Aquitaine SA 266,694
Telecommunications -- 3.9%
15,650 France Telecom, SA* 593,533
-----------
Total France 1,890,527
-----------
Germany -- 11.0%
Banking -- 2.6%
9,570 Dresdner Bank AG 396,444
Capital Goods -- 2.2%
792 Mannesmann AG 334,994
Consumer Products -- 2.0%
2,150 Adidas AG, ADR# 311,666
See notes to financial statements.
8
<PAGE>
Vista European Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Health Care/Health Care Services -- 2.8%
2,980 Fresenius Medical Care AG, Ordinary
Shares* $ 210,365
3,800 Fresenius Medical Care AG,
Preference Shares* 216,367
Machinery & Engineering Equipment -- 1.4%
600 GEA AG, Ordinary Shares 195,218
40 GEA AG, Preference Shares 12,829
-----------
Total Germany 1,677,883
-----------
Greece -- 0.8%
Construction -- 0.8%
2,600 Titan Cement Company, SA 127,221
-----------
Ireland -- 3.3%
Construction Materials -- 0.7%
8,500 CRH PLC 102,484
Food/Beverage Products -- 0.7%
23,000 Greencore Group PLC 109,149
Real Estate -- 1.9%
48,299 Green Property PLC 283,474
-----------
Total Ireland 495,107
-----------
Italy -- 7.0%
Banking -- 1.5%
83,000 Banco Ambrosiano Veneto Spa, RNC 234,737
Consumer Products -- 1.3%
18,000 CSP International Industria Calze
SPA* 198,621
Oil & Gas -- 4.2%
36,500 Ente Nazionale Idrocarburi Spa (ENI) 205,591
75,500 Saipem SPA 424,594
-----------
Total Italy 1,063,543
-----------
Netherlands -- 7.5%
Business Services -- 4.1%
19,500 Brunel International NV* 411,960
6,400 Koninklijke Ahrend Groep NV 213,364
Computer Software -- 3.4%
7,200 Baan Company, N.V.* 510,119
-----------
Total Netherlands 1,135,443
-----------
See notes to financial statements.
9
<PAGE>
Vista European Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Poland -- 0.7%
Banking -- 0.7%
7,000 Bank Inicjatyw Gospodarczych BIG
SA, GDR* $ 105,452
-----------
Portugal -- 2.0%
Retailing -- 1.2%
2,790 Estabelecimentos Jeronimo Martins &
Filho, Sociedade Gestora de Part 182,571
Telecommunications -- 0.8%
2,850 Portugal Telecom SA* 117,007
-----------
Total Portugal 299,578
-----------
Spain -- 2.7%
Business Services -- 0.9%
12,600 Prosequr, CIA de Segkuridad SA,
Registered 141,291
Construction -- 1.8%
7,200 Fomento de Construcciones y
Contratas SA 264,997
-----------
Total Spain 406,288
-----------
Switzerland -- 7.6%
Electronics/Electrical Equipment -- 1.5%
130 SEZ Holding AG 220,641
Pharmaceuticals -- 6.1%
100 Ares-Serono Group, Class B 189,776
85 Roche Holding AG 749,023
-----------
Total Switzerland 1,159,440
-----------
United Kingdom -- 31.0%
Aerospace -- 1.2%
6,643 British Aerospace PLC 176,229
Business Services -- 0.8%
11,000 Delphi Group PLC 128,383
Construction -- 3.1%
18,030 Berkeley Group PLC 195,466
50,500 Jarvis PLC 275,221
Diversified -- 0.9%
35,615 Cookson Group PLC 142,737
See notes to financial statements.
10
<PAGE>
Vista European Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Financial Services -- 3.1%
57,300 Legal & General Group PLC $ 466,019
Food/Beverage Products -- 2.6%
15,388 Allied Domecq PLC 125,537
44,000 Devro PLC 272,630
Hotels/Other Lodging -- 1.0%
62,436 Jarvis Hotels PLC 152,860
Insurance -- 3.9%
19,000 General Accident PLC 323,231
27,900 Royal & Sun Alliance Insurance
Group PLC 268,784
Multi-Media -- 0.5%
9,100 Carlton Communications PLC 75,841
Oil & Gas -- 5.0%
22,431 British-Borneo Petro Syndica PLC 179,045
81,398 Shell Transport & Trading PLC 577,038
Real Estate -- 2.0%
34,800 MEPC PLC 303,160
Real Estate Investment Trust -- 0.8%
86,674 TBI PLC 124,996
Retailing -- 3.1%
12,211 Boots Company, PLC 174,870
13,277 Great Universal Stores PLC 157,297
21,300 Safeway PLC 138,675
Shipping/Transportation -- 2.2%
15,505 British Airport Authority PLC 143,002
12,000 Railtrack Group PLC* 191,770
Telecommunications -- 0.8%
21,700 Vodafone Group PLC 119,264
-----------
Total United Kingdom 4,712,055
-----------
Total Common Stock 13,948,089
-----------
(Cost $13,117,223)
See notes to financial statements.
11
<PAGE>
Vista European Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- -------------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------------
Rights -- 0.0%
--------------
United Kingdom -- 0.0%
Construction -- 0.0%
4,006 The Berkeley Group PLC* $ 5,508
-----------
Principal
Amount
(Local
Currency)
Convertible Corporate Notes & Bonds -- 0.0%
-------------------------------------------
Germany -- 0.0%
Automotive -- 0.0%
$ 4,800 Daimler-Benz AG, 5.75%, 06/14/02 3,598
-----------
(Cost $3,675)
Corporate Notes & Bonds -- 1.3%
-------------------------------
Poland -- 1.3%
Electronics/Electrical Equipment -- 1.3%
340,000 Elektrim Spolka Akcyjna SA, 2.00%,
5/30/04 194,243
(Cost $214,025)
-----------------------------------------------------------------
Total Investments -- 93.2% $14,151,438
(Cost $13,334,924)
-----------------------------------------------------------------
See notes to financial statements.
12
<PAGE>
Unaudited
About Your Fund
VISTA SOUTHEAST ASIAN FUND
-----------------------------------------------------------------------------
FUND FACTS
-----------------------------------------------------------------------------
Objective: Capital Growth
Primary investments: Stocks of Companies in the Pacific Rim,
Except Japan
Suggested investment
time frame: Long-Term
Market benchmark: MSCI Pacific Ex-Japan Index
Lipper funds category: Lipper Pacific Ex-Japan Funds Average
Class A Class B
-------- -------
Inception date: 11/2/95 11/3/95
Newspaper symbol: Not listed Not listed
As of October 31, 1997
Net assets: $6.6 million $1.1 million
-----------------------------------------------------------------------------
PERFORMANCE
Vista Southeast Asian Fund, which seeks long-term growth of capital by
investing in stocks of companies located in the Pacific Rim (excluding Japan),
had a total return of -28.86% (Class A shares, without sales charges) for the
year ended October 31, 1997.
STRATEGY
Despite relatively good country and individual stock selection throughout the
reporting year, the Fund was unable to avoid the heavy losses in Southeast
Asian equity markets. Obviously, these losses were particularly acute during
the currency crisis that began with the Thai baht and subsequently spread to
Malaysia, Indonesia and throughout the region.
Throughout most of the reporting year, the Fund emphasized investments in Hong
Kong, the largest and most liquid equity market in the region. It should be
noted that although Hong Kong stocks have been hit quite hard during the Asian
volatility, the management team believes the country's fundamentals and
financial system are in far better shape than those of other Asian markets.
Singapore, too, exhibits stronger underlying fundamentals and therefore was
overweighted. As usual during any time of volatility, the management team had
used -- and expects to continue to use -- currency hedging and investment in
dollar-based securities to seek to protect shareholders.
13
<PAGE>
Unaudited
About Your Fund
VISTA SOUTHEAST ASIAN FUND
OUTLOOK
Moving forward, therefore, the management team is quite cautious and is
maintaining a country-by-country and market-by-market approach that is closely
tied to steps governments are taking to deal with the crisis. It's important to
remember that, whenever there are sharp downturns in markets and regions,
investors can be quite indiscriminate in punishing the good with the bad. The
management team, therefore, is carefully identifying companies whose stocks it
believes can perform well in the slower overall economic environment it
anticipates going forward -- and whose stocks are trading at low levels
relative to expected earnings growth.
VISTA SOUTHEAST ASIAN FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Cash/Other 28.23%
Investments 71.77%
VISTA SOUTHEAST ASIAN FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Australia 19.5%
Hong Kong 64.7%
Indonesia 2.0%
Malaysia 5.3%
Singapore 6.3%
Other 2.2%
14
<PAGE>
Unaudited
About Your Fund
VISTA SOUTHEAST ASIAN FUND
-----------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 10/31/97
-----------------------------------------------------------------------------
Citic Pacific Ltd. 7.27%
Wharf (Holdings) Ltd. 6.87%
Hutchison Whampoa 6.71%
Hongkong Land Holdings, Ltd. 4.64%
Cheung Kong Holdings Ltd. 4.49%
New World Development Co., Ltd . 4.49%
Sun Hung Kai Properties, Ltd. 4.41%
Energy Equity Corp. Ltd. 4.05%
Foster's Brewing Group, Ltd. 3.81%
HSBC Holdings PLC 3.80%
-----------------------------------------------------------------------------
Top 10 holdings comprised 50.54% of the Fund's market value of investments.
Fund holdings are subject to change at any time.
-----------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97
-----------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year -28.86% -32.24%
Five Years N/A N/A
Since Inception (11/2/95) -7.72% -9.94%
Without With
Class B Shares CDSC CDSC*
One Year -29.48% -32.82%
Five Years N/A N/A
Since Inception (11/3/95) -8.43% -10.19%
-----------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
The Fund is currently waiving certain fees. The voluntary waiver may be modified
or terminated at any time, which would reduce performance.
* Assumes a 5% CDSC for the one year period and a 4% CDSC for the period since
inception.
15
<PAGE>
Unaudited
About Your Fund
VISTA SOUTHEAST ASIAN FUND
-----------------------------------------------------------------------------
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA SOUTHEAST ASIA FUND--CLASS A
AND ITS KEY BENCHMMARKS
[LINE CHART]
[LINE CHART PLOT POINTS]
Southeast Lipper Pacific MSCI Pacific
Asian Fund Ex-Japan Funds Avg. Ex-Japan Index
11/95 9,525 10,000 10,000
10/96 11,401 10,500 11,011
10/31/97 8,111 7,993 8,180
-----------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Southeast Asia Fund, the Lipper Pacific Ex-Japan Funds Average
and the MSCI Pacific Ex-Japan Index from November 2, 1995 to October 31, 1997.
The performance of the Fund assumes reinvestment of all dividends and capital
gains and includes a 4.75% sales charge. The performance of the average and the
index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
The Lipper Pacific Ex-Japan Funds Average represents the average performance of
a universe of 81 actively managed mutual funds that invest in Asian stock
markets with exception of Japan. Lipper is an independent mutual fund
performance monitor whose results are based on total return and do not reflect a
sales charge.
The MSCI Pacific Ex-Japan Index is unmanaged and is a replica (or model) of the
performance of the Pacific regional equity markets, excluding Japan. The index
is unmanaged and reflects the reinvestment of dividends. An individual cannot
invest directly in the index.
International investing involves a greater degree of risk and increased
volatility. Changes in currency exchange rates and differences in accounting and
taxation policies outside the U.S. can raise or lower returns. Also, some
overseas markets may not be as politically and economically stable as the Unites
States and other nations.
16
<PAGE>
Vista Southeast Asian Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value (USD)
- ------------------------------------------------------------
Long-Term Investments -- 81.3%
- ------------------------------------------------------------
Common Stock -- 80.9%
---------------------
Australia -- 15.8%
Banking -- 1.2%
8,000 Commonwealth Bank of Australia $ 92,198
Diversified -- 3.0%
195,000 Futuris Corp. Ltd. 228,168
Entertainment/Leisure -- 1.8%
29,000 TABCORP Holdings Ltd. 133,278
Food/Beverage Products -- 3.0%
124,000 Foster's Brewing Group, Ltd. 235,992
Insurance -- 2.2%
97,000 National Mutual Holdings, Ltd. 167,514
Multi-Media -- 1.3%
17,000 Publishing & Broadcasting Ltd. 98,859
Oil & Gas -- 3.3%
345,000 Energy Equity Corp. Ltd.* 250,477
-----------
Total Australia 1,206,486
-----------
Hong Kong -- 52.6%
Banking -- 5.3%
75,000 Guoco Group Ltd. 163,982
10,400 HSBC Holdings PLC 235,462
Business Services -- 2.1%
140,000 Cosco Pacific Ltd. 163,012
Consumer Products -- 1.0%
60,000 Guangdong Kelon Elec Holding,
Class H 76,072
Diversified -- 13.2%
94,000 Citic Pacific Ltd.+ 449,964
224,000 Guangdong Investments, Ltd. 142,726
60,000 Hutchison Whampoa+ 415,292
Food/Beverage Products -- 0.1%
28,000 Guangdong Brewery Holdings, Ltd.* 5,144
Manufacturing -- 2.2%
38,000 Shanghai Industrial Holdings Ltd. 169,118
Real Estate -- 28.7%
40,000 Cheung Kong Holdings, Ltd. 278,155
138,000 China Resources Beijing Land 56,239
42,000 China Resources Enterprises Ltd. 115,195
See notes to financial statements.
17
<PAGE>
Vista Southeast Asian Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- -------------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------------
24,000 Henderson Land Development
Company, Ltd. $ 132,893
307,120 HKR International, Ltd. 202,641
125,000 Hongkong Land Holdings, Ltd.* 287,500
79,000 New World Development Company,
Ltd.+ 278,000
37,000 Sun Hung Kai Properties, Ltd. 272,851
208,000 Wharf (Holdings) Ltd. 425,176
116,000 Wheelock & Co., Ltd. 132,065
-----------
Total Hong Kong 4,001,487
-----------
India -- 0.5%
Utilities -- 0.5%
2,600 BSES Ltd., GDR* 41,990
-----------
Indonesia -- 1.6%
Diversified -- 0.5%
46,000 PT Bimantara Citra 42,108
Telecommunications -- 1.1%
87,000 PT Telekomunikasi Indonesia 80,846
-----------
Total Indonesia 122,954
-----------
Korea -- 0.1%
Telecommunications -- 0.1%
223 Sungmi Telecom Electronics Co. 10,863
-----------
Malaysia -- 4.0%
Agricultural Production/Services -- 1.8%
60,000 Kumpulan Guthrie Bhd. 49,791
37,000 Malakoff Bhd. 88,358
Construction -- 0.8%
85,000 Sunway Building Technology Bhd. 58,612
Construction Materials -- 1.4%
165,000 Sungei Way Holdings Bhd. 108,359
-----------
Total Malaysia 305,120
-----------
Philippines -- 0.7%
Diversified -- 0.5%
493,430 Metro Pacific Corp. 32,919
Utilities -- 0.2%
5,850 Manila Electric Co. 17,860
-----------
Total Philippines 50,779
-----------
See notes to financial statements.
18
<PAGE>
Vista Southeast Asian Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value (USD)
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Singapore -- 5.1%
Banking -- 1.8%
25,000 Overseas Chinese Banking Corp.
(Foreign) 139,064
Business Services -- 1.0%
22,000 Venture Manufacturing Ltd. 75,524
Real Estate -- 2.3%
136,000 Wing Tai Holdings Ltd. 172,916
---------
Total Singapore 387,504
---------
Thailand -- 0.5%
Food/Beverage Products -- 0.3%
19,000 Thai Theparos Food Product Public
Co. Ltd. (Foreign) 21,767
Printing & Publishing -- 0.2%
5,000 Siam Sport Syndicate Public Co., Ltd.
(Foreign) 12,431
---------
Total Thailand 34,198
---------
Total Common Stock 6,161,381
---------
(Cost $8,569,394)
Warrants -- 0.4%
----------------
Hong Kong -- 0.1%
Financial Services -- 0.1%
44,600 Guangdong Investment, 8.00,
Expires 07/30/99* 6,924
---------
Malaysia -- 0.3%
Construction -- 0.3%
80,000 Sunway Building Technology, Bhd.,
Expires 07/30/01* 22,687
---------
Total Warrants 29,611
(Cost $83,371)
-------------------------------------------------------------
Total Investments -- 81.3% $6,190,992
(Cost $8,652,765)
-------------------------------------------------------------
See notes to financial statements.
19
<PAGE>
Vista Southeast Asian Fund
Portfolio of Investments October 31, 1997 (continued)
Short Index Futures
- -------------------
Expiration Number of Original Value at Unrealized
Description Date Contracts Cost 10/31/97 Appreciation
- -------------------------------------------------------------------------------
Hang Seng Nov. 97 15 $1,073,291 $1,027,557 $45,734
- -------------------------------------------------------------------------------
See notes to financial statements.
20
<PAGE>
Unaudited
About Your Fund
VISTA JAPAN FUND
---------------------------------------------------------------------------
FUND FACTS
---------------------------------------------------------------------------
Objective: Capital Growth
Primary investments: Stocks of Companies Located in Japan
Suggested investment
time frame: Long-Term
Market benchmark: Tokyo SE (Topix) 1st Section
Lipper funds category: Japan Equity Funds Average
Class A Class B
------- -------
Inception date: 11/2/95 11/3/95
Newspaper symbol: not listed not listed
As of October 31, 1997
Net assets: $5.0 million $1.9 million
---------------------------------------------------------------------------
PERFORMANCE
Vista Japan Fund, which seeks long-term growth of capital by investing in the
stocks of companies located in Japan, provided shareholders with a total return
of 3.49% (Class A shares, without sales charges) for the year ended October 31,
1997.
STRATEGY
The Fund's management team utilized Vista's international stock management
system to deliver a positive total return during a year in which the broad
Japanese market had a return of -22.11% as measured by the Tokyo SE (Topix) 1st
Section Index.
The management team correctly anticipated that the yen would fall against the
dollar and, as such, made extensive use of currency hedging and dollar-based
securities. Additionally, the positive performance was driven by investments in
the stocks of large multinational exporting companies that benefited from the
weaker yen as well as avoidance of financial stocks in light of ongoing turmoil
in the Japanese banking sector. Prior to the sharp fall in Japanese securities,
which began with reports of slower-than-expected second-quarter growth and
worsened with the collapse of many Asian markets in late October, the management
team had raised the Fund's dollar-denominated cash level, providing an
additional cushion for shareholders.
21
<PAGE>
Unaudited
About Your Fund
VISTA JAPAN FUND
OUTLOOK
Moving forward, Fund management expects to maintain the current cautious
strategy until economic fundamentals in Japan improve. Several key
interconnected problems--the health of the financial system, the lack of
economic growth, turmoil in Asian export markets and poor consumer
confidence--must be resolved before Japanese markets can fully stabilize and
realize the potential in the world's second-largest economy. In the meantime,
the management team will rely on Vista's international stock management system
to seek to protect and enhance shareholder return.
VISTA JAPAN FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Cash/Other 31.36%
Investments 68.64%
VISTA JAPAN FUND
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Apparel 2.4%
Automotive 8.5%
Banking 3.4%
Computer Software 4.4%
Diversified 2.4%
Entertainment/Leisure 2.2%
Financial Services 5.9%
Manufacturing 11.9%
Pharmaceuticals 4.1%
Real Estate 6.3%
Retailing 5.6%
Telecommunications 2.5%
Electronics/Electrical Equipment 22.0%
Consumer Products 9%
Photographic Equipment 3.7%
Other 5.7%
22
<PAGE>
Unaudited
About Your Fund
VISTA JAPAN FUND
---------------------------------------------------------------------------
TOP 10 HOLDINGS AS OF 10/31/97
---------------------------------------------------------------------------
Murata Mfg. Co. Ltd. 5.04%
Sankyo Co. Ltd. 4.10%
Sony Corp. 3.96%
Acom Co., Ltd. 3.86%
Fuji Photo Film Co. 3.75%
Keyence Corp. 3.41%
Matsushita Electric Industrial Co., Ltd . 3.13%
Citizen Watch Co. 3.04%
Futaba Corp. 3.02%
Fuji Machine Mfg., Co. 3.00%
---------------------------------------------------------------------------
Top 10 holdings comprised 36.31% of the Fund's market value of investments.
Fund holdings are subject to change at any time.
---------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97
---------------------------------------------------------------------------
Without With
Class A Shares Sales Charg Sales Charge
One Year 3.49% -1.43%
Five Years N/A N/A
Since Inception (11/2/95) -1.27% -3.64%
Without With
Class B Shares CDSC CDSC*
One Year 2.72% -2.28%
Five Years N/A N/A
Since Inception (11/3/95) -2.00% -3.94%
---------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
* Assumes 5% CDSC for the one year period, and a 4% CDSC for the period since
inception.
23
<PAGE>
Unaudited
About Your Fund
VISTA JAPAN FUND
---------------------------------------------------------------------------
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA JAPAN FUND--CLASS A
AND ITS KEY BENCHMARKS
---------------------------------------------------------------------------
[LINE CHART]
[LINE CHART PLOT POINTS]
Lipper Japan Equity Tokyo SE (Topix)
Japan Fund Funds Average 1st Section Index
11/95 9,525 10,000 10,000
10/96 8,972 9,909 9,877
10/31/97 9,285 8,746 7,912
---------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista Japan Fund, the Lipper Japan Equity Funds Average and the Tokyo
SE (Topix) 1st. Section from November 2, 1995 to October 31, 1997. The
performance of the Fund assumes the reinvestment of all dividends and capital
gains and includes a 4.75% sales charge. The performance of the average and the
index does not include a sales charge and has been adjusted to reflect
reinvestment of all dividends and capital gains on the securities included in
the benchmark.
The Fund is currently waiving fees. This voluntary waiver may be modified or
terminated at any time, which would reduce performance.
The Lipper Japan Equity Funds Average represents the average performance of a
universe of 34 actively managed mutual funds that invest primarily in Japanese
stocks. Lipper is an independent mutual fund performance monitor whose results
are based on total return and do not reflect a sales charge.
The Tokyo SE (Topix), also known as the Tokyo Price Index, is an unmanaged
capitalization-weighted index of all the companies listed on the First Section
of the Tokyo Stock Exchange. The index is unmanaged and reflects reinvestment of
dividends. An individual cannot invest in the index.
International investing involves a greater degree of risk and increased
volatility. Changes in currency exchange rates and differences in accounting and
taxation policies outside the U.S. can raise or lower returns. Also, some
overseas markets may not be as politically and economically stable as the Unites
States and other nations.
24
<PAGE>
Vista Japan Fund
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- 70.0%
- ------------------------------------------------------------------
Common Stock -- 70.0%
---------------------
Japan -- 70.0%
Apparel -- 1.7%
3,200 World Co., Ltd. $ 118,400
----------
Automotive -- 5.9%
4,000 Honda Motor Co. Ltd. 134,697
4,000 Keihin Corp. 54,544
12,000 Sanden Corp. 80,319
5,000 Toyota Motor Corp. 139,270
----------
408,830
----------
Banking -- 2.4%
3,000 Bank of Tokyo-Mitsubishi 39,162
4,000 Mitsubishi Trust & Banking Corp. 49,223
10,000 Sumitomo Trust & Banking 76,245
----------
164,630
----------
Computer Software -- 3.1%
3,000 Capcom Co., Ltd. 49,888
2,500 Konami Co., Ltd. 76,910
2,900 Meitec 85,599
----------
212,397
----------
Computers/Computer Hardware -- 0.6%
4,000 Fujitsu Ltd. 43,901
----------
Consumer Products -- 6.3%
23,000 Citizen Watch Co. 146,870
7,000 KAO Corp. 97,780
2,300 Sony Corp. 191,045
----------
435,695
----------
Diversified -- 1.7%
15,000 Mitsui & Co. 113,869
----------
Electronics/Electrical Equipment -- 15.5%
3,000 Futaba Corp. 145,922
1,100 Keyence Corp. 164,630
9,000 Matsushita Electric Industrial Co., Ltd. 151,160
6,000 Murata Manufacturing Co., Ltd. 243,452
1,000 Rohm Company 98,944
1,600 SMC Corp. 138,355
See notes to financial statements.
25
<PAGE>
Vista Japan Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -----------------------------------------------------------
Long-Term Investments -- (continued)
- -----------------------------------------------------------
5,000 Sumitomo Electric Industries $ 66,101
6,000 Tokin Corp. 52,881
----------
1,061,445
----------
Entertainment/Leisure -- 1.5%
3,000 Shimano Inc. 61,112
330 Toho Co., Ltd. 43,352
----------
104,464
----------
Financial Services -- 4.1%
3,400 Acom Co., Ltd. 186,580
3,700 Credit Saison Co., Ltd. 99,368
----------
285,948
----------
Insurance -- 1.3%
9,000 Tokio Marine & Fire Insurance Co. 89,798
----------
Machinery & Engineering
Equipment -- 1.0%
15,000 Tokyo Kikai Seisakusho 69,843
----------
Manufacturing -- 8.3%
5,000 Fuji Machine Manufacturing Co. 145,090
6,000 Komori Corp. 109,753
7,000 Lintec Corp. 115,241
8,000 Nitto Denko Corp. 144,342
1,500 Shima Seiki Manufacturing, Ltd. 61,112
----------
575,538
----------
Pharmaceuticals -- 2.9%
6,000 Sankyo Co. Ltd. 198,054
----------
Photographic Equipment -- 2.6%
5,000 Fuji Photo Film Co. 181,259
----------
Real Estate -- 4.4%
15,000 Hankyu Realty 97,406
7,000 Mitsubishi Estate Co., Ltd. 88,468
6,000 Mitsui Fudosan 67,847
2,000 Tachihi Enterprise Co. Ltd. 48,557
----------
302,278
----------
See notes to financial statements.
26
<PAGE>
Vista Japan Fund
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------
Retailing -- 3.9%
3,740 Fast Retailing Co., Ltd. $ 69,968
2,000 Ito-Yokado Co. Ltd. 99,443
2,700 Matsumotokiyoshi 98,778
----------
268,189
----------
Shipping/Transportation -- 1.1%
6,000 Yamato Transport Co., Ltd. 76,328
----------
Telecommunications -- 1.7%
7,000 Nippon Comsys Corp. 84,975
8 Nippon Telegraph & Telephone Corp. 33,924
----------
118,899
- -------------------------------------------------------------
Total Investments -- 70.0% $4,829,765
(Cost $5,260,737)
- -------------------------------------------------------------
Short Index Futures
- -------------------
Number
Expiration of Original Value at Unrealized
Description Date Contracts Cost 10/31/97 Appreciation
- -------------------------------------------------------------------------
SMX
Nikkei 225 Dec. 1997 10 $684,086 $611,167 $72,919
- -------------------------------------------------------------------------
# -- Security may only be sold to qualified institutional buyers.
* -- Non income producing security.
+ -- All or a portion of this security is pledged to cover financial futures
contract.
ADR -- American Depository Receipt.
GDR -- Global Depositary Receipt.
HKD -- Hong Kong Dollar.
See notes to financial statements.
27
<PAGE>
Unaudited
About Your Fund
VISTA INTERNATIONAL EQUITY FUND
-------------------------------------------------------------------------
FUND FACTS
-------------------------------------------------------------------------
Objective: Capital Growth
Primary investments: Common Stocks of Established
Overseas Companies
Suggested investment
time frame: Long-Term
Market benchmark: MSCI EAFE Index
Lipper funds category: International Funds Average
Class A Class B
------- -------
Inception date: 12/31/92 11/4/93
Newspaper symbol: Intl Eq Intl Eq
As of October 31, 1997
Net assets: $23.3 million $8.0 million
-------------------------------------------------------------------------
PERFORMANCE
Vista International Equity Fund, which seeks long-term growth of capital by
investing in the common stocks of established overseas companies, provided
shareholders with a total return of 2.27% (Class A shares, without sales
charges) for the year ended October 31, 1997.
STRATEGY
Throughtout the reporting year, the Fund benefited from a sharply underweight
position in the poorly-performing Japanese market and an overweight position in
European equities, particularly those of restructuring companies. Within the
emerging markets, the Fund's growing holdings in Latin American companies
generally proved helpful to performance as Brazil and Mexico, in particular,
advanced. Despite these good asset allocation decisions, overall performance
was significantly held back by the Fund's Southeast Asian positions.
The Fund was not immune to the sharp downturn in world equity markets at the
end of October, and this had the effect of reducing the annual return
substantially. For American investors, these losses were further compounded by
the fact that most global currencies fell relative to the dollar, although the
management team's currency stance did provide a small measure of relief.
28
<PAGE>
Unaudited
About Your Fund
VISTA INTERNATIONAL EQUITY FUND
OUTLOOK
Moving forward, the management team believes that European markets may continue
to provide the best relative values in the world and, therefore, expects to
continue overweighting European equities in the portfolio. Although markets
elsewhere remain highly volatile, Vista's international stock management system
provides valuable tools to analyze the relative values of markets, seek to
protect shareholders from the negative effects of currency fluctuations and
pick individual companies based on valuation and earnings growth. It's a
challenging time to invest internationally, but one which may hold a great deal
of promise for long-term investors willing to stay the course.
VISTA INTERNATIONAL EQUITY FUND
COMPOSITION OF TOTAL ASSETS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Cash/Other 0.15%
Investments 99.85%
VISTA INTERNATIONAL EQITY PORTFOLIO
COMPOSITION OF MARKET VALUE OF INVESTMENTS AS OF 10/31/97
[PIE CHART]
[PIE CHART PLOT POINTS]
Austria 4.0%
Brazil 4.5%
Finland 2.9%
France 12.2%
Germany 8.5%
Ireland 3.2%
Italy 3.7%
Japan 16.9%
Mexico 2.9%
Netherlands 6.9%
Spain 2.4%
Switzerland 5.4%
United Kingdom 20.7%
Other 5.8%
29
<PAGE>
Unaudited
About Your Fund
VISTA INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------
PORTFOLIO'S TOP 10 HOLDINGS AS OF 10/31/97
------------------------------------------------------------------------
Royal and Sun Alliance Ins. Group PLC 4.91%
Roche Holding AG 3.68%
Baan Company, NV 2.80%
Telecomunicacocs Brasileiras SA, ADR 2.79%
British-Borneo Petro Syndicate PLC. 2.64%
France Telecom, SA 2.29%
Cookson Group PLC. 2.16%
Dresdner Bank AG 2.14%
Fresenius Medical Care AG 2.11%
Koninklijke Ahrend Groep NV 2.09%
------------------------------------------------------------------------
Top 10 holdings comprised 27.61% of the Portfolio's market value of investments.
Fund holdings are subject to change at any time.
------------------------------------------------------------------------
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS AS OF 10/31/97+
------------------------------------------------------------------------
Without With
Class A Shares Sales Charge Sales Charge
One Year 2.27% -2.58%
Five Years N/A N/A
Since Inception (12/31/92) 5.47% 4.41%
Without With
Class B Shares CDSC CDSC*
One Year 1.74% -3.26%
Five Years N/A N/A
Since Inception (12/31/92)+ 5.02% 4.50%
------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
The Fund is currently waiving certain fees. This voluntary waiver may be
modified or terminated at any time, which would reduce performance.
* Assumes 5% CDSC for the one year period, and a 2% CDSC for the period since
inception.
+ The Fund commenced operations on 12/31/92. Class B shares were introduced on
11/4/93. Investors should note that information presented for Class B prior to
their introduction is based upon historical expenses of the predecessor Class A
Shares, which are lower than the actual expenses of the Class B Shares.
Additionally, annualized figures have been restated to reflect the maximum 5%
contingent deferred sales charge that applies to the Fund's B Shares.
30
<PAGE>
Unaudited
About Your Fund
VISTA INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------
GROWTH OF HYPOTHETICAL $10,000 INVESTMENTS IN
VISTA INTERNATIONAL EQUITY FUND--CLASS A
AND ITS KEY BENCHMARKS
------------------------------------------------------------------------
[LINE CHART]
[LINE CHART PLOT POINTS]
International Lipper International MSCI
Equity Fund Funds Average EAFE Index
12/92 9,525 10,000 10,000
10/93 11,258 12,947 13,580
10/94 11,777 14,330 14,989
10/95 11,638 14,182 14,980
10/96 12,049 15,738 16,594
10/31/97 12,323 17,312 17,410
------------------------------------------------------------------------
Source: Lipper Analytical Services, Inc. Past performance is not indicative of
future results. Investment return and principal value will fluctuate with market
conditions. When shares are redeemed, they may be worth more or less than their
original cost.
This chart illustrates comparative performance for $10,000 invested in Class A
Shares of Vista International Equity Fund, the Lipper International Funds
Average and the MSCI EAFE Index from December 31, 1992 to October 31, 1997. The
performance of the Fund assumes reinvestment of all dividends and capital gains
and includes a 4.75% sales charge. The performance of the average and the index
does not include a sales charge and has been adjusted to reflect reinvestment of
all dividends and capital gains on the securities included in the benchmark.
The Fund is currently waiving fees. This voluntary waiver may be modified or
terminated at any time, which would reduce performance.
The Lipper International Funds Average represents the average performance of a
universe of 476 actively managed international stock funds. Lipper is an
independent mutual fund performance monitor whose results are based on total
return and do not reflect a sales charge.
The MSCI EAFE (Europe, Australia, Far East) Index is a replica (or model) of the
performance of the world's equity markets, excluding the U.S. and Canada. The
Index is unmanaged and reflects the reinvestment of dividends. An individual
cannot invest in the Index.
International investing involves a greater degree of risk and increased
volatility. Changes in currency exchange rates and differences in accounting and
taxation policies outside the U.S. can raise or lower returns. Also, some
overseas markets may not be as politically and economically stable as the United
States and other nations.
31
<PAGE>
Vista Mutual Funds
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
Vista Southeast Vista International
European Asian Japan Equity
Fund Fund Fund Fund
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1) ............... $14,151,438 $ 6,190,992 $4,829,765 $31,411,576
Cash ....................................... 637,269 767,048 1,660,223 --
Foreign Currency (Cost $387,774;
$591,076; $80,874)........................... 383,143 581,665 80,969 --
Receivables:
Open forward currency contracts ............ 33,115 2,062 -- --
Investment securities sold .................. 460,565 1,009,981 376,411 --
Interest and dividends ..................... 54,482 30,654 8,056 --
Trust shares sold ........................... 46,015 38,516 -- 20,812
Expense reimbursement from
Distributor .............................. 2,407 -- -- --
Other assets ................................. 1,937 5,134 81,223 25,834
----------- ----------- ---------- ------------
Total assets .............................. 15,770,371 8,626,052 7,036,647 31,458,222
----------- ----------- ---------- ------------
LIABILITIES:
Payable for investment securities
purchased ................................. 400,364 784,673 -- --
Payable for Trust shares redeemed ............ 1,044 136,018 58,731 94,250
Payable for open forward currency
contracts ................................. 88,673 2,615 30,140 --
Accrued liabilities: (Note 2)
Administration fees ........................ 1,974 1,410 -- --
Distribution fees ........................... 4,237 2,977 2,427 10,422
Shareholder servicing fees .................. 462 318 423 6,824
Custodian ................................. 10,227 3,379 3,379 --
Other ....................................... 80,571 77,000 40,829 90,682
----------- ----------- ---------- ------------
Total Liabilities ........................ 587,552 1,008,390 135,929 202,178
----------- ----------- ---------- ------------
NET ASSETS:
Paid in capital .............................. 12,268,543 11,354,389 7,578,239 29,821,236
Accumulated undistributed net
investment income (loss) .................. 271,752 (388) 180,922 222,936
Accumulated undistributed net realized
gain (loss) on investment transactions . 1,881,491 (1,307,405) (470,466) 676,738
Net unrealized appreciation (depreciation)
of investments, futures and forward
exchange contracts ........................ 761,033 (2,428,938) (387,977) 535,134
----------- ----------- ---------- ------------
Net Assets: ................................. $15,182,819 $ 7,617,662 $6,900,718 $31,256,044
=========== =========== ========== ============
Class A Shares .............................. $12,965,301 $ 6,566,448 $5,007,580 $23,266,560
Class B Shares .............................. $ 2,217,518 $ 1,051,214 $1,893,138 $ 7,989,484
Shares of beneficial interest outstanding
($.001 par value; unlimited number
of shares authorized):
Class A Shares .............................. 919,427 813,970 526,255 1,921,189
Class B Shares .............................. 159,235 132,180 200,943 668,972
Class A Shares:
Net asset value and redemption price
per share* ................................. $ 14.10 $ 8.07 $ 9.52 $ 12.11
Maximum offering price per share (net
asset value per share/95.25%) ............... $ 14.80 $ 8.47 $ 9.99 $ 12.71
Class B Shares:
Net asset value and offering price per
share* .................................... $ 13.93 $ 7.95 $ 9.42 $ 11.94
=========== =========== ========== ============
Cost of Investments ........................ $13,334,924 $ 8,652,765 $5,260,737 --
=========== =========== ========== ============
</TABLE>
- --------------
* Net assets/shares outstanding
See notes to financial statements.
32
<PAGE>
Vista Mutual Funds
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
Vista Southeast Vista International
European Asian Japan Equity
Fund Fund Fund Fund
----------- ------------ --------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend .............................. $ 243,292 $ 227,652 $ 15,184 $ --
Interest .............................. 21,047 60,424 31,773 --
Investment income from Portfolio ...... -- -- -- 599,947
Foreign taxes withheld ............... (29,621) (12,763) (2,278) (66,777)
Expenses from Portfolio ............... -- -- -- (260,346)
---------- ------------ --------- ----------
Total investment income ............... 234,718 275,313 44,679 272,824
---------- ------------ --------- ----------
EXPENSES: (Note 2)
Shareholder servicing fees ............ 3,107 4,363 1,886 81,125
Administration fees .................. 16,894 18,888 8,267 32,450
Distribution fees ..................... 34,371 40,207 17,551 123,071
Investment Advisory fees ............... 112,618 125,923 55,120 --
Custodian fees ........................ 21,275 33,890 15,805 --
Printing and postage .................. 12,256 14,586 5,423 10,577
Professional fees ..................... 18,291 20,855 17,626 19,998
Registration costs ..................... 35,519 31,232 18,892 6,261
Transfer agent fees .................. 52,667 66,642 41,542 162,251
Trustees fees and expenses ............ 563 630 276 973
Other ................................. 21,418 14,259 15,984 20,227
---------- ------------ --------- ----------
Total expenses ........................ 328,979 371,475 198,372 456,933
---------- ------------ --------- ----------
Less amounts waived (Note 2E) ............ 122,150 138,009 63,387 24,366
Less expenses borne by the
Distributor .............................. -- -- 32,867 --
---------- ------------ --------- ----------
NET EXPENSES ........................ 206,829 233,466 102,118 432,567
---------- ------------ --------- ----------
Net investment income (loss) ......... 27,889 41,847 (57,439) (159,743)
---------- ------------ --------- ----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on:
Investments ........................... 1,995,792 (1,124,154) (399,372) 859,928
Futures transactions .................. -- (177,380) 108,817 70,550
Foreign currency transactions ......... 223,071 (101,201) 309,506 270,106
Change in net unrealized
appreciation/depreciation on:
Investments .......................... 388,468 (2,839,003) (35,717) (2,047)
Futures transactions ................. -- 47,559 72,919 --
Foreign currency transactions ........ (66,193) (13,019) (140,495) --
---------- ------------ --------- ----------
Net realized and unrealized gain
(loss) .............................. 2,541,138 (4,207,198) (84,342) 1,198,537
---------- ------------ --------- ----------
Net increase (decrease) in net assets
from operations ..................... $2,569,027 $ (4,165,351) $(141,781) $1,038,794
========== ============ ========= ==========
</TABLE>
See notes to financial statements.
33
<PAGE>
Vista Mutual Funds
Statement of Changes in Net Assets For the periods indicated
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Vista
European Southeast Asian
Fund* Fund*
------------------------- ----------------------------
Year Ended October 31,
1997 1996 1997 1996
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .............................. $ 27,889 $ 77,290 $ 41,847 ($ 14,599)
Net realized gain (loss) on investments, futures and
foreign currency transactions ..................... 2,218,863 502,136 (1,402,735) 544,179
Change in net unrealized appreciation/depreciation
on investments, futures and foreign exchange ...... 322,275 438,666 (2,804,463) 375,527
----------- ---------- ------------ ---------
Increase (decrease) in net assets from operations ... 2,569,027 1,018,092 (4,165,351) 905,107
----------- ---------- ------------ ---------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
(Note 1.C.3):
Net investment income .............................. 59,310 (44,714) -- --
Net realized gain on investment transactions ...... 568,911 -- (535,632) --
Tax return of capital .............................. -- -- (19,890) --
----------- ---------- ------------ ---------
Total distributions ................................. (628,221) (44,714) (555,522) --
----------- ---------- ------------ ---------
Net increase (decrease) in net assets from shares of
beneficial interest transactions .................. 6,693,863 5,574,772 2,665,871 8,767,557
----------- ---------- ------------ ---------
Total increase (decrease) ........................ 8,634,669 6,548,150 (2,055,002) 9,672,664
NET ASSETS:
Beginning of period ................................. 6,548,150 -- 9,672,664 --
----------- ---------- ------------ ---------
End of period ....................................... $15,182,819 $6,548,150 $ 7,617,662 $9,672,664
=========== ========== ============ ==========
Undistributed net investment income (loss) ......... $ 271,752 $ 52,307 $ (388) $ (181)
</TABLE>
<TABLE>
<CAPTION>
Vista Vista
Japan Fund* International Equity Fund
------------------------- ---------------------------
1997 1996 1997 1996
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .............................. ($ 57,439) ($ 42,663) ($ 159,743) ($ 24,797)
Net realized gain (loss) on investments, futures and
foreign currency transactions ..................... 18,951 (99,527) 1,200,584 3,616,790
Change in net unrealized appreciation/depreciation
on investments, futures and foreign exchange ...... (103,293) (284,684) (2,047) (2,436,093)
---------- ---------- ----------- -----------
Increase (decrease) in net assets from operations ... (141,781) (426,874) 1,038,794 1,155,900
---------- ---------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
(Note 1.C.3):
Net investment income .............................. (113,008) -- (70,477) (143,398)
Net realized gain on investment transactions ...... -- -- (1,359,426) (27)
Tax return of capital .............................. -- -- -- --
---------- ---------- ----------- -----------
Total distributions ................................. (113,008) -- (1,429,903) (143,425)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets from shares of
beneficial interest transactions .................. 2,213,206 5,369,175 (1,076,165) (1,335,627)
---------- ---------- ----------- -----------
Total increase (decrease) ........................ 1,958,417 4,942,301 (1,467,274) (323,152)
NET ASSETS:
Beginning of period ................................. 4,942,301 -- 32,723,318 33,046,470
---------- ---------- ----------- -----------
End of period ....................................... $6,900,718 $4,942,301 $31,256,044 $32,723,318
========== ========== =========== ===========
Undistributed net investment income (loss) ......... $ 180,922 $ 895 $ 222,936 $ (66,746)
</TABLE>
- -------
* Fund commenced operations on November 2, 1995.
See notes to financial statements.
34
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- Mutual Fund Group (the
"Trust") was organized on May 11, 1987 as a Massachusetts Business Trust, and is
registered under the Investment Company Act of 1940, as amended, (the "1940
Act") as an open-end management investment company. Vista European Fund ("VEF"),
Vista Southeast Asian Fund ("VSEAF"), Vista Japan Fund ("VJF") and Vista
International Equity Fund ("VIEF"), collectively, the "Funds", are four separate
series of the Trust. VEF, VSEAF and VJF commenced operations on November 2,
1995. The Funds each offer two classes of shares. Class A shares generally
provide for a front-end sales charge while Class B shares provide for a
contingent deferred sales charge. All classes of shares have equal rights as to
earnings, assets and voting privileges except that each class may bear different
distribution and shareholder servicing fees and each class has exclusive voting
rights with respect to its distribution plan.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The following is a summary of significant accounting policies follwed by the
Funds:
A. VIEF
Since inception, the VIEF has utilized the Master Feeder Fund Structure.
VIEF seeks to achieve investment objective by investing all of its
investable assets of the Fund in the International Equity Portfolio (the
"Portfolio"). The Portfolio, like the Fund, is an open-end management
investment company having the same investment objectives as the Fund. As of
October 31, 1997 VIEF owned 99.99% of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with
the financial statements of the Fund.
1. Valuation of Investments -- VIEF records its investments in the
Portfolio at value. Securities of the Portfolio are recorded at value as
more fully discussed in the notes to those financial statements.
2. Foreign Currency Translations -- The books and records of the
Portfolio are maintained in U.S. dollars, the foreign currency
translation policy is more fully discussed in the notes to those
financial statements.
3. Investment Income -- VIEF records daily its pro-rata share of the
Portfolio's income expenses, and realized and unrealized gains and
losses. In addition, the Fund accrues its own expenses daily as
incurred. Realized gain/losses and changes in unrealized
appreciation/depreciation represent the Fund's share of such elements
allocated from the Portfolio.
B. VEF, VSEAF and VJF
1. Valuation of Investments -- Equity securities, purchased options and
futures are valued at the last sale price on the exchange on which they
are primarily traded, including the NASDAQ National Market. Securities
for which sale prices are not available and other over-the-counter
securities are valued at the last quoted bid price. Bonds and other
fixed income securities (other than short-term obligations), including
listed issues, are valued on the basis of valuations supplied by pricing
services or by matrix pricing systems of a major dealer in bonds. Short-
term debt securities with 61 days or more to maturity at time of
purchase are valued, through the 61st day prior to maturity, at market
value based on quotations obtained from market makers or other
appropriate sources; thereafter, the value on the 61st day is amortized
on a straight-line basis over the remaining number of days to maturity.
Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market.
35
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Portfolio securities 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 Trustees.
2. Repurchase Agreements -- It is the Trust's policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government
Agency securities. All collateral is held by the Trust's custodian bank,
subcustodian, or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book
Entry System. In connection with transactions in repurchase agreements,
if the seller defaults and the value of the collateral declines, or if
the seller enters an insolvency proceeding, realization of the
collateral by the Trust may be delayed or limited.
3. Futures Contracts -- When a fund enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in cash
or liquid securities. Thereafter, the futures contract is marked to
market and the fund makes (or receives) additional cash payments daily
to the broker. Changes in the value of the contract are recorded as
unrealized appreciation/depreciation until the contract is closed or
settled. At October 31, 1997, a portion of the foreign currency of the
VSEAF and VJF is restricted in connection with futures transactions.
The Funds may enter into futures contracts only on exchanges or boards
of trade. The exchange or board of trade acts as the counterparty to
each futures transaction, therefore, the Fund's credit risk is limited
to failure of the exchange or board of trade.
The Funds invest in stock index futures contracts for the purpose of
hedging the Fund against share price volatilty, which purpose may or may
not be achieved. When the Fund is not fully invested in the securities
market, it may enter into "long" positions in futures or options
contracts in order to gain rapid market exposure that may in part or
entirely offset increases in the cost of securities intended for
purchase. Use of long futures contracts subject the Fund to risk of loss
in excess of amounts shown on the Statement of Assets and Liabilities,
up to the amount of the value of the futures contracts as shown in the
Portfolio of Investments at October 31, 1997. Use of short futures
contracts subject the Fund to unlimited risk.
4. Written Options -- When a fund writes an option on a futures
contract, an amount equal to the premium received by the fund is
included in the fund's Statement of Assets and Liabilities as an asset
and corresponding liability. The amount of the liability is adjusted
daily to reflect the current market value of the written option and the
change is recorded in a corresponding unrealized gain or loss account.
When a written option expires on its stipulated expiration date, or when
a closing transaction is entered into, the related liability is
extinguished and the fund realizes a gain or loss if the cost of the
closing transaction exceeds the premium received when the option was
written.
The Funds write options on stock index securities futures. These options
are settled for cash and subject the Funds to market risk in excess of
the amounts that are reflected in the Statement of Assets and
Liabilities. The Funds, however, are not subject to credit risk on
written options as the counterparty has already performed its obligation
by paying a premium at the inception of the contract.
As of October 31, 1997, the Funds had no outstanding written options.
5. Foreign Currency Translation -- The books and records of the Funds
are maintained in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars at the prevailing exchange rates, or at the mean of
the current bid and asked prices, of such currencies against the U.S.
dollar as quoted by a major bank, on the following basis:
36
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
a. Market value of investment securities and other assets and
liabilities: at the closing rate of exchange at the valuation
date.
b. Purchases and sales of investment securities, income and expenses:
at the rates of exchange prevailing on the respective dates of
such transactions.
Although the net assets of the Funds are presented at the foreign
exchange rates and market values at the close of the periods, the Funds
do not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held during the
year. Similarly, the Funds do not isolate the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the
market prices of long-term debt securities sold during the year.
Accordingly, such realized foreign currency gains (losses) are included
in the reported net realized gains (losses) on investment transactions.
Reported realized foreign currency gains or losses arise from
disposition of foreign currency, currency gains or losses realized
between the trade and settlement dates on securities transactions, and
the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Funds' books on the transaction date
and the U.S. dollar equivalent of the amounts actually received or paid.
Unrealized foreign exchange gains and losses arise from changes (due to
the changes in the exchange rate) in the value of foreign currency and
other assets and liabilities denominated in foreign currencies which are
held at period end.
6. Forward Foreign Currency Exchange Contracts -- The Funds may enter
into forward foreign currency contracts (obligations to purchase or sell
foreign currency in the future on a date and price fixed at the time the
contracts are entered into) to hedge the Fund against fluctuations in
the value of its assets or liabilities due to change in the value of
foreign currencies. Each day the forward contract is open, changes in
the value of the contract are recognized as unrealized gains or losses
by "marking to market". When the forward contract is closed, or the
delivery of the currency is made or taken, the Fund records a realized
gain or loss equal to the difference between the proceeds from (or cost
of) the closing transaction and the Fund's basis in the contract. The
Funds are subject to off-balance sheet risk to the extent of the value
of the contracts for purchases of currency and in an unlimited amount
for sales of currency.
7. Security Transactions and Investment Income -- Investment
transactions are accounted for on the trade date (the date the order to
buy or sell is executed). Securities gains and losses are calculated on
the identified cost basis. Interest income is accrued as earned.
Dividend income is recorded on the ex-dividend date.
C. General Policies
1. Organization Costs -- Organization and initial registration costs
incurred in connection with establishing the VIEF have been deferred and
are being amortized on a straight-line basis over a sixty month period
beginning at the commencement of operations of each Fund.
2. Federal Income Taxes -- Each Fund is treated as a separate taxable
entity for Federal income tax purposes. The Trust's policy is to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute to shareholders all of its
distributable net investment income, and net realized gain on
investments. In addition, the Trust intends to make distributions as
required to avoid excise taxes. Accordingly, no provision for Federal
income or excise tax is necessary.
3. Distributions to Shareholders -- Dividends paid to shareholders are
recorded on the ex-dividend date. The amount of dividends and
distributions from net
37
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
investment income and net realized capital gains is determined in
accordance with Federal income tax regulations, which may differ from
generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature (i.e., that they result from other
than timing of recognition -- "temporary differences") such amounts are
reclassified within the capital accounts based on their Federal
tax-basis treatment. The reclassifications for the funds are as follows:
VEF accumulated undistributed net investment income was increased by
$320,524 and undistributed net realized gain was decreased by $320,522;
VSEAF paid in capital was decreased by $79,037, accumulated
undistributed net investment income was decreased by $30,791 and
undistributed net realized loss was decreased by $109,828; VJF paid in
capital was decreased by $4,142, accumulated undistributed net
investment income was increased by $350,474 and undistributed net
realized loss was increased by $346,332; VIEF paid in capital was
increased by $1,438, accumulated undistributed net investment income was
increased by $519,902 and undistributed net realized gain was decreased
$521,340. The adjustments for the Funds relate primarily to the
character for tax purposes of certain short-term gains or losses.
Dividends and distributions which exceed net investment income or net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as distributions in excess of net investment
income or net realized capital gains.
4. Expenses -- Expenses of the Trust directly attributable to a Fund are
charged to that Fund; other expenses are allocated proportionately among
each Fund within the trust in relation to the net assets of each Fund or
on another reasonable basis. In calculating the net asset value per
share of each class, investment income, realized and unrealized gains
and losses and expenses other than class specific expenses, are
allocated daily to each class of shares based upon the proportion of net
assets of each class at the beginning of each day.
2. Fees and Other Transactions with Affiliates
A. Investment Advisory Fee -- Pursuant to separate Investment Advisory
Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor"), acts as the
Investment Advisor to the VEF, VSEAF, and VJF. Chase is a direct wholly-owned
subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase
supervises the investments of the Funds and for such services is paid a fee.
The fee is computed daily and paid monthly at an annual rate equal to 1.00%
of the average daily net assets of each Fund. The Advisor voluntarily waived
all or a portion of its fees as outlined in Note 2.E below.
Chase Asset Management, Inc. ("CAM"), a registered investment advisor, is the
sub-investment advisor to each Fund, pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly owned subsidiary of Chase
and is entitled to receive a fee, payable by Chase from its advisory fee, at
an annual rate equal to 0.50% of each Fund's average daily net assets.
B. Shareholder Servicing Fees -- The Trust has adopted an Administrative
Services Plan for the Class B Shares of all of the Funds and Class A of VIEF,
which, among other things, provides that the Trust on behalf of the Funds may
obtain the services of one or more Shareholder Servicing Agents. For its
services, the Shareholder Servicing Agent will receive a fee that is computed
daily and paid monthly at an annual rate equal to 0.25% of the average daily
net assets of the Class B Shares of each Fund and for the Class A Shares of
VIEF. No Shareholder Servicing Fees have been charged to Class A Shares of
the VEF, VSEAF and VJF.
Since inception, Chase, and certain affiliates have been the only Shareholder
Servicing Agents of the funds.
C. Distribution and Sub-Administration Fees -- Pursuant to a Distribution and
Sub-Administration Agreement, Vista Fund Distributors, Inc. (the
"Distributor"), a wholly
38
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
owned subsidiary of The BISYS Group, Inc., acts as the Trust's exclusive
underwriter and promotes and arranges for the sale of each Fund's shares. In
addition, the Distributor provides certain sub-administration services to the
Trust, including providing officers, clerical staff and office space for an
annual fee of 0.05% of the average daily net assets of each Fund. The
Trustees have adopted Distribution Plans (the "Distribution Plans") for Class
A and B shares of the Funds in accordance with Rule 12b-1 under the 1940 Act.
The Class A Distribution Plans provide that each Fund shall pay distributions
fees, including payments to the Distributor, at annual rates not to exceed
0.25% of the average daily net assets of the Class A Shares of each Fund for
distribution services. The Class B Distribution Plan provides that each Fund
shall pay distribution fees, including payments to the Distributor, at an
annual rate not to exceed 0.75% of the average annual net assets of the Class
B Shares for distribution services.
The Distributor voluntarily waived all or a portion of the sub-administration
fees as outlined in Note 2.E. below.
D. Administration Fee -- Pursuant to an Administration Agreement, Chase (the
"Administrator") provides certain administration services to the Trust. For
these services and facilities, the Administrator receives from VEF, VSEAF,
and VJF a fee computed at the annual rate equal to 0.10% of the respective
Fund's average daily net assets and from VIEF at the annual rate equal to
0.05% of the Fund's average daily net assets. The Administrator voluntarily
waived all or a portion of the administration fees as outlined in Note 2.E.
below.
E. Waivers of fees -- For the year ended October 31, 1997, the Administrator
and Investment Adviser voluntarily waived fees for each of the Funds as
follows:
VEF VSEAF VJF VIEF
-------- -------- ------- -------
Fee Waivers
-----------
Administration ............ $ 9,532 $ 12,086 $ 8,267 $24,366
Investment Advisory ...... 112,618 125,923 55,120 --
-------- -------- ------- -------
Total .................. $122,150 $138,009 $63,387 $24,366
======== ======== ======= =======
Distributor
Reimbursement ............ -- -- $32,867 --
======== ======== ======= =======
F. Other -- Certain officers of the Trust are officers of Vista Fund
Distributors, Inc. or of its parent corporation, BISYS.
Chase provides portfolio accounting and custody services for VEF, VSEAF and
VJF. Compensation for such services are presented in the Statement of
Operations as custodian fees.
3. Investment Transactions -- For the year ended October 31, 1997, purchases
and sales of investments (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
VEF VSEAF VJF VIEF
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Purchases (excluding
U.S. Government) ...... $23,140,158 $27,034,535 $10,371,183 --
Sales (excluding U.S.
Government) ............ 17,814,015 25,124,436 9,576,401 --
Increases in Portfolio
Investment ............ -- -- -- $ 21,245,996
Decreases in Portfolio
Investment ............ -- -- -- (23,628,198)
</TABLE>
39
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
4. Federal Income Tax Matters -- For Federal income tax purposes, the cost and
unrealized appreciation (depreciation) in value of the investment securities at
October 31, 1997 are as follows:
<TABLE>
<CAPTION>
VEF VSEAF VJF
----------- ----------- ----------
<S> <C> <C> <C>
Aggregate cost ..................... $13,334,924 $ 8,652,765 $5,260,737
----------- ----------- ----------
Gross unrealized appreciation ...... $ 1,303,711 $ 121,885 $ 181,341
Gross unrealized depreciation ...... (487,197) (2,583,658) (612,470)
----------- ----------- ----------
Net unrealized appreciation
(depreciation) .................. $ 816,514 ($ 2,461,773) ($ 431,129)
=========== =========== ==========
</TABLE>
At October 31, 1997, the VSEAF, had a net capital loss carryover of
approximately $1,300,000 which will be available to offset capital gains
arising through October 31, 2005. At October 31, 1997, the VJF had a net
capital loss carryover of approximately $460,000 which will be available to
offset capital gains arising through October 31, 2004 and 2005. To the extent
that any net capital loss carryovers are used to offset future capital gains,
it is probable that the gains so offset will not be distributed to
shareholders.
5. Transactions in Shares of Beneficial Interest -- Transactions in Shares of
Beneficial Interest were as follows:
<TABLE>
<CAPTION>
Vista European Fund
------------------------------------------------------------
Year 11/02/95*
Ended through
10/31/97 10/31/96
-------------------------- ------------------------
Amount Shares Amount Shares
Class A ------------ ------- ---------- -------
<S> <C> <C> <C> <C>
Shares sold .................. $ 6,046,866 475,708 $6,376,204 642,276
Shares issued in reinvestment of
distributions ............... 317,578 26,732 8,362 716
Shares redeemed ............... (1,468,167) (113,203) (991,677) (112,802)
------------ -------- ---------- --------
Net increase (decrease) in Trust
shares outstanding ......... $ 4,896,277 389,237 $5,392,889 530,190
============ ======== ========== ========
<CAPTION>
Vista European Fund
------------------------------------------------------------
Year 11/03/95**
Ended through
10/31/97 10/31/96
-------------------------- ------------------------
Amount Shares Amount Shares
Class B ------------ ------- ---------- -------
<S> <C> <C> <C> <C>
Shares sold .................. $ 1,973,442 156,388 $ 186,865 16,436
Shares issued in reinvestment of
distributions ............... 25,246 2,139 449 38
Shares redeemed ............... (201,102) (15,254) (5,431) (512)
------------ ------- ---------- ------
Net increase (decrease) in Trust
shares outstanding ......... $ 1,797,586 143,273 $ 181,883 15,962
============ ======= ========== ======
</TABLE>
40
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Southeast Asian Fund
-------------------------------------------------------------
Year 11/02/95*
Ended through
10/31/97 10/31/96
-------------------------- -------------------------
Amount Shares Amount Shares
Class A ------------ ------- ------------ --------
<S> <C> <C> <C> <C>
Shares sold .................. $ 5,782,426 482,047 $ 9,712,207 895,578
Shares issued in reinvestment of
distributions ............... 336,152 28,019 -- --
Shares redeemed ............... (3,889,478) (401,922) (2,159,565) (189,753)
------------ -------- ------------ --------
Net increase (decrease) in Trust
shares outstanding ......... $ 2,229,100 108,144 $ 7,552,642 705,825
============ ======== ============ ========
<CAPTION>
Vista Southeast Asian Fund
-------------------------------------------------------------
Year 11/03/95**
Ended through
10/31/97 10/31/96
-------------------------- ------------------------
Amount Shares Amount Shares
Class B ------------ ------- ---------- -------
<S> <C> <C> <C> <C>
Shares sold .................. $ 1,737,310 150,937 $ 1,414,580 119,531
Shares issued in reinvestment of
distributions ............... 64,154 5,396 -- --
Shares redeemed ............... (1,364,693) (126,869) (199,665) (16,815)
------------- -------- ------------- --------
Net increase (decrease) in Trust
shares outstanding ......... $ 436,771 29,464 $ 1,214,915 102,716
============= ======== ============= ========
</TABLE>
<TABLE>
<CAPTION>
Vista Japan Fund
------------------------------------------------------------
Year 11/02/95*
Ended through
10/31/97 10/31/96
-------------------------- ------------------------
Amount Shares Amount Shares
Class A ------------ ------- ---------- -------
<S> <C> <C> <C> <C>
Shares sold ..................... $ 1,738,000 173,318 $5,956,715 581,717
Shares issued in reinvestment
of distributions ............... 22,242 2,417 -- --
Shares redeemed .................. (1,482,838) (157,103) (768,571) (74,093)
------------ -------- ---------- -------
Net increase (decrease) in
Trust shares outstanding ...... $ 277,404 18,632 $5,188,144 507,624
============ ======== ========== =======
<CAPTION>
Vista Japan Fund
-------------------------------------------------------------
Year 11/03/95**
Ended through
10/31/97 10/31/96
-------------------------- ------------------------
Amount Shares Amount Shares
Class B ------------ ------- ---------- -------
<S> <C> <C> <C> <C>
Shares sold ..................... $ 2,065,148 196,578 $ 221,292 21,331
Shares issued in reinvestment
of distributions ............... 6,797 663 -- --
Shares redeemed .................. (136,143) (13,584) (40,261) (4,046)
------------ ------- ---------- ------
Net increase (decrease) in
Trust shares outstanding ...... $ 1,935,802 183,657 $ 181,031 17,285
============ ======= ========== ======
</TABLE>
41
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista International Equity Fund
--------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------
10/31/97 10/31/96
------------------------------- ------------------------------
Class A Amount Shares Amount Shares
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Shares sold ..................... $ 15,571,919 1,239,710 $ 17,914,479 1,456,995
Shares issued in reinvestment
of distributions ............... 981,769 80,407 116,872 9,707
Shares redeemed .................. (17,919,728) (1,410,777) (20,230,065) (1,640,951)
------------- ---------- ------------- ----------
Net increase (decrease) in
Trust shares outstanding ...... $ (1,366,040) (90,660) $ (2,198,714) (174,249)
============= ========== ============= ==========
<CAPTION>
Vista International Equity Fund
------------------------------------------------------------------
Year Ended
------------------------------------------------------------------
10/31/97 10/31/96
------------------------------- ----------------------------
Class B Amount Shares Amount Shares
------------- ---------- ------------- -------
<S> <C> <C> <C> <C>
Shares sold ..................... $ 5,139,431 415,783 $ 3,728,205 305,390
Shares issued in reinvestment
of distributions ............... 328,637 27,160 5,775 483
Shares redeemed .................. (5,178,193) (413,069) (2,870,893) (235,173)
------------- ---------- ------------- --------
Net increase (decrease) in
Trust shares outstanding ...... $ 289,875 29,874 $ 863,087 70,700
============= ========== ============= ========
</TABLE>
- --------------
* Fund commenced operations.
** Commenced offering class of shares.
6. Open Forward Foreign Currency Contracts -- The following forward foreign
currency contracts were open at October 31, 1997:
<TABLE>
<CAPTION>
Vista European Fund
---------------------------------------------------------------
Delivery Net
Value Market Unrealized
(Local Cost Settlement Value Gain (Loss)
Currency) (USD) Date (USD) (USD)
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Purchases
German Deutsche
Mark .................. 3,059,660 $1,752,232 12/17/97 $1,782,580 $ 30,348
French Franc ............ 808,000 138,139 12/31/97 140,906 2,767
Sales
German Deutsche
Mark .................. 3,059,660 1,700,000 12/17/97 1,782,580 (82,580)
French Franc ............ 808,000 136,411 12/31/97 140,906 (4,495)
British Pound ......... 170,000 283,475 11/03/97 285,073 (1,598)
Vista Southeast Asian Fund
-----------------------------------------------------------------
Sales
Thai Baht ............... 3,334,800 $ 83,349 11/04/97 $ 81,287 $ 2,062
Malaysian Ringgit ...... 350,000 101,863 11/04/97 104,478 (2,615)
Vista Japan Fund
-----------------------------------------------------------------
Sales
Japanese Yen ............ 137,401,110 $1,134,000 11/28/97 $1,147,027 ($ 13,027)
Japanese Yen ............ 138,280,224 1,088,000 11/28/97 1,105,113 (17,113)
</TABLE>
42
<PAGE>
Vista Mutual Funds
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
7. Foreign Cash Positions
Vista European Fund
--------------------------------------------------
Market Net Unrealized
Local Cost Value Gain (Loss)
Currency Currency (USD) (USD) (USD)
- ------------------------- --------- -------- -------- --------------
German Deutsche Mark ... 451,255 $269,898 $262,183 ($ 7,715)
Spanish Peseta ......... 21,133 142 145 3
French Franc ............ 36,731 6,350 6,381 31
British Pound ......... 58,244 94,534 97,670 3,136
Greek Drachma ......... 154,612 541 568 27
Irish Punt ............ 1,275 1,902 1,918 16
Italian Lira ............ 7,185,010 4,197 4,251 54
Dutch Guilder ......... 5,531 2,801 2,850 49
Portuguese Escudo ...... 466,895 2,897 2,657 (240)
Swedish Krona ......... 33,828 4,512 4,520 8
-------- -------- --------
387,774 $383,143 ($ 4,631)
======== ======== ========
Vista Southeast Asian Fund
---------------------------------------------------
Market Net Unrealized
Local Cost Value Gain (Loss)
Currency Currency (USD) (USD) (USD)
- ---------------------------- ----------- -------- -------- --------------
Australian Dollar ...... 12,444 $ 8,629 $ 8,772 $ 143
Hong Kong Dollar ...... 3,827,135 376,729 376,929 200
Indonesian Rupiah ...... 865 -- -- --
South Korean Won ...... 125,528,676 137,878 130,109 (7,769)
Malyasian Ringgit ...... 14,766 4,429 4,408 (21)
Philippines Peso ...... 2,140,282 62,535 60,503 (2,032)
Singapore Dollar ...... 1,441 846 916 70
Thai Baht ............... 1,157 30 28 (2)
-------- -------- -------
$591,076 $581,665 ($9,411)
======== ======== =======
Vista Japan Fund
---------------------------------------------------
Japanese Yen ............ 9,738,171 $ 80,874 $ 80,969 $ 95
======== ======== ========
8. Concentrations -- At October 31, 1997, substantially all of the Fund's net
assets consist of securities of issuers which are denominated in foreign
currencies. Changes in currency exchange rates will affect the value of and
investment income from such securities. Substantially all of VSEAF's net assets
consist of securities which are subject to greater price volatility, limited
capitalization and liquidity, and higher rates of inflation than securities of
companies based in the United States. In addition, certain Asian securities may
be subject to substantial governmental involvement in the economy and social
economic and political uncertainty.
9. Retirement Plans -- The Funds have adopted an unfunded noncontributory
defined benefit pension plan covering all independent trustees of the Funds who
will have served as independent trustees for at least five years at the time of
retirement. Benefits under this plan are based on compensation and years of
service. Pension expenses for the year ended October 31, 1997, included in
Trustees Fees and Expenses in the Statement of Operations, and accrued pension
liability included in other accrued liabilities, respectively, in the Statement
of Assets and Liabilities were as follows:
Pension Accrued Pension
Expenses Liability
Fund: ---------- ---------------
VEF ......... $143 $721
VSEAF ...... 207 748
VJF ......... 96 384
VIEF ...... 334 838
43
<PAGE>
Vista Mutual Funds
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista European Fund
---------------------------------------------------
Class A Class B
----------------------- -----------------------
Year 11/02/95* Year 11/03/95**
Ended Through Ended Through
10/31/97 10/31/96 10/31/97 10/31/96
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 11.99 $ 10.00 $ 11.93 $ 9.97
-------- -------- -------- -------
Income from Investment Operations:
Net Investment Income ................................. 0.048 0.146 0.047 0.066
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... 3.014 1.929 2.888 1.961
-------- -------- -------- -------
Total from Investment Operations ..................... 3.062 2.075 2.935 2.027
-------- -------- -------- -------
Less Distributions:
Dividends from Net Investment Income .................. 0.102 0.085 0.084 0.067
Distributions from Realized Gains ..................... 0.850 -- 0.850 --
Tax return of Capital ................................. -- -- -- --
-------- -------- -------- -------
Total Distributions .................................... 0.952 0.085 0.934 0.067
-------- -------- -------- -------
Net Asset Value, End of Period ........................ $ 14.10 $ 11.99 $ 13.93 $ 11.93
======== ======== ======== =======
Total Return (1) 28.19% 20.78% 27.25% 20.35%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 12,965 $ 6,358 $ 2,218 $ 190
Ratio of Expenses to Average Net Assets # ............ 1.75% 1.75% 2.51% 2.47%
Ratio of Net Investment Income to Average Net Assets # 0.32% 1.44% (0.30%) 0.80%
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 2.84% 3.49% 3.58% 3.83%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses to Average Net Assets # ...... (0.77%) (0.30%) (1.37%) (0.56%)
Portfolio Turnover Rate ................................. 170% 186% 170% 186%
Commission rate per share .............................. $ 0.0364 $ 0.0242 $ 0.0364 $ 0.0242
<CAPTION>
Vista Southeast Asian Fund
------------------------------------------------------
Class A Class B
------------------------ ------------------------
Year 11/02/95* Year 11/03/95**
Ended Through Ended Through
10/31/97 10/31/96 10/31/97 10/31/96
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 11.97 $ 10.00 $ 11.89 $ 10.01
-------- -------- ------- --------
Income from Investment Operations:
Net Investment Income ................................. 0.066 (0.013) 0.025 (0.055)
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... (3.305) 1.983 ( 3.315) 1.935
-------- -------- ------- --------
Total from Investment Operations ..................... (3.239) 1.970 ( 3.290) 1.880
-------- -------- ------- --------
Less Distributions:
Dividends from Net Investment Income .................. -- -- -- --
Distributions from Realized Gains ..................... 0.640 -- 0.640 --
Tax return of Capital ................................. 0.021 -- 0.01 --
-------- -------- ------- --------
Total Distributions .................................... 0.661 -- 0.650 --
-------- -------- ------- --------
Net Asset Value, End of Period ........................ $ 8.07 $ 11.97 $ 7.95 $ 11.89
======== ======== ======= ========
Total Return (1) (28.86%) 19.70% (29.48) 18.78%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 6,566 $ 8,451 $ 1,051 $ 1,222
Ratio of Expenses to Average Net Assets # ............ 1.75% 1.74% 2.50% 2.52%
Ratio of Net Investment Income to Average Net Assets # 0.42% (0.12%) (0.23%) (0.90%)
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 2.84% 3.26% 3.60% 3.70%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses to Average Net Assets # ...... (0.67%) (1.64%) (1.33%) (2.08%)
Portfolio Turnover Rate ................................. 234% 149% 234% 149%
Commission rate per share .............................. $ 0.0100 $ 0.0129 $0.0100 $ 0.0129
</TABLE>
- -------
(1) Total return figures do not include the effect of any sales load.
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
See notes to financial statements.
44
<PAGE>
Vista Mutual Funds
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista Japan Fund
---------------------------------------------------
Class A Class B
---------------------- -----------------------
Year 11/02/95* Year 11/03/95**
Ended Through Ended Through
10/31/97 10/31/96 10/31/97 10/31/96
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 9.42 $ 10.00 $ 9.35 $ 10.00
------- --------- ------- ---------
Income from Investment Operations:
Net Investment Income ................................. 0.078 (0.083) (0.048) (0.022)
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... 0.242 (0.497) 0.298 (0.628)
-------- --------- ------- ---------
Total from Investment Operations ..................... 0.320 (0.580) 0.250 (0.650)
-------- --------- ------- ---------
Less Distributions:
Dividends from Net Investment Income .................. 0.220 -- 0.180 --
Distributions from Realized Gains ..................... -- -- -- --
-------- --------- ------- ---------
Total Distributions .................................... 0.220 -- 0.180 --
-------- --------- ------- ---------
Net Asset Value, End of Period ........................ $ 9.52 $ 9.42 $ 9.42 $ 9.35
======== ========= ======= =========
Total Return (1) 3.49% (5.80%) 2.72% (6.50%)
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 5,008 $ 4,781 $ 1,893 $ 162
Ratio of Expenses to Average Net Assets # ............ 1.75% 1.75% 2.51% 2.52%
Ratio of Net Investment Income to Average Net Assets # (0.30%) (0.91%) (5.73%) (0.40%)
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 2.89% 3.60% 3.66% 4.00%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ........................... (1.44%) (2.76%) (6.88%) (1.88%)
Portfolio Turnover Rate ................................. 217% 121% 217% 121%
Commission rate per share .............................. $ 0.0582 $ 0.0499 $0.0582 $ 0.0499
<CAPTION>
Vista International Equity Fund
------------------------------------------------
Class A
------------------------------------------------
Year Ended
------------------------------------------------
10/31/97 10/31/96 10/31/95 10/31/94
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period .................. $ 12.38 $ 12.02 $ 12.31 $ 11.82
-------- -------- --------- ---------
Income from Investment Operations:
Net Investment Income ................................. (0.046)@ 0.056 0.039 (0.022)
Net Gains or (Losses) in Securities (both realized and
unrealized) .......................................... 0.330 0.367 (0.190) 0.566
-------- -------- --------- ---------
Total from Investment Operations ..................... 0.284 0.423 (0.151) 0.544
-------- -------- --------- ---------
Less Distributions:
Dividends from Net Investment Income .................. 0.036 0.063 -- --
Distributions from Realized Gains ..................... 0.520 -- 0.137 0.054
-------- -------- --------- ---------
Total Distributions .................................... 0.556 0.063 0.137 0.054
-------- -------- --------- ---------
Net Asset Value, End of Period ........................ $ 12.11 $ 12.38 $ 12.02 $ 12.31
======== ======== ========= =========
Total Return (1) 2.27% 3.53% (1.19%) 4.61%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) ............... $ 23,267 $ 24,904 $ 26,287 $ 37,926
Ratio of Expenses to Average Net Assets # ............ 2.01% 2.00% 2.01% 2.00%
Ratio of Net Investment Income to Average Net Assets # (0.36%) 0.03% (0.10%) (0.27%)
Ratio of Expenses Without Waivers and Assumption of
Expenses to Average Net Assets # ..................... 2.08% 2.86% 2.86% 2.86%
Ratio of Net Investment Income Without Waivers and
Assumptions of Expenses # ........................... (0.43%) (0.89%) (0.96%) (1.13%)
Portfolio Turnover Rate ................................. -- -- -- --
Commission rate per share .............................. -- -- -- --
</TABLE>
- -------
(1) Total return figures do not include the effect of any sales load.
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
@ Calculated using average shares outstanding
See notes to financial statements.
45
<PAGE>
Vista Mutual Funds
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Vista International Equity Fund
--------------------------------------------
Class A Class B
---------- ------------------------------
12/31/92* Year Ended
Through -------------------------------
10/31/93 10/31/97 10/31/96 10/31/95
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................................ $ 10.00 $ 12.24 $ 11.89 $ 12.23
--------- ------- -------- -------
Income from Investment Operations:
Net Investment Income ............................................................ (0.010) (0.111)@ 0.013 (0.026)
Net Gains or (Losses) in Securities (both realized and unrealized) ............... 1.830 0.330 0.350 (0.180)
--------- ------- -------- -------
Total from Investment Operations ................................................ 1.820 0.219 0.363 (0.206)
--------- ------- -------- -------
Less Distributions:
Dividends from Net Investment Income ............................................. -- -- -- --
Distributions from Realized Gains ................................................ -- 0.520 0.010 0.137
--------- ------- -------- -------
Total Distributions ............................................................... -- 0.520 0.010 0.137
--------- ------- -------- -------
Net Asset Value, End of Period ...................................................... $ 11.82 $ 11.94 $ 12.24 $ 11.89
========= ======= ======== =======
Total Return (1) 22.23% 1.74% 3.03% (1.61%)
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) .......................................... $ 14,290 $ 7,989 $ 7,819 $ 6,759
Ratio of Expenses to Average Net Assets # .......................................... 2.13% 2.51% 2.50% 2.50%
Ratio of Net Investment Income to Average Net Assets # ........................... (0.14%) (0.88%) (0.43%) (0.53%)
Ratio of Expenses Without Waivers and Assumption of Expenses to Average Net Assets # 2.86% 2.61% 3.36% 3.36%
Ratio of Net Investment Income Without Waivers and Assumptions of Expenses # ...... (0.87%) (0.98%) (1.29%) (1.40%)
Portfolio Turnover Rate ............................................................ --
Commission rate per share ......................................................... --
<CAPTION>
11/04/93**
Through
10/31/94
----------
<S> <C>
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................................ $ 11.69
---------
Income from Investment Operations:
Net Investment Income ............................................................ (0.053)
Net Gains or (Losses) in Securities (both realized and unrealized) ............... 0.647
---------
Total from Investment Operations ................................................ 0.594
---------
Less Distributions:
Dividends from Net Investment Income ............................................. --
Distributions from Realized Gains ................................................ 0.054
---------
Total Distributions ............................................................... 0.054
---------
Net Asset Value, End of Period ...................................................... $ 12.23
=========
Total Return (1) 5.09%
Ratios/Supplemental Data:
Net Assets, End of Period (000 omitted) .......................................... $ 7,182
Ratio of Expenses to Average Net Assets # .......................................... 2.50%
Ratio of Net Investment Income to Average Net Assets # ........................... (0.94%)
Ratio of Expenses Without Waivers and Assumption of Expenses to Average Net Assets # 3.36%
Ratio of Net Investment Income Without Waivers and Assumptions of Expenses # ...... (1.80%)
Portfolio Turnover Rate ............................................................
Commission rate per share .........................................................
</TABLE>
- -------
(1) Total return figures do not include the effect of any sales load.
* Commencement of operations.
** Commencement of offering of class of shares.
# Short periods have been annualized.
@ Calculated using average shares outstanding.
See notes to financial statements.
46
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
Mutual Fund Group
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Vista European Fund, Vista
Southeast Asian Fund, Vista Japan Fund and Vista International Equity Fund
(separate portfolios of Mutual Fund Group, hereafter referred to as the
"Trust") at October 31, 1997, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at October 31, 1997 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
47
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997
Shares Issuer Value
- ------------------------------------------------------------------
Long-Term Investments -- 81.7%
- ------------------------------------------------------------------
Common Stock -- 81.1%
---------------------
Australia -- 1.0%
Banking -- 0.1%
3,000 Commonwealth Bank of Australia $ 34,494
Food/Beverage Products -- 0.4%
72,000 Foster's Brewing Group Ltd. 136,712
Multi-Media -- 0.1%
6,000 Publishing & Broadcasting Ltd. 34,811
Oil & Gas -- 0.4%
168,000 Energy Equity Corp. Ltd.* 121,690
-----------
Total Australia 327,707
-----------
Austria -- 3.3%
Oil & Gas -- 2.2%
2,505 OMV AG 356,161
3,015 Schoeller-Bleckmann Oilfield
Equipment AG 356,606
Steel -- 1.1%
4,640 Boehler -- Uddeholm AG 332,726
-----------
Total Austria 1,045,493
-----------
Brazil -- 3.7%
Telecommunications -- 2.3%
7,100 Telecomunicacoes Brasileiras SA, ADR 720,650
Utilities -- 1.4%
20,500 Centrais Electricas Brasileiras SA-
Electrobras, ADR 446,277
-----------
Total Brazil 1,166,927
-----------
Finland -- 2.4%
Electronics/Electrical Equipment -- 2.4%
8,490 Nokia AB, Ser. A, 740,941
-----------
France -- 10.0%
Appliances & Household Durables -- 1.1%
15,990 Moulinex* 360,369
Automotive -- 1.1%
2,090 Equipment et Composants pour
l'Industrie Automobile (ECIA) 346,023
See notes to financial statements.
48
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ----------------------------------------------------------------
Long-Term Investments -- (continued)
- ----------------------------------------------------------------
Banking -- 2.3%
12,000 Banque Nationale de Paris $ 530,490
3,450 Credit Commercial de France 195,460
Computer Software -- 1.1%
4,300 Cap Gemini Sogeti SA 341,421
Oil & Gas -- 1.3%
3,300 Societe National ELF-Aquitane 408,477
Telecommunications -- 3.1%
3,096 Alcatel Alsthom (Cie General El) 373,565
15,650 France Telecom, SA* 592,276
-----------
Total France 3,148,081
-----------
Germany -- 7.0%
Banking -- 1.8%
13,500 Dresdner Bank AG 551,963
Capital Goods -- 0.9%
700 Mannesmann AG 295,540
Consumer Products -- 1.1%
2,300 Adidas AG, ADR# 332,802
Health Care/Health Care Services -- 1.7%
4,500 Fresenius Medical Care AG* 317,085
4,000 Fresenius Medical Care AG, Preference
Shares 227,339
Machinery & Engineering
Equipment -- 1.5%
1,460 GEA AG, Preference Shares 467,390
-----------
Total Germany 2,192,119
-----------
Greece -- 0.5%
Construction Equipment -- 0.5%
3,190 Titan Cement Co., SA, 155,618
-----------
Hong Kong -- 0.3%
Business Services -- 0.3%
66,000 Cosco Pacific Ltd. 76,829
Real Estate Investment Trust -- 0.0%
5,840 HKR International, Ltd. 3,852
-----------
Total Hong Kong 80,681
-----------
See notes to financial statements.
49
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- --------------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------------
Ireland -- 2.7%
Construction Materials -- 1.3%
34,180 CRH PLC $ 412,130
Real Estate -- 1.4%
70,269 Green Property PLC 424,228
-----------
Total Ireland 836,358
-----------
Italy -- 3.0%
Banking -- 0.9%
100,000 Banco Ambrosiano Veneto SPA, RNC 282,669
Consumer Products -- 1.0%
30,000 CSP International Industria Calze
SPA* 330,310
Oil & Gas -- 1.1%
60,000 Saipem SPA 340,372
-----------
Total Italy 953,351
-----------
Japan -- 13.9%
Banking -- 1.2%
6,600 Acom Co., Ltd. 361,944
Consumer Products -- 2.1%
25,000 KAO Corp. 348,982
3,800 Sony Corp. 315,430
Electronics/Electrical Equipment -- 5.3%
2,700 Keyence Corp. 403,822
19,000 Matsushita Electric Industrial Co., Ltd. 318,903
8,000 Murata Manufacturing Co., Ltd., 321,728
3,000 Rohm Company 296,635
3,700 SMC Corp. 319,734
Manufacturing -- 1.2%
13,000 Fuji Machine Manufacturing Co. 376,984
Pharmaceuticals -- 1.2%
11,000 Sankyo Co. Ltd. 362,858
Photographic Equipment -- 1.0%
9,000 Fuji Photo Film 326,049
See notes to financial statements.
50
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- ---------------------------------------------------------------
Long-Term Investments -- (continued)
- ---------------------------------------------------------------
Real Estate -- 0.9%
22,000 Mitsubishi Estate Co., Ltd. $ 277,856
Retailing -- 0.0%
530 Fast Retailing Co., Ltd. 9,909
Telecommunications -- 1.0%
370 Nippon Telegraph & Telephone Corp. 313,585
-----------
Total Japan 4,354,419
-----------
Mexico -- 2.3%
Diversified -- 1.4%
58,329 ALFA, SA de CV, Class A 428,511
Financial Services -- 0.4%
70,000 Grupo Financiero Banamex Accival, SA
de CV (Banacci), Ser. B* 138,414
Home Building Construction -- 0.5%
8,000 Corporacion GEO, SA de CV, Ser. B,
ADR* 169,064
-----------
Total Mexico 735,989
-----------
Netherlands -- 5.7%
Banking -- 0.0%
1 ING Groep NV 42
Business Services -- 3.4%
25,000 Brunel International NV* 527,942
16,200 Koninklijke Ahhrend Groep NV 539,861
Computer Software -- 2.3%
10,200 Baan Company, NV* 722,380
-----------
Total Netherlands 1,790,225
-----------
Poland -- 0.4%
Banking -- 0.4%
9,000 Bank Inicjatyw Gospodarczych BIG
SA, GDR* 126,450
-----------
Portugal -- 1.2%
Telecommunications -- 1.2%
9,025 Portugal Telecom SA* 370,289
-----------
Spain -- 1.9%
Business Services -- 0.5%
15,400 Prosegur, CIA de Seguridad SA 172,558
See notes to financial statements.
51
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- -------------------------------------------------------------------
Long-Term Investments -- (continued)
- -------------------------------------------------------------------
Construction -- 1.4%
11,900 Fomento de Construcciones y
Contratas SA $ 437,650
-----------
Total Spain 610,208
-----------
Switzerland -- 4.4%
Electronics/Electrical Equipment -- 1.4%
260 SEZ Holding AG, Registered A Shares, 439,891
Pharmaceuticals -- 3.0%
1,080 Roche Holding AG 948,701
-----------
Total Switzerland 1,388,592
-----------
United Kingdom -- 17.0%
Aerospace -- 1.3%
15,360 British Aerospace PLC 406,988
Business Services -- 1.2%
33,735 Delphi Group PLC 389,226
Diversified -- 1.8%
139,286 Cookson Group PLC 558,262
Food/Beverage Products -- 1.2%
58,240 Devro International PLC 360,885
Hotels/Other Lodging -- 1.2%
160,340 Jarvis Hotels PLC* 392,580
Insurance -- 4.0%
132,100 Royal & Sun Alliance Insurance Group
PLC 1,266,054
Oil & Gas -- 2.2%
84,864 British-Borneo Petroleum Syndicate
PLC 680,275
Real Estate -- 1.6%
58,600 MEPC PLC 510,524
Shipping/Transportation -- 1.2%
40,450 British Airport Authority PLC 373,091
Telecommunications -- 1.3%
72,510 Vodafone Group PLC 395,198
-----------
Total United Kingdom 5,333,083
-----------
See notes to financial statements.
52
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Shares Issuer Value
- --------------------------------------------------------------------------
Long-Term Investments -- (continued)
- --------------------------------------------------------------------------
Venezuela -- 0.4%
Telecommunications -- 0.4%
3,000 Compania Anonima Nacional
Telefonos de Venezuela (CANTV),
ADR $ 131,250
-----------
Total Common Stock 25,487,781
(Cost $24,725,835) -----------
Warrants --
-----------
Malaysia -- 0.0%
Construction -- 0.0%
60,000 Sunway Building Technology, Bhd.,
3.0% RULs (Redeemable,
Unsecured, Loan Stock) 12,599
21,000 Sunway Building Technology, Bhd.,
attached to RULs, Expires
07/11/01 5,985
-----------
(Cost $24,077) 18,584
-----------
Principal
Amount
(USD)
Corporate Notes & Bonds -- 0.6%
-------------------------------
France -- 0.0%
Banking -- 0.0%
$ 15,840 Societe Generale, 3.5%, 01/01/00 3,420
-----------
Germany -- 0.0%
Automotive -- 0.0%
8,800 Daimler Benz AG, 5.75%, 06/14/02 6,584
-----------
Poland -- 0.6%
Electronics/Electrical Equipment -- 0.6%
304,000 Elektrim Spolka Akcyjna SA, 05/30/04 174,241
-----------
Total Corporate Notes & Bonds 184,245
(Cost $203,593)
------------------------------------------------------------------------
Total Long-Term Investments 25,690,610
(Cost $24,953,505)
------------------------------------------------------------------------
See notes to financial statements.
53
<PAGE>
International Equity Portfolio
Portfolio of Investments October 31, 1997 (continued)
Principal
Amount
(USD) Issuer Value
- -----------------------------------------------------------
Short-Term Investments -- 0.4%
- -----------------------------------------------------------
U.S. Treasury Securities -- 0.4%
$120,000 U.S. Treasury Bill, 11/13/97 $ 118,457
(Cost $118,457)
- -----------------------------------------------------------
Total Investments -- 82.1% $25,809,067
(Cost $25,071,962)
- -----------------------------------------------------------
# -- Security may only be sold to qualified institutional buyers.
* -- Non income producing security.
ADR -- American Depository Receipt.
GDR -- Global Depositary Receipt.
See notes to financial statements.
54
<PAGE>
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment securities, at value (Note 1) ..................... $25,809,067
Cash ......................................................... 4,800,902
Foreign cash (Cost $792,428) ................................. 792,237
Receivables:
Investment securities sold ................................. 335,319
Interest and dividends .................................... 77,974
Other assets ................................................ 2,667
-----------
Total assets ............................................. 31,818,166
-----------
LIABILITIES:
Payable for investment securities purchased .................. 131,469
Payable for open forward currency contracts .................. 191,657
Accrued liabilities: (Note 2) ..............................
Custodian ................................................... 6,725
Other ...................................................... 76,739
-----------
Total Liabilities ....................................... 406,590
-----------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS ...... $31,411,576
===========
Cost of Investments .......................................... $25,071,962
===========
</TABLE>
See notes to financial statements.
55
<PAGE>
Statement of Operations For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend .......................................... $ 558,472
Interest .......................................... 41,475
Foreign taxes withheld .............................. (66,777)
----------
Total investment income ........................... 533,170
----------
EXPENSES: (Note 2)
Investment Advisory fees ........................... 325,433
Administration fees ................................. 16,272
Custodian fees .................................... 51,020
Amortization of organization costs (Note 1) ......... 11,516
Professional fees ................................. 187,561
Trustees fees ....................................... 497
Other ............................................. 20,923
----------
Total expenses .................................... 613,222
----------
Less amounts waived ................................. 341,705
Less expenses borne by the Administrator ............ 11,171
----------
Net Expenses ....................................... 260,346
----------
Net investment income ........................... 272,824
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on:
Investments ....................................... 859,928
Futures transactions .............................. 70,551
Foreign currency transactions ..................... 270,106
Change in net unrealized appreciation/depreciation on:
Investments ...................................... 201,421
Foreign currency contracts and transactions ..... (201,029)
----------
Net realized and unrealized gain (loss) ............... 1,200,977
----------
Net increase in net assets from operations ............ $1,473,801
==========
</TABLE>
See notes to financial statements.
56
<PAGE>
Statement of Changes in Net Assets For the year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996
------------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ........................ $ 272,824 $ 405,376
Net realized gain (loss) on investments, futures
and foreign currency transactions ............ 1,200,585 3,618,264
Change in net unrealized appreciation/
depreciation on investments, futures and
foreign currency transactions ............... 392 (2,439,963)
------------- -----------
Increase in net assets from operations ......... 1,473,801 1,583,677
------------- -----------
TRANSACTIONS IN INVESTORS'
BENEFICIAL INTEREST:
Contributions ................................. 21,249,906 20,400,056
Withdrawals .................................... (23,632,110) (24,033,082)
------------- -----------
Net (decrease) from transactions in investors'
beneficial interests ........................ (2,382,202) (3,633,026)
------------- -----------
Net (decrease) in net assets ............... (908,401) (2,049,349)
NET ASSETS:
Beginning of year .............................. 32,319,977 34,369,326
------------- -----------
End of year .................................... $ 31,411,576 $32,319,977
============= ===========
</TABLE>
See notes to financial statements.
57
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies -- International Equity
Portfolio (the "Portfolio") is separately registered under the Investment
Company Act of 1940, as amended, as a non-diversified, open end management
investment company organized as a trust under the Laws of the State of New
York. The declaration of trust permits the Trustees to issue beneficial
interests in the Portfolio. The Portfolio commenced operations on December 29,
1992.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by
the Portfolio:
A. Valuation of Investments -- Equity securities, purchased options and
futures are valued at the last sale price on the exchange on which they are
primarily traded, including the NASDAQ National Market. Securities for which
sale prices are not available and other over-the-counter securities are
valued at the last quoted bid price. Bonds and other fixed income securities
(other than short-term obligations), including listed issues, are valued on
the basis of valuations supplied by pricing services or by matrix pricing
systems of a major dealer in bonds. Short-term debt securities with 61 days
or more to maturity at time of purchase are valued, through the 61st day
prior to maturity, at market value based on quotations obtained from market
makers or other appropriate sources; thereafter, the value on the 61st day is
amortized on a straight-line basis over the remaining number of days to
maturity. Short-term investments with 60 days or less to maturity at time of
purchase are valued at amortized cost, which approximates market. Portfolio
securities 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
Trustees.
B. Repurchase Agreements -- It is the Trust's policy that repurchase
agreements are fully collateralized by U.S. Treasury and Government Agency
securities. All collateral is held by the Trust's custodian bank,
subcustodian or a bank with which the custodian bank has entered into a
subcustodian agreement, or is segregated in the Federal Reserve Book Entry
System. In connection with transactions in repurchase agreements, if the
seller defaults and the value of the collateral declines, or if the seller
enters an insolvency proceeding, realization of the collateral by the Trusts
may be delayed or limited.
C. Forward Foreign Currency Exchange Contracts -- The Portfolio may enter
into forward foreign currency contracts (obligations to purchase or sell
foreign currency in the future on a date and price fixed at the time the
contracts are entered into) to hedge the Portfolio against fluctuations in
the value of its assets or liabilities due to change in the value of foreign
currencies. Each day the forward contract is open, changes in the value of
the contract are recognized as unrealized gains or losses by "marking to
market". When the forward contract is closed, or the delivery of the currency
is made or taken, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Fund's basis in the contract. The Portfolio is subject to off-balance
sheet risk to the extent of the value of the contracts for purchases of
currency and in an unlimited amount for sales of currency.
D. Foreign Currency Translation -- The books and records of the Portfolio are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars at the prevailing exchange rates, or at the mean of the current bid
and asked prices, of such currencies against the U.S. dollar as quoted by a
major bank, on the following basis:
1. Market value of investment securities and other assets and
liabilities: at the closing rate of exchange at the balance sheet date.
58
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
2. Purchases and sales of investment securities, income and expenses: at
the rates of exchange prevailing on the respective dates of such
transactions.
Although the net assets of the Portfolio are presented at the foreign
exchange rates and market values at the close of the periods, the Portfolio
does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the fluctuations arising
from changes in the market prices of securities sold during the year.
Accordingly, such realized foreign currency gains (losses) are included in
the reported net realized losses on security transactions.
Reported realized foreign exchange gains or losses arise from disposition of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Portfolio's books on the transaction date and the U.S. dollar equivalent of
the amounts actually received or paid. Unrealized foreign exchange gains and
losses arise from changes (due to the changes in the exchange rate) in the
value of foreign currency and other assets and liabilities denominated in
foreign currencies which are held at period end.
E. Futures Contracts -- When the Portfolio enters into a futures contract, it
makes an initial margin deposit in a segregated account, either in cash or
liquid securities. Thereafter, the futures contract is marked to market and
the Portfolio makes (or receives) additional cash payments daily to the
broker. Changes in the value of the contract are recorded as unrealized
appreciation/depreciation until the contract is closed or settled.
The Portfolio invested a portion of its liquid assets in long stock index
futures contracts to more fully participate in the market. Use of long
futures contracts subject the Portfolio to risk of loss in excess of amounts
shown on the Statement of Assets and Liabilities, up to the amount of the
value of the contract.
The Portfolio may enter into futures contracts only on exchanges or boards of
trade. The exchange or board of trade acts as the counterparty to each
futures transaction, therefore, the Fund's credit risk is limited to failure
of the exchange or board of trade.
As of October 31, 1997, the Portfolio had no outstanding futures contracts.
F. Written Options -- When the Portfolio writes an option on a futures
contract, an amount equal to the premium received by the Portfolio is
included in the Portfolio's Statement of Assets and Liabilities as an asset
and corresponding liability. The amount of the liability is adjusted daily to
reflect the current market value of the written option and the change is
recorded in a corresponding unrealized gain or loss account. When a written
option expires on its stipulated expiration date, or when a closing
transaction is entered into, the related liability is extinguished and the
fund realizes a gain (or loss if the cost of the closing transaction exceeds
the premium received when the option was written).
The Portfolio writes options on stock index securities futures. These options
are settled for cash and subject the Portfolio to market risk in excess of
the amounts that are reflected in the Statement of Assets and Liabilities.
The Portfolio, however, is not subject to credit risk on written options as
the counterparty has already performed its obligation by paying a premium at
the inception of the contract.
As of October 31, 1997, the Portfolio had no outstanding written options.
G. Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date (the date the order to buy or sell is
executed). Securities gains and losses are calculated on the identified cost
basis. Interest income is accrued as earned. Dividend income is recorded on
the ex-dividend date.
H. Organization Costs -- Organization and initial registration costs incurred
in connection with establishing the Portfolio have been deferred and are
being amortized
59
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
on a straight-line basis over a sixty month period beginning at the
commencement of operations of the Portfolio.
I. Federal Income Taxes -- The Portfolio intends to continue to qualify as a
partnership and therefore net income and net realized gains are taxed to the
partners. Accordingly, no tax provision is recorded by the Portfolio. The
investors in the Portfolio must take into account their proportionate share
of the Portfolio's income, gains, losses, deductions, credits and tax
preference items in computing their federal income tax liability, without
regard to whether they have received any cash distributions from the
Portfolio. The Portfolio does not intend to distribute to investors its net
investment income or its net realized gains, if any. It is intended that the
Portfolio will be managed in such a way that investors in the Portfolio will
be able to satisfy the requirements of subchapter M of the Internal Revenue
Code to be taxed as regulated investment companies.
2. Fees and Other Transactions with Affiliates
A. Investment Advisory Fee -- Pursuant to an Investment Advisory Agreement,
The Chase Manhattan Bank ("Chase" or the "Advisor") acts as the Investment
Advisor to the Portfolio. Chase is a direct wholly-owned subsidiary of The
Chase Manhattan Corporation. As Investment Advisor, Chase supervises the
investments of the Portfolio and for such services is paid a fee. The fee is
computed daily and paid monthly at an annual rate equal to 1.00% of the
Portfolio's average daily net assets. For the year ended October 31, 1997,
the Advisor waived all of its fees for the Portfolio.
Chase Asset Management, Inc. ("CAM"), a registered investment advisor, is the
sub-investment advisor to the Portfolio pursuant to a Sub-Investment Advisory
Agreement between CAM and Chase. CAM is a wholly owned subsidiary of Chase
and is entitled to receive a fee, payable by Chase from its advisory fee, at
an annual rate equal to 0.50% of the Portfolio's average daily net assets.
B. Custodial Fees -- Chase, as Custodian, provides safekeeping services for
the Portfolio's securities. Compensation for such services are presented in
the Statement of Operations as custodian fees.
C. Administration Fee -- Pursuant to an Administration Agreement, Chase (the
"Administrator") provides certain administration services to the Portfolio.
For these services and facilities, the Administrator receives from the
Portfolio a fee computed at the annual rate equal to 0.05% of the Portfolio's
average daily net assets. For the year ended October 31, 1997, the
Administrator waived all of its fees for the Portfolio.
3. Investment Transactions -- For the year ended October 31, 1997, purchases and
sales of investments (excluding short-term investments) were as follows:
<TABLE>
<S> <C>
Purchases (excluding U.S. Government) ...... $59,966,089
Sales (excluding U.S. Government) ......... 64,347,147
</TABLE>
The portfolio turnover rate of IEP for the year ended October 31, 1997, was
198.59%. The average commission rate per share was $0.0276.
4. Open Forward Foreign Currency Contracts -- The following forward foreign
currency contracts were open at October 31, 1997.
60
<PAGE>
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Delivery Net
Value Market Unrealized
(Local Cost Settlement Value Gain (Loss)
Currency) (USD) Date (USD) (USD)
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Purchases
Hong Kong Dollar ......... 542,000 $ 70,094 11/03/97 $ 70,058 $ (36)
Sales
German Deutsche Mark ...... 3,540,000 $1,931,893 11/14/97 $2,054,681 $ (122,788)
German Deutsche Mark ...... 2,600,000 1,446,936 11/14/97 1,509,088 (62,152)
Malaysian Ringgit ......... 780,000 227,008 11/04/97 233,689 (6,681)
</TABLE>
5. Retirement Plan -- The Portfolio has adopted an unfunded noncontributory
defined benefit pension plan covering all independent trustees of the Portfolio
who will have served as independent trustees for at least five years at the
time of retirement. Benefits under this plan are based on compensation and
years of service. Pension expenses for the year ended October 31, 1997,
included in Trustees Fees in the Statement of Operations, and accrued pension
liability included in other accrued liabilities, in the Statement of Assets and
Liabilities were $335 and $839, respectively.
6. Foreign Cash Positions
<TABLE>
<CAPTION>
Net
Market Unrealized
Local Cost Value Gain (Loss)
Currency Currency (USD) (USD) (USD)
- ------------------------------ ---------- -------- -------- -----------
<S> <C> <C> <C> <C>
Australian Dollar ............ 31,043 $ 2,492 $ 2,559 $ 67
Austrian Schilling ......... 409 298 288 (10)
British Pound Sterling ...... 60,253 97,871 101,045 3,174
Deutsche Mark ............... 852,592 494,204 494,457 253
French Franc ............... 80,538 13,499 13,962 463
Greek Drachma ............... 33,671,222 122,188 123,410 1,222
Hong Kong Dollar ............ 18,558 2,400 2,400 0
Indonesian Rupiah ............ 961,005 283 267 (16)
Italian Lira ............... 1,259,431 739 744 5
Japanese Yen ............... 881,469 7,230 7,324 94
Malaysian Ringgit ............ 120 36 36 0
Philippine Peso ............ 72,126 2,110 2,035 (75)
Portuguese Escudo ............ 372,100 2,068 2,116 48
Singapore Dollar ............ 26 17 17 0
Thai Baht .................. 1,677,636 46,993 41,577 (5,416)
-------- -------- --------
$792,428 $792,237 $ (191)
======== ======== ========
</TABLE>
61
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Trustees and Beneficial Interest Holders of
International Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets present fairly, in all material respects, the financial
position of International Equity Portfolio (the "Portfolio") at October 31,
1997, the results of its operations for the year then ended and the changes in
its net assets for each of the two years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Portfolio's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 17, 1997
62
<PAGE>
Unaudited
Vista European Fund
Vista Southeast Asian Fund
Vista Japan Fund
Vista International Equity Fund
- --------------------------------------------------------------------------------
Certain tax information regarding the Vista Mutual Funds is required to be
provided to shareholders based upon the Funds' income and distributions for the
taxable year ended October 31, 1997. The information and distributions reported
in this letter may differ from the information and distributions reported in
this letter may differ from the information and distributions taxable to the
shareholders for the calendar year ending December 31, 1997. The information
necessary to complete your income tax returns for the calendar year ending
December 31, 1997 will be received under separate cover.
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997.
The following represents the source and percentage of income earned from
government obligations by the Funds:
<TABLE>
<CAPTION>
Long-Term Capital Gains
Vista Fund U.S. Treasury Obligations Federal Home Loan Bank Distribution Per Share
- -------------------- ------------------------- ---------------------- -----------------------
<S> <C> <C> <C>
European -- -- $ 0.850
Southeast Asian 17.01% -- 0.650
Japan 0.92% -- --
International Equity 2.06% 0.07% 0.52
</TABLE>
63
<PAGE>
Vista Service Center
P.O. Box 419392
Kansas City, MO 64179
Investment Adviser, Administrator,
Shareholder and Fund Servicing Agent
and Custodian
The Chase Manhattan Bank
Distributor
Vista Fund Distributors, Inc.
Transfer Agent
DST Systems, Inc.
Legal Counsel
Simpson Thacher & Bartlett
Independent Accountants
Price Waterhouse LLP
Vista Mutual Funds are distributed by Vista
Fund Distributors, Inc. which is unaffiliated
with The Chase Manhattan Bank. Chase and its
respective affiliates receive compensation from
the Vista Funds for providing investment
advisory and other services.
This report is submitted for the general
information of the shareholders of the Funds.
It is not authorized for distribution to
prospective investors in the funds unless
preceded or accompanied by a prospectus.
To obtain a prospectus for any of the Vista
Funds, call 1-800-34-VISTA. The prospectus
contains more complete information, including
charges and expenses. Please read it carefully
before you invest or send money.
VINTL-2-1297
