VISTA^(SM) 100% U.S. TREASURY SECURITIES MONEY MARKET FUND
VISTA SHARES PROSPECTUS -- FEBRUARY 8, 1996
Mutual Fund Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the Commonwealth of
Massachusetts on February 4, 1994, presently consisting of 12 separate series
("Funds"). Under a multi-class distribution system, the money market funds may
be offered through three separate classes of shares (the "Shares"). The Vista
Shares described in and offered pursuant to this Prospectus are shares of the
Vista 100% U.S. Treasury Securities Money Market Fund (the "Vista Shares"). The
Premier Shares of the Fund are offered only to institutional clients and are
sold under a separate prospectus. The Institutional Shares of the Fund are also
sold under a separate prospectus available only to qualified institutional
investors making an initial investment of at least $1,000,000.
THE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND'S (the "100%
U.S. Treasury Fund" or the "Fund") investment objective is to seek maximum
current income consistent with maximum safety of principal and maintenance of
liquidity. The Fund seeks to achieve its objective by investing in obligations
issued by the U.S. Treasury, including U.S. Treasury bills, bonds and notes,
which differ principally only in their interest rates, maturities and dates of
issuance. The Fund does not purchase securities issued or guaranteed by agencies
or instrumentalities of the U.S. Government, nor does it enter repurchase
agreements. Because the Fund invests exclusively in direct United States
Treasury Obligations, investors may benefit from income tax exclusions and
exemptions that are available in certain states and localities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Chase Manhattan Bank, N.A. ("Chase") is the investment adviser (the
"Adviser"), custodian (the "Custodian"), administrator (the "Administrator") and
a Shareholder Servicing Agent for the 100% U.S. Treasury Fund. Chase Asset
Management, Inc. is the investment sub-adviser ("CAM Inc." or the "Sub-Adviser")
for the 100% U.S. Treasury Fund. The parent company of the Adviser, The Chase
Manhattan Corporation has entered an Agreement and Plan of Merger with Chemical
Banking Corporation which, if affected will have certain effects upon the
Adviser, see "Management of the Fund -- The Adviser" on page 8.
Vista Broker-Dealer Services, Inc. ("VBDS") is the Fund's distributor
and is unaffiliated with Chase. INVESTMENT IN THE FUND IS SUBJECT TO RISK --
INCLUDING POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE NOT BANK DEPOSITS
OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK, N.A.
OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY INSURED BY, OBLIGATIONS OF, OR
OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share. Prospective investors should
carefully consider the risks associated with an investment in the Fund. For a
further discussion on the risks associated with an investment in the Fund, see
"Investment Objectives and Policies" in this Prospectus. There can be no
assurance that the Fund will achieve its investment objective.
The Vista Shares are continuously offered for sale without a sales load
through VBDS, the Fund's distributor (the "Distributor"), to customers of a
financial institution, such as a federal or state-chartered bank, trust company
or savings and loan association with which the Trust has entered into a
shareholder servicing agreement (collectively, "Shareholder Servicing Agents")
or securities brokers or certain financial institutions which have entered into
Selected Dealer Agreements with the Distributor. The Vista Shares have a
distribution plan and may incur distribution expenses, at an annual rate not to
exceed a specified percentage of average daily net assets. An investor should
obtain from his Shareholder Servicing Agent, if appropriate, and should read in
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conjunction with this Prospectus, the materials provided by the Shareholder
Servicing Agent describing the procedures under which Vista Shares may be
purchased and redeemed through such Shareholder Servicing Agent. Shares may be
redeemed by shareholders at the net asset value next determined on any Fund
Business Day as hereinafter defined.
This Prospectus sets forth concisely information concerning the Fund
and its Vista Shares that a prospective investor ought to know before investing.
A Statement of Additional Information dated February 8, 1996 containing more
detailed information about the Fund has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. An
investor may obtain a copy of the Statement of Additional Information without
charge by contacting his Shareholder Servicing Agent, the Distributor or the
Fund.
Investors should read this Prospectus and retain it for future
reference.
For information about the Vista Shares, simply call the Vista Service
Center at 1-800-34-VISTA.
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TABLE OF CONTENTS
Expense Summary...................................................... 4
Investment Objectives and Policies................................... 5
Additional Information on Investment Policies and Techniques......... 5
Management of the Fund .............................................. 8
Purchases and Redemptions of Shares.................................. 11
Tax Matters.......................................................... 15
Other Information Concerning Shares of the Fund...................... 16
Shareholder Servicing Agents, Transfer Agent and Custodian........... 20
Yield and Performance Information.................................... 21
Other Information.................................................... 22
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EXPENSE SUMMARY
The following table provides (i) a summary of the aggregate annual
operating expenses of Vista Shares of the Fund, as a percentage of average net
assets of Vista Shares of the Fund, and (ii) an example illustrating the dollar
cost of such expenses on a $1,000 investment in Vista Shares of the Fund.
Vista
Shares
------
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee........................................... 10%
Rule 12b-1 Distribution Plan Fee.................................. 10%
Administrative Fee................................................ 05%
Other Expenses
Sub-Administration Fee......................................... 05%
Shareholder Servicing Fee (after estimated waiver)*............ 18%
Other Operating Expenses**..................................... 11%
Total Other Expenses.............................................. 34%
Total Fund Operating Expenses (after waiver of fees).............. 59%
Example:
You would pay the following expenses on a $1,000 investment in the Fund based
upon payment by the Fund of operating expenses at the levels set forth in the
table above, assuming (1) 5% annual return and (2) redemption at the end of:
1 year...............................................................$ 6
3 years..............................................................$19
5 years..............................................................$33
10 years.............................................................$74
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* "Total Fund Operating Expenses" reflect the agreement by Chase
voluntarily to waive fees payable to it and/or reimburse expenses for a
period of at least one year following the consummation of the
Reorganization (as defined under "General-- Reorganization With
Predecessor Fund" on page 14) to the extent necessary to prevent Total
Fund Operating Expenses of the Fund for such period from exceeding
0.59% of average net assets. "Shareholder Servicing Fees" for the Fund
reflect estimated fee waivers by Chase pursuant to such agreement;
absent such waivers, "Shareholder Servicing Fees" would be 0.35% for
the Fund. In addition, Chase has agreed to waive fees payable to it
and/or reimburse expenses for a two year period following consummation
of the Reorganization to the extent necessary to prevent Total Fund
Operating Expenses for the Fund from exceeding 0.71% of average net
assets during such period.
** "Other Operating Expenses" include custody fees, transfer agency fees,
registration fees, legal fees, audit fees, directors' fees, insurance
fees, and other miscellaneous expenses. A shareholder may incur a
$10.00 charge for certain wire redemptions.
The expense summary is intended to assist investors in understanding
the various costs and expenses that a shareholder in the Vista Shares class of
shares of the Fund will bear directly or indirectly. The expense summary shows
the investment advisory fee, distribution fee, administrative fee,
sub-administration fee and shareholder servicing agent fee expected to be
incurred by the Vista Shares class of shares of the Fund.
As a result of the distribution fees, long-term investors may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers, Inc. ("NASD"). More complete
descriptions of each Class of shares' expenses, including any fee waivers, are
set forth herein or in the prospectus for such class of Shares.
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THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF FUTURE EXPENSES OR ANNUAL RETURN OF VISTA SHARES OF THE FUND; ACTUAL EXPENSES
AND ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN.
INVESTMENT OBJECTIVES AND POLICIES
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing securities pursuant to Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), certain requirements of which are summarized
as follows. In accordance with Rule 2a-7, the Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
instruments having remaining maturities of 397 days or less. The Fund invests
only in U.S. dollar denominated securities determined in accordance with
procedures established by the Board of Trustees to present minimal credit risks
and which are rated in the highest short-term rating category for debt
obligations by at least two nationally recognized statistical rating
organizations ("NRSRO") (or one rating organization if the instrument was rated
only by one such organization) or, if unrated, are of comparable quality as
determined in accordance with procedures established by the Board of Trustees.
If a security is backed by an unconditional demand feature, the issuer of the
demand feature rather than the issuer of the underlying security may be relied
upon in determining whether the foregoing criteria have been met. Securities in
which the Fund invests may not earn as high a level of current income as
long-term or lower quality securities.
The Fund's investment objective is to seek to provide maximum current
income consistent with maximum safety of principal and maintenance of liquidity.
The Fund seeks to achieve its objective by investing in obligations issued by
the U.S. Treasury, including U.S. Treasury bills, bonds and notes, which differ
principally only in their interest rates, maturities and dates of issuance. The
Fund does not purchase securities issued or guaranteed by agencies or
instrumentalities of the United States Government, nor does it enter into
repurchase agreements. The dollar weighted average maturity of the Fund will be
90 days or less. Although the Fund seeks to be fully invested, at times it may
hold uninvested cash reserves, which would adversely affect its yield.
Interest on United States Treasury obligations is exempt from state and
local income taxes under federal law; the interest is not exempt from federal
income tax. However, shareholders of the 100% U.S. Treasury Fund do not directly
receive interest on United States Treasury obligations, but rather receive
dividends from the 100% U.S. Treasury Fund that are derived from such interest.
Although many states allow the character of the 100% U.S. Treasury Fund's income
to pass through to its shareholders, certain states do not, so that
distributions from the 100% U.S. Treasury Fund derived from interest that is
exempt from state and local income taxes when received directly by a taxpayer
may not be exempt from such taxes when earned as a dividend by a shareholder of
the 100% U.S. Treasury Fund. Shareholders of the 100% U.S. Treasury Fund should
consult their tax advisers as to state and local consequences of investment in
the Fund.
Although the Fund's investment objective may not be changed without
shareholder approval, such approval is not required to change any of the other
investment policies discussed above or below under "Additional Information on
Investment Policies and Techniques."
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND TECHNIQUES
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet redemptions. A reverse
repurchase agreement involves the sale of money market securities held by the
Fund with an agreement to repurchase the securities at an agreed-upon price,
date and interest payment. Reverse repurchase agreements have the same
characteristics as borrowing by the Fund. During the time a reverse repurchase
agreement is outstanding, the Fund will maintain a segregated custodial account
containing U.S. Government or other appropriate high-quality debt securities
having a value equal to the repurchase price. Reverse repurchase agreements are
usually for seven days or less and cannot be repaid prior to
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their expiration dates. Reverse repurchase agreements involve the risk that the
market value of the Fund's securities transferred may decline below the price at
which the Fund is obliged to repurchase the securities. Further, because a
reverse repurchase agreement entered into by the Fund constitutes borrowing, it
may have a leveraging effect.
WHEN-ISSUED OR FORWARD DELIVERY PURCHASES.
The Fund may purchase new issues of securities in which it is permitted
to invest on a "when-issued" or, with respect to existing issues, on a "forward
delivery" basis, which means that the securities will be delivered at a future
date beyond the customary settlement time. There is no limit as to the amount of
the commitments which may be made by the Fund to purchase securities on a
"when-issued" or "forward delivery" basis. The Fund does not pay for such
obligations or start earning interest on them until the contractual settlement
date. Although commitments to purchase "when-issued" or "forward delivery"
securities will only be made with the intention of actually acquiring them,
these securities may be sold before the settlement date if deemed advisable by
the SubAdviser.
While it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a "when-issued" or "forward
delivery" basis can involve more risk than other types of purchases and have the
effect of leveraging. For example, when the time comes to pay for a
"when-issued" or "forward delivery" security, the Fund's securities may have to
be sold in order to meet payment obligations, and a sale of securities to meet
such obligations carries with it a greater potential for the realization of
capital gain, which is not tax-exempt. Also, if it is necessary to sell the
"when-issued" or "forward delivery" security before delivery, the Fund may incur
a loss because of market fluctuations since the time the commitment to purchase
the "whenissued" or "forward delivery" security was made. Any gain resulting
from any such sale would not be tax-exempt. For additional information
concerning these risks and other risks associated with the purchase of
"whenissued" or "forward delivery" securities as well as other aspects of the
purchase of securities on a "when-issued" or "forward delivery" basis, see
"Investment Objectives, Policies and Restrictions -- Investment Policies:
WhenIssued and Forward Delivery Purchases" in the Statement of Additional
Information.
No income accrues to the purchase of a security on a firm commitment
basis prior to delivery. Purchasing a security on a firm commitment basis can
involve a risk that the market price at the time of delivery may be lower than
the agreed upon purchase price, in which case there could be an unrealized loss
at the time of delivery.
The Fund will establish a segregated account in which it will maintain
assets in an amount at least equal in value to the Fund's commitments to
purchase securities on a firm commitment basis. If the value of these assets
declines, the Fund will place additional liquid assets in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.
STAND-BY COMMITMENTS
The Fund may enter into put transactions, including transactions sometimes
referred to as stand-by commitments, with respect to U.S. Government securities
held in its portfolio. In a put transaction, the Fund acquires the right to sell
a security at an agreed-upon price within a specified period prior to its
maturity date, and a stand-by commitment entitles the Fund to same-day
settlement and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise. In
the event that the party obligated to purchase the underlying security from the
Fund defaults on its obligation to purchase the underlying security, then the
Fund might be unable to recover all or a portion of any loss sustained from
having to sell the security elsewhere. Acquisition of puts will have the effect
of increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities. For further information
concerning stand-by commitments, see "Investment Objectives, Policies and
Restrictions -- Investment Policies -- Stand-by Commitments" in the Statement of
Additional Information.
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PORTFOLIO SECURITIES LENDING
Although the Fund does not anticipate engaging in such activity in the
ordinary course of business, the Fund may lend portfolio 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
its total assets. In connection with such loans, the Fund will receive
collateral consisting of cash, cash equivalents, U.S. Government securities or
irrevocable letters of credit issued by financial institutions. Such collateral
will be maintained at all times in an amount equal to at least 102% of the
current market value of the securities loaned plus accrued interest. The Fund
can earn income through the investment of such collateral. The Fund continues to
be entitled to the interest payable on a loaned security and, in addition,
receive interest on the amount of the loan. Such loans will be terminable at any
time upon specified notice. The Fund might experience risk of loss if the
institutions with which it has engaged in portfolio loan transactions breach
their agreements with such Fund. The risk 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 Adviser or SubAdviser to be of
good standing and will not be made unless, in the judgment of the investment
Adviser or SubAdviser, the consideration to be earned from such loans justifies
the risk.
The foregoing investment policies and activities are not fundamental
and may be changed by the Board of Trustees of the Trust without the approval of
shareholders. For more detailed descriptions of certain of the Fund's investment
activities, see "Investment Policies -- Additional Investment Activities" in the
Statement of Additional Information.
PORTFOLIO MANAGEMENT AND TURNOVER
It is intended that the portfolio of the Fund will be fully managed by
buying and selling securities, as well as holding securities to maturity. In
managing the portfolio of the Fund, the Sub-Adviser seeks to take advantage of
market developments, yield disparities and variations in the creditworthiness of
issuers. For a description of the strategies that may be used by the Sub-Adviser
in managing the portfolio of the Fund, which may include adjusting the average
maturity of a portfolio in anticipation of a change in interest rates, see
"Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Management" in the Statement of Additional Information.
Generally, the primary consideration in placing portfolio securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Since money market instruments are generally
purchased in principal transactions, the Fund rarely pays brokerage commissions.
For a complete discussion of portfolio transactions and brokerage allocation,
see "Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Transactions and Brokerage Allocation" in the Statement of Additional
Information.
EFFECT OF RULE 2a-7 ON PORTFOLIO MANAGEMENT
The portfolio management of the Fund is intended to comply with the
provisions of Rule 2a-7 under the 1940 Act (the "Rule") under which, if a Fund
meets certain conditions, it may use the "amortized cost" method of valuing its
securities. Under the Rule, the maturity of an instrument is generally
considered to be its stated maturity (or in the case of an instrument called for
redemption, the date on which the redemption payment must be made), with special
exceptions for certain kinds of instruments. Repurchase agreements and
securities loan agreements are, in general, treated as having a maturity equal
to the period remaining until they can be executed.
In accordance with the provisions of the Rule, the Fund must: (i)
maintain a dollar weighted average portfolio maturity (see above) not in excess
of 90 days, (ii) limit its investments to those instruments which are
denominated in U.S. dollars, which the Board of Trustees determines present
minimal credit risks, and which are of "high quality" as determined by at least
two major rating services; or, in the case of any instrument that is split-rated
or not rated, of comparable quality as determined by the Board; and (iii) not
purchase any instruments
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with a remaining maturity (see above) or more than 397 days. The Rule also
contains special provisions as to the maturity of variable rate and floating
rate instruments.
MANAGEMENT OF THE FUND
THE ADVISER
The Chase Manhattan Bank, N.A. manages the assets of the Fund pursuant
to an Investment Advisory Agreement. Subject to such policies as the Board of
Trustees may determine, Chase makes investment decisions for the Fund. For its
services under the Investment Advisory Agreement, Chase is entitled to receive
an annual fee computed daily and paid monthly at an annual rate equal to 0.10%
of the Fund's average daily net assets. However, Chase may, from time to time,
voluntarily waive all or a portion of its fees payable under the Investment
Advisory Agreement.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, is a commercial bank offering a
wide range of banking and investment services to customers throughout the United
States and around the world. Its headquarters is at One Chase Manhattan Plaza,
New York, NY 10081. The Adviser, including its predecessor organizations, has
over 100 years of money management experience. Also included among the Adviser's
accounts are commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives.
On August 27, 1995, The Chase Manhattan Corporation announced its entry
into an Agreement and Plan of Merger (the "Merger Agreement") with Chemical
Banking Corporation ("Chemical"), a bank holding company, pursuant to which The
Chase Manhattan Corporation will merge with and into Chemical (the "Holding
Company Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors of each holding company has
approved the Holding Company Merger, which will create the second largest bank
holding company in the United States based on assets. The consummation of the
Holding Company Merger is subject to certain closing conditions. On December 11,
1995, the respective shareholders of The Chase Manhattan Corporation and
Chemical voted to approve the Holding Company Merger. The Holding Company Merger
is expected to be completed on or about March 31, 1996.
Subsequent to the Holding Company Merger, it is expected that the
adviser to the Funds, The Chase Manhattan Bank, N.A., will be merged with and
into Chemical Bank. a New York State chartered bank ("Chemical Bank") (the "Bank
Merger" and together with the Holding Company Merger, the "Mergers"). The
surviving bank will continue operations under the name The Chase Manhattan Bank
(as used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and
its successor in the Bank Merger, and the term "Adviser" means Chase (including
its successor in the Bank Merger) in its capacity as investment adviser to the
Fund). The consummation of the Bank Merger is subject to certain closing
conditions, including the receipt of certain regulatory approvals. The Bank
Merger is expected to occur in July 1996.
Chemical is a publicly owned bank holding company incorporated under
Delaware law and registered under the Federal Bank Holding Company Act of 1956,
as amended. As of December 31, 1995, through its direct or indirect
subsidiaries, Chemical managed more than $57 billion in assets, including
approximately $6.9 billion in mutual fund assets in 11 mutual fund portfolios.
Chemical Bank is a wholly owned subsidiary of Chemical and is a New York State
chartered bank.
THE SUB-ADVISER
Under the investment advisory agreement between the Trust, on behalf of
the Fund, and Chase, Chase may delegate a portion of its responsibilities to a
sub-adviser. In addition, the investment 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 adviser of the Fund and are
under the common control of Chase as long
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as all such persons are functioning as part of an organized group of persons,
managed by authorized officers of Chase.
Chase has entered into an investment sub-advisory agreement with its
affiliate, CAM Inc., a registered investment adviser, on behalf of the Fund. The
Sub-Adviser is a wholly-owned subsidiary of Chase. Subject to the supervision
and direction of the Adviser and the Board of Trustees, CAM Inc. provides
investment subadvisory services to the Fund in accordance with the Fund's
objectives and policies, makes investment decisions for the Fund and places
orders to purchase and sell securities on behalf of the Fund. The Sub-Advisory
Agreement provides that, as compensation for services, the Sub-Adviser receives,
from the Adviser, a fee, based on the Fund's average daily net assets,
determined at a rate agreed upon from time to time between the Adviser and CAM
Inc.
CAM Inc. is a wholly-owned operating subsidiary of Chase, and upon
consummation of the Bank Merger, will be a wholly-owned operating subsidiary of
the Adviser. CAM Inc. is registered with the Commission as an investment adviser
and was formed for the purpose of providing discretionary investment advisory
services to institutional clients and to consolidate Chase's investment
management function, and the same individuals who serve as portfolio managers
for CAM Inc. also serve as portfolio managers for Chase. CAM Inc. is located at
1211 Avenue of the Americas, New York, New York 10036.
CERTAIN RELATIONSHIPS AND ACTIVITIES. Chase and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of the Fund, including outstanding loans to such
issuers which may be repaid in whole or in part with the proceeds of securities
so purchased. Chase and its affiliates deal, trade and invest for their own
accounts in U.S. Treasury obligations and are among the leading dealers of
various types of U.S. Treasury obligations. Chase and its affiliates may sell
U.S. Treasury obligations to, and purchase them from, other investment companies
sponsored by the Distributor or affiliates of the Distributor. The Adviser will
not invest any Fund assets in any U.S. Treasury obligations purchased from
itself or any affiliate, although under certain circumstances such securities
may be purchased from other members of an underwriting syndicate in which the
Adviser or an affiliate is a non-principal member. This restriction may limit
the amount or type of U.S. Treasury obligations available to be purchased on
behalf of the Fund. The Adviser has informed the Fund that in making its
investment decisions, it does not obtain or use material inside information in
the possession of any other division or department of such Adviser or in the
possession of any affiliate of such Adviser, including the division of Chase
that performs services for the Trust as Custodian. Shareholders of the Fund
should be aware that, subject to applicable legal or regulatory restrictions,
Chase and its affiliates may exchange among themselves certain information about
the shareholders and their accounts.
ADMINISTRATOR
Pursuant to an administration agreement, dated April 15, 1994 (the
"Administration Agreement"), Chase serves as Administrator of the Trust. The
Administrator provides certain administrative services, including, among other
responsibilities, coordinating relationships with independent contractors and
agents; preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations excluding those of
the securities laws of the various states; arranging for the maintenance of
books and records; and providing office facilities necessary to carry out its
duties. For these services and facilities, the Administrator is entitled to
receive from the Fund a fee computed daily and paid monthly at an annual rate
equal to 0.05% of the Fund's average daily net assets. However, the
Administrator may, from time to time, voluntarily waive all or a portion of its
fees payable under the Administration Agreement. The Administrator, pursuant to
the terms of the Administration Agreement, shall not have any responsibility or
authority for the Fund's investments, the determination of investment policy, or
for any matter pertaining to the distribution of Fund shares.
REGULATORY MATTERS. Banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of Governors of the
Federal Reserve System, prohibit a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, or any affiliate thereof from
sponsoring, organizing, controlling, or distributing the shares of a registered,
open-end investment company continuously engaged in the
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issuance of its shares, and prohibit banks generally from issuing, underwriting,
selling or distributing securities, but do not prohibit such a bank holding
company or affiliate from acting as investment adviser, administrator, transfer
agent, or custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of a customer. The Adviser and
the Trust believe that Chase, CAM, Inc. or any other affiliate of Chase, may
perform the investment advisory, administrative, custody and transfer agency
services for the Fund, as the case may be, described in this Prospectus and that
Chase, CAM, Inc., or any other affiliate of Chase, subject to such banking laws
and regulations, may perform the shareholder services contemplated by this
Prospectus without violation of such banking laws or regulations. However,
future changes in legal requirements relating to the permissible activities of
banks and their affiliates, as well as future interpretations of present
requirements, could prevent Chase, CAM, Inc. or any other affiliate of Chase
from continuing to perform investment advisory, administrative or custody
services for the Fund, as the case may be, or require Chase, CAM, Inc. or any
other affiliate of Chase to alter or discontinue the services provided by it to
shareholder of the Funds.
If Chase, CAM, Inc. or any other affiliate of Chase were prohibited
from performing investment advisory, administrative, custody or transfer agency
services for the Fund, as the case may be, it is expected that the Board of
Trustees would recommend to shareholders that they approve new agreements with
another entity or entities qualified to perform such services and selected by
the Board of Trustees. If Chase, CAM, Inc. or any other affiliate of Chase were
required to discontinue all or part of its shareholder servicing activities, its
customers would be permitted to remain the beneficial owners of Fund shares and
alternative means for continuing the servicing of such customers would be
sought. Vista does not anticipate that investors would suffer any adverse
financial consequences as a result of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state laws.
Based on the advice of its counsel, Chase believes that the court's
decision, and these other decisions of federal banking regulators, permit it to
serve as investment adviser to a registered, open-end investment company.
Regarding the performance of shareholder servicing and custodial
activities, the staff of the Office of the Comptroller of the Currency, which
supervises national banks, has issued opinion letters stating that national
banks may engage in shareholder servicing and custodial activities. Therefore,
Chase believes, based on advice of its counsel, that it may serve as shareholder
servicing agent to the Fund and render the services described in the shareholder
servicing agreements, and Chase believes, based on advice of its counsel, that
it may serve as Custodian to the Trust and render the services set forth in the
Custodian Agreement, as appropriate, incidental national banking functions and
as proper adjunct to its serving as investment adviser and administrator to the
Fund.
Industry practice and regulatory decisions also support a bank's
authority to act as administrator for a registered investment company. Chase, on
the advice of its counsel, believes that it may render the services described in
its Administration Agreement without violating the Glass-Steagall Act or other
applicable banking laws.
Possible future changes in federal law or administrative or judicial
interpretations of current or future law, however, could prevent Chase from
continuing to perform investment advisory, shareholder servicing, custodian or
other administrative services for the Fund. If that occurred, the Trust's Board
of Trustees promptly would seek to obtain for the Fund the services of another
qualified adviser, shareholder servicing agent, custodian or administrator, as
necessary. Although no assurances can be given, the Trust believes that, if
necessary, the switch to a new adviser, shareholder servicing agent, custodian
or administrator could be accomplished without undue disruption to the Funds'
operations.
In addition, state securities laws on this issue may differ from the
interpretation of federal law expressed herein, and banks and financial
institutions may be required to register as dealers pursuant to state law.
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PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
The Vista Shares are continuously offered for sale without a sales load
at the net asset value next determined through Vista Broker-Dealer Services,
Inc. ("VBDS" or the "Distributor") after an order is received and accepted by
the Transfer Agent, provided it is transmitted prior to 12:00 noon, Eastern time
on any business day during which the New York Stock Exchange and the Adviser are
open for trading ("Fund Business Day"). (See "Other Information Concerning
Shares of the Fund -- Net Asset Value"). Orders for Vista Shares received and
accepted prior to the above designated times will be entitled to all dividends
declared on such day.
It is anticipated that the Vista Shares' net asset value will remain
constant at $1.00 per share and the Fund will employ specific investment
policies and procedures to accomplish this result. Shares are being offered to
customers of a Shareholder Servicing Agent (i.e., a financial institution, such
as a federal or state-chartered bank, trust company or savings and loan
association that has entered into a shareholder servicing agreement with the
Fund) or to customers of brokers or certain financial institutions which have
entered into Selected Dealer Agreements with VBDS. An investor may purchase
Vista Shares by authorizing his Shareholder Servicing Agent, broker or financial
institution to purchase such Shares on his behalf through the Distributor, which
the Shareholder Servicing Agent, broker or financial institution must do on a
timely basis. All share purchases must be paid for in U.S. dollars, and checks
must be drawn on U.S. banks. In the event a check used to pay for shares
purchased is not honored by the bank on which it is drawn, the purchase order
will be canceled and the shareholder will be liable for any losses or expenses
incurred by the Fund or its agents.
All purchases made by check should be in U.S. dollars and made payable
to the Vista Funds. Third party checks, except those payable to an existing
shareholder who is a natural person (as opposed to a corporation or
partnership), credit cards and cash will not be accepted. When purchases are
made by check or periodic automatic investment, redemptions will not be allowed
until the investment being redeemed has been in the account for 15 business
days.
Shareholder Servicing Agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Vista Shares, such as pre-authorized or systematic purchase and redemption
programs and "sweep" checking programs. Each Shareholder Servicing Agent may
establish its own terms, conditions and charges, including limitations on the
amounts of transactions, with respect to such services. Charges for these
services may include fixed annual fees, transaction fees, account maintenance
fees and minimum account balance requirements. The effect of any such fees will
be to reduce the yield on the investment of customers of that Shareholder
Servicing Agent. Conversely, certain Shareholder Servicing Agents may (although
they are not required by the Fund to do so) credit to the accounts of their
customers from whom they are already receiving other fees an amount not
exceeding the fees for their services as Shareholder Servicing Agents (see
"Shareholder Servicing Agents, Transfer Agent and Custodian -- Shareholder
Servicing Agents"), which will have the effect of increasing the yield on the
investment of customers of that Shareholder Servicing Agent. Shareholder
Servicing Agents may also increase or reduce the minimum dollar amount required
to invest in the Fund and waive any applicable holding periods.
The Fund intends to be as fully invested at all times as is reasonably
practicable in order to enhance the yield on its assets. Accordingly, in order
to make investments which will immediately generate income, the Fund must have
federal funds available to it (i.e., monies credited to the account of the
Fund's custodian bank by a Federal Reserve Bank). Each Shareholder Servicing
Agent has agreed to provide each of the Vista Shares with federal funds for each
purchase at the time it transmits the order for such purchase to the
Distributor. Therefore, each shareholder and prospective investor should be
aware that if he does not have sufficient funds on deposit with, or otherwise
immediately available to, his Shareholder Servicing Agent, there may be a delay
in transmitting and effecting his purchase order since his Shareholder Servicing
Agent will have to convert his check, bank draft, money order or similar
negotiable instrument into federal funds prior to effecting the purchase order.
In such case, the purchase order will be effected at the purchase price per
share next determined after the
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conversion to federal funds has been accomplished. If such a delay is necessary,
it is expected that in most cases it would not be longer than two business days.
The Vista Shares reserves the right to cease offering shares for sale
at any time, to reject any order for the purchase of shares and to cease
offering any services provided by a Shareholder Servicing Agent. Fund shares
will be maintained in book entry form, and no certificates representing shares
owned will be issued to shareholders.
MINIMUM INVESTMENTS
The Fund has established minimum initial and additional investments for
the purchase of Fund Shares. The minimums detailed below vary by the type of
account being established:
Minimum
Initial
Account Type Investment
- -------------------------------------------- ----------------
Individual......................................................$ 2,500(1)
Individual Retirement Account (IRA).............................$ 1,000(2)
Spousal IRA.....................................................$ 250(2)
SEP-IRA.........................................................$ 1,000(2)
Purchase Accumulation Plan......................................$ 250(3)
Payroll Deduction Program (401(k), 403(b), Keogh)...............$ 100(4)
- ---------------
(1) Employees of the Adviser and its affiliates, and certain Qualified
Persons are eligible for a $1,000 minimum initial investment.
(2) A $250 minimum initial investment is allowed if the new account is
established with a $100 minimum monthly Systematic Investment Plan as
described below.
(3) Account must be established with a $200 minimum monthly Systematic
Investment Plan as described below.
(4) A $25 minimum monthly investment must be established through an
automated payroll cycle.
The minimum additional investment is $100 for all types of accounts.
For further information as to how to direct a Shareholder Servicing
Agent to purchase shares of the Fund, an investor should contact his Shareholder
Servicing Agent.
SYSTEMATIC INVESTMENT PLAN. A shareholder may establish a monthly
investment plan by which investments are automatically made to his/her Vista
Fund account through Automatic Clearing House (ACH) deductions from a checking
account. The minimum monthly investment through this plan is $100. Shareholders
may choose either to have these investments made during the first or third week
each month. Please note that your initial ACH transactions may take up to 10
days from the receipt of your request to be established.
Shareholders electing to start this Systematic Investment Plan when
opening an account should complete Section 8 of the account application. Current
shareholders may begin a Systematic Investment Plan at any time by sending a
signed letter with signature guarantee to the Vista Service Center, P.O. Box
419392, Kansas City, MO 64141-6392. The letter should contain your Vista Fund
account number, the desired amount and cycle of the systematic investment, and
must include a voided check from the checking account from which debits are to
be made. A signature guarantee may be obtained from a bank, trust company,
broker-dealer or other member of the national securities exchange. Please note
that a notary public cannot provide signature guarantees.
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<PAGE>
REDEMPTIONS
A shareholder may redeem all or any portion of the shares in his
account on any Fund Business Day at the net asset value next determined after a
redemption request in proper form is furnished by the shareholder to his
Shareholder Servicing Agent and transmitted by it to and received by a Fund's
Transfer Agent. Therefore, redemptions will be effected on the same day the
redemption order is received only if such order is received prior to 12:00 noon,
Eastern time. Shares which are redeemed earn dividends up to and including the
day prior to the day the redemption is effected. The proceeds of a redemption
normally will be paid on the Fund Business Day the redemption is effected, but
in any event within seven days. The forwarding of proceeds from redemption of
shares which were recently purchased by check may be delayed until the purchase
check has cleared, which may take up to fifteen days. Similarly, the forwarding
of proceeds from redemption of shares which were purchased by Automatic Clearing
House transfer may be delayed up to seven days. A shareholder who is a customer
of a Shareholder Servicing Agent may redeem his Vista Shares by authorizing his
Shareholder Servicing Agent or its agent to redeem such shares which the
Shareholder Servicing Agent or its agent must do on a timely basis.
The signature of both shareholders is required for any written
redemption requests (other than those by check) from a joint account. In
addition, a redemption request may be deferred for up to 15 calendar days if the
Transfer Agent has been notified of a change in either the address or the bank
account registration previously listed in the Fund records.
Although the Fund generally retains the right to pay the redemption
price of shares in kind with securities (instead of cash) the Trust has filed an
election under Rule 18f-1 of the Investment Company Act of 1940, as amended (the
"1940 Act"), committing to pay in cash all redemptions by a shareholder of
record up to the amounts specified in the rule (approximately $250,000).
The payment of redemption requests may be wired or mailed directly to a
previously designated domestic commercial bank account. However, all telephone
redemption requests in excess of $25,000 will be wired directly to such
previously designated bank account, for the protection of shareholders.
Normally, redemption payments will be transmitted on the next business day
following receipt of the request (provided it is made prior to 12:00 noon,
Eastern time). Redemption payments requested by telephone may not be available
in a previously designated bank account for up to four days. If no share
certificates have been issued, a wire redemption may be requested by telephone
or wire to the Vista Service Center. For telephone redemptions, call the Vista
Service Center at (800) 34-VISTA.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such exchange is restricted or, to the
extent otherwise permitted by the 1940 Act if an emergency exists. Payment may
also be delayed on days when the Federal Reserve Bank is closed.
AUTOMATIC REDEMPTION PLAN. A shareholder owning $10,000 or more of the
shares of the Fund as determined by the then current net asset value may provide
for the payment monthly or quarterly of any requested dollar amount (subject to
limits) from his account to his order. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is received on
approximately the 1st or 15th day of the month following the end of the selected
payment period.
For further information as to how to direct a Shareholder Servicing
Agent to redeem shares of the Fund, a shareholder should contact his Shareholder
Servicing Agent.
REDEMPTION OF ACCOUNTS OF LESS THAN $500. The Fund may involuntarily
redeem the shares of any shareholder, if at such time, the aggregate net asset
value of the shares in such shareholder's account is less than $500. In the
event of any such redemption, a shareholder will receive at least 60 days'
notice prior to the redemption.
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<PAGE>
EXCHANGE PRIVILEGES
Shareholders of the Vista Shares of the Fund may exchange at relative
net asset value among the Vista Shares offered by Vista's other money market
funds, and may exchange at relative net asset value plus any applicable sales
charges among certain classes of shares of portfolios of Mutual Fund Group
("MFG"), an affiliated investment company, of which Chase is the adviser and
VBDS is the distributor, in accordance with the terms of the then-current
prospectus of the Fund being acquired. The prospectus of the Fund into which
shares are being exchanged should be read carefully prior to any exchange and
retained for future reference. With respect to exchanges into a fund which
charges a front-end sales charge, such sales charge will not be applicable if
the shareholder previously acquired his Vista Shares by exchange from such fund.
Under the Exchange Privilege, Shares of a Fund may be exchanged for
shares of other Funds of the Trust or MFG only if those Funds are registered in
the states where the exchange may legally be made. In addition, the account
registration for the Vista Fund (whether a Fund of the Trust or MFG) into which
shares of the Funds are being exchanged must be identical to that of the account
registration for the Fund from which shares are being redeemed. 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 Date, but such purchase may be delayed by either fund up to five
business days if the fund determines that it would be disadvantaged by an
immediate transfer of the proceeds.
This privilege may be amended or terminated at any time without notice.
Arrangements have been made for the acceptance of instructions by telephone to
exchange shares if certain preauthorizations or indemnifications are accepted
and on file. Further information and telephone exchange forms are available from
the Vista Service Center.
MARKET TIMING. The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In order to limit
excessive exchange activity and other circumstances where the Trustees, or
Adviser believes doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving a Fund in a
year or three in a calendar quarter will be charged $5.00 administration fee per
each such exchange.
GENERAL
REORGANIZATION WITH PREDECESSOR FUND. The Fund has been established to
receive all the assets of The Hanover 100% U.S. Treasury Securities Money Market
Fund series of The Hanover Funds, Inc. (the "Predecessor Fund"). Subject to
approval by the shareholders of the Predecessor Fund, the Predecessor Fund will
transfer all its assets and liabilities to the Fund in exchange for Vista shares
of the Fund, which will be distributed pro rata to shareholders of the
Predecessor Fund, who will become shareholders of the Fund (the
"Reorganization"). The Predecessor Fund will cease operations after the
Reorganization. The Fund will have no assets and will not begin operations until
the Reorganization occurs.
The Fund has established certain procedures and restrictions, subject
to change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Fund's Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in this Prospectus are not available
until a completed and signed account application has been received by the Fund's
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. To provide evidence of
telephone instructions, the Transfer Agent will record telephone conversations
with shareholders. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. In the event the Fund does
not employ such procedures, it may be liable for losses due to unauthorized or
fraudulent instructions.
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<PAGE>
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, the Fund or its agents are authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming shares of the Fund and depositing and withdrawing
monies from the bank account specified in the Bank Account Registration section
of the shareholder's latest account application or as otherwise properly
specified to the Fund in writing. Shareholders agree to release and hold
harmless the Fund, the Adviser, the Administrator, any Shareholder Servicing
Agent or sub-agent and broker-dealer, and the officers, directors, employees and
agents thereof against any claim, liability, loss, damage and expense for any
act or failure to act in connection with Fund shares, any related investment
account, any privileges or services selected in connection with such investment
account, or any written or oral instructions or requests with respect thereto,
or any written or oral instructions or requests from someone claiming to be a
shareholder if the Fund or any of the above-described parties follow
instructions which they reasonably believe to be genuine and act in good faith
by complying with the reasonable procedures that have been established for Fund
accounts and services.
Shareholders purchasing their shares through a Shareholder Servicing
Agent may not assign, transfer or pledge any rights or interest in any Fund
shares or any investment account established with a Shareholder Servicing Agent
to any other person without the prior written consent of such Shareholder
Servicing Agent, and any attempted assignment, transfer or pledge without such
consent may be disregarded.
The Fund may also establish and revise, from time to time, account
minimums and transactions or amount restrictions on purchases, exchanges,
redemptions, checkwriting services, or other transactions permitted in
connection with shareholder accounts. The Fund may also 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 the bank
account specified in the Bank Account Registration, or for any written requests
for additional account services made after a shareholder has submitted an
initial account application to the Fund. The Fund may refuse to accept or carry
out any transaction that does not satisfy any restrictions then in effect.
TAX MATTERS
The following discussion is addressed primarily to individual investors
and is for general information only. A prospective investor, including a
corporate investor, should also review the more detailed discussion of federal
income tax considerations that is contained in the Statement of Additional
Information. In addition, each prospective investor should consult with his own
tax advisers as to the tax consequences of an investment in the Fund, including
the status of distributions from the Fund in his own state and locality.
The Fund intends to qualify each year and elect to be treated as a
separate "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If the Fund is treated as a
"regulated investment company" and all its taxable income, if any, is
distributed to its shareholders in accordance with the timing requirements
imposed by the Code, it will not be subject to federal income tax on amounts so
distributed. If for any taxable year the Fund does not qualify for the treatment
as a regulated investment company, all of its taxable income will be subject to
tax at regular corporate rates without any deduction for distributions to its
shareholders, and such distributions to shareholders will be taxable to the
extent of the Fund's current and accumulated earnings and profits.
The Trust is organized as a Massachusetts business trust and, under
current law, is not liable for any income or franchise tax in the Commonwealth
of Massachusetts as long as the Fund (and each other series of the Trust)
qualifies as a regulated investment company under the Code.
Distributions by the Fund of its taxable ordinary income (net of
expenses) and the excess, if any, of its net short-term capital gain over its
net long-term capital loss are generally taxable to shareholders as ordinary
income. Such distributions are treated as dividends for federal income tax
purposes, but do not qualify for the
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<PAGE>
dividends-received deduction for corporations. Distributions by a Fund of the
excess, if any, of its net long-term capital gain over its net short-term
capital loss are designated as capital gain dividends and are taxable to
shareholders as long-term capital gains, regardless of the length of time a
shareholder has held his shares. The Fund will seek to avoid recognition of
capital gains.
Distributions to shareholders will be treated in the same manner for
federal income tax purposes whether received in cash or reinvested in additional
shares of a Fund. In general, distributions by a Fund are taken into account by
shareholders in the year in which they are made. However, certain distributions
made during January will be treated as having been paid by the Fund and received
by the shareholders on December 31 of the preceding year. A statement setting
forth the federal income tax status of all distributions made (or deemed made)
during the fiscal year, including any portions which constitute ordinary income
dividends, capital gain dividends and exempt-interest dividends, will be sent to
the Fund's shareholders promptly after the end of each year.
Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on distributions and
redemption payments made by the Fund. Generally, shareholders are subject to
backup withholding if they have not provided the Fund with a correct taxpayer
identification number and certain required certifications.
Shareholders of the Fund will be subject to federal income tax on the
ordinary income dividends and any capital gain dividends from the Fund and may
also be subject to state and local taxes. The laws of some states and
localities, however, exempt from some taxes dividends such as those paid on
shares of the U.S. Government Fund to the extent such dividends are attributable
to interest on obligations of the and certain of its agencies and
instrumentalities. The Fund intends to advise its shareholders of the proportion
of their ordinary income dividends which are attributable to such interest.
The State of New York for example, exempts from its personal income tax
dividends such as those paid on shares of the Fund to the extent such dividends
are attributable to interest from obligations of the U.S. Government and certain
of its agencies and instrumentalities, provided that at least 50% of the Fund's
portfolio consists of such obligations and the Fund complies with certain notice
requirements. The New York State Department of Taxation and Finance (like most
other states) currently takes the position, however, that certain obligations
backed by the full faith and credit of the U.S. Treasury, such as GNMA
Certificates and repurchase agreements backed by any U.S. Government obligation,
do not constitute exempt obligations of the U.S. Government. (UNDER PRESENT
MARKET CONDITIONS, IT IS EXPECTED THAT LESS THAN 50% OF THE FUND'S PORTFOLIO
WILL CONSIST OF OBLIGATIONS WHICH THE NEW YORK STATE DEPARTMENT OF TAXATION AND
FINANCE VIEWS AS EXEMPT. ACCORDINGLY, IT IS LIKELY THAT NO PORTION OF THE
DIVIDENDS PAID ON SHARES OF THE FUND WILL BE EXEMPT FROM NEW YORK STATE PERSONAL
INCOME TAX.)
Shareholders are urged to consult their tax advisers regarding the
possible exclusion from state and local income tax of a portion of the dividends
paid on shares of the Fund which is attributable to interest from obligations of
the U.S. Government and its agencies and instrumentalities
OTHER INFORMATION CONCERNING SHARES OF THE FUND
NET ASSET VALUE
The net asset value of the Shares of the Fund is determined as of 12:00
noon, Eastern time on each Fund Business Day, by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities, including expenses payable or accrued) by the number of its shares
outstanding at the time the determination is made. The portfolio securities of
the Fund are valued at their amortized cost pursuant to Rule 2a-7 under the 1940
Act, certain requirements of which are summarized under "Additional Information
on Investment Policies and Techniques." This method increases stability in
valuation, but may result in periods during which the stated value of a
portfolio security is higher or lower than the price the Fund would receive if
the instrument were sold. It is anticipated that the net asset value of each
share will remain constant at $1.00 and the
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Fund will employ specific investment policies and procedures to accomplish this
result, although no assurance can be given that they will be able to do so on a
continuing basis. These procedures include a review of the extent of any
deviation of net asset value per share, based on available market rates, from
the $1.00 amortized cost price per share, and consideration of certain actions
before such deviation exceeds 1/2 of 1%. Income earned on the Fund's investments
is accrued daily and the Net Income, as defined under "Distributions and
Dividends" below, is declared each Fund Business Day as a dividend. See
"Determination of Net Asset Value" in the Statement of Additional Information
for further information regarding determination of net asset value and the
procedures to be followed to stabilize the net asset value at $1.00 per share.
DISTRIBUTIONS AND DIVIDENDS
The net income of the Vista Shares is determined each Fund Business Day
(and on such other days as the Trustees deem necessary in order to comply with
Rule 22c-1 under the 1940 Act). This determination is made once during each such
day as of 12:00 noon, Eastern time. All the net income, as defined below, of the
Vista Shares so determined is declared in shares as a dividend to shareholders
of record at the time of such determination. Shares begin accruing dividends on
the day they are purchased. Dividends are distributed monthly on or about the
last business day of each month (or on such other date in each month as the
shareholder's Shareholder Servicing Agent may designate as the dividend
distribution date with respect to a particular shareholder). Unless a
shareholder elects to receive dividends in cash (subject to the policies of the
shareholder's Shareholder Servicing Agent), dividends are distributed in the
form of additional shares at the rate of one share (and fractions thereof) for
each one dollar (and fractions thereof) of dividend income.
For this purpose, the net income of the Vista Shares (from the time of
the immediately preceding determination thereof) shall consist of all income
accrued, including the accretion of discounts less the amortization of any
premium on the portfolio assets of the Fund, less all actual and accrued
expenses determined in accordance with generally accepted accounting principles.
As noted above, securities are valued at amortized cost, which the Trustees have
determined in good faith constitutes fair value for the purposes of complying
with the 1940 Act. This valuation method will continue to be used until such
time as the Trustees determine that it does not constitute fair value for such
purposes.
Since the net income of the Vista Shares is declared as a dividend each
time its net income is determined, the net asset value per share (i.e., the
value of its net assets divided by the number of its shares outstanding) is
expected to remain at $1.00 per share immediately after each such determination
and dividend declaration. Any increase in the value of a shareholder's
investment, representing the reinvestment of dividend income, is reflected by an
increase in the number of shares in his account.
It is expected that the Vista Shares will have a positive net income at
the time of each determination thereof. If for any reason the net income
determined at any time is a negative amount, which could occur, for instance,
upon default by an issuer of a portfolio security, the Fund would first offset
the negative amount with respect to each shareholder account from the dividends
declared during the month with respect to each such account. If, and to the
extent that such negative amount exceeds such declared dividends at the end of
the month, the number of outstanding shares will be reduced by treating each
shareholder as having contributed to the capital of the Fund that number of full
and fractional shares in the account of such shareholder which represents his
proportion of the amount of such excess. Each shareholder will be deemed to have
agreed to such contribution in these circumstances by his investment. Thus, the
net asset value per share will be maintained at a constant $1.00.
DISTRIBUTION PLAN AND DISTRIBUTION AND SUB-ADMINISTRATION AGREEMENT
The Trustees have adopted a Distribution Plan ("Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act, after having concluded that there
is a reasonable likelihood that the Distribution Plan will benefit the Fund and
its shareholders.
The Distribution Plan provides that the Fund shall pay distribution
fees (the "Basic Distribution Fee"), including payments to the Distributor, at
an annual rate not to exceed .10% of the average daily net assets for
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distribution services. Since the Basic Distribution Fee is not directly tied to
its expenses, the amount of Basic Distribution Fees paid by each of the Vista
Shares during any year may be more or less than actual expenses incurred
pursuant to the Distribution Plan. 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 such as those described in the next paragraph, by
which a distributor's compensation is directly linked to its expenses). However,
the Vista Shares are not liable for any distribution expenses incurred in excess
of the Basic Distribution Fee paid.
The Distribution and Sub-Administration Agreement dated August 21, 1995
(the "Distribution Agreement") provides that the Distributor will act as the
principal underwriter of the Fund's shares and 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. In
addition, the Distributor will provide certain sub-administration services,
including providing officers, clerical staff and office space. The Distributor
currently receives a fee for sub-administration from the Fund at an annual rate
equal to 0.05% of the Fund's average daily net assets, on an annualized basis
for the Fund's then-current fiscal year. Other funds which have investment
objectives similar to those of the Fund, but which do not pay some or all of
such fees from their assets, may offer a higher return, although investors
would, in some cases, be required to pay a sales charge or a redemption fee.
The Distributor has agreed to use a portion of its distribution and
sub-administration fee to pay for certain expenses of the Fund incurred in
connection with organizing new series of the Trust and certain other ongoing
expenses of the Trust. The Distributor may, from time to time, waive all or a
portion of the fees payable to it by the Fund under the Distribution and
Sub-Administration Agreement.
EXPENSES
The Fund intends to pay all of its pro rata share of expenses,
including the compensation of the Trustees; all fees under its Distribution
Plan; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute; fees and expenses of independent accountants, of
legal counsel and of any transfer agent, Shareholder Servicing Agent, or
dividend disbursing agent; expenses of redeeming shares and servicing
shareholder accounts; expenses of preparing, printing and mailing prospectuses,
reports, notices, proxy statements and reports to shareholders and to
governmental officers and commissions; expenses connected with the execution,
recording and settlement of portfolio security transactions; insurance premiums;
fees and expenses of the Custodian including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating the net
asset values of the Vista Shares; expenses of shareholder meetings; and the
advisory fees payable to the Adviser under the Investment Advisory Agreement,
the administration fee payable to the Administrator under the Administration
Agreement and the sub-administration fee payable to the Distributor under the
Distribution and Sub-Administration Agreement. Expenses relating to the
issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses for such purposes are borne by
the Fund except that the Distribution and Sub-Administration Agreement with the
Distributor requires the Distributor to pay for prospectuses which are to be
used for sales to prospective investors.
Pursuant to offering multiple classes of shares, certain expenses of
the Fund are borne by certain classes, either exclusively, or in a manner which
approximates the proportionate value received by the Class as a result of the
expense being incurred.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Mutual Fund Trust is an open-end, management investment company
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts in 1994. The Trust has reserved the right to create and issue
additional series or classes. Each share of a series or class represents an
equal proportionate interest in that series or class with each other share of
that series or class. The shares of each series or class participate equally in
the earnings, dividends and assets of the particular series or class. Expenses
of the Trust which are not attributable to a specific series or class are
allocated among all the series in a manner believed by
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<PAGE>
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
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 separately, for example to
approve an investment advisory agreement or distribution plan, but shares of all
series and classes vote together, to the extent required under the 1940 Act, in
the election or selection of Trustees and independent accountants.
Shareholders of the Vista Shares bear the fees and expenses described
in this Prospectus. Similarly, shareholders of the counterpart Premier Shares
and Institutional Shares bear the fees and expenses described in the prospectus
for such classes of Shares. The fees paid by the Vista Shares to the Distributor
and Shareholder Servicing Agent under the distribution plan and shareholder
servicing arrangements for distribution expenses and shareholder services
provided to investors by the Distributor and Shareholder Servicing Agents are
more than the respective fees paid under distribution plans and shareholder
servicing arrangements adopted for its counterpart Premier Shares. Moreover, the
Institutional Shares pay no fees under distribution plans or shareholder
servicing arrangements. As a result, at any given time, the net yield on the
Vista Shares will be approximately .10% to .25% lower then the yield on its
counterpart Premier Shares and approximately .30% to .50% lower than the yield
on the counterpart Institutional Shares. Standardized yield quotations will be
computed separately for each class of shares of the Fund.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders of each series or class or of all
series or classes when in the judgment of the Trustees it is necessary or
desirable to submit matters for a shareholder vote. A Trustee of the Trust may,
in accordance with certain rules of the Securities and Exchange Commission, be
removed from office when the holders of record of not less than two-thirds of
the outstanding shares either present a written declaration to the Funds'
Custodian or vote in person or by proxy at a meeting called for this purpose. In
addition, the Trustees will promptly call a meeting of shareholders to remove a
trustee(s) when requested to do so in writing by record holders of not less than
10% of the outstanding shares of the Trust.
Finally, the Trustees shall, in certain circumstances, give such
shareholders access to a list of the names and addresses of all other
shareholders or inform them of the number of shareholders and the cost of
mailing their request. The Trust's Declaration of Trust provides that, at any
meeting of shareholders, a Shareholder Servicing Agent may vote any shares as to
which such Shareholder Servicing Agent is the agent of record and which are
otherwise not represented in person or by proxy at the meeting, proportionately
in accordance with the votes cast by holders of all shares of the same 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. Shareholders of each series or class would be
entitled to share pro rata in the net assets of that series or class available
for distribution to shareholders upon liquidation of that series or class.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Code of Ethics of the Trust prohibits all affiliated personnel from
engaging in personal investment activities which compete with or attempt to take
advantage of a Fund's planned portfolio transactions. The objective of the Code
of Ethics is to ensure that the operations of a Fund be carried out for the
exclusive benefit of a Fund's shareholders. The Trust maintains careful
monitoring of compliance with the Code of Ethics. See "General Information" in
the Fund's Statement of Additional Information.
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<PAGE>
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
SHAREHOLDER SERVICING AGENTS
The shareholder servicing agreement with the Shareholder Servicing
Agent provides that such Shareholder Servicing Agent will, as agent for its
customers, perform various services, including but not limited to the following:
answer customer inquiries regarding account status, history, the manner in which
purchases and redemptions of shares may be effected for the Fund or class of
shares as to which the Shareholder Servicing Agent is so acting and certain
other matters pertaining to the Fund or class of shares; assist shareholders in
designating and changing dividend options, account designations and addresses;
provide necessary personnel and facilities to establish and maintain shareholder
accounts and records; assist in processing purchase and redemption transactions;
arrange for the wiring of funds; transmit and receive funds in connection with
customer orders to purchase or redeem shares; verify and guarantee shareholder
signatures in connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnish (either separately or on an integrated
basis with other reports sent to a shareholder by a Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases and redemptions;
transmit, on behalf of the Fund or class of shares, proxy statements, annual
reports, updated prospectuses and other communications to shareholders; receive,
tabulate and transmit to the Fund proxies executed by shareholders with respect
to meetings of shareholders of the Fund or class of shares; vote the outstanding
shares of the Fund or class of shares whose shareholders do not transmit
executed proxies or attend shareholder meetings in the same proportion as the
votes cast by other shareholders of the Fund or class represented at the
shareholder meeting 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.
For performing these services, the Shareholder Servicing Agent for the
Vista Shares receives certain fees, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by such Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in accounts serviced by such Shareholder Servicing Agent during the
period, and the expenses incurred by such Shareholder Servicing Agent. The fees
relating to acting as liaison to shareholders and providing personal services to
shareholders will not exceed, on an annualized basis for the Fund's then-current
fiscal year, .25% for the Vista Shares of the Fund, of the average daily net
assets represented by shares owned during the period for which payment is being
made by investors for whom such Shareholder Servicing Agent maintains a
servicing relationship. Each Shareholder Servicing Agent may, from time to time,
voluntarily waive a portion of the fees payable to it. In addition, Chase may
provide other related services to the Fund for which it may receive
compensation.
The Shareholder Servicing Agent, and its affiliates, agents and
representatives acting as Shareholder Servicing Agents, may establish custodial
investment accounts ("Accounts"), known as Chase Investment Accounts or by any
other name designated by a Shareholder Servicing Agent. Through such Accounts,
customers can purchase, exchange and redeem Fund shares, receive dividends and
distributions on Fund investments, and take advantage of any services related to
an Account offered by such Shareholder Servicing Agent from time to time. All
Accounts and any related privileges or services shall be governed by the laws of
the State of New York, without regard to its conflicts of laws provisions.
The Glass-Steagall Act and other applicable laws generally prohibit
federally chartered or supervised banks from publicly underwriting or
distributing certain securities such as the Fund's shares. The Trust, on behalf
of the Funds, will engage banks, including Chase and its affiliates, as
Shareholder Servicing Agents only to perform advisory, custodian, administrative
and shareholder servicing functions as described above. While the matter is not
free from doubt, the management of the Trust believes that such laws should not
preclude a bank, including a bank which acts as investment adviser, custodian or
administrator, or in all such capacities for the Trust, from acting as a
Shareholder Servicing Agent. However, possible future changes in federal law or
administrative or judicial interpretations of current or future law, could
prevent a bank from continuing to perform all or a part of its servicing
activities. If that occurred, the bank's shareholder clients would be permitted
to remain as shareholders and alternative means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the Fund might occur and a shareholder serviced by such bank might no
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<PAGE>
longer be able to avail himself of any automatic investment or other services
then being provided by such bank. The Trust does not expect that shareholders
would suffer any adverse financial consequences as a result of these
occurrences.
TRANSFER AGENT AND CUSTODIAN
DST Systems, Inc. ("DST") acts as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Trust. In this capacity, DST
maintains the account records of all shareholders in the Fund, including
statement preparation and mailing. DST is also responsible for disbursing
dividend and capital gain distributions to shareholders, whether taken in cash
or additional shares. From time to time, DST and/or the Fund may contract with
other entities to preform certain services for the Transfer Agent. For its
services as Transfer Agent, DST receives such compensation as is from time to
time agreed upon by the Trust and DST. DST's address is 127 W. 10th Street,
Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the Fund for which Chase receives compensation as is from time to time
agreed upon by the Trust and Chase. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on the Fund's investments, maintaining books of original entry for portfolio and
Fund accounting and other required books and accounts, and calculating the daily
net asset value of shares of the Fund. Portfolio securities and cash may be held
by sub-custodian banks if such arrangements are reviewed and approved by the
Trustees. The internal division of Chase which serves as the Trust's Custodian
does not determine the investment policies of the Fund or decide which
securities will be bought or sold on behalf of the Fund or otherwise have access
to or share material inside information with the internal division that performs
advisory services for the Fund.
Tax Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following
qualified prototype retirement plans: IRA, Rollover IRA, SEP-IRA,
Profit-Sharing, and Money Purchase Pension Plans which can be adopted by
self-employed persons ("Keogh") and by corporations, 401(k) and 403(b)
Retirement Plans. Call or write the Transfer Agent for more information.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Vista Shares may use hypothetical investment
examples and performance information in advertisements, shareholder reports or
other communications to shareholders. Because such performance information is
based on historical earnings, it should not be considered as an indication or
representation of the performance of the Vista Shares in the future. From time
to time, the yield of the Vista Shares, as a measure of its performance, 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 other relevant indices or to rankings prepared by
independent services or other financial or industry publications, such as Lipper
Analytical Services, Inc. or the Morningstar Mutual Funds on Disc, that monitor
the performance of mutual funds. In addition, the yield of each of the Vista
Shares may be compared to the Donoghue's Money Fund AveragesTM, compiled in the
Donoghue's Money Fund Report(R), a widely recognized independent publication
that monitors the performance of money market funds. Also, each of the Vista
Shares' yield data may be 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 publications of a local or regional nature. The
Vista Shares may, with proper authorization, reprint articles written about the
Vista Shares and provide them to prospective shareholders.
Vista Shares may provide its annualized "yield" and "effective yield"
to current and prospective shareholders. The "yield" of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period shall be stated in any advertisement or communication with a
shareholder). This income
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<PAGE>
is then "annualized", that is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period and
is shown as a percentage of investment. The "effective yield" is calculated
similarly, but when annualized the income earned by the investment during that
week is assumed to be reinvested. The "effective yield" will be slightly higher
than the "yield" because of the compounding effect of this assumed reinvestment.
Unlike some bank deposits or other investments which pay a fixed yield
for a stated period of time, the yield of each of the Vista Shares will vary
based on interest rates, the current market value of the securities held in the
Fund's portfolio and changes in the Fund's and the Shares' expenses. The
Adviser, the Administrator, the Distributor and each Shareholder Servicing Agent
may voluntarily waive a portion of their fees on a month-to-month basis. In
addition, the Distributor may assume a portion of the Fund's operating expenses
on a month-to-month basis. These actions would have the effect of increasing the
net income (and therefore the yield) of the Vista Shares during the period such
waivers of fees or assumptions of expenses are in effect. These factors and
possible differences in the methods used to calculate yields should be
considered when comparing the Vista Shares' yields to those published for other
money market funds and other investment vehicles. A Shareholder Servicing Agent
may charge its customers direct fees in connection with an investment (see
"Purchases and Redemptions of Shares-Purchases") which will have the effect of
reducing the net return on the investment of customers of that Shareholder
Servicing Agent. Conversely, the Vista Shares are 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 (see "Purchases and Redemptions of
SharesPurchases"), 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. See the Statement of Additional
Information for further information concerning each of the Vista Shares'
calculation of yield.
OTHER INFORMATION
The Statement of Additional Information contains more detailed
information about the Trust and the Fund, including information related to (i)
the Fund's investment policies and restrictions, (ii) risk factors associated
with the Fund's policies and investments, (iii) the Trust's Trustees, officers
and the Administrator, the Adviser and the Sub-Adviser, (iv) portfolio
transactions and brokerage allocation, (v) the Fund's shares, including rights
and liabilities of shareholders, and (vi) additional performance information,
including the method used to calculate yield or total rate of return quotations
of the Fund. The audited financial statements of the Predecessor Fund for its
last fiscal year end is incorporated by reference in the Statement of Additional
Information.
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<PAGE>
VISTA^(SM) 100% U.S. TREASURY SECURITIES MONEY MARKET FUND
PREMIER SHARES PROSPECTUS -- FEBRUARY 8, 1996
Mutual Fund Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the Commonwealth of
Massachusetts on February 4, 1994, presently consisting of 12 separate series
("Funds"). Under a multi-class distribution system, the money market funds may
be offered through three separate classes of shares (the "Shares"). The Premier
Shares described in and offered pursuant to this Prospectus, which are offered
only to institutional investors, are shares of the Vista 100% U.S. Treasury
Securities Money Market Fund (the "Premier Shares"). The Institutional Shares of
the Fund are also sold under a separate prospectus available only to qualified
institutional investors making an initial investment of at least $1,000,000.
THE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND'S (the "100%
U.S. Treasury Fund" or the "Fund") investment objective is to seek maximum
current income consistent with maximum safety of principal and maintenance of
liquidity. The Fund seeks to achieve its objective by investing solely in
obligations issued by the U.S. Treasury, including U.S. Treasury bills, bonds
and notes, which differ principally only in their interest rates, maturities and
dates of issuance. The Fund does not purchase securities issued or guaranteed by
agencies or instrumentalities of the U.S. Government, nor does it enter
repurchase agreements. Because the Fund invests exclusively in direct United
States Treasury Obligations, investors may benefit from income tax exclusions
and exemptions that are available in certain states and localities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Chase Manhattan Bank, N.A. ("Chase") is the investment adviser (the
"Adviser"), custodian (the "Custodian"), administrator (the "Administrator") and
a Shareholder Servicing Agent for the 100% U.S. Treasury Fund. Chase Asset
Management, Inc. is the investment sub-adviser ("CAM Inc." or the "Sub-Adviser")
for the 100% U.S. Treasury Fund. The parent company of the Adviser, The Chase
Manhattan Corporation has entered an Agreement and Plan of Merger with Chemical
Banking Corporation which, if affected will have certain effects upon the
Adviser, see "Management of the Fund -- The Adviser" on page 5.
Vista Broker-Dealer Services, Inc. ("VBDS" ) is the Fund's distributor
(the "Distributor") and is unaffiliated with Chase. INVESTMENT IN THE FUND IS
SUBJECT TO RISK -- INCLUDING POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE
NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE
MANHATTAN BANK, N.A. OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY INSURED BY,
OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share. Prospective investors should
carefully consider the risks associated with an investment in the Fund. For a
further discussion on the risks associated with an investment in the Fund, see
"Investment Objective and Policies" in this Prospectus. There can be no
assurance that the Fund will achieve its investment objective.
The Premier Shares are continuously offered for sale without a sales
load through VBDS, the Fund's distributor (the "Distributor"), only to
institutional investors who are customers of a financial institution, such as a
federal or state-chartered bank, trust company or savings and loan association
with which the Trust has entered into a shareholder servicing agreement
(collectively, "Shareholder Servicing Agents") or securities brokers or certain
financial institutions which have entered into Selected Dealer Agreements with
the Distributor. The
<PAGE>
Premier Shares have a distribution plan and may incur distribution expenses, at
an annual rate, not to exceed a specified percentage of its average daily net
assets. An investor should obtain from his Shareholder Servicing Agent, if
appropriate, and should read in conjunction with this Prospectus, the materials
provided by the Shareholder Servicing Agent describing the procedures under
which Premier Shares may be purchased and redeemed through such Shareholder
Servicing Agent. Shares may be redeemed by shareholders at the net asset value
next determined on any Fund Business Day as hereinafter defined.
This Prospectus sets forth concisely information concerning the Fund
and its Premier Shares that a prospective investor ought to know before
investing. A Statement of Additional Information for the Premier Shares dated
February 8, 1996 containing more detailed information about the Fund has been
filed with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference. An investor may obtain a copy of the Statement of
Additional Information for the Premier Shares without charge by contacting his
Shareholder Servicing Agent, the Distributor or the Fund.
Investors should read this Prospectus and retain it for future
reference.
For information about the Premier Shares, simply call the Vista Service
Center at 1-800-34-VISTA.
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<PAGE>
TABLE OF CONTENTS
Expense Summary................................................... 4
Investment Objectives and Policies................................ 5
Additional Information on Investment Policies and Techniques...... 5
Management of the Fund............................................ 8
Purchases and Redemptions of Shares............................... 11
Tax Matters....................................................... 15
Other Information Concerning Shares of the Fund................... 16
Shareholder Servicing Agents, Transfer Agent and Custodian........ 19
Yield and Performance Information................................. 21
Other Information................................................. 21
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<PAGE>
EXPENSE SUMMARY
The following table provides (i) a summary of the aggregate annual operating
expenses of the Fund, as a percentage of average net assets of the Fund, and
(ii) an example illustrating the dollar cost of such expenses on a $1,000
investment in shares of the Fund.
Premier
Shares
-------
Annual Fund Operating Expenses (after waiver of fees)
(as a percentage of average net assets)
Investment Advisory Fee ...................................... .10%
Rule 12b-1 Distribution Plan Fee ............................. .00%
Administrative Fee ........................................... .05%
Other Expenses
Sub-Administration Fee............................. .05%
Shareholder Servicing Fee +........................ .25%
Other Operating Expenses++......................... .10%
Total Other Expenses .40%
Total Fund Operating Expenses .55%
---------
Example:
You would pay the following expenses on a $1,000 investment in a Fund,
assuming (1) 5% annual return and (2) redemption at the end of:
1 year........................................$ 6
3 years.......................................$18
5 years.......................................$31
10 years......................................$69
- ---------------
+ Shareholder Servicing Agents may provide various services to their
customers and charge additional fees for these services. The
Shareholder Servicing and Fund Servicing Fees include fees for
activities in connection with serving as liaison for holders of Premier
Shares and in providing personal services to such shareholders as well
as other ministerial and servicing activities. Fees for the activities
in connection with serving as liaison to, and providing personal
services to, holders of Premier Shares will not exceed the NASD's
maximum fee of 0.25% for these types of activities. The other
ministerial and servicing activities provided for the Fund include:
assisting in processing purchase and redemption transactions;
transmitting and receiving funds in connection with purchase and
redemption orders; preparing and providing periodic statements showing
account balances; and preparing and transmitting proxy statements and
other periodic reports and communications from the Trust to customers.
++ A shareholder may incur a $10.00 charge for certain wire redemptions.
The expense summary is intended to assist investors in understanding
the various costs and expenses that a shareholder in the Premier Shares class of
shares of the Fund will bear directly or indirectly. The expense summary shows
the investment advisory fee, distribution fee, administrative fee,
sub-administration fee and shareholder servicing agent fee expected to be
incurred by the Premier Shares class of shares of the Fund.
As a result of the distribution fees, long-term investors may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers, Inc. ("NASD"). More complete
descriptions of each class of shares' expenses, including any fee waivers, are
set forth herein or in the Prospectus for such class of shares.
The "Example" set forth above should not be considered a representation
of future expenses or annual return of Premier Shares of the Fund; actual
expenses and annual return may be greater or less than those shown.
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<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing securities pursuant to Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), certain requirements of which are summarized
as follows. In accordance with Rule 2a-7, the Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less. The Fund invests
only in U.S. dollar denominated securities determined in accordance with
procedures established by the Board of Trustees to present minimal credit risks
and which are rated in the highest short-term rating category for debt
obligations by at least two nationally recognized statistical rating
organizations ("NRSRO") (or one NRSRO if the instrument was rated only by one
such organization) or, if unrated, are of comparable quality as determined in
accordance with procedures established by the Board of Trustees.. If a security
is backed by an unconditional demand feature, the issuer of the demand feature
rather than the issuer of the underlying security may be relied upon in
determining whether the foregoing criteria have been met. Securities in which
the Fund invests may not earn as high a level of current income as long-term or
lower quality securities.
The Fund's investment objective is to seek to provide maximum current
income consistent with maximum safety of principal and maintenance of liquidity.
The Fund seeks to achieve its objective by investing in obligations issued by
the U.S. Treasury, including U.S. Treasury bills, bonds and notes, which differ
principally only in their interest rates, maturities and dates of issuance. The
Fund does not purchase securities issued or guaranteed by agencies or
instrumentalities of the United States Government, nor does it enter into
repurchase agreements. The dollar weighted average maturity of the Fund will be
90 days or less. Although the Fund seeks to be fully invested, at times it may
hold uninvested cash reserves, which would adversely affect its yield.
Interest on United States Treasury obligations is exempt from state and
local income taxes under federal law; the interest is not exempt from federal
income tax. However, shareholders of the 100% U.S. Treasury Fund do not directly
receive interest on United States Treasury obligations, but rather receive
dividends from the 100% U.S. Treasury Fund that are derived from such interest.
Although many states allow the character of the 100% U.S. Treasury Fund's income
to pass through to its shareholders, certain states do not, so that
distributions from the 100% U.S. Treasury Fund derived from interest that is
exempt from state and local income taxes when received directly by a taxpayer
may not be exempt from such taxes when earned as a dividend by a shareholder of
the 100% U.S. Treasury Fund. Shareholders of the 100% U.S. Treasury Fund should
consult their tax advisers as to state and local consequences of investment in
the Fund.
Although the Fund's investment objective may not be changed without
shareholder approval, such approval is not required to change any of the other
investment policies discussed above or below under "Additional Information on
Investment Policies and Techniques."
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND TECHNIQUES
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet redemptions. A reverse
repurchase agreement involves the sale of money market securities held by the
Fund with an agreement to repurchase the securities at an agreed-upon price,
date and interest payment. Reverse repurchase agreements have the same
characteristics as borrowing by the Fund. During the time a reverse repurchase
agreement is outstanding, the Fund will maintain a segregated custodial account
containing U.S. Government or other appropriate high-quality debt securities
having a value equal to the repurchase price. 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 Fund's securities transferred may decline below the price at which the Fund
is obliged to repurchase the securities. Further, because a reverse repurchase
agreement entered into by the Fund constitutes borrowing, it may have a
leveraging effect.
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<PAGE>
WHEN-ISSUED OR FORWARD DELIVERY PURCHASES.
The Fund may purchase new issues of securities in which it is permitted
to invest on a "when-issued" or, with respect to existing issues, on a "forward
delivery" basis, which means that the securities will be delivered at a future
date beyond the customary settlement time. There is no limit as to the amount of
the commitments which may be made by the Fund to purchase securities on a
"when-issued" or "forward delivery" basis. The Fund does not pay for such
obligations or start earning interest on them until the contractual settlement
date. Although commitments to purchase "when-issued" or "forward delivery"
securities will only be made with the intention of actually acquiring them,
these securities may be sold before the settlement date if deemed advisable by
the SubAdviser.
While it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a "when-issued" or "forward
delivery" basis can involve more risk than other types of purchases and have the
effect of leveraging. For example, when the time comes to pay for a
"when-issued" or "forward delivery" security, the Fund's securities may have to
be sold in order to meet payment obligations, and a sale of securities to meet
such obligations carries with it a greater potential for the realization of
capital gain, which is not tax-exempt. Also, if it is necessary to sell the
"when-issued" or "forward delivery" security before delivery, the Fund may incur
a loss because of market fluctuations since the time the commitment to purchase
the "whenissued" or "forward delivery" security was made. Any gain resulting
from any such sale would not be tax-exempt. For additional information
concerning these risks and other risks associated with the purchase of
"whenissued" or "forward delivery" securities as well as other aspects of the
purchase of securities on a "when-issued" or "forward delivery" basis, see
"Investment Objectives, Policies and Restrictions -- Investment Policies:
WhenIssued and Forward Delivery Purchases" in the Statement of Additional
Information.
No income accrues to the purchase of a security on a firm commitment
basis prior to delivery. Purchasing a security on a firm commitment basis can
involve a risk that the market price at the time of delivery may be lower than
the agreed upon purchase price, in which case there could be an unrealized loss
at the time of delivery.
The Fund will establish a segregated account in which it will maintain
assets in an amount at least equal in value to the Fund's commitments to
purchase securities on a firm commitment basis. If the value of these assets
declines, the Fund will place additional liquid assets in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.
STAND-BY COMMITMENTS
The Fund may enter into put transactions, including transactions
sometimes referred to as stand-by commitments, with respect to U.S. Government
securities held in its portfolio. In a put transaction, the Fund acquires the
right to sell a security at an agreed-upon price within a specified period prior
to its maturity date, and a stand-by commitment entitles the Fund to same-day
settlement and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise. In
the event that the party obligated to purchase the underlying security from the
Fund defaults on its obligation to purchase the underlying security, then the
Fund might be unable to recover all or a portion of any loss sustained from
having to sell the security elsewhere. Acquisition of puts will have the effect
of increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities. For further information
concerning stand-by commitments, see "Investment Objectives, Policies and
Restrictions -- Investment Policies:
Stand-by Commitments" in the Statement of Additional Information.
PORTFOLIO SECURITIES LENDING
Although the Fund does not anticipate engaging in such activity in the
ordinary course of business, the Fund may lend portfolio 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
its total assets. In connection with such loans, the Fund will receive
collateral consisting of cash, cash equivalents, U.S.
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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 102% of the current market value of the securities loaned plus
accrued interest. The Fund can earn income through the investment of such
collateral. The Fund continues to be entitled to the interest payable on a
loaned security and, in addition, receive interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. The Fund might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund. The risk 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 Adviser or SubAdviser to be of good standing and will not be made
unless, in the judgment of the investment Adviser or SubAdviser, the
consideration to be earned from such loans justifies the risk.
The foregoing investment policies and activities are not fundamental
and may be changed by the Board of Trustees of the Trust without the approval of
shareholders. For more detailed descriptions of certain of the Fund's investment
activities, see "Investment Policies -- Additional Investment Activities" in the
Statement of Additional Information.
PORTFOLIO MANAGEMENT AND TURNOVER
It is intended that the portfolio of the Fund will be fully managed by
buying and selling securities, as well as holding securities to maturity. In
managing the portfolio of the Fund, the Sub-Adviser seeks to take advantage of
market developments, yield disparities and variations in the creditworthiness of
issuers. For a description of the strategies that may be used by the Sub-Adviser
in managing the portfolio of the Fund, which may include adjusting the average
maturity of a portfolio in anticipation of a change in interest rates, see
"Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Management" in the Statement of Additional Information.
Generally, the primary consideration in placing portfolio securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Since money market instruments are generally
purchased in principal transactions, the Fund rarely pays brokerage commissions.
For a complete discussion of portfolio transactions and brokerage allocation,
see "Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Transactions and Brokerage Allocation" in the Statement of Additional
Information.
EFFECT OF RULE 2a-7 ON PORTFOLIO MANAGEMENT
The portfolio management of the Fund is intended to comply with the
provisions of Rule 2a-7 under the 1940 Act (the "Rule") under which, if a Fund
meets certain conditions, it may use the "amortized cost" method of valuing its
securities. Under the Rule, the maturity of an instrument is generally
considered to be its stated maturity (or in the case of an instrument called for
redemption, the date on which the redemption payment must be made), with special
exceptions for certain kinds of instruments. Repurchase agreements and
securities loan agreements are, in general, treated as having a maturity equal
to the period remaining until they can be executed.
In accordance with the provisions of the Rule, the Fund must: (i)
maintain a dollar weighted average portfolio maturity (see above) not in excess
of 90 days, (ii) limit its investments to those instruments which are
denominated in U.S. dollars, which the Board of Trustees determines present
minimal credit risks, and which are of "high quality" as determined by at least
two major rating services; or, in the case of any instrument that is split-rated
or not rated, of comparable quality as determined by the Board; and (iii) not
purchase any instruments with a remaining maturity (see above) or more than 397
days. The Rule also contains special provisions as to the maturity of variable
rate and floating rate instruments.
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MANAGEMENT OF THE FUND
THE ADVISER
The Chase Manhattan Bank, N.A. manages the assets of the Fund pursuant
to an Investment Advisory Agreement. Subject to such policies as the Board of
Trustees may determine, Chase makes investment decisions for the Fund. For its
services under the Investment Advisory Agreement, Chase is entitled to receive
an annual fee computed daily and paid monthly at an annual rate equal to 0.10%
of the Fund's average daily net assets. However, Chase may, from time to time,
voluntarily waive all or a portion of its fees payable under the Investment
Advisory Agreement.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, is a commercial bank offering a
wide range of banking and investment services to customers throughout the United
States and around the world. Its headquarters is at One Chase Manhattan Plaza,
New York, NY 10081. The Adviser, including its predecessor organizations, has
over 100 years of money management experience. Also included among the Adviser's
accounts are commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives.
On August 27, 1995, The Chase Manhattan Corporation announced its entry
into an Agreement and Plan of Merger (the "Merger Agreement") with Chemical
Banking Corporation ("Chemical"), a bank holding company, pursuant to which The
Chase Manhattan Corporation will merge with and into Chemical (the "Holding
Company Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors of each holding company has
approved the Holding Company Merger, which will create the second largest bank
holding company in the United States based on assets. The consummation of the
Holding Company Merger is subject to certain closing conditions. On December 11,
1995, the respective shareholders of The Chase Manhattan Corporation and
Chemical voted to approve the Holding Company Merger. The Holding Company Merger
is expected to be completed on or about March 31, 1996.
Subsequent to the Holding Company Merger, it is expected that the
adviser to the Funds, The Chase Manhattan Bank, N.A., will be merged with and
into Chemical Bank. a New York State chartered bank ("Chemical Bank") (the "Bank
Merger" and together with the Holding Company Merger, the "Mergers"). The
surviving bank will continue operations under the name The Chase Manhattan Bank
(as used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and
its successor in the Bank Merger, and the term "Adviser" means Chase (including
its successor in the Bank Merger) in its capacity as investment adviser to the
Fund). The consummation of the Bank Merger is subject to certain closing
conditions, including the receipt of certain regulatory approvals. The Bank
Merger is expected to occur in July 1996.
Chemical is a publicly owned bank holding company incorporated under
Delaware law and registered under the Federal Bank Holding Company Act of 1956,
as amended. As of December 31, 1995, through its direct or indirect
subsidiaries, Chemical managed more than $57 billion in assets, including
approximately $6.9 billion in mutual fund assets in 11 mutual fund portfolios.
Chemical Bank is a wholly owned subsidiary of Chemical and is a New York State
chartered bank.
THE SUB-ADVISER
Under the investment advisory agreement between the Trust, on behalf of
the Fund, and Chase, Chase may delegate a portion of its responsibilities to a
sub-adviser. In addition, the investment 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 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.
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Chase has entered into an investment sub-advisory agreement with its
affiliate, CAM Inc., a registered investment adviser, on behalf of the Fund. The
Sub-Adviser is a wholly-owned subsidiary of Chase. Subject to the supervision
and direction of the Adviser and the Board of Trustees, CAM Inc. provides
investment subadvisory services to the Fund in accordance with the Fund's
objectives and policies, makes investment decisions for the Fund and places
orders to purchase and sell securities on behalf of the Fund. The Sub-Advisory
Agreement provides that, as compensation for services, the Sub-Adviser receives,
from the Adviser, a fee, based on the Fund's average daily net assets,
determined at a rate agreed upon from time to time between the Adviser and CAM
Inc.
CAM Inc. is a wholly-owned operating subsidiary of Chase, and upon
consummation of the Bank Merger, will be a wholly-owned operating subsidiary of
the Adviser. CAM Inc. is registered with the Commission as an investment adviser
and was formed for the purpose of providing discretionary investment advisory
services to institutional clients and to consolidate Chase's investment
management function, and the same individuals who serve as portfolio managers
for CAM Inc. also serve as portfolio managers for Chase. CAM Inc.
is located at 1211 Avenue of the Americas, New York, New York 10036.
CERTAIN RELATIONSHIPS AND ACTIVITIES. Chase and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of the Fund, including outstanding loans to such
issuers which may be repaid in whole or in part with the proceeds of securities
so purchased. Chase and its affiliates deal, trade and invest for their own
accounts in U.S. Treasury obligations and are among the leading dealers of
various types of U.S. Treasury obligations. Chase and its affiliates may sell
U.S. Treasury obligations to, and purchase them from, other investment companies
sponsored by the Distributor or affiliates of the Distributor. The Adviser will
not invest any Fund assets in any U.S. Treasury obligations purchased from
itself or any affiliate, although under certain circumstances such securities
may be purchased from other members of an underwriting syndicate in which the
Adviser or an affiliate is a non-principal member. This restriction may limit
the amount or type of U.S. Treasury obligations available to be purchased on
behalf of the Fund. The Adviser has informed the Fund that in making its
investment decisions, it does not obtain or use material inside information in
the possession of any other division or department of such Adviser or in the
possession of any affiliate of such Adviser, including the division of Chase
that performs services for the Trust as Custodian. Shareholders of the Fund
should be aware that, subject to applicable legal or regulatory restrictions,
Chase and its affiliates may exchange among themselves certain information about
the shareholders and their accounts.
ADMINISTRATOR
Pursuant to an administration agreement, dated April 15, 1994 (the
"Administration Agreement"), Chase serves as Administrator of the Trust. The
Administrator provides certain administrative services, including, among other
responsibilities, coordinating relationships with independent contractors and
agents; preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations excluding those of
the securities laws of the various states; arranging for the maintenance of
books and records; and providing office facilities necessary to carry out its
duties. For these services and facilities, the Administrator is entitled to
receive from the Fund a fee computed daily and paid monthly at an annual rate
equal to 0.05% of the Fund's average daily net assets. However, the
Administrator may, from time to time, voluntarily waive all or a portion of its
fees payable under the Administration Agreement. The Administrator, pursuant to
the terms of the Administration Agreement, shall not have any responsibility or
authority for the Fund's investments, the determination of investment policy, or
for any matter pertaining to the distribution of Fund shares.
REGULATORY MATTERS. Banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of Governors of the
Federal Reserve System, prohibit a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, or any affiliate thereof from
sponsoring, organizing, controlling, or distributing the shares of a registered,
open-end investment company continuously engaged in the issuance of its shares,
and prohibit banks generally from issuing, underwriting, selling or distributing
securities, but do not prohibit such a bank holding company or affiliate from
acting as investment adviser, administrator, transfer agent, or custodian to
such an investment company or from purchasing shares of such a company as agent
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<PAGE>
for and upon the order of a customer. The Adviser and the Trust believe that
Chase, CAM, Inc. or any other affiliate of Chase, may perform the investment
advisory, administrative, custody and transfer agency services for the Fund, as
the case may be, described in this Prospectus and that Chase, CAM, Inc., or any
other affiliate of Chase, subject to such banking laws and regulations, may
perform the shareholder services contemplated by this Prospectus without
violation of such banking laws or regulations. However, future changes in legal
requirements relating to the permissible activities of banks and their
affiliates, as well as future interpretations of present requirements, could
prevent Chase, CAM, Inc. or any other affiliate of Chase from continuing to
perform investment advisory, administrative or custody services for the Fund, as
the case may be, or require Chase, CAM, Inc. or any other affiliate of Chase to
alter or discontinue the services provided by it to shareholder of the Funds.
If Chase, CAM, Inc. or any other affiliate of Chase were prohibited
from performing investment advisory, administrative, custody or transfer agency
services for the Fund, as the case may be, it is expected that the Board of
Trustees would recommend to shareholders that they approve new agreements with
another entity or entities qualified to perform such services and selected by
the Board of Trustees. If Chase, CAM, Inc. or any other affiliate of Chase were
required to discontinue all or part of its shareholder servicing activities, its
customers would be permitted to remain the beneficial owners of Fund shares and
alternative means for continuing the servicing of such customers would be
sought. Vista does not anticipate that investors would suffer any adverse
financial consequences as a result of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state laws.
Based on the advice of its counsel, Chase believes that the court's
decision, and these other decisions of federal banking regulators, permit it to
serve as investment adviser to a registered, open-end investment company.
Regarding the performance of shareholder servicing and custodial
activities, the staff of the Office of the Comptroller of the Currency, which
supervises national banks, has issued opinion letters stating that national
banks may engage in shareholder servicing and custodial activities. Therefore,
Chase believes, based on advice of its counsel, that it may serve as shareholder
servicing agent to the Fund and render the services described in the shareholder
servicing agreements, and Chase believes, based on advice of its counsel, that
it may serve as Custodian to the Trust and render the services set forth in the
Custodian Agreement, as appropriate, incidental national banking functions and
as proper adjunct to its serving as investment adviser and administrator to the
Fund.
Industry practice and regulatory decisions also support a bank's
authority to act as administrator for a registered investment company. Chase, on
the advice of its counsel, believes that it may render the services described in
its Administration Agreement without violating the Glass-Steagall Act or other
applicable banking laws.
Possible future changes in federal law or administrative or judicial
interpretations of current or future law, however, could prevent Chase from
continuing to perform investment advisory, shareholder servicing, custodian or
other administrative services for the Fund. If that occurred, the Trust's Board
of Trustees promptly would seek to obtain for the Fund the services of another
qualified adviser, shareholder servicing agent, custodian or administrator, as
necessary. Although no assurances can be given, the Trust believes that, if
necessary, the switch to a new adviser, shareholder servicing agent, custodian
or administrator could be accomplished without undue disruption to the Funds'
operations.
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PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
The Premier Shares are continuously offered for sale without a sales
load at the net asset value next determined through VBDS after an order is
received and accepted by the Transfer Agent, provided it is transmitted prior to
12:00 noon, Eastern time on any business day during which the New York Stock
Exchange and the Adviser are open for trading ("Fund Business Day"). (See "Other
Information Concerning Shares of the Fund--Net Asset Value"). Orders for Premier
Shares received and accepted prior to the above designated times will be
entitled to all dividends declared on such day. The minimum initial purchase is
$100,000. Shareholders must maintain a minimum account balance of $100,000 in
the Premier Shares at all times. It is anticipated that the Premier Shares net
asset value will remain constant at $1.00 per share and the Fund will employ
specific investment policies and procedures to accomplish this result. Shares
are being offered to customers of a Shareholder Servicing Agent (i.e., a
financial institution, such as a federal or state-chartered bank, trust company
or savings and loan association that has entered into a shareholder servicing
agreement with the Fund) or to customers of brokers or certain financial
institutions which have entered into Selected Dealer Agreements with VBDS. An
investor may purchase Vista Premier Shares by authorizing his Shareholder
Servicing Agent, broker or financial institution to purchase such Shares on his
behalf through the Distributor, which the Shareholder Servicing Agent, broker or
financial institution must do on a timely basis. All share purchases must be
paid for in U.S. dollars, and checks must be drawn on U.S. banks. In the event a
check used to pay for shares purchased is not honored by the bank on which it is
drawn, the purchase order will be canceled and the shareholder will be liable
for any losses or expenses incurred by the Fund or its agents.
All purchases made by check should be in U.S. dollars and made payable
to the Vista Funds. Third party checks, except those payable to an existing
shareholder who is a natural person (as opposed to a corporation or
partnership), credit cards and cash will not be accepted. When purchases are
made by check or periodic automatic investment, redemptions will not be allowed
until the investment being redeemed has been in the account for 15 business
days.
Shareholder Servicing Agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Premier Shares, such as pre-authorized or systematic purchase and redemption
programs and "sweep" checking programs. Each Shareholder Servicing Agent may
establish its own terms, conditions and charges, including limitations on the
amounts of transactions, with respect to such services. Charges for these
services may include fixed annual fees, transaction fees, account maintenance
fees and minimum account balance requirements. The effect of any such fees will
be to reduce the yield on the investment of customers of that Shareholder
Servicing Agent. Conversely, certain Shareholder Servicing Agents may (although
they are not required by the Fund to do so) credit to the accounts of their
customers from whom they are already receiving other fees an amount not
exceeding the fees for their services as Shareholder Servicing Agents (see
"Shareholder Servicing Agents, Transfer Agent and Custodian - Shareholder
Servicing Agents"), which will have the effect of increasing the yield on the
investment of customers of that Shareholder Servicing Agent. Shareholder
Servicing Agents may also increase or reduce the minimum dollar amount; required
to invest in the Fund and waive any applicable holding periods.
The Fund intends to be as fully invested at all times as is reasonably
practicable in order to enhance the yield on its assets. Accordingly, in order
to make investments which will immediately generate income, the Fund must have
federal funds available to it (i.e., monies credited to the account of the
Fund's custodian bank by a Federal Reserve Bank). Each Shareholder Servicing
Agent has agreed to provide each of the Premier Shares with federal funds for
each purchase at the time it transmits the order for such purchase to the
Distributor. Therefore, each shareholder and prospective investor should be
aware that if he does not have sufficient funds on deposit with, or otherwise
immediately available to, his Shareholder Servicing Agent, there may be a delay
in transmitting and effecting his purchase order since his Shareholder Servicing
Agent will have to convert his check, bank draft, money order or similar
negotiable instrument into federal funds prior to effecting the purchase order.
In such case, the purchase order will be effected at the purchase price per
share next determined after the
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<PAGE>
conversion to federal funds has been accomplished. If such a delay is necessary,
it is expected that in most cases it would not be longer than two business days.
The Premier Shares reserves the right to cease offering shares for sale
at any time, to reject any order for the purchase of shares and to cease
offering any services provided by a Shareholder Servicing Agent. Fund shares
will be maintained in book entry form, and no certificates representing shares
owned will be issued to shareholders.
For further information as to how to direct a Shareholder Servicing
Agent to purchase shares of the Fund, an investor should contact his or her
Shareholder Servicing Agent.
SYSTEMATIC INVESTMENT PLAN. Shareholders may establish a monthly
investment plan by which investments are automatically made to his/her Vista
Fund account through Automatic Clearing House (ACH) deductions from a checking
account. The minimum monthly investment through this plan is $100. Shareholders
may choose either to have these investments made during the first or third week
each month. Please note that your initial ACH transactions may take up to 10
days from the receipt of your request to be established.
Shareholders electing to start this Systematic Investment Plan when
opening an account should complete Section 8 of the account application. Current
shareholders may begin a Systematic Investment Plan at any time by sending a
signed letter with signature guarantee to the Vista Service Center, P.O. Box
419392, Kansas City, MO 64141-6492. The letter should contain your Vista Fund
account number, the desired amount and cycle of the systematic investment, and
must include a voided check from the checking account from which debits are to
be made. A signature guarantee may be obtained from a bank, trust company,
broker-dealer or other member of the national securities exchange. Please note
that notaries public cannot provide signature guarantees.
REDEMPTIONS
A shareholder may redeem all or any portion of the shares in his
account on any Fund Business Day at the net asset value next determined after a
redemption request in proper form is furnished by the shareholder to his
Shareholder Servicing Agent and transmitted by it to and received by a Fund's
Transfer Agent. Therefore, redemptions will be effected on the same day the
redemption order is received only if such order is received prior to 12:00 noon,
Eastern time on any Fund Business Day. Shares which are redeemed earn dividends
up to and including the day prior to the day the redemption is effected. The
proceeds of a redemption normally will be paid on the Fund Business Day the
redemption is effected, but in any event within seven days. The forwarding of
proceeds from redemption of shares which were recently purchased by check may be
delayed until the purchase check has cleared, which may take up to fifteen days.
Similarly, the forwarding of proceeds from redemption of shares which were
purchased by Automatic Clearing House transfer may be delayed up to seven days.
A shareholder who is a customer of a Shareholder Servicing Agent may redeem his
Premier Shares by authorizing his Shareholder Servicing Agent or its agent to
redeem such shares, which the Shareholder Servicing Agent or its agent must do
on a timely basis.
The signature of both shareholders is required for any written
redemption requests (other than those by check) from a joint account. In
addition, a redemption request may be deferred for up to 15 calendar days if the
Transfer Agent has been notified of a change in either the address or the bank
account registration previously listed in the Fund records.
The value of shares of the Fund redeemed may be more or less than the
shareholder's cost, depending on portfolio performance during the period the
shareholder owned his shares. Redemption of shares are taxable events on which
the shareholder may recognize a gain or loss. Although the Fund generally
retains the right to pay the redemption price of shares in kind with securities
(instead of cash), the Trust has filed an election under Rule 18f-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") committing to pay in
cash all redemptions by a shareholder of record up to the amounts specified in
the rule (approximately $250,000).
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The payment of redemption requests may be wired or mailed directly to a
previously designated domestic commercial bank account. However, all telephone
redemption requests in excess of $25,000 will be wired directly to such
previously designated bank account, for the protection of shareholders.
Normally, redemption payments will be transmitted on the next business day
following receipt of the request (provided it is made prior to 12:00 noon,
Eastern time. Redemption payments requested by telephone may not be available in
a previously designated bank account for up to four days. If no share
certificates have been issued, a wire redemption may be requested by telephone
or wire to the Vista Service Center. For telephone redemptions, call the Vista
Service Center at (800) 34-VISTA.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such exchange is restricted or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists. Payment may
also be delayed on days when the Federal Reserve Bank is closed.
AUTOMATIC REDEMPTION PLAN. A shareholder owning $10,000 or more of the
shares of a Fund as determined by the then current net asset value may provide
for the payment monthly or quarterly of any requested dollar amount (subject to
limits) from his account to his order. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is received on
approximately the 1st or 15th day of the month following the end of the selected
payment period.
EXCHANGE PRIVILEGES
Shareholders of the Premier Shares of the Fund may exchange at relative
net asset value among the Premier Shares offered by Vista's other money market
funds, and may exchange at relative net asset value plus any applicable sales
charges among certain classes of shares of portfolios of Mutual Fund Group
("MFG"), an affiliated investment company, of which Chase is the advisor and
VBDS is the distributor, in accordance with the terms of the then-current
prospectus of the Fund being acquired. The prospectus of the Vista Fund into
which shares are being exchanged should be read carefully prior to any exchange
and retained for future reference. With respect to exchanges into a fund which
charges a front-end sales charge, such sales charge will not be applicable if
the shareholder previously acquired his Premier Shares by exchange from such
fund. Under the Exchange Privilege, Shares of a Fund may be exchanged for shares
of other funds of the Trust or MFG only if those Funds are registered in the
states where the exchange may legally be made. In addition, the account
registration for the Vista Fund (whether a Fund of the Trust or MFG) into which
shares of the Fund are being exchanged must be identical to that of the account
registration for the Fund from which shares are being redeemed. 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 Date, but such purchase may be delayed by either fund up to five
business days if the fund determines that it would be disadvantaged by an
immediate transfer of the proceeds. This privilege my be amended or terminated
at any time without notice. Arrangements have been made for the acceptance of
instructions by telephone to exchange shares if certain preauthorizations or
indemnifications are accepted and on file. Further information and telephone
exchange forms are available from Vista Service Center.
MARKET TIMING. The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In order to limit
excessive exchange activity and other circumstances where the Trustees, or
Adviser believes doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving a Fund in a
year or three in a calendar quarter will be charged $5.00 administration fee per
each such exchange.
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GENERAL
REORGANIZATION WITH PREDECESSOR FUND. The Fund has been established to
receive all the assets of The Hanover 100% U.S. Treasury Securities Money Market
Fund series of The Hanover Funds, Inc. (the "Predecessor Fund"). Subject to
approval by the shareholders of the Predecessor Fund, the Predecessor Fund will
transfer all its assets and liabilities to the Fund in exchange for Vista shares
of the Fund, which will be distributed pro rata to shareholders of the
Predecessor Fund, who will become shareholders of the Fund (the
"Reorganization"). The Predecessor Fund will cease operations after the
Reorganization. The Fund will have no assets and will not begin operations until
the Reorganization occurs.
The Fund has established certain procedures and restrictions, subject
to change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Fund's Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in this Prospectus are not available
until a completed and signed account application has been received by the Fund's
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. To provide evidence of
telephone instructions, the Transfer Agent will record telephone conversations
with shareholders. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. In the event the Fund does
not employ such procedures, it may be liable for losses due to unauthorized or
fraudulent instructions.
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, the Fund or its agents are authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming shares of the Fund and depositing and withdrawing
monies from the bank account specified in the Bank Account Registration section
of the shareholder's latest account application or as otherwise properly
specified to the Fund in writing. Shareholders agree to release and hold
harmless the Fund, the Adviser, the Administrator, any Shareholder Servicing
Agent or sub-agent and broker-dealer, and the officers, directors, employees and
agents thereof against any claim, liability, loss, damage and expense for any
act or failure to act in connection with Fund shares, any related investment
account, any privileges or services selected in connection with such investment
account, or any written or oral instructions or requests with respect thereto,
or any written or oral instructions or requests from someone claiming to be a
shareholder if the Fund or any of the above-described parties follow
instructions which they reasonably believe to be genuine and act in good faith
by complying with the reasonable procedures that have been established for Fund
accounts and services.
Shareholders purchasing their shares through a Shareholder Servicing
Agent may not assign, transfer or pledge any rights or interest in any Fund
shares or any investment account established with a Shareholder Servicing Agent
to any other person without the prior written consent of such Shareholder
Servicing Agent, and any attempted assignment, transfer or pledge without such
consent may be disregarded.
The Fund may also establish and revise, from time to time, account
minimums and transactions or amount restrictions on purchases, exchanges,
redemptions, checkwriting services, or other transactions permitted in
connection with shareholder accounts. The Fund may also 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 the bank
account specified in the Bank Account Registration, or for any written requests
for additional account services made after a shareholder has submitted an
initial account application to the Fund. The Fund may refuse to accept or carry
out any transaction that does not satisfy any restrictions then in effect.
.
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<PAGE>
TAX MATTERS
The following discussion is addressed primarily to individual investors
and is for general information only. A prospective investor, including a
corporate investor, should also review the more detailed discussion of federal
income tax considerations that is contained in the Statement of Additional
Information. In addition, each prospective investor should consult with his own
tax advisers as to the tax consequences of an investment in the Fund, including
the status of distributions from the Fund in his own state and locality.
The Fund intends to qualify each year and elect to be treated as a
separate "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If the Fund is treated as a
"regulated investment company" and all its taxable income, if any, is
distributed to its shareholders in accordance with the timing requirements
imposed by the Code, it will not be subject to federal income tax on amounts so
distributed. If for any taxable year the Fund does not qualify for the treatment
as a regulated investment company, all of its taxable income will be subject to
tax at regular corporate rates without any deduction for distributions to its
shareholders, and such distributions to shareholders will be taxable to the
extent of the Fund's current and accumulated earnings and profits.
The Trust is organized as a Massachusetts business trust and, under
current law, is not liable for any income or franchise tax in the Commonwealth
of Massachusetts as long as the Fund (and each other series of the Trust)
qualifies as a regulated investment company under the Code.
Distributions by the Fund of its taxable ordinary income (net of
expenses) and the excess, if any, of its net short-term capital gain over its
net long-term capital loss are generally taxable to shareholders as ordinary
income. Such distributions are treated as dividends for federal income tax
purposes, but do not qualify for the dividends-received deduction for
corporations. Distributions by a Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gains, regardless of the length of time a shareholder has held his shares. The
Fund will seek to avoid recognition of capital gains.
Distributions to shareholders will be treated in the same manner for
federal income tax purposes whether received in cash or reinvested in additional
shares of a Fund. In general, distributions by a Fund are taken into account by
shareholders in the year in which they are made. However, certain distributions
made during January will be treated as having been paid by the Fund and received
by the shareholders on December 31 of the preceding year. A statement setting
forth the federal income tax status of all distributions made (or deemed made)
during the fiscal year, including any portions which constitute ordinary income
dividends, capital gain dividends and exempt-interest dividends, will be sent to
the Fund's shareholders promptly after the end of each year.
Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on distributions and
redemption payments made by the Fund. Generally, shareholders are subject to
backup withholding if they have not provided the Fund with a correct taxpayer
identification number and certain required certifications.
Shareholders of the Fund will be subject to federal income tax on the
ordinary income dividends and any capital gain dividends from the Fund and may
also be subject to state and local taxes. The laws of some states and
localities, however, exempt from some taxes dividends such as those paid on
shares of the U.S. Government Fund to the extent such dividends are attributable
to interest on obligations of the and certain of its agencies and
instrumentalities. The Fund intends to advise its shareholders of the proportion
of their ordinary income dividends which are attributable to such interest.
The State of New York, for example, exempts from its personal income
tax dividends such as those paid on shares of the Fund to the extent such
dividends are attributable to interest from obligations of the U.S. Government
and certain of its agencies and instrumentalities, provided that at least 50% of
the Fund's portfolio consists of such obligations and the Fund complies with
certain notice requirements. The New York State Department of Taxation and
Finance (like most other states) currently takes the position, however, that
certain
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<PAGE>
obligations backed by the full faith and credit of the U.S. Treasury, such as
GNMA Certificates and repurchase agreements backed by any U.S. Government
obligation, do not constitute exempt obligations of the U.S. Government. (UNDER
PRESENT MARKET CONDITIONS, IT IS EXPECTED THAT LESS THAN 50% OF THE FUND'S
PORTFOLIO WILL CONSIST OF OBLIGATIONS WHICH THE NEW YORK STATE DEPARTMENT OF
TAXATION AND FINANCE VIEWS AS EXEMPT. ACCORDINGLY, IT IS LIKELY THAT NO PORTION
OF THE DIVIDENDS PAID ON SHARES OF THE FUND WILL BE EXEMPT FROM NEW YORK STATE
PERSONAL INCOME TAX.)
Shareholders are urged to consult their tax advisers regarding the
possible exclusion from state and local income tax of a portion of the dividends
paid on shares of the Fund which is attributable to interest from obligations of
the U.S. Government and its agencies and instrumentalities
OTHER INFORMATION CONCERNING SHARES OF THE FUND
NET ASSET VALUE
The net asset value of the Shares of the Fund is determined as of 12:00
noon, Eastern time on each Fund Business Day, by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities, including expenses payable or accrued) by the number of its shares
outstanding at the time the determination is made. The portfolio securities of
the Fund are valued at their amortized cost pursuant to Rule 2a-7 under the 1940
Act, certain requirements of which are summarized under "Additional Information
on Investment Policies and Techniques." This method increases stability in
valuation, but may result in periods during which the stated value of a
portfolio security is higher or lower than the price the Fund would receive if
the instrument were sold. It is anticipated that the net asset value of each
share will remain constant at $1.00 and the Fund will employ specific investment
policies and procedures to accomplish this result, although no assurance can be
given that they will be able to do so on a continuing basis. These procedures
include a review of the extent of any deviation of net asset value per share,
based on available market rates, from the $1.00 amortized cost price per share,
and consideration of certain actions before such deviation exceeds 1/2 of 1%.
Income earned on the Fund's investments is accrued daily and the Net Income, as
defined under "Distributions and Dividends" below, is declared each Fund
Business Day as a dividend. See "Determination of Net Asset Value" in the
Statement of Additional Information for further information regarding
determination of net asset value and the procedures to be followed to stabilize
the net asset value at $1.00 per share.
DISTRIBUTIONS AND DIVIDENDS
The net income of the Premier Shares is determined each Fund Business
Day (and on such other days as the Trustees deem necessary in order to comply
with Rule 22c-1 under the 1940 Act). This determination is made once during each
such day as of 12:00 noon, Eastern time. All the net income, as defined below,
of the Premier Shares so determined is declared in shares as a dividend to
shareholders of record at the time of such determination. Shares begin accruing
dividends on the day they are purchased. Dividends are distributed monthly on or
about the last business day of each month (or on such other date in each month
as the shareholder's Shareholder Servicing Agent may designate as the dividend
distribution date with respect to a particular shareholder). Unless a
shareholder elects to receive dividends in cash (subject to the policies of the
shareholder's Shareholder Servicing Agent), dividends are distributed in the
form of additional shares at the rate of one share (and fractions thereof) for
each one dollar (and fractions thereof) of dividend income.
For this purpose, the net income of the Premier Shares (from the time
of the immediately preceding determination thereof) shall consist of all income
accrued, including the accretion of discounts less the amortization of any
premium on the portfolio assets of the Fund, less all actual and accrued
expenses determined in accordance with generally accepted accounting principles.
As noted above, securities are valued at amortized cost, which the Trustees have
determined in good faith constitutes fair value for the purposes of complying
with the 1940 Act. This valuation method will continue to be used until such
time as the Trustees determine that it does not constitute fair value for such
purposes.
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<PAGE>
Since the net income of the Premier Shares is declared as a dividend
each time its net income is determined, the net asset value per share (i.e., the
value of its net assets divided by the number of its shares outstanding) is
expected to remain at $1.00 per share immediately after each such determination
and dividend declaration. Any increase in the value of a shareholder's
investment, representing the reinvestment of dividend income, is reflected by an
increase in the number of shares in his account.
It is expected that the Premier Shares will have a positive net income
at the time of each determination thereof. If for any reason the net income
determined at any time is a negative amount, which could occur, for instance,
upon default by an issuer of a portfolio security, the Fund would first offset
the negative amount with respect to each shareholder account from the dividends
declared during the month with respect to each such account. If, and to the
extent that such negative amount exceeds such declared dividends at the end of
the month, the number of outstanding shares will be reduced by treating each
shareholder as having contributed to the capital of the Fund that number of full
and fractional shares in the account of such shareholder which represents his
proportion of the amount of such excess. Each shareholder will be deemed to have
agreed to such contribution in these circumstances by his investment. Thus, the
net asset value per share will be maintained at a constant $1.00.
DISTRIBUTION PLAN AND DISTRIBUTION AND SUB-ADMINISTRATION AGREEMENT
The Trustees have adopted a Distribution Plan ("Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act, after having concluded that there
is a reasonable likelihood that the Distribution Plan will benefit the Fund and
its shareholders.
The Distribution Plan provides that the Fund shall pay distribution
fees (the "Basic Distribution Fee"), including payments to the Distributor, at
an annual rate not to exceed .10% of the average daily net assets for
distribution services. Since the Basic Distribution Fee is not directly tied to
its expenses, the amount of Basic Distribution Fees paid by each of the Vista
Shares during any year may be more or less than actual expenses incurred
pursuant to the Distribution Plan. 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 such as those described in the next paragraph, by
which a distributor's compensation is directly linked to its expenses). However,
the Vista Shares are not liable for any distribution expenses incurred in excess
of the Basic Distribution Fee paid.
The Distribution and Sub-Administration Agreement dated August 21,
1995, for the Fund (the "Distribution Agreement") provides that the Distributor
will act as the principal underwriter of shares of the Fund and 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. In addition, the Distributor will provide certain sub-administration
services, including providing officers, clerical staff and office space. While
there is no sales load, the Distributor receives a fee from the Fund at an
annual rate equal to 0.05% of the Fund's average daily net assets, on an
annualized basis for the Fund's then-current fiscal year. Other funds which have
investment objectives similar to those of the Fund, but which do not pay some or
all of such fees from their assets, may offer a higher return, although
investors would, in some cases, be required to pay a sales charge or a
redemption fee.
The Distributor has agreed to use a portion of its distribution and
sub-administration fee to pay for certain expenses of the Fund incurred in
connection with organizing new series or classes of the Trust and certain other
ongoing expenses of the Trust. The Distributor may, from time to time, waive all
or a portion of the fees payable to it by the Fund under the Distribution and
Sub-Administration Agreement.
EXPENSES
The Fund intends to pay all of its pro rata share of expenses,
including the compensation of the Trustees; all fees under its Distribution
Plan; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute; fees and expenses of independent accountants, of
legal counsel and of any transfer agent, Shareholder Servicing Agent, or
dividend disbursing agent; expenses of redeeming shares and servicing
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<PAGE>
shareholder accounts; expenses of preparing, printing and mailing prospectuses,
reports, notices, proxy statements and reports to shareholders and to
governmental officers and commissions; expenses connected with the execution,
recording and settlement of portfolio security transactions; insurance premiums;
fees and expenses of the Custodian including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating the net
asset values of the Premier Shares; expenses of shareholder meetings; and the
advisory fees payable to the Adviser under the Investment Advisory Agreement,
the administration fee payable to the Administrator under the Administration
Agreement and the sub-administration fee payable to the Distributor under the
Distribution and Sub-Administration Agreement. Expenses relating to the
issuance, registration and qualification of shares of the Fund and the
preparation, printing and mailing of prospectuses for such purposes are borne by
the Fund except that the Distribution and Sub-Administration Agreement with the
Distributor requires the Distributor to pay for prospectuses which are to be
used for sales to prospective investors.
Pursuant to offering multiple classes of shares, certain expenses of
the Fund are borne by certain classes, either exclusively, or in a manner which
approximates the proportionate value received by the Class as a result of the
expense being incurred.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Mutual Fund Trust is an open-end, management investment company
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts in 1994. The Trust has reserved the right to create and issue
additional series or classes. Each share of a series or class represents an
equal proportionate interest in that series or class with each other share of
that series or class. The shares of each series or class participate equally in
the earnings, dividends and assets of the particular series or class. Expenses
of the Trust which are not attributable to a specific series or class are
allocated among all the series in a manner believed by management of the Trust
to be fair and equitable. Shares have no pre-emptive or conversion rights.
Shares when issued are fully paid and non-assessable, except as set forth below.
Shareholders are entitled to one vote for each whole share held and each
fractional share shall be entitled to a proportionate fractional vote, except
that Trust shares held in the treasury of the Trust shall not be voted. Shares
of each series or class generally vote separately, for example to approve an
investment advisory agreement or distribution plan, but shares of all series and
classes vote together, to the extent required under the 1940 Act, in the
election or selection of Trustees and independent accountants.
Shareholders of the Premier Shares bear the fees and expenses described
in this Prospectus. Similarly, shareholders of the counterpart Vista Shares and
Institutional Shares bear the fees and expenses described in the prospectus for
such classes of Shares. The fees paid by the Premier Shares to the Distributor
and Shareholder Servicing Agent under the distribution plan and shareholder
servicing arrangements for distribution expenses and shareholder services
provided to institutional investors by the Shareholder Servicing Agents are less
than the respective fees paid under distribution plans and shareholder servicing
arrangements adopted for its counterpart Vista Shares. Moreover, the
Institutional Shares pay no fees under distribution plans or shareholder
servicing arrangements.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders of each series or class or of all
series or classes when in the judgment of the Trustees it is necessary or
desirable to submit matters for a shareholder vote. A Trustee of the Trust may,
in accordance with certain rules of the Securities and Exchange Commission, be
removed from office when the holders of record of not less than two-thirds of
the outstanding shares either present a written declaration to the Funds'
Custodian or vote in person or by proxy at a meeting called for this purpose. In
addition, the Trustees will promptly call a meeting of shareholders to remove a
trustee(s) when requested to do so in writing by record holders of not less than
10% of the outstanding shares of the Trust.
Finally, the Trustees shall, in certain circumstances, give such
shareholders access to a list of the names and addresses of all other
shareholders or inform them of the number of shareholders and the cost of
mailing their request. The Trust's Declaration of Trust provides that, at any
meeting of shareholders, a Shareholder Servicing Agent may vote any shares as to
which such Shareholder Servicing Agent is the agent of record and which are
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<PAGE>
otherwise not represented in person or by proxy at the meeting, proportionately
in accordance with the votes cast by holders of all shares of the same 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. Shareholders of each series or class would be
entitled to share pro rata in the net assets of that series or class available
for distribution to shareholders upon liquidation of that series or class.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Code of Ethics of the Trust prohibits all affiliated personnel from
engaging in personal investment activities which compete with or attempt to take
advantage of a Fund's planned portfolio transactions. The objective of the Code
of Ethics is to ensure that the operations of a Fund be carried out for the
exclusive benefit of a Fund's shareholders. The Trust maintains careful
monitoring of compliance with the Code of Ethics. See "General Information" in
the Fund's Statement of Additional Information.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
SHAREHOLDER SERVICING AGENTS
The shareholder servicing agreement with the Shareholder Servicing
Agent provides that such Shareholder Servicing Agent will, as agent for its
customers, perform various services, including but not limited to the following:
answer customer inquiries regarding account status, history, the manner in which
purchases and redemptions of shares may be effected for the Fund or class of
shares as to which the Shareholder Servicing Agent is so acting and certain
other matters pertaining to the Fund or class of shares; assist shareholders in
designating and changing dividend options, account designations and addresses;
provide necessary personnel and facilities to establish and maintain shareholder
accounts and records; assist in processing purchase and redemption transactions;
arrange for the wiring of funds; transmit and receive funds in connection with
customer orders to purchase or redeem shares; verify and guarantee shareholder
signatures in connection with redemption orders and transfers and changes in
shareholder-designated accounts; furnish (either separately or on an integrated
basis with other reports sent to a shareholder by a Shareholder Servicing Agent)
monthly and year-end statements and confirmations of purchases and redemptions;
transmit, on behalf of the Fund or class of shares, proxy statements, annual
reports, updated prospectuses and other communications to shareholders; receive,
tabulate and transmit to the Fund proxies executed by shareholders with respect
to meetings of shareholders of the Fund or class of shares; vote the outstanding
shares of the Fund or class of shares whose shareholders do not transmit
executed proxies or attend shareholder meetings in the same proportion as the
votes cast by other shareholders of the Fund or class represented at the
shareholder meeting 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.
For performing these services, the Shareholder Servicing Agent for the
Premier Shares receives certain fees, which may be paid periodically, determined
by a formula based upon the number of accounts serviced by such Shareholder
Servicing Agent during the period for which payment is being made, the level of
activity in accounts serviced by such Shareholder Servicing Agent during the
period, and the expenses incurred by such Shareholder Servicing Agent. The fees
relating to acting as liaison to shareholders and providing personal services to
shareholders will not exceed, on an annualized basis for the Fund's then-current
fiscal year, .25% for the Premier Shares of the Fund, of the average daily net
assets represented by shares owned during the period for which payment is being
made by investors for whom such Shareholder Servicing Agent maintains a
servicing relationship. Each Shareholder Servicing Agent may, from time to time,
voluntarily waive a portion of the fees payable to it. In addition, Chase may
provide other related services to the Fund for which it may receive
compensation.
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<PAGE>
The Shareholder Servicing Agent, and its affiliates, agents and
representatives acting as Shareholder Servicing Agents, may establish custodial
investment accounts ("Accounts"), known as Chase Investment Accounts or by any
other name designated by a Shareholder Servicing Agent. Through such Accounts,
customers can purchase, exchange and redeem Fund shares, receive dividends and
distributions on Fund investments, and take advantage of any services related to
an Account offered by such Shareholder Servicing Agent from time to time. All
Accounts and any related privileges or services shall be governed by the laws of
the State of New York, without regard to its conflicts of laws provisions.
The Glass-Steagall Act and other applicable laws generally prohibit
federally chartered or supervised banks from publicly underwriting or
distributing certain securities such as the Fund's shares. The Trust, on behalf
of the Funds, will engage banks, including Chase and its affiliates, as
Shareholder Servicing Agents only to perform advisory, custodian, administrative
and shareholder servicing functions as described above. While the matter is not
free from doubt, the management of the Trust believes that such laws should not
preclude a bank, including a bank which acts as investment adviser, custodian or
administrator, or in all such capacities for the Trust, from acting as a
Shareholder Servicing Agent. However, possible future changes in federal law or
administrative or judicial interpretations of current or future law, could
prevent a bank from continuing to perform all or a part of its servicing
activities. If that occurred, the bank's shareholder clients would be permitted
to remain as shareholders and alternative means for continuing the servicing of
such shareholders would be sought. In such event, changes in the operation of
the Fund might occur and a shareholder serviced by such bank might no longer be
able to avail himself of any automatic investment or other services then being
provided by such bank. The Trust does not expect that shareholders would suffer
any adverse financial consequences as a result of these occurrences.
TRANSFER AGENT AND CUSTODIAN
DST Systems, Inc. ("DST") acts as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Trust. In this capacity, DST
maintains the account records of all shareholders in the Fund, including
statement preparation and mailing. DST is also responsible for disbursing
dividend and capital gain distributions to shareholders, whether taken in cash
or additional shares. From time to time, DST and/or the Fund may contract with
other entities to perform certain services for the Transfer Agent. For its
services as Transfer Agent, DST receives such compensation as is from time to
time agreed upon by the Trust and DST. DST's address is 127 W. 10th Street,
Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the Fund for which Chase receives compensation as is from time to time
agreed upon by the Trust and Chase. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on the Fund's investments, maintaining books of original entry for portfolio and
Fund accounting and other required books and accounts, and calculating the daily
net asset value of shares of the Fund. Portfolio securities and cash may be held
by sub-custodian banks if such arrangements are reviewed and approved by the
Trustees. The internal division of Chase which serves as the Trust's Custodian
does not determine the investment policies of the Fund or decide which
securities will be bought or sold on behalf of the Fund or otherwise have access
to or share material inside information with the internal division that performs
advisory services for the Fund.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following
qualified prototype retirement plans: IRA, Rollover IRA, SEP-IRA,
Profit-Sharing, and Money Purchase Pension Plans which can be adopted by
self-employed persons ("Keogh") and by corporations, 401(k), and 403(b)
Retirement Plans. Call or write the Transfer Agent for more information.
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<PAGE>
YIELD AND PERFORMANCE INFORMATION
From time to time, the Premier Shares may use hypothetical investment
examples and performance information in advertisements, shareholder reports or
other communications to shareholders. Because such performance information is
based on historical earnings, it should not be considered as an indication or
representation of the performance of the Premier Shares in the future. From time
to time, the yield of the Premier Shares, as a measure of its performance, 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 other relevant indices or to rankings prepared by
independent services or other financial or industry publications, such as Lipper
Analytical Services, Inc. or the Morningstar Mutual Funds on Disc, that monitor
the performance of mutual funds. In addition, the yield of each of the Premier
Shares may be compared to the Donoghue's Money Fund AveragesTM, compiled in the
Donoghue's Money Fund Report(R), a widely recognized independent publication
that monitors the performance of money market funds. Also, each of the Premier
Shares' yield data may be 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 publications of a local or regional nature. The
Premier Shares may, with proper authorization, reprint articles written about
the Premier Shares and provide them to prospective shareholders.
Premier Shares may provide its annualized "yield" and "effective yield"
to current and prospective shareholders. The "yield" of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period shall be stated in any advertisement or communication with a
shareholder). This income is then "annualized", that is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of investment. The
"effective yield" is calculated similarly, but when annualized the income earned
by the investment during that week is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment.
Unlike some bank deposits or other investments which pay a fixed yield
for a stated period of time, the yield of each of the Premier Shares will vary
based on interest rates, the current market value of the securities held in the
Fund's portfolio and changes in the Fund's and the Shares' expenses. The
Adviser, the Administrator, the Distributor and each Shareholder Servicing Agent
may voluntarily waive a portion of their fees on a month-to-month basis. In
addition, the Distributor may assume a portion of the Fund's operating expenses
on a month-to-month basis. These actions would have the effect of increasing the
net income (and therefore the yield) of the Premier Shares during the period
such waivers of fees or assumptions of expenses are in effect. These factors and
possible differences in the methods used to calculate yields should be
considered when comparing the Premier Shares' yields to those published for
other money market funds and other investment vehicles. A Shareholder Servicing
Agent may charge its customers direct fees in connection with an investment (see
"Purchases and Redemptions of Shares-Purchases") which will have the effect of
reducing the net return on the investment of customers of that Shareholder
Servicing Agent. Conversely, the Premier Shares are 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 (see "Purchases and Redemptions of
Shares-Purchases"), 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. See the Statement of Additional
Information for further information concerning each of the Premier Shares'
calculation of yield.
OTHER INFORMATION
The Statement of Additional Information contains more detailed
information about the Trust and the Fund, including information related to (i)
the Fund's investment policies and restrictions, (ii) risk factors associated
with the Fund's policies and investments, (iii) the Trust's Trustees, officers
and the Administrator, the Adviser and the Sub-Adviser, (iv) portfolio
transactions and brokerage allocation, (v) the Fund's shares, including rights
and liabilities of shareholders, and (vi) additional performance information,
including the method used to
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<PAGE>
calculate yield or total rate of return quotations of the Fund. The audited
financial statements of the Predecessor Fund for its last fiscal year end is
incorporated by reference in the Statement of Additional Information.
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<PAGE>
VISTA^(SM) 100% U.S. TREASURY SECURITIES MONEY MARKET FUND
INSTITUTIONAL SHARES PROSPECTUS -- FEBRUARY 8, 1996
Mutual Fund Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the Commonwealth of
Massachusetts on February 4, 1994, presently consisting of 12 separate series
("Funds"). Under a multi-class distribution system, the money market funds may
be offered through three separate classes of shares (the "Shares"). The
Institutional Shares described in and offered pursuant to this Prospectus, which
are offered only to qualified institutional investors making an initial minimum
investment of $1,000,000, are offered through the Vista 100% U.S. Treasury
Securities Money Market Fund (the "Institutional Shares"). The Premier Shares of
the Fund are offered only to institutional clients and are sold under a separate
prospectus.
THE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND'S (the "100%
U.S. Treasury Fund" or the "Fund") investment objective is to seek maximum
current income consistent with maximum safety of principal and maintenance of
liquidity. The Fund seeks to achieve its objective by investing in obligations
issued by the U.S. Treasury, including U.S. Treasury bills, bonds and notes,
which differ principally only in their interest rates, maturities and dates of
issuance. The Fund does not purchase securities issued or guaranteed by agencies
or instrumentalities of the U.S. Government, nor does it enter repurchase
agreements. Because the Fund invests exclusively in direct United States
Treasury Obligations, investors may benefit from income tax exclusions and
exemptions that are available in certain states and localities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Chase Manhattan Bank, N.A. ("Chase") is the investment adviser (the
"Adviser"), custodian (the "Custodian"), administrator (the "Administrator") and
a Shareholder Servicing Agent for the 100% U.S. Treasury Fund. Chase Asset
Management, Inc. is the investment sub-adviser ("CAM Inc." or the "Sub-Adviser")
for the 100% U.S. Treasury Fund. The parent company of the Adviser, The Chase
Manhattan Corporation has entered an Agreement and Plan of Merger with Chemical
Banking Corporation which, if affected will have certain effects upon the
Adviser, see "Management of the Fund -- The Adviser" on page 5.
Vista Broker-Dealer Services, Inc. ("VBDS") is the Fund's distributor
(the "Distributor") and is unaffiliated with Chase. INVESTMENT IN THE FUND IS
SUBJECT TO RISK -- INCLUDING POSSIBLE LOSS OF PRINCIPAL. SHARES OF THE FUND ARE
NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE
MANHATTAN BANK, N.A. OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY INSURED BY,
OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share. Prospective investors should
carefully consider the risks associated with an investment in the Fund. For a
further discussion on the risks associated with an investment in the Fund, see
"Investment Objectives and Policies" in this Prospectus.
There can be no assurance that the Fund will achieve its investment objective.
The Institutional Shares are continuously offered for sale without a
sales load through VBDS only to qualified institutional investors that make an
initial investment of $1,000,000. Shares may be redeemed by shareholders at the
net asset value next determined on any Fund Business Day as hereinafter defined.
<PAGE>
This Prospectus sets forth concisely information concerning the Fund
and its Institutional Shares that a prospective investor ought to know before
investing. A Statement of Additional Information for the Institutional Shares,
dated February 8, 1996, containing more detailed information about the Fund has
been filed with the Securities and Exchange Commission and is incorporated into
this Prospectus by reference. An investor may obtain a copy of the Statement of
Additional Information for the Institutional Shares without charge by contacting
the Fund.
Investors should read this Prospectus and retain it for future
reference.
For information about the Institutional Shares, simply call the Vista
Service Center at 1-800-34-VISTA.
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<PAGE>
TABLE OF CONTENTS
Expense Summary............................................................ 4
Investment Objectives and Policies......................................... 5
Additional Information on Investment Policies and Techniques............... 5
Management of the Fund..................................................... 8
Purchases and Redemptions of Shares........................................ 11
Tax Matters................................................................ 12
Other Information Concerning Shares of the Fund............................ 14
Transfer Agent and Custodian............................................... 16
Yield and Performance Information.......................................... 17
Other Information.......................................................... 18
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<PAGE>
EXPENSE SUMMARY
The following table provides (i) a summary of the aggregate annual operating
expenses of the Fund, as a percentage of average net assets of the Fund, and
(ii) an example illustrating the dollar cost of such expenses on a $1,000
investment in shares of the Fund.
Institutional
Shares
Annual Fund Operating Expenses
(as a percentage of average net assets)
Investment Advisory Fee............................. .10%
Rule 12b-1 Distribution Plan Fee ...................... .00%
Administrative Fee .................................... .05%
Other Expenses
Sub-Administration Fee.............................. .05%
Servicing Fee ..................................... .00%
Other Operating Expenses+ .......................... .07%
Total Other Expenses .12%
Total Fund Operating Expenses .27%
---------
Example:
You would pay the following expenses on a $1,000 investment in the Fund based
upon payment by the Fund of operating expenses at the levels set forth in the
table above, assuming (1) 5% annual return and (2) redemption at the end of:
1 year........................................$ 3
3 years.......................................$ 9
5 years.......................................$15
10 years......................................$34
- ---------------
+ "Other Operating Expenses" include custody fees, transfer agency fees,
registration fees, legal fees, audit fees, directors' fees, insurance
fees, and other miscellaneous expenses. A shareholder may incur a
$10.00 charge for certain wire redemptions.
The expense summary is intended to assist investors in understanding
the various costs and expenses that a shareholder in the Institutional Shares
class of shares of the Fund will bear directly or indirectly. The expense
summary shows the investment advisory fee, distribution fee, administrative fee,
sub-administration fee and shareholder servicing agent fee expected to be
incurred by the Institutional Shares class of shares of the Fund.
The "Example" set forth above should not be considered a representation
of future expenses or annual return of Institutional Shares of the Fund; actual
expenses and annual return may be greater or less than those shown.
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<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing securities pursuant to Rule 2a-7 under the Investment Company Act of
1940, as amended (the "1940 Act"), certain requirements of which are summarized
as follows. In accordance with Rule 2a-7, the Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
instruments having remaining maturities of 397 days or less and invest only in
U.S. dollar denominated securities determined in accordance with procedures
established by the Board of Trustees to present minimal credit risks and which
are rated in the highest short-term rating category for debt obligations by at
least two nationally recognized statistical rating organizations ("NRSRO") (or
one NRSRO if the instrument was rated only by one such organization) or, if
unrated, are of comparable quality as determined in accordance with procedures
established by the Board of Trustees. If a security is backed by an
unconditional demand feature, the issuer of the demand feature rather than the
issuer of the underlying security may be relied upon in determining whether the
foregoing criteria have been met. Securities in which the Fund invests may not
earn as high a level of current income as long-term or lower quality securities.
The Fund's investment objective is to seek to provide maximum current
income consistent with maximum safety of principal and maintenance of liquidity.
The Fund seeks to achieve its objective by investing in obligations issued by
the U.S. Treasury, including U.S. Treasury bills, bonds and notes, which differ
principally only in their interest rates, maturities and dates of issuance. The
Fund does not purchase securities issued or guaranteed by agencies or
instrumentalities of the United States Government, nor does it enter into
repurchase agreements. The dollar weighted average maturity of the Fund will be
90 days or less. Although the Fund seeks to be fully invested, at times it may
hold uninvested cash reserves, which would adversely affect its yield.
Interest on United States Treasury obligations is exempt from state and
local income taxes under federal law; the interest is not exempt from federal
income tax. However, shareholders of the 100% U.S. Treasury Fund do not directly
receive interest on United States Treasury obligations, but rather receive
dividends from the 100% U.S. Treasury Fund that are derived from such interest.
Although many states allow the character of the 100% U.S. Treasury Fund's income
to pass through to its shareholders, certain states do not, so that
distributions from the 100% U.S. Treasury Fund derived from interest that is
exempt from state and local income taxes when received directly by a taxpayer
may not be exempt from such taxes when earned as a dividend by a shareholder of
the 100% U.S. Treasury Fund. Shareholders of the 100% U.S. Treasury Fund should
consult their tax advisers as to state and local consequences of investment in
the Fund.
Although the Fund's investment objective may not be changed without
shareholder approval, such approval is not required to change any of the other
investment policies discussed above or below under "Additional Information on
Investment Policies and Techniques."
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND TECHNIQUES
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet redemptions. A reverse
repurchase agreement involves the sale of money market securities held by the
Fund with an agreement to repurchase the securities at an agreed-upon price,
date and interest payment. Reverse repurchase agreements have the same
characteristics as borrowing by the Fund. During the time a reverse repurchase
agreement is outstanding, the Fund will maintain a segregated custodial account
containing U.S. Government or other appropriate high-quality debt securities
having a value equal to the repurchase price. 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 Fund's securities transferred may decline below the price at which the Fund
is obliged to repurchase the securities. Further, because a reverse repurchase
agreement entered into by the Fund constitutes borrowing, it may have a
leveraging effect.
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<PAGE>
WHEN-ISSUED OR FORWARD DELIVERY PURCHASES.
The Fund may purchase new issues of securities in which it is permitted
to invest on a "when-issued" or, with respect to existing issues, on a "forward
delivery" basis, which means that the securities will be delivered at a future
date beyond the customary settlement time. There is no limit as to the amount of
the commitments which may be made by the Fund to purchase securities on a
"when-issued" or "forward delivery" basis. The Fund does not pay for such
obligations or start earning interest on them until the contractual settlement
date. Although commitments to purchase "when-issued" or "forward delivery"
securities will only be made with the intention of actually acquiring them,
these securities may be sold before the settlement date if deemed advisable by
the SubAdviser.
While it is not intended that such purchases would be made for
speculative purposes, purchases of securities on a "when-issued" or "forward
delivery" basis can involve more risk than other types of purchases and have the
effect of leveraging. For example, when the time comes to pay for a
"when-issued" or "forward delivery" security, the Fund's securities may have to
be sold in order to meet payment obligations, and a sale of securities to meet
such obligations carries with it a greater potential for the realization of
capital gain, which is not tax-exempt. Also, if it is necessary to sell the
"when-issued" or "forward delivery" security before delivery, the Fund may incur
a loss because of market fluctuations since the time the commitment to purchase
the "whenissued" or "forward delivery" security was made. Any gain resulting
from any such sale would not be tax-exempt. For additional information
concerning these risks and other risks associated with the purchase of
"whenissued" or "forward delivery" securities as well as other aspects of the
purchase of securities on a "when-issued" or "forward delivery" basis, see
"Investment Objectives, Policies and Restrictions -- Investment Policies:
WhenIssued and Forward Delivery Purchases" in the Statement of Additional
Information.
No income accrues to the purchase of a security on a firm commitment
basis prior to delivery. Purchasing a security on a firm commitment basis can
involve a risk that the market price at the time of delivery may be lower than
the agreed upon purchase price, in which case there could be an unrealized loss
at the time of delivery.
The Fund will establish a segregated account in which it will maintain
assets in an amount at least equal in value to the Fund's commitments to
purchase securities on a firm commitment basis. If the value of these assets
declines, the Fund will place additional liquid assets in the account on a daily
basis so that the value of the assets in the account is equal to the amount of
such commitments.
STAND-BY COMMITMENTS
The Fund may enter into put transactions, including transactions
sometimes referred to as stand-by commitments, with respect to U.S. Government
securities held in its portfolio. In a put transaction, the Fund acquires the
right to sell a security at an agreed-upon price within a specified period prior
to its maturity date, and a stand-by commitment entitles the Fund to same-day
settlement and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise. In
the event that the party obligated to purchase the underlying security from the
Fund defaults on its obligation to purchase the underlying security, then the
Fund might be unable to recover all or a portion of any loss sustained from
having to sell the security elsewhere. Acquisition of puts will have the effect
of increasing the cost of the securities subject to the put and thereby reducing
the yields otherwise available from such securities. For further information
concerning stand-by commitments, see "Investment Objectives, Policies and
Restrictions -- Investment Policies:
Stand-by Commitments" in the Statement of Additional Information.
PORTFOLIO SECURITIES LENDING
Although the Fund does not anticipate engaging in such activity in the
ordinary course of business, the Fund may lend portfolio 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
its total assets. In connection with such loans, the Fund will receive
collateral consisting of cash, cash equivalents, U.S.
- 6 -
<PAGE>
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 102% of the current market value of the securities loaned plus
accrued interest. The Fund can earn income through the investment of such
collateral. The Fund continues to be entitled to the interest payable on a
loaned security and, in addition, receive interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. The Fund might
experience risk of loss if the institutions with which it has engaged in
portfolio loan transactions breach their agreements with such Fund. The risk 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 Adviser or SubAdviser to be of good standing and will not be made
unless, in the judgment of the investment Adviser or SubAdviser, the
consideration to be earned from such loans justifies the risk.
The foregoing investment policies and activities are not fundamental
and may be changed by the Board of Trustees of the Trust without the approval of
shareholders. For more detailed descriptions of certain of the Fund's investment
activities, see "Investment Policies -- Additional Investment Activities" in the
Statement of Additional Information.
PORTFOLIO MANAGEMENT AND TURNOVER
It is intended that the portfolio of the Fund will be fully managed by
buying and selling securities, as well as holding securities to maturity. In
managing the portfolio of the Fund, the Sub-Adviser seeks to take advantage of
market developments, yield disparities and variations in the creditworthiness of
issuers. For a description of the strategies that may be used by the Sub-Adviser
in managing the portfolio of the Fund, which may include adjusting the average
maturity of a portfolio in anticipation of a change in interest rates, see
"Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Management" in the Statement of Additional Information.
Generally, the primary consideration in placing portfolio securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. Since money market instruments are generally
purchased in principal transactions, the Fund rarely pays brokerage commissions.
For a complete discussion of portfolio transactions and brokerage allocation,
see "Investment Objective, Policies and Restrictions -- Investment Policies:
Portfolio Transactions and Brokerage Allocation" in the Statement of Additional
Information.
EFFECT OF RULE 2a-7 ON PORTFOLIO MANAGEMENT
The portfolio management of the Fund is intended to comply with the
provisions of Rule 2a-7 under the 1940 Act (the "Rule") under which, if a Fund
meets certain conditions, it may use the "amortized cost" method of valuing its
securities. Under the Rule, the maturity of an instrument is generally
considered to be its stated maturity (or in the case of an instrument called for
redemption, the date on which the redemption payment must be made), with special
exceptions for certain kinds of instruments. Repurchase agreements and
securities loan agreements are, in general, treated as having a maturity equal
to the period remaining until they can be executed.
In accordance with the provisions of the Rule, the Fund must: (i)
maintain a dollar weighted average portfolio maturity (see above) not in excess
of 90 days, (ii) limit its investments to those instruments which are
denominated in U.S. dollars, which the Board of Trustees determines present
minimal credit risks, and which are of "high quality" as determined by at least
two major rating services; or, in the case of any instrument that is split-rated
or not rated, of comparable quality as determined by the Board; and (iii) not
purchase any instruments with a remaining maturity (see above) or more than 397
days. The Rule also contains special provisions as to the maturity of variable
rate and floating rate instruments.
- 7 -
<PAGE>
MANAGEMENT OF THE FUND
THE ADVISER
The Chase Manhattan Bank, N.A. manages the assets of the Fund pursuant
to an Investment Advisory Agreement. Subject to such policies as the Board of
Trustees may determine, Chase makes investment decisions for the Fund. For its
services under the Investment Advisory Agreement, Chase is entitled to receive
an annual fee computed daily and paid monthly at an annual rate equal to 0.10%
of the Fund's average daily net assets. However, Chase may, from time to time,
voluntarily waive all or a portion of its fees payable under the Investment
Advisory Agreement.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, is a commercial bank offering a
wide range of banking and investment services to customers throughout the United
States and around the world. Its headquarters is at One Chase Manhattan Plaza,
New York, NY 10081. The Adviser, including its predecessor organizations, has
over 100 years of money management experience. Also included among the Adviser's
accounts are commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives.
On August 27, 1995, The Chase Manhattan Corporation announced its entry
into an Agreement and Plan of Merger (the "Merger Agreement") with Chemical
Banking Corporation ("Chemical"), a bank holding company, pursuant to which The
Chase Manhattan Corporation will merge with and into Chemical (the "Holding
Company Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors of each holding company has
approved the Holding Company Merger, which will create the second largest bank
holding company in the United States based on assets. The consummation of the
Holding Company Merger is subject to certain closing conditions. On December 11,
1995, the respective shareholders of The Chase Manhattan Corporation and
Chemical voted to approve the Holding Company Merger. The Holding Company Merger
is expected to be completed on or about March 31, 1996.
Subsequent to the Holding Company Merger, it is expected that the
adviser to the Funds, The Chase Manhattan Bank, N.A., will be merged with and
into Chemical Bank. a New York State chartered bank ("Chemical Bank") (the "Bank
Merger" and together with the Holding Company Merger, the "Mergers"). The
surviving bank will continue operations under the name The Chase Manhattan Bank
(as used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and
its successor in the Bank Merger, and the term "Adviser" means Chase (including
its successor in the Bank Merger) in its capacity as investment adviser to the
Fund). The consummation of the Bank Merger is subject to certain closing
conditions, including the receipt of certain regulatory approvals. The Bank
Merger is expected to occur in July 1996.
Chemical is a publicly owned bank holding company incorporated under
Delaware law and registered under the Federal Bank Holding Company Act of 1956,
as amended. As of December 31, 1995, through its direct or indirect
subsidiaries, Chemical managed more than $57 billion in assets, including
approximately $6.9 billion in mutual fund assets in 11 mutual fund portfolios.
Chemical Bank is a wholly owned subsidiary of Chemical and is a New York State
chartered bank.
THE SUB-ADVISER
Under the investment advisory agreement between the Trust, on behalf of
the Fund, and Chase, Chase may delegate a portion of its responsibilities to a
sub-adviser. In addition, the investment 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 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.
- 8 -
<PAGE>
Chase has entered into an investment sub-advisory agreement with its
affiliate, CAM Inc., a registered investment adviser, on behalf of the Fund. The
Sub-Adviser is a wholly-owned subsidiary of Chase. Subject to the supervision
and direction of the Adviser and the Board of Trustees, CAM Inc. provides
investment subadvisory services to the Fund in accordance with the Fund's
objectives and policies, makes investment decisions for the Fund and places
orders to purchase and sell securities on behalf of the Fund. The Sub-Advisory
Agreement provides that, as compensation for services, the Sub-Adviser receives,
from the Adviser, a fee, based on the Fund's average daily net assets,
determined at a rate agreed upon from time to time between the Adviser and CAM
Inc.
CAM Inc. is a wholly-owned operating subsidiary of Chase, and upon
consummation of the Bank Merger, will be a wholly-owned operating subsidiary of
the Adviser. CAM Inc. is registered with the Commission as an investment adviser
and was formed for the purpose of providing discretionary investment advisory
services to institutional clients and to consolidate Chase's investment
management function, and the same individuals who serve as portfolio managers
for CAM Inc. also serve as portfolio managers for Chase. CAM Inc.
is located at 1211 Avenue of the Americas, New York, New York 10036.
CERTAIN RELATIONSHIPS AND ACTIVITIES. Chase and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of the Fund, including outstanding loans to such
issuers which may be repaid in whole or in part with the proceeds of securities
so purchased. Chase and its affiliates deal, trade and invest for their own
accounts in U.S. Treasury obligations and are among the leading dealers of
various types of U.S. Treasury obligations. Chase and its affiliates may sell
U.S. Treasury obligations to, and purchase them from, other investment companies
sponsored by the Distributor or affiliates of the Distributor. The Adviser will
not invest any Fund assets in any U.S. Treasury obligations purchased from
itself or any affiliate, although under certain circumstances such securities
may be purchased from other members of an underwriting syndicate in which the
Adviser or an affiliate is a non-principal member. This restriction may limit
the amount or type of U.S. Treasury obligations available to be purchased on
behalf of the Fund. The Adviser has informed the Fund that in making its
investment decisions, it does not obtain or use material inside information in
the possession of any other division or department of such Adviser or in the
possession of any affiliate of such Adviser, including the division of Chase
that performs services for the Trust as Custodian. Shareholders of the Fund
should be aware that, subject to applicable legal or regulatory restrictions,
Chase and its affiliates may exchange among themselves certain information about
the shareholders and their accounts.
ADMINISTRATOR
Pursuant to an administration agreement, dated April 15, 1994 (the
"Administration Agreement"), Chase serves as Administrator of the Trust. The
Administrator provides certain administrative services, including, among other
responsibilities, coordinating relationships with independent contractors and
agents; preparing for signature by officers and filing of certain documents
required for compliance with applicable laws and regulations excluding those of
the securities laws of the various states; arranging for the maintenance of
books and records; and providing office facilities necessary to carry out its
duties. For these services and facilities, the Administrator is entitled to
receive from the Fund a fee computed daily and paid monthly at an annual rate
equal to 0.05% of the Fund's average daily net assets. However, the
Administrator may, from time to time, voluntarily waive all or a portion of its
fees payable under the Administration Agreement. The Administrator, pursuant to
the terms of the Administration Agreement, shall not have any responsibility or
authority for the Fund's investments, the determination of investment policy, or
for any matter pertaining to the distribution of Fund shares.
REGULATORY MATTERS. Banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of Governors of the
Federal Reserve System, prohibit a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, or any affiliate thereof from
sponsoring, organizing, controlling, or distributing the shares of a registered,
open-end investment company continuously engaged in the issuance of its shares,
and prohibit banks generally from issuing, underwriting, selling or distributing
securities, but do not prohibit such a bank holding company or affiliate from
acting as investment adviser, administrator, transfer agent, or custodian to
such an investment company or from purchasing shares of such a company as agent
- 9 -
<PAGE>
for and upon the order of a customer. The Adviser and the Trust believe that
Chase, CAM, Inc. or any other affiliate of Chase, may perform the investment
advisory, administrative, custody and transfer agency services for the Fund, as
the case may be, described in this Prospectus and that Chase, CAM, Inc., or any
other affiliate of Chase, subject to such banking laws and regulations, may
perform the shareholder services contemplated by this Prospectus without
violation of such banking laws or regulations. However, future changes in legal
requirements relating to the permissible activities of banks and their
affiliates, as well as future interpretations of present requirements, could
prevent Chase, CAM, Inc. or any other affiliate of Chase from continuing to
perform investment advisory, administrative or custody services for the Fund, as
the case may be, or require Chase, CAM, Inc. or any other affiliate of Chase to
alter or discontinue the services provided by it to shareholder of the Funds.
If Chase, CAM, Inc. or any other affiliate of Chase were prohibited
from performing investment advisory, administrative, custody or transfer agency
services for the Fund, as the case may be, it is expected that the Board of
Trustees would recommend to shareholders that they approve new agreements with
another entity or entities qualified to perform such services and selected by
the Board of Trustees. If Chase, CAM, Inc. or any other affiliate of Chase were
required to discontinue all or part of its shareholder servicing activities, its
customers would be permitted to remain the beneficial owners of Fund shares and
alternative means for continuing the servicing of such customers would be
sought. Vista does not anticipate that investors would suffer any adverse
financial consequences as a result of these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state laws.
Based on the advice of its counsel, Chase believes that the court's
decision, and these other decisions of federal banking regulators, permit it to
serve as investment adviser to a registered, open-end investment company.
Regarding the performance of shareholder servicing and custodial
activities, the staff of the Office of the Comptroller of the Currency, which
supervises national banks, has issued opinion letters stating that national
banks may engage in shareholder servicing and custodial activities. Therefore,
Chase believes, based on advice of its counsel, that it may serve as shareholder
servicing agent to the Fund and render the services described in the shareholder
servicing agreements, and Chase believes, based on advice of its counsel, that
it may serve as Custodian to the Trust and render the services set forth in the
Custodian Agreement, as appropriate, incidental national banking functions and
as proper adjunct to its serving as investment adviser and administrator to the
Fund.
Industry practice and regulatory decisions also support a bank's
authority to act as administrator for a registered investment company. Chase, on
the advice of its counsel, believes that it may render the services described in
its Administration Agreement without violating the Glass-Steagall Act or other
applicable banking laws.
Possible future changes in federal law or administrative or judicial
interpretations of current or future law, however, could prevent Chase from
continuing to perform investment advisory, shareholder servicing, custodian or
other administrative services for the Fund. If that occurred, the Trust's Board
of Trustees promptly would seek to obtain for the Fund the services of another
qualified adviser, shareholder servicing agent, custodian or administrator, as
necessary. Although no assurances can be given, the Trust believes that, if
necessary, the switch to a new adviser, shareholder servicing agent, custodian
or administrator could be accomplished without undue disruption to the Funds'
operations.
In addition, state securities laws on this issue may differ from the
interpretation of federal law expressed herein, and banks and financial
institutions may be required to register as dealers pursuant to state law.
- 10 -
<PAGE>
PURCHASES AND REDEMPTIONS OF SHARES
PURCHASES
The Institutional Shares are continuously offered for sale without a
sales load at the net asset value next determined through Vista Broker-Dealer
Services, Inc. ("VBDS" or the "Distributor") after an order is received and
accepted by the Transfer Agent, provided it is transmitted prior to 12:00 noon,
Eastern time on any business day during which the New York Stock Exchange and
the Adviser are open for trading ("Fund Business Day"). (See "Other Information
Concerning Shares of the Fund--Net Asset Value"). Orders for Institutional
Shares received and accepted prior to the above designated times will be
entitled to all dividends declared on such day. The minimum initial purchase is
$1,000,000. Shareholders must maintain a minimum account balance of $1,000,000
in the Institutional Shares at all times. It is anticipated that each
Institutional Share's net asset value will remain constant at $1.00 per share
and the Fund will employ specific investment policies and procedures to
accomplish this result. An investor may purchase Institutional Shares by
authorizing his broker or financial institution to purchase such Shares on his
behalf through the Distributor, which the broker or financial institution must
do on a timely basis. All share purchases must be paid for by federal funds
wire. If federal funds are not available with respect to any such order by the
close of business on the day the order is received by the Transfer Agent, the
order will be canceled. Any order received after the time noted above, will not
be accepted. Any funds received in connection with late orders will be invested
on the next business day. The Fund may at its discretion reject any order for
shares. The Fund also reserves the right to suspend sales of shares to the
public at any time, in response to the conditions in the securities market or
otherwise. Fund shares will be maintained in book entry form, and no
certificates representing shares owned will be issued to shareholders.
Federal regulations require that each investor provide a certified
Taxpayer Identification Number upon opening an account.
The Fund intends to be as fully invested at all times as is reasonably
practicable in order to enhance the yield on its assets. Accordingly, in order
to make investments which will immediately generate income, the Fund must have
federal funds available to it (i.e., monies credited to the account of the
Fund's custodian bank by a Federal Reserve Bank).
REDEMPTIONS
An investor may redeem all or any portion of the shares in his account
on any Fund Business Day at the net asset value next determined after a
redemption request in proper form is received by the Fund's Transfer Agent.
Therefore, redemptions will be effected on the same day the redemption order is
received only if such order is received prior to 12:00 noon, Eastern time on any
Fund Business Day. Shares which are redeemed earn dividends up to and including
the day prior to the day the redemption is effected. The proceeds of a
redemption will be paid by wire in federal funds normally on the Fund Business
Day the redemption is effected, but in any event within seven days. Payment for
redemption requests received prior to the above-mentioned times is normally made
in federal funds wired to the redeeming shareholder on the same Business Day.
Payment for redeemed shares for which a redemption order is received after the
times stated above on a Business Day is normally made in federal funds wired to
the redeeming shareholder on the next Business Day following redemption. In
order to allow Chase to most effectively manage the Fund's portfolio, investors
are urged to make redemption requests as early in the day as possible. In making
redemption requests, the names of the registered shareholders and their account
numbers must be supplied. While the Fund retains the right to pay the redemption
price of shares in kind with securities (instead of cash), the Trust has filed
an election under Rule 18f-1 under the Investment Company Act of 1940, as
amended (the "1940 Act") committing to pay in cash all redemptions by a
shareholder of record up to the amounts specified in the rule (approximately
$250,000).
A wire redemption may be requested by telephone or wire to the Vista
Service Center. For telephone redemptions, call the Vista Service Center at
(800) 622-4273.
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The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
GENERAL
REORGANIZATION WITH PREDECESSOR FUND. The Fund has been established to
receive all the assets of The Hanover 100% U.S. Treasury Securities Money Market
Fund series of The Hanover Funds, Inc. (the "Predecessor Fund"). Subject to
approval by the shareholders of the Predecessor Fund, the Predecessor Fund will
transfer all its assets and liabilities to the Fund in exchange for Vista shares
of the Fund, which will be distributed pro rata to shareholders of the
Predecessor Fund, who will become shareholders of the Fund (the
"Reorganization"). The Predecessor Fund will cease operations after the
Reorganization. The Fund will have no assets and will not begin operations until
the Reorganization occurs.
The Fund has established certain procedures and restrictions, subject
to change from time to time, for purchase and redemption, including procedures
for accepting telephone instructions. The Fund's Transfer Agent may defer acting
on a shareholder's instructions until it has received them in proper form. In
addition, the privileges described in this Prospectus are not available until a
completed and signed account application has been received by the Fund's
Transfer Agent. Telephone transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in the account application. To provide evidence of telephone
instructions, the Transfer Agent will record telephone conversations with
shareholders. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. In the event the Fund does
not employ such procedures, it may be liable for losses due to unauthorized or
fraudulent instructions.
Shareholders agree to release and hold harmless the Fund, the Adviser,
the Administrator, any sub-agent and broker-dealer, and the officers, directors,
employees and agents thereof against any claim, liability, loss, damage and
expense for any act or failure to act in connection with Fund shares, any
related investment account, any privileges or services selected in connection
with such investment account, or any written or oral instructions or requests
with respect thereto, or any written or oral instructions or requests from
someone claiming to be a shareholder if the Fund or any of the above-described
parties follow instructions which they reasonably believe to be genuine and act
in good faith by complying with the reasonable procedures that have been
established for Fund accounts and services.
The Fund may also establish and revise from time to time account
minimums and transactions or amount restrictions on purchases, redemptions, or
other transactions permitted in connection with shareholder accounts. The Fund
may also require signature guarantees for changes that shareholders request be
made in Fund records with respect to its accounts, including but not limited to,
changes in the bank account specified in the Bank Account Registration, or for
any written requests for additional account services made after a shareholder
has submitted an initial account application to the Fund. The Fund may refuse to
accept or carry out any transaction that does not satisfy any restrictions then
in effect.
TAX MATTERS
The following discussion is addressed primarily to individual investors
and is for general information only. A prospective investor, including a
corporate investor, should also review the more detailed discussion of federal
income tax considerations that is contained in the Statement of Additional
Information. In addition, each prospective investor should consult with his own
tax advisers as to the tax consequences of an investment in the Fund, including
the status of distributions from the Fund in his own state and locality.
The Fund intends to qualify each year and elect to be treated as a
separate "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If the Fund is
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treated as a "regulated investment company" and all its taxable income, if any,
is distributed to its shareholders in accordance with the timing requirements
imposed by the Code, it will not be subject to federal income tax on amounts so
distributed. If for any taxable year the Fund does not qualify for the treatment
as a regulated investment company, all of its taxable income will be subject to
tax at regular corporate rates without any deduction for distributions to its
shareholders, and such distributions to shareholders will be taxable to the
extent of the Fund's current and accumulated earnings and profits.
The Trust is organized as a Massachusetts business trust and, under
current law, is not liable for any income or franchise tax in the Commonwealth
of Massachusetts as long as the Fund (and each other series of the Trust)
qualifies as a regulated investment company under the Code.
Distributions by the Fund of its taxable ordinary income (net of
expenses) and the excess, if any, of its net short-term capital gain over its
net long-term capital loss are generally taxable to shareholders as ordinary
income. Such distributions are treated as dividends for federal income tax
purposes, but do not qualify for the dividends-received deduction for
corporations. Distributions by a Fund of the excess, if any, of its net
long-term capital gain over its net short-term capital loss are designated as
capital gain dividends and are taxable to shareholders as long-term capital
gains, regardless of the length of time a shareholder has held his shares. The
Fund will seek to avoid recognition of capital gains.
Distributions to shareholders will be treated in the same manner for
federal income tax purposes whether received in cash or reinvested in additional
shares of a Fund. In general, distributions by a Fund are taken into account by
shareholders in the year in which they are made. However, certain distributions
made during January will be treated as having been paid by the Fund and received
by the shareholders on December 31 of the preceding year. A statement setting
forth the federal income tax status of all distributions made (or deemed made)
during the fiscal year, including any portions which constitute ordinary income
dividends, capital gain dividends and exempt-interest dividends, will be sent to
the Fund's shareholders promptly after the end of each year.
Under the backup withholding rules of the Code, certain shareholders
may be subject to 31% withholding of federal income tax on distributions and
redemption payments made by the Fund. Generally, shareholders are subject to
backup withholding if they have not provided the Fund with a correct taxpayer
identification number and certain required certifications.
Shareholders of the Fund will be subject to federal income tax on the
ordinary income dividends and any capital gain dividends from the Fund and may
also be subject to state and local taxes. The laws of some states and
localities, however, exempt from some taxes dividends such as those paid on
shares of the U.S. Government Fund to the extent such dividends are attributable
to interest on obligations of the and certain of its agencies and
instrumentalities. The Fund intends to advise its shareholders of the proportion
of their ordinary income dividends which are attributable to such interest.
The State of New York, for example, exempts from its personal income
tax dividends such as those paid on shares of the Fund to the extent such
dividends are attributable to interest from obligations of the U.S. Government
and certain of its agencies and instrumentalities, provided that at least 50% of
the Fund's portfolio consists of such obligations and the Fund complies with
certain notice requirements. The New York State Department of Taxation and
Finance (like most other states) currently takes the position, however, that
certain obligations backed by the full faith and credit of the U.S. Treasury,
such as GNMA Certificates and repurchase agreements backed by any U.S.
Government obligation, do not constitute exempt obligations of the U.S.
Government. (UNDER PRESENT MARKET CONDITIONS, IT IS EXPECTED THAT LESS THAN 50%
OF THE FUND'S PORTFOLIO WILL CONSIST OF OBLIGATIONS WHICH THE NEW YORK STATE
DEPARTMENT OF TAXATION AND FINANCE VIEWS AS EXEMPT. ACCORDINGLY, IT IS LIKELY
THAT NO PORTION OF THE DIVIDENDS PAID ON SHARES OF THE FUND WILL BE EXEMPT FROM
NEW YORK STATE PERSONAL INCOME TAX.)
Shareholders are urged to consult their tax advisers regarding the
possible exclusion from state and local income tax of a portion of the dividends
paid on shares of the Fund which is attributable to interest from obligations of
the U.S. Government and its agencies and instrumentalities
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OTHER INFORMATION CONCERNING SHARES OF THE FUND
NET ASSET VALUE
The net asset value of the Shares of the Fund is determined as of 12:00
noon, Eastern time on each Fund Business Day, by dividing the value of the
Fund's net assets (i.e., the value of its securities and other assets less its
liabilities, including expenses payable or accrued) by the number of its shares
outstanding at the time the determination is made. The portfolio securities of
the Fund are valued at their amortized cost pursuant to Rule 2a-7 under the 1940
Act, certain requirements of which are summarized under "Additional Information
on Investment Policies and Techniques." This method increases stability in
valuation, but may result in periods during which the stated value of a
portfolio security is higher or lower than the price the Fund would receive if
the instrument were sold. It is anticipated that the net asset value of each
share will remain constant at $1.00 and the Fund will employ specific investment
policies and procedures to accomplish this result, although no assurance can be
given that they will be able to do so on a continuing basis. These procedures
include a review of the extent of any deviation of net asset value per share,
based on available market rates, from the $1.00 amortized cost price per share,
and consideration of certain actions before such deviation exceeds 1/2 of 1%.
Income earned on the Fund's investments is accrued daily and the Net Income, as
defined under "Distributions and Dividends" below, is declared each Fund
Business Day as a dividend. See "Determination of Net Asset Value" in the
Statement of Additional Information for further information regarding
determination of net asset value and the procedures to be followed to stabilize
the net asset value at $1.00 per share.
DISTRIBUTIONS AND DIVIDENDS
The net income of the Institutional Shares is determined each Fund
Business Day (and on such other days as the Trustees deem necessary in order to
comply with Rule 22c-1 under the 1940 Act). This determination is made once
during each such day as of 12:00 noon, Eastern time. All the net income, as
defined below, of the Institutional Shares so determined is declared in shares
as a dividend to shareholders of record at the time of such determination.
Shares begin accruing dividends on the day they are purchased. Dividends are
distributed monthly on or about the last business day of each month. Unless a
shareholder elects to receive dividends in cash, dividends are distributed in
the form of additional shares at the rate of one share (and fractions thereof)
for each one dollar (and fractions thereof) of dividend income.
For this purpose, the net income of the Institutional Shares (from the
time of the immediately preceding determination thereof) shall consist of all
income accrued, including the accretion of discounts less the amortization of
any premium on the portfolio assets of the Fund, less all actual and accrued
expenses determined in accordance with generally accepted accounting principles.
As noted above, securities are valued at amortized cost, which the Trustees have
determined in good faith constitutes fair value for the purposes of complying
with the 1940 Act. This valuation method will continue to be used until such
time as the Trustees determine that it does not constitute fair value for such
purposes.
Since the net income of the Institutional Shares is declared as a
dividend each time its net income is determined, the net asset value per share
(i.e., the value of its net assets divided by the number of its shares
outstanding) is expected to remain at $1.00 per share immediately after each
such determination and dividend declaration. Any increase in the value of a
shareholder's investment, representing the reinvestment of dividend income, is
reflected by an increase in the number of shares in his account.
It is expected that the Institutional Shares will have a positive net
income at the time of each determination thereof. If for any reason the net
income determined at any time is a negative amount, which could occur, for
instance, upon default by an issuer of a portfolio security, the Fund would
first offset the negative amount with respect to each shareholder account from
the dividends declared during the month with respect to each such account. If,
and to the extent that such negative amount exceeds such declared dividends at
the end of the month, the number of outstanding shares will be reduced by
treating each shareholder as having contributed to the capital of the Fund that
number of full and fractional shares in the account of such shareholder which
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represents his proportion of the amount of such excess. Each shareholder will be
deemed to have agreed to such contribution in these circumstances by his
investment. Thus, the net asset value per share will be maintained at a constant
$1.00.
DISTRIBUTION AND SUB-ADMINISTRATION AGREEMENT
The Distribution and Sub-Administration Agreement dated August 21, 1995
for the Fund (the "Distribution Agreement") provides that the Distributor will
act as the principal underwriter of shares of the Fund and 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. In addition, the Distributor will provide
certain sub-administration services, including providing officers, clerical
staff and office space. While there is no sales load, the Distributor receives a
fee from the Fund at an annual rate equal to 0.05% of the Fund's average daily
net assets, on an annualized basis for the Fund's then-current fiscal year.
Other funds which have investment objectives similar to those of the Fund, but
which do not pay some or all of such fees from their assets, may offer a higher
return, although investors would, in some cases, be required to pay a sales
charge or a redemption fee.
The Distributor has agreed to use a portion of its distribution and
sub-administration fee to pay for certain expenses incurred in connection with
organizing new series or classes of the Trust and certain other ongoing expenses
of the Trust. The Distributor may, from time to time, waive all or a portion of
the fees payable to it by the Fund under the Distribution and Sub-Administration
Agreement.
EXPENSES
The Fund intends to pay all of its pro rata share of certain expenses,
including the compensation of the Trustees; governmental fees; interest charges,
taxes; membership dues in the Investment Company Institute; fees and expenses of
independent accountants, of legal counsel and of any transfer agent, dividend
disbursing agent; expenses of redeeming shares; expenses of preparing, printing
and mailing prospectuses, reports, notices, proxy statements and reports to
shareholders and to governmental officers and commissions; expenses connected
with the execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the Custodian including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset values of the Fund Shares; expenses of shareholder
meetings; and the advisory fees payable to the Adviser under the Investment
Advisory Agreement, the administration fee payable to the Administrator under
the Administration Agreement and the sub-administration fee payable to the
Distributor under the Distribution and Sub-Administration Agreement. Expenses
relating to the issuance, registration and qualification of shares of the Fund
and the preparation, printing and mailing of prospectuses for such purposes are
borne by the Fund or the Shares except that the Distribution and
Sub-Administration Agreement with the Distributor requires the Distributor to
pay for prospectuses which are to be used for sales to prospective investors.
Pursuant to offering multiple classes of shares, certain expenses of
the Fund are borne by certain classes, either exclusively, or in a manner which
approximates the proportionate value received by the class as a result of the
expenses being incurred.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Mutual Fund Trust is an open-end management investment company
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts in 1994. The Trust has reserved the right to create and issue
additional series or classes. Each share of a series or class represents an
equal proportionate interest in that series or class with each other share of
that series or class. The shares of each series or class participate equally in
the earnings, dividends and assets of the particular series or class. Expenses
of the Trust which are not attributable to a specific series or class are
allocated among all the series in a manner believed by management of the Trust
to be fair and equitable. Shares have no pre-emptive or conversion rights.
Shares when issued are fully paid and non-assessable, except as set forth below.
Shareholders are entitled to one vote for each whole share held, and each
fractional share shall be entitled to a proportionate fractional vote, except
that trust
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shares held in the treasury of the trust shall not be voted. Shares of each
series or class generally vote separately, for example to approve an investment
advisory agreement or distribution plan, but shares of all series and classes
vote together, to the extent required under the 1940 Act, in the election or
selection of Trustees and independent accountants.
Shareholders of the Institutional Shares bear the fees and expenses
described in this Prospectus. Similarly, shareholders of the counterpart Vista
Shares and Premier Shares bear the fees and expenses described in the
appropriate prospectuses for such classes of Shares. The absence of fees paid by
each of the Institutional Shares to the Distributor and shareholder servicing
agents for distribution expenses and shareholder services provided to
institutional investors differ significantly from similar fees paid under
distribution plans and shareholder servicing arrangements adopted for its
counterpart Vista Shares. As a result, at any given time, the net yield on the
Institutional Shares will be approximately .30% to .50% higher than the yield on
the counterpart Vista Shares and approximately .15% to .30% higher than the
yield on the counterpart Premier Shares. Standardized yield quotations will be
computed separately for each class of shares of a Fund.
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders of a series or class or of all series
and classes when in the judgment of the Trustees it is necessary or desirable to
submit matters for a shareholder vote. A Trustee of the Trust may, in accordance
with certain rules of the Securities and Exchange Commission, be removed from
office when the holders of record of not less than two-thirds of the outstanding
shares either present a written declaration to the Trust's Custodian or vote in
person or by proxy at a meeting called for this purpose. In addition, the
Trustees will promptly call a meeting of shareholders to remove a trustee(s)
when requested to do so in writing by record holders of not less than 10% of the
outstanding shares of the Trust.
Finally, the Trustees shall, in certain circumstances, give such
shareholders access to a list of the names and addresses of all other
shareholders or inform them of the number of shareholders and the cost of
mailing their request. The Trust's Declaration of Trust provides that, at any
meeting of shareholders, a Shareholder Servicing Agent may vote any shares as to
which such Shareholder Servicing Agent is the agent of record and which are
otherwise not represented in person or by proxy at the meeting, proportionately
in accordance with the votes cast by holders of all shares of the same 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. Shareholders of each series or class would be
entitled to share pro rata in the net assets of that series or class available
for distribution to shareholders upon liquidation of that series or class.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
The Code of Ethics of the Trust prohibits all affiliated personnel from
engaging in personal investment activities which compete with or attempt to take
advantage of a Fund's planned portfolio transactions. The objective of the Code
of Ethics is to ensure that the operations of a Fund be carried out for the
exclusive benefit of a Fund's shareholders. The Trust maintains careful
monitoring of compliance with the Code of Ethics. See "General Information" in
the Fund's Statement of Additional Information.
TRANSFER AGENT AND CUSTODIAN
DST Systems, Inc. ("DST") acts as transfer agent and dividend
disbursing agent (the "Transfer Agent") for the Trust. In this capacity, DST
maintains the account records of all shareholders in the Fund, including
statement preparation and mailing. DST is also responsible for disbursing
dividend and capital gain distributions to shareholders, whether taken in cash
or additional shares. From time to time, DST and/or the Fund may
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<PAGE>
contract with other entities to perform certain services for the Transfer Agent.
For its services as Transfer Agent, DST receives such compensation as is from
time to time agreed upon by the Trust and DST. DST's address is 127 W. 10th
Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the Fund for which Chase receives compensation as is from time to time
agreed upon by the Trust and Chase. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on the Fund's investments, maintaining books of original entry for portfolio and
Fund accounting and other required books and accounts, and calculating the daily
net asset value of shares of the Fund. Portfolio securities and cash may be held
by sub-custodian banks if such arrangements are reviewed and approved by the
Trustees. The internal division of Chase which serves as the Trust's Custodian
does not determine the investment policies of the Fund or decide which
securities will be bought or sold on behalf of the Fund or otherwise have access
to or share material inside information with the internal division that performs
advisory services for the Fund.
TAX SHELTERED RETIREMENT PLANS
Shares of the Fund are offered in connection with the following
qualified prototype retirement plans: IRA, Rollover IRA, SEP-IRA,
Profit-Sharing, and Money Purchase Pension Plans which can be adopted by
self-employed persons ("Keogh") and by corporations, 401(k), and 403(b)
Retirement Plans. Call or write the Transfer Agent for more information.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Institutional Shares may use hypothetical
investment examples and performance information in advertisements, shareholder
reports or other communications to shareholders. Because such performance
information is based on historical earnings, it should not be considered as an
indication or representation of the performance of the Institutional Shares in
the future. From time to time, the yield of the Institutional Shares, as a
measure of its performance, 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 other relevant
indices or to rankings prepared by independent services or other financial or
industry publications, such as Lipper Analytical Services, Inc. or the
Morningstar Mutual Funds on Disc, that monitor the performance of mutual funds.
In addition, the yield of each of the Institutional Shares may be compared to
the Donoghue's Money Fund AveragesTM, compiled in the Donoghue's Money Fund
Report(R), a widely recognized independent publication that monitors the
performance of money market funds. Also, each of the Institutional Shares' yield
data may be 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 publications of a local or regional nature. The
Institutional Shares may, with proper authorization, reprint articles written
about the Institutional Shares and provide them to prospective shareholders.
Institutional Shares may provide its annualized "yield" and "effective
yield" to current and prospective shareholders. The "yield" of the Fund refers
to the income generated by an investment in the Fund over a seven-day period
(which period shall be stated in any advertisement or communication with a
shareholder). This income is then "annualized", that is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of investment. The
"effective yield" is calculated similarly, but when annualized the income earned
by the investment during that week is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment.
Unlike some bank deposits or other investments which pay a fixed yield
for a stated period of time, the yield of each of the Institutional Shares will
vary based on interest rates, the current market value of the securities held in
the Fund's portfolio and changes in the Fund's and the Shares' expenses. The
Adviser, the Administrator, the Distributor may voluntarily waive a portion of
their fees on a month-to-month basis. In addition, the
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Distributor may assume a portion of the Fund's operating expenses on a
month-to-month basis. These actions would have the effect of increasing the net
income (and therefore the yield) of the Institutional Shares during the period
such waivers of fees or assumptions of expenses are in effect. These factors and
possible differences in the methods used to calculate yields should be
considered when comparing the Institutional Shares' yields to those published
for other money market funds and other investment vehicles. See the Statement of
Additional Information for further information concerning each of the
Institutional Shares' calculation of yield.
OTHER INFORMATION
The Statement of Additional Information contains more detailed
information about the Trust and the Fund, including information related to (i)
the Fund's investment policies and restrictions, (ii) risk factors associated
with the Fund's policies and investments, (iii) the Trust's Trustees, officers
and the Administrator, the Adviser and the Sub-Adviser, (iv) portfolio
transactions and brokerage allocation, (v) the Fund's shares, including rights
and liabilities of shareholders, and (vi) additional performance information,
including the method used to calculate yield or total rate of return quotations
of the Fund. The audited financial statements of the Predecessor Fund for its
last fiscal year end is incorporated by reference in the Statement of Additional
Information.
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<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
FEBRUARY 8, 1996
VISTASM 100% U.S. TREASURY SECURITIES MONEY MARKET FUND
125 WEST 55TH STREET, NEW YORK, NEW YORK 10019
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 the Fund's shares. This Statement of Additional Information should be
read in conjunction with the Prospectuses offering shares of the Vista 100% U.S.
Treasury Securities Money Market Fund. Copies of the Prospectuses may be
obtained by an investor without charge by contacting Vista Broker-Dealer
Services, Inc., the Fund's 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 the Vista Service Center at
our toll-free number:
1-800-34-VISTA
Vista Service Center
P.O. Box 419392
Kansas City, MO 64141
MFT-SAI
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<PAGE>
Table of Contents Page
The Fund ....................................................... 3
Investment Objective, Policies and Restrictions................. 3
Performance Information......................................... 8
Determination of Net Asset Value................................ 9
Tax Matters..................................................... 9
Management of the Fund..........................................14
Independent Accountants.........................................23
General Information.............................................23
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THE FUND
Mutual Fund Trust (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 February 4, 1994. The Trust presently consists of 12 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"). Under a multiple class distribution system, the
Fund is offered through multiple classes of shares. The Vista Shares class of
the Fund is referred to in this Statement of Additional Information as the
"Vista Shares", the Premier Shares class of the Fund is referred to herein as
the "Premier Shares" and the Institutional Shares class of the Fund is referred
to herein as the "Institutional Shares".
The Fund has been established to receive all the assets of The 100% U.S.
Treasury Securities Money Market Fund series of The Hanover Funds, Inc. (the
"Predecessor Fund"). Subject to approval by the shareholders of the Predecessor
Fund, the Predecessor Fund will transfer all its assets and liabilities to the
Fund in exchange for Vista Shares of the Fund, which will be distributed pro
rata to shareholders of the Predecessor Fund, who will then become shareholders
of the Fund (the "Reorganization"). The Predecessor Fund will cease operations
after the Reorganization. The Fund will have no assets and will not begin
operations until the Reorganization occurs.
The Fund's shares are continuously offered for sale through Vista Broker-Dealer
Services, Inc. ("VBDS"), the Fund's distributor (the "Distributor"), which is
not affiliated with Chase Manhattan Bank, N.A. or its affiliates, to investors
who are customers of a financial institution, such as a federal or
state-chartered bank, trust company, or savings and loan association that has
entered into a shareholder servicing agreement with the Trust on behalf of the
Fund (collectively, "Shareholder Servicing Agents") or customers of a securities
broker or certain financial institutions who have entered into Selected Dealer
Agreements with the Distributor. VBDS receives a distribution fee from the Fund
with respect to the Vista Shares class and Premier Shares class, pursuant to the
plan of distribution adopted pursuant to Rule 12b-1 of the 1940 Act with respect
to such classes.
The Board of Trustees of the Trust provides broad supervision over the affairs
of the Trust including the Fund. The Chase Manhattan Bank, N.A. ("Chase") is the
investment adviser (the "Adviser") for the Fund. Chase also serves as the
Trust's administrator (the "Administrator") and supervises the overall
administration of the Trust, including the Fund. Chase Asset Management, Inc.
("CAM Inc." or the "Sub-Adviser") is the investment sub-adviser to the Fund. The
Sub-Adviser continuously manage the investments of the Fund in accordance with
the investment objective and policies of the Fund. The selection of investments
for the Fund and the way in which it is managed depend on the conditions and
trends in the economy and the financial marketplaces. Occasionally,
communications to shareholders may contain the views of the Sub-Adviser as to
current market, economic, trade and interest rate trends, as well as
legislative, regulatory and monetary developments, and may include investment
strategies and related matters believed to be of relevance to the Fund. A
majority of the Trustees of the Trust are not affiliated with the Sub-Adviser.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVE
THE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND's (the "100% U.S.
Treasury Fund" or the "Fund") investment objective is to seek to provide maximum
current income consistent with maximum safety of principal and maintenance of
liquidity. The Fund seeks to achieve its objective by investing in obligations
issued by the U.S. Treasury, including U.S. Treasury bills, bonds and notes,
which differ only in their interest rates, maturities and dates of issuance. The
Fund does not purchase securities issued or guaranteed by agencies or
instrumentalities of the U.S. Government, nor does it enter repurchase
agreements. Because the 100% U.S. Treasury Fund invests exclusively in direct
United States Treasury obligations, investors may benefit from income tax
exclusions and exemptions that are available in certain states or localities.
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INVESTMENT POLICIES
The Prospectus sets forth the various investment policies applicable to the
Fund. Unless otherwise stated, the following policies are not fundamental and
may be changed by the Board of Trustees of the Trust without shareholder
approval.
The following information supplements and should be read in conjunction with the
sections of the Prospectus entitled "Investment Objectives and Policies" and
"Additional Information on Investment Policies and Techniques."
UNITED STATES GOVERNMENT SECURITIES
United States Treasury Obligations. The United States Treasury issues various
types of marketable securities. These securities are direct obligations of the
United States Government and differ only in their interest rates, maturities and
dates of issuance. Treasury bills, the most frequently issued marketable United
States Government security, have a maturity of up to one year and are issued on
a discount basis.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend securities from its portfolio if liquid assets in an amount
equal to 102% of the current market value of the securities loaned (including
accrued interest thereon) plus the interest payable to the Fund with respect to
the loan is maintained by the Fund in a segregated account. The Fund will
typically loan its portfolio securities only on a short-term basis, and will not
enter into any portfolio security lending arrangements having a duration of
longer than thirteen months. Any securities that the Fund may receive as
collateral will not become a part of its portfolio at the time of the loan and,
in the event of a default by the borrower, the Fund will, if permitted by law,
dispose of such collateral except for such part thereof that is a security in
which the Fund is permitted to invest. During the time securities are on loan,
the borrower will pay the Fund any accrued income on those securities, and the
Fund may invest the cash collateral and earn additional income or receive an
agreed-upon fee from a borrower that has delivered cash equivalent collateral.
Cash collateral received by the Fund will be invested in securities in which the
Fund is permitted to invest. The value of securities loaned will be marked to
market daily. Portfolio securities purchased with cash collateral are subject to
possible depreciation. Loans of securities by the Fund will be subject to
termination at the Fund's or the borrower's option. The Fund may pay reasonable
administrative and custodial fees in connection with a securities loan and may
pay a negotiated portion of the interest or fee earned with respect to the
collateral to the borrower or a placing broker. The Fund does not currently
intend to make loans of portfolio securities with a value in excess of 5% of the
value of its total assets.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which may not be
changed without approval by a "majority of the outstanding shares" of the Fund
which, as used in this Statement of Additional Information, means the vote of
the lesser of (i) 67% or more of the shares of the Fund present at a meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund.
The Fund may not:
(i) borrow money, except that the Fund 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. Any
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borrowings representing more than 5% of the Fund's total assets must be
repaid before the Fund may make additional investments;
(ii) make loans, except that the Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures
or other obligations and fixed time deposits) in accordance with its
investment objective 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;
(iii) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of the Fund's total assets would be invested in
the securities of companies whose principal business activities are
in the same industry. Notwithstanding the foregoing, with respect to
the Fund's permissible futures and options transactions in U.S.
Government securities, positions in such options and futures shall
not be subject to this restriction;
(iv) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this
shall not prevent the Fund from (i) purchasing or selling options and
futures contracts or (ii) from investing in securities or other
instruments backed by physical commodities) or engaging in forward
purchases or sales of foreign currencies or securities;
(v) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments but this shall not
prevent the Fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business. Investments by the Fund in securities backed by
mortgages on real estate or in marketable securities of companies
engaged in such activities are not hereby precluded;
(vi) issue any senior security (as defined in the 1940 Act), except
that (a) the Fund may engage in transactions that may result in the
issuance of senior securities to the extent permitted under
applicable regulations and interpretations of the 1940 Act or an
exemptive order; (b) the Fund may acquire other securities, the
acquisition of which may result in the issuance of a senior security,
to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions
set forth above, the Fund may borrow money as authorized by the 1940
Act. For purposes of this restriction, collateral arrangements with
respect to the Fund's permissible options and futures transactions,
including deposits of initial and variation margin, are not
considered to be the issuance of a senior security for purposes of
this restriction; or
(vii) underwrite securities issued by other persons except insofar as
the Fund may technically be deemed an underwriter under the
Securities Act of 1933 in selling a portfolio security.
For purposes of investment restriction (v) above, real estate includes Real
Estate Limited Partnerships. For purposes of investment restriction (iii),
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.
The following investment restrictions are nonfundamental and may be changed
without shareholder approval:
(i) The Fund may not, with respect to 75% of its assets, hold more
than 10% of the outstanding voting securities of an issuer.
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<PAGE>
(ii) The Fund may not make short sales of securities, other than
short sales "against the box," or purchase securities on margin
except for short-term credits necessary for clearance of portfolio
transactions, provided that this restriction will not be applied to
limit the use of options, futures contracts and related options, in
the manner otherwise permitted by the investment restrictions,
policies and investment program of the Fund.
(iii) The Fund may not purchase or sell interests in oil, gas or
mineral leases.
(iv) The Fund may not invest more than 10% of its net assets in
illiquid securities.
(v) The Fund may not write, purchase or sell any put or call option
or any combination thereof, provided that this shall not prevent the
writing, purchasing or selling of puts, calls or combinations thereof
with respect to U.S. government securities or with respect to the
Fund's permissible futures and options transactions, purchasing,
ownership, holding or selling of futures and options positions or of
puts, calls or combinations thereof with respect to futures.
(vi) The Fund may invest up to 5% of its total assets in the
securities of any one investment company, but may not own more than
3% of the securities of any one investment company or invest more
than 10% of its total assets in the securities of other investment
companies.
Notwithstanding any other investment policy or restriction, the Fund may seek to
achieve its investment objective by investing all of its investable assets in
another investment company having substantially the same investment objective
and policies as the Fund.
For purposes of nonfundamental restriction (vi) above, to the extent the Fund
invests in other investment companies, the Fund will limit its investment to
those investment companies with a similar investment objective to that of the
Fund.
For purposes of the Fund's investment restrictions, the issuer of a tax-exempt
security is deemed to be the entity (public or private) ultimately responsible
for the payment of the principal of and interest on the security.
If a percentage limitation on investment or use of assets is adhered to at the
time a transaction is effected, later changes in percentage resulting from any
cause other than actions by the Fund will not be considered a violation. If the
value of the Fund's holdings of illiquid securities at any time exceeds the
percentage limitation applicable at the time of acquisition due to subsequent
fluctuations in value or other reasons, the Board of Trustees will consider what
actions, if any, are appropriate to maintain adequate liquidity.
It is the Trust's position that proprietary strips, such as CATS and TIGRS, are
United States Government securities. However, the Trust has been advised that
the staff of the Commission's Division of Investment Management does not
consider these to be United States Government securities, as defined under the
Investment Company Act of 1940, as amended.
In order to permit the sale of its shares in certain states, the Fund may make
commitments more restrictive than the investment policies and limitations
described above and in the Prospectus. Should the Fund determine that any such
commitment is no longer in its best interests, it will revoke the commitment by
terminating sales of its shares in the state involved.
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PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Changes in the Fund's investments are reviewed by the Board of Trustees. The
Fund's portfolio manager may serve other clients of the Sub-Adviser in a similar
capacity. Money market instruments are generally purchased in principal
transactions; thus, the Fund pays no brokerage commissions.
Under the Sub-Advisory Agreement, the Sub-Adviser shall use its best efforts to
seek to execute portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the Fund. The
Sub-Adviser attempts to achieve this result by selecting broker-dealers to
execute portfolio transactions on behalf of the Funds and other clients of the
Sub-Adviser on the basis of their professional capability, the value and quality
of their brokerage services, and the level of their brokerage commissions. 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 Sub-Adviser 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 Sub-Adviser on the tender of the Fund's portfolio
securities in so-called tender or exchange offers. Such soliciting dealer fees
are in effect recaptured for the Funds and by the Sub-Adviser. At present, no
other recapture arrangements are in effect.
Under the Fund's Sub-Advisory Agreement and as permitted by Section 28(e) of the
Securities Exchange Act of 1934, the Sub-Adviser may cause the Funds to pay a
broker-dealer which provides brokerage and research services to the Sub-Adviser,
the Funds and/or other accounts for which the Sub-Adviser exercises investment
discretion an amount of commission for effecting a securities transaction for
the Funds and in excess of the amount other broker-dealers would have charged
for the transaction if the Sub-Adviser determines 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 the Sub-Adviser's overall responsibilities to the
Funds or to accounts over which they exercise investment discretion. Not all of
such services are useful or of value in advising the Fund. The Sub-Adviser shall
report to the Board of Trustees of the Trust regarding overall commissions paid
by the Funds and their reasonableness in relation to the benefits to the Funds.
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.
Although commissions paid on every transaction will, in the judgment of the
Sub-Adviser, be reasonable in relation to the value of the brokerage services
provided, commissions exceeding those which another broker might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Fund and the Adviser's or SubAdviser's other clients as part of providing
advice as to the availability of securities or of purchasers or sellers of
securities and services in effecting securities transactions and performing
functions incidental thereto, such as clearance and settlement.
Broker-dealers may be willing to furnish statistical, research and other factual
information or services ("Research") to the Sub-Adviser for no consideration
other than brokerage or underwriting commissions. Securities may be bought or
sold through such broker-dealers, but at present, unless otherwise directed by
the Funds, a commission higher than one charged elsewhere will not be paid to
such a firm solely because it provided Research to the Sub-Adviser.
The Adviser's or Sub-Adviser's investment management personnel will attempt to
evaluate the quality of Research provided by brokers. Results of this effort are
sometimes used by the Sub-Adviser as a consideration in the
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selection of brokers to execute portfolio transactions. However, the Sub-Adviser
would be unable to quantify the amount of commissions which are paid as a result
of such Research because a substantial number of transactions are effected
through brokers which provide Research but which are selected principally
because of their execution capabilities.
The management fees that the Fund pays to the Sub-Adviser will not be reduced as
a consequence of the Sub-Adviser's receipt of brokerage and research services.
To the extent the Funds' portfolio transactions are used to obtain such
services, the brokerage commissions paid by the Funds will exceed those that
might otherwise be paid, by an amount which cannot be presently determined. Such
services would be useful and of value to the Sub-Adviser in serving one or more
of the Funds and other clients and, conversely, such services obtained by the
placement of brokerage business of other clients would be useful to the
Sub-Adviser in carrying out its obligations to a Fund. While such services are
not expected to reduce the expenses of the Sub-Adviser, the Sub-Adviser would,
through use of the services, avoid the additional expenses which would be
incurred if it should attempt to develop comparable information through its own
staff.
In certain instances, there may be securities that are suitable for one or more
of the Funds as well as one or more of the Sub-Adviser's other clients.
Investment decisions for the Funds and for the Sub-Adviser's 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. In executing portfolio transactions for a Fund, the
Sub-Adviser may, to the extent permitted by applicable laws and regulations, but
shall not be obligated to, aggregate the securities to be sold or purchased with
those of other Funds or its other clients if, in the Sub-Adviser's reasonable
judgment, such aggregation (i) will result in an overall economic benefit to the
Fund, taking into consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading requirements, and (ii) is
not inconsistent with the policies set forth in the Trust's registration
statement and the Fund's Prospectus and Statement of Additional Information. In
such event, the Sub-Adviser will allocate the securities so purchased or sold,
and the expenses incurred in the transaction, in an equitable manner, consistent
with its fiduciary obligations to the Fund and such other clients. When two or
more Funds or other clients are simultaneously engaged in the purchase or sale
of the same security, the securities are allocated among clients in a manner
believed to be equitable to each. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security as
far as the Funds are concerned. However, it is believed that the ability of the
Funds to participate in volume transactions will generally produce better
executions for the Funds.
No portfolio transactions are executed with the Adviser, Sub-Adviser or a
Shareholder Servicing Agent, or with any affiliate of the Adviser, Sub-Adviser
or a Shareholder Servicing Agent, acting either as principal or as broker.
PERFORMANCE INFORMATION
Any current "yield" of a class of shares of the Fund which is used in such a
manner as to be subject to the provisions of Rule 482(d) under the Securities
Act of 1933, as amended, shall consist of an annualized historical yield,
carried at least to the nearest hundredth of one percent, based on a specific
seven calendar day period and shall be calculated by dividing the net change in
the value of an account having a balance of one share at the beginning of the
period by the value of the account at the beginning of the period and
multiplying the quotient by 365/7. For this purpose, the net change in account
value would reflect the value of additional shares purchased with dividends
declared on the original share and dividends declared on both the original share
and any such additional shares, but would not reflect any realized gains or
losses from the sale of securities or any unrealized appreciation or
depreciation on portfolio securities. In addition, any effective yield quotation
of the shares of any class of the
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Fund so used shall be calculated by compounding the current yield quotation for
such period by multiplying such quotation by 7/365, adding 1 to the product,
raising the sum to a power equal to 365/7, and subtracting 1 from the result.
DETERMINATION OF NET ASSET VALUE
The Fund determines the net asset value of each class once each day as of 12:00
noon, New York City time during which the New York Stock Exchange is open for
trading (a "Fund Business Day"), by dividing the value of a classes', net assets
(i.e., the value of its securities and other assets less its liabilities,
including expenses payable or accrued, by the number of its shares outstanding
(by class) at the time the determination is made. (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,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.) The Sub-Adviser is closed on the following:
Martin Luther King Junior Day, Columbus Day and Veterans' Day. Purchases and
redemptions will be effected at the time of determination of net asset value
next following the receipt of any purchase or redemption order. (See "Purchases
and Redemptions of Shares" in the Prospectus.)
The Fund's portfolio securities are valued at their amortized cost. Amortized
cost valuation involves valuing an instrument at its cost and thereafter
accreting discounts and amortizing premiums at a constant rate to maturity.
Pursuant to the rules of the Securities and Exchange Commission, the Board of
Trustees has established procedures to stabilize the net asset value of the Fund
at $1.00 per share. These procedures include a review of the extent of any
deviation of net asset value per share, based on available market rates, from
the $1.00 amortized cost price per share. If fluctuating interest rates cause
the market value of the Fund's portfolio to approach a deviation of more than
1/2 of 1% from the value determined on the basis of amortized cost, the Board of
Trustees will consider what action, if any, should be initiated. Such action may
include redemption of shares in kind (as described in greater detail below),
selling portfolio securities prior to maturity, reducing or withholding
dividends and utilizing a net asset value per share as determined by using
available market quotations.
The Fund will maintain a dollar-weighted average portfolio maturity of 90 days
or less. The Fund will not purchase any instrument with a remaining maturity
greater than thirteen months.
The Fund has established procedures to ensure that its portfolio securities meet
its high quality criteria. (See "Investment Objectives, Policies and
Restrictions -- Investment Policies" above.)
Subject to compliance with applicable regulations, the Fund has reserved the
right to pay the redemption price of its shares, either totally or partially, by
a distribution in kind of portfolio securities (instead of cash). The securities
so distributed would be valued at the same amount as that assigned to them in
calculating the net asset value for the shares being sold. If a shareholder
received a distribution in kind, the shareholder could incur brokerage or other
charges in converting the securities to cash. The Trust has filed an election
under Rule 18f-1 committing to pay in cash all redemptions by a shareholder of
record up to amounts specified by the rule (approximately $250,000).
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
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
the Fund's Prospectus are not intended as substitutes for careful tax planning.
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Qualification as a Regulated Investment Company
The Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Fund is not subject to federal income tax on
the portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) and at least 90% of its
tax-exempt income (net of expenses allocable thereto) for the taxable year (the
"Distribution Requirement"), and satisfies certain other requirements of the
Code that are described below. Distributions by a the Fund made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year, will be considered distributions of income and gains
of the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, 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"); and (2) derive less than 30% of its gross
income (exclusive of certain gains on designated hedging transactions that are
offset by realized or unrealized losses on offsetting positions) from the sale
or other disposition of stock, securities or foreign currencies (or options,
futures or forward contracts thereon) held for less than three months (the
"Short-Short Gain Test"). For purposes of these calculations, gross income
includes tax-exempt income. However, foreign currency gains, including those
derived from options, futures and forwards, will not in any event be
characterized as Short-Short Gain if they are directly related to the regulated
investment company's investments in stock or securities (or options or futures
thereon). Because of the Short-Short Gain Test, the Fund may have to limit the
sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent the Fund from disposing of
investments at a loss, since the recognition of a loss before the expiration of
the three-month holding period is disregarded for this purpose. Interest
(including original issue discount) received by the Fund at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.
In general, gain or loss recognized by the Fund on the disposition of an asset
will be a capital gain or loss. However, gain recognized on the disposition of a
debt obligation (including a municipal obligation) purchased by the Fund at a
market discount (generally, at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of the market discount
which accrued during the period of time the Fund held the debt obligation.
Further, the Code also treats as ordinary income, a portion of the capital gain
attributable to a transaction where substantially all of the return realized is
attributable to the time value of the Fund's net investment in the transaction
and: (1) the transaction consists of the acquisition of property by the Fund and
a contemporaneous contract to sell substantially identical property in the
future; (2) the transaction is a straddle within the meaning of Section 1092 of
the Code; (3) the transaction is one that was marketed or sold to the Fund on
the basis that it would have the economic characteristics of a loan but the
interest-like return would be taxed as capital gain; or (4) the transaction is
described as a conversion transaction in the Treasury Regulations. The amount of
the gain recharacterized generally will not exceed the amount of the interest
that would have accrued on the net investment for the relevant period at a yield
equal to 120% of the federal long-term, mid-term, or short-term rate, depending
upon the type of instrument at issue, reduced by an amount equal to: (1) prior
inclusions of ordinary income items from the
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conversion transaction; and (2) the capitalized interest on acquisition
indebtedness under Code Section 263(g). Built-in losses will be preserved where
the Fund has a built-in loss with respect to property that becomes a part of a
conversion transaction. No authority exists that indicates that the converted
character of the income will not be passed to the Fund's shareholders.
In general, for purposes of determining whether capital gain or loss recognized
by the Fund on the disposition of an asset is long-term or short-term, the
holding period of the asset may be affected if: (1) the asset is used to close a
"short sale" (which includes for certain purposes the acquisition of a put
option) or is substantially identical to another asset so used, (2) the asset is
otherwise held by the Fund as part of a "straddle" (which term generally
excludes a situation where the asset is stock and the Fund grants a qualified
covered call option (which, among other things, must not be deep-in-the-money)
with respect thereto); or (3) the asset is stock and the Fund grants an
in-the-money qualified covered call option with respect thereto. However, for
purposes of the Short-Short Gain Test, the holding period of the asset disposed
of may be reduced only in the case of clause (i) above. In addition, a Fund may
be required to defer the recognition of a loss on the disposition of an asset
held as part of a straddle to the extent of any unrecognized gain on the
offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss recognized
by the Fund from a closing transaction with respect to, an option written by the
Fund will be treated as a short-term capital gain or loss. For purposes of the
Short-Short Gain Test, the holding period of an option written by the Fund will
commence on the date it is written and end on the date it lapses or the date a
closing transaction is entered into. Accordingly, the Fund may be limited in its
ability to write options which expire within three months and to enter into
closing transactions at a gain within three months of the writing of options.
Treasury Regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or any part of any net capital loss, any net
long-term capital loss or any net foreign currency loss incurred after October
31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
If for any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to 98% of ordinary
taxable income for the calendar year and 98% of capital gain
11
<PAGE>
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")) (Tax-exempt interest on municipal obligations is not subject to the
excise tax). 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.
For purposes of the excise tax, a regulated investment company shall: (1) reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year; and (2) exclude foreign currency
gains and losses incurred after October 31 of any year (or after the end of its
taxable year if it has made a taxable year election) in determining the amount
of ordinary taxable income for the current calendar year (and, instead, include
such gains and losses in determining ordinary taxable income for the succeeding
calendar year).
The Fund intends to make sufficient distributions or deemed distributions of its
ordinary taxable income and capital gain net income prior to the end of each
calendar year to avoid liability for the excise tax. However, investors should
note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment company
taxable 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.
The Fund may either retain or distribute to shareholders its net capital gain
for each taxable year. The Fund currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon a Fund's disposition of "small
business" stock will be subject to tax.
Conversely, if the Fund elects to retain its net capital gain, the Fund will be
taxed thereon (except to the extent of any available capital loss carryovers) at
the 35% corporate tax rate. If 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.
Distributions by the Fund that do not constitute ordinary income dividends,
exempt-interest dividends or capital gain dividends will be treated as a return
of capital to the extent of (and in reduction of) the shareholder's tax basis in
his shares; any excess will be treated as gain from the sale of his shares, as
discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of 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
12
<PAGE>
be taxable to the shareholder in the manner described above, although such
distributions economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of ordinary income dividends and capital gain dividends, and the
proceeds of redemption of shares, paid to any shareholder (1) who has provided
either an incorrect tax identification number or no number at all, (2) who is
subject to backup withholding by the IRS for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is a corporation or
other "exempt recipient."
Sale or Redemption of Shares
The Fund seeks to maintain a stable net asset value of $1.00 per share; however,
there can be no assurance that the Fund will do this. In such a case 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. For this purpose, the
special holding period rules of Code Section 246(c)(3) and (4) (discussed above
in connection with the dividends-received deduction for corporations) generally
will apply in determining the holding period of shares. Longterm capital gains
of noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
If a shareholder (1) incurs a sales load in acquiring shares of a Fund, (2)
disposes of such shares less than 91 days after they are acquired and (3)
subsequently acquires shares of the Fund or another fund at a reduced sales load
pursuant to a right to reinvest at such reduced sales load acquired in
connection with the acquisition of the shares disposed of, then the sales load
on the shares disposed of (to the extent of the reduction in the sales load on
the shares subsequently acquired) shall not be taken into account in determining
gain or loss on the shares disposed of but shall be treated as incurred on the
acquisition of the shares subsequently acquired.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from the Fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
13
<PAGE>
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, ordinary income dividends paid to
a foreign shareholder 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, capital gain dividends and
exempt-interest dividends and amounts retained by the Fund that are designated
as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of its
foreign status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Fund, including the
applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
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.
Rules of state and local taxation of ordinary income dividends, exempt-interest
dividends and capital gain dividends from regulated investment companies often
differ from the rules for U.S. federal income taxation described above.
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.
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and officers and their principal occupations for at least the past
five years are set forth below. Their titles may have varied during that period.
Asterisks indicate those Trustees and officers that are "interested persons" (as
defined in the 1940 Act). Unless otherwise indicated below, the address of each
officer is 125 W. 55th Street, New York, New York 10019.
TRUSTEES
FERGUS REID, III* - Chairman of the Board of Trustees of the Trust. Chairman of
the Board of Trustees of Mutual Fund Group; Trustee of certain Portfolios
managed by Chase (the "Portfolios"). Chairman and Chief Executive Officer,
Lumelite Corporation, since September 1985; Trustee, Morgan Stanley Portfolios;
from January 1985 through September 1985, Director of Corporate Finance, Noyes
Partners (investment advisory firm); from 1982 through 1984, Managing Director,
Bernhard Associates (venture capital firm). Address: 971 West Road, New Canaan,
Connecticut 06840.
14
<PAGE>
DR. RICHARD E. TEN HAKEN - Trustee. Trustee of Mutual Fund Group and the
Portfolios. Former District Superintendent of Schools, Monroe No.2 and Orleans
Counties, New York; Chairman of the Finance and the Audit and Accounting
Committees, Member of the Executive Committee; Chairman of the Board and
President, New York State Teachers' Retirement System. Address: 4 Barnfield
Road, Pittsford, New York 14534.
WILLIAM J. ARMSTRONG - Trustee. Trustee of Mutual Fund Group. Vice President and
Treasurer, Ingersoll- Rand Company. Address: 49 Aspen Way, Upper Saddle River,
New Jersey 07458.
JOHN R.H. BLUM - Trustee. Trustee of Mutual Fund Group. Attorney in Private
Practice; formerly, a Partner in the law firm of Richard, O'Neil & Allegaert;
Commissioner of Agriculture - State of Connecticut, 1992-1995.
Address: 322 Main Street, Lakeville, Connecticut 06039.
JOSEPH J. HARKINS*- Trustee. Trustee of Mutual Fund Group. Retired; formerly,
Commercial Sector Executive and Executive Vice President of The Chase Manhattan
Bank, N.A. from 1985 through 1989. He has been employed by Chase in numerous
capacities and offices since 1954. Director of Blessings Corporation, Jefferson
Insurance Company of New York, Monticello Insurance Company and Nationar.
Address: 257 Plantation Circle South, Ponte Vedra Beach, Florida 32082.
H. RICHARD VARTABEDIAN*- Trustee and President of the Trust. Trustee and
President of Mutual Fund Group; Chairman of the Board of Trustees of the
Portfolios. Consultant, Republic Bank of New York; formerly, Senior Investment
Officer, Division Executive of the Investment Management Division of The Chase
Manhattan Bank, N.A., 1980 through 1991. Address: P.O. Box 296, Beach Road,
Hendrick's Head, Southport, Maine 04576
STUART W. CRAGIN, JR.*- Trustee. Trustee of Mutual Fund Group and the
Portfolios. 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. Address: 108 Valley Road, Cos Cob, Connecticut 06807.
IRVING L. THODE - Trustee. Trustee of Mutual Fund Group and the Portfolios.
Retired; 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. Address:
80 Perkins Road, Greenwich, Connecticut 06830.
The Board of Trustees met seven times during the twelve months ended December
31, 1995, and each of the Trustees attended at least 75% of those meetings.
The Board of Trustees of the Trust presently has an Audit Committee. The members
of the Audit Committee are Messrs. Ten Haken (Chairman), Blum, Cragin, Thode,
Armstrong, Harkins*, Reid, and Vartabedian*. The function of the Audit Committee
is to recommend independent auditors and monitor accounting and financial
matters. The Audit Committee met two times during the fiscal year ended October
31, 1995.
* Interested Trustees as defined under the 1940 Act.
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 Adviser 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
15
<PAGE>
companies advised by the Adviser. 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. Effective August 21,
1995, each Trustee of the Vista Funds receives a quarterly retainer of $12,000
and an additional per meeting fee of $1,500. Prior to August 21, 1995, the
quarterly retainer was $9,000 and the per-meeting fee was $1,000. The Chairman
of the Trustees and the Chairman of the Investment Committee each receive a 50%
increment over regular Trustee total compensation for serving in such capacities
for all the investment companies advised by the Adviser.
Set forth below is information regarding compensation paid or accrued during the
fiscal year ended August 31, 1995 for each Trustee of the Trust:
<TABLE>
<CAPTION>
Vista Vista Vista
U.S. Vista Vista Vista New York California
Government Global Tax Fee Prime Tax Free Tax Free
Money Money Money Money Money Money
Market Market Market Market Market Market
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $12,789.94 $10,079.61 $4,097.69 $2,974.65 $3,453.60 $531.54
Richard E. Ten Haken, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
William J. Armstrong, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
John R.H. Blum, Trustee 8,306.57 6,575.89 2,687.12 1,948.80 2,303.73 347.07
Joseph J. Harkins, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
H. Richard Vartabedian, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
Stuart W. Cragin, Jr., Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
Irving L. Thode, Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
</TABLE>
<TABLE>
<CAPTION>
Vista Vista Vista Vista Vista
Federal Treasury Plus New York Tax Free California
Money Money Tax Free Income Income Intermediate
Market Fund Market Fund Fund Fund Tax Free Fund
<S> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $3,377.47 $489.54 $1,052.32 $971.82 $314.23
Richard E. Ten Haken, Trustee 2,251.63 326.37 701.55 647.85 209.49
William J. Armstrong, Trustee 2,251.63 326.37 701.55 647.85 209.49
John R.H. Blum, Trustee 2,187.37 323.30 685.48 633.77 204.80
Joseph J. Harkins, Trustee 2,251.63 326.37 701.55 647.85 209.49
H. Richard Vartabedian, Trustee 2,251.63 326.37 701.55 647.85 209.49
Stuart W. Cragin, Jr., Trustee 2,243.38 323.47 683.69 629.99 209.49
Irving L. Thode, Trustee 2,243.38 323.47 683.69 629.99 209.49
</TABLE>
(1) Data reflects total compensation earned during the period January 1, 1995 to
December 31, 1995 for service as a Trustee to all thirty-two (Portfolios) Funds
advised by the Adviser.
16
<PAGE>
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 Portfolios, the Adviser, 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 Portfolios"). Each
Eligible Trustee is entitled to receive from the Covered Portfolios an annual
benefit commencing on the first day of the calendar quarter coincident with or
following his date of retirement equal to 10% of the highest annual compensation
received from the Covered Portfolios 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 Portfolios. Such benefit is payable to each eligible Trustee in
monthly installments for the life of the Trustee.
Set forth in the table below are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1995, the estimated credited years
of service for Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian,
Cragin, and Thode are 11, 11, 8, 11, 3, 3 and 3, respectively.
17
<PAGE>
HIGHEST ANNUAL COMPENSATION PAID BY ALL VISTA FUNDS
40,000 45,000 50,000 55,000
YEARS OF
SERVICE ESTIMATED ANNUAL BENEFIT UPON RETIREMENT
10 40,000 45,000 50,000 55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
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 Adviser, Administrator
or Distributor or any of their affiliates) may enter into agreements with the
Funds whereby payment of the Trustees' fees are deferred until the payment date
elected by the Trustee (or the Trustee's termination of service). The deferred
amounts are deemed invested in shares of a Fund on whose Board the Trustee sits,
subject to the Trustee's election. 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. The following Eligible
Trustees have executed a deferred compensation agreement for the 1996 calendar
year: Messrs. Ten Haken, Thode and Vartabedian.
PRINCIPAL EXECUTIVE OFFICERS:
The principal executive officers of the Trust are as follows:
H. Richard Vartabedian - President and Trustee.
Martin R. Dean - Treasurer and Assistant Secretary; Vice President, BISYS Funds
Group, Inc.
Ann Bergin - Secretary and Assistant Treasurer; Vice President, BISYS Funds
Group, Inc.; Secretary, Vista BrokerDealer Services, Inc.
OWNERSHIP OF SHARES OF THE PORTFOLIOS. The Trustees and officers as a group
directly or beneficially own less than 1% of each Portfolio.
The Declaration of Trust provides that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust, unless,
as to liability to the Trust or its shareholders, it is finally adjudicated that
they engaged in wilful 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
18
<PAGE>
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 wilful misfeasance, bad faith, gross negligence or reckless disregard
of their duties.
The Fund pays no direct remuneration to any officer of the Trust.
ADVISER
The Adviser manages the assets of the Fund pursuant to an Investment Advisory
Agreement to become effective prior to the commencement of the Fund's
operations. Subject to such policies as the Board of Trustees may determine,
Chase makes investment decisions for the Fund. Pursuant to the terms of the
Advisory Agreements, the Adviser provides the Fund with such investment advice
and supervision as it deems necessary for the proper supervision of the Fund's
investments. The Adviser continuously provides investment programs and
determines from time to time what securities shall be purchased, sold or
exchanged and what portion of the Fund's assets shall be held uninvested. The
Adviser furnishes, at its own expense, all services, facilities and personnel
necessary in connection with managing the investments and effecting portfolio
transactions for the Fund. The other expenses attributable to, and payable by
the Fund, are described under "Expenses" in the Prospectus. The Advisory
Agreement for the Fund will continue in effect from year to year with respect to
the Fund only if such continuance is specifically approved at least annually by
the Board of Trustees or by vote of a majority of the Fund's outstanding voting
securities and, in either case, by a majority of the Trustees who are not
parties to the Advisory Agreement or interested persons of any such party, at a
meeting called for the purpose of voting on such Advisory Agreement.
Under the Advisory Agreement, the Adviser may utilize the specialized portfolio
skills of all its various affiliates, thereby providing the Fund with greater
opportunities and flexibility in accessing investment expertise.
On August 27, 1995, The Chase Manhattan Corporation announced its entry into an
Agreement and Plan of Merger (the "Merger Agreement") with Chemical Banking
Corporation ("Chemical"), a bank holding company, pursuant to which The Chase
Manhattan Corporation will merge with and into Chemical (the "Holding Company
Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors of each holding company has
approved the Holding Company Merger, which will create the second largest bank
holding company in the United States based on assets. The consummation of the
Holding Company Merger is subject to certain closing conditions. On December 11,
1995, the respective shareholders of The Chase Manhattan Corporation and
Chemical voted to approve the Merger Agreement. The Holding Company Merger is
expected to be completed on or about March 31, 1996.
Subsequent to the Holding Company Merger, it is expected that the Adviser will
be merged with and into Chemical Bank. a New York State chartered bank
("Chemical Bank") (the "Bank Merger" and together with the Holding Company
Merger, the "Mergers"). The surviving bank will continue operations under the
name The Chase Manhattan Bank (as used herein, the term "Chase" refers to The
Chase Manhattan Bank, N.A. and its successor in the Bank Merger, and the term
"Adviser" means Chase (including its successor in the Bank Merger) in its
capacity as investment adviser to the Funds). The consummation of the Bank
Merger is subject to certain closing conditions, including the receipt of
certain regulatory approvals. The Bank Merger is expected to occur in July 1996.
Chemical is a publicly owned bank holding company incorporated under Delaware
law and registered under the Federal Bank Holding Company Act of 1956, as
amended. As of December 31, 1995, through its direct or indirect subsidiaries,
Chemical managed more than $57 billion in assets, including approximately $6.9
billion in mutual fund assets in 11 mutual fund portfolios. Chemical Bank is
wholly-owned subsidiary of Chemical and is a New York State chartered bank.
-19-
<PAGE>
Pursuant to the terms of the Advisory Agreement, the Adviser is permitted to
render services to others. The Advisory Agreement is terminable without penalty
by the Trust on behalf of the Fund and each Portfolio on not more than 60 days',
nor less than 30 days', written notice when authorized either by a majority vote
of the Fund's shareholders or by a vote of a majority of the Board of Trustees
of the Trust, or by the Adviser 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 Agreement provides that
the Adviser under the 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 Fund, except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
thereunder.
In the event the operating expenses of the Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to the Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of the Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the Adviser shall reduce
its advisory fee (which fee is described below) to the extent of its share of
such excess expenses. The amount of any such reduction to be borne by the
Adviser shall be deducted from the monthly advisory fee otherwise payable with
respect to the Fund during such fiscal year; and if such amounts should exceed
the monthly fee, the Adviser shall pay to the Fund its share of such excess
expenses no later than the last day of the first month of the next succeeding
fiscal year.
In consideration of the services provided by the Adviser pursuant to the
Advisory Agreements, the Fund pays an investment advisory fee computed and paid
monthly based on a rate equal to .10% with respect to its Fund's average daily
net assets, on an annualized basis for the Fund's then-current fiscal year.
month-to-month basis.
Under an investment advisory agreement between the Trust, on behalf of the Fund,
and Chase, Chase may delegate a portion of its responsibilities to a subadviser.
In addition, the investment 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 New Chase as long as all such persons are
functioning as part of an organized group of persons, managed by authorized
officers of Chase.
Chase has entered into an investment sub-advisory agreement with its affiliate,
(Chase Asset Management, Inc. ("CAM Inc") on behalf of the Fund. The Sub-Adviser
is a wholly-owned subsidiary of New Chase. With respect to the day to day
management of the Fund, under the sub-advisory agreement, the Sub-Adviser makes
decisions concerning, and places all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and sales.
The Sub-Adviser may, in its discretion, provide such services through its 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-Adviser. This arrangement
will not result in the payment of additional fees by the Fund.
ADMINISTRATOR
Pursuant to an Administration Agreement (the "Administration Agreement"), Chase
serves as administrator of the Trust. Chase and provide certain administrative
services to the Trust, including, among other responsibilities, coordinating the
negotiation of contracts and fees with, and the monitoring of performance and
billing of, the Trust's independent contractors and agents; preparation for
signature by an officer of the Trust of all documents required to be filed for
compliance by the Trust with applicable laws and regulations excluding those of
the securities laws of various states; arranging for the computation of
performance data, including net asset value and yield; responding to shareholder
inquiries; and arranging for the maintenance of books and records of the Trust
and providing, at its
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own expense, office facilities, equipment and personnel necessary to carry out
its duties. The administrator does not have any responsibility or authority for
the management of the Fund, the determination of investment policy, or for any
matter pertaining to the distribution of Fund shares.
Under the administration agreement Chase renders administrative services to
others. The administration agreement will continue in effect from year to year
with respect to the Fund only if such continuance is specifically approved at
least annually by the Board of Trustees 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 administration agreement or "interested persons" (as
defined in the 1940 Act) of any such party. The administration agreement is
terminable without penalty by the Trust on behalf of the Fund on 60 days'
written notice when authorized either by a majority vote of the Fund's
shareholders or by vote of a majority of the Board of Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust, or by the Administrator on 60 days' written notice, and
will automatically terminate in the event of its "assignment" (as defined in the
1940 Act). The administration agreements also provide that neither Chase nor
their personnel shall be liable for any error of judgment or mistake of law or
for any act or omission in the administration or management of the Fund, except
for willful misfeasance, bad faith or gross negligence in the performance of its
or their duties or by reason of reckless disregard of its or their obligations
and duties under the administration agreements.
In addition, the administration agreements provide that, in the event the
operating expenses of the Fund, including all investment advisory,
administration and sub-administration fees, but excluding brokerage commissions
and fees, taxes, interest and extraordinary expenses such as litigation, for any
fiscal year exceed the most restrictive expense limitation applicable to the
Fund imposed by the securities laws or regulations thereunder of any state in
which the shares of the Fund are qualified for sale, as such limitations may be
raised or lowered from time to time, 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 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 agreement, the Administrator receives from the Fund a fee
computed and paid monthly at an annual rate equal to 0.05% of the Fund's average
daily net assets, on an annualized basis for the Fund's then-current fiscal
year. Chase may voluntarily waive a portion of the fees payable to it with
respect to the Fund on a month-to-month basis.
DISTRIBUTOR
DISTRIBUTION PLAN
The Trust has adopted a plan of distribution on behalf of the Class A shares and
the Premier Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act (each a
"Distribution Plan") which provides that the Fund shall pay a distribution fee
(the "Basic Distribution Fee"), including payments to the Distributor, at an
annual rate not to exceed 0.25% of its Class A Shares (0.10% with respect to the
Premier Shares) average daily net assets for distribution services. The
Distributor may use all or any portion of such Basic 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.
The 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 Plan or in any
agreement related to such Plan ("Qualified Trustees"). The Distribution Plan
requires that the Trust shall provide to the Board of Trustees, and the Board of
Trustees shall review, at least
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quarterly, a written report of the amounts expended (and the purposes therefor)
under the Distribution Plan. The 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. The Distribution Plan may be terminated at any time by a vote of a
majority of the Qualified Trustees or, with respect to the Fund, by vote of a
majority of the outstanding voting Shares of the Fund (as defined in the 1940
Act). The Distribution Plan may not be amended to increase materially the amount
of permitted expenses thereunder without the approval of Class A shareholders
and may not be materially amended in any case without a vote of the majority of
both the Trustees and the Qualified Trustees. The Fund will preserve copies of
any plan, agreement or report made pursuant to the 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.
Since the Distribution Fee is not directly tied to actual expenses, the amount
of Basic Distribution Fee paid by each of the Shares during any year may be more
or less than actual expenses incurred pursuant to the Distribution Plan. 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 the Distributor's
compensation is directly linked to its expenses). However, the Shares are not
liable for any distribution expenses incurred in excess of the Basic
Distribution Fee paid.
DISTRIBUTION AND SUB-ADMINISTRATION AGREEMENT
The Trust has entered into a Distribution and Sub-Administration Agreement dated
August 21, 1995, with the Distributor, pursuant to which the Distributor acts as
the Fund's exclusive underwriter, provides certain administration services and
promotes and arranges for the sale of each of the Shares. The Distributor is a
wholly-owned subsidiary of BISYS Fund Services, Inc. The Distribution Agreement
provides that the Distributor will bear the expenses of printing, distributing
and filing prospectuses and statements of additional information and reports
used for sales purposes, and of preparing and printing sales literature and
advertisements not paid for by the Distribution Plan. The Trust pays for all of
the expenses for qualification of the shares of the Fund for sale in connection
with the public offering of such shares, and all legal expenses in connection
therewith. In addition, pursuant to the Distribution Agreement, the Distributor
provides certain sub-administration services to the Trust, including providing
officers, clerical staff and office space.
The Distribution Agreement is currently in effect and will continue in effect
with respect to the Fund only if such continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of 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 the 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 the Fund, including all investment
advisory, administration and sub-administration fees, but excluding brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, for any fiscal year exceed the most restrictive expense limitation
applicable to that Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of the Fund are qualified for sale, as such
limitations may be raised or lowered from time to time, the Distributor shall
reduce its sub-administration fee with respect to the Fund (which fee is
described below) to the extent of its share of such excess expenses. The amount
of any such reduction to be borne by the Distributor shall be deducted from the
monthly sub-administration
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fee otherwise payable with respect to the Fund during such fiscal year; and if
such amounts should exceed the monthly fee, the Distributor shall pay to the
Fund its share of such excess expenses no later than the last day of the first
month of the next succeeding fiscal year.
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 the Fund. However, the
Distributor has voluntarily agreed to waive a portion of the fees payable to it
under the Distribution Agreement with respect to the Fund on a month-to-month
basis.
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.
The fees relating to acting as liaison to shareholders and providing personal
services to shareholders will not exceed, on an annualized basis, 0.25% of the
average daily net assets of each of the Shares represented by shares owned
during the period for which payment is being made by investors with whom such
Shareholder Servicing Agent maintains a servicing relationship. However, each
Shareholder Servicing Agent has voluntarily agreed to waive a portion of the
fees payable to it under its Servicing Agreement with respect to the Fund on a
month-to-month basis.
The Trust has also entered into a Transfer Agency Agreement with DST Systems,
Inc. ("DST") pursuant to which DST acts as transfer agent for the Trust.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the assets of
the Fund for which Chase receives compensation as is from time to time agreed
upon by Chase. For additional information, see "Shareholder Servicing Agents,
Transfer Agent and Custodian" in the Prospectus.
In certain circumstances Shareholder Servicing Agents may be required to
register as dealers under state law.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
serves as independent accountants of the Fund. Price Waterhouse LLP provides the
Fund with audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission.
GENERAL INFORMATION
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
Mutual Fund Trust is an open-end, management investment company organized as
Massachusetts business trust under the laws of the Commonwealth of Massachusetts
on February 4, 1994. The fiscal year-end of the Fund is August 31.
The Trust currently consists of 12 Funds of shares of beneficial interest
without par value. With respect to the Money Market Funds and certain of the
Income 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 share held. Shares of each series or class generally vote separately,
for example to approve investment advisory agreements or distribution plans, but
shares of all series and classes vote together, to the extent required under the
1940 Act, in the election or selection of Trustees and independent accountants.
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With respect to shares purchased through a Shareholder Servicing Agent and, in
the event written proxy instructions are not received by the Fund or its
designated agent prior to a shareholder meeting at which a proxy is to be voted
and the shareholder does not attend the meeting in person, the Shareholder
Servicing Agent for such shareholder will be authorized pursuant to an
applicable agreement with the shareholder to vote the shareholder's outstanding
shares in the same proportion as the votes cast by other Fund shareholders
represented at the meeting in person or by proxy.
Shareholders of the Vista Shares, Premier Shares and Institutional Shares of the
Money Market Funds bear the fees and expenses described herein. The fees paid by
the Vista Shares to the Distributor and Shareholder Servicing Agent under the
distribution plans and shareholder servicing arrangements for distribution
expenses and shareholder services provided to investors by the Distributor and
Shareholder Servicing Agents generally are more than the respective fees paid
under distribution plans and shareholder servicing arrangements adopted for the
Premier Shares. The Institutional Shares pay no distribution or Shareholder
Servicing fee. As a result, at any given time, the net yield on the Vista Shares
will be lower than the yield on the Premier Shares and, similarly, the net yield
of the Premier Shares will be lower than the yield on the Institutional Shares.
Standardized yield quotations will be computed separately for each class of
shares of a Fund.
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.
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.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust". Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations. However, the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides for indemnification and reimbursement of expenses out of the Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Trust's Declaration of Trust also provides that the Trust shall
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on account
of
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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 of Ethics substantially conforms to the
recommendations made by the Investment Company Institute ("ICI") (except where
noted) and includes such provisions as:
o Prohibitions on investment personnel acquiring securities in
initial offerings;
o A requirement that access persons obtain prior to acquiring
securities in a private placement and that the officer granting
such approval have no interest in the issuer making the private
placement;
o A restriction on access persons executing transactions for
securities on a recommended list until 14 days after distribution
of that list;
o A prohibition on access persons acquiring securities that are
pending execution by one of the Portfolios until 7 days after the
transactions of the Portfolios are completed;
o A prohibition of any buy or sell transaction in a particular
security in a 30-day period, except as may be permitted in certain
hardship cases or exigent circumstances where prior approval is
obtained. This provision differs slightly from the ICI
recommendation;
o A requirement for pre-clearance of any buy or sell transaction in a
particular security after 30 days, but within 60 days;
o A requirement that any gift exceeding $75.00 from a customer must
be reported to the appropriate compliance officer;
o A requirement that access persons submit in writing any request to
serve as a director or trustee of a publicly traded company;
o A requirement that all securities transactions in excess of $1,000
be pre-cleared, except that if a person has engaged in more than
$10,000 of securities transactions in a calendar quarter all
securities of such person require pre-clearance (this de minimus
exception differs slightly from the ICI recommendations);
o A requirement that all access persons direct their broker-dealer to
submit duplicate confirmation and customer statements to the
appropriate compliance unit; and
o A requirement that all access persons sign a Code of Ethics
acknowledgment, affirming that they have read and understood the
Code and submit a personal security holdings report upon
commencement of employment or status and a personal security
transaction report within 10 days of each calendar quarter
thereafter.
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