As filed via EDGAR with the Securities and Exchange Commission on
May 21, 1999
File No. 811-5151
Registration No. 33-14196
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | |
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 59 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |
Post-Effective Amendment No. 98 |X|
-------------------------------
MUTUAL FUND GROUP
(Exact Name of Registrant as Specified in Charter)
One Chase Manhattan Plaza
New York, New York 10081
--------------------------------------------------
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (212) 492-1600
George Martinez, Esq. Peter Eldridge, Esq. Gary S. Schpero, Esq.
BISYS Fund Services, Inc. Chase Manhattan Bank Simpson Thacher & Bartlett
3435 Stelzer Road 270 Park Avenue 425 Lexington Avenue
Columbus, Ohio 43219 New York, New York 10017 New York, New York 10017
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
| | immediately upon filing pursuant to |_| on ( ) pursuant to
paragraph (b) paragraph (b)
| | 60 days after filing pursuant to |_| on ( ) pursuant to
paragraph (a)(1) paragraph (a)(1)
|X| 75 days after filing pursuant to |_| on ( ) pursuant to
paragraph (a)(2) paragraph (a)(2) rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
------------------
The Registrant has registered an indefinite number or amount of its shares of
common stock for each of its series under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940 on July 18, 1994 and
Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, 1998 was
filed on January 27, 1999.
<PAGE>
EXPLANATORY NOTE
<PAGE>
PROSPECTUS FEBRUARY 26, 1999
CHASE VISTA EQUITY FUNDS
CLASS A, CLASS B AND CLASS C SHARES
BALANCED FUND
EQUITY INCOME FUND
LARGE CAP EQUITY FUND
GROWTH AND INCOME FUND
FOCUS FUND
CORE EQUITY FUND
EQUITY GROWTH FUND
CAPITAL GROWTH FUND
SMALL CAP EQUITY FUND
SMALL CAP OPPORTUNITIES FUND
Neither the Securities and Exchange Commission nor any state securities
commission has approved securities of this Fund or determined if this prospectus
is accurate or complete. It is a crime to state otherwise.
[CHASE VISTA FUNDS LOGO]
PSEQ-1-599X
<PAGE>
<TABLE>
<S> <C>
BALANCED FUND 1
EQUITY INCOME FUND 10
LARGE CAP EQUITY FUND 17
GROWTH AND INCOME FUND 25
FOCUS FUND 33
CORE EQUITY FUND 39
EQUITY GROWTH FUND 47
CAPITAL GROWTH FUND 55
SMALL CAP EQUITY FUND 62
SMALL CAP OPPORTUNITIES FUND 69
THE FUNDS' INVESTMENT ADVISER &
THE YEAR 2000 76
HOW YOUR ACCOUNT WORKS 79
ABOUT SALES CHARGES 79
BUYING FUND SHARES 81
SELLING FUND SHARES 83
EXCHANGING FUND SHARES 84
OTHER INFORMATION CONCERNING THE FUNDS 84
DISTRIBUTIONS AND TAXES 85
SHAREHOLDER SERVICES 87
WHAT THE TERMS MEAN 88
FINANCIAL HIGHLIGHTS OF THE FUNDS 89
HOW TO REACH US Back cover
</TABLE>
<PAGE>
CHASE VISTA BALANCED FUND
The Fund's objective
The Fund seeks to
maximize total
return through
long-term capital
growth and earning
current income.
The Fund's main
investment strategy
The Fund invests in both equity and debt securities. Under normal market
conditions, the Fund invests 35% to 70% of its total assets in equity securities
and at least 25% of its total assets in investment grade debt securities. Most
of the Funds' equity securities are in well known, established companies with
market capitalizations of at least $200 million at the time of purchase and
which are traded on established securities markets or over-the-counter. Market
capitalization is the total market value of a company's shares. Equity
securities include common stocks, preferred stocks and securities that are
convertible into common stocks, and warrants to buy common stocks.
The Funds' debt securities include non-convertible corporate debt, and U.S.
Government debt securities. The Fund invests in corporate debt securities that
are rated Baa or higher by Moody's Investors Service, Inc., BBB or higher by
Standard & Poor's Corporation, or the equivalent rating by another national
rating organization. It may also invest in unrated securities of comparable
quality. There is no restriction on the maturity of the Fund's debt portfolio or
on any individual security in the portfolio. The average maturity, or time until
debt investments come due, will vary as market conditions change.
The Fund's advisers may change the balance between equity and fixed income
investments to suit market conditions.
1
<PAGE>
CHASE VISTA BALANCED FUND
In selecting equity securities, the Funds' advisers do quantitative analysis
and fundamental research to seek to identify undervalued stocks which have the
potential to increase in value. The advisers first seek to find companies with
the best earnings prospects and then select companies which appear to have the
most attractive values. The advisers also seek to invest in sectors with good
earnings prospects as well.
The advisers may look for value-oriented factors, such as a low price-to-
earnings or price-to-cash ratio, in determining whether a stock is undervalued.
In addition, they may also attempt to identify those undervalued companies
which will experience earnings growth or improved earnings characteristics.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still undervalued. This may include selling those securities which have
appreciated to meet their target valuations.
For debt securities, the Fund develops an appropriate portfolio strategy by
selecting among various sectors (for example, corporate bonds, U.S. government
debt, mortgage-backed securities or asset-backed securities) and securities.
When making these selections, the advisers use a relative value investment
approach as well as extensive analyses of the securities' creditworthiness and
structures. The advisers seek to spread the Funds' investments across a variety
of sectors to maximize diversification and liquidity. The advisers also
actively manage the duration of the Funds' portfolio.
In determining if a sector or security is relatively undervalued, the advisers
look to whether different sectors and securities are appropriately priced given
their risk characteristics and the fundamental (such as economic growth or
inflation outlook) and technical (such as supply and demand) factors in the
market at any point in time. The advisers may change the emphasis that they
place on each of these factors from time to time. In addition, research plays
an important role in the advisers' relative value investment process. The
research effort incorporates both fundamental and quantitative analysis.
In determining whether to sell a debt security, the advisers will use the same
type of analysis that they use in buying debt securities in order to determine
whether the debt security is still undervalued. This may include selling those
securities which have appreciated to meet their target valuations.
The frequency of yield curve shifts over the last few years has made yield
curve strategies an important dimension of the Funds' overall investment
strategy. Yield curves show the relationship between yields on similar debt
securities with different maturities. The Fund may seek gains by investing in
anticipation of yield curve movements.
The Fund may invest up to 20% of it total assets in foreign securities. These
investments may take the form of depositary receipts. It may also invest in
convertible securities, which generally pay interest or dividends and which can
be converted into common or preferred stock.
The Fund's equity holdings may also include real estate investment trusts
(REITs), which are pools of investments primarily in income-producing real
estate or loans related to real estate.
2
<PAGE>
The Fund may invest in mortgage-related securities issued by governmental
entities and private issuers. These may include invest- ments in collateralized
mortgage obligations and principal-only and interest-only stripped
mortgage-backed securities.
The Fund may enter into "dollar rolls," in which the Fund sells mortgage-backed
securities and at the same time contracts to buy back very similar securities
on a future date. It may also buy asset-backed securities. These receive a
stream of income from a particular asset, such as credit card receivables.
The Fund may invest in floating rate securities, whose interest rate adjusts
automatically whenever a specified interest rate changes, and in variable rate
securities, whose interest rates are changed periodically.
The Fund may also invest in high quality money market instruments and
repurchase agreements. To temporarily defend its assets, the Fund may put any
amount of its assets in these types of investments.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (but not its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
3
<PAGE>
CHASE VISTA BALANCED FUND
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Balanced Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate.
The securities of smaller cap companies may trade less frequently and in
smaller volumes than securities of larger, more established companies. As a
result, share price changes may be more sudden or more erratic. Smaller cap
companies may have limited product lines, markets or financial resources, and
they may depend on a small management group.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize or
expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
4
<PAGE>
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
In early 1999, the European Monetary Union implemented a new currency called
the "euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The value of the Fund's fixed income securities tends to fall when prevailing
interest rates rise. Such a drop could be worse if the Fund invests a larger
portion of its assets in debt securities with longer maturities. That's because
long-term debt securities are more sensitive to interest rate changes than
other fixed income securities. Note that conversely the value of fixed income
investments tends to increase when prevailing interest rates fall.
When the Fund invests in mortgage-related securities, the value of the Fund
could change more often and to a greater degree than if it did not buy
mortgage-related securities. That's because the prepayment features on some
mortgage-related securities make them more sensitive to interest rate changes.
Mortgage-related securities are subject to scheduled and unscheduled principal
payments as property owners pay down or prepay their mortgages. As these
payments are received, they must be reinvested when interest rates may be
higher or lower than on the original mortgage security. When interest rates are
rising, the value of fixed-income securities with prepayment features are
likely to decrease as much or more than securities without prepayment features.
In addition, while the value of fixed-income securities will generally increase
when interest rates decline, the value of mortgage-related securities with
prepayment features may not increase as much as securities without prepayment
features.
Collateral mortgage obligations are issued in multiple classes, and each class
may have its own interest rate and/or final payment date. A class with an
earlier final payment date may have certain preferences in receiving principal
payments or earning interest. As a result, the value of some classes in which
the Fund invests may be more volatile and may be subject to higher risk of
nonpayment.
The value of interest-only and principal-only mortgage backed securities are
more volatile than other types of mortgage-related securities. That's because
they are very sensitive not only to changes in interest rates, but also to the
rate of prepayments. A rapid or unexpected increase in prepayments can
significantly depress the price of interest-only securities, while a rapid or
unexpected decrease could have the same effect on principal-only securities. In
addition, these instruments may be illiquid.
Certain securities which the Fund may hold, such as stripped obligations and
zero coupon securities, are more sensitive to changes in interest rates than
ordinary interest-paying securities. As a result, they may be more volatile
than other types of investments.
The Fund's performance will also depend on the credit quality of its
investments.
5
<PAGE>
CHASE VISTA BALANCED FUND
Securities which are rated Baa by Moody's or BBB by S&P may have fewer
protective provisions and are generally more risky than higher rated
securities. The issuer may have trouble making principal and interest payments
when difficult economic conditions exist.
Some asset-backed securities may have additional risk because they may receive
little or no collateral protection from the underlying assets.
Because the interest rate changes on floating and variable rate securities, the
Fund's yield may decline and it may lose the opportunity for capital
appreciation when interest rates decline.
Dollar rolls, forward commitments and repurchase agreements involve some risk
to the Fund if the other party does not live up to its obligations under the
agreement.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
The value of REITs will depend on the value of the underlying properties or the
underlying loans or interest. The value of REITs may decline when interest
rates rise. The value of a REIT will also be affected by the real estate market
and by the management of the REIT's underlying properties. REITs may be more
volatile or more illiquid than other types of securities.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government obligations, including
where the Fund is investing for temporary defensive purposes, it could reduce
the Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
6
<PAGE>
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year, five years and since inception.
It compares that performance to the Lehman Aggregate Bond Index and the S&P 500
Index, widely recognized market benchmarks, and the Lipper Balanced Funds
Average, representing the average performance of a universe of 392 actively
managed balanced funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund.
[CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1993 12.68%
1994 0.21%
1995 24.98%
1996 14.56%
1997 22.03%
1998 14.47%
<TABLE>
<S> <C>
- ------------------- --------
BEST QUARTER 11.35%
- ------------------- --------
4th quarter, 1998
- ------------------- --------
WORST QUARTER -4.96%
- ------------------- --------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
0.94%.
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
SINCE
INCEPTION
PAST 1 YEAR PAST 5 YEARS (11/4/92)
<S> <C> <C> <C>
CLASS A SHARES 7.89% 13.56% 13.91%
CLASS B SHARES 8.66% 13.84% 14.29%
CLASS C SHARES 12.73% 14.09% 14.31%
LEHMAN AGGREGATE BOND INDEX 8.69% 7.27% 7.74%
S&P 500 INDEX 28.60% 24.05% 24.84%
LIPPER BALANCED FUNDS AVG. 13.48% 13.84% 13.23%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
Class B shares were first offered on November 4, 1993. Class C shares were
first offered on November 23, 1998. The performance for the period before Class
B shares were launched is based on the performance of Class A shares of the
Fund and the performance for the period before Class C shares were launched is
based on the performance of Class A and Class B shares. The actual returns of
Class B and Class C shares would have been lower than shown because Class B and
Class C shares have higher expenses than Class A shares.
7
<PAGE>
CHASE VISTA BALANCED FUND
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDERS FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.50% 0.25% 0.67% 1.42%
CLASS B 0.50% 0.75% 0.67% 1.92%
CLASS C 0.50% 0.75% 0.67% 1.92%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
actual Other expenses for Class A shares are expected to be 0.50% and the total
annual Fund operating expenses are expected not to exceed 1.25% for Class A
shares and 1.75% for Class B and Class C shares. That's because The Chase
Manhattan Bank (Chase) and some of the Fund's other service providers have
volunteered not to collect a portion of their fees and to reimburse others.
Chase and these other service providers may end this arrangement at any time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
8
<PAGE>
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses are not waived and remain the same as shown
above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $ 711 $ 998 $ 1307 $ 2179
CLASS B SHARES** $ 695 $ 903 $ 1237 $ 2114***
CLASS C SHARES** $ 295 $ 603 $ 1037 $ 2243
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $ 195 $ 603 $ 1037 $ 2114***
CLASS C SHARES $ 195 $ 603 $ 1037 $ 2243
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
The costs above are based on pre-waiver Annual Fund Operating Expenses.
9
<PAGE>
CHASE VISTA EQUITY INCOME FUND
The Fund's objective
The Fund seeks to obtain income primarily by investing in income-producing
equity securities. Capital growth is a secondary consideration.
The Fund's main investment strategy
Under normal market conditions, the Fund invests at least 65% of its total
assets in dividend-paying equity securities. Equity securities include common
stocks, preferred stocks and securities that are convertible into com- mon
stocks. The major portion of the Fund's assets will be invested in common stocks
which are traded on a national securities exchange or on NASDAQ. A significant
portion of the Fund's assets may be invested in convertible bonds or convertible
preferred stock, which generally pay interest or dividends and which can be
converted into common or preferred stock.
The Fund attempts to achieve a yield higher than the composite yield on the
securities in the Standard & Poor's 500 Stock Price Index.
The Funds' advisers may seek income through various methods, including
investing in convertible securities and seeking to identify companies with
characteristics such as above-average dividend yields. The advisers do
quantitative analysis and fundamental research to seek to identify undervalued
stocks which have the potential to increase in value. The advisers first seek
to find companies with the best earnings prospects and then select companies
which appear to have the most attractive values. The advisers also seek to
invest in sec-tors with good earnings prospects as well.
10
<PAGE>
The advisers may look for value-oriented factors, such as a low
price-to-earnings or price-to-cash ratio, in determining whether a stock is
undervalued. In addition, they may also attempt to identify those undervalued
companies which will experience earnings growth or improved earnings
characteristics.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still undervalued. This may include those securities which have appreciated
to meet their target valuations.
The Fund's equity holdings may also include real estate investment trusts
(REITs), which are pools of investments primarily in income- producing real
estate or loans related to real estate.
The Fund may invest up to 20% of it total assets in foreign securities. These
investments may take the form of depositary receipts.
The Fund may, under normal market conditions, invest up to 35% of its total
assets in investment grade debt securities, high quality money market
instruments and repurchase agreements. To temporarily defend its assets, the
Fund may put any amount of its assets in these types of investments. Investment
grade means a rating of Baa or higher by Moody's Investors Service, Inc., BBB
or higher by Standard & Poor's Corporation or the equivalent by another
national rating organization or unrated securities of comparable quality.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
11
<PAGE>
CHASE VISTA EQUITY INCOME FUND
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Equity Income Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate or if the
companies in which it invests do not pay dividends.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize
or expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
In early 1999, the European Monetary Union implemented a new currency called the
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
12
<PAGE>
"euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The market value of the Fund's convertible securities and fixed income
securities tends to fall when prevailing interest rates rise. The value of
convertible securities also tends to change whenever the market value of the
underlying common or preferred stock fluctuates. Securities which are rated Baa
by Moody's or BBB by S&P may have fewer protective provisions than higher rated
securities. The issuer may have trouble making principal and interest payments
when difficult economic conditions exist.
The value of REITs will depend on the value of the underlying properties or the
underlying loans or interest. The value of REITs may decline when interest
rates rise. The value of a REIT will also be affected by the real estate market
and by the management of the REIT's underlying properties. REITs may be more
volatile or more illiquid than other types of securities.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and debt securities, including where the
Fund is investing for temporary defensive purposes, it could reduce the Fund's
potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
13
<PAGE>
CHASE VISTA EQUITY INCOME FUND
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year, five years and since inception.
It compares that performance to the S&P 500 Index, a widely recognized market
benchmark, and the Lipper Equity Income Funds Average, representing the average
performance of a universe of 210 actively managed equity income funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1994 -3.82%
1995 32.33%
1996 27.31%
1997 33.47%
1998 11.48%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 17.10%
- ------------------- ---------
4th quarter, 1998
- ------------------- ---------
WORST QUARTER -10.62%
- ------------------- ---------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
-1.82%.
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
SINCE
INCEPTION
PAST 1 YEAR PAST 5 YEARS (7/15/93)
<S> <C> <C> <C>
CLASS A SHARES 5.07% 17.83% 17.21%
CLASS B SHARES 5.94% 18.65% 18.05%
CLASS C SHARES 10.01% 18.86% 18.15%
S&P 500 INDEX 28.60% 24.05% 16.03%
LIPPER EQUITY INCOME FUNDS AVG. 10.89% 16.62% 22.68%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
Class B shares were first offered on May 7, 1996. Class C shares were first
offered on January 8, 1998. The performance for the period before Class B
shares were launched is based on the performance of Class A shares of the Fund
and the performance for the period before Class C shares were launched is based
on the performance of Class A and Class B shares. The actual returns of Class B
and Class C shares would have been lower than shown because Class B and Class C
shares have higher expenses than Class A shares.
14
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.40% 0.25% 0.80% 1.45%
CLASS B 0.40% 0.75% 0.80% 1.95%
CLASS C 0.40% 0.75% 0.80% 1.95%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
table does not reflect charges or credits which you might incur if you invest
through a financial institution.
15
<PAGE>
CHASE VISTA EQUITY INCOME FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $714 $1007 $1322 $2210
CLASS B SHARES** $698 $ 912 $1252 $2146***
CLASS C SHARES** $298 $ 612 $1052 $2275
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $198 $612 $1052 $2146***
CLASS C SHARES $198 $612 $1052 $2275
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
16
<PAGE>
CHASE VISTA LARGE CAP EQUITY FUND
The Fund's objective
The Fund seeks capital growth over the long term.
The Fund's main investment strategy
Under normal conditions, the Fund invests at least 80% of its total assets in
equity securities and at least 65% of its total assets in equity securities of
companies with market capitalization over $1 billion at the time of purchase
(large cap companies). Market capitalization is the total market value of a
company's shares. The companies the Fund chooses typically have a large number
of publicly held shares and high trading volumes.
The Funds' advisers do quantitative analysis and fundamental research to seek
to identify undervalued stocks which have the potential to increase in value.
The advisers first seek to find companies with the best earnings prospects and
then select companies which appear to have the most attractive values. The
advisers also seek to invest in sec-tors with good earnings prospects as well.
The advisers may look for value-oriented factors, such as a low price-to-
earnings or price-to-cash ratio, in determining whether a stock is undervalued.
In addition, they may also attempt to identify those undervalued companies
which will experience earnings growth or improved earnings characteristics.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still undervalued. This may include
17
<PAGE>
CHASE VISTA LARGE CAP EQUITY FUND
those securities which have appreciated to meet their target valuations.
The advisers try to spread their investments across a number of sectors.
However, they may change sector weightings in response to market developments.
The Fund may invest up to 20% of it total assets in foreign securities. These
investments may take the form of depositary receipts. It may also invest up to
20% of its total assets in convertible securities, which generally pay interest
or dividends and which can be converted into common or preferred stock.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these
investments. During unusual market conditions, the Fund may invest up to 20% of
its assets in U.S. Government debt securities.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
18
<PAGE>
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Large Cap Equity Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize
or expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
In early 1999, the European Monetary Union implemented a new currency called the
"euro." It is possible that the euro could
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
19
<PAGE>
CHASE VISTA LARGE CAP EQUITY FUND
increase volatility in financial markets, which could have a negative effect on
the value of shares of the Fund.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government debt, including where
the Fund is investing for temporary defensive purposes, it could reduce the
Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
20
<PAGE>
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year, five years and since inception.
It compares that performance to the S&P 500 Index, a widely recognized market
benchmark, and the Lipper Growth Funds Average, representing the average
performance of a universe of 932 actively managed growth funds.
The performance for the period before Class A and Class B shares were launched
in May 1996 is based on performance for Institutional Class shares of the Fund.
The actual returns of Class A and Class B would have been lower than shown
because Class A and Class B shares have higher expenses than Institutional
Class shares.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1991 31.24%
1992 5.20%
1993 8.63%
1994 0.22%
1995 31.03%
1996 22.54%
1997 32.63%
1998 21.69%
<TABLE>
<S> <C>
- ------------------- --------
BEST QUARTER 18.90%
- ------------------- --------
4th quarter, 1998
- ------------------- --------
WORST QUARTER -9.73%
- ------------------- --------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
1.69%.
21
<PAGE>
CHASE VISTA LARGE CAP EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
SINCE
INCEPTION
PAST 1 YEAR PAST 5 YEARS (11/30/90)
<S> <C> <C> <C>
CLASS A SHARES 14.70% 19.60% 17.87%
CLASS B SHARES 16.13% 20.58% 18.58%
CLASS C SHARES 20.21% 20.78% 18.59%
S&P 500 INDEX 28.60% 24.05% 21.85%
LIPPER GROWTH FUNDS AVG. 22.86% 18.63% 18.65%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
Class C shares were first offered on November 2, 1998. The performance for the
period before Class C shares were launched is based on the performance of
Institutional Class and Class B shares of the Fund. The actual returns of Class
C shares would have been lower than shown because Class C shares have higher
expenses than Institutional Class shares.
22
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.40% 0.25% 0.65% 1.30%
CLASS B 0.40% 0.75% 0.65% 1.80%
CLASS C 0.40% 0.75% 0.65% 1.80%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
actual management fee is currently expected to be 0.00%, other expenses are
expected to be 0.55% and the total annual Fund operating expenses are expected
not to exceed 0.80% for Class A shares and 1.30% for Class B shares and Class C
shares. That's because The Chase Manhattan Bank (Chase) and some of the Fund's
other service providers have volunteered not to collect a portion of their fees
and to reimburse others. Chase and these other service providers may end this
arrangement at any time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
23
<PAGE>
CHASE VISTA LARGE CAP EQUITY FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses are not waived and remain the same as shown
above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $700 $963 $1247 $2053
CLASS B SHARES** $683 $866 $1175 $1985***
CLASS C SHARES** $283 $566 $ 975 $2116
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $183 $566 $975 $1985***
CLASS C SHARES $183 $566 $975 $2116
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
The costs above are based on pre-waiver Annual Fund Operating Expenses.
24
<PAGE>
CHASE VISTA GROWTH AND INCOME FUND
The Fund's objective
The Fund seeks to provide capital growth over the long term and earn income from
dividends.
The Fund's main investment strategy
The Fund seeks to achieve its objective by investing all of its investable
assets in Growth and Income Portfolio, an open-end investment company which has
identical investment objectives and policies as the Fund. As a result, the
strategies and risks outlined below apply to Growth and Income Portfolio as well
as to the Fund.
Under normal market conditions, the Fund invests at least 80% of its total
assets in common stocks of a broad range of market capitalizations. Market
capitalization is the total market value of a company's shares.
The Funds' advisers do quantitative analysis and fundamental research to seek
to identify undervalued stocks which have the potential to increase in value.
The advisers first seek to find companies with the best earnings prospects and
then select companies which appear to have the most attractive values. The
advisers also seek to invest in sec-tors with good earnings prospects as well.
The advisers may look for value-oriented factors, such as a low
price-to-earnings or price-to-cash ratio, in determining whether a stock is
undervalued. In addition, they may also attempt to identify those undervalued
companies which will experience earnings growth or improved earnings
characteristics. The advisers may seek current income through various methods,
including investing in convertible securities and seeking to identify
25
<PAGE>
CHASE VISTA GROWTH AND INCOME FUND
companies with characteristics such as average
or above-average dividend yields.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still undervalued. This may include those securities which have appreciated
to meet their target valuations.
The Fund may invest up to 20% of it total assets in foreign securities. These
investments may take the form of depositary receipts. It may also invest up to
20% of its total assets in convertible securities, which generally pay interest
or dividends and which can be converted into common or preferred stock.
The Fund's equity holdings may also include real estate investment trusts
(REITs), which are pools of investments primarily in income-producing real
estate or loans related to real estate.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these
investments as well as in U.S. Government debt securities and investment grade
debt securities. During unusual market conditions, the Fund may invest up to
20% of its assets in U.S. Government debt securities.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
26
<PAGE>
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose on your
investment in the Fund. Here are some of the specific risks of investing in
Growth and Income Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate or if the
companies in which it invests do not pay dividends.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize
or expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
Unsponsored depository receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depository receipts.
In early 1999, the European Monetary Union implemented a new currency called the
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
27
<PAGE>
CHASE VISTA GROWTH AND INCOME FUND
"euro." It is possible that the euro could increasevolatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
The value of REITs will depend on the value of the underlying properties or the
underlying loans or interest. The value of REITs may decline when interest
rates rise. The value of a REIT will also be affected by the real estate market
and by the management of the REIT's underlying properties. REITs may be more
volatile or more illiquid than other types of securities.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and debt securities, including where the
Fund is investing for temporary defensive purposes, it could reduce the Fund's
potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund is not diversified. It may invest a greater percentage of its assets
in a particular issuer or group of issuers than a diversified fund would. That
makes the value of its shares more sensitive to economic problems among those
issuing the securities.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
28
<PAGE>
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year, five years and 10 years. It
compares that performance to the S&P 500 Index, a widely recognized market
benchmark, and the Lipper Growth and Income Funds Average, representing the
average performance of a universe of 718 actively managed growth and income
funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1989 56.85%
1990 0.16%
1991 59.07%
1992 15.06%
1993 12.99%
1994 -3.41%
1995 15.11%
1996 19.38%
1997 29.53%
1998 14.11%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 33.98%
- ------------------- ---------
1st quarter, 1991
- ------------------- ---------
WORST QUARTER -13.65%
- ------------------- ---------
3rd quarter, 1990
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
0.14%.
29
<PAGE>
CHASE VISTA GROWTH AND INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
CLASS A SHARES 7.55% 15.42% 21.89%
CLASS B SHARES 8.55% 15.98% 22.24%
CLASS C SHARES 10.67% 15.81% 21.06%
S&P 500 INDEX 28.60% 24.05% 19.19%
LIPPER GROWTH & INCOME FUNDS AVG. 15.61% 18.35% 15.52%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
Class B shares were first offered on November 4, 1993. Class C shares were
first offered on January 2, 1998. The performance for the period before Class B
shares were launched is based on the performance of Class A shares of the Fund
and the performance for the period before Class C shares were launched is based
on the performance of Class A and Class B shares. The actual returns of Class B
and Class C shares would have been lower than shown because Class B and Class C
shares have higher expenses than Class A shares.
30
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.40% 0.25% 0.61% 1.26%
CLASS B 0.40% 0.75% 0.61% 1.76%
CLASS C 0.40% 0.75% 0.61% 1.76%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
table does not reflect charges or credits which you might incur if you invest
through a financial institution.
31
<PAGE>
CHASE VISTA GROWTH AND INCOME FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $696 $952 $1227 $2010
CLASS B SHARES** $679 $854 $1154 $1942***
CLASS C SHARES** $279 $554 $ 954 $2073
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $179 $554 $954 $1942***
CLASS C SHARES $179 $554 $954 $2073
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
32
<PAGE>
CHASE VISTA FOCUS FUND
The Fund's objective
The Fund seeks capital growth
The Fund's main investment strategy
Under normal conditions, the Fund invests at least 80% of its total assets in
common stocks of established companies which have market capitalizations of more
than $1 billion at the time of purchase. Market capitalization is the total
market value of a company's shares. The Fund invests primarily in U.S.
companies, but may also invest in multinational companies that issue American
depositary receipts.
The Fund will seek to invest in the 25 companies identified by the advisers as
having the most favorable characteristics through a disciplined investment
approach. The Fund's advisers use a proprietary computer model developed in 1987
to select from among more than 900 companies with market capitalizations of more
than $1 billion. The computer model seeks to identify undervalued stocks which
have favorable characteristics to increase in value. The model uses both value
and growth/momentum factors. The model considers value factors such as a low
price- to-earnings or price-to-cash flow ratio and/or improving earnings
characteristics and growth factors such as projected earnings growth and risk-
adjusted price momentum. After the model identifies the stocks which appear to
have the most favorable characteristics, the advisers use a research-intensive
fundamental analysis to select the 25 stocks which they think have the most
potential for capital growth.
33
<PAGE>
CHASE VISTA FOCUS FUND
Fundamental research typically includes analysis of products and market niches,
evaluation of competitors, detailed financial analysis, meetings with company
management, and interviews with industry analysts. In doing their analysis, the
advisers will meet industry concentration limits by investing across a number of
sectors. However, they may change sector weightings in response to market
developments.
The advisers go through this process at least monthly to identify what they
believe are the best 25 companies and adjust their holdings as needed. The Fund
usually invests approximately equal amounts in each of the 25 companies.
However, it may change these weightings and hold assets of more or less than 25
companies. The advisers also use the process to frequently monitor the Fund's
investments. The process will identify which investments have lost value or
growth potential, and the advisers will re-evaluate such investments based on a
number of factors, including how a company's valuations and earnings compare to
its competitors.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these types of
investments. During unusual market conditions, the Fund may invest up to 20% of
its assets in U.S. Government obligations.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
34
<PAGE>
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in Fund. Here are some of the specific risks of investing in Focus
Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate.
Investments in foreign securities may be riskier than investments in the U.S.
They may be affected by political, social and economic instability. Some
securities may be harder to trade without incurring a loss and may be difficult
to convert into cash. There may be less public information available, differing
settlement procedures, or regulations and standards that don't match U.S.
standards. Some countries may nationalize or expropriate assets or impose
exchange controls. These risks increase when investing in issuers located in
developing countries.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government debt, including where the
Fund is investing for temporary defensive purposes,it could reduce the Fund's
potential return.
Derivatives may be more risky than other types of investments because they may
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
35
<PAGE>
CHASE VISTA FOCUS FUND
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund is not diversified. It may invest a greater percentage of its assets
in a particular issuer or group of issuers than a diversified fund would. That
makes the value of its shares more sensitive to economic problems among those
issuing the securities. Since the Fund invests in a relatively small number of
companies, a decrease in the value of any one of its investments can have a
large impact on the value of the entire portfolio.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
36
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDERS FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.40% 0.25% 1.25% 1.90%
CLASS B 0.40% 0.75% 1.25% 2.40%
CLASS C 0.40% 0.75% 1.25% 2.40%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on estimated expenses for the current fiscal year. The
actual management fee is currently expected to be 0.00%, other expenses are
expected to be 1.00% for Class A shares and, 1.10% for Class B and Class C
shares and the total annual Fund operating expenses are expected not to exceed
1.25% for Class A shares, 1.85% for Class B shares and 1.85% for Class C
shares. That's because The Chase Manhattan Bank (Chase) and some of the Fund's
other service providers have volunteered not to collect a portion of their fees
and to reimburse others. Chase and these other service providers may end this
arrangement at any time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
37
<PAGE>
CHASE VISTA FOCUS FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses are not waived and remain the same as shown
above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $757 $1138 $1542 $2669
CLASS B SHARES** $743 $1048 $1480 $2613***
CLASS C SHARES** $343 $ 748 $1280 $2736
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $243 $748 $1280 $2613***
CLASS C SHARES $243 $748 $1280 $2736
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
The costs above are based on pre-waiver Annual Fund Operating Expenses.
38
<PAGE>
CHASE VISTA CORE EQUITY FUND
The Fund's objective
The Fund aims to maximize total investment return with an emphasis on long-term
capital appreciation and current income while taking reasonable risk.
The Fund's main investment strategy
The Fund seeks to achieve its objective by investing all of its investable
assets in Core Equity Portfolio, an open-end investment company which has
identi- cal investment objectives and policies as the Fund. As a result, the
strategies and risks outlined below apply to Core Equity Portfolio as well as to
the Fund.
The Fund uses an active equity management style which focuses on strong earnings
momentum and profitability within the universe of S&P stocks. The fund normally
invests at least 70% of its total assets in equity securities.
The Fund seeks capital appreciation by emphasizing companies with a superior
record of earnings growth relative to the equity markets in general or a
projected rate of earnings growth that's greater than or equal to the equity
markets.
The Fund seeks to earn current income and manage risk by focusing on larger
companies with a stable record of earnings growth. In addition, it diversifies
its portfolio across all sectors of the S&P 500. The Fund also emphasizes
companies with return on assets and return on equity equal to or greater than
the equity markets.
The Fund may invest up to 30% of its total assets in foreign securities,
including Depositary Receipts. Its equity investments may include convertible
securities, which generally pay interest
39
<PAGE>
CHASE VISTA CORE EQUITY FUND
or dividends and which can be converted into common or preferred stock.
The Fund may also invest in investment grade debt securities. When the adviser
wishes to limit the Fund's equity investments because of adverse market
conditions, the Fund may temporarily invest any amount in investment grade debt
securities. There is no restriction on the maturity of the Fund's debt portfolio
or on any individual security in the portfolio.
The Fund may invest any portion of its assets that aren't in stocks or fixed
income securities in high quality money market instruments and repurchase
agreements. To temporarily defend its assets, the Fund may put any amount of
its assets in these types of investments.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
40
<PAGE>
The main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Core Equity Fund.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize
or expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
In early 1999, the European Monetary Union implemented a new currency called
the "euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the strength and value of the
U.S. dollar and, as a result, the value of shares of the Fund.
The market value of convertible securities and debt securities tends to decline
as interest rates increase. The value of convertible secu-
41
<PAGE>
CHASE VISTA CORE EQUITY FUND
rities also tends to change whenever the market value of the underlying common
or preferred stock fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government obligations, including
where the Fund is investing for temporary defensive purposes, it could reduce
the Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment. [CHASE VISTA LOGO]
[SIDE BAR]
An investment in the Fund
isn't a deposit of The Chase
Manhattan Bank and it isn't
insured or guaranteed by the
Federal Deposit Insurance
Corporation or any other
government agency.
[END SIDE BAR]
42
<PAGE>
The Fund's past performance
The performance results for Class A, Class B and Class C shares of the Fund are
based upon the performance of the Core Equity Portfolio. The Core Equity
Portfolio was formed after the Chase Core Equity Fund series of Mutual Fund
Investment Trust was converted to a master/feeder structure. The performance of
Core Equity Portfolio prior to the date of this prospectus is based upon the
performance of the Chase Core Equity Fund. For each class, the Core Equity
Portfolio's performance has been adjusted to reflect the class's historical
expenses (absent waivers and reimbursements) at the Fund's inception. Under
this method of calculating performance, the bar chart shows how the performance
of the Fund's Class A shares has varied from year to year. This provides some
indication of the risks of investing in the Fund. The table shows the average
annual return over the past year, five years and since inception. It compares
that performance to the S&P 500 Index. The S&P 500 Index is an unmanaged,
broad-based index of 500 companies and is generally considered to represent the
U.S. market.
The calculations assume that all dividends and distributions are reinvested in
the Fund. Some of the companies that provide services to the Fund have agreed
not to collect some expenses and to reimburse others. Without these agreements,
the performance figures would be lower than shown. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
1994 -4.79%
1995 24.77%
1996 21.78%
1997 32.57%
1998 30.19%
<TABLE>
<S> <C>
- ------------------- --------
BEST QUARTER 22.78%
- ------------------- --------
4th quarter, 1998
- ------------------- --------
WORST QUARTER -9.74%
- ------------------- --------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
7.13%.
43
<PAGE>
CHASE VISTA CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
CLASS A SHARES 22.70% 18.67% 17.49%
CLASS B SHARES 24.69% 19.38% 18.20%
CLASS C SHARES 28.69% 19.58% 18.20%
S&P 500 INDEX 28.60% 24.05% 19.19%
LIPPER GROWTH & INCOME FUNDS AVG. 15.61% 18.35% 15.52%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
44
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.75% 0.25% 0.76% 1.76%
CLASS B 0.75% 0.75% 0.76% 2.26%
CLASS C 0.75% 0.75% 0.76% 2,26%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
actual management fee is expected to be 0.64%, Distribution Fees for Class A
shares are expected to be 0.00%, Other expenses are expected to be 0.61% and
the total annual Fund operating expenses are expected not to exceed 1.25% for
Class A shares and 2.00% for Class B and Class C shares. That's because The
Chase Manhattan Bank (Chase) and some of the Fund's other service providers
have volunteered not to collect a portion of their fees and to reimburse
others. Chase and these other service providers may end this arrangement at any
time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
45
<PAGE>
CHASE VISTA CORE EQUITY FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $744 $1097 $1474 $2529
CLASS B SHARES** $729 $1006 $1410 $2470***
CLASS C SHARES** $329 $ 706 $1210 $2595
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $229 $706 $1210 $2470***
CLASS C SHARES $229 $706 $1210 $2595
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
46
<PAGE>
CHASE VISTA EQUITY GROWTH FUND
The Fund's objective
The Fund aims to provide capital appreciation. Producing current income is a
secondary objective.
The Fund's main investment strategy
The Fund seeks to achieve its objective by investing all of its investable
assets in Equity Growth Portfolio, an open-end investment company which has
identical investment objectives and policies as the Fund. As a result, the
strategies and risks outlined below apply to Equity Growth Portfolio as well as
to the Fund.
The Fund uses an active equity management style which focuses on strong
earnings momentum and profitability within the universe of growth-oriented
stocks. The Fund normally invests at least 70% of its total assets in equity
securities.
The Fund seeks capital appreciation by emphasizing the growth sectors of the
economy. It looks for companies with one or more of the following
characteristics:
o a projected earnings growth rate that's greater than or equal to the equity
markets in general
o a return on assets and return on equity equal to or greater than the equity
markets
o above market average price-earnings ratios
o below-average dividend yield
o above-average market volatility
o a market capitalization of more than $500 million.
47
<PAGE>
CHASE VISTA EQUITY GROWTH FUND
The Fund focuses on companies with strong earnings and high levels of
profitability as well as positive industry or company characteristics.
The Fund may invest up to 30% of its total assets in foreign securities,
including Depositary Receipts. Its equity investments may include convertible
securities, which generally pay interest or dividends and which can be converted
into common or preferred stock.
The Fund may also invest in investment grade debt securities. When the adviser
wishes to limit the Fund's equity investments because of adverse market
conditions, the Fund may temporarily invest any amount in investment grade debt
securities. There is no restriction on the maturity of the Fund's debt
portfolio or on any individual security in the portfolio.
The Fund may invest any portion of its assets that aren't in stocks or fixed
income securities in high quality money market instruments and repurchase
agreements. To temporarily defend its assets, the Fund may put any amount of
its assets in these types of investments.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
48
<PAGE>
The main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Equity Growth Fund.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The securities of mid-capitalization companies may trade less frequently and in
smaller volumes than securities of larger, more established companies. As a
result, share price changes may be more sudden or more erratic. Mid-sized
companies may have limited product lines, markets or financial resources, and
they may depend on a small management group.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize
or expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
Unsponsored depositary receipts may not provide as much information about the
underlying issuer and may not carry the same voting privileges as sponsored
depositary receipts.
In early 1999, the European Monetary Union implemented a new currency called
the
49
<PAGE>
CHASE VISTA EQUITY GROWTH FUND
"euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the strength and value of the
U.S. dollar and, as a result, the value of shares of the Fund.
The market value of convertible securities and debt securities tends to decline
as interest rates increase. The value of convertible securities also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government obligations, including
where the Fund is investing for temporary defensive purposes, it could reduce
the Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment. [CHASE VISTA LOGO]
[SIDE BAR]
An investment in the Fund
isn't a deposit of The Chase
Manhattan Bank and it isn't
insured or guaranteed by the
Federal Deposit Insurance
Corporation or any other
government agency.
[END SIDE BAR]
50
<PAGE>
The Fund's past performance
The performance results for Class A, Class B and Class C shares of the Fund are
based upon the performance of the Equity Growth Portfolio. The Equity Growth
Portfolio was formed after the Chase Equity Growth Fund series of Mutual Fund
Investment Trust was converted to a master/feeder structure. The performance of
Equity Portfolio Growth prior to the date of this prospectus is based upon the
performance of the Chase Equity Growth Fund. For each class, the Equity Growth
Portfolio's performance has been adjusted to reflect the class's historical
expenses (absent waivers and reimbursements) at the Fund's inception. Under
this method of calculating performance, the bar chart shows how the performance
of the Fund's Class A shares has varied from year to year. This provides some
indication of the risks of investing in the Fund. The table shows the average
annual return over the past year, five years and ten years. It compares that
performance to the S&P 500 Index and the S&P Barra Growth Index.
The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is
generally considered to represent the U.S. market. The S&P Barra Growth Index
includes S&P 500 Index securities that have high price-to-book ratios, low
dividend yields and high price/earnings ratios. It's a market-weighted index,
which means each stock affects the index in proportion to its market value.
The calculations assume that all dividends and distributions are reinvested in
the Fund. Some of the companies that provide services to the Fund have agreed
not to collect some expenses and to reimburse others. Without these agreements,
the performance figures would be lower than shown. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
1989 25.04%
1990 -2.14%
1991 31.00%
1992 5.74%
1993 1.79%
1994 -1.59%
1995 25.09%
1996 19.83%
1997 36.51%
1998 40.69%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 27.23%
- ------------------- ---------
4th quarter, 1998
- ------------------- ---------
WORST QUARTER -15.70%
- ------------------- ---------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
8.37%.
51
<PAGE>
CHASE VISTA EQUITY GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
CLASS A SHARES 32.60% 21.70% 16.50%
CLASS B SHARES 35.19% 22.47% 16.78%
CLASS C SHARES 39.19% 22.65% 16.69%
S&P 500 INDEX 28.60% 24.05% 19.19%
LIPPER GROWTH & INCOME FUNDS AVG. 15.61% 18.35% 15.52%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
52
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.75% 0.25% 0.69% 1.69%
CLASS B 0.75% 0.75% 0.69% 2.19%
CLASS C 0.75% 0.75% 0.69% 2.19%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
actual management fee is expected to be 0.71%, Distribution Fees for Class A
shares are expected to be 0.00%, Other expenses are expected to be 0.54% and
the total annual Fund operating expenses are expected not to exceed 1.25% for
Class A shares and 2.00% for Class B and Class C shares. That's because The
Chase Manhattan Bank (Chase) and some of the Fund's other service providers
have volunteered not to collect a portion of their fees and to reimburse
others. Chase and these other service providers may end this arrangement at any
time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
53
<PAGE>
CHASE VISTA EQUITY GROWTH FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $ 737 $ 1077 $ 1440 $2458
CLASS B SHARES** $ 722 $ 985 $ 1375 $2397***
CLASS C SHARES** $ 322 $ 685 $ 1175 $2524
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $ 222 $ 685 $ 1175 $2397***
CLASS C SHARES $ 222 $ 685 $ 1175 $2524
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
54
<PAGE>
CHASE VISTA CAPITAL GROWTH FUND
The Fund's objective
The Fund seeks capital growth over the long term.
The Fund's main investment strategy
The Fund seeks to achieve its objective by investing all of its investable
assets in Capital Growth Portfolio, an open-end investment company which has
identical investment objectives and policies as the Fund. As a result, the
strategies and risks outlined below apply to Capital Growth Portfolio as well as
to the Fund.
Under normal market conditions, the Fund invests at least 80% of its total
assets in a broad portfolio of common stocks of companies with market
capitalizations of $1 billion to $5 billion at the time of purchase. Market
capitalization is the total market value of a company's shares.
The Funds' advisers do quantitative analysis and fundamental research to seek
to identify undervalued stocks which have the potential to increase in value.
The advisers first seek to find companies with the best earnings prospects and
then select companies which appear to have the most attractive values. The
advisers also seek to invest in sectors with good earnings prospects as well.
The advisers may look for value-oriented factors, such as a low price-to-
earnings or price-to-cash ratio, in determining whether a stock is undervalued.
In addition, they may also attempt to identify those undervalued companies
which will experience earnings growth or improved earnings characteristics.
55
<PAGE>
CHASE VISTA CAPITAL GROWTH FUND
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still under- valued. This may include those securities which have appreciated
to meet their target valuations.
The Fund may invest up to 20% of it total assets in foreign securities. It may
also invest up to 20% of its total assets in convertible securities, which
generally pay interest or dividends and which can be converted into common or
preferred stock.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these types of
investments. During unusual market conditions, the Fund may invest up to 20% of
its assets in U.S. Government debt securities.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
56
<PAGE>
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Capital Growth Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The securities of small or mid-sized companies may trade less frequently and in
smaller volumes than securities of larger, more established companies. As a
result, share price changes may be more sudden or more erratic. Small and
mid-sized companies may have limited product lines, markets or financial
resources, and they may depend on a small management group.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to convert into cash. There may be less
public information available, differing settlement procedures, or regulations
and standards that don't match U.S. standards. Some countries may nationalize or
expropriate assets or impose exchange controls. These risks increase when
investing in issuers located in developing countries.
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
57
<PAGE>
CHASE VISTA CAPITAL GROWTH FUND
In early 1999, the European Monetary Union implemented a new currency called
the "euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government debt securities,
including where the Fund is investing for temporary defensive purposes, it
could reduce the Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund is not diversified. It may invest a greater percentage of its assets
in a particular issuer or group of issuers than a diversified fund would. That
makes the value of its shares more sensitive to economic problems among those
issuing the securities.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally.
[CHASE VISTA LOGO]
58
<PAGE>
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year, five years and 10 years. It
compares that performance to the Russell 2000 Index, a widely recognized market
benchmark, and the Lipper Mid-Cap Funds Average, representing the average
performance of a universe of 298 actively managed mid-cap funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1989 44.41%
1990 -5.98%
1991 70.74%
1992 12.95%
1993 20.17%
1994 -1.31%
1995 22.24%
1996 24.20%
1997 23.37%
1998 5.54%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 26.78%
- ------------------- ---------
1st quarter, 1991
- ------------------- ---------
WORST QUARTER -19.57%
- ------------------- ---------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
-5.40%.
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
<S> <C> <C> <C>
CLASS A SHARES -0.53% 12.95% 19.18%
CLASS B SHARES 0.26% 13.48% 19.58%
CLASS C SHARES 3.21% 13.53% 19.48%
RUSSELL 2000 INDEX -2.55% 11.87% 12.92%
LIPPER MID-CAP FUNDS AVG. 12.16% 14.87% 15.35%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
59
<PAGE>
CHASE VISTA CAPITAL GROWTH FUND
Class B shares were first offered on November 4, 1993. Class C shares were
first offered on January 2, 1998. The performance for the period before Class B
shares were launched is based on the performance of Class A shares of the Fund
and the performance for the period before Class C shares were launched is based
on the performance of Class A and Class B shares. The actual returns of Class B
and Class C shares would have been lower than shown because Class B and Class C
shares have higher expenses than Class A shares.
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.40% 0.25% 0.63% 1.28%
CLASS B 0.40% 0.75% 0.63% 1.78%
CLASS C 0.40% 0.75% 0.63% 1.78%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
table does not reflect charges or credits which you might incur if you invest
through a financial institution.
60
<PAGE>
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $698 $958 $1237 $2031
CLASS B SHARES** $681 $860 $1164 $1963***
CLASS C SHARES** $281 $560 $ 964 $2095
</TABLE>
IF YOU DON'T SELL YOUR SHARES:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $181 $560 $964 $1963***
CLASS C SHARES $181 $560 $964 $2095
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
61
<PAGE>
CHASE VISTA SMALL CAP EQUITY FUND
The Fund's objective
The Fund seeks capital growth over the long term.
The Fund's main investment strategy
Under normal conditions, the Fund invests at least 80% of its total assets in
equity securities and at least 65% of its total assets in equity securities of
companies with market capitalization of $1 billion or less at the time of
purchase (small cap companies). Market capitalization is the total market value
of a company's shares.
The Funds' advisers do quantitative analysis and fundamental research to seek
to identify undervalued stocks which have the potential to increase in value.
The advisers first seek to find companies with the best earnings prospects and
then select companies which appear to have the most attractive values. The
advisers also seek to invest in sec-tors with good earnings prospects as well.
The advisers may look for value-oriented factors, such as a low price-to-
earnings or price-to-cash ratio, in determining whether a stock is undervalued.
In addition, they may also attempt to identify those undervalued companies
which will experience earnings growth or improved earnings characteristics.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying stocks in order to determine whether the stock
is still undervalued. This may include those securities which have appreciated
to meet their target valuations.
62
<PAGE>
The Fund is currently closed to new investors. You may only buy shares in this
Fund through an account established before November 30, 1998. The Fund may
modify or eliminate this policy at any time.
The Fund may invest up to 20% of it total assets in foreign securities. It may
also invest up to 20% of its total assets in convertible securities, which
generally pay interest or dividends and which can be converted into common or
preferred stock.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these types of
investments. During unusual market conditions, the Fund may invest up to 20% of
its assets in U.S. Government obligations.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (but not its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
63
<PAGE>
CHASE VISTA SMALL CAP EQUITY FUND
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Small Cap Equity Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
Because the assets in this Fund are invested mostly in small companies, the
value of your investment is likely to fluctuate more dramatically than an
investment in a fund which invests mostly in larger companies. That's because
smaller companies trade less frequently and in smaller volumes, which may lead
to more volatility in the prices of the securities. They may have limited
product lines, markets or financial resources, and they may depend on a small
management group.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability.
Some securities may be harder to trade without incurring a loss and may be
difficult to convert into cash. There may be less public information available,
differing settlement procedures, or regulations and standards that don't match
U.S. standards. Some countries may nationalize or expropriate assets or
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
64
<PAGE>
impose exchange controls. These risks increase when investing in issuers
located in developing countries.
In early 1999, the European Monetary Union implemented a new currency called
the "euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government debt, including where
the Fund is investing for temporary defensive purposes, it could reduce the
Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund is not diversified. It may invest a greater percentage of its assets
in a particular issuer or group of issuers than a diversified fund would. That
makes the value of its shares more sensitive to economic problems among those
issuing the securities.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
65
<PAGE>
CHASE VISTA SMALL CAP EQUITY FUND
The Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year and since inception. It compares
that performance to the Russell 2000 Index, a widely recognized market
benchmark, and the Lipper Small Company Growth Funds Average, representing the
average performance of a universe of 583 actively managed small company funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1995 54.04%
1996 28.80%
1997 17.76%
1998 3.34%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 19.38%
- ------------------- ---------
4th quarter, 1998
- ------------------- ---------
WORST QUARTER -21.13%
- ------------------- ---------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
-10.54%.
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
SINCE
INCEPTION
PAST 1 YEAR (12/20/94)
<S> <C> <C>
CLASS A SHARES -2.60% 23.76%
CLASS B SHARES -2.40% 24.49%
RUSSELL 2000 INDEX -2.55% 15.58%
LIPPER SMALL COMPANY GROWTH FUNDS AVG. -0.31% 16.97%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B shares reflects the
deduction of the applicable contingent deferred sales load.
Class B shares were first offered March 28, 1995. The performance for the
period before Class B shares were launched is based on performance for Class A
shares of the Fund. The actual returns of Class B shares would have been lower
than shown because Class B shares have higher expenses than Class A shares.
66
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.65% 0.25% 0.46% 1.36%
CLASS B 0.65% 0.75% 0.68% 2.08%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
table does not reflect charges or credits which you might incur if you invest
through a financial institution.
67
<PAGE>
CHASE VISTA SMALL CAP EQUITY FUND
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses remain the same as shown above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $706 $981 $1277 $2116
CLASS B SHARES** $711 $952 $1319 $2226***
</TABLE>
IF YOU DON'T SELL YOUR SHARES:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $211 $652 $1119 $2226***
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
68
<PAGE>
CHASE VISTA SMALL CAP OPPORTUNITIES FUND
The Fund's objective
The Fund seeks capital growth over the long term.
The Fund's main investment strategy
Under normal conditions, the Fund invests at least 80% of its total assets in
equity securities and at least 65% of its total assets in equity securities of
companies with market capitalization of $1 billion or less at the time of
purchase. Market capitalization is the total market value of a company's shares.
Companies with market capitalizations of less than $1 billion are considered by
the Fund to be small cap companies.
The Fund's advisers do quantitative analysis and fundamental research in an
attempt to identify equities with the best combination of value and growth
among small capitalization stocks. The advisers may look for value-oriented
factors, such as a low price-to-earnings or price-to-cash ratio, in determining
whether a stock is undervalued. They may also look at growth-oriented factors,
such as projected earnings growth, improved earnings characteristics or
risk-adjusted price momentum.
In determining whether to sell a stock, the advisers will use the same type of
analysis that they use in buying a stock in order to determine if the stock is
still an attractive investment opportunity.
To maintain investment flexibility, the Fund may stop accepting new investors
once the Fund's net assets reach approximately $1 billion. If that happens,
existing shareholders would still be able to buy additional Fund shares.
69
<PAGE>
CHASE VISTA SMALL CAP OPPORTUNITIES FUND
The Fund may invest up to 20% of its total assets in foreign securities. It may
also invest up to 20% of its total assets in convertible securities, which
generally pay interest or dividends and which can be converted into common or
preferred stock.
Although the Fund intends to invest primarily in equity securities, under
normal market conditions it may invest up to 20% of its total assets in high
quality money market instruments and repurchase agreements. To temporarily
defend its assets, the Fund may put any amount of its assets in these types of
investments. During unusual market conditions, the Fund may invest up to 20% of
its assets in U.S. Government debt securities.
The Fund may invest in derivatives, which are financial instruments whose value
is based on another security, index or exchange rate. The Fund may use
derivatives to hedge various market risks or to increase the Fund's income or
gain.
The Fund may change any of these investment policies (including its investment
objective) without shareholder approval. [CHASE VISTA LOGO]
[SIDE BAR]
FREQUENCY OF TRADING
The Fund may trade securities
actively, which could increase
transaction costs (and lower
performance) and increase your
taxable dividends.
[END SIDE BAR]
70
<PAGE>
The Funds' main investment risks
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some of the specific risks of investing in
Small Cap Opportunities Fund.
The Fund may not achieve its objective if the advisers' expectations regarding
particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
Because the assets in this Fund are invested mostly in smaller companies, the
value of your investment is likely to fluctuate more dramatically than an
investment in a fund which invests mostly in larger companies. That's because
smaller companies trade less frequently and in smaller volumes, which may lead
to more volatility in the prices of the securities. They may have limited
product lines, markets or financial resources, and they may depend on a small
management group.
The Fund may not achieve its objective if securities which the advisers believe
are undervalued do not appreciate as much as the advisers anticipate or if
companies which the advisers believe will experience earnings growth do not
grow as expected.
Investments in foreign securities may be riskier than investments in the U.S.
Because foreign securities are usually denominated in foreign currencies, the
value of the Fund's portfolio may be influenced by currency exchange rates and
exchange control regulations. Foreign securities may be affected by political,
social and economic instability. Some securities may be harder to trade without
incurring a loss and may be difficult to
[SIDE BAR]
Investments in the Fund are
not bank deposits or
obligations of, or guaranteed
or endorsed by, The Chase
Manhattan Bank are not insured
or guaranteed by the Federal
Deposit Insurance Corporation,
Federal Reserve Board or any
other government agency.
[END SIDE BAR]
71
<PAGE>
CHASE VISTA SMALL CAP OPPORTUNITIES FUND
convert into cash. There may be less public information available, differing
settlement procedures, or regulations and standards that don't match U.S.
standards. Some countries may nationalize or expropriate assets or impose
exchange controls. These risks increase when investing in issuers located in
developing countries.
In early 1999, the European Monetary Union implemented a new currency called
the "euro." It is possible that the euro could increase volatility in financial
markets, which could have a negative effect on the value of shares of the Fund.
The market value of convertible securities tends to decline as interest rates
increase, and increase as interest rates decline. Their value also tends to
change whenever the market value of the underlying common or preferred stock
fluctuates.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and U.S. Government debt, including where
the Fund is investing for temporary defensive purposes, it could reduce the
Fund's potential return.
Derivatives may be more risky than other types of investments because they may
respond more to changes in economic conditions than other types of investments.
If they are used for non-hedging purposes, they could cause losses that exceed
the Fund's original investment.
The Fund is not diversified. It may invest a greater percentage of its assets
in a particular issuer or group of issuers than a diversified fund would. That
makes the value of its shares more sensitive to economic problems among those
issuing the securities.
The Fund, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service
providers to do the same, but there's no guarantee these systems will work
properly. Year 2000 problems could also hurt issuers whose securities the Fund
holds or securities markets generally. [CHASE VISTA LOGO]
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<PAGE>
Fund's past performance
This section shows the Fund's performance record. The bar chart shows how the
performance of the Fund's Class A shares has varied from year to year. This
provides some indication of the risk of investing in the Fund. The table shows
the average annual return over the past year and since inception. It compares
that performance to the Russell 2000 Index, a widely recognized market
benchmark, and the Lipper Small Company Growth Funds Average, representing the
average performance of a universe of 583 actively managed small company funds.
The calculations assume that all dividends and distributions are reinvested in
the Fund. [CHASE VISTA LOGO]
YEAR-BY-YEAR RETURNS
Past performance does not predict how
this Fund will perform in the future.
The performance figures in the bar chart do not reflect any deduction for the
front-end sales load which is assessed on Class A shares. If the load were
reflected, the performance figures would have been lower.
1998 13.46%
<TABLE>
<S> <C>
- ------------------- ---------
BEST QUARTER 22.93%
- ------------------- ---------
4th quarter, 1998
- ------------------- ---------
WORST QUARTER -18.98%
- ------------------- ---------
3rd quarter, 1998
</TABLE>
The total return for the Fund from
January 1, 1999 to March 31, 1999 was
-7.58%.
AVERAGE ANNUAL TOTAL RETURNS
For the periods ending December 31, 1998:
<TABLE>
<CAPTION>
SINCE
INCEPTION
PAST 1 YEAR (5/19/97)
<S> <C> <C>
CLASS A SHARES 6.94% 24.71%
CLASS B SHARES 7.61% 26.33%
CLASS C SHARES 11.54% 28.40%
RUSSELL 2000 INDEX -2.55% 12.84%
LIPPER SMALL COMPANY GROWTH FUNDS AVG. -0.31% 15.36%
</TABLE>
The performance for the Class A shares reflects the deduction of the maximum
front end sales load and the performance for Class B and Class C shares
reflects the deduction of the applicable contingent deferred sales load.
Class C shares were first offered on January 8, 1998. The performance for the
period before Class C shares were launched is based on the performance for
Class B shares of the Fund.
73
<PAGE>
CHASE VISTA SMALL CAP OPPORTUNITIES FUND
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MAXIMUM SALES CHARGE MAXIMUM DEFERRED SALES
(LOAD) WHEN YOU BUY CHARGE (LOAD) SHOWN AS
SHARES, SHOWN AS % OF THE LOWER OF ORIGINAL PURCHASE
OFFERING PRICE(1) PRICE OR REDEMPTION PROCEEDS
<S> <C> <C>
CLASS A SHARES 5.75% NONE
CLASS B SHARES NONE 5.00%
CLASS C SHARES NONE 1.00%
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)*
<TABLE>
<CAPTION>
TOTAL ANNUAL
MANAGEMENT DISTRIBUTION OTHER FUND OPERATING
CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
CLASS A 0.65% 0.25% 0.94% 1.84%
CLASS B 0.65% 0.75% 0.94% 2.34%
CLASS C 0.65% 0.75% 0.94% 2.34%
</TABLE>
(1)The offering price is the net asset value of the shares purchased plus any
sales charge.
*The table is based on expenses incurred in the most recent fiscal year. The
actual management fee is currently expected to be 0.55%, other expenses are
expected to be 0.70% for Class A shares and the total annual Fund operating
expenses are expected not to exceed 1.50% for Class A shares, 2.24% for Class B
shares and 2.24% for Class C shares. That's because The Chase Manhattan Bank
(Chase) and some of the Fund's other service providers have volunteered not to
collect a portion of their fees and to reimburse others. Chase and these other
service providers may end this arrangement at any time.
The table does not reflect charges or credits which you might incur if you
invest through a financial institution.
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<PAGE>
EXAMPLE This example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. The example assumes:
o you invest $10,000
o you sell all your shares at the end of the period
o your investment has a 5% return each year, and
o the Fund's operating expenses are not waived and remain the same as shown
above.
Although your actual costs may be higher or lower, based on these assumptions:
IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES* $751 $1120 $1513 $2609
CLASS B SHARES** $737 $1030 $1450 $2552***
CLASS C SHARES** $337 $ 730 $1250 $2676
</TABLE>
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS B SHARES $237 $730 $1250 $2552***
CLASS C SHARES $237 $730 $1250 $2676
</TABLE>
*Assumes sales charge is deducted when shares are purchased.
**Assumes applicable deferred sales charge is deducted when shares are sold.
***Reflects conversion of Class B shares to Class A shares after they have been
owned for eight years.
The costs above are based on pre-waiver Annual Fund Operating Expenses.
75
<PAGE>
FUNDS' INVESTMENT ADVISER
THE YEAR 2000
The Funds, like any business, could be affected if the computer systems on which
it relies fail to properly process information beginning on January 1, 2000. The
Funds' advisers are updating their own systems and encouraging service providers
to do the same, but there's no guarantee these systems will work properly. Year
2000 problems could also hurt issuers whose securities the Funds hold or
securities markets generally.
The Chase Manhattan Bank (Chase) is the investment adviser to the Funds. Chase
is a wholly owned subsidiary of The Chase Manhattan Corporation (CMC), a bank
holding company. Chase provides the Funds with investment advice and
supervision. Chase and its predecessors have more than a century of money
management experience. Chase is located at 270 Park Avenue, New York, NY 10017
Chase is entitled to receive an annual management fee at the rate of:
o 0.40% of the average daily net assets of the Equity Income Fund, Large Cap
Equity Fund, Growth and Income Fund, Focus Fund and Capital Growth fund,
o 0.50% of the average daily net assets of the Balanced Fund and
o 0.65% of the average daily net assets of the Small Cap Equity Fund and
Small Cap Opportunities Fund.
Chase Asset Management Inc. (CAM) is the sub-adviser to the Funds. CAM is a
wholly-owned subsidiary of Chase. It makes the day-to-day investment decisions
for the Funds. CAM provides discretionary investment services to institutional
clients and is located at 1211 Avenue of the Americas New York, NY 10036.
76
<PAGE>
The portfolio managers
David Klassen, Director, U.S. Funds Management and Equity Research at Chase, is
responsible for asset allocation and investment strategy for Chase's domestic
equity portfolios. Before joining Chase in 1992, Mr. Klassen was a Vice
President and Portfolio Manager at Dean Witter Reynolds, responsible for
managing several mutual funds and other accounts.
BALANCED FUND
Greg Adams and Leonard Lovito, Vice Presidents and Senior Portfolio Managers at
Chase, are responsible for the management of the Fund's portfolio. Mr. Adams
has managed the equity portion of the Fund since its inception in 1993. He
joined Chase in 1987 and has been responsible for overseeing the proprietary
computer model program used in the U.S. equity selection process.
Mr. Lovito has been responsible for the debt portion of the Fund since July
1998. From 1984 to June 1998, Mr. Lovito was a Vice President and Portfolio
Manager at J.W. Seligman & Co., Inc, where he was responsible for managing a
number of institutional portfolios and mutual funds. Before that, Mr. Lovito
was in the Investment Department at Dime Savings Bank of New York.
EQUITY INCOME FUND
Tony Gleason, a Vice President of Chase, has been responsible for the
day-to-day management of the Fund's portfolio since September 1995. Mr. Gleason
joined Chase in 1995. Prior to joining Chase, Mr. Gleason spent nine years as a
Vice President and Portfolio Manager with Prudential Equity Management.
Bill Ellsworth, Senior Research Analyst and Associate Portfolio Manager at
Chase, participates in the management of the Fund. Mr. Ellsworth has been
employed by Chase since 1992.
LARGE CAP EQUITY FUND
Mr. Adams has been primarily responsible for the management of the Fund since
February 1994.
GROWTH AND INCOME FUND
Mr. Adams and Diane Sobin, a Senior Portfolio Manager at Chase, are responsible
for the day-to-day management of the Growth and Income Portfolio. Mr. Adams has
been a manager of the Portfolio since March 1995.
Ms. Sobin joined Chase in 1997 and has been a manager of the portfolio since
July 1997. Prior to joining Chase, Ms. Sobin was a senior portfolio manager at
Oppenheimer Funds Inc., where she managed mutual funds. Prior to 1995, Ms.
Sobin was a senior portfolio manager at Dean Witter Discover, where she managed
several mutual funds and other accounts.
FOCUS FUND
Mr. Klassen and Mr. Adams have been responsible for management of the Fund
since inception.
Mr. Klassen and Mr. Adams work under the direction of Pamela Carlton, Director
of Equity research at Chase. Ms. Carlton joined Chase in 1996. For the 14 years
prior to joining Chase, she held various positions at Morgan Stanley & Co.
Inc., including, most recently, Director of global equity
77
<PAGE>
FUNDS' INVESTMENT ADVISER
research operations, responsible for global coordination of research. From
1994-95, Ms. Carlton was the Co-director of U.S. equity research, where she
co-managed sellside research. From 1992-94, she was a principal in the fixed
income private placement group responsible for structuring, pricing and selling
debt private placements.
CAPITAL GROWTH FUND
Mr. Klassen and Mr. Gleason, have been responsible for the management of the
Capital Growth Portfolio since September 1995.
SMALL CAP EQUITY FUND
Jill Greenwald, a Vice President of Chase, and Mr. Klassen have managed the
Fund since its inception.
Ms. Greenwald joined Chase in 1993, specializing in small capitalization
issues. Before that, she was a Director for Prudential Equity Investors and a
Senior Analyst for Fred Alger Management, Inc.
SMALL CAP OPPORTUNITIES FUND
Ms. Greenwald and Ronald Zibelli, a Vice President and Senior Portfolio Manager
at Chase, are responsible for the management of the Fund.
Mr. Zibelli joined Chase in June 1996. Most recently, he held a similar
position at The Portfolio Group, Inc. for one year. Prior to that, he was
Director of Equity Research and Portfolio Manager at Princeton Bank & Trust
Company for seven years and began his career at J.P. Morgan Investment
Management.
78
<PAGE>
HOW YOUR ACCOUNT WORKS
About sales charges
There's a sales charge to buy shares in the Funds. There are also ongoing
charges that all investors pay as long as they own their shares, as explained
later.
You have a choice of three different kinds of charges. Class A shares have a
charge you pay when you invest. Class B shares have a deferred sales charge.
You don't pay any charge when you buy the Class B shares, but you may have to
pay a charge when you sell them, depending on how long you hold them. Class C
shares also have a deferred sales charge you may have to pay if you sell your
shares within one year of buying them.
Small Cap Equity Fund, is available in either Class A or Class B shares in this
prospectus. The other Funds are available in Class A, Class B or Class C shares
in this prospectus.
There are a number of plans and special discounts which can decrease or even
eliminate these charges.
This section explains how the three sales charges work.
79
<PAGE>
HOW YOUR ACCOUNT WORKS
CLASS A SHARES
The initial sales charge is deducted directly from the money you invest. As the
table shows, the charge is lower the more you invest. The public offering price
of Class A shares is the net asset value plus the initial sales charge. Net
asset value is the value of everything a Fund owns, minus everything it owes,
divided by the number of shares held by investors. The Funds receive the net
asset value.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
AS % OF THE
OFFERING AS % OF
AMOUNT OF PRICE NET AMOUNT
INVESTMENT PER SHARE INVESTED
<S> <C> <C>
LESS THAN
$100,000 5.75% 6.10%
$100,000
BUT UNDER
$250,000 3.75% 3.90%
$250,000
BUT UNDER
$500,000 2.50% 2.56%
$500,000
BUT UNDER
$1 MILLION 2.00% 2.04%
</TABLE>
There is no sales charge for investments of $1 million or more.
CLASS B SHARES
The deferred sales charge is deducted directly from your assets when you sell
your shares. It's a percentage of the original purchase price or the current
value of the shares, whichever is lower. As the table shows, the deferred sales
charge gets lower the longer you hold the shares and disappears altogether
after six years. Class B shares automatically convert into Class A shares at
the beginning of the ninth year after you bought them.
<TABLE>
<CAPTION>
YEAR DEFERRED SALES CHARGE
<S> <C>
1 5%
2 4%
3 3%
4 3%
5 2%
6 1%
7 None
8 None
</TABLE>
We calculate the deferred sales charge from the month you buy your shares. We
always sell the shares with the lowest deferred sales charge first. Shares
acquired by reinvestment distribution can be sold without a deferred sales
charge.
CLASS C SHARES
The deferred sales charge is deducted directly from your assets when you sell
your shares. It's equal to 1% of the original purchase price or the current
value of the shares, whichever is lower. The deferred sales charge on Class C
shares disappears altogether after one year. We calculate the deferred sales
charge from the month you buy your charges. We always sell the shares with the
lowest deferred sales charge first.
Like Class B shares, Class C shares have higher combined distribution and
service fees. Unlike Class B shares, Class C shares are never converted to
Class A shares. That means you keep paying the higher service and distribution
fees as long as you hold them. Over the long term, this can add up to higher
total fees than either Class A or Class B shares.
80
<PAGE>
GENERAL
Vista Fund Distributors Inc. (VFD) is the distributor for the Funds. It's a
subsidiary of BISYS Group, Inc. and is not affiliated with Chase. Each Fund has
adopted Rule 12b-1 distribution plans under which it pays annual distribution
fees of up to 0.25% of the average daily net assets attributed to Class A
shares and up to 0.75% of the average daily net assets attributed to Class B
shares. In addition, each Fund except the Small Cap Equity Fund has adopted a
Rule 12b-1 distribution plan under which it pays annual distribution fees of up
to 0.75% of the average daily net assets attributed to Class C shares.
This payment covers such things as compensation for services provided by
broker-dealers and expenses connected to the sale of shares. Payments are not
tied to actual expenses incurred.
Because 12b-1 expenses are paid out of a Fund's assets on an ongoing basis,
over time these fees will increase the cost of your investment and may cost you
more than other types of sales charges.
WHICH CLASS OF SHARES IS BEST?
Your decision about which class of shares to buy depends on a number of
factors, including the amount you're buying and how long you intend to hold
your shares. If you have no plans to sell your shares for at least six years
and you don't want to pay an up-front sales charge, you may consider buying
Class B shares.
Class A shares may be a good choice if you qualify to have the sales charge
reduced or eliminated. In almost all cases, if you plan to buy $250,000 of
shares or more, Class A is the most economical choice.
Class C shares may be best if you prefer not to pay an initial sales charge and
you're not sure how long you intend to hold your investment.
You should also consider the distribution and service fees, which are lower for
Class A shares. These fees appear in the table called Annual Fund operating
expenses (expenses that are deducted from Fund assets) for each Fund.
Your investment representative may be able to advise you about the best class
of shares for you. [CHASE VISTA LOGO]
Buying Fund shares
You can buy shares three ways:
Through your investment representative
Tell your representative which Funds you want to buy and he or she will contact
us. Your representative may charge you a fee and may offer additional services,
such as special purchase and redemption programs. Some representatives charge a
single fee that covers all services. Your representative may impose different
minimum investments and earlier deadlines to buy and sell shares.
Through the Chase Vista Funds Service Center
Call 1-800-34-VISTA
81
<PAGE>
HOW YOUR ACCOUNT WORKS
Or
Complete the application form and mail it along with a check for the amount you
want to invest to:
Chase Vista Funds Service Center,
P.O. Box 419392
Kansas City, MO 64141-6392
Through a Systematic Investment Plan
You can make regular automatic purchases of at least $100. See There's more on
the Systematic Investment Plan later in this document.
Whether you choose Class A, Class B or Class C shares, the price of the shares
is based on the net asset value per share (NAV). NAV is the value of everything
a Fund owns, minus everything it owes, divided by the number of shares held by
investors. You'll pay the public offering price, which is based on the next NAV
calculated after the Chase Vista Funds Service Center accepts your
instructions. Each Fund calculates its NAV once each day at the close of
regular trading on the New York Stock Exchange. Each Fund generally values its
assets at their market value but may use fair value if market prices are
unavailable. The Chase Vista Funds Service Center will not accept your order
until it is in proper form. An order is in proper form only after payment is
converted into federal funds.
The Chase Vista Funds Service Center accepts purchase orders on any business
day that the New York Stock Exchange is open. Normally, if the Chase Vista
Funds Service Center receives your order in proper form by the close of regular
trading on the New York Stock Exchange, we'll process your order at that day's
price.
You must provide a Social Security Number or Taxpayer Identification Number
when you open an account. Each Fund has the right to refuse any purchase order
or to stop offering shares for sale at any time.
TO OPEN AN ACCOUNT, BUY OR SELL SHARES OR GET FUND INFORMATION, CALL:
THE CHASE VISTA FUNDS SERVICE CENTER
1-800-34-VISTA
MINIMUM INVESTMENTS
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENT INVESTMENTS
<S> <C> <C>
REGULAR
ACCOUNT $ 2,500 $ 100
SYSTEMATIC
INVESTMENT
PLAN $ 1,000 $ 100
IRAS $ 1,000 $ 100
SEP-IRAS $ 1,000 $ 100
EDUCATION
IRAS $ 500 $ 100
</TABLE>
Make your check out to Chase Vista Funds in U.S. dollars. We won't accept
credit cards, cash, or checks from a third party. You cannot sell your shares
until your check has cleared, which could take more than 15 calendar days. If
you buy through an Automated Clearing House, you can't sell your shares until
the payment clears. That could take more than seven business days.
Your purchase will be canceled if your check doesn't clear and you'll be
responsible for any expenses and losses to the Funds. Orders by wire will be
cancelled if the Chase Vista
82
<PAGE>
Funds Service Center doesn't receive payment by 4:00 p.m. Eastern time on the
day you buy.
If you're planning to exchange, sell or transfer shares to another person
shortly after buying the shares, you should pay by certified check to avoid
delays. The Funds will not issue certificates for Class A or Class C shares
unless you request them and they will not issue certificates for Class B
shares.
Selling Fund shares
You can sell your shares three ways:
Through your investment representative
Tell your representative which Funds you want to sell. He or she will send the
necessary documents to the Chase Vista Funds Service Center. Your
representative might charge you for this service.
Through the Chase Vista Funds Service Center
Call 1-800-34-VISTA. We will mail you a check or send the proceeds via
electronic transfer or wire. You cannot sell by phone if you have changed your
address of record within the previous 30 days. If you sell $25,000 or more
worth of Funds by phone, we'll send it by wire only to a bank account on our
records.
We charge $10 for each transaction by wire.
Or
Send a signed letter with your instructions to:
Chase Vista Funds Service Center,
P.O. Box 419392
Kansas City, MO 64141-6392
Through a Systematic
Withdrawal Plan
You can automatically sell as little as $50 worth of shares. See Shareholder
Services for details.
You can sell your shares on any day the Chase Vista Funds Service Center is
accepting purchase orders. You'll receive the next NAV calculated after the
Chase Vista Funds Service Center accepts your order, less any applicable sales
charges.
Under normal circumstances, if the Chase Vista Funds Service Center receives
your order before the close of regular trading on the New York Stock Exchange,
each Fund will send you the proceeds the next business day. We won't accept an
order to sell shares if the Fund hasn't collected your payment for the shares.
Each Fund may stop accepting orders to sell and may postpone payments for more
than seven days, as federal securities laws permit.
You'll need to have signatures guaranteed for all registered owners or their
legal representative if:
o you want to sell shares with a net asset value of $100,000 or more
o you want your payment sent to an address other than the one we have in our
records.
We may also need additional documents or a letter from a surviving joint owner
before selling the shares. Contact the Chase Vista Funds Service Center for
more details.
83
<PAGE>
HOW YOUR ACCOUNT WORKS
Exchanging Fund shares
You can exchange your shares for shares of the same class of certain other
Chase Vista Funds at net asset value, beginning 15 days after you buy your
shares. For tax purposes, an exchange is treated a sale of Fund shares. This
will generally result in a capital gain or loss to you.
You can exchange your shares three ways:
Through your investment representative
Tell your representative which Funds you want to exchange from and to. He or
she will send the necessary documents to the Chase Vista Funds Service Center.
Your representative might charge you for this service.
Through the Chase Vista Funds Service Center
Call 1-800-34-VISTA to ask for details.
Through a Systematic
Exchange Plan
You can automatically exchange money from one Chase Vista account to another of
the same class. Call the Chase Vista Funds Service Center for details.
If you exchange Class B shares of a Fund for Class B shares of another Chase
Vista Fund, or Class C for Class C, you will not pay a deferred sales charge
until you sell the shares of the other Fund. The amount of deferred sales
charge will be based on when you bought the original shares, not when you made
the exchange. Carefully read the prospectus of the Fund you want to buy before
making an exchange. You'll need to meet any minimum investment requirements.
You should not exchange shares as means of short-term trading as this could
increase management cost and affect all shareholders. We reserve the right to
limit the number of exchanges or to refuse an exchange. We may also terminate
this privilege. We charge an administration fee of $5 for each exchange if you
make more than 10 exchanges in a year or three in a quarter. See the Statement
of Additional Information to find out more about the exchange privilege.
[CHASE VISTA LOGO]
Other information
concerning the Funds
We may close your account if the balance falls below $500 because you've sold
shares. We may also close the account if you are in the Systematic Investment
Plan and fail to meet investment minimums over a 12-month period. We'll give
you 60 days notice before closing your account.
Unless you indicate otherwise on your account application, we are authorized to
act on redemption and transfer instructions received by phone. If someone
trades on your account by phone, we'll ask that person to confirm your account
registration and address to make sure they match those you provided us. If
84
<PAGE>
they give us the correct information, we are generally authorized to follow
that person's instructions. We'll take all reasonable precautions to confirm
that the instructions are genuine. Investors agree that they will not hold a
Fund liable for any loss or expenses from any sales request, if the Fund takes
reasonable precautions. The Funds will be liable for any losses to you from an
unauthorized sale or fraud against you if we do not follow reasonable
procedures.
You may not always reach the Chase Vista Funds Service Center by telephone.
This may be true at times of unusual market changes and shareholder activity.
You can mail us your instructions or contact your investment representative or
agent. We may modify or cancel the sale of shares by phone without notice.
The Funds have agreements with certain shareholder servicing agents (including
Chase) under which the shareholder servicing agents have agreed to provide
certain support services to their customers. For performing these services,
each shareholder servicing agent receives an annual fee of up to 0.25% of the
average daily net assets of the Class A, Class B and Class C shares of the
Funds held by investors by the shareholder servicing agent.
Chase and/or VFD may, at their own expense, make additional payments to certain
selected dealers or other shareholder servicing agents for performing
administrative services for their customers. The amount may be up to an
additional 0.10% annually of the average net assets of the Fund attributable to
shares of the Funds held by customers of those shareholder servicing agents.
Each Fund may issue multiple classes of shares. This prospectus relates only to
Class A and Class B shares of the Funds and Class C shares of all Funds except
the Small Cap Equity Fund. Each class may have different requirements for who
may invest, and may have different sales charges and expense levels. A person
who gets compensated for selling Fund shares may receive a different amount for
each class.
Chase and its affiliates and the Funds and their affiliates, agents and
subagents may share information about shareholders and their accounts with each
other and with others unless this sharing is prohibited by contract. The
information can be used for a variety of purposes, including offering
investment and insurance products to shareholders. [CHASE VISTA LOGO]
Distributions and taxes
The Funds can earn income and they can realize capital gain. The Funds deduct
any expenses then pay out these earnings to shareholders as distributions.
The Balanced Fund, Equity Income Fund, Large Cap Equity Fund and Growth and
Income Fund distribute
85
<PAGE>
HOW YOUR ACCOUNT WORKS
any net investment income at least quarterly. The Focus Fund, Capital Growth
Fund, Small Cap Equity Fund and Small Cap Opportunities Fund distribute any net
investment income at least semi-annually. Net capital gain is distributed
annually. You have three options for your distributions. You may:
o reinvest all of them in additional Fund shares without a sales charge;
o take distributions of net investment income in cash or as a deposit in a
pre-assigned bank account and reinvest distributions of net capital gain
in additional shares; or
o take all distributions in cash or as a deposit in a pre-assigned bank
account.
If you don't select an option when you open your account, we'll reinvest all
distributions. If your distributions are reinvested, they will be in the form
of shares of the same class. The taxation of dividends won't be affected by the
form in which you receive them.
Dividends of net investment income are usually taxable as ordinary income at
the federal, state and local levels. The state or municipality where you live
may not charge you state and local taxes on tax-exempt interest earned on
certain bonds. Dividends earned on bonds issued by the U.S. government and its
agencies may also be exempt from some types of state and local taxes.
If you receive distributions of net capital gain, the tax rate will be based on
how long a Fund held a particular asset, not on how long you have owned your
shares. If you buy shares just before a distribution, you will pay tax on the
entire amount of the taxable distribution you receive, even though the NAV will
be higher on that date because it includes the distribution amount.
The Balanced Fund and Equity Income Fund expect that their distributions will
consist primarily of ordinary income. The Growth and Income Fund, Focus Fund,
Capital Growth Fund, Small Cap Equity Fund and Small Cap Opportunities Fund
expect that their distributions will consist primarily of capital gains.
Early in each calendar year, each Fund will send you a notice showing the
amount of distributions you received in the preceding year and the tax status
of those distributions.
The above is a general summary of tax implications of investing in the Funds.
Please consult your tax adviser to see how investing in a Fund will affect your
own tax situation. [CHASE VISTA LOGO]
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<PAGE>
SHAREHOLDER SERVICES
SYSTEMATIC INVESTMENT PLAN
You can regularly invest $100 or more in the first or third week of any month.
The money is automatically deducted from your checking or savings account.
You can set up a plan when you open an account by completing the appropriate
section of the application. Current shareholders can join by sending a signed
letter and a deposit slip or void check to the Chase Vista Funds Service
Center. Call 1-800-34-VISTA for complete instructions.
SYSTEMATIC WITHDRAWAL PLAN
You can make regular withdrawals of $50 or more ($100 or more for Class B
accounts). You can have automatic withdrawals made monthly, quarterly or
semiannually. Your account must contain at least $5,000 to start the plan. Call
1-800-34-VISTA for complete instructions.
SYSTEMATIC EXCHANGE
You can transfer assets automatically from one Vista account to another on a
regular basis. It's a free service.
FREE EXCHANGE PRIVILEGE
You can exchange money between Chase Vista Funds in the same class without
charge. This allows you to adjust your investments as your objectives change.
REINSTATEMENT PRIVILEGE
You can buy back Class A shares you sell, without paying a sales charge, as
long as you make a request in writing within 90 days of the sale. If you sell
Class B shares or Class C on which you've paid a deferred sales charge, you can
use the proceeds to buy Class A shares without a sales charge. You must buy the
class A shares within 90 days of selling the Class B or Class C shares.
[CHASE VISTA LOGO]
87
<PAGE>
SHAREHOLDER SERVICES
What the terms mean
COLLATERALIZED MORTGAGE
OBLIGATIONS: debt securities that are collateralized by a portfolio of
mortgages or mortgage-backed securities.
DEBT SECURITIES: securities used by issuers, such as governmental entities
and corporations, to borrow money. The issuer usually pays a fixed, variable or
floating rate of interest and repays the amount borrowed at the maturity date
of the security. However, if a borrower issues a zero coupon debt security, it
does not make regular interest payments.
DEPOSITARY RECEIPTS: instruments which are typically issued by financial
institutions and which represent ownership of securities of foreign
corporations. Depositary receipts are usually designed for use on U.S. and
European securities exchanges.
DISTRIBUTION FEE: covers the cost of the distribution system used to sell
shares to the public.
FUNDAMENTAL RESEARCH: method which concentrates on "fundamental" information
about an issuer such as its financial statements, history, management, etc.
GROWTH APPROACH: approach which focuses on identifying securities of companies
whose earnings growth potential appears to the manager to be greater than the
market in general and whose growth in revenue is expected to continue for an
extended period.
LIQUIDITY: the ability to easily convert investments into cash without losing a
significant amount of money in the process.
MANAGEMENT FEE: a fee paid to the investment adviser to manage the Fund and
make decisions about buying and selling the Fund's investments.
MATURITY: the length of time until the issuer who sold a debt security must pay
back the principal amount of the debt.
MORTGAGE-RELATED SECURITIES: securities that directly or indirectly represent
an interest in, or are secured by and paid from, mortgage loans secured by real
property.
OTHER EXPENSES: miscellaneous items, including transfer agency, administration,
shareholder servicing, custody and registration fees.
REPURCHASE AGREEMENTS: a type of short-term investment in which a dealer sells
securities to the Fund and agrees to buy them back later at a set price. The
price includes interest. In effect, the dealer is borrowing the Fund's money
for a short time, using the securities as collateral.
SHAREHOLDER SERVICE FEE: a fee to cover the cost of paying shareholder
servicing agents to provide certain support services for your account.
STRIPPED OBLIGATIONS: debt securities which are separately traded interest-only
or principal-only components of an underlying obligation.
VALUE APPROACH: approach which focuses on identifying securities that the
advisers believe are undervalued by the market as measured by certain financial
formulas. [CHASE VISTA LOGO]
88
<PAGE>
Chase Vista Balanced Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for each of the past five years. The total returns in the
table represent the rate an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions).
The table set forth below provides selected per share data and ratios for one
Class A Share and one Class B Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
<TABLE>
<CAPTION>
CLASS A
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 15.41 $ 13.83 $ 12.45 $ 11.09 $ 11.38
- ------------------------------------ ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income 0.383 0.392 0.353 0.382 0.356
Net Gains or Losses in Securities
(both realized and unrealized) 1.016 2.393 1.692 1.517 (0.187)
-------- -------- -------- -------- --------
Total from Investment Operations 1.399 2.785 2.045 1.899 0.169
Less Distributions:
Dividends from
Net Investment Income 0.389 0.395 0.345 0.408 0.359
Distributions from Capital Gains 0.980 0.810 0.320 0.131 0.100
-------- -------- -------- -------- --------
Total Distributions 1.369 1.205 0.665 0.539 0.459
- ------------------------------------ -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 15.44 $ 15.41 $ 13.83 $ 12.45 $ 11.09
- ------------------------------------ -------- -------- -------- -------- --------
TOTAL RETURN(1) 9.60% 21.48% 16.89% 17.70% 1.56%
- ------------------------------------ -------- -------- -------- -------- --------
</TABLE>
89
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period
(in millions) $ 95 $ 93 $ 55 $ 34 $ 22
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses to
Average Net Assets 1.25% 1.25% 1.25% 1.06% 0.58%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Net Income
to Average Net Assets 2.51% 2.91% 2.97% 3.48% 3.21%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.44% 1.52% 1.78% 2.20% 2.20%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 2.32% 2.64% 2.44% 2.34% 1.59%
- ----------------------------------- ------- ------- ------- ------- -------
Portfolio Turnover Rate 94% 136% 149% 68% 77%
- ----------------------------------- ------- ------- ------- ------- -------
</TABLE>
CLASS B
<TABLE>
<CAPTION>
Year Year Year Year 11/04/93**
ended ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.21 $ 13.70 $ 12.36 $ 11.03 $ 11.22
- ---------------------------------------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income 0.276 0.319 0.283 0.309 0.345
Net Gains or Losses in Securities
(both realized and unrealized) 1.003 2.326 1.656 1.502 (0.117)
-------- -------- -------- -------- --------
Total from Investment Operations 1.279 2.645 1.939 1.811 0.228
Less Distributions:
Dividends from Net Investment Income 0.319 0.325 0.279 0.131 0.318
Distributions from Capital Gains 0.980 0.810 0.320 0.350 0.100
-------- -------- -------- -------- --------
Total Distributions 1.299 1.135 0.599 0.481 0.418
- ---------------------------------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 15.19 $ 15.21 $ 13.70 $ 12.36 $ 11.03
- ---------------------------------------- -------- -------- -------- -------- --------
TOTAL RETURN(1) 8.89% 20.55% 16.10% 16.93% 2.17%
- ---------------------------------------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(in millions) $ 23 $ 15 $ 10 $ 6 $ 4
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Expenses to
Average Net Assets 1.93% 2.04% 2.00% 1.82% 1.50%#
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Net Income to
Average Net Assets 1.81% 2.26% 2.21% 2.68% 2.46%#
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.93% 2.06% 2.29% 2.72% 2.69%#
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 1.81% 2.24% 1.92% 1.78% 1.27%#
- ---------------------------------------- -------- -------- -------- -------- --------
Portfolio Turnover Rate 94% 136% 149% 68% 77%
- ---------------------------------------- -------- -------- -------- -------- --------
</TABLE>
**Commencement of offering of class of shares.
#Short periods have been annualized.
1Total return figures do not include the effect of any sales load.
90
<PAGE>
Chase Vista Equity Income Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for each of the past five years. The total returns in the
table represent the rate an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions).
The table set forth below provides selected per share data and ratios for one
Class A, one Class B Share and one Class C Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
CLASS A
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 19.23 $ 15.98 $ 13.39 $ 12.12 $ 13.84
- ---------------------------------------- -------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income 0.216 0.260 0.348 0.347 0.290
Net Gains or Losses in Securities
(both realized and unrealized) 1.067 4.709 3.434 1.698 (0.477)
-------- -------- -------- -------- --------
Total from Investment Operations 1.283 4.969 3.782 2.045 (0.187)
Less Distributions:
Dividends from Net Investment Income 0.267 0.228 0.329 0.366 0.258
Distributions from Capital Gains 1.176 1.490 0.863 0.410 1.275
-------- -------- -------- -------- --------
Total Distributions 1.443 1.718 1.192 0.776 1.533
- ---------------------------------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 19.07 $ 19.23 $ 15.98 $ 13.39 $ 12.12
- ---------------------------------------- -------- -------- -------- -------- --------
TOTAL RETURN(1) 6.90% 33.66% 29.79% 17.97% (1.35%)
- ---------------------------------------- -------- -------- -------- -------- --------
</TABLE>
91
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period (in millions) $ 80 $ 47 $ 17 $ 12 $ 11
- ----------------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses to
Average Net Assets 1.46% 1.50% 1.50% 1.50% 1.50%
- ----------------------------------------- ------- ------- ------- ------- -------
Ratio of Net Income
to Average Net Assets 1.20% 1.65% 2.41% 2.81% 2.31%
- ----------------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.46% 1.70% 2.32% 2.19% 2.02%
- ----------------------------------------- ------- ------- ------- ------- -------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 1.20% 1.45% 1.59% 2.12% 1.79%
- ----------------------------------------- ------- ------- ------- ------- -------
Portfolio Turnover Rate 160% 75% 114% 91% 75%
- ----------------------------------------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------- -----------
Year Year 5/7/96* 1/8/98*
ended ended through through
10/31/98 10/31/97 10/31/96 10/31/98
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.09 $ 15.92 $ 14.56 $ 18.62
- ----------------------------------------- ------- -------- ------- -------
Income from Investment Operations:
Net Investment Income 0.136 0.220 0.134 0.091
Net Gains or Losses in Securities
(both realized and unrealized) 1.050 4.615 1.376 0.307
-------- -------- -------- --------
Total from Investment Operations 1.186 4.835 1.510 0.398
Less Distributions:
Dividends from Net Investment Income 0.180 0.175 0.151 0.108
Distributions from Capital Gains 1.176 1.490 -- --
-------- -------- -------- --------
Total Distributions 1.356 1.665 0.151 0.108
- ----------------------------------------- -------- -------- -------- --------
Net Asset Value, End of Period $ 18.92 $ 19.09 $ 15.92 $ 18.91
- ----------------------------------------- -------- -------- -------- --------
TOTAL RETURN(1) 6.42% 32.87% 10.43% 2.13%
- ----------------------------------------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net Assets, End of Period (in millions) $ 26 $ 15 $ 1 $ 4
- ----------------------------------------- -------- -------- -------- --------
Ratio of Expenses to
Average Net Assets 1.96% 2.11% 2.25%# 1.95%#
- ----------------------------------------- -------- -------- -------- --------
Ratio of Net Income
to Average Net Assets 0.70% 1.06% 1.75%# 0.56%#
- ----------------------------------------- -------- -------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.96% 2.13% 2.75%# 1.95%#
- ----------------------------------------- -------- -------- -------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets 0.70% 1.04% 1.25%# 0.56%#
- ----------------------------------------- -------- -------- -------- --------
Portfolio Turnover Rate 160% 75% 114% 160%
- ----------------------------------------- -------- -------- -------- --------
</TABLE>
*Commencement of offering of class of shares.
#Short periods have been annualized.
1Total return figures do not include the effect of any sales load.
92
<PAGE>
Chase Vista Large Cap Equity Fund*
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the periods since shares were first offered. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions).
The table set forth below provides selected per share data and ratios for one
Class A Share and one Class B Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
<TABLE>
<CAPTION>
CLASS A CLASS B
Year Year 5/8/96** Year Year 5/7/96**
ended ended through ended ended through
10/31/98 10/31/97 10/31/96 10/31/98 10/31/97 10/31/96
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 14.83 $ 13.25 $ 12.06 $ 14.76 $ 13.22 $ 12.06
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net Investment Income 0.118 0.108 0.050 0.054 0.067 0.050
Net Gains or Losses In Securities
(both realized and unrealized) 1.918 3.456 1.209 1.914 3.423 1.187
-------- -------- -------- -------- -------- --------
Total from Investment Operations 2.036 3.564 1.259 1.968 3.490 1.237
Less Distributions:
Dividends from Net Investment Income 0.118 0.094 0.069 0.051 0.061 0.077
Distributions from Capital Gains 1.658 1.890 -- 1.658 1.890 --
-------- -------- -------- -------- -------- --------
Total Distributions 1.776 1.984 0.069 1.709 1.951 0.077
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 15.09 $ 14.83 $ 13.25 $ 15.02 $ 14.76 $ 13.22
- ---------------------------------------- -------- -------- -------- -------- -------- --------
TOTAL RETURN(1) 15.15% 30.69% 10.84% 14.71% 30.15% 6.66%
- ---------------------------------------- -------- -------- -------- -------- -------- --------
</TABLE>
93
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B
Year Year 5/8/96** Year Year 5/7/96**
ended ended through ended ended through
10/31/98 10/31/97 10/31/96 10/31/98 10/31/97 10/31/96
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period
(in millions) $ 50 $ 44 $ 8 $ 10 $ 5 $ 1
- ------------------------------------- ------- ------- ------- ------- ------- --------
Ratio of Expenses to
Average Net Assets 0.85% 1.13% 1.38%# 1.35% 1.59% 1.88%#
- ------------------------------------- ------- ------- ------- ------- ------- --------
Ratio of Net Income
to Average Net Assets 0.81% 0.61% 0.84%# 0.31% 0.15% 0.14%#
- ------------------------------------- ------- ------- ------- ------- ------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.35% 1.63% 1.87%# 1.85% 2.09% 2.38%#
- ------------------------------------- ------- ------- ------- ------- ------- --------
Ratio of Net Investment Income
without waivers and assumptions
of expenses to Average Net Assets 0.31% 0.11% 0.35%# (0.19%) (0.35%) (0.36%#)
- ------------------------------------- ------- ------- ------- ------- ------- --------
Portfolio Turnover Rate 72% 72% 89% 72% 72% 89%
- ------------------------------------- ------- ------- ------- ------- ------- --------
</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.
94
<PAGE>
Chase Vista Growth and Income Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for each of the past five years. The total returns in the
table represent the rate an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions).
The table set forth below provides selected per share data and ratios for one
Class A Share, one Class B Share and one Class C Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
<TABLE>
<CAPTION>
CLASS A
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 46.21 $ 39.21 $ 34.96 $ 30.26 $ 30.99
- ---------------------------------------- -------- ------- ------- ------- -------
Income from Investment Operations:
Net Investment Income 0.187 0.347@ 0.599 0.614 0.466
Net Gains or Losses in Securities
(both realized and unrealized) 3.590 10.180@ 5.960 4.710 (0.429)
-------- -------- -------- -------- --------
Total from Investment Operations 3.777 10.527 6.559 5.324 0.037
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income 0.187 0.379 0.549 0.621 0.422
Distributions from Capital Gains 6.564 3.150 1.762 -- 0.345
-------- -------- -------- -------- --------
Total Distributions 6.751 3.529 2.311 0.621 0.767
- ---------------------------------------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 43.24 $ 46.21 $ 39.21 $ 34.96 $ 30.26
- ---------------------------------------- -------- -------- -------- -------- --------
TOTAL RETURN(1) 9.09% 28.84% 19.60% 17.79% 0.15%
- ---------------------------------------- -------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------
Net Assets, End of Period
(in millions) $ 1,499 $ 1,497 $ 1,591 $ 1,521 $ 1,414
- ---------------------------------------- -------- -------- -------- -------- --------
Ratios of Expenses to
Average Net Assets 1.25% 1.27% 1.32% 1.43% 1.40%
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Net Income
to Average Net Assets 0.44% 0.82% 1.46% 1.93% 1.60%
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.25% 1.27% 1.32% 1.45% 1.40%
- ---------------------------------------- -------- -------- -------- -------- --------
Ratio of Net Investment Income
without wivers and assumption
of expenses to Average Net Assets 0.44% 0.82% 1.46% 1.91% 1.60%
- ---------------------------------------- -------- -------- -------- -------- --------
</TABLE>
95
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
Year Year Year Year 11/04/93*
ended ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 45.96 $ 39.02 $ 34.81 $ 30.12 $ 30.39
- ---------------------------------------- ------- -------- -------- ------- -------
Income From Investment Operations:
Net Investment Income (0.020) 0.132@ 0.366 0.463 0.336
Net Gains or Losses in Securities
(both realized and unrealized) 3.540 10.130@ 5.984 4.700 0.109
-------- -------- -------- -------- -------
Total from Investment Operations 3.520 10.262 6.350 5.163 0.445
-------- -------- -------- -------- -------
Less Distributions:
Dividends from Net Investment Income -- 0.173 0.379 0.470 0.370
Distributions from Capital Gains 6.564 3.150 1.762 -- 0.345
-------- -------- -------- -------- -------
Total Distributions 6.564 3.323 2.141 0.470 0.715
- ---------------------------------------- -------- -------- -------- -------- -------
Net Asset Value, End of Period $ 42.92 $ 45.96 $ 39.02 $ 34.81 $ 30.12
- ---------------------------------------- -------- -------- -------- -------- -------
TOTAL RETURN(1) 8.52% 28.20% 19.02% 17.21% 1.55%
- ---------------------------------------- -------- -------- -------- -------- -------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------
Net Assets, End of Period
(in millions) $ 542 $ 489 $ 370 $ 274 $ 160
- ---------------------------------------- -------- -------- -------- -------- -------
Ratios of Expenses to
Average Net Assets 1.75% 1.77% 1.81% 1.93% 1.89%#
- ---------------------------------------- -------- -------- -------- -------- -------
Ratio of Net Income
to Average Net Assets ( 0.06%) 0.31% 0.95% 1.38% 1.21%#
- ---------------------------------------- -------- -------- -------- -------- -------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.75% 1.77% 1.81% 1.94% 1.89%#
- ---------------------------------------- -------- -------- -------- -------- -------
Ratio of Net Investment Income
without wivers and assumption
of expenses to Average Net Assets ( 0.06%) 0.31% 0.95% 1.37% 1.21%#
- ---------------------------------------- -------- -------- -------- -------- -------
</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.
96
<PAGE>
<TABLE>
<CAPTION>
CLASS C
01/02/98**
through
10/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $ 41.64
- ---------------------------------------- --------
Income from Investment Operations:
Net Investment Income ( 0.019)@
Net Gains or Losses in Securities
(both realized and unrealized) 0.677@
--------
Total from Investment Operations 0.658
--------
Less Distributions:
Dividends from Net Investment Income 0.088
Distributions from Capital Gains 0.080
--------
Total Distributions 0.168
- ---------------------------------------- --------
Net Asset Value, End of Period $ 42.13
- ---------------------------------------- --------
TOTAL RETURN(1) 1.55%
- ---------------------------------------- --------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------
Net Assets, End of Period
(in millions) $ 5
- ---------------------------------------- --------
Ratios of Expenses to
Average Net Assets 1.72%#
- ---------------------------------------- --------
Ratio of Net Income
to Average Net Assets ( 0.05%)#
- ---------------------------------------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.72%#
- ---------------------------------------- --------
Ratio of Net Investment Income
without wivers and assumption
of expenses to Average Net Assets ( 0.05%)#
- ---------------------------------------- --------
</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.
97
<PAGE>
FINANCIAL HIGHLIGHTS
Chase Vista Focus Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the periods since shares were first offered. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions).
The table set forth below provides selected per share data and ratios for one
Class A, one Class B Share, and one Class C Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
6/30/98* 6/30/98* 6/30/98*
through through through
10/31/98 10/31/98 10/31/98
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $ 10.00 $ 10.00 $ 10.00
- ---------------------------------------- -------- ------- -------
Income from Investment Operations:
Net Investment Income 0.012 (0.003) (0.003)
Net Gains or Losses in Securities
(both realized and unrealized) (0.612) (0.617) (0.617)
-------- ------- -------
Total from Investment Operations (0.600) (0.620) (0.620)
-------- ------- -------
Less Distributions:
Dividends from Net Investment Income -- -- --
Distributions from Capital Gains -- -- --
-------- ------- -------
Total Distributions -- -- --
- ---------------------------------------- -------- ------- -------
Net Asset Value, End of Period $ 9.40 $ 9.38 $ 9.38
- ---------------------------------------- -------- ------- -------
TOTAL RETURN(1) (6.00%) (6.20%) ( 6.20%)
- ---------------------------------------- -------- ------- -------
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
6/30/98* 6/30/98* 6/30/98*
through through through
10/31/98 10/31/98 10/31/98
<S> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net Assets, End of Period
(in millions) $ 18 $ 18 $ 4
- ----------------------------------- -------- -------- --------
Ratio of Expenses to
Average Net Assets 1.25%# 1.85%# 1.85%#
- ----------------------------------- -------- -------- --------
Ratio of Net Income
to Average Net Assets 0.48%# (0.15%)# (0.14%)#
- ----------------------------------- -------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 2.05%# 2.54%# 2.55%#
- ----------------------------------- -------- -------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (0.32%)# (0.84%)# (0.84%)#
- ----------------------------------- -------- -------- --------
Portfolio Turnover Rate 33% 33% 33%
- ----------------------------------- -------- -------- --------
</TABLE>
*Commencement of operations.
(1)Total return figures do not include the effect of any sales load.
#Short periods have been annualized.
99
<PAGE>
FINANCIAL HIGHLIGHTS
Chase Vista Capital Growth Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for each of the past five years. The total returns in the
table represent the rate an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions).
The table set forth below provides selected per share data and ratios for one
Class A Share, one Class B Share and one Class C Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
CLASS A
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 46.76 $ 41.60 $ 35.65 $ 32.17 $ 32.01
- ---------------------------------------- ------- -------- ------- ------- -------
Income From Investment Operations:
Net Investment Income (0.120) ( 0.022)@ 0.147 0.189 0.099@
Net Gains or Losses in Securities
(both realized and unrealized) (0.520) 10.130@ 7.270 4.160 0.719@
------- -------- ------- ------- -------
Total from Investment Operations (0.640) 10.108 7.417 4.349 0.818
Less Distributions:
Dividends from Net Investment Income -- 0.144 0.117 0.189 0.027
Distributions from Capital Gains 4.901 4.800 1.355 0.676 0.631
------- -------- ------- ------- -------
Total Distributions 4.901 4.944 1.472 0.865 0.658
- ---------------------------------------- ------- -------- ------- ------- -------
Net Asset Value, End of Period $ 41.22 $ 46.76 $ 41.60 $ 35.65 $ 32.17
- ---------------------------------------- -------- -------- ------- ------- -------
TOTAL RETURN(1) ( 1.60)% 26.47% 21.48% 13.89% 2.62%
- ---------------------------------------- ------- -------- ------- ------- -------
</TABLE>
100
<PAGE>
<TABLE>
<CAPTION>
Year Year Year Year Year
ended ended ended ended ended
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period
(in millions) $ 728 $ 839 $ 768 $ 748 $ 549
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses to
Average Net Assets 1.27% 1.31% 1.37% 1.51% 1.49%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Net Income
to Average Net Assets (0.24%) (0.05%) 0.39% 0.54% 0.33%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.27% 1.31% 1.37% 1.53% 1.50%
- ----------------------------------- ------- ------- ------- ------- -------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (0.24%) (0.05%) 0.39% 0.52% 0.32%
- ----------------------------------- ------- ------- ------- ------- -------
</TABLE>
101
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
Year Year Year Year 11/4/95*
ended ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 46.11 $ 41.21 $ 35.39 $ 32.03 $ 31.38
- ---------------------------------------- ------- -------- ------- ------- -------
Income From Investment Operations:
Net Investment Income (0.290) (0.236)@ (0.076) 0.044 0.011@
Net Gains or Losses in Securities
(both realized and unrealized) (0.540) 10.010@ 7.246 4.100 1.296@
------- -------- -------- -------- -------
Total from Investment Operations (0.830) 9.774 7.170 4.144 1.307
Less Distributions:
Dividends from Net Investment Income -- 0.078 -- 0.111 0.026
Distributions from Capital Gains 4.901 4.800 1.355 0.676 0.631
-------- --------- -------- -------- --------
Total Distributions 4.901 4.878 1.355 0.787 0.657
- ---------------------------------------- -------- --------- -------- -------- --------
Net Asset Value, End of Period $ 40.38 $ 46.11 $ 41.21 $ 35.39 $ 32.03
- ---------------------------------------- -------- --------- -------- -------- --------
TOTAL RETURN(1) (2.08)% 25.85% 20.88% 13.34% 4.19%
- ---------------------------------------- -------- --------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------
Net Assets, End of Period
(in millions) $ 405 $ 422 $ 334 $ 260 $ 124
- ---------------------------------------- -------- --------- -------- -------- --------
Ratio of Expenses to
Average Net Assets 1.77% 1.81% 1.87% 2.01% 2.00%#
- ---------------------------------------- -------- --------- -------- -------- --------
Ratio of Net Income
to Average Net Assets (0.74%) (0.56%) (0.21%) 0.02% (0.09%)#
- ---------------------------------------- -------- --------- -------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.77% 1.81% 1.87% 2.02% 2.02%#
- ---------------------------------------- -------- --------- -------- -------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (0.74%) (0.56%) (0.21%) 0.01% (0.11%)#
- ---------------------------------------- -------- --------- -------- -------- --------
</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.
102
<PAGE>
CLASS C
<TABLE>
<CAPTION>
01/02/98**
through
10/31/98
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------
<S> <C>
Net Asset Value,
Beginning of Period $ 42.81
- ---------------------------------------- --------
Income From Investment Operations:
Net Investment Income (0.090)
Net Gains or Losses in Securities
(both realized and unrealized) (2.690)
--------
Total from Investment Operations (2.780)
--------
Less Distributions:
Dividends from Net Investment Income --
Distributions from Capital Gains --
--------
Total Distributions --
- ---------------------------------------- --------
Net Asset Value, End of Period $ 40.03
- ---------------------------------------- --------
TOTAL RETURN(1) (6.49)%
- ---------------------------------------- --------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------
Net Assets, End of Period
(in millions) $ 4
- ---------------------------------------- --------
Ratios of Expenses to
Average Net Assets 1.73%#
- ---------------------------------------- --------
Ratio of Net Income
to Average Net Assets ( 0.59%)#
- ---------------------------------------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.73%#
- ---------------------------------------- --------
Ratio of Net Investment Income
without wivers and assumption
of expenses to Average Net Assets ( 0.59%)#
- ---------------------------------------- --------
</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.
103
<PAGE>
FINANCIAL HIGHLIGHTS
Chase Vista Small Cap Equity Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the periods since shares were first offered. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions).
The table set forth below provides selected per share data and ratios for one
Class A and one Class B Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
CLASS A
<TABLE>
<CAPTION>
Year Year Year 12/20/94*
ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 23.57 $ 19.19 $ 15.07 $ 10.00
- ---------------------------------------- -------- ------- ------- -------
Income from Investment Operations:
Net Investment Income (0.114) (0.051) 0.005 0.060
Net Gain or Losses in Securities
(both realized and unrealized) (2.416) 4.720 4.328 5.056
-------- ------- -------- --------
Total from Investment Operations (2.530) 4.669 4.333 5.116
Less Distributions:
Dividends from Net Investment Income -- -- 0.033 0.042
Distributions from Capital Gains 0.640 0.290 0.180 0.004
--------- ------- -------- --------
Total Distributions 0.640 0.290 0.213 0.046
- ---------------------------------------- --------- ------- -------- --------
Net Asset Value, End of Period $ 20.40 $ 23.57 $ 19.19 $ 15.07
- ---------------------------------------- --------- ------- -------- --------
TOTAL RETURN(1) (10.93%) 24.61% 29.06% 51.25%
- ---------------------------------------- --------- ------- -------- --------
</TABLE>
104
<PAGE>
<TABLE>
<CAPTION>
Year Year Year 12/20/94*
ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets, End of Period (in millions) $ 133 $ 174 $ 145 $ 44
- ----------------------------------------- ------- ------- ------- --------
Ratio of Expenses to
Average Net Assets 1.38% 1.45% 1.50% 1.51%#
- ----------------------------------------- ------- ------- ------- --------
Ratio of Net Income
to Average Net Assets (0.43%) (0.23%) 0.03% 0.52%#
- ----------------------------------------- ------- ------- ------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.38% 1.45% 1.52% 2.67%#
- ----------------------------------------- ------- ------- ------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (0.43%) (0.23%) 0.01% (0.64%)#
- ----------------------------------------- ------- ------- ------- --------
Portfolio Turnover Rate 74% 55% 78% 75%
- ----------------------------------------- ------- ------- ------- --------
</TABLE>
105
<PAGE>
FINANCIAL HIGHLIGHTS
CLASS B
<TABLE>
<CAPTION>
Year Year Year 3/28/95
ended ended ended through
10/31/98 10/31/97 10/31/96 10/31/95
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 23.19 $ 19.00 $ 15.01 $ 11.39
- ----------------------------------------- -------- ------- ------- --------
Income from Investment Operations:
Net Investment Income (0.305) (0.270) (0.074) (0.018)
Net Gain or Losses in Securities
(both realized and unrealized) (2.335) 4.754 4.248 3.669
-------- -------- -------- ---------
Total from Investment Operations (2.640) 4.484 4.174 3.651
Less Distributions:
Dividends from Net Investment Income -- -- -- 0.027
Distributions from Capital Gains 0.640 0.290 0.180 0.004
--------- -------- -------- ---------
Total Distributions 0.640 0.290 0.180 0.031
- ----------------------------------------- --------- -------- -------- ---------
Net Asset Value, End of Period $ 19.91 $ 23.19 $ 19.00 $ 15.01
- ----------------------------------------- --------- -------- -------- ---------
TOTAL RETURN(1) (11.60%) 23.84% 28.04% 32.09%
- ----------------------------------------- --------- -------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------
Net Assets, End of Period (in millions) $ 80 $ 100 $ 73 $ 22
- ----------------------------------------- --------- -------- -------- ---------
Ratio of Expenses to
Average Net Assets 2.10% 2.16% 2.22% 2.24%#
- ----------------------------------------- --------- -------- -------- ---------
Ratio of Net Income
to Average Net Assets (1.15%) (0.94%) (0.68%) (0.25%)#
- ----------------------------------------- --------- -------- -------- ---------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 2.10% 2.16% 2.25% 3.23%#
- ----------------------------------------- --------- -------- -------- ---------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (1.15%) (0.94%) (0.71)% (1.24%)#
- ----------------------------------------- --------- -------- -------- ---------
Portfolio Turnover Rate 74% 55% 78% 75%
- ----------------------------------------- --------- -------- -------- ---------
</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.
106
<PAGE>
Chase Vista Small Cap Opportunities Fund
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the periods since shares were first offered. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions).
The table set forth below provides selected per share data and ratios for one
Class A, one Class B Share and one Class C Share.
This information is supplemented by financial statements including accompanying
notes appearing in the Funds' Annual Report to Shareholders for the year ended
October 31, 1998, which is incorporated by reference into the SAI. Shareholders
may obtain a copy of this annual report by contacting the Fund or their
Shareholder Servicing Agent.
The financial statements, which include the financial information set forth
below, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon is included in the Annual Report to
Shareholders.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
Year 5/19/97* Year 5/19/97* 1/7/98**
ended through ended through through
10/31/98 10/31/97 10/31/98 10/31/97 10/31/98
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 13.85 $ 10.00 $ 13.81 $ 10.00 $ 13.17
- ---------------------------------------- ------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income (0.093) (0.041) (0.170) (0.057) (0.084)
Net Gains or Losses in Securities
(both realized and unrealized) (0.967) 3.891 (0.970) 3.867 (0.426)
------- -------- ------- -------- -------
Total from Investment Operations (1.060) 3.850 (1.140) 3.810 (0.510)
Less Distributions:
Dividends from Net Investment Income -- -- -- -- --
Distributions from Capital Gains -- -- -- -- --
------- -------- ------- ------- -------
Total Distributions -- -- -- -- --
- ---------------------------------------- ------- -------- ------- ------- -------
Net Asset Value, End of Period $ 12.79 $ 13.85 $ 12.67 $ 13.81 $ 12.66
- ---------------------------------------- ------- -------- ------- ------- -------
TOTAL RETURN(1) (7.65%) 38.50% (8.25%) 38.10% (3.87%)
- ---------------------------------------- ------- -------- ------- ------- -------
</TABLE>
107
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
Year 5/19/97* Year 5/19/97* 1/7/98**
ended through ended through through
10/31/98 10/31/97 10/31/98 10/31/97 10/31/98
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------
Net Assets, End of Period
(in millions) $ 62 $ 43 $ 57 $ 38 $ 5
- ----------------------------------- ------- -------- ------- -------- --------
Ratio of Expenses to
Average Net Assets 1.50% 1.49%# 2.24% 2.24%# 2.24%#
- ----------------------------------- ------- -------- ------- -------- --------
Ratio of Net Income
to Average Net Assets (0.91%) (1.16%)# (1.65%) (1.93%)# (1.55%)#
- ----------------------------------- ------- -------- ------- -------- --------
Ratio of Expenses without waivers
and assumption of expenses to
Average Net Assets 1.83% 2.38%# 2.33% 2.88%# 2.29%#
- ----------------------------------- ------- -------- ------- -------- --------
Ratio of Net Investment Income
without waivers and assumption
of expenses to Average Net Assets (1.24%) (2.05%)# (1.74%) (2.57%)# (1.60%)#
- ----------------------------------- ------- -------- ------- -------- --------
Portfolio Turnover Rate 68% 7% 68% 7% 68%
- ----------------------------------- ------- -------- ------- -------- --------
</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.
108
<PAGE>
HOW TO REACH US
More information
You'll find more information about the Funds in the following documents:
ANNUAL AND SEMI-ANNUAL REPORTS
Our annual and semi-annual reports contain more information about each Fund's
investments and performance. The annual report also includes details about the
market conditions and investment strategies that had a significant effect on
each Fund's performance during the last fiscal year.
STATEMENT OF ADDITIONAL
INFORMATION (SAI)
The SAI contains more detailed information about the Funds and their policies.
It's incorporated by reference into this prospectus. That means, by law, it's
considered to be part of this prospectus.
You can get a free copy of these documents and other information, or ask us any
questions, by calling us at 1-800-34-VISTA or writing to:
Chase Vista Fund Service Center
P.O. Box 419392
Kansas City, MO 64141-6392
If you buy your shares through The Chase Manhattan Bank or another institution,
you should contact that institution directly for more information. You can also
find information on-line at www.chasevista.com on the internet.
You can write the SEC's Public Reference Room and ask them to mail you
information about the Funds, including the SAI. They'll charge you a copying
fee for this service. You can also visit the Public Reference Section and copy
the documents while you're there.
Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330
Reports, a copy of the SAI and other information about the Funds is also
available on the SEC's website at http://www.sec.gov.
The Fund's Investment Company Act File No. is 811-5151
Chase Vista Funds
Fulfillment Center
393 Manley Street
West Bridgewater, MA 02379-1039
<PAGE>
[CHASE VISTA FUNDS LOGO]
STATEMENT OF
ADDITIONAL INFORMATION
February 26, 1999
BALANCED FUND
BOND FUND
CAPITAL GROWTH FUND
CORE EQUITY FUND
EQUITY GROWTH FUND
EQUITY INCOME FUND
FOCUS FUND
GROWTH AND INCOME FUND
LARGE CAP EQUITY FUND
SHORT TERM BOND FUND
SMALL CAP EQUITY FUND
SMALL CAP OPPORTUNITIES FUND
STRATEGIC INCOME FUND
U.S. GOVERNMENT SECURITIES FUND
U.S. TREASURY INCOME FUND
One Chase Manhattan Plaza, Third Floor, New York, New York 10081
This Statement of Additional Information sets forth information which may
be of interest to investors but which is not necessarily included in the
Prospectuses offering shares of the Funds. This Statement of Additional
Information should be read in conjunction with the Prospectuses offering shares
of U.S. Government Securities Fund, U.S. Treasury Income Fund, Bond Fund,
Short-Term Bond Fund and Strategic Income Fund (collectively, the "Income
Funds"), and Balanced Fund, Core Equity Fund, Equity Growth Fund, Equity Income
Fund, Focus Fund, Growth and Income Fund, Capital Growth Fund, Large Cap Equity
Fund, Small Cap Equity Fund and Small Cap Opportunities Fund (collectively, the
"Equity Funds"). Any references to a "Prospectus" in this Statement of
Additional Information is a reference to one or more of the foregoing
Prospectuses, as the context requires. Copies of each Prospectus may be
obtained by an investor without charge by contacting Vista Fund Distributors,
Inc. ("VFD"), the Funds' distributor (the "Distributor"), at the above-listed
address.
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by an
effective prospectus.
For more information about your account, simply call or write the Chase Vista
Funds Service Center at:
1-800-34-VISTA
Chase Vista Funds Service Center
P.O. Box 419392
Kansas City, MO 64141
MFG-SAI
<PAGE>
<TABLE>
<S> <C>
Table of Contents Page
- --------------------------------------------------------------------------------
The Funds ............................................................ 3
Investment Policies and Restrictions ................................. 3
Performance Information .............................................. 25
Determination of Net Asset Value ..................................... 35
Purchases, Redemptions and Exchanges ................................. 35
Distributions; Tax Matters ........................................... 40
Management of the Trust and the Funds or Portfolios .................. 45
Independent Accountants .............................................. 62
Certain Regulatory Matters ........................................... 62
General Information .................................................. 63
Appendix A--Description of Certain Obligations Issued or Guaranteed by
U.S. Government Agencies or Instrumentalities ....................... A-1
Appendix B--Description of Ratings ................................... B-1
</TABLE>
2
<PAGE>
THE FUNDS
Mutual Fund Group (the "Trust") is an open-end management investment
company which was organized as a business trust under the laws of the
Commonwealth of Massachusetts on May 11, 1987. The Trust presently consists of
21 separate series (the "Funds"). Certain of the Funds are diversified and
other Funds are non-diversified, as such term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). The shares of the Funds are
collectively referred to in this Statement of Additional Information as the
"Shares."
The Growth and Income Fund and Capital Growth Fund converted to a master
fund/feeder fund structure in December 1993. The Core Equity Fund and Equity
Growth Fund were formed with a master fund/ feeder fund structure. Under this
structure, each of these Funds seeks to achieve its investment objective by
investing all of its investable assets in an open-end management investment
company which has the same investment objective as that Fund. The Growth and
Income Fund invests in the Growth and Income Portfolio, the Capital Growth Fund
invests in the Capital Growth Portfolio (collectively the "Portfolios"). Each
of Portfolios is a New York trust with its principal office in New York.
Immediately prior to the inception of each of the Core Equity Fund and Equity
Growth Fund, the Chase Core Equity Fund and Chase Equity Growth Fund series of
Mutual Fund Investment Trust, another open-end management investment company,
were converted to a master/feeder structure and the Core Equity Portfolio and
Equity Growth Portfolio were formed. The Core Equity Fund invests in the Core
Equity Portfolio and Equity Growth Fund invests in the Equity Growth Portfolio.
Certain qualified investors, in addition to a Fund, may invest in a Portfolio.
For purposes of this Statement of Additional Information, any information or
references to any or all of the Portfolios refer to the operations and
activities after implementation of the master fund/feeder fund structure.
On May 3, 1996, The Hanover Large Cap Equity Fund merged into the
Institutional Shares of Large Cap Equity Fund, The Hanover Short-Term Bond Fund
merged into the Class A shares of Short-Term Bond Fund, Investor Shares of The
Hanover Small Cap Equity Fund merged into the Class A shares of Small Cap
Equity Fund, CBC Benefit Shares of The Hanover Small Cap Equity Fund merged
into the Institutional Shares of Small Cap Equity Fund and The Hanover U.S.
Government Securities Fund merged into the Institutional Shares of U.S.
Government Securities Fund. The foregoing mergers are referred to herein as the
"Hanover Reorganization."
Effective as of May 6, 1996, U.S. Government Income Fund changed its name
to U.S. Treasury Income Fund and Equity Fund changed its name to Large Cap
Equity Fund.
The Board of Trustees of the Trust provides broad supervision over the
affairs of the Trust including the Funds. In the case of the Portfolios,
separate Boards of Trustees provide broad supervision. The Chase Manhattan Bank
("Chase") is the investment adviser for the Funds (other than the Growth and
Income Fund, Capital Growth Fund, Core Equity Fund and Equity Growth Fund,
which do not have their own advisers) and the four Portfolios. Chase also
serves as the Trust's administrator (the "Administrator") and supervises the
overall administration of the Trust, including the Funds, and is the
administrator of the Portfolios. A majority of the Trustees of the Trust are
not affiliated with the investment adviser or sub-advisers. Similarly, a
majority of the Trustees of the Portfolios are not affiliated with the
investment adviser or sub-advisers.
INVESTMENT POLICIES AND RESTRICTIONS
Investment Policies
The Prospectuses set forth the various investment policies of each Fund
and Portfolio. The following information supplements and should be read in
conjunction with the related sections of each Prospectus. For descriptions of
the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see
Appendix B.
U.S. Government Securities. All the Funds and Portfolios may invest in
U.S. Government Securities. U.S. Government Securities include (1) U.S.
Treasury obligations, which generally differ only in their interest rates,
maturities and times of issuance, including: U.S. Treasury bills (maturities of
one year or less),
3
<PAGE>
U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years); and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities which are
supported by any of the following: (a) the full faith and credit of the U.S.
Treasury, (b) the right of the issuer to borrow any amount listed to a specific
line of credit from the U.S. Treasury, (c) discretionary authority of the U.S.
Government to purchase certain obligations of the U.S. Government agency or
instrumentality or (d) the credit of the agency or instrumentality. Agencies
and instrumentalities of the U.S. Government include but are not limited to:
Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal
Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal National Mortgage Association, Student
Loan Marketing Association, United States Postal Service, Chrysler Corporate
Loan Guarantee Board, Small Business Administration, Tennessee Valley Authority
and any other enterprise established or sponsored by the U.S. Government.
Certain U.S. Government Securities, including U.S. Treasury bills, notes and
bonds, Government National Mortgage Association certificates and Federal
Housing Administration debentures, are supported by the full faith and credit
of the United States. Other U.S. Government Securities are issued or guaranteed
by federal agencies or government sponsored enterprises and are not supported
by the full faith and credit of the United States. These securities include
obligations that are supported by the right of the issuer to borrow from the
U.S. Treasury, such as obligations of the Federal Home Loan Banks, and
obligations that are supported by the creditworthiness of the particular
instrumentality, such as obligations of the Federal National Mortgage
Association or Federal Home Loan Mortgage Corporation. For a description of
certain obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, see Appendix A.
In addition, certain U.S. Government agencies and instrumentalities issue
specialized types of securities, such as guaranteed notes of the Small Business
Administration, Federal Aviation Administration, Department of Defense, Bureau
of Indian Affairs and Private Export Funding Corporation, which often provide
higher yields than are available from the more common types of
government-backed instruments. However, such specialized instruments may only
be available from a few sources, in limited amounts, or only in very large
denominations; they may also require specialized capability in portfolio
servicing and in legal matters related to government guarantees. While they may
frequently offer attractive yields, the limited-activity markets of many of
these securities means that, if a Fund or Portfolio were required to liquidate
any of them, it might not be able to do so advantageously; accordingly, each
Fund and Portfolio investing in such securities normally to hold such
securities to maturity or pursuant to repurchase agreements, and would treat
such securities (including repurchase agreements maturing in more than seven
days) as illiquid for purposes of its limitation on investment in illiquid
securities.
Bank Obligations. Investments in bank obligations are limited to those of
U.S. banks (including their foreign branches) which have total assets at the
time of purchase in excess of $1 billion and the deposits of which are insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation, and foreign banks (including their
U.S. branches) having total assets in excess of $10 billion (or the equivalent
in other currencies), and such other U.S. and foreign commercial banks which
are judged by the advisers to meet comparable credit standing criteria.
Bank obligations include negotiable certificates of deposit, bankers'
acceptances, fixed time deposits and deposit notes. A certificate of deposit is
a short-term negotiable certificate issued by a commercial bank against funds
deposited in the bank and is either interest-bearing or purchased on a discount
basis. A bankers' acceptance is a short-term draft drawn on a commercial bank
by a borrower, usually in connection with an international commercial
transaction. The borrower is liable for payment as is the bank, which
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Fixed time deposits are obligations of branches of United States banks or
foreign banks which are payable at a stated maturity date and bear a fixed rate
of interest. Although fixed time deposits do not have a market, there are no
contractual restrictions on the right to transfer a beneficial interest in the
deposit to a third party. Fixed time deposits subject to withdrawal penalties
and with respect to which a Fund or Portfolio cannot realize the proceeds
thereon within seven days are deemed "illiquid" for the purposes of its
restriction on investments in illiquid securities. Deposit
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notes are notes issued by commercial banks which generally bear fixed rates of
interest and typically have original maturities ranging from eighteen months to
five years.
The dependence on the banking industry may involve certain credit risks,
such as defaults or downgrades, if at some future date adverse economic
conditions prevail in such industry. Banks are subject to extensive
governmental regulations that may limit both the amounts and types of loans and
other financial commitments that may be made and the interest rates and fees
that may be charged. The profitability of this industry is largely dependent
upon the availability and cost of capital funds for the purpose of financing
lending operations under prevailing money market conditions. Also, general
economic conditions play an important part in the operations of this industry
and exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations. Bank
obligations may be general obligations of the parent bank or may be limited to
the issuing branch by the terms of the specific obligations or by government
regulation. Investors should also be aware that securities of foreign banks and
foreign branches of United States banks may involve foreign investment risks in
addition to those relating to domestic bank obligations. These investment risks
may involve, among other considerations, risks relating to future political and
economic developments, more limited liquidity of foreign obligations than
comparable domestic obligations, the possible imposition of withholding taxes
on interest income, the possible seizure or nationalization of foreign assets
and the possible establishment of exchange controls or other restrictions.
There may be less publicly available information concerning foreign issuers,
there may be difficulties in obtaining or enforcing a judgment against a
foreign issuer (including branches) and accounting, auditing and financial
reporting standards and practices may differ from those applicable to U.S.
issuers. In addition, foreign banks are not subject to regulations comparable
to U.S. banking regulations.
Foreign Securities. For purposes of a Fund's investment policies, the
issuer of a security may be deemed to be located in a particular country if (i)
the principal trading market for the security is in such country, (ii) the
issuer is organized under the laws of such country or (iii) the issuer derives
at least 50% of its assets situated in such country.
Depositary Receipts. The Equity Funds and Portfolios may invest their
assets in securities of multinational companies in the form of American
Depositary Receipts or other similar securities representing securities of
foreign issuers, such as European Depositary Receipts, Global Depositary
Receipts and other similar securities representing securities of foreign
issuers (collectively, "Depositary Receipts"). The Funds and Portfolios treat
Depositary Receipts as interests in the underlying securities for purposes of
their investment policies.
Supranational Obligations. The Balanced Fund, the Equity Income Fund, the
Growth and Income Portfolio and the Strategic Income Fund may invest in
supranational obligations. Supranational organizations, include organizations
such as The World Bank, which was chartered to finance development projects in
developing member countries; the European Community, which is a twelve-nation
organization engaged in cooperative economic activities; the European Coal and
Steel Community, which is an economic union of various European nations steel
and coal industries; and, the Asian Development Bank, which is an international
development bank established to lend funds, promote investment and provide
technical assistance to member nations of the Asian and Pacific regions.
Obligations of supranational agencies are supported by subscribed, but unpaid,
commitments of member countries. There is no assurance that these commitments
will be undertaken or complied with in the future, and foreign and
supranational securities are subject to certain risks associated with foreign
investing.
Money Market Instruments. Each Fund and Portfolio may invest in cash or
high-quality, short-term money market instruments. These may include U.S.
Government securities, commercial paper of domestic and foreign issuers and
obligations of domestic and foreign banks. Investments in foreign money market
instruments may involve certain risks associated with foreign investment.
Corporate Reorganizations. In general, securities that are the subject of
a tender or exchange offer or proposal sell at a premium to their historic
market price immediately prior to the announcement of the offer
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or proposal. The increased market price of these securities may also discount
what the stated or appraised value of the security would be if the contemplated
action were approved or consummated. These investments may be advantageous when
the discount significantly overstates the risk of the contingencies involved;
significantly undervalues the securities, assets or cash to be received by
shareholders of the prospective portfolio company as a result of the
contemplated transaction; or, fails adequately to recognize the possibility
that the offer or proposal may be replaced or superseded by an offer or
proposal of greater value. The evaluation of these contingencies requires
unusually broad knowledge and experience on the part of the advisers that must
appraise not only the value of the issuer and its component businesses as well
as the assets or securities to be received as a result of the contemplated
transaction, but also the financial resources and business motivation of the
offeror as well as the dynamics of the business climate when the offer or
proposal is in progress. Investments in reorganization securities may tend to
increase the turnover ratio of a Fund or Portfolio and increase its brokerage
and other transaction expenses.
Warrants and Rights. Warrants basically are options to purchase equity
securities at a specified price for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying securities.
Rights are similar to warrants but normally have a shorter duration and are
distributed directly by the issuer to shareholders. Rights and warrants have no
voting rights, receive no dividends and have no rights with respect to the
assets of the issuer.
Commercial Paper. Commercial paper consists of short-term (usually from 1
to 270 days) unsecured promissory notes issued by corporations in order to
finance their current operations. A variable amount master demand note (which
is a type of commercial paper) represents a direct borrowing arrangement
involving periodically fluctuating rates of interest under a letter agreement
between a commercial paper issuer and an institutional lender pursuant to which
the lender may determine to invest varying amounts.
Preferred Stock. Preferred Stock are securities that represent an
ownership interest in a corporation and that give the owner a prior claim over
common stock on the corporation's earnings or assets.
Investment Grade Debt Securities. The Fixed Income Funds, the Equity
Income Fund and the Growth and Income Portfolio may invest in investment grade
debt securities. Investment grade debt securities are securities rated in the
category BBB or higher by Standard & Poor's Corporation ("S&P"), or Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or the equivalent by
another national rating organization, or, if unrated, determined by the
advisers to be of comparable quality.
Repurchase Agreements. All the Funds and Portfolios may enter into
repurchase agreements. A Fund or Portfolio will enter into repurchase
agreements only with member banks of the Federal Reserve System and securities
dealers believed creditworthy, and only if fully collateralized by securities
in which such Fund or Portfolio is permitted to invest. Under the terms of a
typical repurchase agreement, a Fund or Portfolio would acquire an underlying
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase the instrument and the
Fund or Portfolio to resell the instrument at a fixed price and time, thereby
determining the yield during the Fund's or Portfolio's holding period. This
procedure results in a fixed rate of return insulated from market fluctuations
during such period. A repurchase agreement is subject to the risk that the
seller may fail to repurchase the security. Repurchase agreements are
considered under the 1940 Act to be loans collateralized by the underlying
securities. All repurchase agreements entered into by a Fund or Portfolio will
be fully collateralized at all times during the period of the agreement in that
the value of the underlying security will be at least equal to 100% of the
amount of the loan, including the accrued interest thereon, and the Fund or
Portfolio or its custodian or sub-custodian will have possession of the
collateral, which the Board of Trustees believes will give it a valid,
perfected security interest in the collateral. Whether a repurchase agreement
is the purchase and sale of a security or a collateralized loan has not been
conclusively established. This might become an issue in the event of the
bankruptcy of the other party to the transaction. In the event of default by
the seller under a repurchase agreement construed to be a collateralized loan,
the underlying securities would not be owned by the Fund or Portfolio, but
would only constitute collateral for the seller's obligation to pay the
repurchase price. Therefore,
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a Fund or Portfolio may suffer time delays and incur costs in connection with
the disposition of the collateral. The Board of Trustees believes that the
collateral underlying repurchase agreements may be more susceptible to claims
of the seller's creditors than would be the case with securities owned by a
Fund or Portfolio. Repurchase agreements maturing in more than seven days are
treated as illiquid for purposes of the Funds' and Portfolios' restrictions on
purchases of illiquid securities. Repurchase agreements are also subject to the
risks described below with respect to stand-by commitments.
Forward Commitments. All the Funds and Portfolios may purchase securities
on a forward commitment basis. In order to invest a Fund's assets immediately,
while awaiting delivery of securities purchased on a forward commitment basis,
short-term obligations that offer same-day settlement and earnings will
normally be purchased. When a commitment to purchase a security on a forward
commitment basis is made, procedures are established consistent with the
General Statement of Policy of the Securities and Exchange Commission
concerning such purchases. Since that policy currently recommends that an
amount of the respective Fund's or Portfolio's assets equal to the amount of
the purchase be held aside or segregated to be used to pay for the commitment,
a separate account of such Fund or Portfolio consisting of cash or liquid
securities equal to the amount of such Fund's or Portfolio's commitments
securities will be established at such Fund's or Portfolio's custodian bank.
For the purpose of determining the adequacy of the securities in the account,
the deposited securities will be valued at market value. If the market value of
such securities declines, additional cash, cash equivalents or highly liquid
securities will be placed in the account daily so that the value of the account
will equal the amount of such commitments by the respective Fund or Portfolio.
Although it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a forward commitment basis may
involve more risk than other types of purchases. Securities purchased on a
forward commitment basis and the securities held in the respective Fund's or
Portfolio's portfolio are subject to changes in value based upon the public's
perception of the issuer and changes, real or anticipated, in the level of
interest rates. Purchasing securities on a forward commitment basis can involve
the risk that the yields available in the market when the delivery takes place
may actually be higher or lower than those obtained in the transaction itself.
On the settlement date of the forward commitment transaction, the respective
Fund or Portfolio will meet its obligations from then available cash flow, sale
of securities held in the separate account, sale of other securities or,
although it would not normally expect to do so, from sale of the forward
commitment securities themselves (which may have a value greater or lesser than
such Fund's or Portfolio's payment obligations). The sale of securities to meet
such obligations may result in the realization of capital gains or losses.
Purchasing securities on a forward commitment basis can also involve the risk
of default by the other party on its obligation, delaying or preventing the
Fund or Portfolio from recovering the collateral or completing the transaction.
To the extent a Fund or Portfolio engages in forward commitment
transactions, it will do so for the purpose of acquiring securities consistent
with its investment objective and policies and not for the purpose of
investment leverage, and settlement of such transactions will be within 90 days
from the trade date.
Floating and Variable Rate Securities; Participation Certificates. The
Fixed Income Funds may invest in floating rate securities, whose interest rates
adjust automatically whenever a specified interest rate changes, and variable
rate securities, whose interest rates are periodically adjusted. Certain of
these instruments permit the holder to demand payment of principal and accrued
interest upon a specified number of days' notice from either the issuer or a
third party. The securities in which the Funds may invest include participation
certificates and certificates of indebtedness or safekeeping. Participation
certificates are pro rata interests in securities held by others; certificates
of indebtedness or safekeeping are documentary receipts for such original
securities held in custody by others. As a result of the floating or variable
rate nature of these investments, the Funds' yields may decline, and they may
forego the opportunity for capital appreciation during periods when interest
rates decline; however, during periods when interest rates increase, the Funds'
yields may increase, and they may have reduced risk of capital depreciation.
Demand features on certain floating or variable rate securities may obligate
the Funds to pay a "tender fee" to a third party. Demand features provided by
foreign banks involve certain risks associated with foreign investments.
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The securities in which certain Funds and Portfolios may be invested
include participation certificates issued by a bank, insurance company or other
financial institution in securities owned by such institutions or affiliated
organizations ("Participation Certificates"). A Participation Certificate gives
a Fund or Portfolio an undivided interest in the security in the proportion
that the Fund's or Portfolio's participation interest bears to the total
principal amount of the security and generally provides the demand feature
described below. Each Participation Certificate is backed by an irrevocable
letter of credit or guaranty of a bank (which may be the bank issuing the
Participation Certificate, a bank issuing a confirming letter of credit to that
of the issuing bank, or a bank serving as agent of the issuing bank with
respect to the possible repurchase of the Participation Certificate) or
insurance policy of an insurance company that the Board of Trustees of the
Trust has determined meets the prescribed quality standards for a particular
Fund or Portfolio.
A Fund or Portfolio may have the right to sell the Participation
Certificate back to the institution and draw on the letter of credit or
insurance on demand after the prescribed notice period, for all or any part of
the full principal amount of the Fund's or Portfolio's participation interest
in the security, plus accrued interest. The institutions issuing the
Participation Certificates would retain a service and letter of credit fee and
a fee for providing the demand feature, in an amount equal to the excess of the
interest paid on the instruments over the negotiated yield at which the
Participation Certificates were purchased by a Fund or Portfolio. The total
fees would generally range from 5% to 15% of the applicable prime rate or other
short-term rate index. With respect to insurance, a Fund or Portfolio will
attempt to have the issuer of the participation certificate bear the cost of
any such insurance, although the Funds and Portfolios retain the option to
purchase insurance if deemed appropriate. Obligations that have a demand
feature permitting a Fund or Portfolio to tender the obligation to a foreign
bank may involve certain risks associated with foreign investment. A Fund's or
Portfolio's ability to receive payment in such circumstances under the demand
feature from such foreign banks may involve certain risks such as future
political and economic developments, the possible establishments of laws or
restrictions that might adversely affect the payment of the bank's obligations
under the demand feature and the difficulty of obtaining or enforcing a
judgment against the bank.
The advisers have been instructed by the Board of Trustees to monitor on
an ongoing basis the pricing, quality and liquidity of the floating and
variable rate securities held by the Funds and Portfolios, including
Participation Certificates, on the basis of published financial information and
reports of the rating agencies and other bank analytical services to which the
Funds and Portfolios may subscribe. Although these instruments may be sold by a
Fund or Portfolio, it is intended that they be held until maturity.
Past periods of high inflation, together with the fiscal measures adopted
to attempt to deal with it, have seen wide fluctuations in interest rates,
particularly "prime rates" charged by banks. While the value of the underlying
floating or variable rate securities may change with changes in interest rates
generally, the floating or variable rate nature of the underlying floating or
variable rate securities should minimize changes in value of the instruments.
Accordingly, as interest rates decrease or increase, the potential for capital
appreciation and the risk of potential capital depreciation is less than would
be the case with a portfolio of fixed rate securities. A Fund's or Portfolio's
portfolio may contain floating or variable rate securities on which stated
minimum or maximum rates, or maximum rates set by state law, limit the degree
to which interest on such floating or variable rate securities may fluctuate;
to the extent it does, increases or decreases in value may be somewhat greater
than would be the case without such limits. Because the adjustment of interest
rates on the floating or variable rate securities is made in relation to
movements of the applicable banks' "prime rates" or other short-term rate
adjustment indices, the floating or variable rate securities are not comparable
to long-term fixed rate securities. Accordingly, interest rates on the floating
or variable rate securities may be higher or lower than current market rates
for fixed rate obligations of comparable quality with similar maturities.
The maturity of variable rate securities is deemed to be the longer of (i)
the notice period required before a Fund or Portfolio is entitled to receive
payment of the principal amount of the security upon demand or (ii) the period
remaining until the security's next interest rate adjustment.
Inverse Floaters and Interest Rate Caps. The Balanced Fund, the U.S.
Government Securities Fund, the Bond Fund, the Short-Term Bond Fund and the
Strategic Income Fund may invest in inverse float-
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ers and in securities with interest rate caps. Inverse floaters are instruments
whose interest rates bear an inverse relationship to the interest rate on
another security or the value of an index. The market value of an inverse
floater will vary inversely with changes in market interest rates and will be
more volatile in response to interest rates changes than that of a fixed-rate
obligation. Interest rate caps are financial instruments under which payments
occur if an interest rate index exceeds a certain predetermined interest rate
level, known as the cap rate, which is tied to a specific index. These
financial products will be more volatile in price than securities which do not
include such a structure.
Borrowings. Each Fund and Portfolio may borrow money from banks for
temporary or short-term purposes. But, none of the Funds or Portfolios, except
for the Strategic Income Fund, may borrow money to buy additional securities,
which is known as "leveraging."
Reverse Repurchase Agreements. Each Fund and Portfolio may enter into
reverse repurchase agreements. Reverse repurchase agreements involve the sale
of securities held by a Fund or Portfolio with an agreement to repurchase the
securities at an agreed upon price and date. Each Fund and Portfolio may use
this practice to generate cash for shareholder redemptions without selling
securities during unfavorable market conditions. Whenever a Fund or Portfolio
enters into a reverse repurchase agreement, it will establish a segregated
account in which it will maintain liquid assets on a daily basis in an amount
at least equal to the repurchase price (including accrued interest). The Fund
or Portfolio would be required to pay interest on amounts obtained through
reverse repurchase agreements, which are considered borrowings under federal
securities laws. The repurchase price is generally equal to the original sales
price plus interest. Reverse repurchase agreements are usually for seven days
or less and cannot be repaid prior to their expiration dates. Reverse
repurchase agreements involve the risk that the market value of the portfolio
securities transferred may decline below the price at which the Fund or
Portfolio is obliged to purchase the securities.
Other Investment Companies. Apart from being able to invest all of their
investable assets in another investment company having substantially the same
investment objectives and policies, each Fund and Portfolio, except the U.S.
Treasury Fund, may invest up to 10% of their total assets in shares of other
investment companies when consistent with its investment objective and
policies, subject to applicable regulatory limitations. Additional fees may be
charged by other investment companies.
Zero Coupon, Payment-in-Kind and Stripped Obligations. The principal and
interest components of United States Treasury bonds with remaining maturities
of longer than ten years are eligible to be traded independently under the
Separate Trading of Registered Interest and Principal of Securities ("STRIPS")
program. Under the STRIPS program, the principal and interest components are
separately issued by the United States Treasury at the request of depository
financial institutions, which then trade the component parts separately. The
interest component of STRIPS may be more volatile than that of United States
Treasury bills with comparable maturities. The risk is greater when the period
to maturity is longer.
Each Fund and Portfolio, except for the Focus Fund, may invest in stripped
obligations. However, whereas the Balanced Fund, the U.S. Government Securities
Fund, the Bond Fund, the Short-Term Bond Fund and the Strategic Income Fund can
invest in all stripped obligations, the U.S. Treasury Income Fund, the Small
Cap Opportunities Fund, the Small Cap Equity Fund, the Large Cap Equity Fund,
the Equity Income Fund, the Growth and Income Portfolio and the Capital Growth
Portfolio may invest up to 20% of their total assets in stripped obligations
only where the underlying obligations are backed by the full faith and credit
of the U.S. Government.
The Balanced Fund, the Bond Fund, the Short-Term Bond Fund, the U.S.
Government Securities Fund, the U.S. Treasury Income Fund and the Strategic
Income Fund may invest in zero coupon securities issued by governmental and
private issuers. Zero coupon securities are debt securities that do not pay
regular interest payments, and instead are sold at substantial discounts from
their value at maturity. When zero coupon obligations are held to maturity,
their entire return, which consists of the amortization of discount, comes from
the difference between their purchase price and maturity value. Because
interest on a zero coupon obligation is not distributed on a current basis, the
obligation tends to be subject to greater price fluc-
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tuations in response to changes in interest rates than are ordinary
interest-paying securities with similar maturities. As with STRIPS, the risk is
greater when the period to maturity is longer. The value of zero coupon
obligations appreciates more than such ordinary interest-paying securities
during periods of declining interest rates and depreciates more than such
ordinary interest-paying securities during periods of rising interest rates.
Under the stripped bond rules of the Internal Revenue Code of 1986, as amended,
investments by a Fund or Portfolio in zero coupon obligations will result in
the accrual of interest income on such investments in advance of the receipt of
the cash corresponding to such income.
Zero coupon securities may be created when a dealer deposits a U.S.
Treasury or federal agency security with a custodian and then sells the coupon
payments and principal payment that will be generated by this security
separately. Proprietary receipts, such as Certificates of Accrual on Treasury
Securities, Treasury Investment Growth Receipts and generic Treasury Receipts,
are examples of stripped U.S. Treasury securities separated into their
component parts through such custodial arrangements.
The Balanced Fund, the Bond Fund, the Short-Term Bond Fund, the U.S.
Government Securities Fund and the Strategic Income Fund may invest in
payment-in-kind obligations. Payment-in-kind ("PIK") bonds are debt obligations
which provide that the issuer thereof may, at its option, pay interest on such
bonds in cash or in the form of additional debt obligations. Such investments
benefit the issuer by mitigating its need for cash to meet debt service, but
also require a higher rate of return to attract investors who are willing to
defer receipt of such cash. Such investments experience greater volatility in
market value due to changes in interest rates than debt obligations which
provide for regular payments of interest. A Fund or Portfolio will accrue
income on such investments for tax and accounting purposes, as required, which
is distributable to shareholders and which, because no cash is received at the
time of accrual, may require the liquidation of other portfolio securities to
satisfy the Fund's or Portfolio's distribution obligations.
Illiquid Securities. For purposes of its limitation on investments in
illiquid securities, each Fund and Portfolio may elect to treat as liquid, in
accordance with procedures established by the Board of Trustees, certain
investments in restricted securities for which there may be a secondary market
of qualified institutional buyers as contemplated by Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act") and commercial
obligations issued in reliance on the so-called "private placement" exemption
from registration afforded by Section 4(2) of the Securities Act ("Section 4(2)
paper"). Rule 144A provides an exemption from the registration requirements of
the Securities Act for the resale of certain restricted securities to qualified
institutional buyers. Section 4(2) paper is restricted as to disposition under
the federal securities laws, and generally is sold to institutional investors
such as a Fund or Portfolio who agree that they are purchasing the paper for
investment and not with a view to public distribution. Any resale of Section
4(2) paper by the purchaser must be in an exempt transaction.
One effect of Rule 144A and Section 4(2) is that certain restricted
securities may now be liquid, though there is no assurance that a liquid market
for Rule 144A securities or Section 4(2) paper will develop or be maintained.
The Trustees have adopted policies and procedures for the purpose of
determining whether securities that are eligible for resale under Rule 144A and
Section 4(2) paper are liquid or illiquid for purposes of the limitation on
investment in illiquid securities. Pursuant to those policies and procedures,
the Trustees have delegated to the advisers the determination as to whether a
particular instrument is liquid or illiquid, requiring that consideration be
given to, among other things, the frequency of trades and quotes for the
security, the number of dealers willing to sell the security and the number of
potential purchasers, dealer undertakings to make a market in the security, the
nature of the security and the time needed to dispose of the security. The
Trustees will periodically review the Funds' and Portfolios' purchases and
sales of Rule 144A securities and Section 4(2) paper.
Convertible Securities. The Strategic Income Fund and all the Equity Funds
and Portfolios, except for the Focus Fund, may invest in convertible
securities, which are securities generally offering fixed interest or dividend
yields that may be converted either at a stated price or stated rate for common
or preferred stock.
Stand-By Commitments. Each Fund and Portfolio may utilize stand-by
commitments in securities sales transactions. In a put transaction, a Fund or
Portfolio acquires the right to sell a security at an agreed
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upon price within a specified period prior to its maturity date, and a stand-by
commitment entitles a Fund or Portfolio to same-day settlement and to receive
an exercise price equal to the amortized cost of the underlying security plus
accrued interest, if any, at the time of exercise. Stand-by commitments are
subject to certain risks, which include the inability of the issuer of the
commitment to pay for the securities at the time the commitment is exercised,
the fact that the commitment is not marketable by a Fund or Portfolio, and that
the maturity of the underlying security will generally be different from that
of the commitment. A put transaction will increase the cost of the underlying
security and consequently reduce the available yield.
Securities Loans. To the extent specified in its Prospectus, each Fund and
Portfolio is permitted to lend its securities to broker-dealers and other
institutional investors in order to generate additional income. Such loans of
portfolio securities may not exceed 30% of the value of a Fund's or Portfolio's
total assets. In connection with such loans, a Fund or Portfolio will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 100% of the
current market value plus accrued interest of the securities loaned. A Fund or
Portfolio can increase its income through the investment of such collateral. A
Fund or Portfolio continues to be entitled to the interest payable or any
dividend-equivalent payments received on a loaned security and, in addition, to
receive interest on the amount of the loan. However, the receipt of any
dividend-equivalent payments by a Fund or Portfolio on a loaned security from
the borrower will not qualify for the dividends-received deduction. Such loans
will be terminable at any time upon specified notice. A Fund or Portfolio might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund or
Portfolio. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower experience financial difficulty. Loans will
be made only to firms deemed by the advisers to be of good standing and will
not be made unless, in the judgment of the advisers, the consideration to be
earned from such loans justifies the risk.
Real Estate Investment Trusts. The Equity Income Fund and the Growth and
Income Portfolio may invest in shares of real estate investment trusts
("REITs"), which are pooled investment vehicles which invest primarily in
income-producing real estate or real estate related loans or interests. REITs
are generally classified as equity REITs or mortgage REITs. Equity REITs invest
the majority of their assets directly in real property and derive income
primarily from the collection of rents. Equity REITs can also realize capital
gains by selling properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages and derive income
from the collection of interest payments. The value of equity trusts will
depend upon the value of the underlying properties, and the value of mortgage
trusts will be sensitive to the value of the underlying loans or interests.
Diversified Funds. The following Funds are classified as "diversified"
under federal securities law: the Bond Fund, the Short-Term Bond Fund, the U.S.
Government Securities Fund, the Balanced Fund, the Equity Income Fund, the
Large Cap Equity Fund, the Core Equity Fund, the Equity Growth Fund and the
Strategic Income Fund.
Unique Characteristics of Master/Feeder Fund Structure. Unlike other
mutual funds which directly acquire and manage their own portfolio securities,
each Fund is permitted to invest all of its investable assets in a separate
registered investment company (a "Master Portfolio"). The Capital Growth Fund,
Growth and Income Fund, Core Equity Fund and Equity Growth Fund utilize this
structure. In that event, a shareholder's interest in a Fund's underlying
investment securities would be indirect. In addition to selling a beneficial
interest to a Fund, a Master Portfolio could also sell beneficial interests to
other mutual funds or institutional investors. Such investors would invest in
such Master Portfolio on the same terms and conditions and would pay a
proportionate share of such Master Portfolio's expenses. However, other
investors in a Master Portfolio would not be required to sell their shares at
the same public offering price as the Fund, and might bear different levels of
ongoing expenses than the Fund. Shareholders of the Funds should be aware that
these differences would result in differences in returns experienced in the
different funds that invest in a Master Portfolio. Such differences in return
are also present in other mutual fund structures.
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Smaller funds investing in a Master Portfolio could be materially affected
by the actions of larger funds investing in the Master Portfolio. For example,
if a large fund were to withdraw from a Master Portfolio, the remaining funds
might experience higher pro rata operating expenses, thereby producing lower
returns. Additionally, the Master Portfolio could become less diverse,
resulting in increased portfolio risk. However, the possibility also exists for
traditionally structured funds which have large or institutional investors.
Funds with a greater pro rata ownership in a Master Portfolio could have
effective voting control of such Master Portfolio. Under this master/feeder
investment approach, whenever the Trust was requested to vote on matters
pertaining to a Master Portfolio, the Trust would hold a meeting of
shareholders of the relevant Fund and would cast all of its votes in the same
proportion as did the Fund's shareholders. Shares of the Fund for which no
voting instructions had been received would be voted in the same proportion as
those shares for which voting instructions had been received. Certain changes
in a Master Portfolio's objective, policies or restrictions might require the
Trust to withdraw the Fund's interest in such Master Portfolio. Any such
withdrawal could result in a distribution in kind of portfolio securities (as
opposed to a cash distribution from such Master Portfolio). The Funds could
incur brokerage fees or other transaction costs in converting such securities
to cash. In addition, a distribution in kind could result in a less diversified
portfolio of investments or adversely affect the liquidity of the Funds.
State securities regulations generally would not permit the same
individuals who are disinterested Trustees of the Trust to be Trustees of a
Master Portfolio absent the adoption of procedures by a majority of the
disinterested Trustees of the Trust reasonably appropriate to deal with
potential conflicts of interest up to and including creating a separate Board
of Trustees. The Funds will not adopt a master/feeder structure under which the
disinterested Trustees of the Trust are Trustees of the Master Portfolio unless
the Trustees of the Trust, including a majority of the disinterested Trustees,
adopt procedures they believe to be reasonably appropriate to deal with any
conflict of interest up to and including creating a separate Board of Trustees.
If a Fund invests all of its investable assets in a Master Portfolio,
investors in the Fund will be able to obtain information about whether
investment in the Master Portfolio might be available through other funds by
contacting the Fund at 1-800-622-4273. In the event a Funds adopt a
master/feeder structure and invests all of its investable assets in a Master
Portfolio, shareholders of the Fund will be given at least 30 days' prior
written notice.
Additional Policies Regarding Derivative and Related Transactions
Introduction. As explained more fully below, the Funds and Portfolios may
employ derivative and related instruments as tools in the management of
portfolio assets. Put briefly, a "derivative" instrument may be considered a
security or other instrument which derives its value from the value or
performance of other instruments or assets, interest or currency exchange
rates, or indexes. For instance, derivatives include futures, options, forward
contracts, structured notes and various over-the-counter instruments.
Like other investment tools or techniques, the impact of using derivatives
strategies or similar instruments depends to a great extent on how they are
used. Derivatives are generally used by portfolio managers in three ways:
first, to reduce risk by hedging (offsetting) an investment position; second,
to substitute for another security particularly where it is quicker, easier and
less expensive to invest in derivatives; and lastly, to speculate or enhance
portfolio performance. When used prudently, derivatives can offer several
benefits, including easier and more effective hedging, lower transaction costs,
quicker investment and more profitable use of portfolio assets. However,
derivatives also have the potential to significantly magnify risks, thereby
leading to potentially greater losses for a Fund or Portfolio.
Each Fund and Portfolio may invest its assets in derivative and related
instruments subject only to the Fund's or Portfolio's investment objective and
policies and the requirement that the Fund or Portfolio maintain segregated
accounts consisting of cash or other liquid assets (or, as permitted by
applicable regulation, enter into certain offsetting positions) to cover its
obligations under such instruments with respect to positions where there is no
underlying portfolio asset so as to avoid leveraging the Fund or Portfolio.
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The value of some derivative or similar instruments in which the Funds or
Portfolios may invest may be particularly sensitive to changes in prevailing
interest rates or other economic factors, and--like other investments of the
Funds and Portfolios--the ability of a Fund or Portfolio to successfully
utilize these instruments may depend in part upon the ability of the advisers
to forecast interest rates and other economic factors correctly. If the
advisers inaccurately forecast such factors and has taken positions in
derivative or similar instruments contrary to prevailing market trends, a Fund
or Portfolio could be exposed to the risk of a loss. The Funds and Portfolios
might not employ any or all of the strategies described herein, and no
assurance can be given that any strategy used will succeed.
Set forth below is an explanation of the various derivatives strategies
and related instruments the Funds or Portfolios may employ along with risks or
special attributes associated with them. This discussion is intended to
supplement the Funds' current prospectuses as well as provide useful
information to prospective investors.
Risk Factors. As explained more fully below and in the discussions of
particular strategies or instruments, there are a number of risks associated
with the use of derivatives and related instruments, and no assurance can be
given that any strategy will succeed. The value of certain derivatives or
related instruments in which a Fund or Portfolio may invest may be particularly
sensitive to changes in prevailing economic conditions and market value. The
ability of the Fund or Portfolio to successfully utilize these instruments may
depend in part upon the ability of its advisers to forecast these factors
correctly. Inaccurate forecasts could expose the Fund or Portfolio to a risk of
loss. There can be no guarantee that there will be a correlation between price
movements in a hedging vehicle and in the portfolio assets being hedged. An
incorrect correlation could result in a loss on both the hedged assets in a
Fund or Portfolio and the hedging vehicle so that the portfolio return might
have been greater had hedging not been attempted. This risk is particularly
acute in the case of "cross-hedges" between currencies. The advisers may
inaccurately forecast interest rates, market values or other economic factors
in utilizing a derivatives strategy. In such a case, a Fund or Portfolio may
have been in a better position had it not entered into such strategy. Hedging
strategies, while reducing risk of loss, can also reduce the opportunity for
gain. In other words, hedging usually limits both potential losses as well as
potential gains. The Funds are not required to use any hedging strategies, and
strategies not involving hedging involve leverage and may increase the risk to
a Fund or Portfolio. Certain strategies, such as yield enhancement, can have
speculative characteristics and may result in more risk to a Fund or Portfolio
than hedging strategies using the same instruments. There can be no assurance
that a liquid market will exist at a time when a Fund or Portfolio seeks to
close out an option, futures contract or other derivative or related position.
Many exchanges and boards of trade limit the amount of fluctuation permitted in
option or futures contract prices during a single day; once the daily limit has
been reached on particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain instruments are relatively new and
without a significant trading history. As a result, there is no assurance that
an active secondary market will develop or continue to exist. Finally,
over-the-counter instruments typically do not have a liquid market. Lack of a
liquid market for any reason may prevent a Fund from liquidating an unfavorable
position. Activities of large traders in the futures and securities markets
involving arbitrage, "program trading," and other investment strategies may
cause price distortions in these markets. In certain instances, particularly
those involving over-the-counter transactions, forward contracts there is a
greater potential that a counterparty or broker may default or be unable to
perform on its commitments. In the event of such a default, a Fund or Portfolio
may experience a loss. In transactions involving currencies, the value of the
currency underlying an instrument may fluctuate due to many factors, including
economic conditions, interest rates, governmental policies and market forces.
Specific Uses and Strategies. Set forth below are explanations of various
strategies involving derivatives and related instruments which may be used by a
Fund or Portfolio.
Options on Securities, Securities Indexes and Debt Instruments. A Fund or
Portfolio may PURCHASE, SELL or EXERCISE call and put options on (i)
securities, (ii) securities indexes, and (iii) debt instruments. Specifically,
each Fund and Portfolio may (i) purchase, write and exercise call and put
options
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on securities and securities indexes (including using options in combination
with securities, other options or derivative instruments) and (ii) enter into
swaps, futures contracts and options on futures contracts. Each Fund and
Portfolio, except for the Focus Fund, may also (i) employ forward currency
contracts and (ii) purchase and sell structured products, which are instruments
designed to restructure or reflect the characteristics of certain other
investments. In addition, the Fixed Income Funds and the Balanced Fund may
employ interest rate contracts. Only the Fixed Income Funds may purchase and
sell mortgage-backed and asset-backed securities as well.
Although in most cases these options will be exchange-traded, the Funds
and Portfolios may also purchase, sell or exercise over-the-counter options.
Over-the-counter options differ from exchange-traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller. As such, over-the-counter options generally have much less market
liquidity and carry the risk of default or nonperformance by the other party.
One purpose of purchasing put options is to protect holdings in an
underlying or related security against a substantial decline in market value.
One purpose of purchasing call options is to protect against substantial
increases in prices of securities the Fund intends to purchase pending its
ability to invest in such securities in an orderly manner. A Fund or Portfolio
may also use combinations of options to minimize costs, gain exposure to
markets or take advantage of price disparities or market movements. For
example, a Fund or Portfolio may sell put or call options it has previously
purchased or purchase put or call options it has previously sold. These
transactions may result in a net gain or loss depending on whether the amount
realized on the sale is more or less than the premium and other transaction
costs paid on the put or call option which is sold. A Fund or Portfolio may
write a call or put option in order to earn the related premium from such
transactions. Prior to exercise or expiration, an option may be closed out by
an offsetting purchase or sale of a similar option. The Funds will not write
uncovered options.
In addition to the general risk factors noted above, the purchase and
writing of options involve certain special risks. During the option period, a
Fund or Portfolio writing a covered call (i.e., where the underlying securities
are held by the Fund or Portfolio) has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but has retained the risk of
loss should the price of the underlying securities decline. The writer of an
option has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying
securities at the exercise price.
If a put or call option purchased by a Fund or Portfolio is not sold when
it has remaining value, and if the market price of the underlying security, in
the case of a put, remains equal to or greater than the exercise price or, in
the case of a call, remains less than or equal to the exercise price, such Fund
or Portfolio will lose its entire investment in the option. Also, where a put
or call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund or Portfolio seeks to close out an
option position. Furthermore, if trading restrictions or suspensions are
imposed on the options markets, a Fund or Portfolio may be unable to close out
a position.
Futures Contracts and Options on Futures Contracts. A Fund or Portfolio
may purchase or sell (i) interest-rate futures contracts, (ii) futures
contracts on specified instruments or indices, and (iii) options on these
futures contracts ("futures options").
The futures contracts and futures options may be based on various
instruments or indices in which the Funds and Portfolios may invest such as
foreign currencies, certificates of deposit, Eurodollar time deposits,
securities indices, economic indices (such as the Consumer Price Indices
compiled by the U.S. Department of Labor).
Futures contracts and futures options may be used to hedge portfolio
positions and transactions as well as to gain exposure to markets. For example,
a Fund or Portfolio may sell a futures contract--or buy
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a futures option--to protect against a decline in value, or reduce the
duration, of portfolio holdings. Likewise, these instruments may be used where
a Fund or Portfolio intends to acquire an instrument or enter into a position.
For example, a Fund or Portfolio may purchase a futures contract--or buy a
futures option--to gain immediate exposure in a market or otherwise offset
increases in the purchase price of securities or currencies to be acquired in
the future. Futures options may also be written to earn the related premiums.
When writing or purchasing options, the Funds and Portfolios may
simultaneously enter into other transactions involving futures contracts or
futures options in order to minimize costs, gain exposure to markets, or take
advantage of price disparities or market movements. Such strategies may entail
additional risks in certain instances. The Funds and Portfolios may engage in
cross-hedging by purchasing or selling futures or options on a security or
currency different from the security or currency position being hedged to take
advantage of relationships between the two securities or currencies.
Investments in futures contracts and options thereon involve risks similar
to those associated with options transactions discussed above. The Funds and
Portfolios will only enter into futures contracts or options on futures
contracts which are traded on a U.S. or foreign exchange or board of trade, or
similar entity, or quoted on an automated quotation system.
Forward Contracts. A Fund and Portfolio may use foreign currency and
interest-rate forward contracts for various purposes as described below.
Foreign currency exchange rates may fluctuate significantly over short
periods of time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or perceived changes in interest rates and other
complex factors, as seen from an international perspective. A Fund or Portfolio
that may invest in securities denominated in foreign currencies may, in
addition to buying and selling foreign currency futures contracts and options
on foreign currencies and foreign currency futures, enter into forward foreign
currency exchange contracts to reduce the risks or otherwise take a position in
anticipation of changes in foreign exchange rates. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be a fixed number of days from the date of
the contract agreed upon by the parties, at a price set at the time of the
contract. By entering into a forward foreign currency contract, a Fund or
Portfolio "locks in" the exchange rate between the currency it will deliver and
the currency it will receive for the duration of the contract. As a result, a
Fund or Portfolio reduces its exposure to changes in the value of the currency
it will deliver and increases its exposure to changes in the value of the
currency it will exchange into. The effect on the value of a Fund or Portfolio
is similar to selling securities denominated in one currency and purchasing
securities denominated in another. Transactions that use two foreign currencies
are sometimes referred to as "cross-hedges."
A Fund or Portfolio may enter into these contracts for the purpose of
hedging against foreign exchange risk arising from the Fund's or Portfolio'
investments or anticipated investments in securities denominated in foreign
currencies. A Fund or Portfolio may also enter into these contracts for
purposes of increasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one country to another.
A Fund or Portfolio may also use forward contracts to hedge against
changes in interest rates, increase exposure to a market or otherwise take
advantage of such changes. An interest-rate forward contract involves the
obligation to purchase or sell a specific debt instrument at a fixed price at a
future date.
Interest Rate and Currency Transactions. A Fund or Portfolio may employ
currency and interest rate management techniques, including transactions in
options (including yield curve options), futures, options on futures, forward
foreign currency exchange contracts, currency options and futures and currency
and interest rate swaps. The aggregate amount of a Fund's or Portfolio's net
currency exposure will not exceed the total net asset value of its portfolio.
However, to the extent that a Fund or Portfolio is fully invested while also
maintaining currency positions, it may be exposed to greater combined risk.
The Funds and Portfolios will only enter into interest rate and currency
swaps on a net basis, i.e., the two payment streams are netted out, with the
Fund or Portfolio receiving or paying, as the case may be, only
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the net amount of the two payments. Interest rate and currency swaps do not
involve the delivery of securities, the underlying currency, other underlying
assets or principal. Accordingly, the risk of loss with respect to interest
rate and currency swaps is limited to the net amount of interest or currency
payments that a Fund or Portfolio is contractually obligated to make. If the
other party to an interest rate or currency swap defaults, a Fund's or
Portfolio's risk of loss consists of the net amount of interest or currency
payments that the Fund or Portfolio is contractually entitled to receive. Since
interest rate and currency swaps are individually negotiated, the Funds and
Portfolios expect to achieve an acceptable degree of correlation between their
portfolio investments and their interest rate or currency swap positions.
A Fund or Portfolio may hold foreign currency received in connection with
investments in foreign securities when it would be beneficial to convert such
currency into U.S. dollars at a later date, based on anticipated changes in the
relevant exchange rate.
A Fund or Portfolio may purchase or sell without limitation as to a
percentage of its assets forward foreign currency exchange contracts when the
advisers anticipate that the foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by such Fund or Portfolio. In
addition, a Fund or Portfolio may enter into forward foreign currency exchange
contracts in order to protect against adverse changes in future foreign
currency exchange rates. A Fund or Portfolio may engage in cross-hedging by
using forward contracts in one currency to hedge against fluctuations in the
value of securities denominated in a different currency if its advisers believe
that there is a pattern of correlation between the two currencies. Forward
contracts may reduce the potential gain from a positive change in the
relationship between the U.S. Dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for a Fund
or Portfolio than if it had not entered into such contracts. The use of foreign
currency forward contracts will not eliminate fluctuations in the underlying
U.S. dollar equivalent value of the prices of or rates of return on a Fund's or
Portfolio's foreign currency denominated portfolio securities and the use of
such techniques will subject the Fund or Portfolio to certain risks.
The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund or Portfolio may not always be able to enter into foreign
currency forward contracts at attractive prices, and this will limit a Fund's
or Portfolio's ability to use such contract to hedge or cross-hedge its assets.
Also, with regard to a Fund's or Portfolio's use of cross-hedges, there can be
no assurance that historical correlations between the movement of certain
foreign currencies relative to the U.S. dollar will continue. Thus, at any time
poor correlation may exist between movements in the exchange rates of the
foreign currencies underlying a Fund's or Portfolio's cross-hedges and the
movements in the exchange rates of the foreign currencies in which the Fund's
or Portfolio's assets that are the subject of such cross-hedges are
denominated.
A Fund or Portfolio may enter into interest rate and currency swaps to the
maximum allowed limits under applicable law. A Fund or Portfolio will typically
use interest rate swaps to shorten the effective duration of its portfolio.
Interest rate swaps involve the exchange by a Fund or Portfolio with another
party of their respective commitments to pay or receive interest, such as an
exchange of fixed rate payments for floating rate payments. Currency swaps
involve the exchange of their respective rights to make or receive payments in
specified currencies.
Mortgage-Related Securities. A Fund or Portfolio may purchase
mortgage-backed securities--i.e., securities representing an ownership interest
in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Mortgage loans included in
the pool--but not the security itself--may be insured by the Government National
Mortgage Association or the Federal Housing Administration or guaranteed by the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Veterans Administration, which guarantees are supported only
by the discretionary authority of the U.S. Government to purchase the agency's
obligations. Mortgage-backed securities
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provide investors with payments consisting of both interest and principal as
the mortgages in the underlying mortgage pools are paid off. Although providing
the potential for enhanced returns, mortgage-backed securities can also be
volatile and result in unanticipated losses.
The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of the
principal invested far in advance of the maturity of the mortgages in the pool.
The actual rate of return of a mortgage-backed security may be adversely
affected by the prepayment of mortgages included in the mortgage pool
underlying the security. In addition, as with callable fixed-income securities
generally, if the Fund or Portfolio purchased the securities at a premium,
sustained early repayment would limit the value of the premium.
A Fund or Portfolio may also invest in securities representing interests
in collateralized mortgage obligations ("CMOs"), real estate mortgage
investment conduits ("REMICs") and in pools of certain other asset-backed bonds
and mortgage pass-through securities. Like a bond, interest and prepaid
principal are paid, in most cases, monthly. CMOs may be collateralized by whole
residential or commercial mortgage loans but are more typically collateralized
by portfolios of mortgage pass-through securities guaranteed by the U.S.
Government, or U.S. Government-related entities, and their income streams.
CMOs are structured into multiple classes, each bearing a different
expected average life and/or stated maturity. Actual maturity and average life
will depend upon the prepayment experience of the collateral. Monthly payments
of principal received from the pool of underlying mortgages, including
prepayments, are allocated to different classes in accordance with the terms of
the instruments, and changes in prepayment rates or assumptions may
significantly affect the expected average life and value of a particular class.
REMICs include governmental and/or private entities that issue a fixed
pool of mortgages secured by an interest in real property. REMICs are similar
to CMOs in that they issue multiple classes of securities. REMICs issued by
private entities are not U.S. Government securities and are not directly
guaranteed by any government agency. They are secured by the underlying
collateral of the private issuer.
The Balanced Fund, the U.S. Government Securities Fund, the Bond Fund, the
Short-Term Bond Fund and the Strategic Income Fund may also invest in
principal-only or interest-only stripped mortgage-backed securities. Stripped
mortgage-backed securities have greater volatility than other types of
mortgage-related securities. Stripped mortgage-backed securities, which are
purchased at a substantial premium or discount, generally are extremely
sensitive not only to changes in prevailing interest rates but also to the rate
of principal payments (including prepayments) on the related underlying
mortgage assets, and a rapid rate of principal payments may have a material
adverse effect on such securities' yield to maturity. In addition, stripped
mortgage securities may be illiquid.
The advisers expect that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. The mortgages underlying these securities
may include alternative mortgage instruments, that is, mortgage instruments
whose principal or interest payments may vary or whose terms to maturity may
differ from customary long-term fixed-rate mortgages. A Fund or Portfolio may
also invest in debentures and other securities of real estate investment
trusts. As new types of mortgage-related securities are developed and offered
to investors, the Funds and Portfolios may consider making investments in such
new types of mortgage-related securities.
Dollar Rolls. Under a mortgage "dollar roll," a Fund sells mortgage-backed
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period, a Fund forgoes principal and
interest paid on the mortgage-backed securities. A Fund is compensated by the
difference between the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. A Fund may only enter into
covered rolls. A "covered
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roll" is a specific type of dollar roll for which there is an offsetting cash
position which matures on or before the forward settlement date of the dollar
roll transaction. At the time a Fund enters into a mortgage "dollar roll", it
will establish a segregated account with its custodian bank in which it will
maintain cash or liquid securities equal in value to its obligations in respect
of dollar rolls, and accordingly, such dollar rolls will not be considered
borrowings. Mortgage dollar rolls involve the risk that the market value of the
securities the Fund is obligated to repurchase under the agreement may decline
below the repurchase price. Also, these transactions involve some risk to the
Fund or Portfolio if the other party should default on its obligation and the
Fund or Portfolio is delayed or prevented from completing the transaction. In
the event the buyer of securities under a mortgage dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of proceeds of the dollar roll
may be restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the
securities.
Asset-Backed Securities. A Fund or Portfolio may invest in asset-backed
securities, which represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool of
assets similar to one another, such as motor vehicle receivables or credit card
receivables. These securities also include conditional sales contracts,
equipment lease certificates and equipment trust certificates. The advisers
expect that other asset-backed securities (unrelated to mortgage loans) will be
offered to investors in the future. Several types of asset-backed securities
already exist, including, for example, "Certificates for Automobile
Receivables(SM)" or "CARS(SM)" ("CARS"). CARS represent undivided fractional
interests in a trust whose assets consist of a pool of motor vehicle retail
installment sales contracts and security interests in the vehicles securing the
contracts. Payments of principal and interest on CARS are passed-through
monthly to certificate holders, and are guaranteed up to certain amounts and
for a certain time period by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the CARS trust. An
investor's return on CARS may be affected by early prepayment of principal on
the underlying vehicle sales contracts. If the letter of credit is exhausted,
the CARS trust may be prevented from realizing the full amount due on a sales
contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the obtaining of deficiency judgments
following such sales or because of depreciation, damage or loss of a vehicle,
the application of federal and state bankruptcy and insolvency laws, the
failure of servicers to take appropriate steps to perfect the CARS trust's
rights in the underlying loans and the servicer's sale of such loans to bona
fide purchasers, giving rise to interests in such loans superior to those of
the CARS trust, or other factors. As a result, certificate holders may
experience delays in payments or losses if the letter of credit is exhausted. A
Fund or Portfolio also may invest in other types of asset-backed securities. In
the selection of other asset-backed securities, the advisers will attempt to
assess the liquidity of the security giving consideration to the nature of the
security, the frequency of trading in the security, the number of dealers
making a market in the security and the overall nature of the marketplace for
the security.
Structured Products. A Fund or Portfolio may invest in interests in
entities organized and operated solely for the purpose of restructuring the
investment characteristics of certain other investments. This type of
restructuring involves the deposit with or purchase by an entity, such as a
corporation or trust, or specified instruments (such as commercial bank loans)
and the issuance by that entity of one or more classes of securities
("structured products") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured products to create securities with different
investment characteristics such as varying maturities, payment priorities and
interest rate provisions, and the extent of the payments made with respect to
structured products is dependent on the extent of the cash flow on the
underlying instruments. A Fund or Portfolio may invest in structured products
which represent derived investment positions based on relationships among
different markets or asset classes.
A Fund or Portfolio may also invest in other types of structured products,
including, among others, inverse floaters, spread trades and notes linked by a
formula to the price of an underlying instrument. Inverse floaters have coupon
rates that vary inversely at a multiple of a designated floating rate (which
typically is determined by reference to an index rate, but may also be
determined through a dutch auction or a remar-
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keting agent or by reference to another security) (the "reference rate"). As an
example, inverse floaters may constitute a class of CMOs with a coupon rate
that moves inversely to a designated index, such as LIBOR (London Interbank
Offered Rate) or the Cost of Funds Index. Any rise in the reference rate of an
inverse floater (as a consequence of an increase in interest rates) causes a
drop in the coupon rate while any drop in the reference rate of an inverse
floater causes an increase in the coupon rate. A spread trade is an investment
position relating to a difference in the prices or interest rates of two
securities where the value of the investment position is determined by
movements in the difference between the prices or interest rates, as the case
may be, of the respective securities. When a Fund or Portfolio invests in notes
linked to the price of an underlying instrument, the price of the underlying
security is determined by a multiple (based on a formula) of the price of such
underlying security. A structured product may be considered to be leveraged to
the extent its interest rate varies by a magnitude that exceeds the magnitude
of the change in the index rate of interest. Because they are linked to their
underlying markets or securities, investments in structured products generally
are subject to greater volatility than an investment directly in the underlying
market or security. Total return on the structured product is derived by
linking return to one or more characteristics of the underlying instrument.
Because certain structured products of the type in which a Fund or Portfolio
may invest may involve no credit enhancement, the credit risk of those
structured products generally would be equivalent to that of the underlying
instruments. A Fund or Portfolio may invest in a class of structured products
that is either subordinated or unsubordinated to the right of payment of
another class. Subordinated structured products typically have higher yields
and present greater risks than unsubordinated structured products. Although a
Fund's or Portfolio's purchase of subordinated structured products would have
similar economic effect to that of borrowing against the underlying securities,
the purchase will not be deemed to be leverage for purposes of a Fund's or
Portfolio' fundamental investment limitation related to borrowing and leverage.
Certain issuers of structured products may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, a Fund's investments in
these structured products may be limited by the restrictions contained in the
1940 Act. Structured products are typically sold in private placement
transactions, and there currently is no active trading market for structured
products. As a result, certain structured products in which a Fund or Portfolio
invests may be deemed illiquid and subject to its limitation on illiquid
investments.
Investments in structured products generally are subject to greater
volatility than an investment directly in the underlying market or security. In
addition, because structured products are typically sold in private placement
transactions, there currently is no active trading market for structured
products.
Additional Restrictions on the Use of Futures and Option Contracts. None
of the Funds is a "commodity pool" (i.e., a pooled investment vehicle which
trades in commodity futures contracts and options thereon and the operator of
which is registered with the CFTC) and futures contracts and futures options
will be purchased, sold or entered into only for bona fide hedging purposes,
provided that a Fund may enter into such transactions for purposes other than
bona fide hedging if, immediately thereafter, the sum of the amount of its
initial margin and premiums on open contracts and options would not exceed 5%
of the liquidation value of the Fund's portfolio, provided, further, that, in
the case of an option that is in-the-money, the in-the-money amount may be
excluded in calculating the 5% limitation.
When a Fund or Portfolio purchases a futures contract, an amount of cash
or cash equivalents or high quality debt securities will be deposited in a
segregated account with such Fund's or Portfolio's custodian or sub-custodian
so that the amount so segregated, plus the initial deposit and variation margin
held in the account of its broker, will at all times equal the value of the
futures contract, thereby insuring that the use of such futures is unleveraged.
Investment Restrictions
The Funds and Portfolios have adopted the following investment
restrictions which may not be changed without approval by a "majority of the
outstanding shares" of a Fund or Portfolio which, as used in this Statement of
Additional Information, means the vote of the lesser of (i) 67% or more of the
shares
19
<PAGE>
of a Fund or total beneficial interests of a Portfolio present at a meeting, if
the holders of more than 50% of the outstanding shares of a Fund or total
beneficial interests of a Portfolio are present or represented by proxy, or
(ii) more than 50% of the outstanding shares of a Fund or total beneficial
interests of a Portfolio. Except as otherwise indicated herein, the Fund or
Portfolio is not subject to any percentage limits with respect to the practices
described below.
Whenever the Trust is requested to vote on a fundamental policy of a
Portfolio, the Trust will hold a meeting of shareholders of the Fund that
invests in such Portfolio and will cast its votes as instructed by the
shareholders of such Fund.
Except for the investment objectives of the Balanced Fund, the Large Cap
Equity Fund, the Short-Term Bond Fund, the U.S. Government Securities Fund and
the U.S. Treasury Income Fund, as well as the investment policies designated as
fundamental herein, the Funds' investment policies are not fundamental. In the
event of a change in a Fund's investment objective where the investment
objective is not fundamental, shareholders will be given at least 30 days'
written notice prior to such a change.
With respect to the Core Equity Fund, the Equity Growth Fund, the Growth
and Income Fund and the Capital Growth Fund, it is a fundamental policy of each
Fund that when the Fund holds no portfolio securities except interests in the
Portfolio in which it invests, the Fund's investment objective and policies
shall be identical to the Portfolio's investment objective and policies, except
for the following: a Fund (1) may invest more than 10% of its net assets in the
securities of a registered investment company, (2) may hold more than 10% of
the voting securities of a registered investment company, and (3) will
concentrate its investments in the investment company. It is a fundamental
investment policy of each such Fund that when the Fund holds only portfolio
securities other than interests in the Portfolio, the Fund's investment
objective and policies shall be identical to the investment objective and
policies of the Portfolio at the time the assets of the Fund were withdrawn
from the Portfolio.
Each Fund and Portfolio may not:
(1) borrow money, except that each Fund and Portfolio may borrow
money for temporary or emergency purposes, or by engaging in reverse
repurchase transactions, in an amount not exceeding 33-1/3% of the value
of its total assets at the time when the loan is made and may pledge,
mortgage or hypothecate no more than 1/3 of its net assets to secure such
borrowings. Each Fund and Portfolio other than the Strategic Income Fund
may borrow money only for temporary or emergency purposes. Any borrowings
representing more than 5% of a Fund's or Portfolio's total assets for each
Fund or Portfolio other than the Strategic Income Fund, must be repaid
before the Fund or Portfolio may make additional investments;
(2) make loans, except that each Fund and Portfolio may: (i) purchase
and hold debt instruments (including without limitation, bonds, notes,
debentures or other obligations and certificates of deposit, bankers'
acceptances and fixed time deposits) in accordance with its investment
objectives and policies; (ii) enter into repurchase agreements with
respect to portfolio securities; and (iii) lend portfolio securities with
a value not in excess of one-third of the value of its total assets;
(3) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's or Portfolio's total assets would be
invested in the securities of companies whose principal business
activities are in the same industry. Notwithstanding the foregoing, with
respect to a Fund's or Portfolio's permissible futures and options
transactions in U.S. Government securities, positions in such options and
futures shall not be subject to this restriction;
(4) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent
a Fund or Portfolio from (i) purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities or (ii) engaging in forward purchases or sales of
foreign currencies or securities;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund or Portfolio from investing insecurities or other instru-
20
<PAGE>
ments backed by real estate or securities of companies engaged in the real
estate business). Investments by a Fund or Portfolio in securities backed
by mortgages on real estate or in marketable securities of companies
engaged in such activities are not hereby precluded;
(6) issue any senior security (as defined in the 1940 Act), except
that (a) a Fund or Portfolio may engage in transactions that may result in
the issuance of senior securities to the extent permitted under applicable
regulations and interpretations of the 1940 Act or an exemptive order; (b)
a Fund or Portfolio may acquire other securities, the acquisition of which
may result in the issuance of a senior security, to the extent permitted
under applicable regulations or interpretations of the 1940 Act; and (c)
subject to the restrictions set forth above, a Fund or Portfolio may
borrow money as authorized by the 1940 Act. For purposes of this
restriction, collateral arrangements with respect to permissible options
and futures transactions, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security; or
(7) underwrite securities issued by other persons except insofar as a
Fund or Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling a portfolio security.
In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, each Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as the
Fund. For purposes of investment restriction (5) above, real estate includes
Real Estate Limited Partnerships.
For purposes of investment restriction (3) above, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as
an "industry." Investment restriction (3) above, however, is not applicable to
investments by a Fund or Portfolio in municipal obligations where the issuer is
regarded as a state, city, municipality or other public authority since such
entities are not members of an "industry." Supranational organizations are
collectively considered to be members of a single "industry" for purposes of
restriction (3) above.
In addition, each Fund and Portfolio is subject to the following
nonfundamental restrictions which may be changed without shareholder approval:
(1) Each Fund other than the Capital Growth Fund, Focus Fund, Growth
and Income Fund, Small Cap Opportunities Fund, Small Cap Equity Fund and
U.S. Treasury Income Fund may not, with respect to 75% of its assets, hold
more than 10% of the outstanding voting securities of any issuer or invest
more than 5% of its assets in the securities of any one issuer (other than
obligations of the U.S. Government, its agencies and instrumentalities);
Each Portfolio and each of the Capital Growth Fund, Focus Fund, Growth and
Income Fund, Small Cap Opportunities Fund, Small Cap Equity Fund and U.S.
Treasury Income Fund may not, with respect to 50% of its assets, hold more
than 10% of the outstanding voting securities of any issuer.
(2) Each Fund and Portfolio may not make short sales of securities,
other than short sales "against the box," or purchase securities on margin
except for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to limit
the use of options, futures contracts and related options, in the manner
otherwise permitted by the investment restrictions, policies and
investment program of a Fund or Portfolio. No Fund or Portfolio has the
current intention of making short sales against the box.
(3) Each Fund and Portfolio may not purchase or sell interests in
oil, gas or mineral leases.
(4) Each Fund and Portfolio may not invest more than 15% of its net
assets in illiquid securities.
(5) Each Fund and Portfolio may not write, purchase or sell any put
or call option or any combination thereof, provided that this shall not
prevent (i) the writing, purchasing or selling of puts, calls or
combinations thereof with respect to portfolio securities or (ii) with
respect to a Fund's or Portfolio's
21
<PAGE>
permissible futures and options transactions, the writing, purchasing,
ownership, holding or selling of futures and options positions or of puts,
calls or combinations thereof with respect to futures.
(6) Except as specified above, each Fund and Portfolio may invest in
the securities of other investment companies to the extent permitted by
applicable Federal securities law; provided, however, that a Mauritius
holding company (a "Mauritius Portfolio Company") will not be considered
an investment company for this purpose.
For purposes of the Funds' and Portfolios' investment restrictions,
the issuer of a tax-exempt security is deemed to be the entity (public or
private) ultimately responsible for the payment of the principal of and
interest on the security.
In order to permit the sale of its shares in certain states and
foreign countries, a Fund or Portfolio may make commitments more
restrictive than the investment policies and limitations described above
and in its Prospectus. Should a Fund or Portfolio determine that any such
commitment is no longer in its best interests, it will revoke the
commitment by terminating sales of its shares in the state or country
involved. In order to comply with certain regulatory policies, as a matter
of operating policy, each Fund and Portfolio will not: (i) borrow money in
an amount which would cause, at the time of such borrowing, the aggregate
amount of borrowing by the Fund to exceed 10% of the value of the Fund's
total assets, (ii) invest more than 10% of its total assets in the
securities of any one issuer (other than obligations of the U.S.
Government, its agencies and instrumentalities), (iii) acquire more than
10% of the outstanding shares of any issuer and may not acquire more than
15% of the outstanding shares of any issuer together with other mutual
funds managed by The Chase Manhattan Bank, (iv) invest more than 10% of
its total assets in the securities of other investment companies, except
as they might be acquired as part of a merger, consolidation or
acquisition of assets, (v) invest more than 10% of its net assets in
illiquid securities (which include securities restricted as to resale
unless they are determined to be readily marketable in accordance with the
procedures established by the Board of Trustees), (vi) grant privileges to
purchase shares of the Fund to shareholders or investors by issuing
warrants, subscription rights or options, or other similar rights or (vii)
sell, purchase or loan securities (excluding shares in the Fund) or grant
or receive a loan or loans to or from the adviser, corporate and
domiciliary agent, or paying agent, the distributors and the authorized
agents or any of their directors, officers or employees or any of their
major shareholders (meaning a shareholder who holds, in his own or other
name (as well as a nominee's name), more than 10% of the total issued and
outstanding shares of stock of such company) acting as principal, or for
their own account, unless the transaction is made within the other
restrictions set forth above and either (a) at a price determined by
current publicly available quotations, or (b) at competitive prices or
interest rates prevailing from time to time on internationally recognized
securities markets or internationally recognized money markets.
A Mauritius Portfolio Company is a special purpose company organized
under the laws of the Republic of Mauritius. The Fund may invest in India
through a Mauritius Portfolio Company, which is intended to allow a Fund
to take advantage of a favorable tax treaty between India and Mauritius.
If a percentage or rating restriction on investment or use of assets
set forth herein or in a Prospectus is adhered to at the time a
transaction is effected, later changes in percentage resulting from any
cause other than actions by a Fund or Portfolio will not be considered a
violation. If the value of a Fund's or Portfolio's holdings of illiquid
securities at any time exceeds the percentage limitation applicable at the
time of acquisition due to subsequent fluctuations in value or other
reasons, the Board of Trustees will consider what actions, if any, are
appropriate to maintain adequate liquidity.
Portfolio Transactions and Brokerage Allocation
Specific decisions to purchase or sell securities for a Fund or Portfolio
are made by a portfolio manager who is an employee of the adviser or
sub-adviser to such Fund or Portfolio and who is appointed and supervised by
senior officers of such adviser or sub-adviser. Changes in a Fund's or
Portfolio's investments are
22
<PAGE>
reviewed by the Board of Trustees of the Trust or Portfolio. The portfolio
managers may serve other clients of the advisers in a similar capacity.
The frequency of a Fund's or Portfolio's portfolio transactions--the
portfolio turnover rate--will vary from year to year depending upon market
conditions. A high turnover rate may increase transaction costs, including
brokerage commissions and dealer mark-ups, and the possibility of taxable
short-term gains. A high turn-over rate could thus make it more difficult for a
Fund to qualify as a registered investment company under federal tax law.
Therefore, the advisers will weigh the added costs of short-term investment
against anticipated gains, and each Fund or Portfolio will engage in portfolio
trading if its advisers believe a transaction, net of costs (including
custodian charges), will help it achieve its investment objective. Funds
investing in both equity and debt securities apply this policy with respect to
both the equity and debt portions of their portfolios.
For the fiscal years ended October 31, 1996, 1997 and 1998, the annual
rates of portfolio turnover for the following Funds were as follows:
<TABLE>
<CAPTION>
1996 1997 1998
--------- -------- --------
<S> <C> <C> <C>
Balanced Fund 149% 136% 94%
U.S. Treasury Income Fund 103% 179% 75%
Growth and Income Fund * * *
Capital Growth Fund * * *
Equity Income Fund 114% 75% 160%
Bond Fund 122% 823% 329%
Short-Term Bond Fund 158% 471% 439%
Large Cap Equity Fund 89% 72% 72%
Small Cap Equity Fund 78% 55% 74%
Small Cap Opportunities Fund -- -- 68%
U.S. Government Securities Fund -- 569% 590%
</TABLE>
- ----------
* The Growth and Income Fund and the Capital Growth Fund invest all of their
investable assets in their respective Portfolio and do not invest directly
in a portfolio of assets, and therefore do not have reportable portfolio
turnover rates. The portfolio turnover rates for the Growth and Income
Portfolio and the Capital Growth Portfolio for the fiscal year ended October
31, 1996, the portfolio turnover rates were 62% and 90%, respectively, for
the fiscal year ended October 31, 1997, the portfolio turnover rates were
65% and 67%, respectively, and for the fiscal year ended October 31, 1998,
the portfolio turnover rates were 113% and 104%, respectively.
For the fiscal period December 1, 1995 through October 31, 1996, the
annual portfolio turnover rate for the U.S. Government Securities Fund was
101%.
For the period May 13, 1997 through October 31, 1997, the Small Cap
Opportunities Fund had a portfolio turnover rate of 7%.
For the fiscal period from June 30, 1998 through October 31, 1998, the
annual rate of portfolio turnover for Focus Fund was 33%.
For the fiscal year ended October 31, 1999, the annual rate of portfolio
turnover for Strategic Income Fund is not expected to exceed 100%.
Under the advisory agreement and the sub-advisory agreements, the adviser
and sub-advisers shall use their best efforts to seek to execute portfolio
transactions at prices which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds and Portfolios. In assessing the
best overall terms available for any transaction, the adviser and sub-advisers
consider all factors they deem relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, research services provided to the adviser
or sub-advisers, and the rea-
23
<PAGE>
sonableness of the commissions, if any, both for the specific transaction and
on a continuing basis. The adviser and sub-advisers are not required to obtain
the lowest commission or the best net price for any Fund or Portfolio on any
particular transaction, and are not required to execute any order in a fashion
either preferential to any or Portfolio Fund relative to other accounts they
manage or otherwise materially adverse to such other accounts.
Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case of
securities traded in the over-the-counter market (where no stated commissions
are paid but the prices include a dealer's markup or markdown), the adviser or
sub-adviser to a Fund or Portfolio normally seeks to deal directly with the
primary market makers unless, in its opinion, best execution is available
elsewhere. In the case of securities purchased from underwriters, the cost of
such securities generally includes a fixed underwriting commission or
concession. From time to time, soliciting dealer fees are available to the
adviser or sub-adviser on the tender of a Fund's or Portfolio's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for a Funds and Portfolios by the adviser and
sub-advisers. At present, no other recapture arrangements are in effect.
Under the advisory and sub-advisory agreements and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may
cause the Funds and Portfolios to pay a broker-dealer which provides brokerage
and research services to the adviser or sub-advisers, the Funds or Portfolios
and/or other accounts for which they exercise investment discretion an amount
of commission for effecting a securities transaction for a Fund or Portfolio in
excess of the amount other broker-dealers would have charged for the
transaction if they determine in good faith that the greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of either a particular
transaction or their overall responsibilities to accounts over which they
exercise investment discretion. Not all of such services are useful or of value
in advising the Funds and Portfolios. The adviser and sub-advisers report to
the Board of Trustees regarding overall commissions paid by the Funds and
Portfolios and their reasonableness in relation to the benefits to the Funds
and Portfolios. The term "brokerage and research services" includes advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or of purchasers or
sellers of securities, furnishing analyses and reports concerning issues,
industries, securities, economic factors and trends, portfolio strategy and the
performance of accounts, and effecting securities transactions and performing
functions incidental thereto such as clearance and settlement.
The management fees that the Funds and Portfolios pay to the adviser will
not be reduced as a consequence of the adviser's or sub-advisers' receipt of
brokerage and research services. To the extent the Funds' or Portfolios'
portfolio transactions are used to obtain such services, the brokerage
commissions paid by the Funds or Portfolios will exceed those that might
otherwise be paid by an amount which cannot be presently determined. Such
services generally would be useful and of value to the adviser or sub-advisers
in serving one or more of their other clients and, conversely, such services
obtained by the placement of brokerage business of other clients generally
would be useful to the adviser and sub-advisers in carrying out their
obligations to the Funds and Portfolios. While such services are not expected
to reduce the expenses of the adviser or sub-advisers, the advisers would,
through use of the services, avoid the additional expenses which would be
incurred if they should attempt to develop comparable information through their
own staffs.
In certain instances, there may be securities that are suitable for one or
more of the Funds and Portfolios as well as one or more of the adviser's or
sub-advisers' other clients. Investment decisions for the Funds and Portfolios
and for other clients are made with a view to achieving their respective
investment objectives. It may develop that the same investment decision is made
for more than one client or that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling that same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable
for the investment objectives of more than one client. When two or more Funds
or Portfolios or other clients are simultaneously
24
<PAGE>
engaged in the purchase or sale of the same security, the securities are
allocated among clients in a manner believed to be equitable to each. It is
recognized that in some cases this system could have a detrimental effect on
the price or volume of the security as far as the Funds or Portfolios are
concerned. However, it is believed that the ability of the Funds and Portfolios
to participate in volume transactions will generally produce better executions
for the Funds and Portfolios.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Capital
Growth Portfolio paid aggregate brokerage commissions of $1,618,640, $2,240,823
and $3,781,335, respectively. For the fiscal years ended October 31, 1996, 1997
and 1998, the Growth and Income Portfolio paid aggregate brokerage commissions
of $1,304,272, $3,456,823 and $7,074,824, respectively.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Large Cap
Equity Fund paid aggregate brokerage commissions of $201,001, $171,628 and
$258,341, respectively.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Balanced
Fund paid aggregate brokerage commissions of $62,036, $62,342 and $82,860,
respectively.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Small Cap
Equity Fund paid aggregate brokerage commissions of $327,762, $716,769 and
$858,732, respectively.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Equity
Income Fund paid aggregate brokerage commissions of $44,136, $75,090 and
$392,017, respectively.
For the period from May 13, 1997 through October 31, 1997 and the fiscal
year ended October 31, 1998, the Small Cap Opportunities Fund paid aggregate
brokerage commissions of $49,826 and $131,466, respectively.
For the period June 30, 1998 through October 31, 1998, the Focus Fund paid
aggregate brokerage commissions of $52,166.
No portfolio transactions are executed with the advisers or a Shareholder
Servicing Agent, or with any affiliate of the advisers or a Shareholder
Servicing Agent, acting either as principal or as broker.
PERFORMANCE INFORMATION
From time to time, a Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Performance is calculated separately for each
class of shares. Because such performance information is based on past
investment results, it should not be considered as an indication or
representation of the performance of any classes of a Fund in the future. From
time to time, the performance and yield of classes of a Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of a Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the
performance and yield of a Fund or its classes. A Fund's performance may be
compared with indices such as the Lehman Brothers Government/Corporate Bond
Index, the Lehman Brothers Government Bond Index, the Lehman Government Bond
1-3 Year Index and the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow
Jones Industrial Average or any other commonly quoted index of common stock
prices; and the Russell 2000 Index and the NASDAQ Composite Index.
Additionally, a Fund may, with proper authorization, reprint articles written
about such Fund and provide them to prospective shareholders.
25
<PAGE>
A Fund may provide period and average annual "total rates of return." The
"total rate of return" refers to the change in the value of an investment in a
Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. For
Class A shares, the average annual total rate of return figures will assume
payment of the maximum initial sales load at the time of purchase. For Class B
and Class C shares, the average annual total rate of return figures will assume
deduction of the applicable contingent deferred sales charge imposed on a total
redemption of shares held for the period. One-, five-, and ten-year periods
will be shown, unless the class has been in existence for a shorter-period.
Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yields and the net asset values of the classes of
shares of a Fund will vary based on market conditions, the current market value
of the securities held by the Fund and changes in the Fund's expenses. The
advisers, Shareholder Servicing Agents, the Administrator, the Distributor and
other service providers may voluntarily waive a portion of their fees on a
month-to-month basis. In addition, the Distributor may assume a portion of a
Fund's operating expenses on a month-to-month basis. These actions would have
the effect of increasing the net income (and therefore the yield and total rate
of return) of the classes of shares of the Fund during the period such waivers
are in effect. These factors and possible differences in the methods used to
calculate the yields and total rates of return should be considered when
comparing the yields or total rates of return of the classes of shares of a
Fund to yields and total rates of return published for other investment
companies and other investment vehicles (including different classes of
shares). The Trust is advised that certain Shareholder Servicing Agents may
credit to the accounts of their customers from whom they are already receiving
other fees amounts not exceeding the Shareholder Servicing Agent fees received,
which will have the effect of increasing the net return on the investment of
customers of those Shareholder Servicing Agents. Such customers may be able to
obtain through their Shareholder Servicing Agents quotations reflecting such
increased return.
Each Fund presents performance information for each class thereof since
the commencement of operations of that Fund (or the related predecessor fund,
as described below), rather than the date such class was introduced.
Performance information for each class introduced after the commencement of
operations of the related Fund (or predecessor fund) is therefore based on the
performance history of a predecessor class or classes. Performance information
is restated to reflect the current maximum front-end sales charge (in the case
of Class A Shares) or the maximum applicable contingent deferred sales charge
(in the case of Class B and Class C Shares) when presented inclusive of sales
charges. Additional performance information may be presented which does not
reflect the deduction of sales charges. Historical expenses reflected in
performance information are based upon the distribution, shareholder servicing
fees and other expenses actually incurred during the periods presented and have
not been restated, for periods during which the performance information for a
particular class is based upon the performance history of a predecessor class,
to reflect the ongoing expenses currently borne by the particular class.
In connection with the Hanover Reorganization, the U.S. Government
Securities Fund was established to receive the assets of The Hanover U.S.
Government Securities Fund. Performance results presented for each class of the
U.S. Government Securities Fund include the performance of The Hanover U.S.
Government Securities Fund for periods prior to the consummation of the Hanover
Organization.
Advertising or communications to shareholders may contain the views of the
advisers as to current market, economic, trade and interest rate trends, as
well as legislative, regulatory and monetary developments, and may include
investment strategies and related matters believed to be of relevance to a
Fund.
Advertisements for the Chase Vista Funds may include references to the
asset size of other financial products made available by Chase, such as the
offshore assets of other funds.
Total Rate of Return
A Fund's or class' total rate of return for any period will be calculated
by (a) dividing (i) the sum of the net asset value per share on the last day of
the period and the net asset value per share on the last day
26
<PAGE>
of the period of shares purchasable with dividends and capital gains declared
during such period with respect to a share held at the beginning of such period
and with respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. The average annual rate of
return quotation will be calculated by (x) adding 1 to the period total rate of
return quotation as calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting
1 from the result.
Average Annual Total Returns*
(excluding sales charges)
The average annual total rate of return figures for the following Funds,
reflecting the initial investment and assuming the reinvestment of all
distributions (but excluding the effects of any applicable sales charges) for
the one and five year periods ended October 31, 1998 and for the period from
commencement of business operations of each such Fund to October 31, 1998 were
as follows:
<TABLE>
<CAPTION>
Since Date of Date of
One Five Ten Fund Fund Class
Fund Year Years Years Inception Inception Introduction
- --------------------------- ----------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Income Fund 9/8/87
A Shares 10.59% 5.87% 8.20% 8.34% 9/8/87
B Shares+ 9.68% 5.21% 7.82% 8.15% 11/4/93
Balanced Fund 11/4/92
A Shares+ 9.60% 13.21% -- 13.97% 11/4/92
B Shares 8.89% 12.39% -- 13.28% 11/4/93
Equity Income Fund 7/15/93
A Shares 6.90% 16.62% -- 16.89% 7/15/93
B Shares+ 6.42% 16.28% -- 16.56% 5/7/96
C Shares++ 6.46% 16.29% -- 16.57% 1/2/98
Growth and Income Fund 9/23/87
A Shares 9.09% 14.67% 20.20% 21.87% 9/23/87
B Shares+ 8.52% 14.08% 19.90% 21.58% 11/4/93
C Shares++ 6.74% 13.70% 19.70% 21.40% 1/2/98
Institutional Shares+++ 9.44% 14.91% 20.33% 21.98% 1/25/96
Capital Growth Fund 9/23/87
A Shares (1.60)% 12.05% 19.28% 18.79% 9/23/87
B Shares+ (2.08)% 11.51% 18.99% 18.53% 11/4/93
C Shares++ (2.93)% 11.31% 18.89% 18.44% 1/2/98
Institutional Shares+++ (1.20)% 12.30% 19.41% 18.91% 1/25/96
Focus Fund 6/30/98
A Shares (6.00)%
B Shares (6.20)%
C Shares (6.20)%
Institutional Shares (6.00)%
Bond Fund 11/30/90
Class A Shares*** 8.22% 6.53% 8.46% 5/6/96
Class B Shares*** 7.33% 6.26% 8.29% 5/6/96
Institutional Shares 8.42% 6.74% 8.60% 11/30/90
Short-Term Bond Fund 11/30/90
Class A Shares*** 5.58% 5.39% 5.79% 5/6/96
Institutional Shares 6.03% 5.60% 5.93% 11/30/90
Large Cap Equity Fund 11/30/90
Class A Shares*** 15.15% 18.78% 17.57% 5/8/96
Class B Shares*** 14.71% 18.55% 17.43% 5/7/96
Institutional Shares 15.82% 19.17% 17.82% 11/30/90
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Since Date of Date of
One Five Ten Fund Fund Class
Fund Year Years Years Inception Inception Introduction
- -------------------------- -------------- ---------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Equity Fund 12/20/94
A Shares (10.93)% -- 22.12% 12/20/94
B Shares+ (11.60)% -- 21.30% 3/28/95
Institutional Shares+++ (10.64)% -- 22.41% 5/7/96
U.S. Government
Securities Fund** 2/19/93
A Shares*** 9.75% 5.88% 6.42% 5/6/96
Institutional Shares 9.94% 6.00% 6.53% 2/19/93
Small Cap Opportunities
Fund 5/19/97
A Shares (7.65)% -- 18.47% 5/19/97
B Shares (8.25)% -- 17.70% 5/19/97
C Shares++ (8.33)% -- 17.64% 1/2/98
Core Equity Fund++++
A Shares
B Shares
C Shares
Equity Growth Fund++++
A Shares
B Shares
C Shares
</TABLE>
- ----------
* The ongoing fees and expenses borne by Class B and Class C Shares are
greater than those borne by Class A Shares; the ongoing fees and
expenses borne by a Fund's Class A, Class B and Class C Shares are
greater than those borne by the Fund's Institutional Shares. As
indicated above, the performance information for each class introduced
after the commencement of operations of the related Fund (or
predecessor fund) is based on the performance history of a predecessor
class or classes and historical expenses have not been restated, for
periods during which the performance information for a particular class
is based upon the performance history of a predecessor class, to
reflect the ongoing expenses currently borne by the particular class.
Accordingly, the performance information presented in the table above
and in each table that follows may be used in assessing each Fund's
performance history but does not reflect how the distinct classes would
have performed on a relative basis prior to the introduction of those
classes, which would require an adjustment to the ongoing expenses.
The performance quoted reflects fee waivers that subsidize and reduce
the total operating expenses of certain Funds (or classes thereof).
Returns on these Funds (or classes) would have been lower if there were
not such waivers. With respect to certain Funds, Chase and/or other
service providers are obligated to waive certain fees and/or reimburse
certain expenses for a stated period of time. In other instances, there
is no obligation to waive fees or to reimburse expenses. Each Fund's
Prospectus discloses the extent of any agreements to waive fees and/or
reimburse expenses.
** Performance information presented in the table above and in each table
that follows for each class of these Funds includes the performance of
their respective predecessor funds for periods prior to the
consummation of the Hanover Reorganization. Performance information
presented for each class of each of these Funds is based on the
historical expenses and performance of a single class of shares of its
predecessor fund and does not reflect the current distribution, service
and/or other expenses that an investor would incur as a holder of such
class of such Fund. Date of Fund inception shown for these Funds is the
date of inception of their respective predecessor funds. These Funds
commenced operations as part of the Trust on May 6, 1996.
28
<PAGE>
*** Performance information presented in the table above and in each table
that follows for this class of this Fund prior to the date the class was
introduced does not reflect shareholder servicing and distribution fees
and certain other expenses borne by this class which, if reflected, would
reduce the performance quoted.
+ Performance information presented in the table above and in each table
that follows for this class of this Fund prior to the date the class was
introduced does not reflect distribution fees and certain other expenses
borne by this class which, if reflected, would reduce the performance
quoted.
++ Performance information presented in the table above and in each table
that follows for this class of this Fund prior to the date this class was
introduced is based on the performance of predecessor classes and, except
for the Small Cap Opportunities Fund, for the period prior to November 5,
1993 (May 7, 1996 in the case of the Equity Income Fund) does not reflect
the distribution fees and other expenses borne by this class which, if
reflected, would reduce the performance quoted.
+++ Performance information presented in the table above and in each table
that follows for this class of this Fund prior to the date the class was
introduced is based upon historical expenses of a predecessor class which
are higher than the actual expenses that an investor would incur as a
holder of shares of this class.
++++ The performance results for Class A, Class B, and Class C shares of the
Fund prior to the date hereof are based upon the performance of the
Portfolio in which it invests. The Core Equity Portfolio and Equity
Growth Portfolio were formed after each of the Chase Core Equity Fund and
Chase Equity Growth Fund series, respectively, of Mutual Fund Investment
Trust was converted to a master/feeder structure. The performance of each
Portfolio prior to the date hereof is based upon the performance of the
series of Mutual Fund Investment Trust which was converted to create it.
For each class, the Portfolio's performance has been adjusted to reflect
the class's anticipated expenses (absent waivers and reimbursements) at
the Fund's inception.
29
<PAGE>
Average Annual Total Returns*
(including sales charges)
With the current maximum sales charge for Class A shares (1.50% for the
Short-Term Bond Fund, 4.50% for the U.S. Treasury Income Fund, Balanced Fund,
Equity Income Fund, Bond Fund and U.S. Government Securities Fund and 5.75% for
the Small Cap Equity Fund, Growth and Income Fund, Capital Growth Fund and
Large Cap Equity Fund) reflected and the currently applicable CDSC for Class B
and Class C shares for each period length, the average annual total rate of
return figures for the same periods would be as follows:
<TABLE>
<CAPTION>
Since
One Five Ten Fund
Fund Year Years Years Inception
- ---------------------------------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury Income Fund
A Shares 5.62% 4.90% 7.71% 8.31%
B Shares 4.68% 4.80% 7.82% 8.51%
Balanced Fund
A Shares 3.30% 11.88% -- 12.85%
B Shares 3.90% 12.14% -- 13.19%
Equity Income Fund
A Shares 0.75% 15.25% -- 15.59%
B Shares 1.46% 16.06% -- 16.46%
C Shares 5.47% 16.29% -- 16.57%
Growth and Income Fund
A Shares 2.82% 13.32% 19.49% 21.22%
B Shares 3.86% 13.84% 19.90% 21.58%
C Shares 5.82% 13.70% 19.70% 21.40%
Capital Growth Fund
A Shares (7.26)% 10.73% 18.58% 18.16%
B Shares (6.46)% 11.25% 18.99% 18.53%
C Shares (3.80)% 11.31% 18.89% 18.44%
Focus Fund
A Shares -- -- -- (11.41%)
B Shares -- -- -- (10.89%)
C Shares -- -- -- (7.14%)
Bond Fund
Class A Shares 3,35% 5.55% -- 7.83%
Class B Shares 2.33% 5.96% -- 8.29%
Short-Term Bond Fund
Class A Shares 4.00% 5.07% -- 5.59%
Large Cap Equity Fund
Class A Shares 8.53% 17.38% -- 16.70%
Class B Shares 9.71% 18.35% -- 17.43%
Small Cap Equity Fund
A Shares (16.05)% -- -- 20.27%
B Shares (15.89)% -- -- 20.85%
U.S. Government Securities Fund**
A Shares 4.81% -- -- 5.56%
Small Cap Opportunities Fund
A Shares (12.96)% -- -- 13.73%
B Shares (12.84)% -- -- 15.13%
C Shares (9.24)% -- -- 17.64%
Core Equity Fund
A Shares
B Shares
C Shares
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Since
One Five Ten Fund
Fund Year Years Years Inception
- ------------------- ------ ------- ------- ----------
<S> <C> <C> <C> <C>
Equity Growth Fund
A Shares
B Shares
C Shares
</TABLE>
- ----------
*See the notes to the preceding table.
The Funds may also from time to time include in advertisements or other
communications a total return figure that is not calculated according to the
formula set forth above in order to compare more accurately the performance of
a Fund with other measures of investment return.
Yield Quotations
Any current "yield" quotation for a class of shares shall consist of an
annualized hypothetical yield, carried at least to the nearest hundredth of one
percent, based on a thirty calendar day period and shall be calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the Fund's net investment income earned during the period by the product of the
average daily number of shares outstanding during the period that were entitled
to receive dividends and the maximum offering price per share on the last day
of the period, (b) subtracting 1 from the result, and (c) multiplying the
result by 2.
The yields of the shares of the Funds for the thirty-day period ended
October 31, 1998 were as follows:
<TABLE>
<CAPTION>
Class A Class B Class C Institutional--
--------- --------- --------- ----------------
<S> <C> <C> <C> <C>
Balanced Fund 2.16% 1.65% -- --
Bond Fund 4.33% 3.79% -- 4.79%
Capital Growth Fund 0.08% 0% 0% 0.41%
Equity Income Fund 1.19% 0.80% 0.80% --
Focus Fund 0.26% 0.00% 0.00% 0.56%
Growth and Income Fund 0.71% 0.29% 0.29% 1.13%
Large Cap Equity Fund 1.06% 0.67% 0% 1.45%
Short-Term Bond Fund 4.28% -- -- 4.67%
Small Cap Equity Fund 0% 0% -- 0%
Small Cap Opportunities Fund 0% 0% 0% 0%
U.S. Government Securities Fund 3.90% -- 4.29%
U.S. Treasury Income Fund 3.95% 3.24% --
</TABLE>
Advertisements for the Funds may include references to the asset size of
other financial products made available by Chase, such as the offshore assets
of other funds advised by Chase.
Non-Standardized Performance Results*
(excluding sales charges)
The table below reflects the net change in the value of an assumed initial
investment of $10,000 in each class of Fund shares in the following Funds
(excluding the effects of any applicable sale charges) for the period from the
commencement date of business for each such Fund through October 31, 1998. The
values reflect an assumption that capital gain distributions and income
dividends, if any, have been invested in additional shares of the same class.
From time to time, the Funds may provide these performance results in addition
to the total rate of return quotations required by the Securities and Exchange
Commission. As discussed more fully in the Prospectuses, neither these
performance results, nor total rate of return quotations, should be considered
as representative of the performance of the Funds in the future. These factors
and the possible differences in the methods used to calculate performance
results and total rates of return should be considered when comparing such
31
<PAGE>
performance results and total rate of return quotations of the Funds with those
published for other investment companies and other investment vehicles.
<TABLE>
<CAPTION>
Fund
Inception
Total Value Date
------------- ----------
<S> <C> <C>
U.S. Treasury Income Fund 9/8/87
A Shares $24,871
B Shares $25,034
Balanced Fund 11/4/92
A Shares $21,905
B Shares $21,119
C Shares $21,119
Equity Income Fund 7/15/92
Class A $22,858
Class B $22,524
Class C $22,524
Growth and Income Fund 9/23/87
Class A $90,067
Class B $87,783
Class C $86,337
Institutional Shares $91,034
Capital Growth Fund 9/23/87
Class A $67,783
Class B $66,158
Class C $65,584
Institutional Shares $68,533
Bond Fund 11/1/90
Class A Shares $19,034
Class B Shares $18,799
Institutional Shares $19,226
Short-Term Bond Fund 11/30/90
Class A Shares $15,620
Institutional Shares $15,780
Large Cap Equity Fund 11/30/90
Class A Shares $36,065
Class B Shares $35,718
Institutional Shares $36,661
Class C Shares $35,718
Small Cap Equity Fund 12/20/94
A Shares $21,667
B Shares $21,106
Institutional Shares $21,864
U.S. Government Securities Fund 2/19/93
A Shares $14,256
Institutional Shares $14,339
Small Cap Opportunities Fund 5/19/97
Class A $12,790
Class B $12,670
Class C $12,660
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Fund
Inception
Total Value Date
------------- ----------
<S> <C> <C>
Focus Fund
Class A $9,400 6/30/98
Class B $9,380
Class C $9,380
Institutional Shares $9,400
Core Equity Fund
Class A
Class B
Class C
Equity Growth Fund
Class A
Class B
Class C
</TABLE>
- ----------
* See the notes to the table captioned "Average Annual Total Return (excluding
sales charges)" above. The table above assumes an initial investment of
$10,000 in a particular class of a Fund for the period from the Fund's
commencement of operations, although the particular class may have been
introduced at a subsequent date. As indicated above, performance information
for each class introduced after the commencement of operations of the related
Fund (or predecessor fund) is based on the performance history of a
predecessor class or classes, and historical expenses have not been restated,
for periods during which the performance information for a particular class is
based upon the performance history of a predecessor class, to reflect the
ongoing expenses currently borne by the particular class.
Non-Standardized Performance Results*
(includes sales charges)
With the current maximum sales charge for Class A shares (1.50% for the
Short-Term Bond Fund, 4.50% for U.S. Treasury Income Fund, Equity Income Fund,
Bond Fund and U.S. Government Securities Fund and 5.75% for Balanced Fund,
Growth and Income Fund, Capital Growth Fund, Large Cap Equity Fund, Small Cap
Equity Fund, Small Cap Opportunities Fund and Focus Fund) reflected, and the
currently applicable CDSC for Class B and Class C shares for each period
length, the performance figures for the same periods would be as follows:
<TABLE>
<CAPTION>
Period Ended
October 31, 1998 Total Value
- -------------------------- ------------
<S> <C>
U.S. Treasury Income Fund
A Shares $26,042
B Shares $25,134
Balanced Fund
A Shares $20,646
B Shares $21,119
C Shares $21,119
Equity Income Fund
Class A $21,543
Class B $22,424
Class C $22,534
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Period Ended
October 31, 1998 Total Value
- -------------------------------- ------------
<S> <C>
Growth and Income Fund
Class A $84,888
Class B $87,783
Class C $86,337
Institutional Shares $91,034
Capital Growth Fund
Class A $63,885
Class B $66,158
Class C $65,584
Institutional Shares
Bond Fund
Class A Shares $18,178
Class B Shares $18,799
Short-Term Bond Fund
Class A Shares $15,386
Large Cap Equity Fund
Class A Shares $33,991
Class B Shares $35,718
Class C Shares $35,718
Small Cap Equity Fund
A Shares $20,421
B Shares+ $20,906
U.S. Government Securities Fund
A Shares $13,615
Institutional Shares
Small Cap Opportunities Fund
Class A $12,055
Class B $12,270
Class C $12,660
Focus Fund
Class A $ 8,860
Class B $ 8,911
Class C $ 9,286
Core Equity Fund
Class A
Class B
Class C
Equity Growth Fund
Class A
Class B
Class C
</TABLE>
- ----------
* See the notes to the table captioned "Average Annual Total Return (excluding
sales charges)" above. The table above assumes an initial investment of
$10,000 in a particular class of a Fund for the period from the Fund's
commencement of operations, although the particular class may have been
introduced at a subsequent date. As indicated above, performance information
for each class introduced after the commencement of operations of the related
Fund (or predecessor fund) is based on the performance history of a
predecessor class or classes, and historical expenses have not been restated,
for periods during which the
34
<PAGE>
performance information for a particular class is based upon the performance
history of a predecessor class, to reflect the ongoing expenses currently
borne by the particular class.
DETERMINATION OF NET ASSET VALUE
As of the date of this Statement of Additional Information, the New York
Stock Exchange is open for trading every weekday except for the following
holidays: New Year's Day, Martin Luther King Jr.'s Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Equity securities in a Fund's or Portfolio's portfolio are valued at the
last sale price on the exchange on which they are primarily traded or on the
NASDAQ National Market System, or at the last quoted bid price for securities
in which there were no sales during the day or for other unlisted
(over-the-counter) securities not reported on the NASDAQ National Market
System. Bonds and other fixed income securities (other than short-term
obligations, but including listed issues) in a Fund's or Portfolio's portfolio
are valued on the basis of valuations furnished by a pricing service, the use
of which has been approved by the Board of Trustees. In making such valuations,
the pricing service utilizes both dealer-supplied valuations and electronic
data processing techniques that take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices or exchange or
over-the-counter prices, since such valuations are believed to reflect more
accurately the fair value of such securities. Short-term obligations which
mature in 60 days or less are valued at amortized cost, which constitutes fair
value as determined by the Board of Trustees. Futures and option contracts that
are traded on commodities or securities exchanges are normally valued at the
settlement price on the exchange on which they are traded. Portfolio securities
(other than short-term obligations) for which there are no such quotations or
valuations are valued at fair value as determined in good faith by or at the
direction of the Board of Trustees.
Interest income on long-term obligations in a Fund's or Portfolio's
portfolio is determined on the basis of coupon interest accrued plus
amortization of discount (the difference between acquisition price and stated
redemption price at maturity) and premiums (the excess of purchase price over
stated redemption price at maturity). Interest income on short-term obligations
is determined on the basis of interest and discount accrued less amortization
of premium.
PURCHASES, REDEMPTIONS AND EXCHANGES
The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Funds' Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in the Prospectuses are not
available until a completed and signed account application has been received by
the Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in Section 6 of the Account Application. The Telephone Exchange
Privilege is not available if you were issued certificates for shares that
remain outstanding.
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, a Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service
options chosen by the shareholder or joint shareholders in his or their latest
account application or other written request for services, including
purchasing, exchanging, or redeeming shares of such Fund and depositing and
withdrawing monies from the bank account specified in the Bank Account
Registration section of the shareholder's latest account application or as
otherwise properly specified to such Fund in writing.
Subject to compliance with applicable regulations, each Fund has reserved
the right to pay the redemption price of its Shares, either totally or
partially, by a distribution in kind of readily marketable portfolio
35
<PAGE>
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Trust has filed an election under Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (approximately $250,000).
With respect to the Core Equity Fund, Equity Growth Fund, Growth and
Income Fund and Capital Growth Fund, the Trust will redeem Fund shares in kind
only if it has received a redemption in kind from the corresponding Portfolio
and therefore shareholders of the Fund that receive redemptions in kind will
receive portfolio securities of such Portfolio and in no case will they receive
a security issued by the Portfolio. Each Portfolio has advised the Trust that
the Portfolio will not redeem in kind except in circumstances in which the
corresponding Fund is permitted to redeem in kind or unless requested by the
corresponding Fund.
Each investor in a Portfolio, including the corresponding Fund, may add to
or reduce its investment in the Portfolio on each day that the New York Stock
Exchange is open for business. Once each such day, based upon prices determined
as of the close of regular trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time, however, options are priced at 4:15 p.m., Eastern
time) the value of each investor's interest in a Portfolio will be determined
by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or reductions which are to be effected on that day
will then be effected. The investor's percentage of the aggregate beneficial
interests in a Portfolio will then be recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of such time on such day plus or minus, as the case may be,
the amount of net additions to or reductions in the investor's investment in
the Portfolio effected on such day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of such time on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
aggregate investments in the Portfolio by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio as of such time on the following day the
New York Stock Exchange is open for trading.
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your
broker-dealer and the Fund's distributor as shown in the following table,
except when the Fund's distributor, in its discretion, allocates the entire
amount to your broker-dealer.
The broker-dealer allocation for Funds with a 5.75% sales charge is set
forth below:
<TABLE>
<CAPTION>
Amount of
Sales charge as a sales charge
percentage of: reallowed to
------------------------ dealers as a
Amount of transaction at Offering Net amount percentage of
offering price($) price invested offering price
- ----------------------------- --------- ------------ ---------------
<S> <C> <C> <C>
Under 100,000 5.75 6.10 5.00
100,000 but under 250,000 3.75 3.90 3.25
250,000 but under 500,000 2.50 2.56 2.25
500,000 but under 1,000,000 2.00 2.04 1.75
</TABLE>
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 1.00% of the amount under
$2.5 million, 0.75% of the next $7.5 million. 0.50% of the next $40 million and
0.20% thereafter. The Fund's distributor may withhold such payments with
respect to short-term investments.
36
<PAGE>
The broker-dealer allocation for Funds with a 4.50% sales charge is set forth
below:
<TABLE>
<CAPTION>
Amount of
Sales charge as a sales charge
percentage of: reallowed to
------------------------ dealers as a
Amount of transaction at Offering Net amount percentage of
offering price($) price invested offering price
- ----------------------------- --------- ------------ ---------------
<S> <C> <C> <C>
Under 100,000 4.50 4.71 4.00
100,000 but under 250,000 3.75 3.90 3.25
250,000 but under 500,000 2.50 2.56 2.25
500,000 but under 1,000,000 2.00 2.04 1.75
</TABLE>
There is no initial sales charge on purchases of Class A shares of $1
million or more.
The Fund's distributor pays broker-dealers commissions on net sales of
Class A shares of $1 million or more based on an investor's cumulative
purchases. Such commissions are paid at the rate of 0.75% of the amount under
$2.5 million, 0.50% of the next $7.5 million. 0.25% of the next $40 million and
0.15% thereafter. The Fund's distributor may withhold such payments with
respect to short-term investments.
The broker-dealer allocation for the Short-Term Bond Fund is set forth
below:
<TABLE>
<CAPTION>
Amount of
Sales charge as a sales charge
percentage of: reallowed to
------------------------ dealers as a
Amount of transaction at Offering Net amount percentage of
offering price($) price invested offering price
- ----------------------------- --------- ------------ ---------------
<S> <C> <C> <C>
Under 100,000 1.50 1.52 1.00
100,000 but under 250,000 1.00 1.00 0.50
250,000 but under 500,000 0.50 0.50 0.25
500,000 but under 1,000,000 0.25 0.25 0.25
</TABLE>
There is no initial sales charge on purchases of Class A shares of $1
million or more.
Investors in Class A shares may qualify for reduced initial sales charges
by signing a statement of intention (the "Statement"). This enables the
investor to aggregate purchases of Class A shares in the Fund with purchases of
Class A shares of any other Fund in the Trust (or if a Fund has only one class,
shares of such Fund), excluding shares of any Chase Vista money market fund,
during a 13-month period. The sales charge is based on the total amount to be
invested in Class A shares during the 13-month period. All Class A or other
qualifying shares of these Funds currently owned by the investor will be
credited as purchases (at their current offering prices on the date the
Statement is signed) toward completion of the Statement. A 90-day back-dating
period can be used to include earlier purchases at the investor's cost. The
13-month period would then begin on the date of the first purchase during the
90-day period. No retroactive adjustment will be made if purchases exceed the
amount indicated in the Statement. A shareholder must notify the Transfer Agent
or Distributor whenever a purchase is being made pursuant to a Statement.
The Statement is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in Class A shares (or if
a Fund has only one class and is subject to an initial sales charge, shares of
such Fund) registered in the shareholder's name in order to assure payment of
the proper sales charge. If total purchases pursuant to the Statement (less any
dispositions and exclusive of any distributions on such shares automatically
reinvested) are less than the amount specified, the investor will be requested
to remit to the Transfer Agent an amount equal to
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the difference between the sales charge paid and the sales charge applicable to
the aggregate purchases actually made. If not remitted within 20 days after
written request, an appropriate number of escrowed shares will be redeemed in
order to realize the difference. This privilege is subject to modification or
discontinuance at any time with respect to all shares purchased thereunder.
Reinvested dividend and capital gain distributions are not counted toward
satisfying the Statement.
Class A shares of a Fund may also be purchased by any person at a reduced
initial sales charge which is determined by (a) aggregating the dollar amount
of the new purchase and the greater of the purchaser's total (i) net asset
value or (ii) cost of any shares acquired and still held in the Fund, or any
other Vista fund excluding any Vista money market fund, and (b) applying the
initial sales charge applicable to such aggregate dollar value (the "Cumulative
Quantity Discount"). The privilege of the Cumulative Quality Discount is
subject to modification or discontinuance at any time with respect to all Class
A shares (or if a Fund has only one class and is subject to an initial sales
charge, shares of such Fund) purchased thereafter.
An individual who is a member of a qualified group (as hereinafter
defined) may also purchase Class A shares of a Fund (or if a Fund has only one
class and is subject to an initial sales charge, shares of such Fund) at the
reduced sales charge applicable to the group taken as a whole. The reduced
initial sales charge is based upon the aggregate dollar value of Class A shares
(or if a Fund has only one class and is subject to an initial sales charge,
shares of such Fund) previously purchased and still owned by the group plus the
securities currently being purchased and is determined as stated in the
preceding paragraph. In order to obtain such discount, the purchaser or
investment dealer must provide the Transfer Agent with sufficient information,
including the purchaser's total cost, at the time of purchase to permit
verification that the purchaser qualifies for a cumulative quantity discount,
and confirmation of the order is subject to such verification. Information
concerning the current initial sales charge applicable to a group may be
obtained by contacting the Transfer Agent.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Class A shares (or if a
Fund has only one class and is subject to an initial sales charge, shares of
such Fund) at a discount and (iii) satisfies uniform criteria which enables the
Distributor to realize economies of scale in its costs of distributing Class A
shares (or if a Fund has only one class and is subject to an initial sales
charge, shares of such Fund). A qualified group must have more than 10 members,
must be available to arrange for group meetings between representatives of the
Fund and the members must agree to include sales and other materials related to
the Fund in its publications and mailings to members at reduced or no cost to
the Distributor, and must seek to arrange for payroll deduction or other bulk
transmission of investments in the Fund. This privilege is subject to
modification or discontinuance at any time with respect to all Class A shares
(or if a Fund has only one class and is subject to an initial sales charge,
shares of such Fund) purchased thereafter.
Under the Exchange Privilege, shares may be exchanged for shares of
another fund only if shares of the fund exchanged into are registered in the
state where the exchange is to be made. Shares of a Fund may only be exchanged
into another fund if the account registrations are identical. With respect to
exchanges from any Vista money market fund, shareholders must have acquired
their shares in such money market fund by exchange from one of the Vista
non-money market funds or the exchange will be done at relative net asset value
plus the appropriate sales charge. Any such exchange may create a gain or loss
to be recognized for federal income tax purposes. Normally, shares of the fund
to be acquired are purchased on the redemption rate, but such purchase may be
delayed by either fund for up to five business days if a fund determines that
it would be disadvantaged by an immediate transfer of the proceeds.
The contingent deferred sales charge for Class B and Class C shares will
be waived for certain exchanges and for redemptions in connection with a Fund's
systematic withdrawal plan, subject to the conditions described in the
Prospectuses. In addition, subject to confirmation of a shareholder's status,
the contingent deferred sales charge will be waived for: (i) a total or partial
redemption made within one year of the shareholder's death or initial
qualification for Social Security disability payments; (ii) a redemption in
connection with a Minimum Required Distribution from an IRA, Keogh or custodial
account under section 403(b)
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of the Internal Revenue Code or a mandatory distribution from a qualified plan;
(iii) redemptions made from an IRA, Keogh or custodial account under section
403(b) of the Internal Revenue Code through an established Systematic
Redemption Plan; (iv) a redemption resulting from an over-contribution to an
IRA; (v) distributions from a qualified plan upon retirement; and (vi) an
involuntary redemption of an account balance under $500.
Class B shares automatically convert to Class A shares (and thus are then
subject to the lower expenses borne by Class A shares) after a period of time
specified below has elapsed since the date of purchase (the "CDSC Period"),
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares attributable to the
Class B shares then converting. The conversion of Class B shares purchased on
or after May 1, 1996, will be effected at the relative net asset values per
share of the two classes on the first business day of the month following the
eighth anniversary of the original purchase. The conversion of Class B shares
purchased prior to May 1, 1996, will be effected at the relative net asset
values per share of the two classes on the first business day of the month
following the seventh anniversary of the original purchase. Up to 12% of the
value of Class B shares subject to a systematic withdrawal plan may also be
redeemed each year without a CDSC, provided that the Class B account had a
minimum balance of $20,000 at the time the systematic withdrawal plan was
established. If any exchanges of Class B shares during the CDSC Period
occurred, the holding period for the shares exchanged will be counted toward
the CDSC Period. At the time of the conversion the net asset value per share of
the Class A shares may be higher or lower than the net asset value per share of
the Class B shares; as a result, depending on the relative net asset values per
share, a shareholder may receive fewer or more Class A shares than the number
of Class B shares converted.
A Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to, changes in bank accounts, for any written requests for
additional account services made after a shareholder has submitted an initial
account application to the Fund, and in certain other circumstances described
in the Prospectuses. A Fund may also refuse to accept or carry out any
transaction that does not satisfy any restrictions then in effect. A signature
guarantee may be obtained from a bank, trust company, broker-dealer or other
member of a national securities exchange. Please note that a notary public
cannot provide a signature guarantee.
Investors may be eligible to buy Class A shares at reduced sales charges.
Interested parties should consult their investment representative or the Chase
Vista Funds Service Center for details about Chase Vista's combined purchase
privilege, cumulative quantity discount, statement of intention, group sales
plan, employee benefit plans and other plans. Sales charges are waived if the
investor is using redemption proceeds received within the prior ninety days
from non-Chase Vista mutual funds to buy his or her shares, and on which he or
she paid a front-end or contingent deferred sales charge.
Some participant-directed employee benefit plans participate in a
"multi-fund" program which offers both Chase Vista and non-Chase Vista mutual
funds. The money that is invested in Chase Vista Funds may be combined with the
other mutual funds in the same program when determining the plan's eligibility
to buy Class A shares for purposes of the discount privileges and programs
described above.
No initial sales charge will apply to the purchase of a Fund's Class A
shares if (i) one is investing proceeds from a qualified retirement plan where
a portion of the plan was invested in the Chase Vista Funds, (ii) one is
investing through any qualified retirement plan with 50 or more participants or
(iii) one is a participant in certain qualified retirement plans and is
investing (or reinvesting) the proceeds from the repayment of a plan loan made
to him or her.
Purchases of a Fund's Class A shares may be made with no initial sales
charge through an investment adviser or financial planner that charges a fee
for its services.
Purchases of a Fund's Class A shares may be made with no initial sales
charge (i) by an investment adviser, broker or financial planner, provided
arrangements are preapproved and purchases are placed
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through an omnibus account with the Fund or (ii) by clients of such investment
adviser or financial planner who place trades for their own accounts, if such
accounts are linked to a master account of such investment adviser or financial
planner on the books and records of the broker or agent. Such purchases may
also be made for retirement and deferred compensation plans and trusts used to
fund those plans.
Purchases of a Fund's Class A shares may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary exercising investment discretion, provided that
appropriate notification of such fiduciary relationship is reported at the time
of the investment to the Fund, the Fund's distributor or the Chase Vista Funds
Service Center.
A Fund may sell Class A shares without an initial sales charge to the
current and retired Trustees (and their immediate families), current and
retired employees (and their immediate families) of Chase, the Fund's
distributor and transfer agent or any affiliates or subsidiaries thereof,
registered representatives and other employees (and their immediate families)
of broker-dealers having selected dealer agreements with the Fund's
distributor, employees (and their immediate families) of financial institutions
having selected dealer agreements with the Fund's distributor (or otherwise
having an arrangement with a broker-dealer or financial institution with
respect to sales of Chase Vista Fund shares) and financial institution trust
departments investing an aggregate of $1 million or more in the Chase Vista
Funds.
Shareholders of record of any Chase Vista fund as of November 30, 1990 and
certain immediate family members may purchase a Fund's Class A shares with no
initial sales charge for as long as they continue to own Class A shares of any
Chase Vista fund, provided there is no change in account registration.
Shareholders of other Chase Vista Funds may be entitled to exchange their
shares for, or reinvest distributions from their funds in, shares of the Fund
at net asset value.
The Funds reserve the right to change any of these policies at any time
and may reject any request to purchase shares at a reduced sales charge.
Investors may incur a fee if they effect transactions through a broker or
agent.
DISTRIBUTIONS; TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the respective Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussions here and in each Fund's Prospectus are not intended as substitutes
for careful tax planning.
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and
to meet all other requirements that are necessary for it to be relieved of
federal taxes on income and gains it distributes to shareholders. Net
investment income for each Fund consists of all interest accrued and discounts
earned, less amortization of any market premium on the portfolio assets of the
Fund and the accrued expenses of the Fund. As a regulated investment company,
each Fund is not subject to federal income tax on the portion of its net
investment income (i.e., its investment company taxable income, as that term is
defined in the Code, without regard to the deduction for dividends paid ) and
net capital gain (i.e., the excess of net long-term capital gain over net
short-term capital loss) that it distributes to shareholders, provided that it
distributes at least 90% of its net investment income for the taxable year (the
"Distribution Requirement"), and satisfies certain other requirements of the
Code that are described below. Because certain Funds invest all of their assets
in Portfolios which will be classified as partnerships for federal income tax
purposes, such Funds will be deemed to own a proportionate share of the income
of the Portfolio into which each contributes all of its assets for purposes of
determining whether such Funds satisfy the Distribution Requirement and the
other requirements necessary to qualify as a regulated investment company
(e.g., Income Requirement (hereinafter defined), etc.).
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In addition to satisfying the Distribution Requirement for each taxable
year, a regulated investment company must: (1) derive at least 90% of its gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "Income Requirement").
In addition to satisfying the requirements described above, each Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the
value of its total assets may be invested in the securities of any one issuer
(other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
Each Fund may engage in hedging or derivatives transactions involving
foreign currencies, forward contracts, options and futures contracts (including
options, futures and forward contracts on foreign currencies) and short sales.
See "Additional Policies Regarding Derivative and Related Transactions." Such
transactions will be subject to special provisions of the Code that, among
other things, may affect the character of gains and losses realized by the Fund
(that is, may affect whether gains or losses are ordinary or capital),
accelerate recognition of income of the Fund and defer recognition of certain
of the Fund's losses. These rules could therefore affect the character, amount
and timing of distributions to shareholders. In addition, these provisions (1)
will require a Fund to "mark-to-market" certain types of positions in its
portfolio (that is, treat them as if they were closed out) and (2) may cause a
Fund to recognize income without receiving cash with which to pay dividends or
make distributions in amounts necessary to satisfy the Distribution Requirement
and avoid the 4% excise tax (described below). Each Fund intends to monitor its
transactions, will make the appropriate tax elections and will make the
appropriate entries in its books and records when it acquires any option,
futures contract, forward contract or hedged investment in order to mitigate
the effect of these rules.
A Fund or Portfolio may make investments that produce income that is not
matched by a corresponding cash distribution to the Fund, such as investments
in pay-in-kind bonds or in obligations such as zero coupon securities having
original issue discount (i.e., an amount equal to the excess of the stated
redemption price of the security at maturity over its issue price) or market
discount (i.e., an amount equal to the excess of the stated redemption price of
the security over the basis of such bond immediately after it was acquired), if
the Fund elects to accrue market discount on a current basis. In addition,
income may continue to accrue for federal income tax purposes with respect to a
non-performing investment. Any such income would be treated as income earned by
a Fund and therefore would be subject to the distribution requirements of the
Code. Because such income may not be matched by a corresponding cash
distribution to a Fund, the Fund may be required to borrow money or dispose of
other securities to be able to make distributions to its investors. In
addition, if an election is not made to currently accrue market discount with
respect to a market discount bond, all or a portion of any deduction or any
interest expenses incurred to purchase or hold such a bond may be deferred
until such bond is sold or otherwise disposed.
If for any taxable year a Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
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Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election").
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that a Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
Each Fund anticipates distributing substantially all of its net investment
income for each taxable year. Such distributions will be taxable to
shareholders as ordinary income and treated as dividends for federal income tax
purposes, but they will qualify for the 70% dividends-received deduction for
corporations only to the extent discussed below. Dividends paid on Class A,
Class B and Class C shares are calculated at the same time. In general,
dividends on Class B and Class C shares are expected to be lower than those on
Class A shares due to the higher distribution expenses borne by the Class B and
Class C shares. Dividends may also differ between classes as a result of
differences in other class specific expenses.
If a check representing a Fund distribution is not cashed within a
specified period, the Chase Vista Service Center will notify the investor that
he or she has the option of requesting another check or reinvesting the
distribution in the Fund or in an established account of another Chase Vista
Fund. If the Chase Vista Service Center does not receive his or her election,
the distribution will be reinvested in the Fund. Similarly, if the Fund or the
Chase Vista Service Center sends the investor correspondence returned as
"undeliverable," distributions will automatically be reinvested in the Fund.
A Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. Each Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a "capital gain
dividend," it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares.
Under recently enacted legislation, the maximum rate of tax on long-term
capital gains of individuals will generally be reduced from 28% to 20% (10% for
gains otherwise taxed at 15%) for long-term capital gains realized after July
28, 1997 with respect to capital assets held for more than 18 months.
Additionally, beginning after December 31, 2000, the maximum tax rate for
capital assets with a holding period beginning after that date and held for
more than five years will be 18%. Under a literal reading of the legislation,
capital gain dividends paid by a regulated investment company would not appear
eligible for the reduced capital gain rates. However, the legislation
authorizes the Treasury Department to promulgate regulations that would apply
the new rates to capital gain dividends paid by a regulated investment company.
Conversely, if a Fund elects to retain its net capital gain, the Fund will
be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
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Ordinary income dividends paid by a Fund with respect to a taxable year
will qualify for the 70% dividends-received deduction generally available to
corporations to the extent of the amount of qualifying dividends received by a
Fund from domestic corporations for the taxable year. A dividend received by a
Fund will not be treated as a qualifying dividend (1) if it has been received
with respect to any share of stock that the Fund has held for less than 46 days
(91 days in the case of certain preferred stock) during the 90 day period
beginning on the date which is 45 days before the date on which such share
becomes ex-dividend with respect to such dividend (during the 180 day period
beginning 90 days before such date in the case of certain preferred stock)
under the Rules of the Code Section 246(c)(3) and (4); (2) to the extent that a
Fund is under an obligation (pursuant to a short sale or otherwise) to make
related payments with respect to positions in substantially similar or related
property; or (3) to the extent the stock on which the dividend is paid is
treated as debt-financed under the rules of Code Section 246A. Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of a Fund. In the case where a Fund
invests all of its assets in a Portfolio and the Fund satisfies the holding
period rules pursuant to Code Section 246(c) as to its interest in the
Portfolio, a corporate shareholder which satisfies the foregoing requirements
with respect to its shares of the Fund should receive the dividends-received
deduction.
For purposes of the Corporate AMT, the corporate dividends-received
deduction is not itself an item of tax preference that must be added back to
taxable income or is otherwise disallowed in determining a corporation's AMT.
However, corporate shareholders will generally be required to take the full
amount of any dividend received from a Fund into account (without a
dividends-received deduction) in determining its adjusted current earnings.
Investment income that may be received by certain of the Funds from
sources within foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties with many foreign
countries which entitle any such Fund to a reduced rate of, or exemption from,
taxes on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of any such Fund's assets to be
invested in various countries is not known.
Distributions by a Fund that do not constitute ordinary income dividends,
or capital gain dividends will be treated as a return of capital to the extent
of (and in reduction of) the shareholder's tax basis in his shares; any excess
will be treated as gain from the sale of his shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date. In addition, if the net asset
value at the time a shareholder purchases shares of a Fund reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Fund, distributions
of such amounts will be taxable to the shareholder in the manner described
above, although such distributions economically constitute a return of capital
to the shareholder.
Ordinarily, shareholders are required to take distributions by a Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
A Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is a corporation
or other "exempt recipient."
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Sale or Redemption of Shares
A shareholder will recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of the Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital
gain or loss and will be long- term capital gain or loss if the shares were
held for longer than one year. However, any capital loss arising from the sale
or redemption of shares held for six months or less will be disallowed to the
extent of the amount of exempt-interest dividends received on such shares and
(to the extent not disallowed) will be treated as a long-term capital loss to
the extent of the amount of capital gain dividends received on such shares.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from a Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from a Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, dividends paid to a foreign
shareholder from net investment income will be subject to U.S. withholding tax
at the rate of 30% (or lower treaty rate) upon the gross amount of the
dividend. Such a foreign shareholder would generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of the Fund and
capital gain dividends and amounts retained by the Fund that are designated as
undistributed capital gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
State and Local Tax Matters
Depending on the residence of the shareholder for tax purposes,
distributions may also be subject to state and local taxes or withholding
taxes. Most states provide that a regulated investment company may pass through
(without restriction) to its shareholders state and local income tax exemptions
available to direct owners of certain types of U.S. government securities (such
as U.S. Treasury obligations). Thus, for residents of these states,
distributions derived from a Fund's investment in certain types of U.S.
government securities should be free from state and local income taxes to the
extent that the interest income from such investments would have been exempt
from state and local income taxes if such securities had been held directly by
the respective shareholders themselves. Certain states, however, do not allow a
regulated investment company to pass through to its shareholders the state and
local income tax exemptions available to direct owners of certain types of U.S.
government securities unless the regulated investment company holds at least a
required amount of U.S. government securities. Accordingly, for residents of
these states, distributions derived from a Fund's investment in certain types
of U.S. government securities may not be entitled to the exemptions from state
and local income taxes that would be available if the shareholders had
purchased
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U.S. government securities directly. Shareholders' dividends attributable to a
Fund's income from repurchase agreements generally are subject to state and
local income taxes, although states and regulations vary in their treatment of
such income. The exemption from state and local income taxes does not preclude
states from asserting other taxes on the ownership of U.S. government
securities. To the extent that a Fund invests to a substantial degree in U.S.
government securities which are subject to favorable state and local tax
treatment, shareholders of such Fund will be notified as to the extent to which
distributions from the Fund are attributable to interest on such securities.
Rules of state and local taxation of ordinary income dividends and capital gain
dividends from regulated investment companies may differ from the rules for
U.S. federal income taxation in other respects. Shareholders are urged to
consult their tax advisers as to the consequences of these and other state and
local tax rules affecting investment in a Fund.
Effect of Future Legislation
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
MANAGEMENT OF THE TRUST AND THE FUNDS OR PORTFOLIOS
Trustees and Officers of Mutual Fund Group, Capital Growth Portfolio and
Growth and Income Portfolio
The Trustees and officers of the Trust and their principal occupations for
at least the past five years are set forth below. Their titles may have varied
during that period.
Fergus Reid, III--Chairman of the Trust. Chairman and Chief Executive
Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley
Funds. Age: 66. Address: 202 June Road, Stamford, CT 06903.
*H. Richard Vartabedian--Trustee and President of the Trust. Investment
Management Consultant; formerly, Senior Investment Officer, Division Executive
of the Investment Management Division of The Chase Manhattan Bank, N.A., 1980
through 1991. Age: 63. Address: P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.
William J. Armstrong--Trustee. Vice President and Treasurer,
Ingersoll-Rand Company. Age: 57. Address: 49 Aspen Way, Upper Saddle River, NJ
07458.
John R.H. Blum--Trustee. Attorney in private practice; formerly, partner
in the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture -
State of Connecticut, 1992-1995. Age: 69. Address: 322 Main Street, Lakeville,
CT 06039.
Stuart W. Cragin, Jr.--Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served in a variety of marketing,
manufacturing and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries. Age: 65. Address: 108 Valley
Road, Cos Cob, CT 06807.
Roland R. Eppley, Jr.--Trustee. Retired; formerly President and Chief
Executive Officer, Eastern States Bankcard Association Inc. (1971-1988);
Director, Janel Hydraulics, Inc.; formerly Director of The Hanover Funds, Inc.
Age: 66. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418.
Joseph J. Harkins--Trustee. Retired; Commercial Sector Executive and
Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through
1989. He was employed by Chase in numerous capacities and offices from 1954
through 1989. Director of Blessings Corporation, Jefferson Insurance Com-
45
<PAGE>
pany of New York, Monticello Insurance Company and National. Age: 67. Address:
257 Plantation Circle South, Ponte Vedra Beach, FL 32082.
*Sarah E. Jones--Trustee. President and Chief Operating Officer of Chase
Mutual Funds Corp.; formerly Managing Director for the Global Asset Management
and Private Banking Division of The Chase Manhattan Bank. Age: 47. Address: One
Chase Manhattan Plaza, Third Floor, New York, NY 10081.
W.D. MacCallan--Trustee. Director of The Adams Express Co. and Petroleum &
Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of
The Adams Express Co. and Petroleum & Resources Corp.; formerly Director of The
Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 71. Address:
624 East 45th Street, Savannah, GA 31405.
W. Perry Neff--Trustee. Independent Financial Consultant; Director of
North America Life Assurance Co., Petroleum & Resources Corp. and The Adams
Express Co.; formerly Director and Chairman of The Hanover Funds, Inc.;
formerly Director, Chairman and President of The Hanover Investment Funds, Inc.
Age: 71. Address: RR 1 Box 102, Weston, VT 05181.
*Leonard M. Spalding, Jr.--Trustee. Chief Executive Officer of Chase
Mutual Funds Corp.; formerly President and Chief Executive Officer of Vista
Capital Management and formerly Chief Investment Executive of The Chase
Manhattan Private Bank. Age: 63. Address: One Chase Manhattan Plaza, Third
Floor, New York, NY 10081.
Richard E. Ten Haken--Trustee; Chairman of the Audit Committee. Formerly
District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New
York; Chairman of the Board and President, New York State Teachers' Retirement
System. Age: 64. Address: 4 Barnfield Road, Pittsford, NY 14534.
Irving L. Thode--Trustee. Retired; formerly Vice President of Quotron
Systems. He has previously served in a number of executive positions with
Control Data Corp., including President of its Latin American Operations, and
General Manager of its Data Services business. Age: 67. Address: 80 Perkins
Road, Greenwich, CT 06830.
Martin R. Dean--Treasurer. Associate Director, Accounting Services, BISYS
Fund Services; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Age: 35.
Address: 3435 Stelzer Road, Columbus, OH 43219.
Richard Baxt--Secretary. Senior vice President, Client Services, BISYS
Fund Services; formerly General Manager of Investment and Insurance, First
Fidelity Bank, President of First Fidelity Brokers, and President of Citicorp
Investment Services. Age: 45. Address: 125 W. 55th Street, New York, NY 10019.
Vicky M. Hayes--Assistant Secretary. Vice President and Global Marketing
Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President,
Alliance Capital Management and held various positions with J. & W. Seligman &
Co. Age: 37. Address: One Chase Manhattan Plaza, 3rd Fl., New York, NY 10081.
Alaina Metz--Assistant Secretary. Chief Administrative Officer, BISYS Fund
Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management
L.P. Age: 31. Address: 3435 Stelzer Road, Columbus, OH 43219.
Lee Schultheis--Assistant Treasurer and Assistant Secretary. President,
BISYS Fund Distributors; formerly Managing Director, Forum Financial Group.
Age: 42. Address: One Chase Manhattan Plaza, 3rd Fl., New York, New York 10081.
- ----------
* Asterisks indicate those Trustees that are "interested persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an interested
person of the Trust solely by reason of being Chairman of the Trust.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong,
Eppley, MacCallan and Thode. The function of the
46
<PAGE>
Audit Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met two times during the fiscal year
ended October 31, 1998.
The Board of Trustees of the Trust has established an Investment
Committee. The members of the Investment Committee are Messrs. Vartabedian
(President), Reid and Spalding. The function of the Investment Committee is to
review the investment management process of the Trust.
The Trustees and officers of the Trust appearing in the table above also
serve in the same capacities with respect to Mutual Fund Trust, Mutual Fund
Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust,
Capital Growth Portfolio, Growth and Income Portfolio and International Equity
Portfolio (these entities, together with the Trust, are referred to below as
the "Chase Vista Funds").
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisers is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by the advisers. Each Trustee
receives a fee, allocated among all investment companies for which the Trustee
serves, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1998 for each Trustee of the Trust:
<TABLE>
<CAPTION>
Capital Equity Growth and
Balanced Bond Growth Income Income Focus
Fund Fund Fund Fund Fund Fund
------------ ------------ -------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $ 436.18 $ 193.67 $ 2,915.95 $ 341.05 $ 4,751.63 $ 20.05
H. Richard Vartabedian, Trustee 327.11 145.25 2,186.94 255.81 3,563.68 15.06
William J. Armstrong, Trustee 218.08 96.83 1,457.96 170.54 2,375.78 10.04
John R.H. Blum, Trustee 225.16 100.11 1,503.92 177.05 2,446.26 10.04
Stuart W. Cragin, Jr., Trustee 218.29 96.92 1,460.89 170.70 2,379.22 10.04
Ronald R. Eppley, Jr., Trustee 218.08 96.83 1,457.96 170.54 2,375.78 10.04
Joseph J. Harkins, Trustee 222.80 99.02 1,488.61 174.88 2,422.78 10.04
Sarah E. Jones, Trustee -- -- -- -- -- --
W.D. MacCallan, Trustee 213.57 94.73 1,430.24 168.38 2,332.22 10.04
W. Perry Neff, Trustee 222.80 99.02 1,488.61 174.88 2,422.78 10.04
Leonard M. Spalding, Jr.,
Trustee 178.31 83.72 1,211.21 150.04 1,875.24 10.04
Richard E. Ten Haken, Trustee 218.08 96.83 1,457.96 170.54 2,375.78 10.04
Irving L. Thode, Trustee 218.08 96.83 1,457.96 170.54 2,375.78 10.04
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Large Cap Short-Term Small Cap Small Cap U.S. Gov't U.S. Treasury
Equity Bond Equity Opportunities Securities Income
Fund Fund Fund Fund Fund Fund
------------ ------------ -------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $ 656.95 $ 202.81 $ 2,308.30 $ 413.14 $ 220.09 $ 300.47
H. Richard Vartabedian, Trustee 492.69 152.08 1,731.17 309.87 165.06 225.33
William J. Armstrong, Trustee 328.46 101.38 1,154.12 206.58 110.04 150.22
John R.H. Blum, Trustee 339.46 104.74 1,192.16 214.53 113.46 154.48
Stuart W. Cragin, Jr., Trustee 328.87 101.56 1,156.63 206.74 110.17 150.37
Ronald R. Eppley, Jr., Trustee 328.46 101.38 1,154.12 206.58 110.04 150.22
Joseph J. Harkins, Trustee 335.79 103.62 1,179.48 211.88 112.32 153.08
Sarah E. Jones, Trustee -- -- -- -- -- --
W.D. MacCallan, Trustee 321.54 99.32 1,131.27 201.44 107.89 147.53
W. Perry Neff, Trustee 335.79 103.62 1,179.48 211.88 112.32 153.06
Leonard M. Spalding, Jr., Trustee 274.77 84.25 936.33 181.13 89.74 109.65
Richard E. Ten Haken, Trustee 328.46 101.38 1.154.12 206.58 110.04 150.22
Irving L. Thode, Trustee 328.46 101.38 1,154.12 206.58 110.04 150.22
</TABLE>
<TABLE>
<CAPTION>
Total
Compensation
Pension or from
Retirement "Fund Complex"(2)
Benefits Accrued (includes all Chase Vista
by the Fund Complex(1) Trusts and Portfolios)
------------------------ --------------------------
<S> <C> <C>
Fergus Reid, III, Trustee $118,145 $139,250
H. Richard Vartabedian, Trustee 39,253 106,500
William J. Armstrong, Trustee 34,864 70,000
John R.H. Blum, Trustee 77,415 72,250
Stuart W. Cragin, Jr., Trustee 21,834 70,000
Ronald R. Eppley, Jr., Trustee 44,575 70,000
Joseph J. Harkins, Trustee 40,643 71,500
Sarah E. Jones, Trustee -- --
W.D. MacCallan, Trustee 52,125 68,500
W. Perry Neff, Trustee 78,474 71,500
Leonard M. Spalding, Jr., Trustee -- 65,167
Richard E. Ten Haken, Trustee 59,303 70,000
Irving L. Thode, Trustee 25,992 68,500
</TABLE>
- ----------
(1) Data reflects total benefits accrued by the Trust, Mutual Fund Select
Group, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio for the fiscal year ended October 31, 1998,
and by Mutual Fund Trust, Mutual Fund Select Trust and Mutual Fund
Variable Annuity Trust for the fiscal year ended August 31, 1998.
(2) Data reflects total compensation earned during the period January 1, 1998
to December 31, 1998 for service as a Trustee to the Trust, Mutual Fund
Trust, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group,
Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income
Portfolio and International Equity Portfolio.
48
<PAGE>
As of December 31, 1998, the Trustees and officers as a group owned less
than 1% of each Fund's outstanding shares, all of which were acquired for
investment purposes. For the fiscal year ended October 31, 1998, the Trust paid
its disinterested Trustees fees and expenses for all of the meetings of the
Board and any committees attended in the aggregate amount of approximately
$15,064, which amount was then apportioned among the Funds comprising the
Trust.
Chase Vista Funds Retirement Plan for Eligible Trustees
Effective August 21, 1995, the Trustees also instituted a Retirement Plan
for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not
an employee of any of the Chase Vista Funds, the advisers, administrator or
distributor or any of their affiliates) may be entitled to certain benefits
upon retirement from the Board of Trustees. Pursuant to the Plan, the normal
retirement date is the date on which the eligible Trustee has attained age 65
and has completed at least five years of continuous service with one or more of
the investment companies advised by the adviser (collectively, the "Covered
Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an
annual benefit commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to the sum of (i) 8% of the
highest annual compensation received from the Covered Funds multiplied by the
number of such Trustee's years of service (not in excess of 10 years) completed
with respect to any of the Covered Funds and (ii) 4% of the highest annual
compensation received from the Covered Funds for each year of service in excess
of 10 years, provided that no Trustee's annual benefit will exceed the highest
annual compensation received by that Trustee from the Covered Funds. Such
benefit is payable to each eligible Trustee in monthly installments for the
life of the Trustee.
Set forth below in the table are the estimated annual benefits payable to
an eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of October 31, 1998, the estimated credited years
of service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley,
Harkins, MacCallan, Neff, Spalding, Ten Haken and Thode and for Ms. Jones are
14, 6, 11, 14, 6, 10, 8, 9, 14, 0, 14, 6 and 0, respectively.
<TABLE>
<CAPTION>
Highest Annual Compensation Paid by All Chase Vista Funds
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$60,000 $80,000 $100,000 $120,000 $140,000
Years of
Service Estimated Annual Benefits upon Retirement
-------- --------------------------------------------------------------------
14 $57,600 $76,800 $ 96,000 $115,200 $134,400
12 52,800 70,400 88,000 105,600 123,200
10 48,000 64,000 80,000 96,000 112,000
8 38,400 51,200 64,000 76,800 89,600
6 28,800 38,400 48,000 57,600 67,200
4 19,200 25,600 32,000 38,400 44,800
</TABLE>
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which
each Trustee (who is not an employee of any of the Funds, the advisers,
administrator or distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustee's fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are invested in shares of Chase Vista Funds
selected by the Trustee. The deferred amounts are paid out in a lump sum or
over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be
distributed to the Trustee's designated beneficiary in a single lump sum
payment as soon as practicable after such deferring Trustee's death.
Messrs. Eppley, Ten Haken, Thode and Vartabedian each executed a deferred
compensation agreement for the 1998 calendar year and as of October 31, 1998
they had contributed $45,467, $22,733, $49,800 and $86,750, respectively.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices
49
<PAGE>
with the Trust, unless, as to liability to the Trust or its shareholders, it is
finally adjudicated that they engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in their offices or
with respect to any matter unless it is finally adjudicated that they did not
act in good faith in the reasonable belief that their actions were in the best
interest of the Trust. In the case of settlement, such indemnification will not
be provided unless it has been determined by a court or other body approving
the settlement or other disposition, or by a reasonable determination based
upon a review of readily available facts, by vote of a majority of
disinterested Trustees or in a written opinion of independent counsel, that
such officers or Trustees have not engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties.
Trustees and Officers of Core Equity Portfolio and Equity Growth Portfolio
The Trustees and officers of the Trust and their principal occupations for
at least the past five years are set forth below. Their titles may have varied
during that period.
*Sarah F. Jones--Chair and Trustee. President and Chief Operating Officer
of Chase Mutual Funds Corp.; formerly Managing Director for the Global Asset
Management and Private Banking Division of The Chase Manhattan Bank. Trustee,
Chase Vista Funds. Age: 46. Address: Chase Mutual Funds Corp., One Chase
Manhattan Plaza, Third Floor, New York, NY 10081.
Frank A. Liddell, Jr.--Trustee. Retired, Of Counsel, Liddell, Sapp,
Zivley, Hill & LeBoon. Member of AVESTA Trust Supervisory Committee from
inception to 1997. Age: 69. Address: P.O. Box 2533, Houston, TX 77252.
George E. McDavid--Trustee. President, Houston Chronicle Publishing
Company. Member of AVESTA Trust Supervisory Committee from inception to 1997.
Age: 66. Address: P.O. Box 2558, Houston, TX 77252.
Kenneth L. Otto--Trustee. Retired; formerly Senior Vice President, Temeco
Inc. Member of AVESTA Trust Supervisory Committee from inception to 1997. Age:
66. Address: P.O. Box 2558, Houston, TX 77252.
Fergus Reid, III--Trustee. Chairman and Chief Executive Officer, Lutteline
Corporation since September 1985. Chairman and Trustee, the Chase Vista Funds.
Trustee, Morgan Stanley Funds. Age: 65. Address: 202 June Road, Stamford, CT
06903.
H. Michael Tyson--Trustee. Retired; formerly Executive Vice President,
Texas Commerce Bank from 1990 to 1995. Member of AVESTA Trust Supervisory
Committee from 1988 to 1997. Age: 58. Address: P.O. Box 2558, Houston, TX
77252.
Martin R. Dean--Treasurer. Associate Director, Accounting Services, BISYS
Fund Services; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Age: 33.
Address: 3435 Stelzer Road, Columbus, OH 43219.
Richard Baxt--Secretary. Senior Vice President, Client Services, BISYS
Fund Services; formerly General Manager of Investment and Insurance, First
Fidelity Bank, President of First Fidelity Brokers, and President of Citicorp
Investment Services. Age: 44. Address: 125 W. 55th Street, New York, NY 10019.
Vicky M. Hayes--Assistant Secretary. Vice President and Global Marketing
Manager, Vista Fund Distributor, Inc.; formerly Assistant Vice President,
Alliance Capital Management and held various positions with J. & W. Seligman &
Co. Age: 36. Address: One Chase Manhattan Plaza, Third Floor, New York, NY
10081.
Alaina Metz--Assistant Secretary. Chief Administrative Officer, BISYS Fund
Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management
L.P. Age: 30. Address: 3535 Stelzer Road, Columbus, OH 43210.
Lee Schultheis--Assistant Treasurer and Assistant Secretary. President,
BISYS Fund Distributors; formerly Senior Managing Director, Forum Financial
Group. Age: 41. Address: One Chase Manhattan Plaza, Third Floor, New York, NY
10081.
50
<PAGE>
Ms. Jones is also a Trustee of Mutual Fund Group, Mutual Fund Trust,
Mutual Fund Select Group, Mutual Fund Select Trust, Mutual Fund Variable
Annuity Trust, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio (these entities are referred to as the "Chase
Vista Funds"). Mr. Reid is Chairman and a Trustee of the Chase Vista Funds.
Messrs. Dean, Baxt and Schultheis and Ms. Hayes and Metz also serve in the same
capacities of the Chase Vista Funds.
- ----------
* Asterisks indicate those Trustees that are "interested persons" (as defined
in the 1940 Act). The Board of Trustees of the Trust presently has an Audit
Committee. The member of the Audit Committee are Messrs. Liddell, McDavid,
Otto, Reid and Tyson. The function of the Audit Committee is to recommend
independent auditors and monitor accounting and financial matters.
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisers is compensated for his or her services. Each such
Trustee receives a fee, which consists of an annual retainer component and a
meeting fee component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended December 31, 1998 for each member of the Board of
Trustees.
<TABLE>
<CAPTION>
Total Compensation from "Fund Complex" (1) (includes
Mutual Fund Investment Trust and Core Equity Portfolio
and Equity Growth Portfolio)
-------------------------------------------------------
<S> <C>
Frank A. Liddell, Jr., Trustee $7,000
George E. McDavid, Trustee 7,000
Kenneth L. Otto, Trustee 7,000
H. Michael Tyson, Trustee 7,000
</TABLE>
- ----------
(1) Data reflects total compensation during the period January 1, 1998 to
December 31, 1998 for service as a Trustee to Mutual Fund Investment Trust.
The Core Equity Portfolio and Equity Growth Portfolio were not in existence
during this period, and, accordingly, the Trustees did not receive any
compensation with respect to them.
Adviser and Sub-Adviser
Chase acts as investment adviser to the Funds or Portfolios pursuant to
several Investment Advisory Agreements (collectively, the "Advisory
Agreement"). Subject to such policies as the Board of Trustees may determine,
Chase is responsible for investment decisions for the Funds or Portfolios.
Pursuant to the terms of the Advisory Agreement, Chase provides the Funds or
Portfolios with such investment advice and supervision as it deems necessary
for the proper supervision of the Funds' or Portfolios' investments. The
advisers continuously provide investment programs and determine from time to
time what securities shall be purchased, sold or exchanged and what portion of
the Funds' or Portfolios' assets shall be held uninvested. The advisers to the
Funds or Portfolios furnish, at their own expense, all services, facilities and
personnel necessary in connection with managing the investments and effecting
portfolio transactions for the Funds or Portfolios. The Advisory Agreement for
the Funds or Portfolios will continue in effect from year to year only if such
continuance is specifically approved at least annually by the Board of Trustees
or by vote of a majority of a Fund's or Portfolio's outstanding voting
securities and by a majority of the Trustees who are not parties to the
Advisory Agreement or interested persons of any such party, at a meeting called
for the purpose of voting on such Advisory Agreement.
51
<PAGE>
Under the Advisory Agreement, the adviser may utilize the specialized
portfolio skills of all its various affiliates, thereby providing the Funds and
Portfolios with greater opportunities and flexibility in accessing investment
expertise.
Pursuant to the terms of the Advisory Agreement and the sub-advisers'
agreements with the adviser, the adviser and sub-advisers are permitted to
render services to others. Each advisory agreement is terminable without
penalty by the Trust on behalf of the Funds on not more than 60 days', nor less
than 30 days', written notice when authorized either by a majority vote of a
Fund's shareholders or by a vote of a majority of the Board of Trustees of the
Trust, or by the adviser or sub-adviser on not more than 60 days', nor less
than 30 days', written notice, and will automatically terminate in the event of
its "assignment" (as defined in the 1940 Act). The advisory agreements provide
that the adviser or sub-adviser under such agreement shall not be liable for
any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio
transactions for the respective Fund, except for wilful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder.
With respect to the Equity Funds or Equity Portfolios, the equity research
team of the adviser looks for two key variables when analyzing stocks for
potential investment by equity portfolios: value and momentum. To uncover these
qualities, the team uses a combination of quantitative analysis, fundamental
research and computer technology to help identify undervalued stocks.
In the event the operating expenses of the Funds, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Funds imposed by the securities laws or regulations
thereunder of any state in which the shares of the Funds are qualified for
sale, as such limitations may be raised or lowered from time to time, the
adviser shall reduce its advisory fee (which fee is described below) to the
extent of its share of such excess expenses. The amount of any such reduction
to be borne by the adviser shall be deducted from the monthly advisory fee
otherwise payable with respect to the Funds during such fiscal year; and if
such amounts should exceed the monthly fee, the adviser shall pay to a Fund its
share of such excess expenses no later than the last day of the first month of
the next succeeding fiscal year.
Under the Advisory Agreement, Chase may delegate a portion of its
responsibilities to a sub-adviser. In addition, the Advisory Agreement provides
that Chase may render services through its own employees or the employees of
one or more affiliated companies that are qualified to act as an investment
adviser of the Fund and are under the common control of Chase as long as all
such persons are functioning as part of an organized group of persons, managed
by authorized officers of Chase.
Chase, on behalf of the Funds or Portfolios (except Core Equity Fund and
Equity Growth Fund), has entered into an investment sub-advisory agreement with
Chase Asset Management, Inc. ("CAM") and on behalf of the Core Equity Portfolio
and Equity Growth Portfolio, Chase Bank of Texas, National Association ("Chase
Texas"). With respect to the Strategic Income Fund, Chase has also entered into
an investment sub-advisory agreement with State Street Research & Management
Company ("State Street"). With respect to the day-to-day management of the
Funds or Portfolios, under the sub-advisory agreements, the sub-advisers make
decisions concerning, and place all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and sales.
The sub-advisers may, in their discretion, provide such services through their
own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Company under applicable laws
and are under the common control of Chase; provided that (i) all persons, when
providing services under the sub-advisory agreement, are functioning as part of
an organized group of persons, and (ii) such organized group of persons is
managed at all times by authorized officers of the sub-advisers. This
arrangement will not result in the payment of additional fees by the Funds.
Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a
registered bank holding company, is a commercial bank offering a wide range of
banking and investment services to customers
52
<PAGE>
throughout the United States and around the world. Also included among Chase's
accounts are commingled trust funds and a broad spectrum of individual trust
and investment management portfolios. These accounts have varying investment
objectives.
CAM is a wholly-owned operating subsidiary of the Adviser. CAM is
registered with the Securities and Exchange Commission as an investment adviser
and provides discretionary investment advisory services to institutional
clients, and the same individuals who serve as portfolio managers for CAM also
serve as portfolio managers for Chase. CAM is located at 1211 Avenue of the
Americas, New York, New York 10036.
Chase Texas, a wholly-owned subsidiary of The Chase Manhattan Corporation,
is a commercial bank offering a wide range of banking and investment services
to customers throughout the United States and around the world. Also included
among Chase Texas's accounts are commingled trust funds and a broad spectrum of
individual trust and investment management portfolios. These accounts have
varying investment objectives.
State Street is a subsidiary of the Metropolitan Life Insurance Company.
State Street is registered with the Securities and Exchange Commission as an
investment adviser and provides discretionary investment advisory services to
institutional and other clients.
In consideration of the services provided by the adviser pursuant to the
Advisory Agreement, the adviser is entitled to receive from each Fund or
Portfolio an investment advisory fee computed daily and paid monthly based on a
rate equal to a percentage of such Fund's or Portfolio's average daily net
assets specified in the relevant Prospectuses. However, the adviser may
voluntarily agree to waive a portion of the fees payable to it on a
month-to-month basis. For its services under its sub-advisory agreement, CAM is
entitled to receive a sub-advisory fee, payable by the adviser out of its
advisory fee, at the annual rate of:
o 0.10% of the average daily net assets of the Short-Term Bond Fund and
U.S. Treasury Income Fund
o 0.15% of the average daily net assets of the Bond Fund, Strategic Income
Fund, U.S. Government Securities Fund
o 0.20% of the average daily net assets of the Capital Growth Portfolio,
Equity Income Fund, Focus Fund, Growth and Income Portfolio and Large Cap
Equity Fund
o 0.25% of the average daily net assets of the Balanced Fund
o 0.30% of the average daily net assets of the Small Cap Equity Fund and
Small Cap Opportunities Portfolio
For its services under its sub-advisory agreement, Chase is entitled to
receive a sub-advisory fee, payable by the adviser out of its advisory fee, at
the annual rate of 0.375% of the average daily net assets of the Core Equity
Portfolio and Equity Growth Portfolio. For its services under its sub-advisory
agreement, State Street is entitled to receive a sub-advisory fee, payable by
the adviser out its advisory fee, at the annual rate of 0.35% of the average
daily net assets of the Strategic Income Fund that are managed by State Street.
53
<PAGE>
For the fiscal years ended October 31, 1996, 1997 and 1998, Chase was paid
or accrued the following investment advisory fees with respect to the following
Funds and Portfolios, and voluntarily waived the amounts in parentheses
following such fees with respect to each such period:
<TABLE>
<CAPTION>
Fiscal Year Ended October 31,
------------------------------------------------------------------------------------
1996 1997 1998
Fund paid/accrued waived paid/accrued waived paid/accrued waived
- --------------------------------- -------------- ------------- -------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund 253,986 (125,808) 419,971 (19,663) 566,217 --
Bond Fund 143,017 (143,017) 74,105 (74,105) 160,268 160,268
Capital Growth Fund * -- * -- * --
Equity Income Fund 54,769 (53,342) 142,666 (14,010) 376,013 --
Growth and Income Fund * -- * -- * --
Large Cap Equity Fund 337,772 (337,772) 476,896 (476,885) 684,337 684,337
Short-Term Bond Fund 105,509 (105,509) 120,146 (120,146) 129,578 129,578
Small Cap Equity Fund 1,069,668 (31,530) 3,122,539 -- 3,688,988 --
Small Cap Opportunities Fund -- -- -- -- 725,783 96,116
U.S. Government Securities Fund 288,582 (17,569)# 195,014 -- 169,150 150,101
U.S. Treasury Income Fund 331,915 (137,440) 329,197 (78,607) 223,287 104,604
</TABLE>
- ----------
* On November 23, 1993, these Funds changed their structure to a Master/Feeder
Fund Structure and do not have an investment adviser because the Trust seeks
to achieve the investment objective of the Funds by investing all of the
investable assets of each respective Fund in each respective Portfolio. The
Portfolios' investment adviser is Chase. With respect to the Growth and
Income Portfolio and the Capital Growth Portfolio, for the year ended
October 31, 1996, Chase was paid or accrued investment advisory fees of
$8,101,188 and $4,226,466, respectively, with respect to such Portfolios.
For the year ended October 31, 1997, Chase was paid or accrued investment
advisory fees of $9,877,868 and $4,971,835, respectively, with respect to
such Portfolios. For the fiscal year ended October 31, 1998, Chase was paid
or accrued investment advisory fees of $11,363,349 and $5,459,469,
respectively.
54
<PAGE>
# Fees paid or accrued for the period from December 1, 1995 through October 31,
1996.
With respect to Small Cap Opportunities Fund, for the period from May 19,
1997 through October 31, 1997, Chase was paid or accrued the following
investment advisory fees and waived the amount in parentheses following such
fees: $123,519 ($110,695).
With respect to the Focus Fund, for the period from June 30, 1998 through
October 31, 1998, Chase was paid or accrued the following advisory fees and
waived the amount in parentheses following such fees: $36,757 ($36,757).
Administrator
Pursuant to separate Administration Agreements (the "Administration
Agreements"), Chase is the administrator of the Funds and the administrator of
each Portfolio. Chase provides certain administrative services to the Funds and
Portfolios, including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Funds' and Portfolios' independent contractors and agents;
preparation for signature by an officer of the Trust and Portfolios of all
documents required to be filed for compliance by the Trust and Portfolios with
applicable laws and regulations excluding those of the securities laws of
various states; arranging for the computation of performance data, including
net asset value and yield; responding to shareholder inquiries; and arranging
for the maintenance of books and records of the Funds and Portfolios and
providing, at its own expense, office facilities, equipment and personnel
necessary to carry out its duties. Chase in its capacity as administrator does
not have any responsibility or authority for the management of the Funds or
Portfolios, the determination of investment policy, or for any matter
pertaining to the distribution of Fund shares.
Under the Administration Agreements Chase is permitted to render
administrative services to others. The Administration Agreements will continue
in effect from year to year with respect to each Fund or Portfolio only if such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust or Portfolio or by vote of a majority of such Fund's or
Portfolio's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Administration Agreements or
"interested persons" (as defined in the 1940 Act) of any such party. The
Administration Agreements are terminable without penalty by the Trust on behalf
of each Fund or by a Portfolio on 60 days' written notice when authorized
either by a majority vote of such Fund's or Portfolio shareholders or by vote
of a majority of the Board of Trustees, including a majority of the Trustees
who are not "interested persons" (as defined in the 1940 Act) of the Trust or
Portfolios, or by Chase on 60 days' written notice, and will automatically
terminate in the event of their "assignment" (as defined in the 1940 Act). The
Administration Agreements also provide that neither Chase or its personnel
shall be liable for any error of judgment or mistake of law or for any act or
omission in the administration of the Funds or Portfolios, except for willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of reckless disregard of its or their obligations and
duties under the Administration Agreements.
In addition, the Administration Agreements provide that, in the event the
operating expenses of any Fund or Portfolio, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for
any fiscal year exceed the most restrictive expense limitation applicable to
that Fund imposed by the securities laws or regulations thereunder of any state
in which the shares of such Fund are qualified for sale, as such limitations
may be raised or lowered from time to time, Chase shall reduce its
administration fee (which fee is described below) to the extent of its share of
such excess expenses. The amount of any such reduction to be borne by Chase
shall be deducted from the monthly administration fee otherwise payable to
Chase during such fiscal year, and if such amounts should exceed the monthly
fee, Chase shall pay to such Fund or Portfolio its share of such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year.
In consideration of the services provided by Chase pursuant to the
Administration Agreements, Chase receives from each Fund a fee computed daily
and paid monthly at an annual rate equal to 0.10% of each of the Fund's average
daily net assets, on an annualized basis for the Fund's then-current fiscal
year, except that
55
<PAGE>
with respect to the Growth and Income Fund and Capital Growth Fund, Chase
receives from each of the Funds and the Portfolios a fee computed daily and
paid monthly at an annual rate equal to 0.05% of their respective average daily
net assets. Chase may voluntarily waive a portion of the fees payable to it
with respect to each Fund on a month-to-month basis.
For the fiscal years ended October 31, 1996, 1997 and 1998, Chase was paid
or accrued the following administration fees and voluntarily waived the amounts
in parentheses following such fees:
<TABLE>
<CAPTION>
Fiscal Year Ended October 31,
---------------------------------------------------------------------------------------------
1996 1997 1998
Fund paid/accrued waived paid/accrued waived paid/accrued waived
- ------------------------------ -------------- -------------- -------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund 50,797 (14,689) 83,940 None 113,243 --
Bond Fund 47,715 (47,715) 24,703 (24,703) 160,268 160,268
Capital Growth Fund+ 526,852 None 619,816 None 681,429 --
Equity Income Fund 13,692 (13,293) 35,929 (1,560) 94,003 --
Growth and Income Fund+ 971,251 None 1,169,015 None 1,112,549 --
Large Cap Equity Fund 84,443 (84,443) 119,235 (119,235) 171,083 171,083
Short-Term Bond Fund 42,171 (42,171) 48,058 (48,058) 51,831 51,831
Small Cap Equity Fund 164,564 (6,152) 480,368 None 567,538 --
Small Cap Opportunities Fund -- -- -- -- 111,659 --
U.S. Government Securities
Fund 63,984 (26,354)* 65,005 None 56,383 46,865
U.S. Treasury Income Fund 110,678 (23,372) 109,732 None 74,429 --
</TABLE>
- ----------
+ On November 23, 1993, these Funds changed their structure to a Master/Feeder
Structure. The Portfolios' administrator is Chase. With respect to the Growth
and Income Portfolio and the Capital Growth Portfolio, for the fiscal year
ended October 31, 1996, Chase was paid or accrued administration fees of
$1,012,648 and $528,308, respectively. For the fiscal year ended October 31,
1997, Chase was paid or accrued administration fees of $1,234,733 and
$621,480, respectively. For the fiscal year ended October 31, 1998, Chase was
paid or accrued administration fees of $1,420,419 and $682,434, respectively.
* Fees paid or accrued for the period from December 1, 1995 through October
31, 1996.
With respect to the Focus Fund, for the period from June 30, 1998 through
October 31, 1998, Chase was paid or accrued the following administration fees
and waived the amount in parentheses following such fees: $9,189 ($9,189).
With respect to the Small Cap Opportunities Fund, for the period May 19,
1997 through October 31, 1997, Chase was paid or accrued the following
administration fees and voluntarily waived the amount in parentheses following
such fees: $18,909 ($7,783).
Distribution Plans
The Trust has adopted separate plans of distribution pursuant to Rule
12b-1 under the 1940 Act (a "Distribution Plan") on behalf of certain classes
of shares of certain Funds as described in the Prospectuses, which provide such
classes of such Funds shall pay for distribution services a distribution fee
(the "Distribution Fee"), including payments to the Distributor, at annual
rates not to exceed the amounts set forth in their respective Prospectuses. The
Distributor may use all or any portion of such Distribution Fee to pay for Fund
expenses of printing prospectuses and reports used for sales purposes, expenses
of the preparation and printing of sales literature and other such
distribution-related expenses. Promotional activities for the sale of each
class of shares of each Fund will be conducted generally by the Chase Vista
Funds, and activities intended to promote one class of shares of a Fund may
also benefit the Fund's other shares and other Chase Vista Funds.
Class B and Class C shares pay a Distribution Fee of up to 0.75% of
average daily net assets. The Distributor currently expects to pay sales
commissions to a dealer at the time of sale of Class B and Class
56
<PAGE>
C shares of up to 4.00% and 1.00%, respectively, of the purchase price of the
shares sold by such dealer. The Distributor will use its own funds (which may
be borrowed or otherwise financed) to pay such amounts. Because the Distributor
will receive a maximum Distribution Fee of 0.75% of average daily net assets
with respect to Class B shares, it will take the Distributor several years to
recoup the sales commissions paid to dealers and other sales expenses.
Some payments under the Distribution Plans may be used to compensate
broker-dealers with trail or maintenance commissions in an amount not to exceed
0.25% annualized of the average net asset values of Class A shares, or 0.25%
annualized of the average net asset value of the Class B shares, or 0.75%
annualized of the average net asset value of the Class C shares, maintained in
a Fund by such broker-dealers' customers. Trail or maintenance commissions on
Class B and Class C shares will be paid to broker-dealers beginning the 13th
month following the purchase of such Class B or Class C shares. Since the
distribution fees are not directly tied to expenses, the amount of distribution
fees paid by a Fund during any year may be more or less than actual expenses
incurred pursuant to the Distribution Plans. For this reason, this type of
distribution fee arrangement is characterized by the staff of the Securities
and Exchange Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements by which a distributor's payments are directly
linked to its expenses). With respect to Class B and Class C shares, because of
the 0.75% annual limitation on the compensation paid to the Distributor during
a fiscal year, compensation relating to a large portion of the commissions
attributable to sales of Class B or Class C shares in any one year will be
accrued and paid by a Fund to the Distributor in fiscal years subsequent
thereto. In determining whether to purchase Class B or Class C shares,
investors should consider that compensation payments could continue until the
Distributor has been fully reimbursed for the commissions paid on sales of
Class B and Class C shares. However, the Shares are not liable for any
distribution expenses incurred in excess of the Distribution Fee paid.
Each class of shares is entitled to exclusive voting rights with respect
to matters concerning its Distribution Plan.
Each Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by
a vote of both a majority of the Trustees and a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the operation of the
Distribution Plans or in any agreement related to such Plan ("Qualified
Trustees"). The continuance of each Distribution Plan was most recently
approved on October 13, 1995. Each Distribution Plan requires that the Trust
shall provide to the Board of Trustees, and the Board of Trustees shall review,
at least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Distribution Plan. Each Distribution Plan further provides
that the selection and nomination of Qualified Trustees shall be committed to
the discretion of the disinterested Trustees (as defined in the 1940 Act) then
in office. Each Distribution Plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or, with respect to a particular Fund, by
vote of a majority of the outstanding voting Shares of the class of such Fund
to which it applies (as defined in the 1940 Act). Each Distribution Plan may
not be amended to increase materially the amount of permitted expenses
thereunder without the approval of shareholders and may not be materially
amended in any case without a vote of the majority of both the Trustees and the
Qualified Trustees. Each of the Funds will preserve copies of any plan,
agreement or report made pursuant to a Distribution Plan for a period of not
less than six years from the date of the Distribution Plan, and for the first
two years such copies will be preserved in an easily accessible place. For the
fiscal year ended October 31, 1998, the Distributor was paid or accrued the
following Distribution Fees and voluntarily waived the amounts of such fees:
57
<PAGE>
<TABLE>
<CAPTION>
Fund Paid/Accrued Waived
- -------------------------------- -------------- ----------
<S> <C> <C>
Balanced Fund
A Shares 233,147 --
B Shares 149,885 --
Bond Fund
A Shares 80,517 35,089
B Shares 20,023 --
Capital Growth Fund
A Shares 2,109,946 --
B Shares 3,352,626 --
C Shares 9,612 --
Equity Income Fund
A Shares 173,516 --
B Shares 168,131 --
C Shares 16,346 --
Focus Fund
A Shares 11,922 --
B Shares 24,903 --
C Shares 8,248 --
Growth and Income Fund
A Shares 3,910,171 --
B Shares 4,069,641 --
C Shares 13,250 --
Large Cap Equity Fund
A Shares 122,882 --
B Shares 54,443 --
Short-Term Bond Fund
Class A Shares 40,617 10,700
Small Cap Equity Fund
A Shares 405,777 --
B Shares 739,520 --
Small Cap Opportunities Fund
A Shares 143,104 --
B Shares 392,357 --
C Shares 15,772 --
U.S. Government Securities Fund
A Shares 6,335 6,335
U.S. Treasury Income Fund
A Shares 157,143 102,503
B Shares 86,788 --
</TABLE>
With respect to the Class A shares of the Funds, the Distribution Fee was
allocated as follows:
<TABLE>
<CAPTION>
Printing, Postage Sales Advertising &
Fund and Handling Compensation Administrative Filings
- --------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Balanced Income Fund
A Shares $ 48,960 $ 142,220 $ 41,967
Bond Fund
A Shares 9,540 27,711 8,177
Capital Growth Fund
A Shares 443,087 1,287,067 379,792
Equity Income Fund
A Shares 36,438 105,845 31,233
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
Printing, Postage Sales Advertising &
Fund and Handling Compensation Administrative Filings
- ---------------------- ------------------- -------------- -----------------------
<S> <C> <C> <C>
Focus Fund
A Shares 2,506 7,630 1,786
Growth and Income
Fund
A Shares 821,136 2,385,204 703,831
Large Cap Equity
Fund
Class A Shares 25,805 74,958 22,119
Short-Term Bond Fund
Class A Shares 6,283 18,249 5,385
Small Cap Equity Fund
Class A Shares 85,213 247,524 73,040
Small Cap
Opportunities Fund
A Shares 30,052 87,293 25,759
U.S. Treasury Income
Fund
A Shares 11,474 33,331 9,835
</TABLE>
With respect to the Class B shares and Class C shares of the Funds, the
Distribution Fee was paid to FEP Capital L.P. for acting as finance agent.
Distribution and Sub-Administration Agreement
The Trust has entered into a Distribution and Sub-Administration Agreement
dated August 24, 1995 (the "Distribution Agreement") with the Distributor,
pursuant to which the Distributor acts as the Funds' exclusive underwriter,
provides certain administration services and promotes and arranges for the sale
of each class of Shares. The Distributor is a wholly-owned subsidiary of BISYS
Fund Services, Inc. The Distribution Agreement provides that the Distributor
will bear the expenses of printing, distributing and filing prospectuses and
statements of additional information and reports used for sales purposes, and
of preparing and printing sales literature and advertisements not paid for by
the Distribution Plan. The Trust pays for all of the expenses for qualification
of the shares of each Fund for sale in connection with the public offering of
such shares, and all legal expenses in connection therewith. In addition,
pursuant to the Distribution Agreement, the Distributor provides certain
sub-administration services to the Trust, including providing officers,
clerical staff and office space.
The Distribution Agreement is currently in effect and will continue in
effect with respect to each Fund only if such continuance is specifically
approved at least annually by the Board of Trustees or by vote of a majority of
such Fund's outstanding voting securities and, in either case, by a majority of
the Trustees who are not parties to the Distribution Agreement or "interested
persons" (as defined in the 1940 Act) of any such party. The Distribution
Agreement is terminable without penalty by the Trust on behalf of each Fund on
60 days' written notice when authorized either by a majority vote of such
Fund's shareholders or by vote of a majority of the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days'
written notice, and will automatically terminate in the event of its
"assignment" (as defined in the 1940 Act). The Distribution Agreement also
provides that neither the Distributor nor its personnel shall be liable for any
act or omission in the course of, or connected with, rendering services under
the Distribution Agreement, except for willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations or duties.
In the event the operating expenses of any Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary
59
<PAGE>
expenses such as litigation, for any fiscal year exceed the most restrictive
expense limitation applicable to that Fund imposed by the securities laws or
regulations thereunder of any state in which the shares of such Fund are
qualified for sale, as such limitations may be raised or lowered from time to
time, the Distributor shall reduce its sub-administration fee with respect to
such Fund (which fee is described below) to the extent of its share of such
excess expenses. The amount of any such reduction to be borne by the
Distributor shall be deducted from the monthly sub-administration fee otherwise
payable with respect to such Fund during such fiscal year; and if such amounts
should exceed the monthly fee, the Distributor shall pay to such Fund its share
of such excess expenses no later than the last day of the first month of the
next succeeding fiscal year.
In consideration of the sub-administration services provided by the
Distributor pursuant to the Distribution Agreement, the Distributor receives an
annual fee, payable monthly, of 0.05% of the net assets of each Fund. However,
the Distributor has voluntarily agreed to waive a portion of the fees payable
to it under the Distribution Agreement with respect to each Fund on a
month-to-month basis. For the fiscal years ended October 31, 1996, 1997 and
1998 the Distributor was paid or accrued the following sub-administration fees
under the Distribution Agreement, and voluntarily waived the amounts in
parentheses following such fees:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
----------------------------------------------------------------------------------
1996 1997 1998
Fund payable waived payable waived payable waived
- --------------------------------- --------- ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund 25,399 (1,680) 41,997 None 56,622 --
Bond Fund 23,793 None 12,350 (6,968) 26,711 (26,711)
Capital Growth Fund 526,852 None 619,911 None 681,429 --
Equity Income Fund 6,846 None 17,963 None 47,001 --
Growth and Income Fund 971,201 None 1,169,014 None 1,112,549 --
Large Cap Equity Fund 42,221 None 59,617 None 85,542 --
Short-Term Bond Fund 21,085 None 24,030 (5,836) 25,916 (25,916)
Small Cap Equity Fund 82,282 None 240,179 None 283,769 --
Small Cap Opportunities Fund -- -- -- -- 55,829 --
U.S. Government Securities Fund 18,814 None* 32,502 (15,205) 28,182 (28,192)
U.S. Treasury Income Fund 53,339 None 54,866 None 37,214 --
</TABLE>
- ----------
* Fees paid or accrued for the period from December 1, 1995 through October
31, 1996.
** Fees paid or accrued for the period from May 6, 1996 through October 31,
1996.
With respect to Small Cap Opportunities Fund, for the period May 13, 1997
through October 31, 1997, the Distributor was paid or accrued the following
sub-administration fees under the Distribution Agreement and voluntarily waived
the amount in parentheses following such fees: $9,451 ($3,891).
With respect to the Focus Fund, for the period from June 30, 1998 through
October 31, 1998, Chase was paid or accrued the following sub-administration
fees and waived the amount in parentheses following such fees: $4,595 ($4,595).
Shareholder Servicing Agents, Transfer Agent and Custodian
The Trust has entered into a shareholder servicing agreement (a "Servicing
Agreement") with each Shareholder Servicing Agent to provide certain services
including but not limited to the following: answer customer inquiries regarding
account status and history, the manner in which purchases and redemptions of
shares may be effected for the Fund as to which the Shareholder Servicing Agent
is so acting and certain other matters pertaining to the Fund; assist
shareholders in designating and changing dividend options, account designations
and addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and receive
funds in connection with customer orders to purchase or redeem
60
<PAGE>
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by a Shareholder Servicing Agent) quarterly and year-end
statements and confirmations of purchases and redemptions; transmit, on behalf
of the Fund, proxy statements, annual reports, updated prospectuses and other
communications to shareholders of the Fund; receive, tabulate and transmit to
the Fund proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as the Fund
or a shareholder may request. Shareholder servicing agents may be required to
register pursuant to state securities law. Shareholder Servicing Agents may
subcontract with other parties for the provision of shareholder support
services.
Each Shareholder Servicing Agent may voluntarily agree from time to time
to waive a portion of the fees payable to it under its Servicing Agreement with
respect to each Fund on a month-to-month basis. For the fiscal years ended
October 31, 1996, 1997 and 1998, fees payable to the Shareholder Servicing
Agents (all of which currently are related parties) and the amounts voluntarily
waived for each such period (as indicated in parentheses), were as follows:
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
-----------------------------------------------------------------------------------------------
1996 1997 1998
Fund payable waived payable waived payable waived
- ----------------------- ------------- ------------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund
A Shares $ 107,171 $ (98,086) $ 179,498 $ (179,498) $ 233,147 $ (171,504)
B Shares $ 19,822 -- $ 30,353 -- $ 49,961 --
C Shares -- -- -- -- -- --
Bond Fund
Class A Shares $ 733 $ (733) $ 13,451 $ (13,451) $ 80,517 $ (58,222)
Class B Shares $ 516 -- $ 2,789 -- $ 6,674 --
Institutional Shares $ 43,872 $ (12,631) $ 45,514 $ (45,313) $ 46,366 $ (46,366)
Growth and Income Fund
Class A $3,989,725 -- $3,744,600 -- $3,910,171 --
Class B $ 820,579 -- $1,092,905 -- $1,356,558 --
Class C -- -- -- -- $ 4,417 --
Institutional $ 46,244 -- $1,007,567 -- $ 291,585 --
Capital Growth Fund
Class A $1,836,642 -- $2,029,200 -- $2,109,946 --
Class B $ 746,722 -- $ 962,344 -- $1,113,911 --
Class C -- -- -- -- $ 3,204 --
Institutional $ 50,897 -- $ 107,773 -- $ 180,080 --
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year-Ended October 31,
---------------------------------------------------------------------------------------
1996 1997 1998
Fund payable waived payable waived payable waived
- ----------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Fund
Class A $ 33,998 $ (33,998) $ 67,368 $ (43,638) $173,516 --
Class B $ 240 -- $ 17,214 -- $ 56,044 --
Class C -- -- -- -- $ 5,449 --
Large Cap Equity Fund
Class A Shares $ 8,140 -- $ 37,298 -- $122,882 --
Class B Shares 96 -- $ 7,218 -- $ 18,148 --
Class C Shares -- -- -- -- $286,680 --
Institutional Shares $131,164 $ (24,277) $253,543 -- $ 0 --
Short-Term Bond Fund
Class A Shares $ 12,200 $ (8,772) $ 22,218 $ (8,902) $ 40,617 $ (35,336)
Institutional Shares $ 46,925 $ (31,710) 97,928 $ (58,693) $ 88,961 $ (78,738)
Small Cap Equity Fund
A Shares $ 37,103 -- $ 66,388 -- $ 62,952 --
B Shares $117,011 -- $226,585 -- $246,507 --
Institutional Shares $ 38,235 $ (38,235) $566,164 $ (90,765) $766,562 $ (766,562)
Small Cap
Opportunities Fund
A Shares -- -- -- -- $143,104 $ (137,222)
B Shares -- -- -- -- $130,786 --
C Shares -- -- -- -- $ 5,257 --
U.S. Government
Securities Fund
A Shares $ 3,551 $ (3,551) $ 7,685 $ (7,685) $ 6,591 $ (6,591)
Institutional Shares $195,938 (935,060) $154,826 $ (21,879) $134,367 --
U.S. Treasury Income
Fund
A Shares $249,561 $ (222,710) $248,112 $ (238,380) $157,143 $ (102,503)
B Shares $ 27,059 -- $ 26,319 -- $ 28,929 --
</TABLE>
With respect to Class A shares of Small Cap Opportunities Fund, for the
period May 13, 1997 through October 31, 1997, fees paid to the Shareholder
Servicing Agents (all of which are currently related parties) and the amount
voluntarily waived for such period (as indicated in parentheses) were as
follows: $27,016 ($26,585).
With respect to the Class B shares of Small Cap Opportunity Fund, for the
period May 19, 1997 through October 31, 1997, fees paid to the Shareholder
Servicing Agents (all of which are currently related parties) and the amount
voluntarily waived for such period (as indicated in parentheses) were as
follows: $20,133 ($--).
With respect to the Class A, Class B and Class C Shares of the Focus Fund
for the period from June 30, 1998 through October 31, 1998, fees paid to the
Shareholder Servicing Agents (all of whom are currently related parties) and
the amounts voluntarily waived for such period (as indicated in parentheses)
were as follows: $11,922 ($11,922), $8,302 ($5,018) and $2,479 ($1,613),
respectively.
Shareholder servicing agents may offer additional services to their
customers, including specialized procedures and payment for the purchase and
redemption of Fund shares, such as pre-authorized or systematic purchase and
redemption programs, "sweep" programs, cash advances and redemption checks.
Each Shareholder Servicing Agent may establish its own terms and conditions,
including limitations on the amounts of subsequent transactions, with respect
to such services. Certain Shareholder Servicing Agents
62
<PAGE>
may (although they are not required by the Trust to do so) credit to the
accounts of their customers from whom they are already receiving other fees
amounts not exceeding such other fees or the fees for their services as
Shareholder Servicing Agents.
For shareholders that bank with Chase, Chase may aggregate investments in
the Chase Vista Funds with balances held in Chase bank accounts for purposes of
determining eligibility for certain bank privileges that are based on specified
minimum balance requirements, such as reduced or no fees for certain banking
services or preferred rates on loans and deposits. Chase and certain
broker-dealers and other Shareholder Servicing Agents may, at their own
expense, provide gifts, such as computer software packages, guides and books
related to investment or additional Fund shares valued up to $250 to their
customers that invest in the Chase Vista Funds.
Chase and/or the Distributor may from time to time, at their own expense
out of compensation retained by them from the Fund or other sources available
to them, make additional payments to certain selected dealers or other
Shareholder Servicing Agents for performing administrative services for their
customers. These services include maintaining account records, processing
orders to purchase, redeem and exchange Fund shares and responding to certain
customer inquiries. The amount of such compensation may be up to an additional
0.10% annually of the average net assets of the Fund attributable to shares if
the Fund held by customers of such Shareholder Servicing Agents. Such
compensation does not represent an additional expense to the Fund or its
shareholders, since it will be paid by Chase and/or the Distributor.
Chase and its affiliates and the Chase Vista Funds, affiliates, agents and
subagents may exchange among themselves and others certain information about
shareholders and their accounts, including information used to offer investment
products and insurance products to them, unless otherwise contractually
prohibited.
The Trust has also entered into a Transfer Agency Agreement with DST
Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the
Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of each Fund and receives such compensation as is from time to time
agreed upon by the Trust and Chase. As custodian, Chase provides oversight and
record keeping for the assets held in the portfolios of each Fund. Chase also
provides fund accounting services for the income, expenses and shares
outstanding for such Funds. Chase is located at 3 Metrotech Center, Brooklyn,
NY 11245.
INDEPENDENT ACCOUNTANTS
The financial statements incorporated herein by reference from the Trust's
Annual Reports to Shareholders for the fiscal year ended October 31, 1998, and
the related financial highlights which appear in the Prospectuses, have been
incorporated herein and included in the Prospectuses in reliance on the reports
of PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036, independent accountants of the Funds, given on the authority of said
firm as experts in accounting and auditing. PricewaterhouseCoopers LLP provides
the Funds with audit services, tax return preparation and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
CERTAIN REGULATORY MATTERS
Banking laws, including the Glass-Steagall Act as currently interpreted,
prohibit bank holding companies and their affiliates from sponsoring,
organizing, controlling, or distributing shares of, mutual funds, and generally
prohibit banks from issuing, underwriting, selling or distributing securities.
These laws do not prohibit banks or their affiliates from acting as investment
adviser, administrator or custodian to mutual funds or from purchasing mutual
fund shares as agent for a customer. Chase and the Trust believe that Chase
(including its affiliates) may perform the services to be performed by it as
described in the Prospectus and this Statement of Additional Information
without violating such laws. If future changes in these laws or inter-
63
<PAGE>
pretations required Chase to alter or discontinue any of these services, it is
expected that the Board of Trustees would recommend alternative arrangements
and that investors would not suffer adverse financial consequences. State
securities laws may differ from the interpretations of banking law described
above and banks may be required to register as dealers pursuant to state law.
Chase and its affiliates may have deposit, loan and other commercial
banking relationships with the issuers of securities purchased on behalf of any
of the Funds, including outstanding loans to such issuers which may be repaid
in whole or in part with the proceeds of securities so purchased. Chase and its
affiliates deal, trade and invest for their own accounts in U.S. Government
obligations, municipal obligations and commercial paper and are among the
leading dealers of various types of U.S. Government obligations and municipal
obligations. Chase and its affiliates may sell U.S. Government obligations and
municipal obligations to, and purchase them from, other investment companies
sponsored by the Funds' distributor or affiliates of the distributor. Chase
will not invest any Fund assets in any U.S. Government obligations, municipal
obligations or commercial paper purchased from itself or any affiliate,
although under certain circumstances such securities may be purchased from
other members of an underwriting syndicate in which Chase or an affiliate is a
non-principal member. This restriction my limit the amount or type of U.S.
Government obligations, municipal obligations or commercial paper available to
be purchased by any Fund. Chase has informed the Funds that in making its
investment decision, it does not obtain or use material inside information in
the possession of any other division or department of Chase, including the
division that performs services for the Trust as custodian, or in the
possession of any affiliate of Chase. Shareholders of the Funds should be aware
that, subject to applicable legal or regulatory restrictions, Chase and its
affiliates may exchange among themselves certain information about the
shareholder and his account. Transactions with affiliated broker-dealers will
only be executed on an agency basis in accordance with applicable federal
regulations.
Expenses
Each Fund pays the expenses incurred in its operations, including its pro
rata share of expenses of the Trust. These expenses include investment advisory
and administrative fees; the compensation of the Trustees; registration fees;
interest charges; taxes; expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Funds' custodian
for all services to the funds, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of preparing and mailing
reports to investors and to government offices and commissions; expenses of
meetings of investors; fees and expenses of independent accountants, of legal
counsel and of any transfer agent, registrar or dividend disbursing agent of
the Trust; insurance premiums; and expenses of calculating the net asset value
of, and the net income on, shares of the Funds. Shareholder servicing and
distribution fees are all allocated to specific classes of the Funds. In
addition, the Funds may allocate transfer agency and certain other expenses by
class. Service providers to a Fund may, from time to time, voluntarily waive
all or a portion of any fees to which they are entitled.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities
Mutual Fund Group is an open-end, non-diversified management investment
company organized as Massachusetts business trust under the laws of the
Commonwealth of Massachusetts in 1987. The Trust currently consists of 19
series of shares of beneficial interest, par value $.001 per share. With
respect to certain Funds, the Trust may offer more than one class of shares.
The Trust has reserved the right to create and issue additional series or
classes. Each share of a series or class represents an equal proportionate
interest in that series or class with each other share of that series or class.
The shares of each series or class participate equally in the earnings,
dividends and assets of the particular series or class. Expenses of the Trust
which are not attributable to a specific series or class are allocated amount
all the series in a manner believed by management of the Trust to be fair and
equitable. Shares have no pre-emptive or conversion rights. Shares when issued
are fully paid and non-assessable, except as set forth below. Shareholders are
entitled to one vote for each whole share
64
<PAGE>
held, and each fractional share shall be entitled to a proportionate fractional
vote, except that Trust shares held in the treasury of the Trust shall not be
voted. Shares of each series or class generally vote together, except when
required under federal securities laws to vote separately on matters that only
affect a particular class, such as the approval of distribution plans for a
particular class. With respect to shares purchased through a Shareholder
Servicing Agent and, in the event written proxy instructions are not received
by a Fund or its designated agent prior to a shareholder meeting at which a
proxy is to be voted and the shareholder does not attend the meeting in person,
the Shareholder Servicing Agent for such shareholder will be authorized
pursuant to an applicable agreement with the shareholder to vote the
shareholder's outstanding shares in the same proportion as the votes cast by
other Fund shareholders represented at the meeting in person or by proxy.
Certain Funds offer Class A, Class B and Class C shares. The classes of
shares have several different attributes relating to sales charges and
expenses, as described herein and in the Prospectuses. In addition to such
differences, expenses borne by each class of a Fund may differ slightly because
of the allocation of other class-specific expenses. For example, a higher
transfer agency fee may be imposed on Class B shares than on Class A shares.
The relative impact of initial sales charges, contingent deferred sales
charges, and ongoing annual expenses will depend on the length of time a share
is held.
Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of shares rather than another.
The business and affairs of the Trust are managed under the general
direction and supervision of the Trust's Board of Trustees. The Trust is not
required to hold annual meetings of shareholders but will hold special meetings
of shareholders of a series or class when, in the judgment of the Trustees, it
is necessary or desirable to submit matters for a shareholder vote.
Shareholders have, under certain circumstances, the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees. Shareholders also have, in
certain circumstances, the right to remove one or more Trustees without a
meeting. No material amendment may be made to the Trust's Declaration of Trust
without the affirmative vote of the holders of a majority of the outstanding
shares of each portfolio affected by the amendment. The Trust's Declaration of
Trust provides that, at any meeting of shareholders of the Trust or of any
series or class, a Shareholder Servicing Agent may vote any shares as to which
such Shareholder Servicing Agent is the agent of record and which are not
represented in person or by proxy at the meeting, proportionately in accordance
with the votes cast by holders of all shares of that portfolio otherwise
represented at the meeting in person or by proxy as to which such Shareholder
Servicing Agent is the agent of record. Any shares so voted by a Shareholder
Servicing Agent will be deemed represented at the meeting for purposes of
quorum requirements. Shares have no preemptive or conversion rights. Shares,
when issued, are fully paid and non-assessable, except as set forth below. Any
series or class may be terminated (i) upon the merger or consolidation with, or
the sale or disposition of all or substantially all of its assets to, another
entity, if approved by the vote of the holders of two-thirds of its outstanding
shares, except that if the Board of Trustees recommends such merger,
consolidation or sale or disposition of assets, the approval by vote of the
holders of a majority of the series' or class' outstanding shares will be
sufficient, or (ii) by the vote of the holders of a majority of its outstanding
shares, or (iii) by the Board of Trustees by written notice to the series' or
class' shareholders. Unless each series and class is so terminated, the Trust
will continue indefinitely.
Stock certificates are issued only upon the written request of a
shareholder, subject to the policies of the investor's Shareholder Servicing
Agent, but the Trust will not issue a stock certificate with respect to shares
that may be redeemed through expedited or automated procedures established by a
Shareholder Servicing Agent. No certificates are issued for Class B shares due
to their conversion feature. No certificates are issued for Institutional
Shares.
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reim-
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<PAGE>
bursement of expenses out of the Trust property for any shareholder held
personally liable for the obligations of the Trust. The Trust's Declaration of
Trust also provides that the Trust shall maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of the Trust, its shareholders, Trustees, officers, employees and
agents covering possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance existed and the
Trust itself was unable to meet its obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the property
of the Trust and that the Trustees will not be liable for any action or failure
to act, errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
The Board of Trustees has adopted a code of ethics addressing personal
securities transactions by investment personnel and access persons and other
related matters. The code has been designated to address potential conflicts of
interest that can arise in connection with personal trading activities of such
persons. Persons subject to the code are generally permitted to engage in
personal securities transactions, subject to certain prohibitions,
pre-clearance requirements and blackout periods.
Principal Holders
As of January 29, 1999, the following persons owned of record 5% or more
of the outstanding shares of the following classes of the following Funds:
<TABLE>
<S> <C>
BALANCED FUND A SHARES
Testa and Company 22.64%
C/O Chase Manhattan Bank
Attn: Mutual Funds / T-C
PO Box 1412
Rochester, NY 14603-1412
Hamill and Company 9.69%
FBO Texas New Mexico Power
Mail Sta 16-HCB-09
PO Box 2558
Houston, TX 77252
BCO Popular TTEE 8.52%
FBO Texaco Pr Inc Pension Plan
Attn: Yantra Nazario
PO Box 762708
San Juan, PR 00916-2708
Texas Commerce Bank NA 5.28%
Avesta
MSC 10 1111F 342
Asset Trading Unit
PO Box 2558
Houston, TX 77252-2558
</TABLE>
<TABLE>
<S> <C>
BALANCED FUND B SHARES
MLPF&S for the sole benefit of its customers 7.63%
Attn: Fund Administration
4800 Deer Lake Drive East
3rd Floor
Jacksonville, FL 32246-6484
BOND FUND A SHARES
Liva & Company 39.83%
C/O Chase Manhattan Bank
Attn: Mut FDS / T-C
PO Box 1412
Rochester NY 14603-1412
Balsa and Company 9.01%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
Testa and Company 6.15%
C/O Chase Manhattan Bank
Attn: Mutual Funds / T-C
PO Box 1412
Rochester, NY 14603-1412
Balsa and Company 7.11%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
</TABLE>
66
<PAGE>
<TABLE>
<S> <C>
BOND FUND INSTITUTIONAL SHARES
Trulin and Company 52.43%
C/O Chase Manhattan Bank
Attn: Mutual Funds FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
Texas Commerce Bank 12.81%
Avesta
MSC 101111F 342
Asset Trading Unit
PO Box 2558
Houston, TX 77252-2558
SEI Trust Co. 5.72%
First National Bank of Rochester
Attn: Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456
Balsa & Co. 7.58%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
Testa and Company 8.99%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
VISTA CAPITAL GROWTH FUND
A SHARES
Charles Schwab & Co. Inc. 6.07%
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122
CAPITAL GROWTH FUND
C SHARES
MLPF&S for the sole benefit of 34.55%
its customers
Attn: Fund Administration
SEC# 87TR4
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
<TABLE>
<S> <C>
CAPITAL GROWTH FUND
INSTITUTIONAL SHARES
Testa and Company 29.83%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
Chase Manhattan Bank TTEE 23.95%
FBO Berg Electronics Savings Plan
Attn: Kurt Smailus
770 Broadway
10th Floor
New York, NY 10003-9522
International Wire 22.78%
Retirement Savings Plan
770 Broadway
10th Floor
New York, NY 10003-9522
Bankers Trust Trustee 17.83%
Alliance Coal Corp PSSP
Attn: Elijah Outen
34 Exchange Place
Jersey City, NJ 07302-3901
Chase Manhattan Bank TTEE 5.06%
VIASystems Retirement Savings Plan
770 Broadway, 10th Floor
New York, NY 10003-9522
EQUITY INCOME FUND
A SHARES
Liva & Company 6.01%
C/O Chase Manhattan Bank
Attn: Mut FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
FOCUS FUND B SHARES
MLPR&S for the sole benefit of 21.14%
its customers
Attn: Fund Administration
SEC# 97FB8
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
MLPR&S for the sole benefit of 8.41%
its customers
Attn: Fund Administration
SEC# 97FB8
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette 17.19%
Securities Corp. Inc.
PO Box 2052
Jersey City, NJ 07303-2052
GROWTH AND INCOME FUND
C SHARES
MLPR&S for the sole benefit of 7.56%
its customers
Attn: Fund Administration
SEC# 97FB8
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette 5.97%
Securities Corp. Inc.
PO Box 2052
Jersey City, NJ 07303-2052
GROWTH AND INCOME FUND
INSTITUTIONAL SHARES
Testa and Company 98.24%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
LARGE CAP EQUITY FUND
A SHARES
Balsa and Company 35.67%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
Liva & Company 9.21%
C/O Chase Manhattan Bank
Attn: Mut FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
Corelink Financial Services 5.67%
PO Box 4054
Concord, CA 94524-4054
</TABLE>
<TABLE>
<S> <C>
MLPR&S for the sole benefit of 5.05%
its customers
Attn: Fund Administration
SEC# 97J65
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
LARGE CAP EQUITY FUND
INSTITUTIONAL SHARES
Trulin and Company 11.96%
C/O Chase Manhattan Bank
Attn: Mutual Funds FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
Testa and Company 10.46%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
Chase Manhattan Bank 5.18%
FBA Jericho OCI Pension PL SLRD EE
Future Benefits--Custody
Attn: Terry Zimmardi
One Chase Manhattan Plaza 4th Floor
New York, NY 10081-1000
Chase Manhattan Bank 6.09%
FBA Jericho OCI Pension PL SLRD EE
Future Benefits--Custody
Attn: Terry Zimmardi
One Chase Manhattan Plaza 4th Floor
New York, NY 10005-1401
Texas Commerce Bank NA 12.61%
Attn: Avesta
PO Box 2558
Houston, TX 77252-2558
SHORT TERM BOND FUND
A SHARES
Liva & Company 27.09%
c/o Chase Manhattan Bank
Attn: Mutual Funds/T-C
PO Box 1412
Rochester, NY 14603-1412
Mass Mutual Agents Health 27.06%
Benefit Trust
C/O Richard Peck D113
1295 State Street
Springfield, MA 01111-0002
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Balsa and Company 6.33%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
SHORT TERM BOND FUND
INSTITUTIONAL SHARES
Trulin and Company 37.91%
C/O Chase Manhattan Bank
Attn: Mutual Funds FDS/T-C
PO Box 1412
Rochester, NY 14603-1412
Testa and Company 25.18%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
Fleet Trust Co 9.76%
#20842002 DTD Jul 91
Custodian for Rochester area Foundation
Attn: 227-401512
PO Box 92800
Rochester, NY 14692-8900
Fleet National Bank 14.87%
FBO Rochester Area Foundation
Attn: #20845012
PO Box 92800
Rochester, NY 14692-8900
SMALL CAP EQUITY FUND
A SHARES
Charles Schwab & Co. 14.02%
Reinvest Account
Attn: Mutual Funds Dept
101 Montgomery Street
San Francisco, CA 94104-4122
Balsa & Co. 6.38%
PO Box 1768
Grand Central Station
New York, NY 10163-1768
SMALL CAP OPPORTUNITIES FUND
INSTITUTIONAL SHARES
IFTC Mutual Funds 25.00%
Audit Output Account
Attn: Alesia Drake
330 West 9th Street
Kansas City, MO 64105-1514
</TABLE>
<TABLE>
<S> <C>
IFTC Mutual Funds 25.00%
Audit Output Account
Attn: Alesia Drake
330 West 9th Street
Kansas City, MO 64105-1514
Vista Broker Dealer Services 25.00%
B Share Funding Account
One Chase Manhattan Plaza
3rd Floor
New York, NY 10005-1401
Vista Fund Distributors 25.00%
One Quarter Percent Account
Attn: Albert Lindahl
One Chase Manhattan Plaza
3rd Floor
New York, NY 10005-1401
SMALL CAP OPPORTUNITIES FUND
B SHARES
MLPF&S for the sole benefit of 6.10%
its customers
Attn: Fund Administration
4800 Deer Lake Drive East
3rd Floor
Jacksonville, FL 32246-6484
SMALL CAP OPPORTUNITIES FUND
C SHARES
MLPR&S for the sole benefit of 6.13%
its customers
Attn: Fund Administration
SEC# 97TR1
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Donaldson Lufkin Jenrette 6.20%
Securities Corp. Inc.
PO Box 2052
Jersey City, NJ 07303-2052
SMALL CAP EQUITY FUND
INSTITUTIONAL SHARES
Chase Manhattan Bank N/A 99.85%
Global Sec Services Omnibus
CMB Thrift Incentive Plan
Attn: Jeff Rosenberg
3 Chase Metro Tech Center
7th Floor
Brooklyn, NY 11245-0001
</TABLE>
69
<PAGE>
<TABLE>
<S> <C>
STRATEGIC INCOME A SHARES
IFTC Cust IRA R/O 15.57%
J.L. Cary Anderson
16358 Halliburton Road
Hacienda Heights, CA 91745-3615
BISYS as seed money for 77.38%
Strategic Income Fund A Shares
Attn: Todd Frank
3435 Stelzer Road
Suite 1000
Columbus, OH 43219-6004
STRATEGIC INCOME B SHARES
BISYS as seed money for 76.82%
Strategic Income Fund B Shares
Attn: Todd Frank
3435 Stelzer Road
Suite 1000
Columbus, OH 43219-6004
Prudential Securities Inc. FBO 7.72%
Mary Parafioriti
c/o Yolanda Latro
7 Bergen Court
Apt. 2D
Bayonne, NJ 07002-2123
STRATEGIC INCOME C SHARES
BISYS as seed money for 100.00%
Strategic Income Fund C Shares
Attn: Todd Frank
3435 Stelzer Road
Suite 1000
Columbus, OH 43219-6004
STRATEGIC INCOME
INSTITUTIONAL SHARES
BISYS as seed money for 100.00%
Strategic Income Fund I Shares
Attn: Todd Frank
3435 Stelzer Road
Suite 1000
Columbus, OH 43219-6004
US GOVERNMENT SECURITIES FUND
A SHARES
Chemical Bank 11.72%
Custodian for the IRA of Rose Faggan
7 East 14th Street
Apt
</TABLE>
<TABLE>
<S> <C>
Texas Commerce Bank NA 12.18%
Attn: Avesta
PO Box 2558
Houston, TX 77252-2558
US GOVERNMENT SECURITIES FUND
INSTITUTIONAL SHARES
Chase Manhattan Bank 7.66%
FBA Jericho Rockaway
Future Benefits--Custody
Attn: Terry Zimmardi
One Chase Manhattan Plaza
4th floor
New York, NY 10081-1000
Chase Manhattan Bank 6.74%
Future Benefits--Custody
Fred Schildwachter Pension Plan
Attn: Terry Zimmardi
One Chase Manhattan Plaza
4th floor
New York, NY 10081-1000
Chase Manhattan Bank 8.90%
FBA Jericho Alleghany Corp Retire
Future Benefits--Custody
Attn: Terry Zimmardi
One Chase Manhattan Plaza
4th floor
New York, NY 10081-1000
Chase Manhattan Bank 5.28%
FBA Jericho RBS Plastics
Future Benefits--Custody
Attn: Terry Zimmardi
One Chase Manhattan Plaza
4th Floor
New York, NY 10005-1401
Chase Manhattan Bank 5.04%
Future Benefits--Custody
OCI Pension Plan Salaried EE's
Attn: Terry Zimmardi
One Chase Manhattan Plaza
4th Floor
New York, NY 10005-1401
US TREASURY INCOME FUND
A SHARES
Testa and Company 17.04%
C/O Chase Manhattan Bank
Attn: Mutual Funds/ T-C
PO Box 1412
Rochester, NY 14603-1412
</TABLE>
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<PAGE>
Financial Statements
The 1998 Annual Report to Shareholders of each Fund, including the reports
of independent accounts, financial highlights and financial statements for the
fiscal year ended October 31, 1998 contained therein, are incorporated herein
by reference.
<TABLE>
<S> <C>
Specimen Computations of Offering Prices Per Share
Focus Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at October 31, 1998 $ 9.40
Maximum Offering Price per Share ($9.40 divided by .9425) (reduced on purchases of
$100,000 or more)........................................................................ $ 9.96
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share.......................................................... $ 9.38
C Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share.......................................................... $ 9.38
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at an assumed net
asset value of $10.00 per share ......................................................... $ 9.40
Growth and Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ........................................................................ $ 43.24
Maximum Offering Price per Share ($43.24 divided by .9425) (reduced on purchases of
$100,000 or more)........................................................................ $ 45.88
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ........................................................................ $ 42.92
C Shares:
Net Asset Value and Redemption Price Per Share of Beneficial Interest at
October 31, 1998 ........................................................................ $ 42.13
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ........................................................................ $ 43.43
Capital Growth Fund (specimen computations)
</TABLE>
71
<PAGE>
<TABLE>
<S> <C>
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 41.22
Maximum Offering Price per Share ($41.22 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................... $ 43.73
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 40.38
C Shares:
Net Asset Value and Redemption Price Per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 40.03
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 41.53
Equity Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 19.07
Maximum Offering Price per Share ($19.07 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................... $ 20.23
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 18.92
C Shares:
Net Asset Value and Redemption Price Per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 18.91
Small Cap Opportunities Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 12.79
Maximum Offering Price per Share ($12.79 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................... $ 13.57
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 12.67
C Shares:
Net Asset Value and Redemption Price Per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 12.66
Balanced Fund (specimen computations)
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 15.44
Maximum Offering Price per Share ($15.44 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................... $ 16.38
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 15.19
Large Cap Equity Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 15.09
Maximum Offering Price per Share ($15.09 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................... $ 16.01
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 15.02
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 15.15
Bond Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 10.96
Maximum Offering Price per Share ($10.96 divided by .955) (reduced on purchases of
$100,000 or more)................................................................... $ 11.48
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 11.00
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 10.94
Short-Term Bond Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................... $ 10.14
Maximum Offering Price per Share ($10.14 divided by .9850) (reduced on purchases of
$100,000 or more)................................................................... $ 10.29
</TABLE>
73
<PAGE>
<TABLE>
<S> <C>
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 10.15
Small Cap Equity Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 20.40
Maximum Offering Price per Share ($20.40 divided by .9425) (reduced on purchases of
$100,000 or more)................................................................. $ 21.64
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 19.91
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 20.59
U.S. Government Securities Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 10.51
Maximum Offering Price per Share ($10.51 divided by .955) (reduced on purchases of
$100,000 or more)................................................................. $ 11.01
Institutional Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 10.49
U.S. Treasury Income Fund (specimen computations)
A Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 11.66
Maximum Offering Price per Share ($11.26 divided by .955) (reduced on purchases of
$100,000 or more)................................................................. $ 12.21
B Shares:
Net Asset Value and Redemption Price per Share of Beneficial Interest at
October 31, 1998 ................................................................. $ 11.66
</TABLE>
74
<PAGE>
APPENDIX A
DESCRIPTION OF CERTAIN OBLIGATIONS
ISSUED OR GUARANTEED BY U.S. GOVERNMENT
AGENCIES OR INSTRUMENTALITIES
Federal Farm Credit System Notes and Bonds--are bonds issued by a
cooperatively owned nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
These bonds are not guaranteed by the U.S. Government.
Maritime Administration Bonds--are bonds issued and provided by the
Department of Transportation of the U.S. Government are guaranteed by the U.S.
Government.
FNMA Bonds--are bonds guaranteed by the Federal National Mortgage
Association. These bonds are not guaranteed by the U.S. Government.
FHA Debentures--are debentures issued by the Federal Housing
Administration of the U.S. Government and are guaranteed by the U.S.
Government.
FHA Insured Notes--are bonds issued by the Farmers Home Administration of
the U.S. Government and are guaranteed by the U.S. Government.
GNMA Certificates--are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such
as mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration and therefore
guaranteed by the U.S. Government. As a consequence of the fees paid to GNMA
and the issuer of GNMA Certificates, the coupon rate of interest of GNMA
Certificates is lower than the interest paid on the VA-guaranteed or
FHA-insured mortgages underlying the Certificates. The average life of a GNMA
Certificate is likely to be substantially less than the original maturity of
the mortgage pools underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures may result in the return of the greater
part of principal invested far in advance of the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of the
GNMA guarantee. As the prepayment rate of individual mortgage pools will vary
widely, it is not possible to accurately predict the average life of a
particular issue of GNMA Certificates. The yield which will be earned on GNMA
Certificates may vary from their coupon rates for the following reasons: (i)
Certificates may be issued at a premium or discount, rather than at par; (ii)
Certificates may trade in the secondary market at a premium or discount after
issuance; (iii) interest is earned and compounded monthly which has the effect
of raising the effective yield earned on the Certificates; and (iv) the actual
yield of each Certificate is affected by the prepayment of mortgages included
in the mortgage pool underlying the Certificates. Principal which is so prepaid
will be reinvested although possibly at a lower rate. In addition, prepayment
of mortgages included in the mortgage pool underlying a GNMA Certificate
purchased at a premium could result in a loss to a Fund. Due to the large
amount of GNMA Certificates outstanding and active participation in the
secondary market by securities dealers and investors, GNMA Certificates are
highly liquid instruments. Prices of GNMA Certificates are readily available
from securities dealers and depend on, among other things, the level of market
rates, the Certificate's coupon rate and the prepayment experience of the pool
of mortgages backing each Certificate. If agency securities are purchased at a
premium above principal, the premium is not guaranteed by the issuing agency
and a decline in the market value to par may result in a loss of the premium,
which may be particularly likely in the event of a prepayment. When and if
available, U.S. Government obligations may be purchased at a discount from face
value.
FHLMC Certificates and FNMA Certificates--are mortgage-backed bonds issued
by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association, respectively, and are guaranteed by the U.S. Government.
A-1
<PAGE>
GSA Participation Certificates--are participation certificates issued by
the General Services Administration of the U.S. Government and are guaranteed
by the U.S. Government.
New Communities Debentures--are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
Public Housing Bonds--are bonds issued by public housing and urban renewal
agencies in connection with programs administered by the Department of Housing
and Urban Development of the U.S. Government, the payment of which is secured
by the U.S. Government.
Penn Central Transportation Certificates--are certificates issued by Penn
Central Transportation and guaranteed by the U.S. Government.
SBA Debentures--are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
Washington Metropolitan Area Transit Authority Bonds--are bonds issued by
the Washington Metropolitan Area Transit Authority. Some of the bonds issued
prior to 1993 are guaranteed by the U.S. Government.
FHLMC Bonds--are bonds issued and guaranteed by the Federal Home Loan
Mortgage Corporation. These bonds are not guaranteed by the U.S. Government.
Federal Home Loan Bank Notes and Bonds--are notes and bonds issued by the
Federal Home Loan Bank System and are not guaranteed by the U.S. Government.
Student Loan Marketing Association ("Sallie Mae") Notes and bonds--are
notes and bonds issued by the Student Loan Marketing Association and are not
guaranteed by the U.S. Government.
D.C. Armory Board Bonds--are bonds issued by the District of Columbia
Armory Board and are guaranteed by the U.S. Government.
Export-Import Bank Certificates--are certificates of beneficial interest
and participation certificates issued and guaranteed by the Export-Import Bank
of the U.S. and are guaranteed by the U.S. Government.
In the case of securities not backed by the "full faith and credit" of the
U.S. Government, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the U.S. Government itself in the event the agency or
instrumentality does not meet its commitments.
Investments may also be made in obligations of U.S. Government agencies or
instrumentalities other than those listed above.
A-2
<PAGE>
APPENDIX B
DESCRIPTION OF RATINGS
A description of the rating policies of Moody's, S&P and Fitch with respect to
bonds and commercial paper appears below.
Moody's Investors Service's Corporate Bond Ratings
Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa--Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated "A" possess many favorable investment qualities and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated "Ba" are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated "B" generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance and
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated "Ca" represent obligations which are speculative in
high degree.
Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated "C" are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers "1", "2", and "3" to certain of its rating
classifications. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
B-1
<PAGE>
Standard & Poor's Ratings Group Corporate Bond Ratings
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and
pay interest.
AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only
in small degree.
A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated categories.
BBB--Bonds rated "BBB" are regarded as having an adequate capacity to repay
principal and pay interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for higher rated categories.
BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
CI--Bonds rated "CI" are income bonds on which no interest is being paid.
D--Bonds rated "D" are in default. The "D" category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired unless S&P believes that such payments
will be made during such grace period. The "D" rating is also used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.
Moody's Investors Service's Commercial Paper Ratings
Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternative liquidity is
maintained.
Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.
B-2
<PAGE>
Standard & Poor's Ratings Group Commercial Paper Ratings
A S&P commercial paper rating is current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded in several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest. The four categories are as follows:
A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
A-3--Issues carrying this designation have adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.
C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D--Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
Fitch Bond Ratings
AAA--Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds rated AA by Fitch are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issues is generally
rated F-1+ by Fitch.
A--Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB--Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position of a
credit within a rating category. Plus and minus signs, however, are not used in
the AAA category.
Fitch Short-Term Ratings
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
B-3
<PAGE>
Fitch's short-term ratings are as follows:
F-1+--Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
F-1--Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2--Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.
F-3--Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term adverse
changes could cause these securities to be rated below investment grade.
LOC--The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
Like higher rated bonds, bonds rated in the Baa or BBB categories are
considered to have adequate capacity to pay principal and interest. However,
such bonds may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade bonds.
After purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by such Fund. Neither event
will require a sale of such security by a Fund. However, a Fund's investment
manager will consider such event in its determination of whether such Fund
should continue to hold the security. To the extent the ratings given by
Moody's, S&P or Fitch may change as a result of changes in such organizations
or their rating systems, a Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in this Prospectus and in the Statement of Additional Information.
B-4
<PAGE>
PART C
MUTUAL FUND GROUP
PART C. OTHER INFORMATION
ITEM 23. Exhibits
Exhibit
Number
- -------
1(a) Declaration of Trust, as amended. (1)
1(b) Certificate of Amendment to Declaration of Trust dated December 14,
1995.(6)
1(c) Certificate of Amendment to Declaration of Trust dated October 19,
1995.(6)
1(d) Certificate of Amendment to Declaration of Trust dated July 25,
1993.(6)
1(e) Certificate of Amendment to Declaration of Trust dated
November 1997.(10)
1(f) Certificate of Amendment to Declaration of Trust dated June 5,
1998.(12)
2 By-laws, as amended. (1)
3 None.
4(a) Form of Investment Advisory Agreement.(6)
4(b) Form of Sub-Advisory Agreement between The Chase Manhattan
Bank and Chase Asset Management, Inc.(6)
5 Distribution and Sub-Administration Agreement dated August 21,
1995.(6)
6(a) Retirement Plan for Eligible Trustees.(6)
6(b) Deferred Compensation Plan for Eligible Trustees.(6)
7 Custodian Agreement. (1)
8(a) Transfer Agency Agreement. (1)
8(b) Form of Shareholder Servicing Agreement. (6)
C-1
<PAGE>
8(c) Form of Administration Agreement.(6)
9 Opinion re: Legality of Securities being Registered.(1)
10 Consent of Price Waterhouse LLP.(13)
11 In Part B: Financial Statements and the Reports
thereon for the Funds filed herein are
incorporated by reference into Part B
as part of the 1997 Annual Reports to
Shareholders for such Funds as filed with the
Securities and Exchange Commission by Mutual Fund
Group on Form N-30D on December 30, 1998,
accession number 0000950146-98-002170,
0000950146-98-002168, 0000950146-98-002171,
0000950146-98-002172, and 0000950146-98-002174
which are incorporated into Part B by reference.
12 None.
13(a) Rule 12b-1 Distribution Plan of Mutual Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
13(b) Rule 12b-1 Distribution Plan - Class B Shares (including forms of
Selected Dealer Agreement and Shareholder Servicing Agreement).(6)
13(c) Form of Rule 12b-1 Distribution Plan - Class C Shares (including
forms of Shareholder Servicing Agreements).(9)
14 Financial Data Schedule.(11)
15 Form of Rule 18f-3 Multi-Class Plan.(6)
99(a) Powers of Attorney for: Fergus Reid, III, H. Richard Vartabedian,
William J. Armstrong, John R.H. Blum, Stuart W. Cragin, Jr., Roland
R. Eppley, Jr., Joseph J. Harkins, W.D. MacCallan, W. Perry Neff,
Richard E. Ten Haken, Irving L. Thode.(8)
99(b) Powers of Attorney for: Sarah E. Jones and Leonard M. Spalding,
Jr.(9)
- --------------------
(1) Filed as an exhibit to Amendment No. 6 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on March 23, 1990.
(2) Filed as an exhibit to Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) as filed with the
Securities and Exchange Commission on October 30, 1992.
(3) Filed as an Exhibit to Amendment No. 26 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on June 30, 1994.
(4) Filed as an Exhibit to Amendment No. 27 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on October 3, 1994.
(5) Filed as an Exhibit to Amendment No. 31 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on November 13, 1995.
(6) Filed as an Exhibit to Amendment No. 32 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on December 28, 1995.
(7) Filed as an Exhibit to Amendment No. 42 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) on February 28, 1997.
(8) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of Mutual Fund Trust (File No.
33-75250) as filed with the Securities and Exchange Commission on September
6, 1996.
(9) Filed as an Exhibit to Amendment No. 45 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) filed on October 28, 1997.
(10) Filed as an Exhibit to Amendment No. 46 to the Registration Statement on
Form N-1A of the Registrant (File No. 33-14196) filed on December 1, 1997.
(11) Filed as an Exhibit to Amendment No. 50 to the Registration Statement on
Form N-1A on February 27, 1998.
(12) Filed as an Exhibit to Amendment No. 53 to the Registration Statement on
Form N-1A on June 29, 1998.
(13) Filed herewith.
ITEM 24. Persons Controlled by or Under Common
Control with Registrant
Not applicable
C-2
<PAGE>
ITEM 25. Indemnification
Reference is hereby made to Article V of the Registrant's Declaration
of Trust.
The Trustees and officers of the Registrant and the personnel of the
Registrant's investment adviser, administrator and distributor are insured under
an errors and omissions liability insurance policy. The Registrant and its
officers are also insured under the fidelity bond required by Rule 17g-1 under
the Investment Company Act of 1940.
Under the terms of the Registrant's Declaration of Trust, the
Registrant may indemnify any person who was or is a Trustee, officer or employee
of the Registrant to the maximum extent permitted by law; provided, however,
that any such indemnification (unless ordered by a court) shall be made by the
Registrant only as authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Trustees, by a majority vote of a quorum
which consists of Trustees who are neither in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the proceeding, or (ii) if the required
quorum is not obtainable or, if a quorum of such Trustees so directs, by
independent legal counsel in a written opinion. No indemnification will be
provided by the Registrant to any Trustee or officer of the Registrant for any
liability to the Registrant or shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of duty.
Insofar as the conditional advancing of indemnification monies for
actions based upon the Investment Company Act of 1940 may be concerned, such
payments will be made only on the following conditions: (i) the advances must be
limited to amounts used, or to be used, for the preparation or presentation of a
defense to the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written promise by,
or on behalf of, the recipient to repay that amount of the advance which exceeds
that amount to which it is ultimately determined that he is entitled to receive
from the Registrant by reason of indemnification; and (iii) (a) such promise
must be secured by a surety bond, other suitable
C-3
<PAGE>
insurance or an equivalent form of security which assures that any repayments
may be obtained by the Registrant without delay or litigation, which bond,
insurance or other form of security must be provided by the recipient of the
advance, or (b) a majority of a quorum of the Registrant's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of it counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26(a). Business and Other Connections of Investment Adviser
The Chase Manhattan Bank (the "Adviser") is a commercial bank
providing a wide range of banking and investment services.
To the knowledge of the Registrant, none of the Directors or
executive officers of the Adviser, except those described below, are or have
been, at any time during the past two years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
Directors and executive officers of the Adviser also hold or have held various
positions with bank and non-bank affiliates of the Adviser, including its
parent, The Chase Manhattan Corporation. Each Director listed below is also a
Director of The Chase Manhattan Corporation.
<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Adviser Nature During Past Two Years
- ---- ------------- -----------------------------
<S> <C> <C>
Thomas G. Labreque President and Chief Operating Officer Chairman, Chief Executive Officer
and Director and a Director of The Chase
Manhattan Corporation and a Director
of AMAX, Inc.
M. Anthony Burns Director Chairman of the Board, President
and Chief Executive Officer of
Ryder System, Inc.
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
H. Laurance Fuller Director Chairman, President, Chief
Executive Officer and Director of
Amoco Corporation and Director of
Abbott Laboratories
Henry B. Schacht Director Chairman and Chief Executive
Officer of Cummins Engine
Company, Inc. and a Director of
each of American Telephone and
Telegraph Company and CBS Inc.
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
James L. Ferguson Director Retired Chairman and Chief
Executive Officer of General Foods
Corporation
William H. Gray III Director President and Chief Executive
Officer of the United Negro College
Fund, Inc.
Frank A. Bennack, Jr. Director President and Chief Executive Officer
The Hearst Corporation
Susan V. Berresford Director President, The Ford Foundation
Melvin R. Goodes Director Chairman of the Board and Chief Executive
Officer, The Warner-Lambert Company
George V. Grune Director Retired Chairman and Chief Executive
Officer, The Reader's Digest Association,
Inc.; Chairman, The DeWitt Wallace-
Reader's Digest Fund; The Lila-Wallace
Reader's Digest Fund
William B. Harrison, Jr. Vice Chairman of the Board
Harold S. Hook Director Chairman and Chief Executive Officer,
General Corporation
Helen L. Kaplan Director Of Counsel, Skadden, Arps, Slate, Meagher
& Flom
Walter V. Shipley Chairman of the Board and
Chief Executive Officer
Andrew C. Sigler Director Chairman of the Board and Chief
Executive Officer, Champion International
Corporation
John R. Stafford Director Chairman, President and Chief Executive
Officer, American Home Products
Corporation
Marina v. N. Whitman Director Professor of Business Administration and
Public Policy, University of Michigan
</TABLE>
C-6
<PAGE>
Item 26(b)
Chase Asset Management ("CAM") is an Investment Advisor providing investment
services to institutional clients.
To the knowledge of the Registrant, none of the Directors or executive
officers of the CAM, except those described below, are or have been, at any time
during the past two years, engaged in any other business, profession, vocation
or employment of a substantial nature, except that certain Directors and
executive officers of the CAM also hold or have held various positions with bank
and non-bank affiliates of the Advisor, including its parent, The Chase
Manhattan Corporation.
<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Sub-Advisor Nature During Past Two Years
- ---- --------------- ----------------------------
<S> <C> <C>
James Zeigon Chairman and Director Director of Chase
Asset Management
(London) Limited
Steven Prostano Executive Vice President Chief Operating Officer
and Chief Operating Officer and Director of Chase
Asset Management
(London) Limited
Mark Richardson President and Chief Chief Investment Officer
Investment Officer and Director of Chase
Asset Management
(London) Limited
</TABLE>
Item 26(c)
Chase Asset Management (London) Limited ("CAM London") is an Investment
Advisor providing investment services to institutional clients.
To the knowledge of the Registrant, none of the Directors or executive
officers of CAM London, except those described below, are or have been, at any
time during the past two years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain Directors
and executive officers of CAM London also hold or have held various positions
with bank and non-bank affiliates of the Advisor, including its parent, The
Chase Manhattan Corporation.
<TABLE>
<CAPTION>
Principal Occupation or Other
Position with Employment of a Substantial
Name the Sub-Advisor Nature During Past Two Years
- ---- --------------- ----------------------------
<S> <C> <C>
Michael Browne Director Fund Manager, The Chase Manhattan
Bank, N.A.; Fund Manager, BZW
Investment Management
David Gordon Ross Director Head of Global Fixed Income
Management, Chase Asset Management,
Inc.; Vice President, The Chase
Manhattan Bank, N.A.
Brian Harte Director Investment Manager, The Chase
Manhattan Bank, N.A.
Cornelia L. Kiley Director
James Zeigon Director Chairman and Director of Chase
Asset Management, Inc.
Mark Richardson Chief Investment Director, President and Chief
Officer and Director Operating Officer of Chase Asset
Management, Inc.
Steve Prostano Chief Operating Director, Executive Vice President
Officer and and Chief Operating Officer of Chase
Director Asset Management, Inc.
</TABLE>
C-7
<PAGE>
ITEM 27. Principal Underwriters
(a) Vista Fund Distributors, Inc., a wholly-owned subsidiary of
The BISYS Group, Inc. is the underwriter for Mutual Fund Group, Mutual Fund
Trust and Mutual Fund Select Trust.
(b) The following are the Directors and officers of Vista Fund
Distributors, Inc. The principal business address of each of these persons, is
listed below.
<TABLE>
<CAPTION>
Position and Offices Position and Offices
Name and Address with Distributor with the Registrant
- ---------------- -------------------- --------------------
<S> <C> <C>
Lynn J. Mangum Chairman None
150 Clove Street
Little Falls, NJ 07424
Robert J. McMullan Director and Exec. Vice President None
150 Clove Street
Little Falls, NJ 07424
Lee W. Schultheis President None
101 Park Avenue, 16th Floor
New York, NY 10178
George O. Martinez Senior Vice President None
3435 Stelzer Road
Columbus, OH 43219
Irimga McKay Vice President None
1230 Columbia Street
5th Floor, Suite 500
San Diego, CA 92101
Michael Burns Vice President/Compliance None
3435 Stelzer Road
Columbus, OH 43219
William Blundin Vice President None
125 West 55th Avenue
11th Floor
New York, NY 10019
Dennis Sheehan Vice President None
150 Clove Street
Little Falls, NJ 07424
Annamaria Porcaro Assistant Secretary None
150 Clove Street
Little Falls, NJ 97424
Robert Tuch Assistant Secretary None
3435 Stelzer Road
Columbus, OH 43219
Stephen Mintos Executive Vice President/COO None
3435 Stelzer Road
Columbus, OH 43219
Dale Smith Vice President/CFO None
3435 Stelzer Road
Columbus, OH 43219
William J. Tomko Vice President None
3435 Stelzer Road
Columbus, OH 43219
</TABLE>
(c) Not applicable
C-8
<PAGE>
ITEM 28. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Vista Fund Distributors, Inc. One Chase Manhattan Plaza, 3rd Floor
New York, NY 10081
DST Systems, Inc. 210 W. 10th Street,
Kansas City, MO 64105
The Chase Manhattan Bank 270 Park Avenue,
New York, NY 10017
Chase Asset Mangement, Inc. 1211 Avenue of the
Americas,
New York, NY 10036
Chase Asset Management, Ltd. (London) Colvile House
32 Curzon Street
London, England W1Y8AL
The Chase Manhattan Bank One Chase Square,
Rochester, NY 14363
</TABLE>
ITEM 29. Management Services
Not applicable
ITEM 30. Undertakings
Registrant undertakes that its trustees shall promptly
call a meeting of shareholders of the Trust for the purpose of voting upon the
question of removal of any such trustee or trustees when requested in writing so
to do by the record holders of not less than 10 per centum of the outstanding
shares of the Trust. In addition, the Registrant shall, in certain
circumstances, give such shareholders assistance in communicating with other
shareholders of a fund as required by Section 16(c) of the Investment Company
Act of 1940.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has certified that it meets all requirements
for effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to its Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of New York and the State of New York on the 21st day of
May, 1999.
MUTUAL FUND GROUP
By /s/ H. Richard Vartabedian
--------------------------
H. Richard Vartabedian
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* Chairman and Trustee May 21, 1999
- -------------------------------
Fergus Reid, III
/s/ H. Richard Vartabedian President May 21, 1999
- ------------------------------- and Trustee
H. Richard Vartabedian
* Trustee May 21, 1999
- -------------------------------
William J. Armstrong
* Trustee May 21, 1999
- -------------------------------
John R.H. Blum
* Trustee May 21, 1999
- -------------------------------
Stuart W. Cragin, Jr.
*
- ------------------------------- Trustee May 21, 1999
Roland R. Eppley, Jr.
* Trustee May 21, 1999
- -------------------------------
Joseph J. Harkins
* Trustee May 21, 1999
- -------------------------------
Sarah E. Jones
*
- ------------------------------- Trustee May 21, 1999
W.D. MacCallan
*
- ------------------------------- Trustee May 21, 1999
W. Perry Neff
* Trustee May 21, 1999
- -------------------------------
Leonard M. Spalding, Jr.
* Trustee May 21, 1999
- -------------------------------
Irv Thode
* Trustee May 21, 1999
- -------------------------------
Richard E. Ten Haken
/s/ Martin R. Dean Treasurer and May 21, 1999
- ------------------------------- Principal Financial
Martin R. Dean Officer
/s/ H. Richard Vartabedian Attorney in May 21, 1999
- ------------------------------- Fact
H. Richard Vartabedian
</TABLE>
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 59 to the registration statement on Form N-1A (the "Registration
Statement") of our reports dated December 15, 1998, relating to the financial
statements and financial highlights appearing in the October 31, 1998 Annual
Reports to Shareholders of Chase Vista Balanced Fund, Chase Vista Bond Fund,
Chase Vista Capital Growth Fund, Chase Vista Equity Income Fund, Chase Vista
Focus Fund, Chase Vista Growth and Income Fund, Chase Vista Large Cap Equity
Fund, Chase Vista Short Term Bond Fund, Chase Vista Small Cap Equity Fund, Chase
Vista Small Cap Opportunities Fund, Chase Vista U.S. Government Securities Fund
and Chase Vista U.S. Treasury Income Fund (separately managed portfolios of
Mutual Fund Group), which are also incorporated by reference into the
Registration Statement. We also consent to the reference to us under the heading
"Financial Highlights" in the Prospectus and under the heading "Independent
Accountants" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
May 21, 1999
