THE QUALIVEST MONEY MARKET FUNDS:
BROUGHT TO YOU BY U.S. BANCORP SECURITIES
Competitive yields, optimum flexibility, and
Qualivest Capital quality local investment management - U.S.
Bancorp Securities is proud to offer the
Qualivest money market funds as part of its
Management, Inc. and full range of services for commercial and
institutional investors.
U.S. Bank are subsidiaries The strength of these funds is based on the
solid investment expertise of our affiliate,
of U.S. Qualivest Capital Management, Inc., and the
quality customer service that institutional
Bancorp, investors have come to count on from U.S.
Bancorp Securities, which executes up to $3
billion in transactions each month as one of
the Northwest's premier broker-dealers.
the largest bank holding
COMPETITIVE YIELDS - IN A FLEXIBLE ACCOUNT
company headquartered in
The Qualivest money market funds were
established to provide institutional
the Northwest. With assets investors with quality and commitment:
- Nationally recognized, locally delivered
of more than $30 billion, investment management expertise.
- 12:00 noon cutoff time for investments;
12:00 noon for redemptions.
U.S. Bancorp has provided - Investment transactions can be linked to
U.S. Bank accounts - for immediate credits
or debits.
individuals and local
QUALIVEST CAPITAL MANAGEMENT, INC.
institutions with quality THE PEOPLE BEHIND THE PERFORMANCE
Your investment in the Qualivest money
investment market funds benefits from the expertise of
the professionals at Qualivest Capital
Management, Inc., a Northwest-based
management for more than investment management firm that combines the
advantages of institutional size and
strength with the entrepreneurship of a
100 years. private investment counselor.
Qualivest money market fund investors are in
good company; Qualivest Capital Management,
Inc. invests and manages over $6.5 billion
for a client base that includes 401(k)
plans, pension and profit-sharing plans,
corporations and private individuals.
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QUALIVEST
FUNDS
CLASS Q SHARES
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
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INVESTMENT ADVISER LEGAL COUNSEL
Qualivest Capital Management, Inc. Dechert Price & Rhoads
P.O. Box 2758 1500 K Street, N.W.
Portland, Oregon 97208 Washington, D.C. 20005-1208
ADMINISTRATOR & DISTRIBUTOR AUDITORS
BISYS Fund Services Deloitte & Touche LLP
3435 Stelzer Road 1700 Courthouse Plaza Northeast
Columbus, Ohio 43219-3035 Dayton, Ohio 45402
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TABLE OF CONTENTS
Page
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Prospectus Summary............................................... 3
Fund Expenses.................................................... 4
Fee Table........................................................ 5
Selected Financial Information................................... 7
Investment Objectives and Policies............................... 8
Investment Techniques and Risk Factors........................... 10
Valuation of Shares.............................................. 16
Purchasing Shares................................................ 16
Redeeming Shares................................................. 18
Management of the Funds.......................................... 19
Distribution Plan................................................ 22
Dividends and Taxes.............................................. 23
General Information.............................................. 25
PROSPECTUS DATED NOVEMBER 15, 1995
AS SUPPLEMENTED AUGUST 1, 1996
..............................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
QUALIVEST FUNDS
3435 Stelzer Road
Columbus, Ohio 43219 1-800-743-8637
Qualivest Funds (the "Trust") is an open-end management investment company
which currently offers thirteen separate diversified investment portfolios
("funds"), each with different investment objectives and policies. These funds
enable the Trust to meet a wide range of investment needs. This Prospectus
relates only to the following funds (the "Funds"):
- Qualivest U.S. Treasury Money Market Fund;
- Qualivest Money Market Fund; and
- Qualivest Tax-Free Money Market Fund.
Qualivest Capital Management, Inc. ("Qualivest"), Portland, Oregon, a
subsidiary of the United States National Bank of Oregon ("U.S. Bank"), acts as
the investment adviser to each of the Funds.
Additional information about the Trust and each of its funds, contained in a
Statement of Additional Information dated November 15, 1995, as supplemented
August 1, 1996, has been filed with the Securities and Exchange Commission and
is available upon request without charge by writing to the Trust at its address
or by calling the Trust at the telephone number shown above. The Statement of
Additional Information is incorporated herein by reference.
Continued on next page
The Shares of the Funds are not insured or guaranteed by the United States
Government. Each of these Funds seeks to maintain a constant net asset value of
$1.00 per Share, but there can be no assurance that net asset value will not
vary.
Shares of the Funds are not deposits or obligations of, and are not
endorsed, insured or guaranteed by, any bank, the Federal Deposit Insurance
Corporation, or any other agency. An investment in the Funds involves investment
risk, including the possible loss of principal.
This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
The date of this Prospectus is November 15, 1995,
as supplemented August 1, 1996.
<PAGE>
The Trustees of the Trust have divided beneficial ownership of each Fund
into transferable units called shares (the "Shares"). Each Fund offers multiple
classes of Shares. This Prospectus describes the Class Q Shares of each Fund.
Class Q Shares of the Funds are currently offered only to certain corporations,
pension plans, foundations, charitable institutions, certain large investors,
insurance companies, banks and other banking institutions, and non-bank
fiduciaries. Each Fund also offers a class of Shares known as Class A Shares to
the general public and a class of Shares known as Class Y Shares to certain
qualified institutional investors. Interested persons who wish to obtain a copy
of the Prospectus of one or more of the other funds of the Trust may contact the
Trust at the telephone number shown above.
2
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PROSPECTUS SUMMARY
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Shares Offered................... Class Q Shares of the Qualivest U.S. Treasury Money
Market Fund (the "U.S. Treasury Fund"), the
Qualivest Money Market Fund (the "Money Market
Fund") and the Qualivest Tax-Free Money Market
Fund (the "Tax-Free Money Market Fund") (collec-
tively, the "Funds"), which are three separate
diversified investment portfolios ("funds") of
Qualivest Funds, a Massachusetts business trust
(the "Trust") which is registered as an open-end
management investment company.
Offering Price................... The public offering price of each Fund is equal to
the net asset value per Share, which the Trust will
seek to maintain at $1.00.
Investment Objectives
U.S. Treasury Fund and
Money Market Fund.......... The U.S. Treasury Fund and the Money Market Fund
seek current income consistent with liquidity and
stability of principal.
Tax-Free Money Market Fund... The Tax-Free Money Market Fund seeks current
income, free from federal income tax, consistent
with liquidity and stability of principal.
Investment Policies
U.S. Treasury Fund........... Under normal market conditions, the U.S. Treasury
Fund will invest at least 65% of its total assets
in short-term U.S. Treasury bills, notes, and
bonds and in other obligations issued or
guaranteed by the U.S. Government.
Money Market Fund............ Under normal market conditions, the Money Market
Fund will invest in high quality (i.e., rated
within the top two rating categories by a
nationally recognized statistical rating
organization ("NRSRO"), such as Standard & Poor's
Corporation ("S&P"), Moody's Investors Service,
Inc. ("Moody's") and Fitch Investors Service
("Fitch")) money market instruments and other
comparable investments.
Tax-Free Money Market Fund... Under normal market conditions, the Tax-Free Money
Market Fund will invest at least 80% of its net
assets in short-term money market obligations the
interest on which is both exempt from federal
income tax and not
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3
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treated as a preference item for individuals for
purposes of the federal alternative minimum tax.
Risk Factors and Special
Considerations................. An investment in the Funds involves a certain
amount of risk and may not be suitable for all
investors. See "INVESTMENT TECHNIQUES AND RISK
FACTORS."
Investment Adviser............... Qualivest Capital Management, Inc. ("Qualivest"),
Portland, Oregon, a subsidiary of the United
States National Bank of Oregon ("U.S. Bank"),
serves as investment adviser to each Fund and
receives from each Fund a fee for providing these
services. See "MANAGEMENT OF THE FUNDS -
Investment Adviser."
Dividends and Capital Gains...... Dividends from net income, excluding short-term
capital gains, are declared daily and paid monthly.
Dividends from short-term capital gains, if any,
are declared and paid as deemed appropriate.
Other Information................ U.S. Bank is the Funds' custodian. BISYS Fund
Services ("BISYS" or "Distributor" or
"Administrator") serves as the distributor and
administrator of the Funds. BISYS Fund Services
Ohio, Inc. ("Transfer Agent") serves as the
transfer agent and dividend disbursing agent and
provides certain accounting services for the
Trust.
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FUND EXPENSES
The following expense tables indicate costs and expenses that an investor
should anticipate incurring either directly or indirectly as a Shareholder of a
Fund.
4
<PAGE>
FEE TABLE
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<CAPTION>
QUALIVEST QUALIVEST QUALIVEST
U.S. TREASURY MONEY MARKET TAX-FREE MONEY
MONEY MARKET FUND FUND MARKET FUND
----------------- ------------ --------------
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SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)..... None None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering
price).................................. None None None
Deferred Sales Charge (as a percentage of
redemption proceeds).................... None None None
Redemption Fees (as a percentage of
redemption proceeds).................... None None None
Exchange Fees............................. None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets
annualized)
Management Fees After Waiver1............. 0.00% 0.25% 0.00%
12b-1 Fees2............................... 0.20% 0.00% 0.25%
Other Expenses............................ 0.32% 0.27% 0.55%
----- ----- -----
Total Fund Operating Expenses After
Waiver3................................. 0.52% 0.52% 0.80%
----- ----- -----
----- ----- -----
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1 Qualivest has agreed to temporarily waive a portion of its investment advisory
fee for all of the Funds for the current fiscal year. Waived fees cannot be
recovered at a future date. Absent the advisory fee waiver, "Management Fees"
as a percentage of average daily net assets would be 0.35% for each of the
Funds. See "MANAGEMENT OF THE FUNDS--Investment Adviser."
2 The Money Market Fund has determined that it will not pay 12b-1 fees under the
Distribution Plan, and the U.S. Treasury Fund has determined that it will pay
0.20% in 12b-1 fees under the Distribution Plan, through the current fiscal
year. Otherwise, "12b-1 Fees" as a percentage of average daily net assets are
payable at an annual rate of up to 0.25% for each Fund. See "DISTRIBUTION
PLAN."
3 Absent the waiver of the investment advisory fee, "Total Fund Operating
Expenses" as a percentage of average daily net assets would be 0.87% for the
U.S. Treasury Fund, 0.62% for the Money Market Fund and 1.15% for the Tax-Free
Money Market Fund.
The purpose of this table is to assist the prospective investor in
understanding the various costs and expenses that a Shareholder in the Funds
will bear. The table has been restated to reflect the current fees for the
Funds.
5
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EXAMPLE*
An investor would pay the following expenses on a $1,000 investment in Class
Q Shares, assuming (1) 5% annual return, and (2) redemption at the end of each
time period:
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QUALIVEST QUALIVEST QUALIVEST
U.S. TREASURY MONEY MARKET TAX-FREE MONEY
MONEY MARKET FUND FUND MARKET FUND
----------------- ------------ --------------
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1 Year........................................ $ 5 $ 5 $ 8
3 Years....................................... $17 $ 17 $ 26
5 Years....................................... $29 $ 29 $ 44
10 Years...................................... $65 $ 65 $ 99
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* This example should not be considered a representation of future expenses,
which may be more than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual return. Actual return may be greater or less than the assumed amount.
6
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SELECTED FINANCIAL INFORMATION
The following tables of selected financial information are included to
assist Shareholders in evaluating the performance of the Funds since their
commencements of operations through July 31, 1995. The information set forth in
these tables has been audited by Deloitte & Touche LLP, the Trust's independent
auditors, whose report on the Funds' financial statements is included in the
Funds' Annual Report, which may be obtained without charge, and is incorporated
by reference in the Funds' Statement of Additional Information. The Annual
Report also includes Management's Discussion of Fund Performance. This
information should be read in conjunction with the financial statements.
<TABLE><CAPTION>
QUALIVEST
QUALIVEST U.S. TREASURY QUALIVEST TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
JANUARY 11, 1995 TO JANUARY 10, 1995 TO JANUARY 9, 1995 TO
JULY 31, 1995(A) JULY 31, 1995(A) JULY 31, 1995(A)
----------------------- ----------------- -----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 1.000 $ 1.000 $ 1.000
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........... 0.029 0.031 0.017
DISTRIBUTIONS
Net investment income........... (0.029) (0.031) (0.017)
------- -------- -------
NET ASSET VALUE, END OF PERIOD...... $ 1.000 $ 1.000 $ 1.000
------- -------- -------
------- -------- -------
TOTAL RETURN(b)..................... 2.90% 3.13% 1.73%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000)......................... $9,659 $55,346 $1,250
Ratio of expenses to average net
assets(c)..................... 0.61% 0.54% 0.85%
Ratio of net investment income
to average net assets(c)...... 5.25% 5.57% 3.19%
Ratio of expenses to average net
assets*(c).................... 1.01% 0.90% 1.21%
Ratio of net investment income
to average net assets*(c)..... 4.86% 5.22% 2.83%
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* During the period the investment advisory and custodian fees were voluntarily
reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
7
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INVESTMENT OBJECTIVES AND POLICIES
GENERAL
The U.S. Treasury Fund. The investment objective of the U.S. Treasury Fund is
to seek current income consistent with liquidity and stability of principal. It
invests primarily in short-term U.S. Treasury bills, notes, and bonds and in
other money market instruments issued or guaranteed by the U.S. Government.
The Money Market Fund. The investment objective of the Money Market Fund is
to seek current income consistent with liquidity and stability of principal. It
invests in high quality short-term money market instruments.
The Tax-Free Money Market Fund. The investment objective of the Tax-Free
Money Market Fund is to seek current income, free from federal income tax,
consistent with liquidity and stability of principal. Under normal market
conditions and as a fundamental policy, at least 80% of the net assets of the
Tax-Free Money Market Fund will be invested in high quality money market
instruments the interest on which is both exempt from federal income tax and not
treated as a preference item for individuals for purposes of the federal
alternative minimum tax.
* * * *
The investment objective of each Fund is a fundamental policy and as such may
not be changed without a vote of the holders of a majority of the outstanding
Shares of that Fund. Other policies of a Fund may be changed without a vote of
the holders of a majority of outstanding Shares of that Fund unless (i) the
policy is expressly deemed to be a fundamental policy, or (ii) the policy is
expressly deemed to be changeable only by such majority vote. There can be no
assurance that the investment objective of any Fund will be achieved.
INVESTMENT POLICIES
Although each Fund has the same investment adviser and a similar investment
objective, its particular portfolio securities and yield may differ due to
differences in the types of permitted investments, cash flow, and the
availability of particular portfolio investments.
U.S. TREASURY FUND
Under normal market conditions, the U.S. Treasury Fund invests at least 65% of
its total assets in short-term U.S. Treasury bills, notes, and bonds and in
other obligations issued or guaranteed by the U.S. Government. The U.S. Treasury
Fund may invest up to 35% of its total assets in other types of high quality
rated money market instruments and money market instruments that, although not
rated, are deemed to be of comparable high quality as determined by Qualivest
pursuant to guidelines adopted by the Board of Trustees.
This Fund expects that a majority of its income will be exempt from state
taxes as a result of its investing in U.S. Government securities whose interest
payments are state tax-exempt. Most states allow for a pass-through of this tax
exemption, so that the Fund's dividend distributions may also be state
tax-exempt with respect to the income earned by the Fund on U.S. Government
securities.
MONEY MARKET FUND
The Money Market Fund invests in high quality rated money market instruments
and other money market instruments that, although not rated, are deemed to be of
comparable high quality as determined by Qualivest pursuant to guidelines
adopted by the Board of Trustees.
8
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TAX-FREE MONEY MARKET FUND
The Tax-Free Money Market Fund invests primarily in high quality money market
obligations issued by or on behalf of states (including the District of
Columbia), territories, and possessions of the United States and their
respective authorities, agencies, instrumentalities, and political subdivisions,
the interest on which is both exempt from federal income tax and not treated as
a preference item for purposes of the federal alternative minimum tax, and
similar tax-exempt money market instruments that, although not rated, are deemed
to be of comparable high quality as determined by Qualivest pursuant to
guidelines adopted by the Board of Trustees ("Municipal Securities"). As a
matter of fundamental policy, under normal market conditions, at least 80% of
the Tax-Free Money Market Fund's net assets will be invested in short-term
Municipal Securities.
The Tax-Free Money Market Fund may invest up to 20% of its net assets in
taxable obligations, the interest on which is either subject to federal income
tax or treated as a preference item for purposes of the federal alternative
minimum tax. At times, Qualivest may determine that, because of unstable
conditions in the markets for Municipal Securities, pursuing the Tax-Free Money
Market Fund's basic investment strategies is inconsistent with the best
interests of the Shareholders of the Tax-Free Money Market Fund. At such times,
Qualivest may use temporary defensive strategies differing from those designed
to achieve the Tax-Free Money Market Fund's investment objective by increasing
the Tax-Free Money Market Fund's holdings in taxable obligations to over 20%
(and up to 100%) of the Tax-Free Money Market Fund's net assets and by holding
uninvested cash reserves pending investment. Taxable obligations may include
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities (some of which may be subject to repurchase agreements),
certificates of deposit and bankers' acceptances of selected banks, and
commercial paper meeting the Tax-Free Money Market Fund's quality standards (as
described below) for tax-exempt commercial paper.
* * * *
Each Fund invests exclusively in U.S. dollar denominated instruments which
Qualivest, acting pursuant to guidelines adopted by the Board of Trustees,
determines present minimal credit risks and which at the time of acquisition are
rated by one or more appropriate NRSROs (e.g., S&P, Moody's and Fitch) within
one of the two highest rating categories for short-term debt obligations or, if
unrated, are of comparable quality. In addition, each Fund except for the
Tax-Free Money Market Fund diversifies its investments so that, with minor
exceptions and except for U.S. Government securities, not more than 5% of its
total assets is invested in the securities of any one issuer, not more than 5%
of its total assets is invested in securities of all issuers rated by the NRSRO
at the time of investment in the second highest rating category for short-term
debt obligations or in unrated securities deemed to be of comparable quality to
securities rated in the second highest rating categories for short-term debt
obligations ("Second Tier Securities") and not more than the greater of 1% of
total assets or one million dollars is invested in the securities of any one
issuer of Second Tier Securities. In addition, no Fund will invest more than 10%
of its net assets in securities that are deemed to be illiquid at the time of
purchase. All securities or instruments in which a Fund invests have remaining
maturities of 397 calendar days (thirteen months) or less. The dollar-weighted
average maturity of the obligations in a Fund will not exceed 90 days.
Subject to the foregoing general limitations, the Funds expect to invest in
the types of securities discussed below under "INVESTMENT TECHNIQUES AND RISK
FACTORS." These securities include short-term obligations
9
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issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, short-term asset-backed and mortgage-related securities,
bankers' acceptances, certificates of deposit and time deposits (including
Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs"),
Canadian Time Deposits ("CTDs"), and Yankee Certificates of Deposit ("Yankee
CDs")), commercial paper (including variable amount master demand notes),
securities issued by other money market investment companies, Guaranteed
Investment Contracts, repurchase agreements, reverse repurchase agreements and
dollar roll agreements.
INVESTMENT TECHNIQUES AND RISK FACTORS
Like any investment program, an investment in a Fund entails certain risks.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. Government obligations in which each Fund may invest include
U.S. Treasury notes, bills, bonds and any other securities directly issued by
the U.S. Government that are available for public investment, which differ only
in their interest rates, maturities, and times of issuance, as well as
"stripped" U.S. Treasury obligations, such as Treasury Receipts issued by the
U.S. Treasury and representing either future interest or principal payments, and
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Stripped securities are issued at a discount to their "face
value" and may exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are returned to
investors. The stripped Treasury obligations in which the Funds may invest do
not include Certificates of Accrual on Treasury Securities ("CATS") or Treasury
Income Growth Receipts ("TIGRs").
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association, are supported by the full
faith and credit of the U.S. Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the Student Loan Marketing
Association, are supported by the discretionary authority of the U.S. Government
to purchase the agency's obligations; still others, such as those of the Federal
Farm Credit Banks or the Federal Home Loan Mortgage Corporation, are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
agencies or instrumentalities if it is not obligated to do so by law. The Funds
will invest in the obligations of such agencies or instrumentalities only when
Qualivest believes that the credit risk with respect thereto is minimal. The
U.S. Government does not guarantee the market value of any security; therefore,
the market value of the U.S. Government obligations in a Fund's portfolio can be
expected to fluctuate as interest rates change.
MORTGAGE-RELATED AND ASSET-BACKED SECURITIES
Investments in these and other derivative securities will not be made for
purposes of leverage or speculation, but rather primarily for conventional
investment or hedging purposes, liquidity, flexibility and to capitalize on
market inefficiencies. Consistent with its investment objective, restrictions
and policies, each of the Funds may invest in mortgage-related money market
securities, which are securities representing interests in "pools" of mortgages
in which payments of both interest and principal on the securities are made
monthly, in effect "passing through" monthly payments made by the individual
borrowers on the residential mortgage loans which underlie the securities (net
of fees paid to the issuer or guarantor of the securities).
10
<PAGE>
Early repayment of principal on mortgage-related securities (arising from
prepayments of principal due to sale of the underlying property, refinancing, or
foreclosure, net of fees and costs which may be incurred) may expose a Fund to a
lower rate of return upon reinvestment of principal. Also, if a security subject
to prepayment has been purchased at a premium, in the event of prepayment, the
value of the premium would be lost. Like other fixed-income securities, when
interest rates rise, the value of a mortgage-related security generally will
decline; however, when interest rates decline, the value of mortgage-related
securities with prepayment features may not increase as much as other
fixed-income securities. For this and other reasons, the stated maturity of a
mortgage-related security may be shortened by unscheduled prepayments on the
underlying mortgages and, accordingly, it is not possible to predict accurately
the security's return to a Fund.
Like mortgages underlying mortgage-backed securities, automobile sales
contracts or credit card receivables underlying asset-backed securities are
subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal prepayment rates tend not to vary much with
interest rates, and the short-term nature of the underlying car loans or other
receivables tends to dampen the impact of any change in the prepayment level.
Certificate holders may also experience delays in prepayment on the certificates
if the full amounts due on underlying sales contracts or receivables are not
realized because of unanticipated legal or administrative costs of enforcing the
contracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors. In certain market
conditions, asset-backed securities may experience volatile fluctuations in
value and periods of illiquidity. If consistent with its investment objective
and policies, each Fund may invest in other asset-backed securities that may be
developed in the future.
Certain issuers of asset-backed securities are investment companies under the
Investment Company Act of 1940 (the "1940 Act"). The Funds intend to conduct
their operations so that they will not invest more than 25% of their total
assets (when combined with investments in securities of other investment
companies, if any) in the obligations of such issuers without obtaining
appropriate regulatory relief.
BANKERS' ACCEPTANCES
The Funds may invest in bankers' acceptances guaranteed by domestic and
foreign banks if at the time of investment the guarantor bank has capital,
surplus, and undivided profits in excess of $100,000,000 (as of the date of its
most recently published financial statements).
CERTIFICATES OF DEPOSIT AND TIME DEPOSITS
The Funds may invest in certificates of deposit and time deposits of domestic
and foreign banks and savings and loan associations if (a) at the time of
investment the depository institution has capital, surplus, and undivided
profits in excess of $100,000,000 (as of the date of its most recently published
financial statements), or (b) the principal amount of the instrument is insured
in full by the Federal Deposit Insurance Corporation.
The Funds may also invest in ECDs, which are U.S. dollar denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the U.S.; ETDs, which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; CTDs, which are essentially the same as
ETDs, except they are issued by Canadian offices of major Canadian banks; and
Yankee CDs, which are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the U.S.
None of the Funds will invest in excess of 10% of its net assets in time
deposits with maturities
11
<PAGE>
in excess of seven days which are subject to penalties upon early withdrawal.
Such time deposits include ETDs and CTDs but do not include certificates of
deposit.
COMMERCIAL PAPER
Within the limitations described above, each Fund may invest in short-term
promissory notes issued by corporations (including variable amount master demand
notes) rated at the time of purchase within the two highest categories assigned
by an NRSRO (e.g., A-2 or better by S&P, Prime-2 or better by Moody's or F-2 or
better by Fitch) or, if not rated, found by Qualivest pursuant to guidelines
adopted by the Board of Trustees to be of comparable quality to instruments that
are so rated. Instruments may be purchased in reliance upon a rating only when
the rating organization is not affiliated with the issuer or guarantor of the
instrument. For a description of the rating symbols of the NRSROs, see the
Appendix to the Statement of Additional Information. The Money Market Fund may
also invest in Canadian Commercial Paper ("CCP"), which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar denominated commercial paper
of a foreign issuer.
Each of the Funds may invest in variable amount master demand notes, which are
unsecured demand notes that permit the indebtedness thereunder to vary, and that
provide for periodic adjustments in the interest rate according to the terms of
the instrument. Because master demand notes are direct lending arrangements
between the Fund and the issuer, they are not normally traded. Although there is
no secondary market in the notes, the Funds may demand payment of principal and
accrued interest at any time. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes (which are
normally manufacturing, retail, financial, and other business concerns) must
satisfy the same criteria as set forth above for commercial paper. Qualivest
will consider the earning power, cash flow, and other liquidity ratios of the
issuers of such notes and will continuously monitor their financial status and
ability to meet payment on demand. In determining average weighted portfolio
maturity, a variable amount master demand note will be deemed to have a maturity
equal to the period of time remaining until the principal amount can be
recovered from the issuer through demand. The period of time remaining until the
principal amount can be recovered under a variable master demand note shall not
exceed seven days.
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES
Each of the Funds may invest up to 25% of its total assets in shares of money
market mutual funds for cash management purposes. The U.S. Treasury Fund expects
to make such purchases only in money market funds that restrict their
investments to U.S. Government securities. A Fund will incur additional expenses
due to the duplication of expenses as a result of investing in other investment
companies.
RESTRICTED SECURITIES
Securities in which the Funds may invest include securities issued by
corporations without registration under the Securities Act of 1933, as amended
(the "1933 Act"), in reliance on the so-called "private placement" exemption
from registration which is afforded by Section 4(2) of the 1933 Act ("Section
4(2) securities"). Section 4(2) securities are restricted as to disposition
under the federal securities laws, and generally are sold to institutional
investors, such as the Funds, who agree that they are purchasing the securities
for investment and not with a view to public distribution. Any resale must also
generally be made in an exempt transaction. Section 4(2) securities are normally
resold to other
insti-
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tutional investors through or with the assistance of the issuer or investment
dealers who make a market in such Section 4(2) securities, thus providing
liquidity. Pursuant to procedures adopted by the Board of Trustees, Qualivest
may determine Section 4(2) securities to be liquid if such securities are
readily marketable. These securities may include securities eligible for resale
under Rule 144A under the 1933 Act.
FOREIGN INVESTMENTS
Investments in ECDs, ETDs, CTDs, Yankee CDs, CCP, and Europaper may subject
the Funds to investment risks that differ in some respects from those related to
investments in obligations of U.S. domestic issuers. Such risks include future
adverse political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on such obligations. In
addition, foreign branches of U.S. banks and foreign banks may be subject to
less stringent reserve requirements and to different accounting, auditing,
reporting, and recordkeeping standards than those applicable to domestic
branches of U.S. banks. The Funds will acquire securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers only when
Qualivest believes that the risks associated with such instruments are minimal.
PRIVATE ACTIVITY BONDS
The Tax-Free Money Market Fund may invest in private activity bonds. It should
be noted that the Tax Reform Act of 1986 substantially revised provisions of
prior federal law affecting the issuance and use of proceeds of certain tax-
exempt obligations. A new definition of private activity bonds applies to many
types of bonds, including those which were industrial development bonds under
prior law. Interest on private activity bonds is tax-exempt (and such bonds will
be considered Municipal Securities for purposes of this Prospectus) only if the
bonds fall within certain defined categories of qualified private activity bonds
and meet the requirements specified in those respective categories. If the Tax-
Free Money Market Fund invests in private activity bonds which fall outside
these categories, the interest from such bonds will not be exempt from federal
income tax. The Tax Reform Act generally does not change the federal tax
treatment of bonds issued to finance government operations. For further
information relating to the types of private activity bonds which will be
included in income subject to the alternative minimum tax, see "ADDITIONAL
INFORMATION--Additional Tax Information" in the Statement of Additional
Information.
MUNICIPAL SECURITIES
The Tax-Free Money Market Fund will invest only in those Municipal Securities
which are considered by Qualivest to present minimal credit risks and which at
the time of purchase are rated high quality by an NRSRO (e.g., rated in the top
two categories) or which are unrated at the time of purchase but are determined
to be of comparable quality by Qualivest pursuant to guidelines approved by the
Trust's Board of Trustees. Municipal Securities may be purchased in reliance
upon a rating only where the rating organization is not affiliated with the
issuer or guarantor of the Municipal Securities. If a security is subject to a
demand feature, the security must receive both a short-term and a long-term high
quality rating or must be determined to be of comparable quality by Qualivest;
except that where the demand feature is considered to be "unconditional" under
the 1940 Act, the security may be acquired solely in reliance on a short-term
high quality rating or a determination of comparable quality by Qualivest of the
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unconditional demand feature. The applicable Municipal Securities ratings are
described in the Appendix to the Statement of Additional Information.
The two principal classifications of Municipal Securities which may be held by
the Fund are "general obligation" securities and "revenue" securities. General
obligation securities are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue
securities are payable only from the revenues derived from a particular facility
or class of facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source such as the user of the facility being
financed.
Private activity bonds held by the Fund are in most cases revenue securities
and are not payable from the unrestricted revenues of the issuer. Consequently,
the credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved.
Municipal Securities in which the Fund may invest may also include "moral
obligation" bonds, which are normally issued by special purpose public
authorities. If the issuer of moral obligation bonds is unable to meet its debt
service obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Municipal Securities purchased by the Tax-Free Money Market Fund may include
rated and unrated variable and floating rate tax-exempt notes, which may have a
stated maturity in excess of 397 days but which will, in such event, be subject
to a demand feature that will permit the Fund to demand payment of the principal
of the note either (i) at any time upon not more than thirty days' notice or
(ii) at specified intervals not exceeding 397 days and upon no more than thirty
days' notice. There may be no active secondary market with respect to a
particular variable or floating rate note. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to the
Fund will approximate their par value. Variable and floating rate notes for
which no readily available market exists will be purchased in an amount which,
together with other illiquid securities, exceeds 10% of the Fund's net assets
only if such notes are subject to a demand feature that will permit the Fund to
receive payment of the principal within seven days after demand by the Fund.
The Tax-Free Money Market Fund may acquire zero coupon obligations, which have
greater price volatility than coupon obligations and which will not result in
the payment of interest until maturity.
The Fund may also purchase Municipal Securities on a "when-issued" basis.
"When-issued" securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield, thereby involving the risk that the
yield obtained in the transaction will be less than that available in the market
when delivery takes place. The Fund will not pay for such securities, and no
income accrues on the securities, until they are received. Securities purchased
on a "when-issued" basis are recorded as an asset and are subject to changes in
value based upon changes in the general level of interest rates. The Fund's
commitments to purchase "when-issued" securities will not exceed 25% of the
value of its total assets under normal market conditions, and a commitment by
the Fund to purchase "when-issued" securities will not exceed 60 days.
Opinions relating to the validity of Municipal Securities and to the exemption
of interest thereon from federal income tax are rendered by bond counsel to the
respective issuers at the time of issuance. Neither the Fund nor Qualivest will
review the proceedings relating to the issuance of
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Municipal Securities or the basis for such opinions. Although the Tax-Free Money
Market Fund presently does not intend to do so on a regular basis, it may invest
more than 25% of its total assets in Municipal Securities which are related in
such a way that an economic, business, or political development or change
affecting one such security would likewise affect the other Municipal
Securities. Examples of such securities are obligations the repayment of which
is dependent upon similar types of projects or projects located in the same
state. Such investments would be made only if deemed necessary or appropriate by
Qualivest. To the extent that the Tax-Free Money Market Fund's assets are
concentrated in Municipal Securities that are so related, the Tax-Free Money
Market Fund will be subject to the peculiar risks presented by such Municipal
Securities, such as negative developments in a particular industry or state, to
a greater extent than it would be if the Tax-Free Money Market Fund's assets
were not so concentrated.
PUTS
The Tax-Free Money Market Fund may acquire "puts" with respect to Municipal
Securities held in its portfolio. Under a put, the Tax-Free Money Market Fund
would have the right to sell a specified Municipal Security within a specified
period of time at a specified price. A put would be sold, transferred, or
assigned only with the underlying Municipal Security. The Tax-Free Money Market
Fund will acquire puts solely to either facilitate portfolio liquidity, shorten
the maturity of the underlying Municipal Securities, or permit the investment of
the Tax-Free Money Market Fund's assets at a more favorable rate of return. The
aggregate price of a security subject to a put may be higher than the price
which otherwise would be paid for the security without such an option, thereby
increasing the security's cost and reducing its yield.
REPURCHASE AGREEMENTS
Securities held by the Money Market and Tax-Free Money Market Funds may be
subject to repurchase agreements. Under the terms of a repurchase agreement, a
Fund would acquire securities from financial institutions, subject to the
seller's agreement to repurchase such securities at a mutually agreed upon date
and price, which includes interest negotiated on the basis of current short-term
rates. The seller under a repurchase agreement will be required to maintain at
all times the value of collateral held pursuant to the agreement at not less
than the repurchase price (including accrued interest). If a seller defaults on
its repurchase obligations, a Fund may suffer a loss in disposing of the
security subject to the repurchase agreement. For further information about
repurchase agreements, see "INVESTMENT OBJECTIVES AND POLICIES--Additional
Information on Portfolio Instruments--Repurchase Agreements" in the Statement of
Additional Information.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLL AGREEMENTS
Each of the Funds may also borrow funds by entering into reverse repurchase
agreements and dollar roll agreements in accordance with applicable investment
restrictions. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase them, or substantially similar securities in the case of a dollar
roll agreement, at a mutually agreed-upon date and price. A dollar roll
agreement is identical to a reverse repurchase agreement except for the fact
that substantially similar securities may be repurchased. At the time a Fund
enters into a reverse repurchase agreement or dollar roll agreement, it will
place in a segregated custodial account assets such as U.S. Government
securities or other liquid high grade debt securities consistent with the Fund's
investment restrictions having a value equal to the repurchase price
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<PAGE>
(including accrued interest), and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements and dollar roll agreements involve the risk that the
market value of the securities sold by a Fund may decline below the price at
which the Fund is obligated to repurchase the securities.
VALUATION OF SHARES
The net asset value of each Fund is determined and its Shares are priced as of
12:00 noon Pacific Time and as of the close of regular trading on the New York
Stock Exchange ("NYSE") (generally 1:00 p.m. Pacific Time) on each Business Day
("Valuation Time"). As used herein a "Business Day" is a day on which the NYSE
is open for trading, the Federal Reserve Bank of San Francisco is open, and any
other day except days on which there are insufficient changes in the value of a
Fund's portfolio securities to materially affect the Fund's net asset value or
days on which no Shares are tendered for redemption and no order to purchase any
Shares is received. Currently, the NYSE or the Federal Reserve Bank of San
Francisco is closed on the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving and Christmas.
Net asset value per Share for a particular class for purposes of pricing sales
and redemptions is calculated by dividing the value of all securities and other
assets belonging to a Fund allocable to such class, less the liabilities charged
to that Fund allocable to such class and any liabilities charged directly to
that class, by the number of such Fund's outstanding Shares of that class.
The assets in each Fund are valued based upon the amortized cost method.
Pursuant to the rules and regulations of the Securities and Exchange Commission
regarding the use of the amortized cost method, each Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less. Although the
Trust seeks to maintain each Fund's net asset value per Share at $1.00, there
can be no assurance that net asset value per Share will not vary.
PURCHASING SHARES
Class Q Shares may be purchased through a broker-dealer who has established a
dealer agreement with the Distributor. Class Q Shares of each Fund are
continuously offered and also may be purchased directly either by mail, by
telephone, or by wire.
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An Account Application Form can be obtained by calling the Trust at
1-800-743-8637.
OTHER INFORMATION REGARDING PURCHASES
Class Q Shares may also be purchased through procedures established by the
Distributor in connection with the requirements of qualified accounts maintained
by or on behalf of certain persons ("Customers") by U.S. Bank or one of its
affiliates. Class Q Shares of the Funds sold to U.S. Bank or an affiliate acting
in a fiduciary, advisory, custodial, agency, or other similar capacity on behalf
of Customers will normally be held of record by U.S. Bank or the affiliate. With
respect to Class Q Shares so sold, it is the responsibility of the holder of
record to transmit purchase or redemption orders to the Distributor and to
deliver funds for the purchase thereof on a timely basis. Beneficial ownership
of such Class Q Shares of the Funds will be recorded by U.S. Bank or one of its
affiliates and reflected in the account statements provided to Customers. U.S.
Bank or one of its affiliates may exercise voting authority for those Class Q
Shares for which it has been granted authority by the Customer.
Purchases of Class Q Shares of the Funds will be executed at the next
calculated net asset value per Share following the receipt by the Trust of an
order to purchase Class Q Shares in good form ("public offering price"). In the
case of orders for the purchase of Class Q Shares placed through a
broker-dealer, the applicable public offering price will be the net asset value
as so determined, but only if the Distributor receives the order prior to the
next Valuation Time for that day and transmits it to the Trust by that Valuation
Time. The broker-dealer is responsible for transmitting such orders promptly. If
the broker-dealer fails to do so, the investor's right to that day's closing
price must be settled between the investor and the broker-dealer. Purchases of
Class Q Shares of any of the Funds will be effected only on a Business Day of
the Funds. An order received prior to a Valuation Time on any Business Day will
be executed at the net asset value determined as of the next Valuation Time on
the date of receipt. An order received after the final Valuation Time on any
Business Day will be executed at the net asset value determined as of the next
Valuation Time on the next Business Day of that Fund. Shares of the Funds
purchased before 12:00 noon Pacific Time begin earning dividends on the same
Business Day. Shares of the Funds purchased after 12:00 noon Pacific Time begin
earning dividends on the next Business Day. All Shares of the Funds continue to
earn dividends through the day before their redemption.
Depending upon the terms of a particular Customer account, U.S. Bank or one of
its affiliates may charge a Customer account fees for services provided in
connection with investment in a Fund. Information concerning these services and
any charges may be obtained from U.S. Bank or the affiliate. This Prospectus
should be read in conjunction with any such information so received.
The Trust reserves the right to reject any order for the purchase of its
Shares in whole or in part, including purchases made through the use of third
party checks and drafts drawn on foreign financial institutions.
Every Shareholder will receive a confirmation of, or account statement
reflecting, each new transaction in the Shareholder's account, which will also
show the total number of Class Q Shares of the respective Fund owned by the
Shareholder. Shareholders may rely on these statements in lieu of certificates.
Certificates representing Class Q Shares of the Funds will not be issued.
EXCHANGE PRIVILEGE
Shareholders may exchange Class Q Shares of one of the Funds for Class Q
Shares offered by another Fund so long as the exchange is made in
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states where it is legally authorized. The exchange will be made on the basis of
the relative net asset values of the Class Q Shares exchanged. Class Q Shares
may not be exchanged for Class A or Class Y Shares of the Funds, or with the
Shares of any other fund of the Trust.
An exchange is considered to be a sale of Class Q Shares for federal income
tax purposes; however, dispositions of Shares of the Funds will not give rise to
a gain or loss if the Funds maintain a net asset value per Share of one dollar.
A Shareholder wishing to exchange his or her Shares may do so by contacting
the Trust at 1-800-743-8637, by contacting their broker-dealer, or by providing
written instructions to the Distributor. For a discussion of risks associated
with unauthorized telephone exchanges, see "REDEEMING SHARES--By Telephone"
below.
REDEEMING SHARES
Shareholders may redeem their Class Q Shares without charge on any day that
net asset value is calculated (see "VALUATION OF SHARES"). Redemptions will be
effected at the net asset value per Share next determined after receipt of a
redemption request by the Distributor. Redemptions may be requested by mail or
by telephone.
BY MAIL
A written request for redemption must be received by the Distributor in order
to honor the request. The Distributor's address is: BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio 43219-3035. The Transfer Agent will require a
signature guarantee by an eligible guarantor institution. The signature
guarantee requirement will be waived if all of the following conditions apply:
(1) the redemption check is payable to the Shareholder(s) of record, and (2) the
redemption check is mailed to the Shareholder(s) at the address of record. The
Shareholder may also have the proceeds mailed to a commercial bank account
previously designated on the Account Application Form. There is no charge for
having redemption proceeds mailed to a designated bank account. To change the
address to which a redemption check is to be mailed, a written request therefor
must be received by the Transfer Agent. In connection with such request, the
Transfer Agent will require a signature guarantee by an eligible guarantor
institution.
For purposes of this policy, the term "eligible guarantor institution" shall
include banks, brokers, dealers, credit unions, securities exchanges and
associations, clearing agencies and savings associations, as those terms are
defined in the Securities Exchange Act of 1934. The Transfer Agent reserves the
right to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.
BY TELEPHONE
Class Q Shares may be redeemed by telephone if the Account Application Form
reflects that the Shareholder has elected that privilege. If the telephone
feature was not originally selected, the Shareholder must provide written
instructions to the Trust to add it. The Shareholder may have the proceeds
mailed to the Shareholder's address or mailed or wired to a commercial bank
account previously designated on the Account Application Form. Under most
circumstances, payments will be transmitted on the next Business Day. Wire
redemption requests may be made by the
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Shareholder by telephone to the Trust at 1-800-743-8637. While the Transfer
Agent currently does not charge a wire redemption fee, the Transfer Agent
reserves the right to impose such a fee in the future.
The Trust's Account Application Form provides that none of BISYS, the Transfer
Agent, Qualivest, the Trust or any of their affiliates or agents will be liable
for any loss, expense or cost when acting upon any oral, wired or electronically
transmitted instructions or inquiries believed by them to be genuine. While
precautions will be taken, as more fully described below, Shareholders bear the
risk of any loss as the result of unauthorized telephone redemptions or
exchanges believed by the Transfer Agent to be genuine. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. These procedures include recording all phone conversations, sending
confirmations to Shareholders within 72 hours of the telephone transaction,
verifying the account name and sending redemption proceeds only to the address
of record or to a previously authorized bank account. If a Shareholder is unable
to contact the Funds by telephone, a Shareholder may also mail the redemption
request to the Distributor at the address above.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next
determined after the Class Q Shares are properly tendered for redemption, as
described above. Payment to Shareholders for Class Q Shares redeemed will be
made within seven days after receipt of the request for redemption, or within
such shorter period as required by law. To the greatest extent possible,
requests from Shareholders of Class Q Shares for next Business Day payments upon
redemption of Shares will be honored if received in good form by the Distributor
before 12:00 noon Pacific Time on a Business Day or, if received after the 12:00
noon Pacific Time, within two Business Days, unless it would be disadvantageous
to that Fund or its Shareholders to sell or liquidate portfolio securities in an
amount sufficient to satisfy requests for payments in that manner.
At various times, the Trust may be requested to redeem Class Q Shares for
which it has not yet received good payment. In such circumstances, the
forwarding of proceeds may be delayed until payment has been collected for the
purchase of such Class Q Shares, which delay may be for 15 days or more. Such
delay may be avoided if Class Q Shares are purchased by wire transfer of federal
funds. The Trust intends to pay cash for all Class Q Shares redeemed, but under
abnormal conditions which make payment in cash unwise, payment may be made
wholly or partly in portfolio securities at their then market value equal to the
redemption price. In such cases, an investor may incur brokerage costs in
converting such securities to cash.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION--Matters Affecting
Redemption" and "NET ASSET VALUE" in the Statement of Additional Information for
examples of when the Trust may suspend the right of redemption or redeem Shares
involuntarily.
MANAGEMENT OF THE FUNDS
TRUSTEES
Overall responsibility for management of the Funds rests with the Trustees of
the Trust, who are elected by the Shareholders of the Trust. The Trust will be
managed by the Trustees in accordance with the laws of the Commonwealth of
Massachusetts governing business trusts. There are currently five Trustees,
three of whom are not "interested persons" of the Trust within the
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meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Trust to supervise actively its day-to-day operations. The
Trustees of the Trust are: George R. Landreth, David F. Jones, John W. Judy,
Raymond H. Lung and David B. Frohnmayer.
INVESTMENT ADVISER
Qualivest Capital Management, Inc., P.O. Box 2758, Portland, Oregon 97208, is
the investment adviser of the Trust. Qualivest, a registered investment adviser,
is a wholly owned subsidiary of U.S. Bank, which is a wholly owned subsidiary of
U.S. Bancorp. U.S. Bancorp is a super-regional financial services holding
company organized under the laws of Oregon in 1968. U.S. Bank, headquartered in
Portland, is a national banking association, chartered in 1891. It offers a wide
variety of full-service and commercial banking operations in over 200 locations
in Oregon. Other services of U.S. Bancorp and its subsidiaries include mortgage
banking, lease financing, consumer financing, commercial finance, international
banking, investment advisory, insurance agency and credit life insurance
services, brokerage and venture capital. As of January 1, 1996, Qualivest had
under management nearly $8.0 billion in assets. It also is investment adviser to
Tax-Free Trust of Oregon, a tax-free municipal bond fund, whose assets were
approximately $310 million at that date.
Subject to the general supervision of the Trust's Board of Trustees and in
accordance with the investment objective, policies and restrictions of each
Fund, Qualivest manages the Funds, makes decisions with respect to and places
orders for all purchases and sales of their portfolio securities, and maintains
each Fund's records relating to such purchases and sales.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Trust, Qualivest receives a fee from each of the
Funds, computed daily and paid monthly, at the annual rate of 0.35% of each
Fund's average daily net assets.
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-3035, a division
of BISYS Group, Inc., is the administrator for each Fund, as well as the other
funds in the Trust, and also acts as the Trust's principal underwriter and
distributor.
The Administrator generally assists in all aspects of the Funds'
administration and operation. For expenses assumed and services provided as
administrator pursuant to its Management and Administration Agreement with the
Trust, BISYS receives a fee from each Fund equal to the lesser of a fee,
computed daily and paid periodically, at an annual rate of 0.13% of such Fund's
average daily net assets, or such other fee as may be agreed upon from time to
time by the Trust and the Administrator. The Administrator may periodically
voluntarily reduce all or a portion of its administrative fee with respect to
any Fund to increase the net income of such Fund available for distribution as
dividends. The voluntary fee reduction will cause the yield of that Fund to be
higher than it would otherwise be in the absence of such a reduction.
The Distributor acts as agent for the Funds in the distribution of their
Shares and, in such capacity, solicits orders for the sale of Shares,
advertises, and pays the cost of advertising, office space and its personnel
involved in such activities. Under its Distribution Agreement with the Trust,
the Distributor may receive compensation under the Class Q Distribution and
Shareholder Service Plan in connection with the sale by it of Class Q Shares.
OTHER SERVICE PROVIDERS
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-3035,
serves as the
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Trust's transfer agent and dividend disbursing agent pursuant to a Transfer
Agency Agreement with the Trust and receives a fee for such services. BISYS Fund
Services Ohio, Inc. also provides certain accounting services for each of the
Funds and receives a fee for such services. Deloitte & Touche LLP serves as
independent auditors for the Trust. United States National Bank of Oregon is the
Funds' custodian. See "MANAGEMENT OF THE TRUST" in the Statement of Additional
Information for further information.
While BISYS Fund Services Ohio, Inc. is a distinct legal entity from BISYS
(the Trust's administrator and distributor), BISYS Fund Services Ohio, Inc. is
considered to be an affiliated person of BISYS under the 1940 Act due to, among
other things, the fact that BISYS Fund Services Ohio, Inc. is owned by
substantially the same persons that directly or indirectly own BISYS.
EXPENSES
Qualivest and the Administrator each bear all expenses in connection with the
performance of its services as investment adviser and administrator,
respectively, other than the cost of securities (including brokerage
commissions, if any) purchased for a Fund. The ratios of operating expenses to
average daily net assets of the Class Q Shares for the period ended July 31,
1995 were as follows: U.S. Treasury Fund--0.61%; Money Market Fund--0.54%; and
Tax-Free Money Market Fund--0.85%.
As a general matter, expenses are allocated to the Class A Shares, Class Q
Shares and Class Y Shares of a Fund on the basis of the relative net asset value
of each class. At present, the only expenses that will be borne solely by Class
Q Shares, other than in accordance with the relative net asset value of the
class, are expenses under the Trust's Class Q Distribution and Shareholder
Service Plan, which relates only to the Class Q Shares.
The Trustees reserve the right, subject to the receipt of relevant regulatory
approvals or rulings, if needed, to allocate certain other expenses to the
Shareholders of a particular class, including Class Q Shares, on a basis other
than relative net asset value, as they deem appropriate ("Class Expenses"). In
such event, Class Expenses would be limited to: transfer agency fees identified
by the Transfer Agent as attributable to a specific class; printing and postage
expenses related to preparing and distributing materials such as Shareholder
reports, prospectuses and proxies to current Shareholders; Blue Sky registration
fees incurred by a class of Shares; Securities and Exchange Commission fees
incurred by a class of Shares; expenses related to administrative personnel and
services as required to support the Shareholders of a specific class; litigation
or other legal expenses relating solely to one class of Shares; and Trustees'
fees incurred as a result of issues relating solely to one class of Shares.
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Advisory Agreement, Qualivest places orders for the
purchase and sale of portfolio investments for the Funds' accounts with brokers
or dealers it selects in its discretion. Broker-dealers selected to execute
portfolio transactions for the Funds may include affiliates of the Trust,
Qualivest or BISYS, provided the charge for any such transaction does not exceed
usual and customary levels.
BANKING LAWS
Federal banking laws and regulations presently prohibit a national bank or any
affiliate thereof from sponsoring, organizing or controlling a registered
open-end investment company continuously engaged in the issuance of its shares,
and generally from underwriting, selling
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or distributing securities, such as Shares of the Funds.
Qualivest is a subsidiary of U.S. Bank, and it and U.S. Bank are affiliates of
a bank holding company. They are therefore subject to applicable federal banking
laws and regulations. Qualivest has been advised by its counsel that it may
perform the advisory services for the Funds required by the Investment Advisory
Agreement and, provided that they do not engage in underwriting, selling or
distribution of the Funds' Shares, Qualivest's national bank affiliates may
perform shareholder servicing activities and may receive compensation without
violating federal banking laws and regulations.
In the event that, due to future events, Qualivest is prohibited from acting
as the Funds' investment adviser, it is probable that the Board of Trustees
would either recommend to Shareholders the selection of another qualified
adviser or, if that course of action appeared impractical, that the Funds be
liquidated.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted a
Distribution and Shareholder Service Plan (the "Plan") with respect to the Class
Q Shares of each Fund. Pursuant to the Plan, each Fund is authorized to pay or
reimburse BISYS, as Distributor of the Class Q Shares of the Fund, for certain
expenses that are incurred in connection with Shareholder and distribution
services. Payments under the Plan will be calculated daily and paid monthly at
an annual rate not to exceed 0.25% of the average daily net assets of Class Q
Shares. As authorized by the Plan, BISYS has entered into a Rule 12b-1 Agreement
with U.S. Bancorp Securities, Inc. ("USBS"), an affiliate of Qualivest, pursuant
to which USBS has agreed to provide certain Shareholder and distribution
services in connection with Class Q Shares of the Funds purchased and held by
USBS for the accounts of its customers and Class Q Shares of the Funds purchased
and held by customers of USBS directly. BISYS will be compensated by the Funds
in an amount equal to its payments to USBS under the Rule 12b-1 Agreement. Such
fee may exceed the actual costs incurred by USBS in providing such services.
Payments under the Plan may be used by BISYS to pay banks and their affiliates
(including U.S. Bank and its affiliates), and other institutions, including
broker-dealers (each a "Participating Organization"), for administration,
distribution, and/or Shareholder service assistance pursuant to an agreement
between BISYS and the Participating Organization. Pursuant to the Plan, the
Distributor may enter into Rule 12b-1 Agreements with Participating
Organizations for providing Shareholder and distribution services to their
customers who are the record or beneficial owners of Class Q Shares. Such
Participating Organizations will be compensated at an annual rate of up to 0.25%
of the average daily net assets of the Class Q Shares held of record or
beneficially by such customers. Under the Plan, a Participating Organization may
include BISYS, its subsidiaries, and its affiliates.
Payments to the Distributor pursuant to the Plan will be used (i) to
compensate Participating Organizations for providing distribution assistance
relating to Class Q Shares, (ii) for promotional activities intended to result
in the sale of Class Q Shares, such as to pay for the preparation, printing and
distribution of prospectuses to other than current Shareholders, and (iii) to
compensate Participating Organizations for providing Shareholder services with
respect to their Customers who are, from time to time, beneficial and record
holders of Class Q Shares.
Fees paid pursuant to the Plan are accrued daily and paid monthly, and are
charged as expenses of Class Q Shares of a Fund as accrued.
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GENERAL INFORMATION
The Plan may be terminated by a vote of 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 Plan or in any
agreements related to the Plan ("Independent Trustees"), or by a vote of a
majority of the holders of Class Q Shares. Any change in the Plan that would
increase materially the distribution expenses paid by a Fund requires
Shareholder approval; otherwise, the Plan may be amended by the Trustees,
including a majority of the Independent Trustees, by a vote cast in person at a
meeting called for the purpose of voting upon the amendment. As long as the Plan
is in effect, the selection or nomination of the Independent Trustees is
committed to the discretion of the Independent Trustees.
DIVIDENDS AND TAXES
The net income, excluding short-term capital gains, of each Fund is declared
daily as a dividend to Shareholders of such Fund at the close of business on the
day of declaration. Share prices on the day following declaration of a dividend
will reflect deduction of the dividend. Dividends consisting of short-term
capital gains are declared from time to time as may be appropriate. Dividends
are paid monthly. A Shareholder will automatically receive all income dividends
and capital gains distributions in additional full and fractional Shares at net
asset value as of the date of declaration, unless the Shareholder elects to
receive dividends or distributions in cash. Such election, or any revocation
thereof, must be made in writing to the Transfer Agent at 3435 Stelzer Road,
Columbus, Ohio 43219-3035, and will become effective with respect to dividends
and distributions having record dates after its receipt by the Transfer Agent.
If a shareholder elects to receive distributions in cash and checks (1) are
returned and marked as "undeliverable" or (2) remain uncashed for six months,
the cash election will be changed automatically and your future dividend and
capi-tal gains distributions will be reinvested in the appropriate Fund. In
addition, any undeliverable checks or checks that remain uncashed for six months
will be canceled and will be reinvested in the Fund.
FEDERAL TAXES
Each Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), so that it generally will not be subject to federal income tax on its
taxable income and gains that are distributed to Shareholders. In order to avoid
a 4% federal excise tax, each Fund intends to distribute each calendar year
substantially all of its taxable income and gains.
Distributions from a Fund's investment company taxable income (which includes,
among other items, dividends, taxable interest and the excess, if any, of net
short-term capital gains over net long-term capital losses) are taxable to
Shareholders as ordinary income. Distributions of net capital gains (the excess
of net long-term capital gains over net short-term capital losses), if any,
designated by a Fund as capital gain dividends, are taxable as long-term capital
gains, regardless of how long the Shareholder has held the Fund's Shares and are
not eligible for the dividends-received deduction.
The Tax-Free Money Market Fund intends to invest a sufficient portion of its
assets in state and municipal obligations so that it will qualify to pay
"exempt-interest dividends" to Shareholders. Such exempt-interest dividends are
excludable from a Shareholder's gross income for federal
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income tax purposes. However, to the extent that the Tax-Free Money Market
Fund's interest income is attributable to certain so-called "private activity
bonds," dividends allocable to such income, while exempt from the regular
federal income tax, will constitute an item of tax preference for purposes of
the alternative minimum tax. In addition, in computing the alternative minimum
tax liability of a corporation, the entire amount of exempt-interest dividends
will be part of an adjustment in computing alternative minimum taxable income
and will have to be taken into account for purposes of the environmental tax
under Code section 59A. Exempt-interest dividends are includable in the tax base
for determining the extent to which social security or railroad retirement
benefits will be subject to federal income tax. The Tax-Free Money Market Fund
may derive taxable investment income and realize capital gains or losses from
portfolio transactions, including the sale of securities; distributions to
Shareholders derived from such income and gains will be taxable to the
Shareholders. Deductions for interest expense incurred (or deemed to be
incurred) to acquire or carry Shares of the Tax-Free Money Market Fund may be
subject to limitations that reduce or eliminate such deductions.
Certain dividends declared by a Fund in October, November or December and paid
during the following January will be treated as having been received by
Shareholders on December 31 in the year the distributions were declared.
Reinvested distributions will be taxable as if they had been received in cash.
Each Fund may be required to withhold federal income tax at the rate of 31% of
all taxable distributions paid to Shareholders who fail to provide a Fund with
their correct taxpayer identification number or to make required certifications
or who have been notified by the Internal Revenue Service ("IRS") that they are
subject to backup withholding. Corporate Shareholders and certain other
Shareholders specified in the Code are exempt from backup withholding. Backup
withholding is not an additional tax and any amounts withheld may be credited
against the Shareholder's federal income tax liability.
Shareholders of the Funds should be aware that under the laws of some state
and local taxing authorities, distributions from a Fund that are attributable to
interest earned on certain U.S. Government securities may not be subject to
state or local taxes. Shareholders of the Tax-Free Money Market Fund should be
aware that under the laws of some state and local taxing authorities,
distributions from the Fund that are attributable to interest on state and
municipal securities issued within the Shareholder's own state may not be
subject to state or local taxes.
Shareholders will be furnished annually with information relating to the
nature and amounts of distributions made by a Fund.
The preceding discussion is only a summary of some of the federal tax
considerations generally affecting the Funds and their Shareholders and does not
address every possible situation. Distributions (including exempt-interest
dividends) may be subject to state, local and foreign taxes, and non-U.S.
Shareholders may be subject to U.S. tax rules that differ significantly from
those summarized herein. Persons who may be "substantial users" (or "related
persons" of substantial users) of facilities financed by private activity bonds
may suffer adverse tax consequences from investing in the Tax-Free Money Market
Fund. Prospective Shareholders should consult their tax advisers with respect to
the effect of investing in a Fund. For additional information relating to taxes,
see "ADDITIONAL INFORMATION--Additional Tax Information" in the Statement of
Additional Information.
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<PAGE>
GENERAL INFORMATION
ORGANIZATION OF THE TRUST
The Trust was organized as a Massachusetts business trust in 1994 and
currently offers thirteen funds. The Shares of all of the funds of the Trust,
other than the U.S. Treasury, Money Market and Tax-Free Money Market Funds, are
offered in three separate classes: Class A Shares, Class C Shares and Class Y
Shares. Shares of each of the U.S. Treasury, Money Market and Tax-Free Money
Market Funds are also offered in three separate classes: Class A Shares, Class Q
Shares and Class Y Shares. Each Share represents an equal proportionate interest
in a Fund with other Shares of the same Fund, and is entitled to such dividends
and distributions out of the income earned on the assets belonging to that Fund
as are declared at the discretion of the Trustees. Shares are without par value.
Shareholders are entitled to one vote for each dollar of value invested, and a
proportionate fractional vote for any fraction of a dollar invested, and will
vote in the aggregate and not by fund except as otherwise expressly required by
law.
An annual or special meeting of Shareholders to conduct necessary business is
not required by the Trust's Declaration of Trust, the 1940 Act or other
authority except, under certain circumstances, to elect Trustees, amend the
Declaration of Trust, approve an investment advisory agreement and satisfy
certain other requirements. To the extent that such a meeting is not required,
the Trust may elect not to have an annual or special meeting.
The Trust will call a special meeting of Shareholders for purposes of
considering the removal of one or more Trustees upon written request therefor
from Shareholders holding not less than 10% of the outstanding votes of the
Trust. At such a meeting, a quorum of Shareholders (constituting a majority of
votes attributable to all outstanding Shares of the Trust), by majority vote,
has the power to remove one or more Trustees.
MULTIPLE CLASSES OF SHARES
In addition to Class Q Shares, the Trust also offers Class A and Class Y
Shares of each of the Funds. Class A Shares are offered to the general public,
while Class Y Shares are sold through procedures established by the Distributor
only to certain institutional investors and to bank trust departments purchasing
Shares on behalf of fiduciary, advisory, agency, custody or other similar
accounts maintained by, or on behalf of, their customers. Class A Shares are not
sold subject to a sales change and bear expenses of up to 0.40% of the average
daily net assets of the Class A Shares under a Plan pertaining to Class A
Shares. Class Y Shares are not sold subject to a sales load and do not bear
expenses under the Plans pertaining to Class A and Class Q Shares. In addition,
Class A Shares may bear additional retail transfer agency expenses not
applicable to Class Q and Class Y Shares. A salesperson or other person entitled
to receive compensation for selling or servicing the Shares may receive
different compensation with respect to one particular class of Shares over
another in the same Fund. For further details regarding eligibility requirements
for the purchase of Class A and Class Y Shares, call the Trust at
1-800-743-8637.
The amount of dividends payable with respect to Class Y Shares will exceed
dividends on Class Q Shares as a result of the Plan fee applicable to Class Q
Shares. The amount of dividends payable with respect to Class Y Shares and Class
Q Shares will exceed dividends on Class A Shares as a result of the Plan fee
applicable to Class A Shares and because Class A Shares may bear additional
retail transfer agency expenses.
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Each Fund intends to seek a ruling from the IRS to the effect that differing
distributions among the classes of its Shares will not result in the Fund's
dividends or other distributions being regarded as "preferential dividends"
under the Code. While similar rulings have been issued by the IRS, complete
assurance cannot, of course, be given that the Funds will receive such rulings.
For additional information, including a discussion of the consequences were the
IRS to decline to grant the requested rulings, see the Statement of Additional
Information.
PERFORMANCE INFORMATION
From time to time performance information for the Funds showing their average
annual total return, aggregate total return and/or yield may be presented in
advertisements, sales literature and Shareholder reports. In addition, tax
equivalent yield may be presented in advertisements, sales literature and
Shareholder reports of the Tax-Free Money Market Fund. Such performance figures
are based on historical earnings and are not intended to indicate future
performance.
Standardized yield and total return quotations will be computed separately for
Class A, Class Q and Class Y Shares. Because of differences in the fees and/or
expenses borne by Class A, Class Q and Class Y Shares of the Funds, the net
yield and total return on Class A Shares can be expected, at any given time, to
be lower than the net yield and total return on Class Q and Class Y Shares for
the same period, and the net yield and total return on Class Q Shares of the
Funds can be expected to be lower than the net yield and total return on Class Y
Shares for the same period.
Investors may also judge the performance of any class of Shares or Fund by
comparing or referencing it to the performance of other mutual funds with
comparable investment objectives and policies through various mutual fund or
market indices such as those prepared by various services, which indices may be
published by such services or by other services or publications, including, but
not limited to, ratings published by Morningstar, Inc. In addition to
performance information, general information about the Funds that appears in
such publications may be included in advertisements, in sales literature and in
reports to Shareholders. For further information regarding such services and
publications, see "ADDITIONAL INFORMATION--Performance Comparisons" in the
Statement of Additional Information.
Total return and yield are functions of the type and quality of instruments
held in the portfolio, operating expenses, and market conditions. Any fees
charged with respect to customer accounts for investing in Shares of the Funds
will not be included in performance calculations; such fees, if charged, will
reduce the actual performance from that quoted. In addition, if Qualivest and
BISYS voluntarily reduce all or part of their respective fees, the total return
of such Fund will be higher than it would otherwise be in the absence of such
voluntary fee reductions.
ACCOUNT SERVICES
Shareholders of the Trust may obtain current price, yield and other
performance information on any of the Funds or any of the Trust's funds 24 hours
a day by calling 1-800-743-8637 from any touch-tone telephone.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants. Inquiries regarding the Trust may be
directed in writing to Qualivest Funds at 3435 Stelzer Road, Columbus, Ohio
43219, or by calling toll free 1-800-743-8637.
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No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Funds
or their Distributor. This Prospectus does not constitute an offering by the
Funds or by the Distributor in any jurisdiction in which such offering may not
lawfully be made.
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QUALIVEST MONEY
MARKET FUNDS
CLASS Q SHARES
Qualivest Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035 MONEY MARKET FUND
Investment Adviser
Qualivest Capital Management, Inc. TAX-FREE MONEY MARKET FUND
P.O. Box 2758
Portland, Oregon 97208
U.S. TREASURY MONEY MARKET FUND
Administrator & Distributor Prospectus Dated: November 15, 1995
BISYS Fund Services as supplemented: August 1, 1996.
3435 Stelzer Road
Columbus, Ohio 43219-3035
Legal Counsel
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
Auditors
Deloitte & Touche LLP
1700 Courthouse Plaza Northeast
Dayton, Ohio 45402
MUTUAL FUNDS
For more information, about these - Are not insured by the FDIC
funds or your account, contact your - Are not deposits or other
investment representative or call obligations of, or
1-800-743-8637. guaranteed by, any bank.
- Are subject to investment
risks, including the
possible loss of the
principal amount invested
- May involve sales charges
and other fees
