As filed with the Securities and Exchange Commission on April 10, 1996
File No. 33-79194
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X/
Post-Effective Amendment No. 8 / X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X/
Amendment No. 10 / X/
QUALIVEST FUNDS
---------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219-3035
--------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: 1-800-743-8637
Jeffrey L. Steele, Esq.
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
Copies to:
George R. Landreth Robert Tuch, Esq.
BISYS Fund Services BISYS Fund Services
3435 Stelzer Road 3435 Stelzer Road
Columbus, Ohio 43219-3035 Columbus, Ohio 43219-3035
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
-----
x on April 30, 1996 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
----------------------------------------------------------------
* Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant filed the notice required by
Rule 24f-2 with respect to its fiscal year ended July 31, 1995 on September
27, 1995, and Registrant intends to file the notice required by Rule 24f-2
with respect to its fiscal year ending July 31, 1996 on or before September
29, 1996.
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST LARGE COMPANIES VALUE FUND
QUALIVEST SMALL COMPANIES VALUE FUND
QUALIVEST INTERNATIONAL OPPORTUNITIES FUND
QUALIVEST OPTIMIZED STOCK FUND
QUALIVEST INTERMEDIATE BOND FUND
QUALIVEST DIVERSIFIED BOND FUND
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
Incorporated by reference from File No. 33-79194, which was filed pursuant
to Rule 497(c) under the Securities Act of 1933 on November 16, 1995 and
initially filed in electronic format as part of Post-Effective Amendment No. 7
to File Nos. 33-79194 and 811-8526 on January 26, 1996.
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Tables
3. Condensed Financial
Information................. Selected Financial Information
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Techniques and Risk
Factors; General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares; Sales Charges on the Equity
and Income Funds; Distribution
Plans
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST LARGE COMPANIES GROWTH FUND
QUALIVEST MICRO CAP VALUE FUND
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Table
3. Condensed Financial
Information................. Inapplicable
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Techniques and Risk
Factors; General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares; Sales Charges; Distribution
Plans
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST ALLOCATED CONSERVATIVE FUND
QUALIVEST ALLOCATED BALANCED FUND
QUALIVEST ALLOCATED GROWTH FUND
QUALIVEST ALLOCATED AGGRESSIVE FUND
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Tables
3. Condensed Financial
Information................. Inapplicable
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Objectives and Poli-
cies -- Underlying Funds;
Underlying Funds' Investment
Techniques and Risk Factors;
General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares; Sales Charges; Distribution
Plans
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
Incorporated by reference from File No. 33-79194, which was filed pursuant
to Rule 497(c) under the Securities Act of 1933 on November 16, 1995 and
initially filed in electronic format as part of Post-Effective Amendment No. 7
to File Nos. 33-79194 and 811-8526 on January 26, 1996.
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Table
3. Condensed Financial
Information................. Selected Financial Information
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Techniques and Risk
Factors; General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares; Distribution Plan
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST LARGE COMPANIES VALUE FUND
QUALIVEST SMALL COMPANIES VALUE FUND
QUALIVEST INCOME EQUITY VALUE FUND
QUALIVEST INTERNATIONAL OPPORTUNITIES FUND
QUALIVEST OPTIMIZED STOCK FUND
QUALIVEST INTERMEDIATE BOND FUND
QUALIVEST DIVERSIFIED BOND FUND
QUALIVEST TAX-FREE NATIONAL BOND FUND
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
Incorporated by reference from File No. 33-79194, which was filed pursuant
to Rule 497(c) under the Securities Act of 1933 on November 16, 1995 and
initially filed in electronic format as part of Post-Effective Amendment No. 7
to File Nos. 33-79194 and 811-8526 on January 26, 1996.
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Tables
3. Condensed Financial
Information................. Selected Financial Information
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Techniques and Risk
Factors; General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST LARGE COMPANIES GROWTH FUND
QUALIVEST MICRO CAP VALUE FUND
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Table
3. Condensed Financial
Information................. Inapplicable
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Techniques and Risk
Factors; General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST ALLOCATED CONSERVATIVE FUND
QUALIVEST ALLOCATED BALANCED FUND
QUALIVEST ALLOCATED GROWTH FUND
QUALIVEST ALLOCATED AGGRESSIVE FUND
Form N-1A Part A Item Prospectus Caption
- --------------------- ------------------
1. Cover page.................. Cover Page
2. Synopsis.................... Prospectus Summary; Fund Expenses;
Fee Tables
3. Condensed Financial
Information................. Inapplicable
4. General Description of
Registrant.................. Investment Objectives and Policies;
Investment Objectives and Poli-
cies -- Underlying Funds;
Underlying Funds' Investment
Techniques and Risk Factors;
General Information
5. Management of the Fund...... Management of the Funds
5A. Management's Discussion of
Fund Performance............ Inapplicable
6. Capital Stock and Other
Securities.................. Dividends and Taxes; General
Information
7. Purchase of Securities
Being Offered............... Valuation of Shares; Purchasing
Shares
8. Redemption or Repurchase.... Redeeming Shares
9. Pending Legal Proceedings... Inapplicable
<PAGE>
QUALIVEST FUNDS
CROSS REFERENCE SHEET
Required by Rule 404
under the Securities Act of 1933
QUALIVEST LARGE COMPANIES VALUE FUND
QUALIVEST LARGE COMPANIES GROWTH FUND
QUALIVEST SMALL COMPANIES VALUE FUND
QUALIVEST MICRO CAP VALUE FUND
QUALIVEST INCOME EQUITY VALUE FUND
QUALIVEST INTERNATIONAL OPPORTUNITIES FUND
QUALIVEST OPTIMIZED STOCK FUND
QUALIVEST INTERMEDIATE BOND FUND
QUALIVEST DIVERSIFIED BOND FUND
QUALIVEST TAX-FREE NATIONAL BOND FUND
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
QUALIVEST ALLOCATED CONSERVATIVE FUND
QUALIVEST ALLOCATED BALANCED FUND
QUALIVEST ALLOCATED GROWTH FUND
QUALIVEST ALLOCATED AGGRESSIVE FUND
Statement of Additional
Form N-1A Part B Item Information Caption
- --------------------- -----------------------
10. Cover Page.................. Cover Page
11. Table of Contents.......... Table of Contents
12. General Information and
History..................... Inapplicable
13. Investment Objectives and
Policies.................... Investment Policies
14. Management of the Fund...... Management of the Trust - Trustees
and Officers
15. Control Persons and Principal
Holders of Securities....... Additional Information - Principal
Shareholders
16. Investment Advisory and Other
<PAGE>
Services.................... Management of the Trust -
Investment Adviser; Management of
the Trust - Distributor; Management
of the Trust - Custodians, Transfer
Agent and Fund Accounting Services;
Management of the Trust - Auditors
17. Brokerage Allocation........ Management of the Trust - Portfolio
Transactions
18. Capital Stock and Other
Securities.................. Additional Information -
Description of Shares
19. Purchase, Redemption and
Pricing of Securities
Being Offered............... Additional Purchase and Redemption
Information
20. Tax Status.................. Additional Information - Additional
Tax Information
21. Underwriters................ Management of the Trust -
Distributor
22. Calculation of Performance
Data........................ Additional Information - Yields of
the Money Funds; Additional
Information - Yields of the Parent
Funds, the Equity Funds and the
Income Funds
23. Financial Statements........ Additional Information - Financial
Statements
<PAGE>
QUALIVEST FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-743-8637
Qualivest Funds (the "Trust") is an open-end management investment company
which offers seventeen 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 Large Companies Growth Fund; and
- Qualivest Micro Cap Value 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 the Funds, contained in
a Statement of Additional Information dated May 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 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 A Shares
and Class C Shares of each Fund. Class A and Class C Shares of the Funds
are currently offered to the general public. Each Fund also offers a class
of Shares known as Class Y Shares to certain qualified institutional
investors.
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.
<PAGE>
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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1996.
- 2 -
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares Offered . . . . . . . . . . . . . . . . . . . . . . . . . .
Offering Price and Sales Charges . . . . . . . . . . . . . . . . .
Minimum Purchase . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives . . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors and Special Considerations . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Dividends and Capital Gains . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . .
Guide to Investing in the Qualivest Funds . . . . . . . . . . . .
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT TECHNIQUES AND RISK FACTORS . . . . . . . . . . . . . . . .
Micro Capitalization Securities . . . . . . . . . . . . . . . . .
Put and Call Options . . . . . . . . . . . . . . . . . . . . . . .
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Transactions . . . . . . . . . . . . . . . . . .
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . .
When-Issued and Delayed-Delivery Transactions . . . . . . . . . .
Lending of Portfolio Securities . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . .
Reverse Repurchase Agreements and Dollar Roll Agreements . . . . .
Mortgage-Related and Asset-Backed Securities . . . . . . . . . . .
Medium-Grade Securities . . . . . . . . . . . . . . . . . . . . .
U.S. Government Securities . . . . . . . . . . . . . . . . . . . .
Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . . . .
Certificates of Deposit and Time Deposits . . . . . . . . . . . .
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . .
Securities Issued by Other Investment Companies . . . . . . . . .
Restricted Securities . . . . . . . . . . . . . . . . . . . . . .
- 3 -
<PAGE>
TABLE OF CONTENTS
Page
----
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone or by Wire . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Purchases . . . . . . . . . . . . . .
SALES CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Class C Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . .
Reduced Sales Charges -- Class A Shares . . . . . . . . . . . . .
Sales Charge Waivers . . . . . . . . . . . . . . . . . . . . . . .
Senior Citizens Discount . . . . . . . . . . . . . . . . . . . . .
Concurrent Purchases . . . . . . . . . . . . . . . . . . . . . . .
Letters of Intent . . . . . . . . . . . . . . . . . . . . . . . .
Rights of Accumulation . . . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares . . .
Factors to Consider When Selecting Class A Shares or Class C
Shares of the Funds . . . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . .
Conversion Feature . . . . . . . . . . . . . . . . . . . . . . . .
QUALIVEST INDIVIDUAL RETIREMENT ACCOUNTS ("IRA") . . . . . . . . . . .
Simplified Employee Pension Plan ("SEP/IRA") . . . . . . . . . . .
Salary Reduction Simplified Employee Pension Plan
("SAR-SEP/IRA") . . . . . . . . . . . . . . . . . . . . . . .
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . .
Auto Withdrawal Plan . . . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Redemption of Shares . . . . . . . . .
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . .
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Administrator and Distributor . . . . . . . . . . . . . . . . . .
Other Service Providers . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . .
Banking Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4 -
<PAGE>
TABLE OF CONTENTS
Page
----
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . . . . . .
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directed Dividend Option . . . . . . . . . . . . . . . . . . . . .
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . . . .
Multiple Classes of Shares . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . .
Account Services . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5 -
<PAGE>
PROSPECTUS SUMMARY
Shares Offered
Class A and Class C Shares of the Qualivest Large Companies Growth Fund
(the "Large Companies Growth Fund") and the Qualivest Micro Cap Value Fund
(the "Micro Cap Fund") (collectively, the "Funds"), which are two 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 and Sales Charges
Each Fund offers investors a choice of Class A and Class C Shares, which
differ principally with respect to sales charges and the rate of expenses
to which they are subject. The public offering price of Class A Shares of
each Fund is equal to the net asset value per Share plus a sales charge
equal to 4.50% of the public offering price, reduced when the total
purchase amount is $50,000 or more (see "SALES CHARGES -- Class A Shares").
Under certain circumstances, the sales charge may be eliminated. The
public offering price of Class C Shares of each Fund is equal to the net
asset value per Share, but investors may be subject to a contingent
deferred sales charge ("CDSC") of 1.00% when Class C Shares are redeemed
less than one year after purchase.
Minimum Purchase
$500 minimum initial purchase per Fund, with $100 minimum subsequent
investments. Such minimum initial investment may be waived for certain
purchasers and is reduced to $50 for investors using the Auto Invest Plan
described herein, and such investors are subject to a $50 minimum for each
subsequent investment in a Fund.
Investment Objectives
- 6 -
<PAGE>
The Large Companies Growth Fund seeks long-term capital appreciation.
- -------------------------------
The Micro Cap Fund seeks capital appreciation.
- ------------------
Investment Policies
The Large Companies Growth Fund. Under normal market conditions, the Large
- -------------------------------
Companies Growth Fund will invest at least 65% of its total assets in
equity securities, including common stocks and securities convertible into
common stocks, of companies with a market capitalization of at least $1
billion at the time of purchase.
The Micro Cap Fund. Under normal market conditions, the Micro Cap Fund
- ------------------
will invest at least 65% of its total assets in equity securities,
including common stocks and securities convertible into common stocks, of
companies with a market capitalization of less than $500 million at the
time of purchase.
Risk Factors and Special Considerations
An investment in the Funds involves a certain amount of risk and may not be
suitable for all investors. The Micro Cap Fund invests in small companies,
which may have more volatile price fluctuations and less liquid securities
markets than larger companies. 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. See "MANAGEMENT OF THE FUNDS -
Investment Adviser."
Dividends and Capital Gains
Dividends from net income are declared and paid quarterly for the Funds.
Net realized capital gains are distributed at least annually.
Other Information
U.S. Bank ("Custodian") 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.
- 7 -
<PAGE>
Guide to Investing in the Qualivest Funds
Purchase orders for the Funds received by the Distributor prior to 1:00
p.m. Pacific Time will become effective that day.
- - Minimum Initial Investment.......................... $500
(Such minimum may be reduced for certain investors.)
- - Minimum Initial Investment for
IRAs and other qualified retirement plans........... $ 50
- - Minimum Subsequent Investment....................... $100
(Such minimum may be reduced for certain investors.)
- - Minimum Subsequent Investment for IRAs
and other qualified retirement plans................ $ 50
Shareholders may exchange Shares of a Fund for Shares of the same class of
another fund by telephone or mail. See "PURCHASING SHARES -- Exchange
Privilege" for more information.
- - Minimum Initial Exchange............................ $500
(No minimum for subsequent exchanges.)
Shareholders may redeem Shares by telephone, mail or through a Fund's Auto
Withdrawal Plan.
All dividends and distributions will be automatically reinvested at net
asset value in additional Shares of the same class of the applicable Fund
unless cash payment is requested.
See "PURCHASING SHARES" and "REDEEMING SHARES" for more information.
FUND EXPENSES
The following expense table indicates costs and expenses that an investor
should anticipate incurring either directly or indirectly as a Shareholder
of a Fund during its first fiscal year of operation. The numbers reflect
estimated levels of operating expenses.
- 8 -
<PAGE>
FEE TABLE
Qualivest Large Qualivest Micro
Companies Growth Fund Cap Value Fund
--------------------- --------------
Class A Class C Class A Class C
------- ------- ------- -------
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . . . . . . . . 4.50% None 4.50% None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) . . . None None None None
Deferred Sales Charge (as a
percentage of redemption
proceeds)1 . . . . . . . . . . . . . None 1.00% None 1.00%
Redemption Fees (as a percentage
of redemption proceeds) . . . . . . None None None None
Exchange Fees . . . . . . . . . . . . None None None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00%
12b-1 Fees2 . . . . . . . . . . . . . 0.25% 1.00% 0.25% 1.00%
Other Expenses . . . . . . . . . . . 0.50% 0.50% 0.50% 0.50%
---- ---- ---- ----
Total Fund Operating Expenses . . . . 1.75% 2.50% 1.75% 2.50%
==== ==== ==== ====
- --------------------------------
1 A 1% CDSC is imposed only on redemptions of Shares redeemed less than
one year after purchase, except for redemptions by certain
"Institutional Investors" as defined below under "SALES CHARGES --
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares."
2 As a result of the payment of 12b-1 fees, long-term Shareholders of
the Funds may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of
Securities Dealers, Inc.
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.
Example*
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of each time
period:
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<PAGE>
Qualivest Large Qualivest
Companies Growth Fund Micro Cap Fund
--------------------- --------------
Class A Class C Class A Class C
------- ------- ------- --------
1 Year . . . . . $ 62 $ 25 $ 62 $ 25
3 Years. . . . . $ 98 $ 78 $ 98 $ 78
_______________
* This example should not be considered a representation of future
expenses, which may be more or less 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.
INVESTMENT OBJECTIVES AND POLICIES
Under normal market conditions, each Fund will invest primarily in equity
securities, including common stocks and securities convertible into common
stocks, of companies believed by Qualivest to be characterized by sound
management and the potential for long-term capital appreciation. Each Fund
may invest in securities convertible into common stocks without regard to
the rating assigned to such securities by a nationally recognized
statistical rating organization ("NRSRO").
The Large Companies Growth Fund. The investment objective of the Large
- -------------------------------
Companies Growth Fund is to seek long-term capital appreciation. Under normal
market conditions, it intends to invest at least 65% of its total assets in
equity securities, including common stocks and securities convertible into
common stocks, of large capitalization companies. Large capitalization
companies are those companies with a market capitalization of at least
$1 billion at the time of purchase.
The Large Companies Growth Fund maintains a flexible investment approach
and considers a variety of companies and types of securities, depending on
the economic environment and the relative attractiveness of the various
securities markets. The Fund generally seeks to invest in financially
secure firms with established operating histories that are proven leaders
in their industry or market sector. Such companies may demonstrate
characteristics such as participation in expanding markets, increasing unit
sales volume, growth in revenues and earnings per share, and increasing
return on investments. However, Qualivest
- 10 -
<PAGE>
may invest the Fund's assets in companies that do not demonstrate such
characteristics if Qualivest expects such companies to undergo an
acceleration in growth of earnings because of special factors such as new
management, new products, changes in consumer demand or basic changes in
the economic environment.
Qualivest analyzes each company considered for investment to determine its
source of earnings, competitive edge, management strength, and level of
industry dominance as measured by market share. At the same time,
Qualivest conducts an analysis of the financial condition of each company
and selects those prospects that demonstrate the greatest potential for
above-average capital appreciation and growth in earnings.
The Micro Cap Fund. The investment objective of the Micro Cap Fund is to
- ------------------
seek capital appreciation. Under normal market conditions, it intends to
invest at least 65% of its total assets in equity securities, including
common stocks and securities convertible into common stocks, of micro
capitalization companies, which are those companies with a market
capitalization of less than $500 million at the time of purchase. Micro
capitalization stocks may be quite volatile and subject to wide
fluctuations in both the short and medium term. As a result, the Micro Cap
Fund may be an appropriate investment only for investors who understand and
are financially able to accept greater risks.
The Micro Cap Fund seeks to achieve its investment objective by following
flexible investment policies emphasizing investment in common stocks and
securities convertible into common stocks that are, in Qualivest's opinion,
undervalued relative to other securities at the time of purchase. In
analyzing different securities, Qualivest will consider ratios of market
price to book value, ratios of market price to earnings, ratios of market
price to assets, estimated liquidating value, earnings growth rate,
management strength, and cash flow as significant factors in assessing
relative value. If in Qualivest's opinion a stock has reached a fully valued
position, it will, under most circumstances, be sold and replaced by
securities which are deemed to be undervalued in the marketplace.
- 11 -
<PAGE>
General
If the Large Companies Growth Fund owns securities issued by a company
whose market capitalization falls below $1 billion, or the Micro Cap Fund
owns securities issued by a company whose market capitalization increases
above $500 million, Qualivest may, but is not required to, sell such
securities. However, Qualivest intends to sell such securities if, in its
judgment, market conditions warrant such a sale, or if the Large Companies
Growth Fund or Micro Cap Fund would no longer be primarily invested in
common stocks and securities convertible into common stocks issued by large
capitalization companies and micro capitalization companies, respectively.
Qualivest will attempt to make such sales when market conditions are
favorable.
Each Fund also may invest up to 35% of the value of its total assets in
notes, units of real estate investment trusts, asset-backed and mortgage-
related securities, and short-term obligations (with maturities of 12
months or less) consisting of commercial paper (including variable amount
master demand notes), bankers' acceptances, certificates of deposit,
repurchase agreements, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations.
Each Fund also may hold securities of other investment companies and
depositary or custodial receipts representing beneficial interests in any
of the foregoing securities.
Each Fund may invest in corporate debt securities such as debt obligations
with a maturity of at least one year from the date of issue ("bonds") and
notes which are rated at the time of purchase within the four highest
rating groups assigned by an NRSRO (e.g., in the case of Moody's Investors
----
Service, Inc. ("Moody's"), Aaa, Aa, A and Baa, and in the case of Standard
& Poor's Corporation ("S&P"), AAA, AA, A and BBB), which are considered to
be investment grade or, if unrated, which Qualivest deems to present
attractive opportunities and are of comparable quality. For a description
of NRSROs and their rating symbols, see the Appendix to the Statement of
Additional Information. For a discussion of debt securities rated within
the fourth highest rating group assigned by an NRSRO, see "INVESTMENT
TECHNIQUES AND RISK FACTORS -- Medium-Grade Securities" herein.
- 12 -
<PAGE>
Subject to the foregoing policies, each Fund also may invest up to 25% of
its total assets in foreign securities either directly or through the
purchase of American Depositary Receipts and also may invest in securities
issued by foreign branches of U.S. banks and foreign banks, in Canadian
Commercial Paper, and in Europaper (U.S. dollar denominated commercial
paper of a foreign issuer). For a discussion of risks associated with
foreign securities, see "INVESTMENT TECHNIQUES AND RISK FACTORS" herein.
Consistent with the foregoing, each Fund will focus its investments in
those companies and types of companies that Qualivest believes will enable
such Fund to achieve its investment objective. Neither Fund will invest
more than 15% of its net assets in securities that are deemed to be
illiquid. During temporary defensive periods as determined by Qualivest, a
Fund may hold up to 100% of its total assets in high quality short-term
debt obligations including domestic bank certificates of deposit, bankers'
acceptances and repurchase agreements secured by U.S. Government securities
or bank instruments. However, to the extent that a Fund is so invested,
its investment objective may not be achieved during that time.
* * * *
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 TECHNIQUES AND RISK FACTORS
Like any investment program, an investment in a Fund entails certain risks.
Micro Capitalization Securities
The Micro Cap Fund may invest in common stocks and securities convertible
into common stocks of companies with market capitalization that is low
compared to other publicly traded
- 13 -
<PAGE>
companies. Investments in larger companies present certain advantages, in
that such companies generally have greater financial resources, more
extensive research and development, manufacturing, marketing and service
capabilities, and more stability and greater depth of management and
technical personnel. Investments in smaller, less seasoned companies may
present greater opportunities for growth but also may involve greater risks
than customarily are associated with more established companies. The
securities of micro capitalization companies may be subject to more abrupt
or erratic market movements than larger, more established companies. These
companies may have limited product lines, markets or financial resources,
or they may be dependent upon a limited management group. Their securities
may be traded only in the over-the-counter market or on a regional
securities exchange. As a result, the disposition of securities to meet
redemptions may require the Micro Cap Fund to sell these securities at a
disadvantageous time, or at disadvantageous prices, or to make many small
sales over a lengthy period of time.
Put and Call Options
Each Fund may purchase put and call options on securities, and each Fund
may purchase such options on foreign currencies, subject to its applicable
investment policies, for the purposes of hedging against market risks
related to its portfolio securities and adverse movements in exchange rates
between currencies, respectively. Each Fund also may engage in writing
call options from time to time as Qualivest deems appropriate. The Funds
will write only covered call options (options on securities or currencies
owned by the particular Fund). When a portfolio security or currency
subject to a call option is sold, the Fund will effect a "closing purchase
transaction" -- the purchase of a call option on the same security or
currency with the same exercise price and expiration date as the call
option which such Fund previously has written. If such Fund is unable to
effect a closing purchase transaction, it will not be able to sell the
underlying security or currency until the option expires or that Fund
delivers the underlying security or currency upon exercise. In addition,
upon the exercise of a call option by the holder thereof, the Fund will
forego the potential benefit represented by market appreciation over the
exercise price. Under normal conditions, it is not expected that a Fund
will cause the underlying value of portfolio securities and/or currencies
subject to such options to exceed 25% of its total assets.
- 14 -
<PAGE>
A Fund, as part of its option transactions, also may purchase index put and
call options and write index options. As with options on individual
securities, a Fund will write only covered index call options. Options on
securities indices are similar to options on a security except that, rather
than the right to take or make delivery of a security at a specified price,
an option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of the
securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of
the option.
Price movements in securities which a Fund owns or intends to purchase may
not correlate perfectly with movements in the level of an index and,
therefore, a Fund bears the risk of a loss on an index option that is not
completely offset by movements in the price of such securities. Because
index options are settled in cash, a call writer cannot determine the
amount of its settlement obligations in advance and, unlike call writing on
specific securities, cannot provide in advance for, or cover, its potential
settlement obligations by acquiring and holding the underlying securities.
A Fund may be required to segregate assets or provide an initial margin to
cover index options that would require it to pay cash upon exercise.
Foreign Securities
Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include political, social
or economic instability in the country of the issuer, the difficulty of
predicting international trade patterns, the possibility of the imposition
of exchange controls, expropriation, limits on removal of currency or other
assets, nationalization of assets, foreign withholding and income taxation,
and foreign trading practices (including higher trading commissions,
custodial charges and delayed settlements). Such securities may be subject
to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The markets on which such securities trade may have
less volume and liquidity, and may be more volatile than securities markets
in the U.S. In addition, there may be less publicly available information
about a foreign company than about a U.S. domiciled company.
- 15 -
<PAGE>
Foreign companies generally are not subject to uniform accounting, auditing
and financial reporting standards comparable to those applicable to U.S.
domestic companies. There is generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or diplomatic developments could also affect
investment in those countries. In addition, foreign branches of U.S.
banks, foreign banks and foreign issuers 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 and U.S. domestic issuers.
If a security is denominated in foreign currency, the value of the security
to a Fund will be affected by changes in currency exchange rates and in
exchange control regulations, and costs will be incurred in connection with
conversions between currencies. Currency risks generally increase in
lesser developed markets. Exchange rate movements can be large and can
endure for extended periods of time, affecting either favorably or
unfavorably the value of a Fund's assets.
For many foreign securities, U.S. dollar denominated American Depositary
Receipts ("ADRs"), which are traded in the United States on exchanges or
over-the-counter, are issued by domestic banks. ADRs represent the right
to receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in
investing in the securities of foreign issuers. However, by investing in
ADRs rather than directly in foreign issuers' stock, a Fund can avoid
currency risks during the settlement period for either purchases or sales.
Subject to its applicable investment policies, each Fund may invest in debt
securities denominated in the European Currency Unit ("ECU"), which is a
"basket" consisting of specified amounts of the currencies of certain of
the member states of the European Community. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers
of the European Community to reflect changes in relative values of the
underlying currencies. Such adjustments may adversely affect holders of
ECU denominated obligations or the marketability of such securities.
- 16 -
<PAGE>
Foreign Currency Transactions
The value of the assets of a Fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and a Fund may incur costs in
connection with conversions between various currencies. A Fund will
conduct its foreign currency exchange transactions either on a spot (i.e.,
----
cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange contract ("forward currency
contract") involves an obligation to purchase or sell a specific currency
at a future date at a price set at the time of the contract. The Funds may
enter into forward currency contracts in order to hedge against adverse
movements in exchange rates between currencies. However, this tends to
limit potential gains which might result from a positive change in such
currency relationships. A Fund may also hedge its foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions. The forecasting of short-term currency market movements is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward currency contract. Accordingly,
it may be necessary for a Fund to purchase additional currency on the spot
market if the market value of the security is less than the amount of
foreign currency such Fund is obligated to deliver when a decision is made
to sell the security and make delivery of the foreign currency in
settlement of a forward contract. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of
the portfolio security if its market value exceeds the amount of foreign
currency such Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss to the extent that there has
been movement in forward currency contract prices. If a Fund engages in an
offsetting transaction, it may subsequently enter into a new forward
currency contract to sell the foreign currency. Although such contracts
tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase. The Funds will have to
- 17 -
<PAGE>
convert their holdings of foreign currencies into U.S. dollars from time to
time. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Futures Contracts
The Funds also may enter into contracts for the future delivery of
securities or foreign currencies and futures contracts based on a specific
security, class of securities, foreign currency or an index, purchase or
sell options on any such futures contracts and engage in related closing
transactions. A futures contract on a securities index is an agreement
obligating either party to pay, and entitling the other party to receive,
while the contract is outstanding, cash payments based on the level of a
specified securities index. A Fund may engage in such futures contracts in
an effort to hedge against market risks and to manage its cash position,
but not for leveraging purposes.
Aggregate initial margin deposits for futures contracts, and premiums paid
for related options, may not exceed 5% of a Fund's total assets, and the
value of securities that are the subject of such futures and options (both
for receipt and delivery) may not exceed 33 1/3% of the market value of a
Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain each Fund's qualification as a regulated investment
company.
When-Issued and Delayed-Delivery Transactions
The Funds each may purchase securities on a when-issued or delayed-delivery
basis. A Fund will engage in when-issued and delayed-delivery transactions
only for the purpose of acquiring portfolio securities consistent with its
investment objective and policies, not for investment leverage.
When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield and thereby involve a
risk that the yield obtained in the transaction will be less than those
available in the market when delivery takes place. A Fund will not pay for
such securities or start earning interest on them until they are received.
When a Fund agrees to purchase such securities, the Custodian will set
aside cash or high grade liquid debt securities equal to the amount of the
commitment in a segregated account. In
- 18 -
<PAGE>
when-issued and delayed-delivery transactions, a Fund relies on the seller
to complete the transaction; the seller's failure to do so may cause such
Fund to miss a price or yield considered to be advantageous.
Lending of Portfolio Securities
In order to generate additional income, the Funds from time to time may
lend portfolio securities to broker-dealers, banks or institutional
borrowers of securities. The Funds must receive 102% collateral in the
form of cash or U.S. Government securities. This collateral must be valued
daily by Qualivest and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Funds.
During the time portfolio securities are on loan, the borrower pays the
Funds any dividends or interest paid on such securities. Loans are subject
to termination by the Funds or the borrower at any time. While the Funds
do not have the right to vote securities on loan, they intend to terminate
the loan and regain the right to vote if that is considered important with
respect to the investment. In the event the borrower defaults on its
obligation to a Fund, the Fund could experience delays in recovering its
securities and possible capital losses. The Funds will only enter into
loan arrangements with broker-dealers, banks or other institutions which
Qualivest has determined to be creditworthy under guidelines established by
the Board of Trustees that permit each Fund to loan up to 33 1/3% of the
value of its total assets.
Repurchase Agreements
Securities held by a Fund 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.
- 19 -
<PAGE>
Reverse Repurchase Agreements and Dollar Roll Agreements
Each Fund also may 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
certain of its 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 its investment
restrictions having a value equal to the repurchase price (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 securities sold by a Fund may decline below the price at
which it is obligated to repurchase the securities.
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 Fund may invest in mortgage-related
securities, which are securities representing interests in "pools" of
mortgages in which payments of both interest and principal on the
securities are made monthly. Early repayment of principal on mortgage-
related securities may expose a Fund to a lower rate of return upon
reinvestment of principal. 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.
- 20 -
<PAGE>
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, a
Fund may invest in other asset-backed securities that may be developed in
the future.
Certain issuers of asset-backed securities are considered to be 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 10%
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.
Medium-Grade Securities
Each Fund may invest up to 10% of its total assets in debt securities
within the fourth highest rating group assigned by an NRSRO (i.e., BBB or
----
Baa by S&P and Moody's, respectively) and comparable unrated securities.
These types of debt securities are considered by Moody's and S&P to have
some speculative characteristics, and are more vulnerable to changes in
economic conditions, higher interest rates or adverse issuer-specific
developments which are more likely to lead to a weaker capacity to make
principal and interest payments than comparable higher rated debt
securities.
Should subsequent events cause the rating of a debt security purchased by a
Fund to fall below BBB or Baa, as the case may be,
- 21 -
<PAGE>
Qualivest will consider such an event in determining whether the Fund
should continue to hold that security. In no event, however, would a Fund
be required to liquidate any such portfolio security where the Fund would
suffer a loss on the sale of such security.
U.S. Government Securities
Obligations of certain agencies and instrumentalities of the U.S.
Government are supported by the full faith and credit of the U.S. Treasury;
others are supported by the right of the issuer to borrow from the
Treasury; some are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; and still others 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.
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 Eurodollar Certificates of Deposit, which are
U.S. dollar denominated certificates of deposit issued by offices of
foreign and domestic banks located outside the United States; Eurodollar
Time Deposits, which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; Canadian Time Deposits, which are
essentially the same as Eurodollar Time Deposits, except they are issued by
Canadian offices of major Canadian banks; and Yankee Certificates of
- 22 -
<PAGE>
Deposit, which are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the United States.
Commercial Paper
Each Fund may invest in short-term promissory notes issued by corporations
(including variable amount master demand notes) rated in the four highest
categories assigned by an NRSRO or, if not rated, found by Qualivest
pursuant to guidelines adopted by the Board of Trustees to be of comparable
quality. The Funds also may invest in Canadian Commercial Paper, 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 Fund 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. 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. 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 Fund may invest up to 10% of its total assets, in shares of money
market mutual funds for cash management purposes. A Fund will incur
additional expenses due to the duplication of expenses as a result of
investing in other investment companies.
- 23 -
<PAGE>
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
institutional 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 of the Trust, 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.
VALUATION OF SHARES
The net asset value of each Fund is determined and its Shares are priced 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, Veterans 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 outstanding
Shares of such class.
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The net asset value per Share of the Funds will fluctuate as the value of
the investment portfolio of a Fund changes.
The securities in each Fund will be valued at market value. If market
quotations are not available, the securities will be valued by a method
which the Board of Trustees believes accurately reflects fair value. For
further information about valuation of investments, see "NET ASSET VALUE"
in the Statement of Additional Information.
PURCHASING SHARES
Class A and Class C Shares may be purchased directly from the Distributor,
or through a broker-dealer who has established a dealer agreement with the
Distributor. Except as otherwise discussed below under "Other Information
Regarding Purchases" and "Auto Invest Plan," the minimum initial investment
in a Fund, based upon the public offering price, is $500 ($50 in the case
of an Individual Retirement Account ("IRA")), and there is a $100 minimum
($50 for an IRA) for subsequent purchases. Shareholders will pay the next
calculated public offering price after the receipt by the Distributor of an
order to purchase Shares, plus any applicable sales charge as described
below (see "SALES CHARGES").
By Mail
To purchase Class A or Class C Shares of the Funds by mail, complete an
Account Application Form and return it along with a check or money order
made payable to Qualivest Funds at the following address: P. O. Box 3205,
Portland, Oregon 97208 .
An Account Application Form can be obtained by calling the Trust at
1-800-743-8637.
By Telephone or by Wire
To purchase Class A or Class C Shares of the Funds by telephone or by wire,
your Account Application Form must have been previously received by the
Distributor. To place an order by telephone or by wire, call the Trust's
toll-free number 1-800-743-8637. Payment for Class A or Class C Shares
ordered by telephone may be made by check or electronic transfer and must
be received by the Custodian within the settlement requirements defined in
the Securities Exchange Act of 1934 (the "1934 Act"). If payment for the
Shares
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<PAGE>
is not received within the prescribed time periods, or if a check timely
received does not clear, the purchase will be canceled and the investor
could be liable for any losses or fees incurred. Any questions regarding
current settlement requirements or electronic payment instructions should
be directed to the Trust at 1-800-743-8637. When purchasing Class A or
Class C Shares by wire, contact the Trust for wire instructions.
Other Information Regarding Purchases
Purchases of 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 Shares in good form ("public offering price"). In the case of
orders for the purchase of 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
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 Shares of the Funds will be effected only on a
Business Day of the Funds. An order received prior to the Valuation Time on
any Business Day will be executed at the net asset value determined as of
the Valuation Time on the date of receipt. An order received after the
Valuation Time on any Business Day will be executed at the net asset value
determined as of the Valuation Time on the next Business Day of that Fund.
The minimum initial investment amount and subsequent investment amount
referred to above may be waived if purchases are made in connection with
payroll deductions, IRAs, Keogh or similar plans and for so-called "sweep"
arrangements where an investor's cash assets are periodically transferred
from an account into one of the Funds. For information on IRAs, Keogh or
similar plans, contact the Trust at 1-800-743-8637.
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.
Depending on the terms of an investor's account, an investor may be charged
a fee in connection with transactions in Shares effected
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<PAGE>
through a broker or other agent. This Prospectus should be read in
conjunction with information regarding the terms of such an account.
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 Shares of the respective Fund owned by the
Shareholder. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Shares of the Funds will not be
issued.
Auto Invest Plan
The Qualivest Funds Auto Invest Plan enables Shareholders to make regular
monthly, bi-monthly or quarterly purchases of Class A or Class C Shares
through automatic deduction from their bank accounts (as long as the
Shareholder's bank is a member of the Automated Clearing House). With
Shareholder authorization, the Trust's Transfer Agent will deduct the
amount specified (subject to the applicable minimums) from the
Shareholder's bank account, which amount will automatically be invested in
Shares at the public offering price on the fifth and/or the twentieth day
of such month or quarter (or the next Business Day thereafter). The
required minimum initial investment for opening an account using the Auto
Invest Plan is $50; the minimum amount for subsequent investments in a Fund
is $50. To participate in the Auto Invest Plan, Shareholders should
complete the appropriate section of the Account Application Form or a
supplemental Auto Invest application that can be acquired by calling the
Trust at 1-800-743-8637. For a Shareholder to change the Auto Invest
instructions, the request must be made in writing to the Trust's
Distributor, BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-
3035 and may take up to 15 days to implement.
SALES CHARGES
Class A Shares
The public offering price of Class A Shares of the Funds equals net asset
value plus the applicable sales charge. BISYS receives this sales charge as
Distributor and may reallow it as dealer discounts and brokerage
commissions as follows:
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<PAGE>
Sales Charge as:
----------------
Size of Transaction % of Offering % of Net Dealer
at Offering Price Price Amount Invested Reallowance
- ------------------- ------------- --------------- -----------
Less than $50,000 4.50% 4.71% 4.05%
$50,000 but less than $100,000 3.75% 3.90% 3.375%
$100,000 but less than $250,000 2.50% 2.56% 2.25%
$250,000 but less than $500,000 2.00% 2.04% 1.80%
$500,000 but less than $1,000,000 1.00% 1.01% 0.90%
$1,000,000 and over 0.00% 0.00% 0.00%
An investor may obtain reduced sales charges on Class A Shares under the
circumstances described below under "Reduced Sales Charges -- Class A
Shares."
Class C Shares
Class C Shares of the Funds may be purchased for individual accounts only
in amounts of less than $500,000. There is no sales charge imposed upon
purchases of Class C Shares, but investors may be subject to a CDSC of
1.00% when Class C Shares are redeemed less than one year after purchase.
See "Contingent Deferred Sales Charge ("CDSC") -- Class C Shares" below.
Other Information
The Distributor, at its expense, will also provide additional compensation
to dealers in connection with sales of Shares of any of the Funds. Such
compensation will include financial assistance to dealers in connection
with conferences, sales or training programs for their employees, seminars
for the public, advertising campaigns regarding one or more of the Funds,
and/or other dealer-sponsored special events. In some instances, this
compensation will be made available only to certain dealers whose
representatives have sold a significant amount of such Shares.
Compensation may include payment for travel expenses, including lodging, to
various locations for meetings or seminars of a business nature.
Compensation may also include the following types of non-cash compensation
offered through promotional contests: (1) travel and lodging at vacation
locations; (2) tickets for entertainment events; and (3) merchandise. None
of the aforementioned compensation is paid for by any Fund or its
Shareholders.
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<PAGE>
Reduced Sales Charges -- Class A Shares
Sales Charge Waivers
The Distributor may waive sales charges for the purchase of Class A Shares
of a Fund by or on behalf of (1) purchasers for whom U.S. Bank or one of
its affiliates acts in a fiduciary, advisory, custodial or similar
capacity, (2) employees and retired employees (including spouses, children
and parents of employees and retired employees) of U.S. Bank, BISYS and any
affiliates thereof, (3) Trustees of the Trust, (4) directors and retired
directors (including spouses and children of directors and retired
directors) of U.S. Bank and any affiliates thereof, (5) purchasers who use
proceeds from an account for which U.S. Bank or one of its affiliates acts
in a fiduciary, advisory, custodial or similar capacity, to purchase Class
A Shares of a Fund, (6) brokers, dealers and agents who have a sales
agreement with the Distributor, and their employees (and the immediate
family members of such individuals), (7) investment advisers or financial
planners that have entered into an agreement with the Distributor and that
place trades for their own accounts or the accounts of eligible clients and
that charge a fee for their services, and clients of such investment
advisers or financial planners who place trades for their own accounts if
such accounts are linked to the master account of the investment adviser or
financial planner on the books and records of a broker or agent that has
entered into an agreement with the Distributor, and (8) orders placed on
behalf of other investment companies distributed by BISYS, The BISYS Group,
Inc., or their affiliated companies. In addition, the Distributor may
waive sales charges for the purchase of a Fund's Class A Shares with the
proceeds from the recent redemption of shares of a non-money market mutual
fund (except one of the other funds of the Trust) sold with a sales charge.
The purchase must be made within 60 days of the redemption, and the
Distributor must be notified in writing by the investor, or by his or her
financial institution, at the time the purchase is made. A copy of the
investor's account statement showing such redemption must accompany such
notice. To receive a sales charge waiver in conjunction with any of the
above categories, Shareholders must, at the time of purchase, give the
Transfer Agent or the Distributor sufficient information to permit
confirmation of qualification.
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<PAGE>
Senior Citizens Discount
The Distributor may offer a 10% reduction of sales charges for the purchase
of Class A Shares of a Fund by or on behalf of a purchaser who has attained
the age of 59 1/2 years. Any such reduction also will apply to purchases
made through the Auto Invest Plan. To receive this sales charge reduction,
Shareholders must, at the time of purchase, give the Transfer Agent or the
Distributor sufficient information to permit confirmation of qualification.
BISYS will receive a sale charge on sales of the Funds and may reallow it
as dealer discounts and brokerage commissions as follows:
Sales Charge as:
----------------
Size of Transaction % of Offering % of Net Dealer
at Offering Price Price Amount Invested Reallowance
- ------------------- ------------- --------------- -----------
Less than $50,000 4.05% 4.22% 3.65%
$50,000 but less than $100,000 3.38% 3.49% 3.04%
$100,000 but less than $250,000 2.25% 2.30% 2.03%
$250,000 but less than $500,000 1.80% 1.83% 1.62%
$500,000 but less than $1,000,000 0.90% 0.91% 0.81%
$1,000,000 and over 0.00% 0.00% 0.00%
Concurrent Purchases
For purposes of qualifying for a lower sales charge, investors have the
privilege of combining "concurrent purchases" of Class A Shares of a Fund.
For example, if a shareholder concurrently purchases Class A Shares in one
of the funds of the Trust sold with a sales charge at the total public
offering price of $25,000 and Class A Shares in another fund sold with a
sales charge at the total public offering price of $75,000, the sales
charge would be that applicable to a $100,000 purchase as shown in the
appropriate table above. The investor's "concurrent purchases" described
above shall include the combined purchases of the investor, the investor's
spouse and children under the age of 21 and the purchaser's retirement plan
accounts. To receive the applicable public offering price pursuant to this
privilege, Shareholders must, at the time of purchase, give the Transfer
Agent or the Distributor sufficient information to permit confirmation of
qualification. This privilege, however, may be modified or eliminated at
any time or from time to time by the Trust without notice.
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<PAGE>
Letters of Intent
An investor may obtain a reduced sales charge by means of a written Letter
of Intent which expresses the intention of such investor to purchase Class
A Shares of a Fund at a designated total public offering price within a
designated 13-month period. Each purchase of Class A Shares under a Letter
of Intent will be made at the net asset value plus the sales charge
applicable at the time of such purchase to a single transaction of the
total dollar amount indicated in the Letter of Intent (the "Applicable
Sales Charge"). A Letter of Intent may include purchases of Class A Shares
made not more than 90 days prior to the date such investor signs a Letter
of Intent; however, the 13-month period during which the Letter of Intent
is in effect will begin on the date of the earliest purchase to be
included. An investor will receive as a credit against his/her purchase(s)
of Shares during this ninety day period at the end of the 13-month period,
the difference, if any, between the sales load paid on previous purchases
qualifying under the Letter of Intent and the Applicable Sales Charge.
A Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intent is 5% of such amount. Class A Shares purchased with the
first 5% of such amount will be held in escrow (while remaining registered
in the name of the investor) to secure payment of the higher sales charge
applicable to the Class A Shares actually purchased if the full amount
indicated is not purchased, and such escrowed Class A Shares will be
involuntarily redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed Class A Shares, whether paid in cash or reinvested in
additional Class A Shares, are not subject to escrow. The escrowed Class A
Shares will not be available for disposal by the investor until all
purchases pursuant to the Letter of Intent have been made or the higher
sales charge has been paid. When the full amount indicated has been
purchased, the escrow will be released. To the extent that an investor
purchases more than the dollar amount indicated in the Letter of Intent and
qualifies for a further reduced sales charge, the sales charge will be
adjusted for the entire amount purchased at the end of the 13-month period.
The difference in sales charge will be used to purchase additional Class A
Shares of such Fund at the then current public offering price subject to
the rate of sales charge applicable to the actual amount of the aggregate
purchases. For further information about Letters of Intent, interested
investors should contact the Trust at
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<PAGE>
1-800-743-8637. This program, however, may be modified or eliminated at
any time or from time to time by the Trust without notice.
Rights of Accumulation
Pursuant to the right of accumulation, investors are permitted to purchase
Class A Shares of the Funds at the public offering price applicable to the
total of (a) the total public offering price of the Class A Shares of the
Fund then being purchased plus (b) an amount equal to the then current net
asset value of the "purchaser's combined holdings" of the Class A Shares of
all of the funds of the Trust sold with a sales charge. Class A Shares
sold to purchasers for whom U.S. Bank or one of its affiliates acts in a
fiduciary, advisory, custodial (other than retirement accounts), agency, or
similar capacity are not presently subject to a sales charge. The
"purchaser's combined holdings" described above shall include the combined
holdings of the purchaser, the purchaser's spouse and children under the
age of 21 and the purchaser's retirement plan accounts. To receive the
applicable public offering price pursuant to the right of accumulation,
Shareholders must, at the time of purchase, give the Transfer Agent or the
Distributor sufficient information to permit confirmation of qualification.
This right of accumulation, however, may be modified or eliminated at any
time or from time to time by the Trust without notice.
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares
Class C Shares of the Funds which are redeemed less than one year after
purchase will be subject to a CDSC equal to one percent of an amount equal
to the lesser of the net asset value at the time of purchase of the Class C
Shares being redeemed or the net asset value of such Shares at the time of
redemption. Accordingly, a CDSC will not be imposed on amounts
representing increases in net asset value above the net asset value at the
time of purchase. In addition, a CDSC will not be assessed on Class C
Shares purchased through reinvestment of dividends or capital gains
distributions, or that are purchased by "Institutional Investors" such as
corporations, pension plans, foundations, charitable institutions,
insurance companies, banks and other banking institutions, and non-bank
fiduciaries.
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<PAGE>
Solely for purposes of determining the amount of time which has elapsed
from the time of purchase of any Class C Shares, all purchases during a
month will be aggregated and deemed to have been made on the last day of
the month. In determining whether a CDSC is applicable to a redemption,
the calculation will be made in the manner that results in the lowest
possible charge being assessed. In this regard, it will be assumed that the
redemption is first of Shares held for more than one year or Shares
acquired pursuant to reinvestment of dividends or distributions.
For example, assume an investor purchased 100 Class C Shares with a net
asset value of $10 per Share (i.e., at an aggregate net asset value of
----
$1,000) and in the eleventh month after purchase, the net asset value per
Share is $12 and, during such time, the investor has acquired five
additional Class C Shares through dividend reinvestment. If at such time
the investor makes his first redemption of 50 Class C Shares (producing
proceeds of $600), five of such Shares will not be subject to the charge
because of dividend reinvestment. With respect to the remaining 45 Class C
Shares being redeemed, the charge will be applied only to the original cost
of $10 per Share and not to the increase in net asset value of $2 per
Share.
The CDSC is waived on redemptions of Class C Shares (i) following the death
or disability (as defined in the Internal Revenue Code of 1986, as amended
(the "Code")) of a Shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an IRA or a Custodial
Account under Code Section 403(b)(7) to a Shareholder who has reached age
70 1/2, and (iii) to the extent the redemption represents the minimum
distribution from retirement plans under Code Section 401(a) where such
redemptions are necessary to make distributions to plan participants.
Factors to Consider When Selecting Class A Shares or Class C Shares of the
Funds
Before purchasing Class A Shares or Class C Shares of a Fund, investors
should consider whether, during the anticipated life of their investment in
the Fund, the accumulated Rule 12b-1 fees and potential CDSC on Class C
Shares would be less than the initial sales charge and accumulated Rule
12b-1 fees on Class A Shares purchased at the same time, and to what extent
such differential would be offset by the higher yield of Class A Shares.
In this regard, to the extent that the sales charge for the Class A Shares
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<PAGE>
is waived or reduced by one of the methods described above, investments in
Class A Shares become more desirable. The Trust will refuse all purchase
orders for individual accounts for Class C Shares of over $500,000.
Although Class A Shares are subject to a Rule 12b-1 fees, they are not
subject to the higher Rule 12b-1 fees applicable to Class C Shares. For
this reason, Class A Shares can be expected to pay correspondingly higher
dividends per Share. However, because initial sales charges are deducted
at the time of purchase, purchasers of Class A Shares that do not qualify
for waivers of or reductions in the initial sales charge would have less of
their purchase price initially invested in a Fund than purchasers of Class
C Shares. See "MANAGEMENT OF THE TRUST -- Distributor" in the Statement of
Additional Information.
Exchange Privilege
The exchange privilege enables Shareholders of Class A or C Shares of the
Funds (including Shares acquired through reinvestment of dividends and
distributions on such Shares) to exchange those Shares at net asset value
without any sales charge for Shares of the same class offered with the same
or lower sales charge by any of the Trust's other funds, provided that the
amount to be exchanged meets the applicable minimum investment requirements
and the exchange is made in states where it is legally authorized.
Exchanges for Shares of one of the Trust's other funds with a higher sales
charge may be made upon payment of the sales charge differential. Holders
of a Fund's Class A Shares or Class C Shares may not exchange their Shares
for Shares of any other class. An exchange of Class C Shares will not
affect the holding period of the Shares for purposes of the CDSC.
If Class A Shares of a fund of the Trust sold without a sales charge were
acquired by a previous exchange from Class A Shares of a fund with respect
to which a sales charge had been paid, then such Class A Shares may be
exchanged for Class A Shares of a Fund without payment of any fees or sales
charge. Under such circumstances, in order to receive a reduced sales
charge, the Shareholder must notify the Distributor that a sales charge was
originally paid and provide the Distributor with sufficient information to
permit confirmation of qualification. The foregoing exchange privilege may
be exercised only once during a calendar year and upon written request by
the Shareholder and may be
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<PAGE>
terminated or modified by the Trust at any time, or from time to time.
An exchange is considered a sale of Shares and may result in a capital gain
or loss for federal income tax purposes.
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. Any Shareholder who
wishes to make an exchange should obtain and review the current prospectus
of the fund of the Trust in which the Shareholder wishes to invest before
making the exchange. For a discussion of risks associated with
unauthorized telephone exchanges, see "REDEEMING SHARES -- By Telephone"
below.
Conversion Feature
Eight years after purchase, Class C Shares will convert automatically to
Class A Shares. The purpose of the conversion is to relieve a holder of
Class C Shares of the higher ongoing expenses charged to those Shares,
after enough time has passed to allow the Distributor to recover
approximately the amount it would have received if a front-end sales charge
had been charged. The conversion from Class C Shares to Class A Shares
takes place at net asset value, as a result of which an investor receives
dollar-for-dollar the same value of Class A Shares as he or she had of
Class C Shares. The conversion occurs eight years after the beginning of
the calendar month in which the Shares are purchased. As a result of the
conversion, the converted Shares are relieved of the Rule 12b-1 fees borne
by Class C Shares, although they are subject to the Rule 12b-1 fees borne
by Class A Shares.
QUALIVEST INDIVIDUAL RETIREMENT ACCOUNTS ("IRA")
A Qualivest IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement
program. Qualivest IRA contributions may be tax-deductible and earnings
are tax-deferred. Under the Tax Reform Act of 1986, the tax deductibility
of IRA contributions is restricted or eliminated for individuals who
participate in certain employer pension plans and whose annual income
exceeds certain limits. Existing IRAs and future contributions up to the
IRA maximums, whether deductible or not, still earn income on a
tax-deferred basis.
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<PAGE>
Simplified Employee Pension Plan ("SEP/IRA")
A Qualivest SEP/IRA may be established on a group basis by an employer who
wishes to sponsor a tax-sheltered retirement program by making
contributions into IRAs on behalf of all eligible employees.
Salary Reduction Simplified Employee Pension Plan ("SAR-SEP/IRA")
A Qualivest SAR-SEP/IRA offers employers with 25 or fewer eligible
employees the ability to establish a SEP/IRA that permits salary reduction
contributions. All Qualivest IRA distribution requests must be made in
writing to BISYS Fund Services. Any additional deposits to a Qualivest IRA
must distinguish the type and year of the contribution.
For more information on any of the Qualivest IRAs or other retirement plan
options available (401(k) Defined Contribution Plans, 403(b)(7) Defined
Compensation Plans, etc.), call the Trust at 1-800-743-8637. Shareholders
are advised to consult a tax adviser on Qualivest IRA contribution and
withdrawal requirements and restrictions.
REDEEMING SHARES
Shareholders may redeem their Class A Shares without charge and their Class
C Shares, subject to the CDSC described above if redeemed less than one
year after purchase, 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 by the Distributor of a redemption
request. 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
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<PAGE>
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 1934 Act. 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
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 his or her 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 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
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<PAGE>
recording all phone conversions, sending confirmations to Shareholders
within 72 hours of the telephone transaction, verifying the account name
and a Shareholder's account number or tax identification number 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.
Auto Withdrawal Plan
The Auto Withdrawal Plan enables Shareholders of the Funds to make regular
monthly, bi-monthly, or quarterly redemptions of Class A or Class C Shares.
With Shareholder authorization, the Transfer Agent will automatically
redeem Class A or Class C Shares at the net asset value on the fifth and/or
twentieth day of the month or quarter (or the next Business Day thereafter)
and have the amount specified transferred according to the written
instructions of the Shareholder. Shareholders participating in this Plan
must maintain a minimum account balance of $500. The required minimum
withdrawal is $100, monthly or quarterly.
The Auto Withdrawal Plan may be modified or terminated without notice. In
addition, the Trust may suspend a Shareholder's withdrawal plan without
notice if the account contains insufficient funds to effect a withdrawal or
in the event that the account balance is less than the minimum $500 amount.
To participate in the Auto Withdrawal Plan, Shareholders should call
1-800-743-8637 for more information. Purchases of additional Class A or
Class C Shares concurrently with withdrawals may be disadvantageous to
certain Shareholders because of tax liabilities and sales charges. For a
Shareholder to change the Auto Withdrawal Plan instructions, the request
must be made in writing to the Distributor and may take up to 15 days to
implement.
Other Information Regarding Redemption of Shares
All redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as
described above. The proceeds paid upon redemption of Shares in the Funds,
less any applicable CDSC, may be more or less than the amount invested.
Payment to Shareholders for Shares redeemed will be made within seven days
after receipt of the
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request for redemption, or within such shorter period as required by law.
To the greatest extent possible, requests from Shareholders of a Fund for
next Business Day payments upon redemption of Shares will be honored if
received in good form by the Distributor before the last Valuation Time on
a Business Day or, if received after the last Valuation 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.
The Trust reserves the right to redeem involuntarily, at net asset value,
the Shares of any Shareholder if, because of redemptions of Shares by or on
behalf of the Shareholder (but not as a result of the establishment of an
account with less than $500 using the Auto Invest Plan), the account of
such Shareholder has a value of less than $500. Accordingly, an investor
purchasing Shares of a Fund in only the minimum investment amount may be
subject to such involuntary redemption if the investor thereafter redeems
any Shares. Before the Trust exercises its right to redeem such Shares and
to send the proceeds to the Shareholder, the Shareholder will be given
notice that the value of the Shares in the Shareholder's account is less
than the minimum amount and will be allowed 60 days to make an additional
investment in an amount which will increase the value of the account to at
least $500.
At various times, the Trust may be requested to redeem 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 Shares, which delay may be for 15 days or more. Such
delay may be avoided if Shares are purchased by wire transfer of federal
funds. The Trust intends to pay cash for all 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 the Statement of Additional Information ("ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION") for examples of when the right of redemption may
be suspended.
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MANAGEMENT OF THE FUNDS
Trustees
Overall responsibility for management of the Trust rests with its Trustees,
who are elected by the Shareholders of all of the Trust's funds. 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 meaning of that term under the 1940 Act. The Trustees, in
turn, elect the officers of the Trust to supervise 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., 111 S.W. Fifth Avenue, Portland, Oregon
97204, is the investment adviser of the Trust. Qualivest, a registered
investment adviser, is an affiliate 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 each Fund's investment objective, policies and
restrictions, Qualivest has agreed in its Investment Advisory Agreement
with the Trust to provide or arrange for the provision of a continuous
investment program for each Fund, including investment research and
management with respect to the Funds' portfolio securities, investments and
cash.
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Michael Cusack is the Equity Manager primarily responsible for managing the
Large Companies Growth Fund. Mr. Cusack received a Bachelor of Science degree
in Economics from Curry College and has over twelve years of experience in
investments and portfolio management, both at Qualivest and at other
investment management organizations.
Dale E. Benson and Frank Magdlen, each an Equity Manager at Qualivest, have
primary responsibility for management of the Micro Cap Fund. Mr. Benson
has twenty-three years of investment management experience and has been
employed by Qualivest since 1973. He received a Bachelor of Arts degree
from Pacific Lutheran University and a Doctorate in History from the
University of Maine. Mr. Benson is a Chartered Financial Analyst.
Mr. Magdlen, who also is a Chartered Financial Analyst, analyzes closely
held companies for Qualivest and has twenty-two years of investment
experience. He received a Bachelor of Arts degree in Finance from
the University of Portland and a Master of Business Administration
degree from the University of Southern California. Mr. Magdlen has
been employed by Qualivest since 1979.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Trust, Qualivest receives a fee from each Fund,
computed daily and paid monthly, at the following annual rates of each
Fund's average daily net assets: Large Companies Growth Fund - 1.00%; and
Micro Cap Fund - 1.00%. While the fees for the Funds are higher than the
advisory fee paid by most investment companies, the Board of Trustees believes
them to be comparable to advisory fees paid by many funds having similar
objectives and policies. Qualivest may periodically voluntarily reduce all or
a portion of its advisory fee with respect to a Fund to increase the net
income of that Fund available for distribution as dividends. The voluntary
fee reduction will cause the return of that Fund to be higher than it would
otherwise be in the absence of such reduction.
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 of 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, the Administrator 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 the 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
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Administrator may periodically voluntarily reduce all or a portion of its
administrative fee with respect to a Fund to increase the net income of
that Fund available for distribution as dividends. The voluntary fee
reduction will cause the return of that Fund to be higher than it would
otherwise be in the absence of such 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 retain some or all of any sales charge
imposed upon the Class A or Class C Shares. It may also receive
compensation under the Distribution and Shareholder Service Plans regarding
the Class A and Class C Shares.
Other Service Providers
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as the 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 custodian of the
Funds. 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 other than the cost of securities
(including brokerage commissions) purchased for the Trust. Each Fund will
bear the following expenses relating to its operation: organizational
expenses, taxes, interest, brokerage fees
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and commissions, fees of the Trustees of the Trust, Securities and Exchange
Commission fees, pricing of portfolio securities, state securities
qualification fees, costs of preparing and printing prospectuses for
regulatory purposes and for distribution to current Shareholders, outside
auditing and legal expenses, advisory and administration fees, fees and
out-of-pocket expenses of the Custodian, Transfer Agent and fund
accountant, certain insurance premiums, costs of maintenance of the Trust's
existence, costs of Shareholders' reports and meetings, and any
extraordinary expenses incurred in each Fund's operation.
As a general matter, expenses are allocated to the Class A, Class C and
Class Y Shares of the Funds on the basis of the relative net asset value of
each class. Class A Shares and Class C Shares may bear certain additional
retail transfer agency expenses. Class A and Class C Shares also bear
certain additional Shareholder service and distribution costs incurred
pursuant to the Distribution and Shareholder Service Plans described below.
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 A and
Class C 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
registration 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,
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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 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 PLANS
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted
Distribution and Shareholder Service Plans with respect to the Class A
Shares of each Fund (the "Class A Plans"), as well as Distribution and
Shareholder Service Plans with respect to Class C Shares of each Fund (the
"Class C Plans" and, with the Class A Plans, the "Plans").
Pursuant to the Class A Plans, each Fund is authorized to pay or reimburse
BISYS, as Distributor of the Class A Shares of the Fund, for certain
expenses that are incurred in connection with Shareholder and distribution
services. Payments under the Class A Plans will be calculated daily and
paid monthly at an annual rate not to exceed 0.25% of the average daily net
assets of Class A
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Shares of each Fund. As authorized by the Class A Plans, 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 A
Shares of the Funds purchased and held by USBS for the accounts of its
customers and Class A 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.
Pursuant to the Class C Plans, a Fund is authorized to pay or reimburse
BISYS, as Distributor of Class C Shares, (a) a distribution fee in an
amount not to exceed on an annual basis 0.75% of the average daily net
assets of Class C Shares of a Fund, and (b) a service fee in an amount not
to exceed on an annual basis 0.25% of the average daily net assets of the
Class C Shares of a Fund. Payments under the Class C Plans will be
calculated daily and paid monthly at a rate not to exceed the limits
described above, which rates are set from time to time by the Board of
Trustees. Actual distribution expenses for Class C Shares at any given
time may exceed the Rule 12b-1 fees and payments received pursuant to
CDSCs. These unrecovered amounts plus interest thereon will be carried
forward and paid from future Rule 12b-1 fees and payments received from
CDSCs. If the Class C Plans were terminated or not continued, the Trust
would not be contractually obligated to pay for any expenses not previously
reimbursed by the Trust or recovered through CDSCs.
Payments under the Plans 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 Plans, 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 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 A Shares, and up to 0.25% of the
average daily net assets of the Class C Shares, held of record or
beneficially by such customers. Under the Plans, a Participating
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Organization may include BISYS, its subsidiaries, and its affiliates.
Payments to the Distributor pursuant to the Plans will be used (i) to
compensate Participating Organizations for providing distribution
assistance relating to Shares, (ii) for promotional activities intended to
result in the sale of 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 Shares of the Funds.
Fees paid pursuant to the Class A Plans and Class C Plans are accrued daily
and paid monthly, and are charged as expenses of Class A Shares and Class C
Shares, respectively, of a Fund as accrued.
General Information
The Plans 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 Plans
or in any agreements related to a Plan ("Independent Trustees"), or by a
vote of a majority of the holders of the outstanding voting securities of
the class of Shares subject thereto. Any change in the Plans that would
increase materially the distribution expenses paid by a Fund requires
Shareholder approval; otherwise, the Plans 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 either Plan is in effect, the selection or nomination of the Independent
Trustees is committed to the discretion of the Independent Trustees.
DIVIDENDS AND TAXES
Dividends
Net income is declared quarterly as a dividend to Shareholders of record of
the Funds at the close of business on the eleventh Business Day of each
Fund's fiscal quarter and is generally paid quarterly. Distributable net
realized capital gains are distributed at least annually. A Shareholder
will automatically
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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 or elects to participate in the Qualivest Directed
Dividend Option. 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.
Directed Dividend Option
A Shareholder may elect to have all income dividends and capital gains
distributions paid by check, reinvested in the Fund or reinvested in the
same class of any of the Trust's other funds, provided the other fund is
maintained at the minimum required balance. The Directed Dividend Option
may be modified or terminated by the Trust at any time after notice to
participating Shareholders. Participation in the Directed Dividend Option
may be terminated or changed by the Shareholder at any time by writing the
Distributor. The Directed Dividend Option is not available to participants
in any of the Qualivest IRAs.
Federal Taxes
Each Fund intends to qualify annually and elect to be treated as a
regulated investment company under 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. Dividends paid by the Funds to
corporate Shareholders, to the extent such dividends are attributable to
dividends received from U.S. corporations, may qualify for the dividends-
received deduction. However, the alternative minimum tax applicable to
corporations may reduce the value of the dividends-received deduction.
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
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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.
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.
Prior to purchasing Shares of the Funds, the impact of dividends or capital
gains distributions which are expected to be declared or have been
declared, but have not been paid, should be carefully considered. Any such
dividends or capital gains distributions paid shortly after a purchase of
Shares prior to the record date will have the effect of reducing the per
Share net asset value of the Shares by the amount of the dividends or
distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to tax.
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 may be subject to
state, local and foreign taxes, and non-U.S. Shareholders may be
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subject to U.S. tax rules that differ significantly from those summarized
herein. 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.
GENERAL INFORMATION
Organization of the Trust
The Trust was organized as a Massachusetts business trust in 1994 and
consists of seventeen funds. The Shares of each Fund are offered in three
separate classes: Class A Shares, Class C Shares and Class Y Shares.
Shares of the Trust's other funds also are offered in multiple separate
classes. 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. Shareholders 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 to
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.
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Multiple Classes of Shares
In addition to Class A and Class C Shares, the Trust also offers Class Y
Shares of the Funds. Class Y Shares are sold through procedures
established by the Distributor only to certain institutional investors and
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 Y Shares are not sold subject to a sales load and
do not bear expenses under the Plans pertaining to Class A and Class C
Shares. The amount of dividends payable with respect to Class Y Shares will
exceed dividends on Class A and Class C Shares as a result of the Plan fees
applicable to Class A and Class C Shares and because Class A and Class C
Shares may bear additional retail transfer agency expenses. For further
details regarding eligibility requirements for the purchase of Class Y
Shares, call the Trust at 1-800-743-8637.
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, 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.
Such performance figures are based on historical earnings and are not
intended to indicate future performance. Also, from time to time, the
Funds may present their respective distribution rates for a class of Shares
in supplemental sales literature which is accompanied or preceded by a
prospectus and in Shareholder reports.
Standardized yield and total return quotations will be computed separately
for Class A, Class C and Class Y Shares. Because of differences in the
fees and/or expenses borne by Class A, Class C and Class Y Shares of the
Funds, the net yield and total return on Class A and Class C Shares can be
expected, at any given time, to
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be lower than the net yield and total return on Class Y Shares for the same
period.
Investors also may 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 a 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 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 43219-3035, or by calling toll free 1-800-743-8637.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection
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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 their Distributor in any
jurisdiction in which such offering may not lawfully be made.
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QUALIVEST FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-743-8637
Qualivest Funds (the "Trust") is an open-end management investment
company which offers seventeen 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"), which are marketed as the "Dynamic Allocation Series":
- Qualivest Allocated Conservative Fund;
- Qualivest Allocated Balanced Fund;
- Qualivest Allocated Growth Fund; and
- Qualivest Allocated Aggressive Fund.
Each Fund seeks its investment objective by investing in a diversified
portfolio of certain of the other funds offered by the Trust (the
"Underlying Funds").
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 the Funds, contained
in a Statement of Additional Information dated May 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 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 A
Shares and Class C Shares of each Fund, which are currently offered to
the general public. Each Fund also offers a class of Shares known as
Class Y Shares to certain qualified institutional investors.
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.
<PAGE>
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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1996.
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TABLE OF CONTENTS
Page
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PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . .
Shares Offered . . . . . . . . . . . . . . . . . . . . . . . .
Offering Price and Sales Charges . . . . . . . . . . . . . . .
Minimum Purchase . . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . .
Risk Factors and Special Considerations . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . .
Dividends and Capital Gains . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . .
Guide to Investing in the Qualivest Funds . . . . . . . . . .
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES -- UNDERLYING FUNDS . . . . . .
Equity Funds . . . . . . . . . . . . . . . . . . . . . . . . .
Income Funds . . . . . . . . . . . . . . . . . . . . . . . . .
Money Funds . . . . . . . . . . . . . . . . . . . . . . . . .
UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS . . . . .
U.S. Government Obligations . . . . . . . . . . . . . . . . .
Mortgage-Related and Asset-Backed Securities . . . . . . . . .
Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . .
Certificates of Deposit and Time Deposits . . . . . . . . . .
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . .
Put and Call Options . . . . . . . . . . . . . . . . . . . . .
Foreign Securities . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Transactions . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . . . . .
Reverse Repurchase Agreements and Dollar Roll Agreements . . .
Futures Contracts . . . . . . . . . . . . . . . . . . . . . .
When-Issued and Delayed-Delivery Transactions . . . . . . . .
Lending of Portfolio Securities . . . . . . . . . . . . . . .
Medium-Grade Securities . . . . . . . . . . . . . . . . . . .
Securities Issued by Other Investment Companies . . . . . . .
Restricted Securities . . . . . . . . . . . . . . . . . . . .
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone or by Wire . . . . . . . . . . . . . . . . . . .
Other Information Regarding Purchases . . . . . . . . . . . .
- 3 -
<PAGE>
TABLE OF CONTENTS
Page
----
SALES CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . .
Class C Shares . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . .
Reduced Sales Charges -- Class A Shares . . . . . . . . . . .
Sales Charge Waivers . . . . . . . . . . . . . . . . . . . . .
Concurrent Purchases . . . . . . . . . . . . . . . . . . . . .
Letters of Intent . . . . . . . . . . . . . . . . . . . . . .
Rights of Accumulation . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares .
Factors to Consider When Selecting Class A Shares or Class C
Shares of the Funds . . . . . . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . .
Conversion Feature . . . . . . . . . . . . . . . . . . . . . .
QUALIVEST INDIVIDUAL RETIREMENT ACCOUNTS ("IRA") . . . . . . . . .
Simplified Employee Pension Plan ("SEP/IRA") . . . . . . . . .
Salary Reduction Simplified Employee Pension Plan
("SAR-SEP/IRA") . . . . . . . . . . . . . . . . . . . . .
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . .
Auto Withdrawal Plan . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Redemption of Shares . . . . . . .
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . .
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . .
Administrator and Distributor . . . . . . . . . . . . . . . .
Other Service Providers . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banking Laws . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . . . .
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . .
Directed Dividend Option . . . . . . . . . . . . . . . . . . .
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . .
Multiple Classes of Shares . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . .
Account Services . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . .
- 4 -
<PAGE>
PROSPECTUS SUMMARY
Shares Offered
Class A and Class C Shares of the Qualivest Allocated Conservative Fund (the
"Conservative Fund"), the Qualivest Allocated Balanced Fund (the "Balanced
Fund"), the Qualivest Allocated Growth Fund (the "Growth Fund"), and the
Qualivest Allocated Aggressive Fund (the "Aggressive Fund") (collectively, the
"Funds"), which are four separate diversified investment portfolios
("funds") of Qualivest Funds (the "Trust"), a Massachusetts business
trust which is registered as an open-end investment company.
Offering Price and Sales Charges
Each Fund offers investors a choice of Class A and Class C Shares, which
differ principally with respect to sales charges and the rate of
expenses to which they are subject. The public offering price of Class
A Shares of each Fund is equal to the net asset value per Share plus a
sales charge equal to 4.50 % of the public offering price, reduced when
the total purchase amount is $50,000 or more (see "SALES CHARGES
- -- Class A Shares"). Under certain circumstances, the sales charge may
be eliminated. The public offering price of Class C Shares of each Fund
is equal to the net asset value per Share, but investors may be subject
to a contingent deferred sales charge ("CDSC") of 1.00% when Class C
Shares are redeemed less than one year after purchase.
Minimum Purchase
$500 minimum initial purchase per Fund, with $100 minimum subsequent
investments. Such minimum initial investment may be waived for certain
purchasers and is reduced to $50 for investors using the Auto Invest
Plan described herein, and such investors are subject to a $50 minimum
for each subsequent investment in a Fund.
Investment Objectives
The Conservative Fund seeks to produce current income with a secondary
- ---------------------
objective of long-term capital appreciation.
The Balanced Fund seeks to provide a balance between long-term capital
- -----------------
appreciation and current income.
The Growth Fund seeks to provide capital appreciation and income growth.
- ---------------
The Aggressive Fund seeks to provide maximum capital appreciation.
- -------------------
- 5 -
<PAGE>
Investment Policies
Each Fund seeks its investment objective by investing in a diversified
portfolio of certain of the other funds offered by the Trust (the
"Underlying Funds"). The Underlying Funds include: the Qualivest Large
Companies Value Fund (the "Large Companies Fund"), the Qualivest Small
Companies Value Fund (the "Small Companies Fund"), the Qualivest
International Opportunities Fund (the "International Fund") and the
Qualivest Optimized Stock Fund (the "Optimized Fund") (collectively, the
"Equity Funds"); the Qualivest Intermediate Bond Fund (the "Intermediate
Bond Fund") and the Qualivest Diversified Bond Fund (the "Bond Fund")
(collectively, the "Income Funds"); and the Qualivest U.S. Treasury
Money Market Fund (the "U.S. Treasury Fund") and the Qualivest Money
Market Fund (the "Money Market Fund") (collectively, the "Money Funds").
See "INVESTMENT OBJECTIVES AND POLICIES."
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 OBJECTIVES AND
POLICIES -- UNDERLYING FUNDS" and "UNDERLYING FUNDS' 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. See "MANAGEMENT OF THE FUNDS
- - Investment Adviser."
Dividends and Capital Gains
Dividends from net income are declared and paid quarterly for the Funds.
Net realized capital gains are distributed at least annually.
Other Information
U.S. Bank ("Custodian") 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.
Guide to Investing in the Qualivest Funds
Purchase orders for the Funds received by the Distributor prior to 1:00
p.m. Pacific Time will become effective that day.
- 6 -
<PAGE>
- - Minimum Initial Investment.......................... $500
(Such minimum may be reduced for certain investors.)
- - Minimum Initial Investment for
IRAs and other qualified retirement plans........... $ 50
- - Minimum Subsequent Investment....................... $100
(Such minimum may be reduced for certain investors.)
- - Minimum Subsequent Investment for IRAs
and other qualified retirement plans................ $ 50
Shareholders may exchange Shares of a Fund for Shares of the same class
of another fund of the Trust by telephone or mail. See "PURCHASING
SHARES -- Exchange Privilege" for more information.
- - Minimum Initial Exchange............................ $500
(No minimum for subsequent exchanges.)
Shareholders may redeem Shares by telephone, mail or through a Fund's
Auto Withdrawal Plan.
All dividends and distributions will be automatically reinvested at net
asset value in additional Shares of the same class of the applicable
Fund unless cash payment is requested.
See "PURCHASING SHARES" and "REDEEMING SHARES" for more information.
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 during its first fiscal year of operations. The
numbers reflect estimated levels of operating expenses.
- 7 -
<PAGE>
<TABLE><CAPTION>
FEE TABLES
Qualivest Allocated Qualivest Allocated
Conservative Fund Balanced Fund
----------------- -------------------
Class A Class C Class A Class C
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . . . . . . . . . . . . . 4.50 % None 4.50 % None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) . . . . . . . . None None None None
Deferred Sales Charge (as a
percentage of redemption
proceeds)1 . . . . . . . . . . . . . . . . . . None 1.00% None 1.00%
Redemption Fees (as a percentage
of redemption proceeds) . . . . . . . . . . . None None None None
Exchange Fees . . . . . . . . . . . . . . . . . None None None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . . . . . . . . . . . . 0.05% 0.05% 0.05% 0.05%
12b-1 Fees2 . . . . . . . . . . . . . . . . . . 0.25% 1.00% 0.25% 1.00%
Other Expenses . . . . . . . . . . . . . . . . 0.19% 0.19% 0.19% 0.19%
---- ---- ---- ----
Total Fund Operating Expenses 0.49% 1.24% 0.49% 1.24%
==== ==== ==== ====
<CAPTION>
Qualivest Allocated Qualivest Allocated
Growth Fund Aggressive Fund
------------------- -------------------
Class A Class C Class A Class C
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . . . . . . . . . . . . . 4.50% None 4.50% None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) . . . . . . . . None None None None
Deferred Sales Charge (as a
percentage of redemption
proceeds)1 . . . . . . . . . . . . . . . . . . None 1.00% None 1.00%
Redemption Fees (as a percentage
of redemption proceeds) . . . . . . . . . . . None None None None
Exchange Fees . . . . . . . . . . . . . . . . . None None None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . . . . . . . . . . . . 0.05% 0.05% 0.05% 0.05%
12b-1 Fees2 . . . . . . . . . . . . . . . . . . 0.25% 1.00% 0.25% 1.00%
Other Expenses . . . . . . . . . . . . . . . . 0.19% 0.19% 0.19% 0.19%
---- ---- ---- ----
Total Fund Operating Expenses 0.49% 1.24% 0.49% 1.24%
==== ==== ==== ====
</TABLE>
- --------------------------------
1 A 1% CDSC is imposed only on redemptions of Shares redeemed less
than one year after purchase, except for redemptions by certain
"Institutional Investors" as defined below under "SALES CHARGES --
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares."
2 As a result of the payment of 12b-1 fees, long-term Shareholders of
the Funds may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of
Securities Dealers, Inc.
- 8 -
<PAGE>
In addition to the expenses shown above, Shareholders of the Funds will
indirectly bear their pro rata share of fees and expenses incurred by
the Underlying Funds, so that the investment returns of the Funds will
be net of the expenses of the Underlying Funds. The following chart
provides the expense ratios for each of the currently operative
Underlying Funds. Where applicable, expense ratios of the Underlying
Funds have been restated to reflect current fees.
Expense
Ratio
------
Large Companies Fund . . . . . . . . . 0.94%
Small Companies Fund . . . . . . . . . 1.11%
International Fund . . . . . . . . . . 0.81%
Optimized Fund . . . . . . . . . . . . 0.61%
Intermediate Bond Fund . . . . . . . . 0.74%
Bond Fund . . . . . . . . . . . . . . 0.62%
U.S. Treasury Fund . . . . . . . . . . 0.32%
Money Market Fund . . . . . . . . . . 0.52%
Based on the expenses for the Funds and the Underlying Funds shown above,
the average weighted expense ratio for each Fund, expressed as a percentage
of each Fund's average daily net assets, is estimated to be as follows:
Expense Ratio
-------------
Class A Class C
------- -------
Conservative Fund .............................. 1.20% 1.95%
Balanced Fund .................................. 1.27% 2.02%
Growth Fund .................................... 1.31% 2.06%
Aggressive Fund ................................ 1.36% 2.11%
On the basis of these estimated expense levels, an investor would pay the
following expenses on a $1,000 investment, assuming (1) 5% annual return, and
(2) redemption at the end of each time period:
Qualivest Allocated Qualivest Allocated
Conservative Fund Balanced Fund
----------------------- -------------------
Class A Class C Class A Class C
------- ------- ------- --------
1 Year . . . $ 57 $ 20 $ 57 $ 21
3 Years. . . $ 81 $ 61 $ 83 $ 63
Qualivest Allocated Qualivest Aggressive
Growth Fund Allocated Fund
----------------------- --------------------
Class A Class C Class A Class C
------- ------- ------- --------
1 Year . . . $ 58 $ 21 $ 58 $ 21
3 Years. . . $ 85 $ 65 $ 86 $ 66
- ----------------------------
* These examples should not be considered representations 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.
- 9 -
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Funds are designed to achieve different investment objectives and to
pursue these objectives by means of different investment strategies.
Shareholders should carefully consider their investment goals and
willingness to tolerate investment risk before investing in the Funds.
The Conservative Fund. The investment objective of the Conservative
- ---------------------
Fund is to seek to produce current income with a secondary objective of
long-term capital appreciation.
The Conservative Fund is designed for investors who want a source of
steady investment income with limited Share price fluctuation, and who
are willing to bear limited investment risk. This Fund will concentrate
its investments in Underlying Funds that invest primarily in fixed
income securities and short-term money market instruments. However, for
purposes of achieving capital appreciation and investment income, the
Conservative Fund also may invest a portion of its assets in Underlying
Funds that invest primarily in equity securities.
The Balanced Fund. The investment objective of the Balanced Fund is to
- -----------------
seek to provide a balance between long-term capital appreciation and
current income.
The Balanced Fund seeks this objective by broadly diversifying its
assets among most or all of the Underlying Funds, with emphasis placed
on investments in the Equity Funds and the Income Funds. This Fund
offers investors greater potential for capital appreciation than does
the Conservative Fund by virtue of its larger investments in the Equity
Funds, while also offering investors the potential for investment
income. This Fund may be suitable for investors seeking capital
appreciation in addition to income, and who are willing to bear some
risk of loss and Share price fluctuation inherent in equity securities.
The Growth Fund. The investment objective of the Growth Fund is to seek
- ---------------
to provide capital appreciation and income growth.
The Growth Fund is designed for investors seeking capital appreciation
primarily through an equity-oriented investment. This Fund focuses on
investments in the Equity Funds, although it also will invest in the Income
Funds and Money Funds. However, this Fund emphasizes the potential
rewards and risks of an investment in equity securities.
- 10 -
<PAGE>
The Aggressive Fund. The investment objective of the Aggressive
- -------------------
Fund is to seek to provide maximum capital appreciation.
The Aggressive Fund seeks to achieve this objective by investing
substantially all of its assets in those Underlying Funds that invest
primarily in equity securities. While this Fund's investments are most
heavily weighted toward the Large Companies Fund and Optimized Fund, up
to 35% of its assets may be invested in each of the Small Companies Fund
and the International Fund. Accordingly, this Fund is oriented toward
those investors seeking long-term capital appreciation, with the
potential for greater gains but with greater risk of loss.
The Funds will invest their assets in the following Underlying Funds,
within the ranges (expressed as a percentage of each Fund's assets)
indicated below:
Conservative Balanced Growth Aggressive
Underlying Fund Fund Fund Fund Fund
- --------------- ------------ -------- ------ --------
Large Companies Fund 0-35% 0-35% 0-35% 0-50%
Small Companies Fund 0-35% 0-35% 0-35% 0-35%
International Fund 0-35% 0-35% 0-35% 0-35%
Optimized Fund 0-35% 0-35% 0-35% 0-50%
Intermediate Bond Fund 0-50% 0-35% 0-35% 0%
Bond Fund 0-50% 0-35% 0-35% 0%
U.S. Treasury Fund 0-10% 0-10% 0-10% 0%
Money Market Fund 0-10% 0-10% 0-10% 0-10%
For purposes of determining each Fund's compliance with these percentage
limitations, Qualivest will determine the value of a Fund's assets at
the time of investment.
While Qualivest intends to invest each Fund's assets in the Underlying
Funds within the ranges set forth above, and to periodically adjust the
allocations in response to economic and market conditions, each Fund has
a "neutral mix" representing the intended typical allocation of the Fund's
assets over time. Qualivest anticipates that each Fund's neutral mix
will be as follows:
Underlying Funds
----------------
Income and
Fund Equity Funds Money Funds
- ---- ------------ -----------
Conservative Fund 20% 80%
Balanced Fund 60% 40%
Growth Fund 80% 20%
Aggressive Fund 100% 0%
- 11 -
<PAGE>
The investment policies set forth above are designed to assure that each
Fund maintains a consistent investment approach. However, the Funds do
not have the same investment flexibility as other mutual funds that are
not subject to these limitations. Also, because the Funds have adopted
a policy of limiting redemptions to no more than 3% of any Underlying
Fund's Shares during any month, except as necessary to meet redemption
requests by the Funds' Shareholders, the Funds may be unable to
reallocate assets among the Underlying Funds as quickly as would be
the case in the absence of this constraint.
Each Fund's investments are concentrated in the Underlying Funds, and
the investment performance of each Fund is directly related to the
performance of the Underlying Funds. The Funds will invest in the Class
Y Shares of the Underlying Funds, which are sold at net asset value per
Share with no sales charge or CDSC. See "INVESTMENT OBJECTIVES AND
POLICIES -- UNDERLYING FUNDS" for a description of the Underlying Funds
in which the Funds invest.
In addition to Shares of the Underlying Funds, for temporary cash
management purposes, each Fund may invest in short-term obligations
(with maturities of 12 months or less) consisting of commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, reverse repurchase
agreements and dollar roll agreements, obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
asset-backed and mortgage-related securities, and demand and time deposits
of domestic and foreign banks and savings and loan associations. The Funds
also may hold depositary or custodial receipts representing beneficial
interests in any of the foregoing securities. See "UNDERLYING FUNDS'
INVESTMENT TECHNIQUES AND RISK FACTORS" for a description of these
investments.
* * * *
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 objectives of any Fund will be achieved.
INVESTMENT OBJECTIVES AND POLICIES -- UNDERLYING FUNDS
The following is a description of the investment objectives and policies
of the Underlying Funds. Additional investment practices are described
in "UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK
- 12 -
<PAGE>
FACTORS," the Statement of Additional Information, and the Prospectus
for each of the Underlying Funds.
Equity Funds
Large Companies and Small Companies Funds
- -----------------------------------------
The Large Companies Fund. The investment objective of the Large
- ------------------------
Companies Fund is to seek long-term capital appreciation. It invests
primarily in common stocks and securities convertible into common stocks
of large capitalization companies. For purposes of this policy, large
capitalization companies are those with capitalization of $1 billion or
more at the time of purchase.
The Small Companies Fund. The investment objective of the Small
- ------------------------
Companies Fund is to seek capital appreciation. It invests primarily in
common stocks and securities convertible into common stocks of small-
sized companies. For purposes of this policy, small-sized companies are
those with capitalization of less than $1 billion at the time of
purchase. Smaller capitalization stocks may be quite volatile and
subject to wide fluctuations in both the short and medium term.
Each of these Underlying Funds seeks to achieve its investment objective
by following flexible investment policies emphasizing investment in
common stocks and securities convertible into common stocks (without
regard to rating by a nationally recognized statistical rating
organization ("NRSRO")) that are, in Qualivest's opinion, undervalued
relative to other securities at the time of purchase. In analyzing
different securities, Qualivest will consider various investment
oriented ratios as significant factors in assessing relative value,
including market price to book value, market price to earnings, and
market price to assets. Also considered are estimated liquidating
value, earnings growth rate, and cash flow. If in Qualivest's opinion a
stock has reached a fully valued position, it will, under most
circumstances, be sold and replaced by securities which are deemed to be
undervalued in the marketplace.
Under normal market conditions, each of the Large Companies and Small
Companies Funds will invest primarily in common stocks and securities
convertible into common stocks of companies believed by Qualivest to be
characterized by sound management and the potential for long-term
capital appreciation. Qualivest also may consider income and payment of
dividends in selecting securities for the Large Companies Fund. Under
normal market conditions, the Large Companies Fund intends to invest at
least 65% of its total assets in common stocks and securities
convertible into common stocks of companies with a market capitalization
of at least $1 billion at the time of purchase. In addition, under
normal market conditions, the Small Companies Fund will invest at least
65% of its total assets in common stocks and securities convertible into
common stocks of companies with a market capitalization of less than $1
- 13 -
<PAGE>
billion at the time of purchase. If the Large Companies Fund owns
securities issued by a company whose market capitalization falls below
$1 billion, or the Small Companies Fund owns securities issued by a
company whose market capitalization increases above $1 billion,
Qualivest may, but is not required to, sell such securities. However,
Qualivest will sell such securities if, in its judgment, market
conditions warrant such a sale, or if the Large Companies Fund or Small
Companies Fund would no longer be primarily invested in common stocks
and securities convertible into common stocks issued by large
capitalization companies and small-sized companies, respectively.
Each of the Large Companies and Small Companies Funds may also invest up
to 35% of the value of its total assets in preferred stocks, notes,
units of real estate investment trusts, asset-backed and mortgage-
related securities, warrants, and short-term obligations (with
maturities of 12 months or less) consisting of commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
and demand and time deposits of domestic and foreign banks and savings
and loan associations. Each of these Underlying Funds may also hold
securities of other investment companies and depositary or custodial
receipts representing beneficial interests in any of the foregoing
securities.
Each of these Underlying Funds may invest in corporate debt securities
such as debt obligations with a maturity of at least one year from the
date of issue ("bonds") and notes which are rated at the time of
purchase within the four highest rating groups assigned by an NRSRO
(e.g., in the case of Moody's Investors Service, Inc. ("Moody's"), Aaa,
----
Aa, A and Baa, and in the case of Standard & Poor's Corporation ("S&P"),
AAA, AA, A and BBB), which are considered to be investment grade or, if
unrated, which Qualivest deems to present attractive opportunities and
are of comparable quality. For a description of NRSROs and their rating
symbols, see the Appendix to the Statement of Additional Information.
For a discussion of debt securities rated within the fourth highest
rating group assigned by an NRSRO, see "UNDERLYING FUNDS' INVESTMENT
TECHNIQUES AND RISK FACTORS -- Medium-Grade Securities" herein.
Subject to the foregoing policies, each of these Underlying Funds may
also invest up to 25% of its total assets in foreign securities either
directly or through the purchase of American Depositary Receipts and may
also invest in securities issued by foreign branches of U.S. banks and
foreign banks, in Canadian Commercial Paper, and in Europaper (U.S.
dollar denominated commercial paper of a foreign issuer). For a
discussion of risks associated with foreign securities, see "UNDERLYING
FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS" herein.
- 14 -
<PAGE>
International and Optimized Funds
- ---------------------------------
The International Fund. The investment objective of the International
- ----------------------
Fund is to seek capital appreciation. It invests primarily in common
stocks and securities convertible into common stocks of companies that
are organized under the laws of countries other than the U.S.
The Optimized Fund. The investment objective of the Optimized Fund is
- ------------------
to seek capital appreciation and current income.
The International Fund and the Optimized Fund each seeks to achieve its
investment objective by investing primarily in common stocks and
securities convertible into common stocks (without regard to NRSRO
rating) of companies whose securities are listed on a specific
securities index. While the performance of the Optimized Fund may be
expected to approximate the performance of the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index"), Qualivest seeks to
outperform the S&P 500 Index through limited management of the Optimized
Fund's portfolio.
Under normal market conditions, at least 80% of the total assets of the
International Fund will be invested in common stocks and securities
convertible into common stocks of foreign companies whose securities are
listed on the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index (the "EAFE Index"). The International Fund
will invest in the securities of issuers from at least three countries
other than the U.S. Investments are selected for inclusion in the
International Fund's portfolio primarily on the basis of market
capitalization and industry weightings, and to create an aggregate
country weighting similar to that of the EAFE Index. While Qualivest
anticipates that substantially all of the International Fund's assets
will be so invested, Qualivest may invest up to 20% of its total assets
in common stocks and securities convertible into common stocks of large
capitalization U.S. companies that Qualivest deems to present attractive
investment opportunities due to such companies' foreign business
operations.
Under normal market conditions, at least 80% of the Optimized Fund's
total assets will be invested in common stocks and securities
convertible into common stocks of companies whose securities are listed
on the S&P 500 Index. While Qualivest anticipates that substantially
all of the Optimized Fund's assets will be so invested, Qualivest may
invest up to 20% of its total assets as described below.
The Optimized Fund does not intend to mirror the performance of the S&P
500 Index; rather, it seeks to optimize its investments in S&P 500 Index
companies and outperform the S&P 500 Index over time by investing in
securities that, on the basis of computerized modelling and performance
optimization strategies implemented by Qualivest, demonstrate attributes
that indicate performance
- 15 -
<PAGE>
superior to that of the S&P 500 Index as a whole. The S&P 500 Index is
composed of 500 common stocks chosen by S&P on a statistical basis to be
included in the index. Because of the market-value weighting, the
largest companies in the S&P 500 Index typically account for a
disproportionate share of the index. Qualivest believes that an
investment in securities of companies listed on the S&P 500 Index may be
optimized by selecting those securities whose growth and value
characteristics indicate that their performance, relative to the other
securities listed on the S&P 500 Index, will exceed the extent to which
the S&P 500 Index reflects their performance. Qualivest intends to
utilize computer modelling and other strategies to identify those stocks
that, in light of its assessment of general economic conditions,
Qualivest believes will achieve capital appreciation and current income
superior to the performance of a portfolio that merely seeks to
replicate the S&P 500 Index.
Each of the International Fund and the Optimized Fund may also invest up
to 20% of the value of its total assets in short-term obligations (with
maturities of 12 months or less) consisting of commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
and demand and time deposits of domestic and foreign banks and savings
and loan associations. These Underlying Funds may also each hold
securities of other investment companies and depositary or custodial
receipts representing beneficial interests in any of the foregoing
securities.
The portfolio turnover rate for the International Fund and the Optimized
Fund is expected to be under 50%, a generally lower turnover rate than
for most other investment companies. Qualivest believes that a lower
turnover rate will reduce securities transaction costs incurred by these
Underlying Funds.
* * * *
Consistent with the foregoing, each of the Equity Funds will focus its
investments in those companies and types of companies that Qualivest
believes will enable such Underlying Fund to achieve its investment
objective. No Equity Fund will invest more than 15% of its net assets
in securities that are deemed to be illiquid. During temporary
defensive periods as determined by Qualivest, any of the Equity Funds
may hold up to 100% of its total assets in high quality (i.e., rated
----
within the top two rating categories by an NRSRO) short-term debt
obligations including domestic bank certificates of deposit, bankers'
acceptances and repurchase agreements secured by bank instruments.
However, to the extent that an Equity Fund is so invested, its
investment objective may not be achieved during that time.
- 16 -
<PAGE>
Income Funds
The Intermediate Bond Fund. The investment objective of the
- --------------------------
Intermediate Bond Fund is to seek current income consistent with
preservation of capital.
The Bond Fund. The investment objective of the Bond Fund is to seek
- -------------
current income consistent with preservation of capital.
Under normal market conditions, at least 65% of the total assets of the
Intermediate Bond Fund and Bond Fund will be invested in bonds, which
for this purpose include debt obligations with a maturity of at least
one year from the date of issue. Fixed income or debt securities in
which these Underlying Funds may invest can have maturities of up to
thirty years or more. Each of these Underlying Funds may invest up to
35% of its total assets in high quality money market instruments such as
commercial paper (including variable amount master demand notes),
certificates of deposit and bankers' acceptances, variable and floating
rate notes, and asset-backed securities without regard to maturity,
except as set forth below. In addition, these Underlying Funds may
engage in certain loans of portfolio securities, repurchase agreements
and reverse repurchase agreements, and may also invest in securities of
other investment companies. The Intermediate Bond Fund will maintain a
dollar-weighted average maturity of three to seven years under ordinary
market conditions, while the Bond Fund will maintain a dollar-weighted
average maturity of approximately seven to eleven years under ordinary
market conditions.
Each of these Underlying Funds expects to invest in bonds, notes and
debentures of a wide range of U.S. corporate issuers. Such obligations,
in the case of debentures, will represent unsecured promises to pay, in
the case of notes and bonds, may be secured by mortgages on real
property or security interests in personal property and will in most
cases differ in their interest rates, maturities and times of issuance.
Each of these Underlying Funds may also invest in corporate debt
securities and convertible debt securities which are rated at the time
of purchase within the four highest rating groups assigned by an NRSRO
(e.g., in the case of Moody's, Aaa, Aa, A and Baa, and in the case of
----
S&P, AAA, AA, A and BBB), which are considered to be investment grade
or, if unrated, which Qualivest deems to present attractive
opportunities and are of comparable quality. For a description of
NRSROs and their rating symbols, see the Appendix to the Statement of
Additional Information. For a discussion of debt securities rated
within the fourth highest rating group assigned by an NRSRO, see
"UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS --
Medium-Grade Securities" herein.
Each of these Underlying Funds may hold short-term obligations (with
maturities of 12 months or less) consisting of domestic and
- 17 -
<PAGE>
foreign commercial paper rated at the time of purchase within the top
two categories 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 Investors Service
("Fitch")) or, if unrated, which Qualivest deems to present attractive
opportunities and are of comparable quality, including variable amount
master demand notes, bankers' acceptances, certificates of deposit and
time deposits of domestic and foreign branches of U.S. banks and foreign
banks, and repurchase agreements. These Underlying Funds may also
invest in securities of other investment companies or in Guaranteed
Investment Contracts ("GICs"), which are considered to be illiquid
securities.
Each of these Underlying Funds may also invest in obligations of the
Export-Import Bank of the United States, in U.S. dollar denominated
international bonds for which the primary trading market is in the
United States ("Yankee Bonds"), or for which the primary trading market
is abroad ("Eurodollar Bonds"), and in Canadian Bonds and bonds issued
by institutions, such as the World Bank and the European Economic
Community, organized for a specific purpose by two or more sovereign
governments ("Supranational Agency Bonds").
Each of these Underlying Funds expects to invest in a variety of U.S.
Treasury obligations, differing 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 representing either
future interest or principal payments ("Stripped Treasury Obligations"),
and mortgage-related securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, such as the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), the Federal Farm Credit Bureau ("FFCB"), the
Tennessee Valley Authority ("TVA"), the Federal Home Loan Bank ("FHLB"),
the Federal Land Bank, the Federal Home Loan Mortgage Corporation
("FHLMC"), the Student Loan Marketing Association ("SLMA") and in
mortgage-related securities issued by nongovernmental entities.
Each of these Underlying Funds may invest in mortgage-related securities
which are rated at the time of purchase within the four highest rating
categories assigned by an NRSRO or, if unrated, which Qualivest deems to
present attractive opportunities and are of comparable quality, and have
mortgage obligations backing such securities, consisting of conventional
thirty year fixed rate mortgage obligations, graduated payment mortgage
obligations, fifteen year mortgage obligations and adjustable rate
mortgage obligations.
Each of these Underlying Funds also may invest in mortgage-related
securities issued by nongovernmental entities. Commercial banks,
savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers also create pass-
through pools of conventional residential mortgage
- 18 -
<PAGE>
loans. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be
readily marketable. Neither of these Underlying Funds will purchase
mortgage-related securities or any other assets which in Qualivest's
opinion are illiquid, if as a result, more than 15% of the value of its
net assets will be illiquid.
Mortgage-related securities in which these Underlying Funds may invest
may also include collateralized mortgage obligations ("CMOs"), which are
debt obligations issued generally by finance subsidiaries or trusts that
are secured by mortgage-backed certificates, including, in many cases,
certificates issued by government-related guarantors, including GNMA,
FNMA and FHLMC, together with certain funds and other collateral.
Each of these Underlying Funds may invest in asset-backed securities
(unrelated to first mortgage loans), which represent fractional
interests in pools of leases, retail installment loans or revolving
credit receivables, both secured (such as Certificates for Automobile
Receivables or "CARS") and unsecured (such as Credit Card Receivable
Securities or "CARDS"). These assets are generally held by a trust and
payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Asset-backed securities will be purchased only if they meet the rating
requirements set forth above or, if unrated, are deemed to be of
comparable quality by Qualivest with respect to these Underlying Funds'
investments in fixed-income securities of U.S. corporations and
mortgage-related securities.
An increase in interest rates will generally reduce the value of the
investments in these Underlying Funds, and a decline in interest rates
will generally increase the value of those investments. Depending upon
the prevailing market conditions, Qualivest may purchase debt securities
at a discount from face value, which produces a yield greater than the
coupon rate. Conversely, if debt securities are purchased at a premium
over face value, the yield will be lower than the coupon rate.
* * * *
In making investment decisions for the Income Funds, Qualivest will
consider many factors, including current yield, maturity, and yield to
maturity. Qualivest will also monitor the financial condition of the
issuers of the Income Funds' portfolio investments and may shorten the
average weighted portfolio maturity of an Income Fund, in light of each
such Underlying Fund's investment objective of preservation of capital,
if economic or market conditions warrant such action.
- 19 -
<PAGE>
Money Funds
Although each Money 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.
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.
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 Underlying 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 U.S.
Treasury Fund's dividend distributions may also be state tax-exempt with
respect to the income earned by it on U.S. Government securities.
The Money Market Fund. The investment objective of the Money Market
- ---------------------
Fund is to seek current income consistent with liquidity and stability
of principal.
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.
* * * *
Each Money 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 Money 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
- 20 -
<PAGE>
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 Money 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 Money Fund invests have remaining maturities of
397 calendar days (thirteen months) or less. The dollar-weighted
average maturity of the obligations in a Money Fund will not exceed 90
days.
Subject to the foregoing general limitations, the Money Funds expect to
invest in the types of securities discussed below under "INVESTMENT
TECHNIQUES AND RISK FACTORS." These securities include short-term
obligations 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, GICs, repurchase agreements,
reverse repurchase agreements and dollar roll agreements.
UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS
Each Fund's Share price will fluctuate in response to changes in the
Share price of one or more of the Underlying Funds, which are permitted
to engage in a wide range of investment techniques. Like any investment
program, an investment in an Underlying Fund entails certain risks.
U.S. Government Obligations
Obligations of certain agencies and instrumentalities of the U.S.
Government, such as the GNMA, are supported by the full faith and credit
of the U.S. Treasury; others, such as those of the FNMA, are supported
by the right of the issuer to borrow from the Treasury; others, such as
those of the SLMA, are supported by the discretionary authority of the
U.S. Government to purchase the agency's obligations; still others, such
as those of the FFCB or the FHLMC, 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 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"). Stripped securities are
issued at a discount to their "face value" and may exhibit greater price
volatility than ordinary debt securities because of
- 21 -
<PAGE>
the manner in which their principal and interest are returned to
investors.
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 and the Underlying
Funds, except the Optimized Fund and the International Fund, may invest in
mortgage-related securities, which are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly. Early repayment of principal on mortgage-
related securities may expose a Fund or an Underlying Fund to a lower rate of
return upon reinvestment of principal. 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 or
an Underlying 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, a Fund or an
Underlying Fund may invest in other asset-backed securities that may be
developed in the future.
Certain issuers of asset-backed securities are considered to be investment
companies under the Investment Company Act of 1940 (the "1940 Act"). The
Underlying Funds intend to conduct their operations so that they will not
invest more than 10% (25% for the Money Funds) of their total assets (when
combined with investments in securities
- 22 -
<PAGE>
of other investment companies, if any) in the obligations of such
issuers without obtaining appropriate regulatory relief.
Bankers' Acceptances
The Funds and Underlying 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 and Underlying 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 and Underlying 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 United States; 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 United States.
None of the Money Funds will invest in excess of 10% of its net assets
in time deposits with maturities 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
Each Fund, the Income Funds, the Money Market Fund, and, within
the limitations described above, the U.S. Treasury 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.
The Equity Funds may invest in such instruments if rated in the four
highest categories assigned by an NRSRO or, if not rated, found by
Qualivest pursuant to guidelines adopted by the Board of Trustees to be
of comparable quality. The Money Market Fund, the Equity Funds and the
Income Funds may also invest in Canadian Commercial Paper, which is
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<PAGE>
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 and the Underlying 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. Although
there is no secondary market in the notes, the Funds and the Underlying
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.
Put and Call Options
Each Equity and Income Fund may purchase put and call options on
securities, and each Equity Fund other than the Optimized Fund may
purchase such options on foreign currencies, subject to its applicable
investment policies, for the purposes of hedging against market risks
related to its portfolio securities and adverse movements in exchange
rates between currencies, respectively. Each Underlying Fund may also
engage in writing call options from time to time as Qualivest deems
appropriate. The Underlying Funds will write only covered call options
(options on securities or currencies owned by the particular Underlying
Fund). When a portfolio security or currency subject to a call option
is sold, the Underlying Fund will effect a "closing purchase
transaction" -- the purchase of a call option on the same security or
currency with the same exercise price and expiration date as the call
option which such Underlying Fund previously has written. If such
Underlying Fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security or currency until the
option expires or that Underlying Fund delivers the underlying security
or currency upon exercise. In addition, upon the exercise of a call
option by the holder thereof, the Underlying Fund will forego the
potential benefit represented by market appreciation over the exercise
price. Under normal conditions, it is not expected that an Underlying
Fund will cause the underlying value of portfolio securities and/or
currencies subject to such options to exceed 25% of its total assets.
- 24 -
<PAGE>
An Underlying Fund, as part of its option transactions, also may
purchase index put and call options and write index options. As with
options on individual securities, an Underlying Fund will write only
covered index call options. Options on securities indices are similar
to options on a security except that, rather than the right to take or
make delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon exercise of
the option, an amount of cash if the closing level of the securities
index upon which the option is based is greater than, in the case of a
call, or less than, in the case of a put, the exercise price of the
option.
Price movements in securities which an Underlying Fund owns or intends
to purchase may not correlate perfectly with movements in the level of
an index and, therefore, an Underlying Fund bears the risk of a loss on
an index option that is not completely offset by movements in the price
of such securities. Because index options are settled in cash, a call
writer cannot determine the amount of its settlement obligations in
advance and, unlike call writing on specific securities, cannot provide
in advance for, or cover, its potential settlement obligations by
acquiring and holding the underlying securities. An Underlying Fund may
be required to segregate assets or provide an initial margin to cover
index options that would require it to pay cash upon exercise.
Foreign Securities
Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include political,
social or economic instability in the country of the issuer, the
difficulty of predicting international trade patterns, the possibility
of the imposition of exchange controls, expropriation, limits on removal
of currency or other assets, nationalization of assets, foreign
withholding and income taxation, and foreign trading practices
(including higher trading commissions, custodial charges and delayed
settlements). Such securities may be subject to greater fluctuations in
price than securities issued by U.S. corporations or issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
The markets on which such securities trade may have less volume and
liquidity, and may be more volatile than securities markets in the U.S.
In addition, there may be less publicly available information about a
foreign company than about a U.S. domiciled company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to U.S. domestic
companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or diplomatic developments could also affect
investment in those countries. In addition, foreign branches of U.S.
banks, foreign banks and foreign issuers may be subject to less
stringent reserve requirements and to different accounting, auditing,
reporting, and
- 25 -
<PAGE>
recordkeeping standards than those applicable to domestic branches of
U.S. banks and U.S. domestic issuers.
If a security is denominated in foreign currency, the value of the
security to an Underlying Fund will be affected by changes in currency
exchange rates and in exchange control regulations, and costs will be
incurred in connection with conversions between currencies. Currency
risks generally increase in lesser developed markets. Exchange rate
movements can be large and can endure for extended periods of time,
affecting either favorably or unfavorably the value of the Underlying
Funds' assets.
For many foreign securities, U.S. dollar denominated American Depositary
Receipts ("ADRs"), which are traded in the United States on exchanges or
over-the-counter, are issued by domestic banks. ADRs represent the
right to receive securities of foreign issuers deposited in a domestic
bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, an
eligible Equity Fund can avoid currency risks during the settlement
period for either purchases or sales.
Subject to its applicable investment policies, each Equity Fund other
than the Optimized Fund may invest in debt securities denominated in the
European Currency Unit ("ECU"), which is a "basket" consisting of
specified amounts of the currencies of certain of the member states of
the European Community. The specific amounts of currencies comprising
the ECU may be adjusted by the Council of Ministers of the European
Community to reflect changes in relative values of the underlying
currencies. Such adjustments may adversely affect holders of ECU
denominated obligations or the marketability of such securities.
Foreign Currency Transactions
The value of the assets of an Equity Fund other than the Optimized Fund
as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control
regulations, and an Underlying Fund may incur costs in connection with
conversions between various currencies. An Equity Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash)
----
basis at the spot rate prevailing in the foreign currency exchange
market, or through forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange contract ("forward
currency contract") involves an obligation to purchase or sell a
specific currency at a future date at a price set at the time of the
contract. The Equity Funds may enter into forward currency contracts in
order to hedge against adverse movements in exchange rates between
currencies. However, this tends to limit potential gains which might
result from a positive change in such currency relationships. An Equity
Fund may also hedge its foreign currency exchange rate
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<PAGE>
risk by engaging in currency financial futures and options transactions.
The forecasting of short-term currency market movements is extremely
difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration of a forward currency contract.
Accordingly, it may be necessary for an Equity Fund to purchase
additional currency on the spot market if the market value of the
security is less than the amount of foreign currency such Underlying
Fund is obligated to deliver when a decision is made to sell the
security and make delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign
currency such Underlying Fund is obligated to deliver.
If an Equity Fund retains the portfolio security and engages in an
offsetting transaction, it will incur a gain or a loss to the extent
that there has been movement in forward currency contract prices. If an
Equity Fund engages in an offsetting transaction, it may subsequently
enter into a new forward currency contract to sell the foreign currency.
Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency
increase. The Equity Funds will have to convert their holdings of
foreign currencies into U.S. dollars from time to time. Although
foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies.
Repurchase Agreements
Securities held by a Fund or an Underlying Fund (other than the U.S. Treasury
Fund) may be subject to repurchase agreements. Under the terms of a repurchase
agreement, a Fund or an Underlying 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 or an Underlying 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.
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<PAGE>
Reverse Repurchase Agreements and Dollar Roll Agreements
Each of the Funds and Underlying 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
or an Underlying Fund would sell certain of its 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 or an Underlying 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 its investment restrictions having a
value equal to the repurchase price (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 securities sold by a Fund or an Underlying Fund may decline below
the price at which it is obligated to repurchase the securities.
Futures Contracts
The Equity and Income Funds may also enter into contracts for the future
delivery of securities or foreign currencies and futures contracts based
on a specific security, class of securities, foreign currency or an
index, purchase or sell options on any such futures contracts and engage
in related closing transactions. A futures contract on a securities
index is an agreement obligating either party to pay, and entitling the
other party to receive, while the contract is outstanding, cash payments
based on the level of a specified securities index. An Underlying Fund
may engage in such futures contracts in an effort to hedge against
market risks and to manage its cash position, but not for leveraging
purposes.
Aggregate initial margin deposits for futures contracts, and premiums
paid for related options, may not exceed 5% of an Underlying Fund's
total assets, and the value of securities that are the subject of such
futures and options (both for receipt and delivery) may not exceed 33
1/3% of the market value of an Underlying Fund's total assets. Futures
transactions will be limited to the extent necessary to maintain each
Underlying Fund's qualification as a regulated investment company.
When-Issued and Delayed-Delivery Transactions
The Underlying Funds may each purchase securities on a when-issued or
delayed-delivery basis. An Underlying Fund will engage in when-issued
and delayed-delivery transactions only for the purpose of acquiring
portfolio securities consistent with its investment
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<PAGE>
objective and policies, not for investment leverage. When-issued
securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk
that the yield obtained in the transaction will be less than those
available in the market when delivery takes place. An Underlying Fund
will not pay for such securities or start earning interest on them until
they are received. When an Underlying Fund agrees to purchase such
securities, its Custodian will set aside cash or high grade liquid debt
securities equal to the amount of the commitment in a segregated
account. In when-issued and delayed-delivery transactions, an
Underlying Fund relies on the seller to complete the transaction; the
seller's failure to do so may cause such Underlying Fund to miss a price
or yield considered to be advantageous.
Lending of Portfolio Securities
In order to generate additional income, the Equity Funds and the Income
Funds from time to time may lend portfolio securities to broker-dealers,
banks or institutional borrowers of securities. The Underlying Funds
must receive 102% collateral in the form of cash or U.S. Government
securities. This collateral must be valued daily by Qualivest and,
should the market value of the loaned securities increase, the borrower
must furnish additional collateral to the Underlying Funds. During the
time portfolio securities are on loan, the borrower pays the Underlying
Funds any dividends or interest paid on such securities. Loans are
subject to termination by the Underlying Funds or the borrower at any
time. While the Underlying Funds do not have the right to vote
securities on loan, they intend to terminate the loan and regain the
right to vote if that is considered important with respect to the
investment. In the event the borrower defaults on its obligation to an
Underlying Fund, the Underlying Fund could experience delays in
recovering its securities and possible capital losses. The Underlying
Funds will only enter into loan arrangements with broker-dealers, banks
or other institutions which Qualivest has determined to be creditworthy
under guidelines established by the Board of Trustees that permit each
Underlying Fund to loan up to 33 1/3% of the value of its total assets.
Medium-Grade Securities
Each of the Income Funds, the Large Companies Fund and the Small
Companies Fund may invest up to 10% of its total assets in debt
securities within the fourth highest rating group assigned by an NRSRO
(i.e., BBB or Baa by S&P and Moody's, respectively) and comparable
----
unrated securities. These types of debt securities are considered by
Moody's and S&P to have some speculative characteristics, and are more
vulnerable to changes in economic conditions, higher interest rates or
adverse issuer-specific developments which are more likely to lead to a
weaker capacity to make principal and interest payments than comparable
higher rated debt securities.
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<PAGE>
Should subsequent events cause the rating of a debt security purchased
by one of the Underlying Funds to fall below BBB or Baa, as the case may
be, Qualivest will consider such an event in determining whether an
Underlying Fund should continue to hold that security. In no event,
however, would a Fund be required to liquidate any such portfolio
security where the Fund would suffer a loss on the sale of such
security.
Securities Issued by Other Investment Companies
Each of the Equity and Income Funds may invest up to 10% of its total
assets, and each of the Money 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. An Underlying 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 Underlying 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 Underlying
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 institutional 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 of the Trust, 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.
VALUATION OF SHARES
The net asset value of each Fund is determined and its Shares are priced
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
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<PAGE>
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,
Veterans 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
outstanding Shares of such class.
The net asset value per Share of the Funds will fluctuate as the value
of the investment portfolio of a Fund changes.
PURCHASING SHARES
Class A and Class C Shares may be purchased directly from the
Distributor, or through a broker-dealer who has established a dealer
agreement with the Distributor. Except as otherwise discussed below
under "Other Information Regarding Purchases" and "Auto Invest Plan,"
the minimum initial investment in a Fund, based upon the public offering
price, is $500 ($50 in the case of an Individual Retirement Account
("IRA")), and there is a $100 minimum ($50 for an IRA) for subsequent
purchases. Shareholders will pay the next calculated public offering
price after the receipt by the Distributor of an order to purchase
Shares, plus any applicable sales charge as described below (see "SALES
CHARGES").
By Mail
To purchase Class A or Class C Shares of any of the Funds by mail,
complete an Account Application Form and return it along with a check or
money order made payable to Qualivest Funds at the following address:
P. O. Box 3205, Portland, Oregon 97208.
An Account Application Form can be obtained by calling the Trust at
1-800-743-8637.
By Telephone or by Wire
To purchase Class A or Class C Shares of any of the Funds by telephone
or by wire, your Account Application Form must have been previously
received by the Distributor. To place an order by telephone or by wire,
call the Trust's toll-free number 1-800-743-8637. Payment for Class A
or Class C Shares ordered by telephone may be made by check or
electronic transfer and must be received by the Custodian within the
settlement requirements defined in the Securities Exchange Act of 1934
(the "1934 Act"). If payment for the Shares is not received within the
prescribed time periods, or if a check timely received does not clear,
the purchase will be canceled and the investor could be liable for any
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<PAGE>
losses or fees incurred. Any questions regarding current settlement
requirements or electronic payment instructions should be directed to
the Trust at 1-800-743-8637. When purchasing Class A or Class C Shares
by wire, contact the Trust for wire instructions.
Other Information Regarding Purchases
Purchases of 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 Shares in good form ("public offering price"). In the case
of orders for the purchase of 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
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 Shares of any of the Funds will be
effected only on a Business Day of the Funds. An order received prior
to the Valuation Time on any Business Day will be executed at the net
asset value determined as of the Valuation Time on the date of receipt.
An order received after the Valuation Time on any Business Day will be
executed at the net asset value determined as of the Valuation Time on
the next Business Day of that Fund.
The minimum initial investment amount and subsequent investment amount
referred to above may be waived if purchases are made in connection with
payroll deductions, IRAs, Keogh or similar plans and for so-called
"sweep" arrangements where an investor's cash assets are periodically
transferred from an account into one of the Funds. For information on
IRAs, Keogh or similar plans, contact the Trust at 1-800-743-8637.
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.
Depending on the terms of an investor's account, an investor may be
charged a fee in connection with transactions in Shares effected through
a broker or other agent. This Prospectus should be read in conjunction
with information regarding the terms of such an account.
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 Shares of the respective Fund owned
by the Shareholder. Shareholders may rely on these statements in lieu
of certificates. Certificates representing Shares of the Funds will not
be issued.
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<PAGE>
Auto Invest Plan
The Qualivest Funds Auto Invest Plan enables Shareholders to make
regular monthly, bi-monthly or quarterly purchases of Class A or Class C
Shares through automatic deduction from their bank accounts (as long as
the Shareholder's bank is a member of the Automated Clearing House).
With Shareholder authorization, the Trust's Transfer Agent will deduct
the amount specified (subject to the applicable minimums) from the
Shareholder's bank account, which amount will automatically be invested
in Shares at the public offering price on the fifth and/or the twentieth
day of such month or quarter (or the next Business Day thereafter). The
required minimum initial investment for opening an account using the
Auto Invest Plan is $50; the minimum amount for subsequent investments
in a Fund is $50. To participate in the Auto Invest Plan, Shareholders
should complete the appropriate section of the Account Application Form
or a supplemental Auto Invest application that can be acquired by
calling the Trust at 1-800-743-8637. For a Shareholder to change the
Auto Invest instructions, the request must be made in writing to the
Trust's Distributor, BISYS Fund Services, 3435 Stelzer Road, Columbus,
Ohio 43219-3035 and may take up to 15 days to implement.
SALES CHARGES
Class A Shares
The public offering price of Class A Shares of the Funds equals net
asset value plus the applicable sales charge. BISYS receives this sales
charge as Distributor and may reallow it as dealer discounts and
brokerage commissions as follows:
Sales Charge as:
----------------
Size of Transaction % of Offering % of Net Dealer
at Offering Price Price Amount Invested Reallowance
- ------------------- ------------- --------------- -----------
Less than $50,000 4.50% 4.71% 4.05%
$50,000 but less than $100,000 3.75% 3.90% 3.375%
$100,000 but less than $250,000 2.50% 2.56% 2.25%
$250,000 but less than $500,000 2.00% 2.04% 1.80%
$500,000 but less than $1,000,000 1.00% 1.01% 0.90%
$1,000,000 and over 0.00% 0.00% 0.00%
An investor may obtain reduced sales charges on Class A Shares under the
circumstances described below under "Reduced Sales Charges -- Class A
Shares."
Class C Shares
Class C Shares of the Funds may be purchased for individual accounts
only in amounts of less than $500,000. There is no sales charge imposed
upon purchases of Class C Shares, but investors may be subject to a CDSC
of 1.00% when Class C Shares are redeemed less
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<PAGE>
than one year after purchase. See "Contingent Deferred Sales Charge
("CDSC") -- Class C Shares" below.
Other Information
The Distributor, at its expense, will also provide additional
compensation to dealers in connection with sales of Shares of any of the
Funds. Such compensation will include financial assistance to dealers
in connection with conferences, sales or training programs for their
employees, seminars for the public, advertising campaigns regarding one
or more of the Funds, and/or other dealer-sponsored special events. In
some instances, this compensation will be made available only to certain
dealers whose representatives have sold a significant amount of such
Shares. Compensation may include payment for travel expenses, including
lodging, to various locations for meetings or seminars of a business
nature. Compensation may also include the following types of non-cash
compensation offered through promotional contests: (1) travel and
lodging at vacation locations; (2) tickets for entertainment events; and
(3) merchandise. None of the aforementioned compensation is paid for by
any Fund or its Shareholders.
Reduced Sales Charges -- Class A Shares
Sales Charge Waivers
The Distributor may waive sales charges for the purchase of Class A
Shares of a Fund by or on behalf of (1) purchasers for whom U.S. Bank or
one of its affiliates acts in a fiduciary, advisory, custodial or
similar capacity, (2) employees and retired employees (including
spouses, children and parents of employees and retired employees) of
U.S. Bank, BISYS and any affiliates thereof, (3) Trustees of the Trust,
(4) directors and retired directors (including spouses and children of
directors and retired directors) of U.S. Bank and any affiliates
thereof, (5) purchasers who use proceeds from an account for which U.S.
Bank or one of its affiliates acts in a fiduciary, advisory, custodial
or similar capacity, to purchase Class A Shares of a Fund, (6) brokers,
dealers and agents who have a sales agreement with the Distributor, and
their employees (and the immediate family members of such individuals),
(7) investment advisers or financial planners that have entered into an
agreement with the Distributor and that place trades for their own
accounts or the accounts of eligible clients and that charge a fee for
their services, and clients of such investment advisers or financial
planners who place trades for their own accounts if such accounts are
linked to the master account of the investment adviser or financial
planner on the books and records of a broker or agent that has entered
into an agreement with the Distributor, and (8) orders placed on behalf
of other investment companies distributed by BISYS, The BISYS Group,
Inc., or their affiliated companies. In addition, the Distributor may
waive sales charges for the purchase of a Fund's Class A Shares
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<PAGE>
with the proceeds from the recent redemption of shares of a non-money
market mutual fund (except one of the other funds of the Trust) sold
with a sales charge. The purchase must be made within 60 days of the
redemption, and the Distributor must be notified in writing by the
investor, or by his or her financial institution, at the time the
purchase is made. A copy of the investor's account statement showing
such redemption must accompany such notice. To receive a sales charge
waiver in conjunction with any of the above categories, Shareholders
must, at the time of purchase, give the Transfer Agent or the
Distributor sufficient information to permit confirmation of
qualification.
Senior Citizens Discount
The Distributor may offer a 10% reduction of sales charges for the
purchase of Class A Shares of a Fund by or on behalf of a purchaser who
has attained the age of 59 1/2 years. Any such reduction also will
apply to purchases made through the Auto Invest Plan. To receive this
sales charge reduction, Shareholders must, at the time of purchase, give
the Transfer Agent or the Distributor sufficient information to permit
confirmation of qualification. BISYS will receive a sale charge on such
sales and may reallow it as dealer discounts and brokerage commissions
as follows:
Sales Charge as:
----------------
Size of Transaction % of Offering % of Net Dealer
at Offering Price Price Amount Invested Reallowance
- ------------------- ------------- --------------- -----------
Less than $50,000 4.05% 4.22% 3.65%
$50,000 but less than $100,000 3.38% 3.49% 3.04%
$100,000 but less than $250,000 2.25% 2.30% 2.03%
$250,000 but less than $500,000 1.80% 1.83% 1.62%
$500,000 but less than $1,000,000 0.90% 0.91% 0.81%
$1,000,000 and over 0.00% 0.00% 0.00%
Concurrent Purchases
For purposes of qualifying for a lower sales charge, investors have the
privilege of combining "concurrent purchases" of Class A Shares of the
Funds, the Equity Funds and the Income Funds. For example, if a
Shareholder concurrently purchases Class A Shares in one of the funds of
the Trust sold with a sales charge at the total public offering price of
$25,000 and Class A Shares in another fund sold with a sales charge at
the total public offering price of $75,000, the sales charge would be
that applicable to a $100,000 purchase as shown in the appropriate table
above. The investor's "concurrent purchases" described above shall
include the combined purchases of the investor, the investor's spouse
and children under the age of 21 and the purchaser's retirement plan
accounts. To receive the applicable public offering price pursuant to
this privilege, Shareholders must, at the time of purchase, give the
Transfer Agent or the Distributor sufficient information to permit
confirmation of qualification. This privilege, however, may be modified
or eliminated at any time or from time to time by the Trust without
notice.
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<PAGE>
Letters of Intent
An investor may obtain a reduced sales charge by means of a written
Letter of Intent which expresses the intention of such investor to
purchase Class A Shares of a Fund, an Equity Fund or an Income Fund at a
designated total public offering price within a designated 13-month
period. Each purchase of Class A Shares under a Letter of Intent will be
made at the net asset value plus the sales charge applicable at the time
of such purchase to a single transaction of the total dollar amount
indicated in the Letter of Intent (the "Applicable Sales Charge"). A
Letter of Intent may include purchases of Class A Shares made not more
than 90 days prior to the date such investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in
effect will begin on the date of the earliest purchase to be included.
An investor will receive as a credit against his/her purchase(s) of
Shares during this ninety day period at the end of the 13-month period,
the difference, if any, between the sales load paid on previous
purchases qualifying under the Letter of Intent and the Applicable Sales
Charge.
A Letter of Intent is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment
under a Letter of Intent is 5% of such amount. Class A Shares purchased
with the first 5% of such amount will be held in escrow (while remaining
registered in the name of the investor) to secure payment of the higher
sales charge applicable to the Class A Shares actually purchased if the
full amount indicated is not purchased, and such escrowed Class A Shares
will be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed Class A Shares, whether paid in cash
or reinvested in additional Class A Shares, are not subject to escrow.
The escrowed Class A Shares will not be available for disposal by the
investor until all purchases pursuant to the Letter of Intent have been
made or the higher sales charge has been paid. When the full amount
indicated has been purchased, the escrow will be released. To the
extent that an investor purchases more than the dollar amount indicated
in the Letter of Intent and qualifies for a further reduced sales
charge, the sales charge will be adjusted for the entire amount
purchased at the end of the 13-month period. The difference in sales
charge will be used to purchase additional Class A Shares of such Fund
at the then current public offering price subject to the rate of sales
charge applicable to the actual amount of the aggregate purchases. For
further information about Letters of Intent, interested investors should
contact the Trust at 1-800-743-8637. This program, however, may be
modified or eliminated at any time or from time to time by the Trust
without notice.
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<PAGE>
Rights of Accumulation
Pursuant to the right of accumulation, investors are permitted to
purchase Class A Shares of the Funds at the public offering price
applicable to the total of (a) the total public offering price of the
Class A Shares of the Funds then being purchased plus (b) an amount
equal to the then current net asset value of the "purchaser's combined
holdings" of the Class A Shares of all of the funds of the Trust sold
with a sales charge. Class A Shares sold to purchasers for whom U.S.
Bank or one of its affiliates acts in a fiduciary, advisory, custodial
(other than retirement accounts), agency, or similar capacity are not
presently subject to a sales charge. The "purchaser's combined
holdings" described above shall include the combined holdings of the
purchaser, the purchaser's spouse and children under the age of 21 and
the purchaser's retirement plan accounts. To receive the applicable
public offering price pursuant to the right of accumulation,
Shareholders must, at the time of purchase, give the Transfer Agent or
the Distributor sufficient information to permit confirmation of
qualification. This right of accumulation, however, may be modified or
eliminated at any time or from time to time by the Trust without notice.
Contingent Deferred Sales Charge ("CDSC") -- Class C Shares
Class C Shares of the Funds which are redeemed less than one year after
purchase will be subject to a CDSC equal to 1.00% of an amount equal to
the lesser of the net asset value at the time of purchase of the Class C
Shares being redeemed or the net asset value of such Shares at the time
of redemption. Accordingly, a CDSC will not be imposed on amounts
representing increases in net asset value above the net asset value at
the time of purchase. In addition, a CDSC will not be assessed on Class
C Shares purchased through reinvestment of dividends or capital gains
distributions, or that are purchased by "Institutional Investors" such
as corporations, pension plans, foundations, charitable institutions,
insurance companies, banks and other banking institutions, and non-bank
fiduciaries.
Solely for purposes of determining the amount of time which has elapsed
from the time of purchase of any Class C Shares, all purchases during a
month will be aggregated and deemed to have been made on the last day of
the month. In determining whether a CDSC is applicable to a redemption,
the calculation will be made in the manner that results in the lowest
possible charge being assessed. In this regard, it will be assumed that
the redemption is first of Shares held for more than one year or Shares
acquired pursuant to reinvestment of dividends or distributions.
For example, assume an investor purchased 100 Class C Shares with a net
asset value of $10 per Share (i.e., at an aggregate net asset value of
----
$1,000) and in the eleventh month after purchase, the net asset value
per Share is $12 and, during such time, the investor has acquired five
additional Class C Shares through dividend reinvestment. If at such
time the investor makes his first
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<PAGE>
redemption of 50 Class C Shares (producing proceeds of $600), five of
such Shares will not be subject to the charge because of dividend
reinvestment. With respect to the remaining 45 Class C Shares being
redeemed, the charge will be applied only to the original cost of $10
per Share and not to the increase in net asset value of $2 per Share.
The CDSC is waived on redemptions of Class C Shares (i) following the
death or disability (as defined in the Internal Revenue Code of 1986, as
amended (the "Code")) of a Shareholder, (ii) to the extent that the
redemption represents a minimum required distribution from an IRA or a
Custodial Account under Code Section 403(b)(7) to a Shareholder who has
reached age 70 1/2, and (iii) to the extent the redemption represents
the minimum distribution from retirement plans under Code Section 401(a)
where such redemptions are necessary to make distributions to plan
participants.
Factors to Consider When Selecting Class A Shares or Class C Shares of
the Funds
Before purchasing Class A Shares or Class C Shares of a Fund, investors
should consider whether, during the anticipated life of their investment
in the Fund, the accumulated Rule 12b-1 fees and potential CDSC on Class
C Shares would be less than the initial sales charge and accumulated
Rule 12b-1 fees on Class A Shares purchased at the same time, and to
what extent such differential would be offset by the higher yield of
Class A Shares. In this regard, to the extent that the sales charge
for the Class A Shares is waived or reduced by one of the methods
described above, investments in Class A Shares become more desirable.
The Trust will refuse all purchase orders for individual accounts for
Class C Shares of over $500,000.
Although Class A Shares are subject to Rule 12b-1 fees, they are not
subject to the higher Rule 12b-1 fees applicable to Class C Shares. For
this reason, Class A Shares can be expected to pay correspondingly
higher dividends per Share. However, because initial sales charges are
deducted at the time of purchase, purchasers of Class A Shares that do
not qualify for waivers of or reductions in the initial sales charge
would have less of their purchase price initially invested in a Fund
than purchasers of Class C Shares. See "MANAGEMENT OF THE TRUST --
Distributor" in the Statement of Additional Information.
Exchange Privilege
The exchange privilege enables Shareholders of Class A or C Shares of
the Funds (including Shares acquired through reinvestment of dividends
and distributions on such Shares) to exchange those Shares at net asset
value without any sales charge for Shares of the same class offered with
the same or lower sales charge by any of the Trust's other funds,
provided that the amount to be exchanged meets the applicable minimum
investment requirements and
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the exchange is made in states where it is legally authorized.
Exchanges for Shares of one of the Trust's other funds with a higher
sales charge may be made upon payment of the sales charge differential.
Holders of a Fund's Class A or Class C Shares may not exchange their
Shares for Shares of any other class. An exchange of Class C Shares
will not affect the holding period of the Shares for purposes of the
CDSC.
If Class A Shares of a Money Fund were acquired by a previous exchange
from Class A Shares of a fund with respect to which a sales charge had
been paid, then such Class A Shares of the Money Fund may be exchanged
for Class A Shares of a Fund without payment of any fees or sales
charge. Under such circumstances, in order to receive a reduced sales
charge, the Shareholder must notify the Distributor that a sales charge
was originally paid and provide the Distributor with sufficient
information to permit confirmation of qualification. The foregoing
exchange privilege may be exercised only once during a calendar year and
upon written request by the Shareholder and may be terminated or
modified by the Trust at any time, or from time to time.
An exchange is considered a sale of Shares and may result in a capital
gain or loss for federal income tax purposes.
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.
Any Shareholder who wishes to make an exchange should obtain and review
the current prospectus of the fund of the Trust in which the Shareholder
wishes to invest before making the exchange. For a discussion of risks
associated with unauthorized telephone exchanges, see "REDEEMING SHARES
- -- By Telephone" below.
Conversion Feature
Eight years after purchase, Class C Shares will convert automatically to
Class A Shares. The purpose of the conversion is to relieve a holder of
Class C Shares of the higher ongoing expenses charged to those Shares,
after enough time has passed to allow the Distributor to recover
approximately the amount it would have received if a front-end sales
charge had been charged. The conversion from Class C Shares to Class A
Shares takes place at net asset value, as a result of which an investor
receives dollar-for-dollar the same value of Class A Shares as he or she
had of Class C Shares. The conversion occurs eight years after the
beginning of the calendar month in which the Shares are purchased. As a
result of the conversion, the converted Shares are relieved of the Rule
12b-1 fees borne by Class C Shares, although they are subject to the
Rule 12b-1 fees borne by Class A Shares.
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QUALIVEST INDIVIDUAL RETIREMENT ACCOUNTS ("IRA")
A Qualivest IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement
program. Qualivest IRA contributions may be tax-deductible and earnings
are tax-deferred. Under the Tax Reform Act of 1986, the tax
deductibility of IRA contributions is restricted or eliminated for
individuals who participate in certain employer pension plans and whose
annual income exceeds certain limits. Existing IRAs and future
contributions up to the IRA maximums, whether deductible or not, still
earn income on a tax-deferred basis.
Simplified Employee Pension Plan ("SEP/IRA")
A Qualivest SEP/IRA may be established on a group basis by an employer
who wishes to sponsor a tax-sheltered retirement program by making
contributions into IRAs on behalf of all eligible employees.
Salary Reduction Simplified Employee Pension Plan ("SAR-SEP/IRA")
A Qualivest SAR-SEP/IRA offers employers with 25 or fewer eligible
employees the ability to establish a SEP/IRA that permits salary
reduction contributions. All Qualivest IRA distribution requests must
be made in writing to BISYS. Any additional deposits to a Qualivest
IRA must distinguish the type and year of the contribution.
For more information on any of the Qualivest IRAs or other retirement
plan options available (401(k) Defined Contribution Plans, 403(b)(7)
Defined Compensation Plans, etc.), call the Trust at 1-800-743-8637.
Shareholders are advised to consult a tax adviser on Qualivest IRA
contribution and withdrawal requirements and restrictions.
REDEEMING SHARES
Shareholders may redeem their Class A Shares without charge and their
Class C Shares, subject to the CDSC described above if redeemed less
than one year after purchase, 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 by the
Distributor of a redemption request. 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
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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 1934 Act. 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
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 his or her 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 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 conversions,
sending confirmations to Shareholders within 72 hours of the telephone
transaction, verifying the account name and a Shareholder's account
number or tax identification number 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
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Shareholder may also mail the redemption request to the Distributor at
the address above.
Auto Withdrawal Plan
The Auto Withdrawal Plan enables Shareholders of the Funds to make
regular monthly, bi-monthly, or quarterly redemptions of Class A or
Class C Shares. With Shareholder authorization, the Transfer Agent
will automatically redeem Class A or Class C Shares at the net asset
value on the fifth and/or twentieth day of the month or quarter (or the
next Business Day thereafter) and have the amount specified transferred
according to the written instructions of the Shareholder. Shareholders
participating in this Plan must maintain a minimum account balance of
$500. The required minimum withdrawal is $100, monthly or quarterly.
The Auto Withdrawal Plan may be modified or terminated without notice.
In addition, the Trust may suspend a Shareholder's withdrawal plan
without notice if the account contains insufficient funds to effect a
withdrawal or in the event that the account balance is less than the
minimum $500 amount.
To participate in the Auto Withdrawal Plan, Shareholders should call
1-800-743-8637 for more information. Purchases of additional Class A or
Class C Shares concurrently with withdrawals may be disadvantageous to
certain Shareholders because of tax liabilities and sales charges. For
a Shareholder to change the Auto Withdrawal Plan instructions, the
request must be made in writing to the Distributor and may take up to 15
days to implement.
Other Information Regarding Redemption of Shares
All redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as
described above. The proceeds paid upon redemption of Shares in the
Funds, less any applicable CDSC, may be more or less than the amount
invested. Payment to Shareholders for 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 a Fund for next Business Day
payments upon redemption of Shares will be honored if received in good
form by the Distributor before the Valuation Time on a Business Day or,
if received after the Valuation 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.
The Trust reserves the right to redeem involuntarily, at net asset
value, the Shares of any Shareholder if, because of redemptions of
Shares by or on behalf of the Shareholder (but not as a result of the
establishment of an account with less than $500 using the Auto Invest
Plan), the account of such Shareholder has a value of less
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than $500. Accordingly, an investor purchasing Shares of a Fund in only
the minimum investment amount may be subject to such involuntary
redemption if the investor thereafter redeems any Shares. Before the
Trust exercises its right to redeem such Shares and to send the proceeds
to the Shareholder, the Shareholder will be given notice that the value
of the Shares in the Shareholder's account is less than the minimum
amount and will be allowed 60 days to make an additional investment in
an amount which will increase the value of the account to at least $500.
At various times, the Trust may be requested to redeem 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 Shares, which delay may be for 15 days or more.
Such delay may be avoided if Shares are purchased by wire transfer of
federal funds. The Trust intends to pay cash for all Shares redeemed.
See the Statement of Additional Information ("ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION") for examples of when the right of redemption
may be suspended.
MANAGEMENT OF THE FUNDS
Trustees
Overall responsibility for management of the Trust rests with its
Trustees, who are elected by the Shareholders of all of the Trust's
funds. 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 meaning of that term under the 1940
Act. The Trustees, in turn, elect the officers of the Trust to
supervise 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.
The Trustees and officers of the Trust serve in such positions for the
Funds and for the Underlying Funds. If the interests of the Funds and
the Underlying Fund were to become divergent, it is possible that a
conflict of interest could arise and affect how the Trustees and
officers fulfill their fiduciary duties to the Funds and the Underlying
Funds. While the Trustees believe they have structured the Funds to
avoid such conflicts, if a situation arises where appropriate action for
a Fund could adversely affect an Underlying Fund, or vice versa, the
Trustees and officers will carefully analyze the situation and take all
steps they believe reasonable to minimize and, where possible, eliminate
the potential conflict. To this end, restrictions have been adopted by
the Funds to minimize this possibility, and close and continuous
monitoring will be exercised to avoid, insofar as possible, these
concerns.
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Investment Adviser
Qualivest Capital Management, Inc., 111 S.W. Fifth Avenue, Portland,
Oregon 97204, is the investment adviser of the Trust. Qualivest, a
registered investment adviser, is an affiliate 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.
Qualivest invests each Fund's assets according to its investment
objective and policies set forth above and pursuant to guidelines
established by the Board of Trustees for each Fund. Such allocation
decisions are made by the Qualivest Investment Strategy Committee (the
"Committee"). Timothy Leach, President and Chief Investment Officer of
Qualivest, acts as Chairman of the Committee. 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 an annual rate of 0.05%
of each Fund's average daily net assets. Each Fund, as a Shareholder in
an Underlying Fund, also will indirectly bear its proportionate share
of any investment advisory fees and other expenses paid by the Underlying
Fund. The ratios of operating expenses to average daily net assets of
the Class Y Shares of the Underlying Funds for the period ended July 31, 1995
were as follows: Large Companies Fund - 0.53%; Small Companies Fund - 0.60%;
International Fund - 1.18%; Optimized Fund - 0.68%; Intermediate Bond
Fund - 0.41%; Bond Fund - 0.70%; U.S. Treasury Fund - 0.40%; and Money
Market Fund - 0.38%.
Subject to the general supervision of the Trust's Board of Trustees and
in accordance with each of the Underlying Funds' investment objective,
policies and restrictions, Qualivest has agreed in its Investment Advisory
Agreement with the Trust to provide or arrange for the provision of a
continuous investment program for each Underlying Fund, including
investment research and management with respect to the Underlying Funds'
portfolio securities, investments and cash.
John R. Dozier, who joined Qualivest in 1976, is the Equity Manager
primarily responsible for managing the Large Companies Fund. Mr. Dozier
has twenty-five years of investment management experience and received a
Bachelor of Arts degree in Economics from Claremont Men's College.
Dale E. Benson, an Equity Manager at Qualivest, has primary
responsibility for management of the Small Companies Fund. Mr.
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Benson has twenty-three years of investment management experience and
has been employed by Qualivest since 1973. He received a Bachelor of
Arts degree from Pacific Lutheran University and a Doctorate in History
from the University of Maine. Mr. Benson is also a Chartered Financial
Analyst.
Timothy Leach, President and Chief Investment Officer of Qualivest,
manages the International Fund and Optimized Fund. He has thirteen
years of investment management experience, both at Qualivest and at
other investment management organizations, and is responsible for the
management of Qualivest. Mr. Leach has a Bachelor of Science degree in
Business Management and Agricultural Science and a Master of Business
Administration degree from the University of California, Berkeley.
Portfolio management of the Intermediate Bond Fund and the Bond Fund is
the responsibility of Curry A. Garvin, a Fixed-Income Manager who has
been employed by Qualivest since 1985. Mr. Garvin, who is a Chartered
Financial Analyst, received a Bachelor of Science degree in Finance from
the University of Oregon.
For the services provided and expenses assumed pursuant to its
Investment Advisory Agreement with the Trust, Qualivest receives a fee
from each of the Underlying Funds, computed daily and paid monthly, at
the following annual rates of each Underlying Fund's average daily net
assets: Large Companies Fund - 0.75%; Small Companies Fund - 0.80%;
International Fund - 0.60%; Optimized Fund - 0.50%; Intermediate Bond
Fund - 0.60%; Bond Fund - 0.60%; U.S. Treasury Fund - 0.35%; and Money
Market Fund - 0.35%.
While the fees for the Large Companies and Small Companies Funds are
higher than the advisory fees paid by most investment companies, the
Board of Trustees believes them to be comparable to advisory fees paid
by many funds having similar objectives and policies. Qualivest may
periodically voluntarily reduce all or a portion of its advisory fee
with respect to an Underlying Fund to increase the net income of that
Underlying Fund available for distribution as dividends. The voluntary
fee reduction will cause the return of that Underlying Fund to be higher
than it would otherwise be in the absence of such reduction.
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 of 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, the Administrator receives a fee from each
Fund equal to the lesser of a fee, computed daily
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and paid periodically, at an annual rate of 0.07% of the 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 a Fund to increase the net income of that Fund
available for distribution as dividends. The voluntary fee reduction
will cause the return of that Fund to be higher than it would otherwise
be in the absence of such 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 retain some or all of any sales
charge imposed upon the Shares. It may also receive compensation under
the Distribution and Shareholder Service Plans regarding the Class A
Shares and Class C Shares described below.
Other Service Providers
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as the 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 custodian of
the Funds. 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 other than the cost of securities
purchased for the Trust. Each Fund will bear the following expenses
relating to its operation: taxes, interest, fees of the Trustees of
the Trust, Securities and Exchange Commission fees, state securities
qualification fees, outside auditing and legal expenses, advisory and
administration fees, fees and out-of-pocket expenses of the Custodian,
Transfer Agent and fund accountant, certain insurance
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premiums, costs of maintenance of the Trust's existence, costs of
Shareholders' reports and meetings, and any extraordinary expenses
incurred in each Fund's operation.
As a general matter, expenses are allocated to the Class A, Class C and
Class Y Shares of the Funds on the basis of the relative net asset value
of each class. Class A Shares and Class C Shares may bear certain
additional retail transfer agency expenses. Class A Shares and Class C
Shares also bear certain additional Shareholder service and
distribution costs incurred pursuant to the Distribution and Shareholder
Service Plans described below.
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 A
and Class C 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 registration 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.
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 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 mayve compensation without
violating federal banking laws and regulations.
In the event that, due to future events, Qualivest is prohibited from
acting as the investment adviser of the Funds and the Underlying Funds,
it is probable that the Board of Trustees would
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either recommend to Shareholders the selection of another qualified
adviser or, if that course of action appeared impractical, that the
Funds and Underlying Funds be liquidated.
DISTRIBUTION PLANS
Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted
Distribution and Shareholder Service Plans with respect to the Class A
Shares of each Fund (the "Class A Plans"), as well as Distribution and
Shareholder Service Plans with respect to Class C Shares of each Fund
(the "Class C Plans" and, with the Class A Plans, the "Plans").
Pursuant to the Class A Plans, each Fund is authorized to pay or
reimburse BISYS, as Distributor of the Class A Shares of the Fund, for
certain expenses that are incurred in connection with Shareholder and
distribution services. Payments under the Class A Plans will be
calculated daily and paid monthly at an annual rate not to exceed 0.25%
of the average daily net assets of Class A Shares of each Fund. As
authorized by the Class A Plans, 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 A Shares
of the Funds purchased and held by USBS for the accounts of its
customers and Class A 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.
Pursuant to the Class C Plans, a Fund is authorized to pay or reimburse
BISYS, as Distributor of Class C Shares, (a) a distribution fee in an
amount not to exceed on an annual basis 0.75% of the average daily net
assets of Class C Shares of a Fund, and (b) a service fee in an amount
not to exceed on an annual basis 0.25% of the average daily net assets
of the Class C Shares of a Fund. Payments under the Class C Plans will
be calculated daily and paid monthly at a rate not to exceed the limits
described above, which rates are set from time to time by the Board of
Trustees. Actual distribution expenses for Class C Shares at any given
time may exceed the Rule 12b-1 fees and payments received pursuant to
CDSCs. These unrecovered amounts plus interest thereon will be carried
forward and paid from future Rule 12b-1 fees and payments received from
CDSCs. If the Class C Plans were terminated or not continued, the Trust
would not be contractually obligated to pay for any expenses not
previously reimbursed by the Trust or recovered through CDSCs.
Payments under the Plans 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
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BISYS and the Participating Organization. Pursuant to the Plans, 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 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 A Shares and Class
C Shares held of record or beneficially by such customers. Under the
Plans, a Participating Organization may include BISYS, its
subsidiaries, and its affiliates.
Payments to the Distributor pursuant to the Plans will be used (i) to
compensate Participating Organizations for providing distribution
assistance relating to Shares, (ii) for promotional activities intended
to result in the sale of 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 Shares of the Funds.
Fees paid pursuant to the Class A Plans and Class C Plans are accrued
daily and paid monthly, and are charged as expenses of Class A Shares
and Class C Shares, respectively, of a Fund as accrued.
General Information
The Plans 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 Plans or in any agreements related to a Plan ("Independent
Trustees"), or by a vote of a majority of the holders of the outstanding
voting securities of the class of Shares subject thereto. Any change in
the Plans that would increase materially the distribution expenses paid
by a Fund requires Shareholder approval; otherwise, the Plans 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 either Plan is in effect, the
selection or nomination of the Independent Trustees is committed to the
discretion of the Independent Trustees.
DIVIDENDS AND TAXES
Dividends
Net income is declared quarterly as a dividend to Shareholders of record
of the Funds at the close of business on the eleventh Business Day of
each Fund's fiscal quarter and is generally paid quarterly.
Distributable net realized capital gains are distributed at least
annually. A Shareholder will automatically receive all income dividends
and capital gains distributions in
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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 or elects to participate in the Qualivest Directed
Dividend Option. 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.
Directed Dividend Option
A Shareholder may elect to have all income dividends and capital gains
distributions paid by check, reinvested in the Fund or reinvested in the
same class of any of the Trust's other funds, provided the other fund is
maintained at the minimum required balance. The Directed Dividend
Option may be modified or terminated by the Trust at any time after
notice to participating Shareholders. Participation in the Directed
Dividend Option may be terminated or changed by the Shareholder at any
time by writing the Distributor. The Directed Dividend Option is not
available to participants in any of the Qualivest IRAs.
Federal Taxes
Each Fund intends to qualify annually and elect to be treated as a
regulated investment company under 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. Dividends paid
by the Funds to corporate Shareholders, to the extent such dividends are
attributable to dividends received from U.S. corporations, may qualify
for the dividends-received deduction. However, the alternative minimum
tax applicable to corporations may reduce the value of the dividends-
received deduction. 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.
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.
- 50 -
<PAGE>
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 also should be
aware that under the laws of some state and local taxing authorities,
distributions from the Funds 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.
Prior to purchasing Shares of the Funds, the impact of dividends or
capital gains distributions which are expected to be declared or have
been declared, but have not been paid, should be carefully considered.
Any such dividends or capital gains distributions paid shortly after a
purchase of Shares prior to the record date will have the effect of
reducing the per Share net asset value of the Shares by the amount of
the dividends or distributions. All or a portion of such dividends or
distributions, although in effect a return of capital, is subject to
tax.
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 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. 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.
- 51 -
<PAGE>
GENERAL INFORMATION
Organization of the Trust
The Trust was organized as a Massachusetts business trust in 1994 and
consists of seventeen funds. The Shares of each of the Funds are
offered in three separate classes: Class A Shares, Class C Shares and
Class Y Shares. Shares of the Equity Funds and the Income Funds also
are offered in Class A Shares, Class C Shares and Class Y Shares, while
Shares of the Money Funds are offered in 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. Shareholders
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 to 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 A and Class C Shares, the Trust also offers Class Y
Shares of the Funds. Class Y Shares are sold through procedures
established by the Distributor only to certain institutional investors
and 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 Y Shares are not sold subject to a
sales load and do not bear expenses under the Plans pertaining to Class
A and Class C Shares. The amount of dividends payable with respect to
Class Y Shares will exceed dividends on Class A and Class C Shares as a
result of the Plan fees applicable to Class A and Class C Shares and
because Class A and Class C Shares may bear additional retail transfer
agency expenses. For further details regarding eligibility
- 52 -
<PAGE>
requirements for the purchase of Class Y Shares, call the Trust at
1-800-743-8637.
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,
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.
Such performance figures are based on historical earnings and are not
intended to indicate future performance. Also, from time to time, the
Funds may present their respective distribution rates for a class of
Shares in supplemental sales literature which is accompanied or preceded
by a prospectus and in Shareholder reports.
Standardized yield and total return quotations will be computed
separately for Class A, Class C and Class Y Shares. Because of
differences in the fees and/or expenses borne by Class A, Class C and
Class Y Shares of the Funds, the net yield and total return on Class A
and Class C Shares can be expected, at any given time, 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 a part of their respective fees,
- 53 -
<PAGE>
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 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 43219-3035, or by calling toll free 1-800-743-8637.
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 their Distributor in any jurisdiction in
which such offering may not lawfully be made.
- 54 -
<PAGE>
QUALIVEST FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-743-8637
Qualivest Funds (the "Trust") is an open-end management investment company
which offers seventeen 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 Large Companies Growth Fund; and
. Qualivest Micro Cap Value 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 the Funds, contained in
a Statement of Additional Information dated May 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 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 one class of Shares
of each Fund -- the Class Y Shares. Class Y Shares of the Funds are
currently offered only through trust departments of banks and other
institutional investors (including other mutual funds distributed by the
BISYS Group, Inc. and its affiliated companies) with account balances of
$1,000,000 or more that have entered into a separate agreement with the
Funds' distributor for monies that are held in a fiduciary, advisory,
agency, custodial, or similar capacity. Each of the Funds also offers
Class A Shares and Class C Shares to the general public. These classes of
Shares differ from each other, and from the Class Y Shares, principally
with respect to sales charges and the rate of expenses to which they are
subject. Interested persons who wish to obtain a copy of the Prospectus of
the Class A or Class C Shares of the Funds may contact the Trust at the
telephone number shown above.
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.
<PAGE>
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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1996.
- 3 -
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares Offered . . . . . . . . . . . . . . . . . . . . . . . . . .
Offering Price and Sales Charges . . . . . . . . . . . . . . . . .
Investment Objectives . . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors and Special Considerations . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Dividends and Capital Gains . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . .
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT TECHNIQUES AND RISK FACTORS . . . . . . . . . . . . . . . .
Micro Capitalization Securities . . . . . . . . . . . . . . . . .
Put and Call Options . . . . . . . . . . . . . . . . . . . . . . .
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Transactions . . . . . . . . . . . . . . . . . .
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . .
When-Issued and Delayed-Delivery Transactions . . . . . . . . . .
Lending of Portfolio Securities . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . .
Reverse Repurchase Agreements and Dollar Roll Agreements . . . . .
Mortgage-Related and Asset-Backed Securities . . . . . . . . . . .
Medium-Grade Securities . . . . . . . . . . . . . . . . . . . . .
U.S. Government Securities . . . . . . . . . . . . . . . . . . . .
Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . . . .
Certificates of Deposit and Time Deposits . . . . . . . . . . . .
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . .
Securities Issued by Other Investment Companies . . . . . . . . .
Restricted Securities . . . . . . . . . . . . . . . . . . . . . .
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . .
- 4 -
<PAGE>
TABLE OF CONTENTS
Page
----
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Purchases . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . .
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Redemption of Shares . . . . . . . . .
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . .
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Administrator and Distributor . . . . . . . . . . . . . . . . . .
Other Service Providers . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . .
Banking Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participating Organizations . . . . . . . . . . . . . . . . . . .
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . . . .
Multiple Classes of Shares . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . .
Account Services . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .
- 5 -
<PAGE>
PROSPECTUS SUMMARY
Shares Offered
Class Y Shares of the Qualivest Large Companies Growth Fund (the "Large
Companies Growth Fund") and the Qualivest Micro Cap Value Fund (the "Micro
Cap Fund") (collectively, the "Funds"), which are two 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 and Sales Charges
The public offering price of Class Y Shares of each Fund is equal to the
net asset value per Share with no sales charge and no contingent deferred
sales charge ("CDSC") imposed on redemptions. Class Y Shares are offered
only through trust departments of banks and other institutional investors
for monies that are held in a fiduciary, agency, custodial, or similar
capacity.
Investment Objectives
The Large Companies Growth Fund seeks long-term capital appreciation.
- -------------------------------
The Micro Cap Fund seeks capital appreciation.
- ------------------
Investment Policies
The Large Companies Growth Fund. Under normal market conditions, the Large
- -------------------------------
Companies Growth Fund will invest at least 65% of its total assets in
equity securities, including common stocks and securities convertible into
common stocks, of companies with a market capitalization of at least $1
billion at the time of purchase.
The Micro Cap Fund. Under normal market conditions, the Micro Cap Fund
- ------------------
will invest at least 65% of its total assets in equity securities,
including common stocks and securities convertible into common stocks, of
companies with a market capitalization of less than $500 million at the
time of purchase.
Risk Factors and Special Considerations
- 6 -
<PAGE>
An investment in the Funds involves a certain amount of risk and may not be
suitable for all investors. The Micro Cap Fund invests in small companies,
which may have more volatile price fluctuations and less liquid securities
markets than larger companies. 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. See "MANAGEMENT OF THE FUNDS -
Investment Adviser."
Dividends and Capital Gains
Dividends from net income are declared and paid quarterly for the Funds.
Net realized capital gains are distributed at least annually.
Other Information
U.S. Bank ("Custodian") 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.
FUND EXPENSES
The following expense table indicates costs and expenses that an investor
should anticipate incurring either directly or indirectly as a Shareholder
of a Fund during its first fiscal year of operation. The numbers reflect
estimated levels of operating expenses.
- 7 -
<PAGE>
FEE TABLE
Qualivest Large Qualivest Micro
Companies Growth Fund Cap Value Fund
--------------------- ---------------
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . None None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) None None
Deferred Sales Charge (as a
percentage of redemption
proceeds) . . . . . . . None None
Redemption Fees (as a percentage
of redemption proceeds) None None
Exchange Fees . . . . . None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . 1.00% 1.00%
12b-1 Fees . . . . . . . None None
Other Expenses . . . . . 0.50% 0.50%
---- ----
Total Fund Operating Expenses 1.50% 1.50%
==== ====
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.
Example*
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of each time
period:
Qualivest
Qualivest Large Micro Cap
Companies Growth Fund Value Fund
--------------------- ----------
1 Year . . . . . . $ 15 $ 15
3 Years . . . . . . $ 47 $ 47
- --------------------------
- 8 -
<PAGE>
* 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.
INVESTMENT OBJECTIVES AND POLICIES
Under normal market conditions, each Fund will invest primarily in equity
securities, including common stocks and securities convertible into common
stocks, of companies believed by Qualivest to be characterized by sound
management and the potential for long-term capital appreciation. Each Fund
may invest in securities convertible into common stocks without regard to
the rating assigned to such securities by a nationally recognized
statistical rating organization ("NRSRO").
The Large Companies Growth Fund. The investment objective of the Large
- -------------------------------
Companies Growth Fund is to seek long-term capital appreciation. Under normal
market conditions, it intends to invest at least 65% of its total assets in
equity securities, including common stocks and securities convertible into
common stocks, of large capitalization companies. Large capitalization
companies are those companies with a market capitalization of at least
$1 billion at the time of purchase.
The Large Companies Growth Fund maintains a flexible investment approach
and considers a variety of companies and types of securities, depending on
the economic environment and the relative attractiveness of the various
securities markets. The Fund generally seeks to invest in financially
secure firms with established operating histories that are proven leaders
in their industry or market sector. Such companies may demonstrate
characteristics such as participation in expanding markets, increasing unit
sales volume, growth in revenues and earnings per share, and increasing
return on investments. However, Qualivest may invest the Fund's assets in
companies that do not demonstrate such characteristics if Qualivest expects
such companies to undergo an acceleration in growth of earnings because of
special factors such as new management, new products, changes in consumer
demand or basic changes in the economic environment.
- 9 -
<PAGE>
Qualivest analyzes each company considered for investment to determine its
source of earnings, competitive edge, management strength, and level of
industry dominance as measured by market share. At the same time,
Qualivest conducts an analysis of the financial condition of each company
and selects those prospects that demonstrate the greatest potential for
above-average capital appreciation and growth in earnings.
The Micro Cap Fund. The investment objective of the Micro Cap Fund is to
- ------------------
seek capital appreciation. Under normal market conditions, it intends to
invest at least 65% of its total assets in equity securities, including
common stocks and securities convertible into common stocks, of micro
capitalization companies, which are those companies with a market
capitalization of less than $500 million at the time of purchase. Micro
capitalization stocks may be quite volatile and subject to wide
fluctuations in both the short and medium term. As a result, the Micro Cap
Fund may be an appropriate investment only for investors who understand and
are financially able to accept greater risks.
The Micro Cap Fund seeks to achieve its investment objective by following
flexible investment policies emphasizing investment in common stocks and
securities convertible into common stocks that are, in Qualivest's opinion,
undervalued relative to other securities at the time of purchase. In
analyzing different securities, Qualivest will consider ratios of market
price to book value, ratios of market price to earnings, ratios of market
price to assets, estimated liquidating value, earnings growth rate,
management strength, and cash flow as significant factors in assessing
relative value. If in Qualivest's opinion a stock has reached a fully
valued position, it will, under most circumstances, be sold and replaced by
securities which are deemed to be undervalued in the marketplace.
General
If the Large Companies Growth Fund owns securities issued by a company
whose market capitalization falls below $1 billion, or the Micro Cap Fund
owns securities issued by a company whose market capitalization increases
above $500 million, Qualivest may, but is not required to, sell such
securities. However, Qualivest intends to sell such securities if, in its
judgment, market conditions warrant such a sale, or if the Large Companies
Growth Fund or Micro Cap Fund would no longer be primarily invested in
common stocks and securities convertible into common stocks issued by large
- 10 -
<PAGE>
capitalization companies and micro capitalization companies, respectively.
Qualivest will attempt to make such sales when market conditions are
favorable.
Each Fund also may invest up to 35% of the value of its total assets in
notes, units of real estate investment trusts, asset-backed and mortgage-
related securities, and short-term obligations (with maturities of 12
months or less) consisting of commercial paper (including variable amount
master demand notes), bankers' acceptances, certificates of deposit,
repurchase agreements, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations.
Each Fund also may hold securities of other investment companies and
depositary or custodial receipts representing beneficial interests in any
of the foregoing securities.
Each Fund may invest in corporate debt securities such as debt obligations
with a maturity of at least one year from the date of issue ("bonds") and
notes which are rated at the time of purchase within the four highest
rating groups assigned by an NRSRO (e.g., in the case of Moody's Investors
----
Service, Inc. ("Moody's"), Aaa, Aa, A and Baa, and in the case of Standard
& Poor's Corporation ("S&P"), AAA, AA, A and BBB), which are considered to
be investment grade or, if unrated, which Qualivest deems to present
attractive opportunities and are of comparable quality. For a description
of NRSROs and their rating symbols, see the Appendix to the Statement of
Additional Information. For a discussion of debt securities rated within
the fourth highest rating group assigned by an NRSRO, see "INVESTMENT
TECHNIQUES AND RISK FACTORS -- Medium-Grade Securities" herein.
Subject to the foregoing policies, each Fund also may invest up to 25% of
its total assets in foreign securities either directly or through the
purchase of American Depositary Receipts and also may invest in securities
issued by foreign branches of U.S. banks and foreign banks, in Canadian
Commercial Paper, and in Europaper (U.S. dollar denominated commercial
paper of a foreign issuer). For a discussion of risks associated with
foreign securities, see "INVESTMENT TECHNIQUES AND RISK FACTORS" herein.
- 11 -
<PAGE>
Consistent with the foregoing, each Fund will focus its investments in
those companies and types of companies that Qualivest believes will enable
such Fund to achieve its investment objective. Neither Fund will invest
more than 15% of its net assets in securities that are deemed to be
illiquid. During temporary defensive periods as determined by Qualivest, a
Fund may hold up to 100% of its total assets in high quality short-term
debt obligations including domestic bank certificates of deposit, bankers'
acceptances and repurchase agreements secured by U.S. Government securities
or bank instruments. However, to the extent that a Fund is so invested,
its investment objective may not be achieved during that time.
* * * *
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 TECHNIQUES AND RISK FACTORS
Like any investment program, an investment in a Fund entails certain risks.
Micro Capitalization Securities
The Micro Cap Fund may invest in common stocks and securities convertible
into common stocks of companies with market capitalization that is low
compared to other publicly traded companies. Investments in larger
companies present certain advantages, in that such companies generally have
greater financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and more stability and
greater depth of management and technical personnel. Investments in
smaller, less seasoned companies may present greater opportunities for
growth but also may involve greater risks than customarily are associated
with more established companies. The securities of micro capitalization
companies may be subject to more abrupt or
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erratic market movements than larger, more established companies. These
companies may have limited product lines, markets or financial resources,
or they may be dependent upon a limited management group. Their securities
may be traded only in the over-the-counter market or on a regional
securities exchange. As a result, the disposition of securities to meet
redemptions may require the Micro Cap Fund to sell these securities at a
disadvantageous time, or at disadvantageous prices, or to make many small
sales over a lengthy period of time.
Put and Call Options
Each Fund may purchase put and call options on securities, and each Fund
may purchase such options on foreign currencies, subject to its applicable
investment policies, for the purposes of hedging against market risks
related to its portfolio securities and adverse movements in exchange rates
between currencies, respectively. Each Fund also may engage in writing
call options from time to time as Qualivest deems appropriate. The Funds
will write only covered call options (options on securities or currencies
owned by the particular Fund). When a portfolio security or currency
subject to a call option is sold, the Fund will effect a "closing purchase
transaction" -- the purchase of a call option on the same security or
currency with the same exercise price and expiration date as the call
option which such Fund previously has written. If such Fund is unable to
effect a closing purchase transaction, it will not be able to sell the
underlying security or currency until the option expires or that Fund
delivers the underlying security or currency upon exercise. In addition,
upon the exercise of a call option by the holder thereof, the Fund will
forego the potential benefit represented by market appreciation over the
exercise price. Under normal conditions, it is not expected that a Fund
will cause the underlying value of portfolio securities and/or currencies
subject to such options to exceed 25% of its total assets.
A Fund, as part of its option transactions, also may purchase index put and
call options and write index options. As with options on individual
securities, a Fund will write only covered index call options. Options on
securities indices are similar to options on a security except that, rather
than the right to take or make delivery of a security at a specified price,
an option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of
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the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of
the option.
Price movements in securities which a Fund owns or intends to purchase may
not correlate perfectly with movements in the level of an index and,
therefore, a Fund bears the risk of a loss on an index option that is not
completely offset by movements in the price of such securities. Because
index options are settled in cash, a call writer cannot determine the
amount of its settlement obligations in advance and, unlike call writing on
specific securities, cannot provide in advance for, or cover, its potential
settlement obligations by acquiring and holding the underlying securities.
A Fund may be required to segregate assets or provide an initial margin to
cover index options that would require it to pay cash upon exercise.
Foreign Securities
Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include political, social
or economic instability in the country of the issuer, the difficulty of
predicting international trade patterns, the possibility of the imposition
of exchange controls, expropriation, limits on removal of currency or other
assets, nationalization of assets, foreign withholding and income taxation,
and foreign trading practices (including higher trading commissions,
custodial charges and delayed settlements). Such securities may be subject
to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The markets on which such securities trade may have
less volume and liquidity, and may be more volatile than securities markets
in the U.S. In addition, there may be less publicly available information
about a foreign company than about a U.S. domiciled company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to U.S.
domestic companies. There is generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or diplomatic developments could also affect
investment in those countries. In addition, foreign branches of U.S.
banks, foreign banks and foreign issuers may be subject to less stringent
reserve
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<PAGE>
requirements and to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers.
If a security is denominated in foreign currency, the value of the security
to a Fund will be affected by changes in currency exchange rates and in
exchange control regulations, and costs will be incurred in connection with
conversions between currencies. Currency risks generally increase in
lesser developed markets. Exchange rate movements can be large and can
endure for extended periods of time, affecting either favorably or
unfavorably the value of a Fund's assets.
For many foreign securities, U.S. dollar denominated American Depositary
Receipts ("ADRs"), which are traded in the United States on exchanges or
over-the-counter, are issued by domestic banks. ADRs represent the right
to receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in
investing in the securities of foreign issuers. However, by investing in
ADRs rather than directly in foreign issuers' stock, a Fund can avoid
currency risks during the settlement period for either purchases or sales.
Subject to its applicable investment policies, each Fund may invest in debt
securities denominated in the European Currency Unit ("ECU"), which is a
"basket" consisting of specified amounts of the currencies of certain of
the member states of the European Community. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers
of the European Community to reflect changes in relative values of the
underlying currencies. Such adjustments may adversely affect holders of
ECU denominated obligations or the marketability of such securities.
Foreign Currency Transactions
The value of the assets of a Fund as measured in U.S. dollars may be
affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and a Fund may incur costs in
connection with conversions between various currencies. A Fund will
conduct its foreign currency exchange transactions either on a spot (i.e.,
----
cash) basis at the spot rate prevailing in the foreign currency exchange
market, or through forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange contract ("forward currency
contract")
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involves an obligation to purchase or sell a specific currency at a future
date at a price set at the time of the contract. The Funds may enter into
forward currency contracts in order to hedge against adverse movements in
exchange rates between currencies. However, this tends to limit potential
gains which might result from a positive change in such currency
relationships. A Fund may also hedge its foreign currency exchange rate
risk by engaging in currency financial futures and options transactions.
The forecasting of short-term currency market movements is extremely
difficult and whether such a short-term hedging strategy will be successful
is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward currency contract. Accordingly,
it may be necessary for a Fund to purchase additional currency on the spot
market if the market value of the security is less than the amount of
foreign currency such Fund is obligated to deliver when a decision is made
to sell the security and make delivery of the foreign currency in
settlement of a forward contract. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of
the portfolio security if its market value exceeds the amount of foreign
currency such Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss to the extent that there has
been movement in forward currency contract prices. If a Fund engages in an
offsetting transaction, it may subsequently enter into a new forward
currency contract to sell the foreign currency. Although such contracts
tend to minimize the risk of loss due to a decline in the value of the
hedged currency, they also tend to limit any potential gain which might
result should the value of such currency increase. The Funds will have to
convert their holdings of foreign currencies into U.S. dollars from time to
time. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Futures Contracts
The Funds also may enter into contracts for the future delivery of
securities or foreign currencies and futures contracts based on a specific
security, class of securities, foreign currency or an
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<PAGE>
index, purchase or sell options on any such futures contracts and engage in
related closing transactions. A futures contract on a securities index is
an agreement obligating either party to pay, and entitling the other party
to receive, while the contract is outstanding, cash payments based on the
level of a specified securities index. A Fund may engage in such futures
contracts in an effort to hedge against market risks and to manage its cash
position, but not for leveraging purposes.
Aggregate initial margin deposits for futures contracts, and premiums paid
for related options, may not exceed 5% of a Fund's total assets, and the
value of securities that are the subject of such futures and options (both
for receipt and delivery) may not exceed 33 1/3% of the market value of a
Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain each Fund's qualification as a regulated investment
company.
When-Issued and Delayed-Delivery Transactions
The Funds each may purchase securities on a when-issued or delayed-delivery
basis. A Fund will engage in when-issued and delayed-delivery transactions
only for the purpose of acquiring portfolio securities consistent with its
investment objective and policies, not for investment leverage.
When-issued securities are securities purchased for delivery beyond the
normal settlement date at a stated price and yield and thereby involve a
risk that the yield obtained in the transaction will be less than those
available in the market when delivery takes place. A Fund will not pay for
such securities or start earning interest on them until they are received.
When a Fund agrees to purchase such securities, the Custodian will set
aside cash or high grade liquid debt securities equal to the amount of the
commitment in a segregated account. In when-issued and delayed-delivery
transactions, a Fund relies on the seller to complete the transaction; the
seller's failure to do so may cause such Fund to miss a price or yield
considered to be advantageous.
Lending of Portfolio Securities
In order to generate additional income, the Funds from time to time may
lend portfolio securities to broker-dealers, banks or institutional
borrowers of securities. The Funds must receive 102% collateral in the
form of cash or U.S. Government securities. This
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collateral must be valued daily by Qualivest and, should the market value
of the loaned securities increase, the borrower must furnish additional
collateral to the Funds. During the time portfolio securities are on loan,
the borrower pays the Funds any dividends or interest paid on such
securities. Loans are subject to termination by the Funds or the borrower
at any time. While the Funds do not have the right to vote securities on
loan, they intend to terminate the loan and regain the right to vote if
that is considered important with respect to the investment. In the event
the borrower defaults on its obligation to a Fund, the Fund could
experience delays in recovering its securities and possible capital losses.
The Funds will only enter into loan arrangements with broker-dealers, banks
or other institutions which Qualivest has determined to be creditworthy
under guidelines established by the Board of Trustees that permit each Fund
to loan up to 33 1/3% of the value of its total assets.
Repurchase Agreements
Securities held by a Fund 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 Fund also may 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
certain of its 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
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<PAGE>
account assets such as U.S. Government securities or other liquid high
grade debt securities consistent with its investment restrictions having a
value equal to the repurchase price (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 securities sold
by a Fund may decline below the price at which it is obligated to
repurchase the securities.
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 Fund may invest in mortgage-related
securities, which are securities representing interests in "pools" of
mortgages in which payments of both interest and principal on the
securities are made monthly. Early repayment of principal on mortgage-
related securities may expose a Fund to a lower rate of return upon
reinvestment of principal. 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)
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<PAGE>
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, a Fund may invest in other asset-backed securities
that may be developed in the future.
Certain issuers of asset-backed securities are considered to be 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 10%
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.
Medium-Grade Securities
Each Fund may invest up to 10% of its total assets in debt securities
within the fourth highest rating group assigned by an NRSRO (i.e., BBB or
----
Baa by S&P and Moody's, respectively) and comparable unrated securities.
These types of debt securities are considered by Moody's and S&P to have
some speculative characteristics, and are more vulnerable to changes in
economic conditions, higher interest rates or adverse issuer-specific
developments which are more likely to lead to a weaker capacity to make
principal and interest payments than comparable higher rated debt
securities.
Should subsequent events cause the rating of a debt security purchased by a
Fund to fall below BBB or Baa, as the case may be, Qualivest will consider
such an event in determining whether the Fund should continue to hold that
security. In no event, however, would a Fund be required to liquidate any
such portfolio security where the Fund would suffer a loss on the sale of
such security.
U.S. Government Securities
Obligations of certain agencies and instrumentalities of the U.S.
Government are supported by the full faith and credit of the U.S. Treasury;
others are supported by the right of the issuer to borrow from the
Treasury; some are supported by the discretionary authority of the U.S.
Government to purchase the agency's
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<PAGE>
obligations; and still others 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.
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 Eurodollar Certificates of Deposit, which are
U.S. dollar denominated certificates of deposit issued by offices of
foreign and domestic banks located outside the United States; Eurodollar
Time Deposits, which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; Canadian Time Deposits, which are
essentially the same as Eurodollar Time Deposits, except they are issued by
Canadian offices of major Canadian banks; and Yankee Certificates of
Deposit, which are certificates of deposit issued by a U.S. branch of a
foreign bank denominated in U.S. dollars and held in the United States.
Commercial Paper
Each Fund may invest in short-term promissory notes issued by corporations
(including variable amount master demand notes) rated in the four highest
categories assigned by an NRSRO or, if not rated, found by Qualivest
pursuant to guidelines adopted by the Board of Trustees to be of comparable
quality. The Funds also may invest in Canadian Commercial Paper, which is
commercial paper
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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 Fund 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. 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. 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 Fund may invest up to 10% of its total assets, in shares of money
market mutual funds for cash management purposes. 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
institutional 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
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adopted by the Board of Trustees of the Trust, 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.
VALUATION OF SHARES
The net asset value of each Fund is determined and its Shares are priced 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, Veterans 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 outstanding
Shares of such class.
The net asset value per Share of the Funds will fluctuate as the value of
the investment portfolio of a Fund changes.
The securities in each Fund will be valued at market value. If market
quotations are not available, the securities will be valued by a method
which the Board of Trustees believes accurately reflects fair value. For
further information about valuation of investments, see "NET ASSET VALUE"
in the Statement of Additional Information.
PURCHASING SHARES
Class Y Shares may be purchased through a broker-dealer, bank, or trust
company that has established a dealer agreement with the Distributor.
Class Y Shares of each Fund are continuously offered
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and also may be purchased directly either by mail, by telephone, or by
wire.
An Account Application Form can be obtained by calling the Trust at 1-800-
743-8637.
Other Information Regarding Purchases
Purchases of Class Y 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 Y Shares in good form ("public offering price").
In the case of orders for the purchase of Class Y 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 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 Y Shares of any of the Funds will be
effected only on a Business Day of the Funds. An order received prior to
the Valuation Time on any Business Day will be executed at the net asset
value determined as of the Valuation Time on the date of receipt. An order
received after the Valuation Time on any Business Day will be executed at
the net asset value determined as of the Valuation Time on the next
Business Day of that Fund.
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 Y Shares of the respective Fund owned
by the Shareholder. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Class Y Shares of the Funds will
not be issued.
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<PAGE>
Exchange Privilege
The exchange privilege enables Shareholders of Class Y Shares of a Fund
(including Class Y Shares acquired through reinvestment of dividends and
distributions on such Shares) to acquire at net asset value Class Y Shares
offered by another fund of the Trust. Holders of Class Y Shares may not
exchange their Shares for Shares of any other class, and holders of Shares
of any other class may not exchange their Shares for Class Y Shares.
An exchange is considered a sale of Shares and may result in a capital gain
or loss for federal income tax purposes.
A Shareholder wishing to exchange his or her Shares may do so by contacting
the Custodian or an affiliate. Any Shareholder who wishes to make an
exchange should obtain and review the current prospectus of the fund to be
acquired before making the exchange. For a discussion of risks associated
with unauthorized telephone exchanges, see "REDEEMING SHARES -- By
Telephone" below.
REDEEMING SHARES
Shareholders may redeem their Class Y 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 by the Distributor of a redemption request. 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.
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<PAGE>
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 Y 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 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 conversions, sending confirmations
to Shareholders within 72 hours of the telephone transaction, verifying the
account name and a Shareholder's account number or
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<PAGE>
tax identification number 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.
Other Information Regarding Redemption of Shares
All redemption orders are effected at the net asset value per Share next
determined after the Class Y Shares are properly tendered for redemption,
as described above. The proceeds paid upon redemption of Class Y Shares in
the Funds may be more or less than the amount invested. Payment to
Shareholders for 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 a Fund for next Business Day payments upon redemption of
Shares will be honored if received by the Distributor before the Valuation
Time on a Business Day or, if received after the Valuation 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 Y 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 Y Shares, which delay may be for 15 days or
more. Such delay may be avoided if Class Y Shares are purchased by wire
transfer of federal funds. The Trust intends to pay cash for all Class Y
Shares redeemed.
See the Statement of Additional Information ("ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION") for examples of when the right of redemption may
be suspended.
MANAGEMENT OF THE FUNDS
Trustees
Overall responsibility for management of the Trust rests with its Trustees,
who are elected by the Shareholders of all of the Trust's funds. 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
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are not "interested persons" of the Trust within the meaning of that term
under the 1940 Act. The Trustees, in turn, elect the officers of the Trust
to supervise 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., 111 S.W. Fifth Avenue, Portland, Oregon
97204, is the investment adviser of the Trust. Qualivest, a registered
investment adviser, is an affiliate 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 each Fund's investment objective, policies and
restrictions, Qualivest has agreed in its Investment Advisory Agreement
with the Trust to provide or arrange for the provision of a continuous
investment program for each Fund, including investment research and
management with respect to the Funds' portfolio securities, investments and
cash.
Michael Cusack is the Equity Manager primarily responsible for managing the
Large Companies Growth Fund. Mr. Cusack received a Bachelor of Science degree
in Economics from Curry College and has over twelve years of experience in
investments and portfolio management, both at Qualivest and at other
investment management organizations.
Dale E. Benson and Frank Magdlen, each an Equity Manager at Qualivest, have
primary responsibility for management of the Micro Cap Fund. Mr. Benson
has twenty-three years of investment management experience and has been
employed by Qualivest since 1973. He received a Bachelor of Arts degree
from Pacific Lutheran
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University and a Doctorate in History from the University of Maine. Mr.
Benson is a Chartered Financial Analyst. Mr. Magdlen, who also is a
Chartered Financial Analyst, analyzes closely held companies for Qualivest and
has twenty-two years of investment experience. He received a Bachelor of Arts
degree in Finance from the University of Portland and a Master of Business
Administration degree from the University of Southern California. Mr.
Magdlen has been employed by Qualivest since 1979.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Trust, Qualivest receives a fee from each Fund,
computed daily and paid monthly, at the following annual rates of each
Fund's average daily net assets: Large Companies Growth Fund - 1.00%; and
Micro Cap Fund - 1.00%. While the fees for the Funds are higher than the
advisory fee paid by most investment companies, the Board of Trustees believes
them to be comparable to advisory fees paid by many funds having similar
objectives and policies. Qualivest may periodically voluntarily reduce all or
a portion of its advisory fee with respect to a Fund to increase the net
income of that Fund available for distribution as dividends. The voluntary
fee reduction will cause the return of that Fund to be higher than it would
otherwise be in the absence of such reduction.
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 of 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, the Administrator 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 the 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 a Fund to increase the net income of
that Fund available for distribution as dividends. The voluntary fee
reduction will cause the return of that Fund to be higher than it would
otherwise be in the absence of such 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
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<PAGE>
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 retain some or all of any sales charge
imposed upon the Class A or Class C Shares. It may also receive
compensation under the Distribution and Shareholder Service Plans regarding
the Class A and Class C Shares.
Other Service Providers
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as the 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 custodian of the
Funds. 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 other than the cost of securities
(including brokerage commissions) purchased for the Trust. Each Fund will
bear the following expenses relating to its operation: organizational
expenses, taxes, interest, brokerage fees and commissions, fees of the
Trustees of the Trust, Securities and Exchange Commission fees, pricing of
portfolio securities, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for
distribution to current Shareholders, outside auditing and legal expenses,
advisory and administration fees, fees and out-of-pocket expenses of the
Custodian, Transfer Agent and fund accountant, certain insurance premiums,
costs of maintenance of the Trust's existence, costs of
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<PAGE>
Shareholders' reports and meetings, and any extraordinary expenses incurred
in each Fund's operation.
As a general matter, expenses are allocated to the Class A, Class C and
Class Y Shares of the Funds on the basis of the relative net asset value of
each class. Class A and Class C Shares may bear certain additional retail
transfer agency expenses. Class A and Class C Shares also bear certain
additional Shareholder service and distribution costs incurred pursuant to
the Distribution and Shareholder Service Plans.
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 Y
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
registration 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
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<PAGE>
engaged in the issuance of its shares, and generally from underwriting,
selling 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.
Participating Organizations
The Distributor may enter into agreements with banks and their affiliates
(including U.S. Bank and its affiliates), and other institutions, including
broker-dealers (each a "Participating Organization"), for providing
Shareholder services with respect to the Class Y Shares. Such
Participating Organizations will be compensated at the annual rate of up to
0.25% of the average daily net assets of the Class Y Shares held of record
or beneficially by customers of Participating Organizations who are record
or beneficial owners of Class Y Shares. The Trust understands that
Participating Organizations may charge fees to their customers who are the
owners of Class Y Shares for additional services provided in connection
with their customer accounts. These fees would be in addition to any
amounts which may be received by a Participating Organization under its
agreement with BISYS. Customers of Participating Organizations should read
this Prospectus in light of the terms governing their accounts with their
Participating Organizations.
The Shareholder services provided by Participating Organizations for which
the fee may be paid may include providing information periodically to
customers, including information showing their
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<PAGE>
positions in Class Y Shares; responding to inquiries from customers
concerning their investment in Class Y Shares; providing sub-accounting
with respect to Class Y Shares beneficially owned by customers or the
information necessary for sub-accounting; arranging for bank wires; and
other continuing personal services to holders of Class Y Shares.
DIVIDENDS AND TAXES
Dividends
Net income is declared quarterly as a dividend to Shareholders of record of
the Funds at the close of business on the eleventh Business Day of each
Fund's fiscal quarter and is generally paid quarterly. Distributable net
realized capital gains are distributed at least annually. 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.
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. Dividends paid by the Funds to
corporate Shareholders, to the extent such dividends are attributable to
dividends received from U.S. corporations, may qualify for the dividends-
received deduction. However, the alternative minimum tax applicable to
corporations may reduce the value of the dividends-received
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deduction. 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.
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.
Prior to purchasing Shares of the Funds, the impact of dividends or capital
gains distributions which are expected to be declared or have been
declared, but have not been paid, should be carefully considered. Any such
dividends or capital gains distributions paid shortly after a purchase of
Shares prior to the record date will have the effect of reducing the per
Share net asset value of the Shares by the amount of the dividends or
distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to tax.
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
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<PAGE>
Shareholders and does not address every possible situation. Distributions 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. 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.
GENERAL INFORMATION
Organization of the Trust
The Trust was organized as a Massachusetts business trust in 1994 and
consists of seventeen funds. The Shares of each Fund are offered in three
separate classes: Class A Shares, Class C Shares and Class Y Shares.
Shares of the Trust's other funds also are offered in multiple separate
classes. 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. Shareholders 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 to
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.
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<PAGE>
Multiple Classes of Shares
In addition to Class Y Shares, the Trust also offers Class A Shares and
Class C Shares of the Funds. These two classes differ principally with
respect to sales charges and the rate of expenses to which they are
subject. Class Y Shares are not sold subject to a sales charge or CDSC and
do not bear expenses under the Distribution and Shareholder Service Plans
pertaining to Class A and Class C Shares. The amount of dividends payable
with respect to Class Y Shares will exceed dividends on Class A and Class C
Shares as a result of the Distribution and Shareholder Service Plan fees
applicable to Class A and Class C Shares and because such Shares may bear
additional retail transfer agency expenses. For further details regarding
Class A and Class C Shares, call the Trust at 1-800-743-8637 or your
broker.
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, 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.
Such performance figures are based on historical earnings and are not
intended to indicate future performance. Also, from time to time the Funds
may present their respective distribution rates for a class of Shares in
supplemental sales literature which is accompanied or preceded by a
prospectus and in Shareholder reports.
Standardized yield and total return quotations will be computed separately
for Class A, Class C and Class Y Shares. Because of differences in the
fees and/or expenses borne by Class A, Class C and Class Y Shares of the
Funds, the net yield and total return on Class A and Class C Shares can be
expected, at any given time, to be lower than the net yield and total
return on Class Y Shares for the same period.
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<PAGE>
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 a 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 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 43219-3035, or by calling toll free 1-800-743-8637.
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 their Distributor in any jurisdiction in which
such offering may not lawfully be made.
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<PAGE>
QUALIVEST FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-743-8637
Qualivest Funds (the "Trust") is an open-end management investment company
which offers seventeen 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"), which are
marketed as the "Dynamic Allocation Series":
. Qualivest Allocated Conservative Fund;
. Qualivest Allocated Balanced Fund;
. Qualivest Allocated Growth Fund; and
. Qualivest Allocated Aggressive Fund.
Each Fund seeks its investment objective by investing in a diversified
portfolio of certain of the other funds offered by the Trust (the
"Underlying Funds").
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 the Funds, contained in
a Statement of Additional Information dated May 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 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 one class of Shares
of each Fund -- the Class Y Shares. Class Y Shares of the Funds are
currently offered only through trust departments of banks and other
institutional investors (including other mutual funds distributed by the
BISYS Group, Inc. and its affiliated companies) with account balances of
$1,000,000 or more that have entered into a separate agreement with the
Funds' distributor relating to the investment of monies that are held in a
fiduciary, advisory, agency, custodial, or similar capacity. Each of the
Funds also offers Class A Shares and Class C Shares to
<PAGE>
the general public. These classes of Shares differ from each other, and from
the Class Y Shares, principally with respect to sales charges and the rate of
expenses to which they are subject. Interested persons who wish to obtain a
copy of the Prospectus of the Class A or Class C Shares of the Funds may
contact the Trust at the telephone number shown above.
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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1996.
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TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares Offered . . . . . . . . . . . . . . . . . . . . . . . . . .
Offering Price and Sales Charges . . . . . . . . . . . . . . . . .
Investment Objectives . . . . . . . . . . . . . . . . . . . . . .
Investment Policies . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors and Special Considerations . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Dividends and Capital Gains . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . .
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES -- UNDERLYING FUNDS . . . . . . . .
Equity Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS . . . . . . .
U.S. Government Obligations . . . . . . . . . . . . . . . . . . .
Mortgage-Related and Asset-Backed Securities . . . . . . . . . . .
Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . . . .
Certificates of Deposit and Time Deposits . . . . . . . . . . . .
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . .
Put and Call Options . . . . . . . . . . . . . . . . . . . . . . .
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Currency Transactions . . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . .
Reverse Repurchase Agreements and Dollar Roll Agreements . . . . .
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . .
When-Issued and Delayed-Delivery Transactions . . . . . . . . . .
Lending of Portfolio Securities . . . . . . . . . . . . . . . . .
Medium-Grade Securities . . . . . . . . . . . . . . . . . . . . .
Securities Issued by Other Investment Companies . . . . . . . . .
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Restricted Securities . . . . . . . . . . . . . . . . . . . . . .
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Purchases . . . . . . . . . . . . . .
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . .
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information Regarding Redemption of Shares . . . . . . . . .
MANAGEMENT OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . .
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . .
Administrator and Distributor . . . . . . . . . . . . . . . . . .
Other Service Providers . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banking Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participating Organizations . . . . . . . . . . . . . . . . . . .
DIVIDENDS AND TAXES . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .
Organization of the Trust . . . . . . . . . . . . . . . . . . . .
Multiple Classes of Shares . . . . . . . . . . . . . . . . . . . .
Performance Information . . . . . . . . . . . . . . . . . . . . .
Account Services . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .
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PROSPECTUS SUMMARY
Shares Offered
Class Y Shares of the Qualivest Allocated Conservative Fund (the "Conservative
Fund"), the Qualivest Allocated Balanced Fund (the "Balanced Fund"), the
Qualivest Allocated Growth Fund (the "Growth Fund"), and the Qualivest Allocated
Aggressive Fund (the "Aggressive Fund") (collectively, the "Funds"), which
are four separate diversified investment portfolios ("funds") of Qualivest
Funds (the "Trust"), a Massachusetts business trust which is registered as
an open-end investment company.
Offering Price and Sales Charges
The public offering price of Class Y Shares of each Fund is equal to the
net asset value per Share with no sales charge and no contingent deferred
sales charge ("CDSC") imposed on redemptions. Class Y Shares are offered
only through trust departments of banks and through other institutional
investors for monies that are held in a fiduciary, agency, custodial, or
similar capacity.
Investment Objectives
The Conservative Fund seeks to produce current income with a secondary
- ---------------------
objective of long-term capital appreciation.
The Balanced Fund seeks to provide a balance between long-term capital
- -----------------
appreciation and current income.
The Growth Fund seeks to provide capital appreciation and income growth.
- ---------------
The Aggressive Fund seeks to provide maximum capital appreciation.
- --------------------------
Investment Policies
Each Fund seeks its investment objective by investing in a diversified
portfolio of certain of the other funds offered by the Trust (the
"Underlying Funds"). The Underlying Funds include: the Qualivest Large
Companies Value Fund (the "Large Companies Fund"),
- 5 -
<PAGE>
the Qualivest Small Companies Value Fund (the "Small Companies Fund"), the
Qualivest International Opportunities Fund (the "International Fund") and the
Qualivest Optimized Stock Fund (the "Optimized Fund") (collectively, the
"Equity Funds"); the Qualivest Intermediate Bond Fund (the "Intermediate
Bond Fund") and the Qualivest Diversified Bond Fund (the "Bond Fund")
(collectively, the "Income Funds"); and the Qualivest U.S. Treasury Money
Market Fund (the "U.S. Treasury Fund") and the Qualivest Money Market Fund
(the "Money Market Fund") (collectively, the "Money Funds"). See
"INVESTMENT OBJECTIVES AND POLICIES."
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 OBJECTIVES AND POLICIES --
UNDERLYING FUNDS" and "UNDERLYING FUNDS' 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. See "MANAGEMENT OF THE FUNDS -
Investment Adviser."
Dividends and Capital Gains
Dividends from net income are declared and paid quarterly for the Funds.
Net realized capital gains are distributed at least annually.
Other Information
U.S. Bank ("Custodian") 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.
- 6 -
<PAGE>
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 during its first fiscal year of operations. The numbers reflect
estimated levels of operating expenses.
FEE TABLES
Qualivest Allocated Qualivest Allocated
Conservative Fund Balanced Fund
------------------- -------------------
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . . None None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) None None
Deferred Sales Charge (as a
percentage of redemption
proceeds) . . . . . . . None None
Redemption Fees (as a percentage
of redemption proceeds). . None None
Exchange Fees . . . . . . None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . . 0.05% 0.05%
12b-1 Fees . . . . . . . . None None
Other Expenses . . . . . . 0.19% 0.19%
---- ----
Total Fund Operating Expenses 0.24% 0.24%
==== ====
Qualivest Allocated Qualivest Allocated
Growth Fund Aggressive Fund
------------------- -------------------
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage
of offering price) . . . . . . None None
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) None None
Deferred Sales Charge (as a
percentage of redemption
proceeds) . . . . . . . None None
Redemption Fees (as a percentage
of redemption proceeds) None None
Exchange Fees . . . . . . None None
Annual Fund Operating Expenses
(as a percentage of average
net assets annualized)
Management Fees . . . . . . . 0.05% 0.05%
12b-1 Fees . . . . . . . . . None None
Other Expenses . . . . . . . 0.19% 0.19%
---- ----
Total Fund Operating Expenses 0.24% 0.24%
==== ====
- 7 -
<PAGE>
In addition to the expenses shown above, Shareholders of the Funds will
indirectly bear their pro rata share of fees and expenses incurred by the
Underlying Funds, so that the investment returns of the Funds will be net of
the expenses of the Underlying Funds. The following chart provides the
expense ratios for each of the currently operative Underlying Funds. Where
applicable, expense ratios of the Underlying Funds have been restated to
reflect current fees.
Expense
Ratio
-------
Large Companies Fund . . . . . . . . . . . . . . 0.94%
Small Companies Fund . . . . . . . . . . . . . . 1.11%
International Fund . . . . . . . . . . . . . . . 0.81%
Optimized Fund . . . . . . . . . . . . . . . . . 0.61%
Intermediate Bond Fund . . . . . . . . . . . . . 0.74%
Bond Fund . . . . . . . . . . . . . . . . . . . 0.62%
U.S. Treasury Fund . . . . . . . . . . . . . . . 0.32%
Money Market Fund . . . . . . . . . . . . . . . 0.52%
Based on these figures, the average weighted expense ratio for each Fund,
expressed as a percentage of each Fund's average daily net assets, is
estimated to be as follows:
Expense
Ratio
-------
Conservative Fund . . . . . . . . . . . . . . . 0.95%
Balanced Fund . . . . . . . . . . . . . . . . . 1.02%
Growth Fund . . . . . . . . . . . . . . . . . . 1.06%
Aggressive Fund . . . . . . . . . . . . . . . . 1.11%
On the basis of these estimated expense levels, an investor would pay the
following expenses on a $1,000 investment,
- 8 -
<PAGE>
assuming (1) 5% annual return, and (2) redemption at the end of each time
period:
Qualivest Allocated Qualivest Allocated
Conservative Fund Balanced Fund
------------------- -------------------
1 Year . . . . . . $10 $10
3 Years . . . . . . $30 $32
Qualivest Allocated Qualivest Allocated
Growth Fund Aggressive Fund
------------------- -------------------
1 Year . . . . . . $11 $11
3 Years . . . . . . $34 $35
- --------------------------
* These examples should not be considered representations 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.
INVESTMENT OBJECTIVES AND POLICIES
The Funds are designed to achieve different investment objectives and to
pursue these objectives by means of different investment strategies.
Shareholders should carefully consider their investment goals and
willingness to tolerate investment risk before investing in the Funds.
The Conservative Fund. The investment objective of the Conservative Fund
- ---------------------
is to seek to produce current income with a secondary objective of long-
term capital appreciation.
The Conservative Fund is designed for investors who want a source of steady
investment income with limited Share price fluctuation, and who are willing
to bear limited investment risk. This Fund will concentrate its
investments in Underlying Funds that invest primarily in fixed income
securities and short-term money market instruments. However, for purposes
of achieving capital appreciation and investment income, the Conservative
Fund also may
- 9 -
<PAGE>
invest a portion of its assets in Underlying Funds that invest primarily in
equity securities.
The Balanced Fund. The investment objective of the Balanced Fund is to
- -----------------
seek to provide a balance between long-term capital appreciation and
current income.
The Balanced Fund seeks this objective by broadly diversifying its assets
among most or all of the Underlying Funds, with emphasis placed on
investments in the Equity Funds and the Income Funds. This Fund offers
investors greater potential for capital appreciation than does the
Conservative Fund by virtue of its larger investments in the Equity Funds,
while also offering investors the potential for investment income. This
Fund may be suitable for investors seeking capital appreciation in addition
to income, and who are willing to bear some risk of loss and Share price
fluctuation inherent in equity securities.
The Growth Fund. The investment objective of the Growth Fund is to seek to
- ---------------
provide capital appreciation and income growth.
The Growth Fund is designed for investors seeking capital appreciation
primarily through an equity-oriented investment. This Fund focuses on
investments in the Equity Funds, although it also will invest in the Income
Funds and Money Funds. However, this Fund emphasizes the potential rewards
and risks of an investment in equity securities.
The Aggressive Fund. The investment objective of the Aggressive
- -------------------
Fund is to seek to provide maximum capital appreciation.
The Aggressive Fund seeks to achieve this objective by investing substantially
all of its assets in those Underlying Funds that invest primarily in equity
securities. While this Fund's investments are most heavily weighted toward
the Large Companies Fund and Optimized Fund, up to 35% of its assets may be
invested in each of the Small Companies Fund and the International Fund.
Accordingly, this Fund is oriented toward those investors seeking long-term
capital appreciation, with the potential for greater gains but with greater
risk of loss.
- 10 -
<PAGE>
The Funds will invest their assets in the following Underlying Funds,
within the ranges (expressed as a percentage of each Fund's assets)
indicated below:
Conservative Balanced Growth Aggressive
Underlying Fund Fund Fund Fund Fund
- --------------- ------------ -------- ------ ----------
Large Companies Fund 0-35% 0-35% 0-35% 0-50%
Small Companies Fund 0-35% 0-35% 0-35% 0-35%
International Fund 0-35% 0-35% 0-35% 0-35%
Optimized Fund 0-35% 0-35% 0-35% 0-50%
Intermediate Bond Fund 0-50% 0-35% 0-35% 0%
Bond Fund 0-50% 0-35% 0-35% 0%
U.S. Treasury Fund 0-10% 0-10% 0-10% 0%
Money Market Fund 0-10% 0-10% 0-10% 0-10%
For purposes of determining each Fund's compliance with these percentage
limitations, Qualivest will determine the value of a Fund's assets at the
time of investment.
While Qualivest intends to invest each Fund's assets in the Underlying
Funds within the ranges set forth above, and to periodically adjust the
allocations in response to economic and market conditions, each Fund has a
"neutral mix" representing the intended typical allocation of the Fund's assets
over time. Qualivest anticipates that each Fund's neutral mix will be as
follows:
Underlying Funds
----------------
Income and
Fund Equity Funds Money Funds
- ---- ------------ -----------
Conservative Fund 20% 80%
Balanced Fund 60% 40%
Growth Fund 80% 20%
Aggressive Fund 100% 0%
The investment policies set forth above are designed to assure that each
Fund maintains a consistent investment approach. However, the Funds do not
have the same investment flexibility as other mutual funds that are not
subject to these limitations. Also, because the Funds have adopted a
policy of limiting redemptions to no more than 3% of any Underlying Fund's
Shares during any month, except as
- 11 -
<PAGE>
necessary to meet redemption requests by the Funds' Shareholders, the Funds
may be unable to reallocate assets among the Underlying Funds as quickly
as would be the case in the absence of this constraint.
Each Fund's investments are concentrated in the Underlying Funds, and the
investment performance of each Fund is directly related to the performance
of the Underlying Funds. The Funds will invest in the Class Y Shares of
the Underlying Funds, which are sold at net asset value per Share with no
sales charge or CDSC. See "INVESTMENT OBJECTIVES AND POLICIES -- UNDERLYING
FUNDS" for a description of the Underlying Funds in which the Funds invest.
In addition to Shares of the Underlying Funds, for temporary cash
management purposes, each Fund may invest in short-term obligations (with
maturities of 12 months or less) consisting of commercial paper (including
variable amount master demand notes), bankers' acceptances, certificates of
deposit, repurchase agreements, reverse repurchase agreements and dollar roll
agreements, obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, asset-backed and mortgage-related securities,
and demand and time deposits of domestic and foreign banks and savings and
loan associations. The Funds also may hold depositary or custodial receipts
representing beneficial interests in any of the foregoing securities. See
"UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS" for a description
of these investments.
* * * *
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 objectives of
any Fund will be achieved.
- 12 -
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES -- UNDERLYING FUNDS
The following is a description of the investment objectives and policies of
the Underlying Funds. Additional investment practices are described in
"UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS," the Statement
of Additional Information, and the Prospectus for each of the Underlying
Funds.
Equity Funds
Large Companies and Small Companies Funds
- -----------------------------------------
The Large Companies Fund. The investment objective of the Large Companies
- ------------------------
Fund is to seek long-term capital appreciation. It invests primarily in
common stocks and securities convertible into common stocks of large
capitalization companies. For purposes of this policy, large
capitalization companies are those with capitalization of $1 billion or
more at the time of purchase.
The Small Companies Fund. The investment objective of the Small Companies
- ------------------------
Fund is to seek capital appreciation. It invests primarily in common
stocks and securities convertible into common stocks of small-sized companies.
For purposes of this policy, small-sized companies are those with capitalization
of less than $1 billion at the time of purchase. Smaller capitalization stocks
may be quite volatile and subject to wide fluctuations in both the short and
medium term.
Each of these Underlying Funds seeks to achieve its investment objective by
following flexible investment policies emphasizing investment in common
stocks and securities convertible into common stocks (without regard to
rating by a nationally recognized statistical rating organization
("NRSRO")) that are, in Qualivest's opinion, undervalued relative to other
securities at the time of purchase. In analyzing different securities,
Qualivest will consider various investment oriented ratios as significant
factors in assessing relative value, including market price to book value,
market price to earnings, and market price to assets. Also considered are
estimated liquidating value, earnings growth rate, and cash flow. If in
Qualivest's opinion a stock has reached a fully valued position, it will,
under most circumstances, be sold and replaced by securities which are
deemed to be undervalued in the marketplace.
- 13 -
<PAGE>
Under normal market conditions, each of the Large Companies and Small
Companies Funds will invest primarily in common stocks and securities
convertible into common stocks of companies believed by Qualivest to be
characterized by sound management and the potential for long-term capital
appreciation. Qualivest also may consider income and payment of dividends
in selecting securities for the Large Companies Fund. Under normal market
conditions, the Large Companies Fund intends to invest at least 65% of its
total assets in common stocks and securities convertible into common stocks
of companies with a market capitalization of at least $1 billion at the
time of purchase. In addition, under normal market conditions, the Small
Companies Fund will invest at least 65% of its total assets in common
stocks and securities convertible into common stocks of companies with a
market capitalization of less than $1 billion at the time of purchase. If
the Large Companies Fund owns securities issued by a company whose market
capitalization falls below $1 billion, or the Small Companies Fund owns
securities issued by a company whose market capitalization increases above
$1 billion, Qualivest may, but is not required to, sell such securities.
However, Qualivest will sell such securities if, in its judgment, market
conditions warrant such a sale, or if the Large Companies Fund or Small
Companies Fund would no longer be primarily invested in common stocks and
securities convertible into common stocks issued by large capitalization
companies and small-sized companies, respectively.
Each of the Large Companies and Small Companies Funds may also invest up to
35% of the value of its total assets in preferred stocks, notes, units of
real estate investment trusts, asset-backed and mortgage-related
securities, warrants, and short-term obligations (with maturities of 12 months
or less) consisting of commercial paper (including variable amount master
demand notes), bankers' acceptances, certificates of deposit, repurchase
agreements, obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and demand and time deposits of domestic and
foreign banks and savings and loan associations. Each of these Underlying
Funds may also hold securities of other investment companies and depositary or
custodial receipts representing beneficial interests in any of the
foregoing securities.
Each of these Underlying Funds may invest in corporate debt securities such
as debt obligations with a maturity of at least one
- 14 -
<PAGE>
year from the date of issue ("bonds") and notes which are rated at the time of
purchase within the four highest rating groups assigned by an NRSRO (e.g., in
----
the case of Moody's Investors Service, Inc. ("Moody's"), Aaa, Aa, A and Baa,
and in the case of Standard & Poor's Corporation ("S&P"), AAA, AA, A and BBB),
which are considered to be investment grade or, if unrated, which Qualivest
deems to present attractive opportunities and are of comparable quality. For a
description of NRSROs and their rating symbols, see the Appendix to the
Statement of Additional Information. For a discussion of debt securities
rated within the fourth highest rating group assigned by an NRSRO, see
"UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS -- Medium-Grade
Securities" herein.
Subject to the foregoing policies, each of these Underlying Funds may also
invest up to 25% of its total assets in foreign securities either directly
or through the purchase of American Depositary Receipts and may also invest
in securities issued by foreign branches of U.S. banks and foreign banks,
in Canadian Commercial Paper, and in Europaper (U.S. dollar denominated
commercial paper of a foreign issuer). For a discussion of risks
associated with foreign securities, see "UNDERLYING FUNDS' INVESTMENT
TECHNIQUES AND RISK FACTORS" herein.
International and Optimized Funds
- ---------------------------------
The International Fund. The investment objective of the International Fund
- ----------------------
is to seek capital appreciation. It invests primarily in common stocks and
securities convertible into common stocks of companies that are organized
under the laws of countries other than the U.S.
The Optimized Fund. The investment objective of the Optimized Fund is to
- ------------------
seek capital appreciation and current income.
The International Fund and the Optimized Fund each seeks to achieve its
investment objective by investing primarily in common stocks and securities
convertible into common stocks (without regard to NRSRO rating) of
companies whose securities are listed on a specific securities index. While
the performance of the Optimized Fund may be expected to approximate the
performance of the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500 Index"),
- 15 -
<PAGE>
Qualivest seeks to outperform the S&P 500 Index through limited management of
the Optimized Fund's portfolio.
Under normal market conditions, at least 80% of the total assets of the
International Fund will be invested in common stocks and securities
convertible into common stocks of foreign companies whose securities are
listed on the Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index (the "EAFE Index"). The International Fund
will invest in the securities of issuers from at least three countries
other than the U.S. Investments are selected for inclusion in the
International Fund's portfolio primarily on the basis of market
capitalization and industry weightings, and to create an aggregate country
weighting similar to that of the EAFE Index. While Qualivest anticipates
that substantially all of the International Fund's assets will be so
invested, Qualivest may invest up to 20% of its total assets in common
stocks and securities convertible into common stocks of large
capitalization U.S. companies that Qualivest deems to present attractive
investment opportunities due to such companies' foreign business
operations.
Under normal market conditions, at least 80% of the Optimized Fund's total
assets will be invested in common stocks and securities convertible into
common stocks of companies whose securities are listed on the S&P 500
Index. While Qualivest anticipates that substantially all of the Optimized
Fund's assets will be so invested, Qualivest may invest up to 20% of its
total assets as described below.
The Optimized Fund does not intend to mirror the performance of the S&P 500
Index; rather, it seeks to optimize its investments in S&P 500 Index
companies and outperform the S&P 500 Index over time by investing in
securities that, on the basis of computerized modelling and performance
optimization strategies implemented by Qualivest, demonstrate attributes
that indicate performance superior to that of the S&P 500 Index as a whole.
The S&P 500 Index is composed of 500 common stocks chosen by S&P on a
statistical basis to be included in the index. Because of the market-value
weighting, the largest companies in the S&P 500 Index typically account for
a disproportionate share of the index. Qualivest believes that an
investment in securities of companies listed on the S&P 500 Index may be
optimized by selecting those securities whose growth and value
characteristics indicate that
- 16 -
<PAGE>
their performance, relative to the other securities listed on the S&P 500 Index,
will exceed the extent to which the S&P 500 Index reflects their performance.
Qualivest intends to utilize computer modelling and other strategies to
identify those stocks that, in light of its assessment of general economic
conditions, Qualivest believes will achieve capital appreciation and current
income superior to the performance of a portfolio that merely seeks to
replicate the S&P 500 Index.
Each of the International Fund and the Optimized Fund may also invest up to
20% of the value of its total assets in short-term obligations (with
maturities of 12 months or less) consisting of commercial paper (including
variable amount master demand notes), bankers' acceptances, certificates of
deposit, repurchase agreements, obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations.
These Underlying Funds may also each hold securities of other investment
companies and depositary or custodial receipts representing beneficial
interests in any of the foregoing securities.
The portfolio turnover rate for the International Fund and the Optimized
Fund is expected to be under 50%, a generally lower turnover rate than for
most other investment companies. Qualivest believes that a lower turnover
rate will reduce securities transaction costs incurred by these
Underlying Funds.
* * * *
Consistent with the foregoing, each of the Equity Funds will focus its
investments in those companies and types of companies that Qualivest
believes will enable such Underlying Fund to achieve its investment
objective. No Equity Fund will invest more than 15% of its net assets in
securities that are deemed to be illiquid. During temporary defensive
periods as determined by Qualivest, any of the Equity Funds may hold up to
100% of its total assets in high quality (i.e., rated within the top two
----
rating categories by an NRSRO) short-term debt obligations including
domestic bank certificates of deposit, bankers' acceptances and repurchase
agreements secured by bank instruments. However, to the extent
- 17 -
<PAGE>
that an Equity Fund is so invested, its investment objective may not be
achieved during that time.
Income Funds
The Intermediate Bond Fund. The investment objective of the Intermediate
- --------------------------
Bond Fund is to seek current income consistent with preservation of
capital.
The Bond Fund. The investment objective of the Bond Fund is to seek
- -------------
current income consistent with preservation of capital.
Under normal market conditions, at least 65% of the total assets of the
Intermediate Bond Fund and Bond Fund will be invested in bonds, which for
this purpose include debt obligations with a maturity of at least one year
from the date of issue. Fixed income or debt securities in which these
Underlying Funds may invest can have maturities of up to thirty years or more.
Each of these Underlying Funds may invest up to 35% of its total assets in
high quality money market instruments such as commercial paper (including
variable amount master demand notes), certificates of deposit and bankers'
acceptances, variable and floating rate notes, and asset-backed securities
without regard to maturity, except as set forth below. In addition, these
Underlying Funds may engage in certain loans of portfolio securities,
repurchase agreements and reverse repurchase agreements, and may also invest
in securities of other investment companies. The Intermediate Bond Fund will
maintain a dollar-weighted average maturity of three to seven years under
ordinary market conditions, while the Bond Fund will maintain a dollar-
weighted average maturity of approximately seven to eleven years under
ordinary market conditions.
Each of these Underlying Funds expects to invest in bonds, notes and
debentures of a wide range of U.S. corporate issuers. Such obligations, in
the case of debentures, will represent unsecured promises to pay, in the
case of notes and bonds, may be secured by mortgages on real property or
security interests in personal property and will in most cases differ in
their interest rates, maturities and times of issuance.
Each of these Underlying Funds may also invest in corporate debt securities
and convertible debt securities which are rated at the time of purchase
within the four highest rating groups assigned by
- 18 -
<PAGE>
an NRSRO (e.g., in the case of Moody's, Aaa, Aa, A and Baa, and in the case of
----
S&P, AAA, AA, A and BBB), which are considered to be investment grade or, if
unrated, which Qualivest deems to present attractive opportunities and are of
comparable quality. For a description of NRSROs and their rating symbols, see
the Appendix to the Statement of Additional Information. For a discussion of
debt securities rated within the fourth highest rating group assigned by an
NRSRO, see "UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS --
Medium-Grade Securities" herein.
Each of these Underlying Funds may hold short-term obligations (with
maturities of 12 months or less) consisting of domestic and foreign
commercial paper rated at the time of purchase within the top two
categories 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 Investors Service ("Fitch")) or, if
unrated, which Qualivest deems to present attractive opportunities and are
of comparable quality, including variable amount master demand notes,
bankers' acceptances, certificates of deposit and time deposits of domestic
and foreign branches of U.S. banks and foreign banks, and repurchase
agreements. These Underlying Funds may also invest in securities of other
investment companies or in Guaranteed Investment Contracts ("GICs"), which
are considered to be illiquid securities.
Each of these Underlying Funds may also invest in obligations of the
Export-Import Bank of the United States, in U.S. dollar denominated
international bonds for which the primary trading market is in the United
States ("Yankee Bonds"), or for which the primary trading market is abroad
("Eurodollar Bonds"), and in Canadian Bonds and bonds issued by
institutions, such as the World Bank and the European Economic Community,
organized for a specific purpose by two or more sovereign governments
("Supranational Agency Bonds").
Each of these Underlying Funds expects to invest in a variety of U.S.
Treasury obligations, differing 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 representing either future
interest or principal payments ("Stripped Treasury Obligations"), and
mortgage-related securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, such as the Government National Mortgage
- 19 -
<PAGE>
Association ("GNMA"), the Federal National Mortgage Association ("FNMA"),
the Federal Farm Credit Bureau ("FFCB"), the Tennessee Valley Authority
("TVA"), the Federal Home Loan Bank ("FHLB"), the Federal Land Bank, the
Federal Home Loan Mortgage Corporation ("FHLMC"), the Student Loan
Marketing Association ("SLMA") and in mortgage-related securities issued by
nongovernmental entities.
Each of these Underlying Funds may invest in mortgage-related securities
which are rated at the time of purchase within the four highest rating
categories assigned by an NRSRO or, if unrated, which Qualivest deems to
present attractive opportunities and are of comparable quality, and have
mortgage obligations backing such securities, consisting of conventional
thirty year fixed rate mortgage obligations, graduated payment mortgage
obligations, fifteen year mortgage obligations and adjustable rate mortgage
obligations.
Each of these Underlying Funds also may invest in mortgage-related
securities issued by nongovernmental entities. Commercial banks, savings
and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers also create pass-through pools
of conventional residential mortgage loans. Although the market for such
securities is becoming increasingly liquid, securities issued by certain
private organizations may not be readily marketable. Neither of these
Underlying Funds will purchase mortgage-related securities or any other
assets which in Qualivest's opinion are illiquid, if as a result, more than
15% of the value of its net assets will be illiquid.
Mortgage-related securities in which these Underlying Funds may invest may
also include collateralized mortgage obligations ("CMOs"), which are debt
obligations issued generally by finance
subsidiaries or trusts that are secured by mortgage-backed certificates,
including, in many cases, certificates issued by government-related
guarantors, including GNMA, FNMA and FHLMC, together with certain funds and
other collateral.
Each of these Underlying Funds may invest in asset-backed securities
(unrelated to first mortgage loans), which represent fractional interests
in pools of leases, retail installment loans or revolving credit
receivables, both secured (such as Certificates for Automobile Receivables
or "CARS") and unsecured (such as Credit
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<PAGE>
Card Receivable Securities or "CARDS"). These assets are generally held by a
trust and payments of principal and interest or interest only are passed
through monthly or quarterly to certificate holders and may be guaranteed
up to certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Asset-backed securities will be purchased only if they meet the rating
requirements set forth above or, if unrated, are deemed to be of comparable
quality by Qualivest with respect to these Underlying Funds' investments in
fixed-income securities of U.S. corporations and mortgage-related securities.
An increase in interest rates will generally reduce the value of the
investments in these Underlying Funds, and a decline in interest rates will
generally increase the value of those investments. Depending upon the
prevailing market conditions, Qualivest may purchase debt securities at a
discount from face value, which produces a yield greater than the coupon
rate. Conversely, if debt securities are purchased at a premium over face
value, the yield will be lower than the coupon rate.
* * * *
In making investment decisions for the Income Funds, Qualivest will
consider many factors, including current yield, maturity, and yield to
maturity. Qualivest will also monitor the financial condition of the
issuers of the Income Funds' portfolio investments and may shorten the
average weighted portfolio maturity of an Income Fund, in light of each
such Underlying Fund's investment objective of preservation of capital, if
economic or market conditions warrant such action.
Money Funds
Although each Money 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.
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.
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<PAGE>
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 Underlying 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 U.S. Treasury Fund's
dividend distributions may also be state tax-exempt with respect to the
income earned by it on U.S. Government securities.
The Money Market Fund. The investment objective of the Money Market Fund
- ---------------------
is to seek current income consistent with liquidity and stability of
principal.
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.
* * * *
Each Money 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 Money 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
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<PAGE>
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 Money 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 Money Fund invests
have remaining maturities of 397 calendar days (thirteen months) or less. The
dollar-weighted average maturity of the obligations in a Money Fund will
not exceed 90 days.
Subject to the foregoing general limitations, the Money Funds expect to
invest in the types of securities discussed below under "INVESTMENT
TECHNIQUES AND RISK FACTORS." These securities include short-term
obligations 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, GICs, repurchase agreements, reverse repurchase agreements and
dollar roll agreements.
UNDERLYING FUNDS' INVESTMENT TECHNIQUES AND RISK FACTORS
Each Fund's Share price will fluctuate in response to changes in the Share
price of one or more of the Underlying Funds, which are permitted to engage
in a wide range of investment techniques. Like any investment program, an
investment in an Underlying Fund entails certain risks.
U.S. Government Obligations
Obligations of certain agencies and instrumentalities of the U.S.
Government, such as the GNMA, are supported by the full faith and credit of
the U.S. Treasury; others, such as those of the FNMA, are supported by the
right of the issuer to borrow from the Treasury; others, such as those of
the SLMA, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as
those of the FFCB or the FHLMC, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide
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<PAGE>
financial support to U.S. Government-sponsored agencies or instrumentalities
if it is not obligated to do so by law.
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"). 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.
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 and the Underlying Funds,
except the Optimized Fund and the International Fund, may invest in
mortgage-related securities, which are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly. Early repayment of principal on mortgage-related
securities may expose a Fund or an Underlying Fund to a lower rate of return
upon reinvestment of principal. 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 or an Underlying 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
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<PAGE>
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, a
Fund or an Underlying Fund may invest in other asset-backed securities that
may be developed in the future.
Certain issuers of asset-backed securities are considered to be
investment companies under the Investment Company Act of 1940 (the "1940 Act").
The Underlying Funds intend to conduct their operations so that they
will not invest more than 10% (25% for the Money Funds) 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 and Underlying 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 and Underlying 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 and Underlying 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 United States; 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
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<PAGE>
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 United States.
None of the Money Funds will invest in excess of 10% of its net assets in
time deposits with maturities 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
Each Fund, the Income Funds, the Money Market Fund, and, within the
limitations described above, the U.S. Treasury 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. The Equity
Funds may invest in such instruments if rated in the four highest
categories assigned by an NRSRO or, if not rated, found by Qualivest
pursuant to guidelines adopted by the Board of Trustees to be of comparable
quality. The Money Market Fund, the Equity Funds and the Income Funds may
also invest in Canadian Commercial Paper, 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 and the Underlying 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. Although there is
no secondary market in the notes, the Funds and the Underlying 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
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<PAGE>
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.
Put and Call Options
Each Equity and Income Fund may purchase put and call options on
securities, and each Equity Fund other than the Optimized Fund may purchase
such options on foreign currencies, subject to its applicable investment
policies, for the purposes of hedging against market risks related to its
portfolio securities and adverse movements in exchange rates between
currencies, respectively. Each Underlying Fund may also engage in writing
call options from time to time as Qualivest deems appropriate. The
Underlying Funds will write only covered call options (options on
securities or currencies owned by the particular Underlying Fund). When a
portfolio security or currency subject to a call option is sold, the
Underlying Fund will effect a "closing purchase transaction" -- the
purchase of a call option on the same security or currency with the same
exercise price and expiration date as the call option which such Underlying
Fund previously has written. If such Underlying Fund is unable to effect a
closing purchase transaction, it will not be able to sell the underlying
security or currency until the option expires or that Underlying Fund
delivers the underlying security or currency upon exercise. In addition,
upon the exercise of a call option by the holder thereof, the Underlying
Fund will forego the potential benefit represented by market appreciation
over the exercise price. Under normal conditions, it is not expected that
an Underlying Fund will cause the underlying value of portfolio securities
and/or currencies subject to such options to exceed 25% of its total
assets.
An Underlying Fund, as part of its option transactions, also may purchase
index put and call options and write index options. As with options on
individual securities, an Underlying Fund will write only covered index call
options. Options on securities indices are similar to options on a security
except that, rather than the right to take or make delivery of a security at
or make delivery of a security at a
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<PAGE>
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
Price movements in securities which an Underlying Fund owns or intends to
purchase may not correlate perfectly with movements in the level of an
index and, therefore, an Underlying Fund bears the risk of a loss on an
index option that is not completely offset by movements in the price of
such securities. Because index options are settled in cash, a call writer
cannot determine the amount of its settlement obligations in advance and,
unlike call writing on specific securities, cannot provide in advance for,
or cover, its potential settlement obligations by acquiring and holding the
underlying securities. An Underlying Fund may be required to segregate
assets or provide an initial margin to cover index options that would
require it to pay cash upon exercise.
Foreign Securities
Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include political, social
or economic instability in the country of the issuer, the difficulty of
predicting international trade patterns, the possibility of the imposition
of exchange controls, expropriation, limits on removal of currency or other
assets, nationalization of assets, foreign withholding and income taxation,
and foreign trading practices (including higher trading commissions,
custodial charges and delayed settlements). Such securities may be subject
to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The markets on which such securities trade may have
less volume and liquidity, and may be more volatile than securities markets
in the U.S. In addition, there may be less publicly available information
about a foreign company than about a U.S. domiciled company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to U.S.
domestic companies. There is generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or
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<PAGE>
diplomatic developments could also affect investment in those countries. In
addition, foreign branches of U.S. banks, foreign banks and foreign issuers
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 and U.S. domestic issuers.
If a security is denominated in foreign currency, the value of the security
to an Underlying Fund will be affected by changes in currency exchange
rates and in exchange control regulations, and costs will be incurred in
connection with conversions between currencies. Currency risks generally
increase in lesser developed markets. Exchange rate movements can be large
and can endure for extended periods of time, affecting either favorably or
unfavorably the value of the Underlying Funds' assets.
For many foreign securities, U.S. dollar denominated American Depositary
Receipts ("ADRs"), which are traded in the United States on exchanges or
over-the-counter, are issued by domestic banks. ADRs represent the right
to receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADRs do not eliminate all the risk inherent in
investing in the securities of foreign issuers. However, by investing in
ADRs rather than directly in foreign issuers' stock, an eligible Equity
Fund can avoid currency risks during the settlement period for either
purchases or sales.
Subject to its applicable investment policies, each Equity Fund other than
the Optimized Fund may invest in debt securities denominated in the
European Currency Unit ("ECU"), which is a "basket" consisting of specified
amounts of the currencies of certain of the member states of the European
Community. The specific amounts of currencies comprising the ECU may be
adjusted by the Council of Ministers of the European Community to reflect
changes in relative values of the underlying currencies. Such adjustments
may adversely affect holders of ECU denominated obligations or the
marketability of such securities.
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<PAGE>
Foreign Currency Transactions
The value of the assets of an Equity Fund other than the Optimized Fund as
measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control
regulations, and an Underlying Fund may incur costs in connection with
conversions between various currencies. An Equity Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis
----
at the spot rate prevailing in the foreign currency exchange market, or
through forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract ("forward currency contract") involves
an obligation to purchase or sell a specific currency at a future date at a
price set at the time of the contract. The Equity Funds may enter into
forward currency contracts in order to hedge against adverse movements in
exchange rates between currencies. However, this tends to limit potential
gains which might result from a positive change in such currency
relationships. An Equity Fund may also hedge its foreign currency exchange
rate risk by engaging in currency financial futures and options
transactions. The forecasting of short-term currency market movements is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a forward currency contract. Accordingly,
it may be necessary for an Equity Fund to purchase additional currency on
the spot market if the market value of the security is less than the amount
of foreign currency such Underlying Fund is obligated to deliver when a
decision is made to sell the security and make delivery of the foreign
currency in settlement of a forward contract. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received
upon the sale of the portfolio security if its market value exceeds the
amount of foreign currency such Underlying Fund is obligated to deliver.
If an Equity Fund retains the portfolio security and engages in an
offsetting transaction, it will incur a gain or a loss to the extent that
there has been movement in forward currency contract prices. If an Equity
Fund engages in an offsetting transaction, it may subsequently enter into a
new forward currency contract to sell the foreign currency. Although such
contracts tend to minimize the
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<PAGE>
risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain which might result should the value of such
currency increase. The Equity Funds will have to convert their holdings of
foreign currencies into U.S. dollars from time to time. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies.
Repurchase Agreements
Securities held by a Fund or an Underlying Fund (other than the U.S. Treasury
Fund) may be subject to repurchase agreements. Under the terms of a repurchase
agreement, a Fund or an Underlying 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
or an Underlying 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 Underlying 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, an
Underlying Fund would sell certain of its 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
an Underlying 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 its investment restrictions having a value equal to the
repurchase price (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 securities sold by an
Underlying Fund may decline below the price at which it is obligated to
repurchase the securities.
Futures Contracts
The Equity and Income Funds may also enter into contracts for the future
delivery of securities or foreign currencies and futures contracts based on
a specific security, class of securities, foreign currency or an index,
purchase or sell options on any such futures contracts and engage in
related closing transactions. A futures contract on a securities index is
an agreement obligating either party to pay, and entitling the other party
to receive, while the contract is outstanding, cash payments based on the
level of a specified securities index. An Underlying Fund may engage in
such futures contracts in an effort to hedge against market risks and to
manage its cash position, but not for leveraging purposes.
Aggregate initial margin deposits for futures contracts, and premiums paid
for related options, may not exceed 5% of an Underlying Fund's total
assets, and the value of securities that are the subject of such futures
and options (both for receipt and delivery) may not exceed 33 1/3% of the
market value of an Underlying Fund's total assets. Futures transactions
will be limited to the extent necessary to maintain each Underlying Fund's
qualification as a regulated investment company.
When-Issued and Delayed-Delivery Transactions
The Underlying Funds may each purchase securities on a when-issued or
delayed-delivery basis. An Underlying Fund will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with its investment objective and policies, not for
investment leverage. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield and
thereby involve a risk that the yield obtained in the transaction will be less
than those available in the market when delivery takes place. An Underlying
Fund will not pay for such securities or start earning interest on them until
they are received. When an Underlying Fund agrees to purchase such securities,
its Custodian will set aside cash or high grade liquid debt securities equal
to the amount of
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<PAGE>
the commitment in a segregated account. In when-issued and delayed-delivery
transactions, an Underlying Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause such Underlying Fund
to miss a price or yield considered to be advantageous.
Lending of Portfolio Securities
In order to generate additional income, the Equity Funds and the Income
Funds from time to time may lend portfolio securities to broker-dealers,
banks or institutional borrowers of securities. The Underlying Funds must
receive 102% collateral in the form of cash or U.S. Government securities.
This collateral must be valued daily by Qualivest and, should the market
value of the loaned securities increase, the borrower must furnish
additional collateral to the Underlying Funds. During the time portfolio
securities are on loan, the borrower pays the Underlying Funds any
dividends or interest paid on such securities. Loans are subject to
termination by the Underlying Funds or the borrower at any time. While the
Underlying Funds do not have the right to vote securities on loan, they
intend to terminate the loan and regain the right to vote if that is
considered important with respect to the investment. In the event the
borrower defaults on its obligation to an Underlying Fund, the Underlying
Fund could experience delays in recovering its securities and possible
capital losses. The Underlying Funds will only enter into loan
arrangements with broker-dealers, banks or other institutions which
Qualivest has determined to be creditworthy under guidelines established by
the Board of Trustees that permit each Underlying Fund to loan up to 33
1/3% of the value of its total assets.
Medium-Grade Securities
Each of the Income Funds, the Large Companies Fund and the Small Companies
Fund may invest up to 10% of its total assets in debt securities within the
fourth highest rating group assigned by an NRSRO (i.e., BBB or Baa by S&P
----
and Moody's, respectively) and comparable unrated securities. These types
of debt securities are considered by Moody's and S&P to have some
speculative characteristics, and are more vulnerable to changes in economic
conditions, higher interest rates or adverse issuer-specific developments
which are more likely to lead to a weaker capacity to
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<PAGE>
make principal and interest payments than comparable higher rated debt
securities.
Should subsequent events cause the rating of a debt security purchased by
one of the Underlying Funds to fall below BBB or Baa, as the case may be,
Qualivest will consider such an event in determining whether an Underlying
Fund should continue to hold that security. In no event, however, would a
Fund be required to liquidate any such portfolio security where the Fund
would suffer a loss on the sale of such security.
Securities Issued by Other Investment Companies
Each of the Equity and Income Funds may invest up to 10% of its total
assets, and each of the Money 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. An Underlying 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 Underlying 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 Underlying 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 institutional 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 of the Trust, 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.
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<PAGE>
VALUATION OF SHARES
The net asset value of each Fund is determined and its Shares are priced 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, Veterans 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 outstanding
Shares of such class.
The net asset value per Share of the Funds will fluctuate as the value of
the investment portfolio of a Fund changes.
PURCHASING SHARES
Class Y Shares may be purchased through a broker-dealer, bank, or trust
company that has established a dealer agreement with the Distributor.
Class Y Shares of each Fund are continuously offered and also may be
purchased directly either by mail, by telephone, or by wire.
An Account Application Form can be obtained by calling the Trust at 1-800-
743-8637.
Other Information Regarding Purchases
Purchases of Class Y 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 Y Shares in good form ("public offering price").
In the case of orders for the purchase
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of Class Y 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 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 Y Shares of any of the
Funds will be effected only on a Business Day of the Funds. An order received
prior to the Valuation Time on any Business Day will be executed at the net
asset value determined as of the Valuation Time on the date of receipt. An
order received after the Valuation Time on any Business Day will be executed at
the net asset value determined as of the Valuation Time on the next
Business Day of that Fund.
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 Y Shares of the respective Fund owned
by the Shareholder. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Class Y Shares of the Funds will
not be issued.
Exchange Privilege
The exchange privilege enables Shareholders of Class Y Shares (including
Class Y Shares acquired through reinvestment of dividends and distributions
on such Shares) to acquire at net asset value Class Y Shares offered by
another Fund with a different investment objective, or Class Y Shares
offered by any of the Trust's other funds. Holders of Class Y Shares may
not exchange their Shares for Shares of any other class, and holders of
Shares of any other class may not exchange their Shares for Class Y Shares.
An exchange is considered a sale of Shares and may result in a capital gain
or loss for federal income tax purposes.
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A Shareholder wishing to exchange his or her Shares may do so by contacting
the Custodian or an affiliate. Any Shareholder who wishes to make an
exchange should obtain and review the current prospectus of the Fund or
fund to be acquired before making the exchange. For a discussion of risks
associated with unauthorized telephone exchanges, see "REDEEMING SHARES --
By Telephone" below.
REDEEMING SHARES
Shareholders may redeem their Class Y 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 by the Distributor of a redemption request. 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
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clearing corporation nor maintains net capital of at least $100,000.
By Telephone
Class Y 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 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 conversions, sending confirmations
to Shareholders within 72 hours of the telephone transaction, verifying the
account name and a Shareholder's account number or tax identification
number 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.
Other Information Regarding Redemption of Shares
All redemption orders are effected at the net asset value per Share next
determined after the Class Y Shares are properly tendered for redemption,
as described above. The proceeds paid upon redemption of Class Y Shares in
the Funds may be more or less than the amount invested. Payment to
Shareholders for Shares redeemed will be made
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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 a Fund for next Business Day payments upon redemption of
Shares will be honored if received by the Distributor before the Valuation
Time on a Business Day or, if received after the Valuation 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 Y 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 Y Shares, which delay may be for 15 days or
more. Such delay may be avoided if Class Y Shares are purchased by wire
transfer of federal funds. The Trust intends to pay cash for all Class Y
Shares redeemed.
See the Statement of Additional Information ("ADDITIONAL PURCHASE AND
REDEMPTION INFORMATION") for examples of when the right of redemption may
be suspended.
MANAGEMENT OF THE FUNDS
Trustees
Overall responsibility for management of the Trust rests with its Trustees,
who are elected by the Shareholders of all of the Trust's funds. 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 meaning of that term under the 1940 Act. The Trustees, in
turn, elect the officers of the Trust to supervise 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.
The Trustees and officers of the Trust serve in such positions for the
Funds and for the Underlying Funds. If the interests of the Funds and the
Underlying Fund were to become divergent, it is possible that a conflict of
interest could arise and affect how the Trustees and officers fulfill their
fiduciary duties to the Funds and the Underlying Funds. While the Trustees
believe they have
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structured the Funds to avoid such conflicts, if a situation arises where
appropriate action for a Fund could adversely affect an Underlying Fund, or
vice versa, the Trustees and officers will carefully analyze the situation
and take all steps they believe reasonable to minimize and, where possible,
eliminate the potential conflict. To this end, restrictions have been
adopted by the Funds to minimize this possibility, and close and continuous
monitoring will be exercised to avoid, insofar as possible, these concerns.
Investment Adviser
Qualivest Capital Management, Inc., 111 S.W. Fifth Avenue, Portland, Oregon
97204, is the investment adviser of the Trust. Qualivest, a registered
investment adviser, is an affiliate 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.
Qualivest invests each Fund's assets according to its investment objective
and policies set forth above and pursuant to guidelines established by the
Board of Trustees for each Fund. Such allocation decisions are made by the
Qualivest Investment Strategy Committee (the "Committee"). Timothy Leach,
President and Chief Investment Officer of Qualivest, acts as Chairman of
the Committee. 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 an annual
rate of 0.05% of each Fund's average daily net assets. Each Fund, as a
Shareholder in an Underlying Fund, also will indirectly bear its proportionate
share of any investment advisory fees and other expenses paid by the Underlying
Fund. The ratios of operating expenses to average daily net assets of the
Class Y Shares of the Underlying Funds for the period ended July 31, 1995 were
as follows: Large Companies Fund - 0.53%; Small Companies Fund - 0.60%;
International Fund - 1.18%; Optimized Fund
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- - 0.68%; Intermediate Bond Fund - 0.41%; Bond Fund - 0.70%; U.S. Treasury
Fund - 0.40%; and Money Market Fund - 0.38%.
Subject to the general supervision of the Trust's Board of Trustees and in
accordance with each of the Underlying Funds' investment objective, policies
and restrictions, Qualivest has agreed in its Investment Advisory Agreement
with the Trust to provide or arrange for the provision of a continuous
investment program for each Underlying Fund, including investment research
and management with respect to the Underlying Funds' portfolio securities,
investments and cash.
John R. Dozier, who joined Qualivest in 1976, is the Equity Manager
primarily responsible for managing the Large Companies Fund. Mr. Dozier
has twenty-five years of investment management experience and received a
Bachelor of Arts degree in Economics from Claremont Men's College.
Dale E. Benson, an Equity Manager at Qualivest, has primary responsibility
for management of the Small Companies Fund. Mr. Benson has twenty-three
years of investment management experience and has been employed by
Qualivest since 1973. He received a Bachelor of Arts degree from Pacific
Lutheran University and a Doctorate in History from the University of
Maine. Mr. Benson is also a Chartered Financial Analyst.
Timothy Leach, President and Chief Investment Officer of Qualivest, manages
the International Fund and Optimized Fund. He has thirteen years of
investment management experience, both at Qualivest and at other investment
management organizations, and is responsible for the management of
Qualivest. Mr. Leach has a Bachelor of Science degree in Business
Management and Agricultural Science and a Master of Business
Administration degree from the University of California, Berkeley.
Portfolio management of the Intermediate Bond Fund and the Bond Fund is the
responsibility of Curry A. Garvin, a Fixed-Income Manager who has been
employed by Qualivest since 1985. Mr. Garvin, who is a Chartered Financial
Analyst, received a Bachelor of Science degree in Finance from the
University of Oregon.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Trust, Qualivest receives a fee from each of
the Underlying Funds, computed daily and paid monthly, at the following
annual rates of each Underlying Fund's
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average daily net assets: Large Companies Fund - 0.75%; Small Companies
Fund - 0.80%; International Fund - 0.60%; Optimized Fund -0.50%; Intermediate
Bond Fund - 0.60%; Bond Fund - 0.60%; U.S. Treasury Fund - 0.35%; and Money
Market Fund - 0.35%.
While the fees for the Large Companies and Small Companies Funds are higher
than the advisory fees paid by most investment companies, the Board of
Trustees believes them to be comparable to advisory fees paid by many funds
having similar objectives and policies. Qualivest may periodically
voluntarily reduce all or a portion of its advisory fee with respect to an
Underlying Fund to increase the net income of that Underlying Fund
available for distribution as dividends. The voluntary fee reduction will
cause the return of that Underlying Fund to be higher than it would
otherwise be in the absence of such reduction.
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 of 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, the Administrator receives a fee from each Fund equal to
the lesser of a fee, computed daily and paid periodically, at an annual
rate of 0.07% of the 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 a Fund to increase the net income of
that Fund available for distribution as dividends. The voluntary fee
reduction will cause the return of that Fund to be higher than it would
otherwise be in the absence of such 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 retain some or all of any sales charge
imposed upon the Class A or Class
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C Shares. It may also receive compensation under the Distribution and
Shareholder Service Plans regarding the Class A and Class C Shares.
Other Service Providers
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as the 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 custodian of the
Funds. 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 other than the cost of securities purchased
for the Trust. Each Fund will bear the following expenses relating to its
operation: taxes, interest, fees of the Trustees of the Trust, Securities and
Exchange Commission fees, state securities qualification fees, outside
auditing and legal expenses, advisory and administration fees, fees and
out-of-pocket expenses of the Custodian, Transfer Agent and fund
accountant, certain insurance premiums, costs of maintenance of the Trust's
existence, costs of Shareholders' reports and meetings, and any
extraordinary expenses incurred in each Fund's operation.
As a general matter, expenses are allocated to the Class A, Class C and
Class Y Shares of the Funds on the basis of the relative net asset value of
each class. Class A and Class C Shares may bear
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certain additional retail transfer agency expenses. Class A and Class C
Shares also bear certain additional Shareholder service and distribution costs
incurred pursuant to the Distribution and Shareholder Service Plans.
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 Y
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
registration 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.
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 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.
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In the event that, due to future events, Qualivest is prohibited from
acting as the investment adviser of the Funds and the Underlying Funds, 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 and Underlying Funds be
liquidated.
Participating Organizations
The Distributor may enter into agreements with banks and their affiliates
(including U.S. Bank and its affiliates), and other institutions, including
broker-dealers (each a "Participating Organization"), for providing
Shareholder services with respect to the Class Y Shares. Such
Participating Organizations will be compensated by the Distributor, which will
in turn be paid or reimbursed by the respective Funds, at the annual rate of
up to 0.25% of the average daily net assets of the Class Y Shares held of
record or beneficially by customers of Participating Organizations who are
record or beneficial owners of Class Y Shares. The Trust understands that
Participating Organizations may charge fees to their customers who are the
owners of Class Y Shares for additional services provided in connection
with their customer accounts. These fees would be in addition to any
amounts which may be received by a Participating Organization under its
agreement with BISYS. Customers of Participating Organizations should read
this Prospectus in light of the terms governing their accounts with their
Participating Organizations.
The Shareholder services provided by Participating Organizations for which
the fee may be paid may include providing information periodically to
customers, including information showing their positions in Class Y Shares;
responding to inquiries from customers concerning their investment in Class
Y Shares; providing sub-accounting with respect to Class Y Shares
beneficially owned by customers or the information necessary for
sub-accounting; arranging for bank wires; and other continuing personal
services to holders of Class Y Shares.
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DIVIDENDS AND TAXES
Dividends
Net income is declared quarterly as a dividend to Shareholders of record of
the Funds at the close of business on the eleventh Business Day of each
Fund's fiscal quarter and is generally paid quarterly. Distributable net
realized capital gains are distributed at least annually. 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.
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. Dividends paid by the Funds to
corporate Shareholders, to the extent such dividends are attributable to
dividends received from U.S. corporations, may qualify for the dividends-
received deduction. However, the alternative minimum tax applicable to
corporations may reduce the value of the dividends-received deduction.
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.
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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 also should
be aware that under the laws of some state and local taxing authorities,
distributions from the Funds 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.
Prior to purchasing Shares of the Funds, the impact of dividends or capital
gains distributions which are expected to be declared or have been
declared, but have not been paid, should be carefully considered. Any such
dividends or capital gains distributions paid shortly after a purchase of
Shares prior to the record date will have the effect of reducing the per
Share net asset value of the Shares by the amount of the dividends or
distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to tax.
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 may be subject
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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.
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.
GENERAL INFORMATION
Organization of the Trust
The Trust was organized as a Massachusetts business trust in 1994 and
consists of seventeen funds. The Shares of each of the Funds are offered
in three separate classes: Class A Shares, Class C Shares and Class Y
Shares. Shares of the Equity Funds and the Income Funds also are offered
in Class A Shares, Class C Shares and Class Y Shares, while Shares of the
Money Funds are offered in 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.
Shareholders 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 to
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.
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Multiple Classes of Shares
In addition to Class Y Shares, the Trust also offers Class A Shares and
Class C Shares of the Funds. These two classes differ principally with
respect to sales charges and the rate of expenses to which they are
subject. Class Y Shares are not sold subject to a sales charge or CDSC and
do not bear expenses under the Distribution and Shareholder Service Plans
pertaining to Class A and Class C Shares. The amount of dividends payable
with respect to Class Y Shares will exceed dividends on Class A and Class C
Shares as a result of the Distribution and Shareholder Service Plan fees
applicable to Class A and Class C Shares and because such Shares may bear
additional retail transfer agency expenses. For further details regarding
Class A and Class C Shares, call the Trust at 1-800-743-8637 or your
broker.
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, 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.
Such performance figures are based on historical earnings and are not
intended to indicate future performance. Also, from time to time the Funds
may present their respective distribution rates for a class of Shares in
supplemental sales literature which is accompanied or preceded by a
prospectus and in Shareholder reports.
Standardized yield and total return quotations will be computed separately
for Class A, Class C and Class Y Shares. Because of differences in the
fees and/or expenses borne by Class A, Class C and Class Y Shares of the
Funds, the net yield and total return on Class A and Class C Shares can be
expected, at any given time, to be lower than the net yield and total
return on Class Y Shares for the same period.
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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 a 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 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 43219-3035, or by calling toll free 1-800-743-8637.
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 their Distributor in any jurisdiction in which
such offering may not lawfully be made.
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Qualivest Funds
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-743-8637
STATEMENT OF ADDITIONAL INFORMATION
November 15, 1995
as supplemented May 1, 1996
This Statement of Additional Information ("SAI") describes the seventeen
diversified investment portfolios (the "Funds") of Qualivest Funds (the
"Trust"), all of which are advised by Qualivest Capital Management, Inc.
("Qualivest"). The Funds are:
. Qualivest U.S. Treasury Money Market . Qualivest Micro Cap Value Fund
Fund . Qualivest Income Equity Value
. Qualivest Money Market Fund Fund
. Qualivest Tax-Free Money Market Fund . Qualivest International
. Qualivest Intermediate Bond Fund Opportunities Fund
. Qualivest Diversified Bond Fund . Qualivest Optimized Stock Fund
. Qualivest Tax-Free National Bond Fund . Qualivest Allocated Conservative Fund
. Qualivest Large Companies Value Fund . Qualivest Allocated Balanced Fund
. Qualivest Large Companies Growth Fund . Qualivest Allocated Growth Fund
. Qualivest Small Companies Value Fund . Qualivest Allocated Aggressive Fund
The Trust offers an indefinite number of transferable units ("Shares") of
each Fund, and each Fund offers multiple classes of Shares. Shares of the
Qualivest Tax-Free National Bond Fund, the Qualivest Large Companies Growth
Fund, the Qualivest Micro Cap Value Fund, and the Qualivest Income Equity
Value Fund are not currently offered for sale. This SAI describes all classes
of Shares offered by the Trust.
This SAI is not a Prospectus and is authorized for distribution only when
preceded or accompanied by the Prospectuses (the "Prospectuses") of the Funds,
each of which is dated or supplemented the date hereof. This SAI contains more
detailed information than that set forth in the Prospectuses and should be read
in conjunction with the Prospectuses. This SAI is incorporated by reference in
its entirety into the Prospectuses. Copies of each of the Prospectuses may be
obtained by writing the Trust at 3435 Stelzer Road, Columbus, Ohio 43219, or by
telephoning toll free 1-800-743-8637.
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TABLE OF CONTENTS
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INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information on the Parent Funds' Investment Policies . . .
Additional Information on Portfolio Instruments of the Equity, Income
and Money Funds . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . .
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation of the Trust's Money Funds . . . . . . . . . . . . . . . . .
Valuation of the Other Funds . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . .
Matters Affecting Redemption . . . . . . . . . . . . . . . . . . . . .
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . .
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . .
Remuneration of Trustees . . . . . . . . . . . . . . . . . . . . . . .
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . .
Glass-Steagall Act . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Custodians, Transfer Agent and Fund Accounting Services . . . . . . .
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of Shares . . . . . . . . . . . . . . . . . . . . . . . .
Vote of a Majority of the Outstanding Shares . . . . . . . . . . . . .
Principal Shareholders . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder and Trustee Liability . . . . . . . . . . . . . . . . . .
Additional Tax Information . . . . . . . . . . . . . . . . . . . . . .
Yields of the Money Funds . . . . . . . . . . . . . . . . . . . . . .
Yields of the Parent Funds, the Equity Funds and the Income Funds . .
Calculation of Total Return . . . . . . . . . . . . . . . . . . . . .
Distribution Rates . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Comparisons . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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The Qualivest Funds (the "Trust") is an open-end management investment
company which offers seventeen separate diversified investment portfolios
(collectively, the "Funds" and singly, a "Fund"), each with a different
investment objective. The Funds enable the Trust to meet a wide range of
investment needs. This SAI contains information about each of the following
Funds: the Qualivest Allocated Conservative Fund (the "Conservative Fund"),
the Qualivest Allocated Balanced Fund (the "Balanced Fund"), the Qualivest
Allocated Growth Fund (the "Growth Fund") and the Qualivest Allocated
Aggressive Fund (the "Aggressive Fund") (collectively, the "Parent Funds");
the Qualivest Large Companies Value Fund (the "Large Companies Value Fund"),
the Qualivest Large Companies Growth Fund (the "Large Companies Growth Fund"),
the Qualivest Small Companies Value Fund (the "Small Companies Fund"), the
Qualivest Micro Cap Value Fund (the "Micro Cap Fund"), the Qualivest Income
Equity Value Fund (the "Income Equity Fund"), the Qualivest International
Opportunities Fund (the "International Fund") and the Qualivest Optimized Stock
Fund (the "Optimized Fund") (collectively, the "Equity Funds"); the Qualivest
Intermediate Bond Fund (the "Intermediate Bond Fund"), the Qualivest Diversified
Bond Fund (the "Bond Fund") and the Qualivest Tax-Free National Bond Fund (the
"Tax-Free Bond Fund") (collectively, the "Income Funds"); and 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") (collectively, the "Money Funds)."
Much of the information contained in this SAI expands upon subjects
discussed in the Prospectuses of the Funds. Capitalized terms not defined
herein are defined in such Prospectuses. No investment in Shares of a Fund
should be made without first reading the Fund's Prospectus.
INVESTMENT POLICIES
Additional Information on the Parent Funds' Investment Policies
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Each Parent Fund seeks its investment objective by investing in a
diversified portfolio of one or more of the following Funds: the Large
Companies Value Fund, the Small Companies Fund, the International Fund, the
Optimized Fund, the Intermediate Bond Fund, the Bond Fund, the U.S. Treasury
Fund and the Money Market Fund (the "Underlying Funds"). Accordingly, the
investment performance of each Parent Fund is directly related to the
performance of the Underlying Funds, which may engage in the investment
techniques described below. In addition to Shares of the Underlying Funds, for
temporary cash management purposes, each Parent Fund may invest in short-term
obligations (with maturities of 12 months or less) consisting of commercial
paper (including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, reverse repurchase agreements
and dollar roll agreements, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, asset-backed and
mortgage-related securities, and demand and time deposits of domestic and
foreign banks and savings and loan associations. The Parent Funds also may hold
depositary or custodial receipts representing beneficial interests in any of the
foregoing securities. These investments are described below under "Additional
Information on Portfolio Instruments of the Equity, Income and Money Funds."
Additional Information on Portfolio Instruments of the Equity, Income and Money
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Funds
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The following policies supplement the investment objectives and policies of
each of the Equity, Income and Money Funds of the Trust as set forth in the
respective Prospectuses for these Funds.
General. The Equity, Income and Money Funds will not acquire portfolio
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securities issued by, make savings deposits in, or enter into repurchase,
reverse repurchase, or dollar roll agreements with affiliates of the Funds,
except that the Optimized Fund may invest in such securities if they are
included in the S&P 500 Index.
Bank Obligations. All Funds may invest in bank obligations consisting of
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bankers' acceptances, certificates of deposit, and time deposits.
Bankers' acceptances are negotiable drafts or bills of exchange typically
drawn by an importer or exporter to pay for specific merchandise, which are
"accepted" by a bank, meaning, in effect, that the bank unconditionally agrees
to pay the face value of the instrument on maturity. Bankers' acceptances
invested in by the Funds will be those guaranteed by domestic and foreign banks
having, at the time of investment, capital, surplus, and undivided profits in
excess of $100,000,000 (as of the date of their most recently published
financial statements).
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank or a savings and loan association for a definite
period of time and earning a specified return. Certificates of deposit and time
deposits will be those 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 Eurodollar Certificates of Deposit, which are
U.S. dollar denominated certificates of deposit issued by offices of foreign and
domestic banks located outside the United States; Yankee Certificates of
Deposit, which are certificates of deposit issued by a U.S. branch of a foreign
bank denominated in U.S. dollars and held in the United States; Eurodollar Time
Deposits ("ETDs"), which are U.S. dollar denominated deposits in a foreign
branch of a U.S. bank or a foreign bank; and Canadian Time Deposits, which are
basically the same as ETDs, except they are issued by Canadian offices of major
Canadian banks.
Commercial Paper. Commercial paper consists of unsecured promissory notes
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issued by corporations. Except as noted below with respect to variable amount
master demand notes, issues of commercial paper normally have maturities of less
than nine months and fixed rates of return.
Variable Amount Master Demand Notes. Variable amount master demand notes,
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in which the Funds may invest, are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate according to the terms of the instrument. Because master demand
notes are direct lending arrangements between a Fund and the issuer, they
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are not normally traded. Although there is no secondary market in the notes, a
Fund 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 dollar weighted average portfolio maturity, a variable amount master
demand note will be deemed to have a maturity equal to the longer of the period
of time remaining until the next interest rate adjustment or the period of time
remaining until the principal amount can be recovered from the issuer through
demand.
Foreign Investments. Investment in foreign securities is subject to
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special investment risks that differ in some respects from those related to
investments in securities of U.S. domestic issuers.
Because foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to U.S. companies, there may be less publicly available
information about a foreign company than about a U.S. company. Volume and
liquidity in most foreign markets are less than in the U.S., and securities of
many foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Fixed commissions on foreign securities exchanges
are generally higher than negotiated commissions on U.S. exchanges, although the
Equity, Income and Money Funds endeavor to achieve the most favorable net
results on portfolio transactions. There is generally less government
supervision and regulation of securities exchanges, brokers, dealers and listed
companies than in the U.S., thus increasing the risk of delayed settlements of
portfolio transactions or loss of certificates for portfolio securities.
Foreign markets also have different clearance and settlement procedures,
and in certain markets, there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Such delays in settlement could result in temporary
periods when a portion of the assets of a Fund is uninvested and no return is
earned thereon. The inability of a Fund to make intended security purchases due
to settlement problems could cause such Fund to miss attractive investment
opportunities. Losses to a Fund due to subsequent declines in the value of
portfolio securities, or losses arising out of the Fund's inability to fulfill a
contract to sell such securities, could result in potential liability to the
Fund. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect a Fund's investments
in those countries. Moreover, individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of gross
national product, rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position.
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In many instances, foreign debt securities may provide higher yields than
securities of domestic issuers which have similar maturities and quality. Under
certain market conditions these investments may be less liquid than the
securities of U.S. corporations and are certainly less liquid than securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Finally, in the event of a default of any such foreign debt
obligations, it may be more difficult for a Fund to obtain or to enforce a
judgment against the issuers of such securities.
A change in the value of any foreign currency against the U.S. dollar will
result in a corresponding change in the U.S. dollar value of a Fund's securities
denominated in that currency. Such changes will also affect a Fund's income and
distributions to Shareholders. In addition, although a Fund will receive income
on foreign securities in such currencies, such Fund will be required to compute
and distribute its income in U.S. dollars. Therefore, if the exchange rate for
any such currency declines materially after such Fund's income has been accrued
and translated into U.S. dollars, the Fund could be required to liquidate
portfolio securities to make required distributions. Similarly, if an exchange
rate declines between the time a Fund incurs expenses in U.S. dollars and the
time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater.
In general, there is a large, liquid market in the United States for many
American Depositary Receipts ("ADRs"). The information available for ADRs is
subject to the accounting, auditing and financial reporting standards of the
domestic market or exchange on which they are traded, which standards are more
uniform and more exacting than those to which many foreign issuers may be
subject. Certain of the ADRs in which the Equity Funds, except for the
Optimized Fund, may invest, typically those denominated as unsponsored, require
the holders thereof to bear most of the costs of such facilities, while issuers
of sponsored facilities normally pay more of the costs thereof. The depositary
of an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited securities
or to pass through the voting rights to facility holders with respect to the
deposited securities, whereas the depositary of a sponsored facility typically
distributes shareholder communications and passes through the voting rights.
Variable and Floating Rate Notes. The Money Funds and the Tax-Free Bond
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Fund may acquire variable and floating rate notes, subject to each such Fund's
investment objective, policies and restrictions. A variable rate note is one
whose terms provide for the adjustment of its interest rate on set dates and
which, upon such adjustment, can reasonably be expected to have a market value
that approximates its par value. A floating rate note is one whose terms
provide for the adjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Such notes are frequently not rated by
credit rating agencies; however, unrated variable and floating rate notes
purchased by a Fund will be determined by Qualivest, under guidelines
established by the Trust's Board of Trustees, to be of comparable quality at the
time of purchase to rated instruments eligible for purchase under the Fund's
investment policies. In making such determinations, the investment adviser will
consider the earning power, cash flow and other liquidity ratios of the
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issuers of such notes (such issuers include financial, merchandising, bank
holding and other companies) and will continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate note purchased by a Fund, it may resell the
note at any time to a third party. The absence of an active secondary market,
however, could make it difficult for the Fund to dispose of a variable or
floating rate note in the event the issuer of the note defaulted on its payment
obligations and the Fund could, as a result or for other reasons, suffer a loss
to the extent of the default. To the extent that the Fund is not entitled to
receive the principal amount of a note within seven days, such note will be
treated as an illiquid security for purposes of calculation of the limitation on
the Fund's investment in illiquid securities as set forth in that Fund's
investment restrictions. Variable or floating rate notes may be secured by bank
letters of credit.
Variable or floating rate notes invested in by the Money Funds may have
maturities of more than 397 days, as follows:
1. An instrument that is issued or guaranteed by the U.S. Government or
any agency thereof which has a variable rate of interest readjusted no less
frequently than every 397 days will be deemed by a Money Fund to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in 397 days or less, will be deemed by a
Money Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature will be
deemed by a Money Fund to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by a Money Fund to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund is
entitled to receive the principal amount of the note either at any time on no
more than 30 days' notice or at specified intervals not exceeding 397 days.
Money Market Funds. Each of the Equity and Income Funds may invest up to
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5% of the value of its total assets in the securities of any one money market
fund (including shares of the U.S. Treasury Fund, the Money Market Fund and the
Tax-Free Money Market Fund), provided that no more than 10% of such Fund's total
assets may be invested in the securities of money market funds in the aggregate.
Each of the Money Funds may invest up to 25% of its total assets in the
securities of money market funds.
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In order to avoid the imposition of additional fees as a result of
investments by the Equity and Income Funds in Shares of the Money Funds of the
Trust, Qualivest, BISYS Fund Services ("BISYS" or "Distributor" or
"Administrator"), and their affiliates will not retain any portion of their
usual service fees from the Funds that are attributable to investments by these
Funds in Shares of those Money Funds. The Equity and Income Funds will incur no
sales charges, contingent deferred sales charges, 12b-1 fees, or other
underwriting or distribution fees in connection with their investments in the
Money Funds of the Trust. These Funds will vote their Shares of each of the
Money Funds of the Trust in proportion to the vote by all other Shareholders of
such Money Fund. Moreover, no single Fund of the Trust may own more than 3% of
the outstanding Shares of any single Money Fund of the Trust.
Municipal Securities. As stated in the Prospectuses of the Tax-Free Money
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Market and Tax-Free Bond Funds (collectively, the "Exempt Funds" and singly, an
"Exempt Fund"), the assets of the Exempt Funds will be primarily invested in
bonds and notes 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
("Municipal Securities"). With respect to the Tax-Free Money Market Fund,
Municipal Securities are expected to have remaining maturities of 397 days or
less. Under normal market conditions, at least 80% of the net assets of each
such Exempt Fund will be invested in Municipal Securities.
Municipal Securities include debt obligations issued by governmental
entities to obtain funds for various public purposes, such as the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses, and the extension of loans to other
public institutions and facilities. Private activity bonds that are issued by
or on behalf of public authorities to finance various privately-operated
facilities are included within the term Municipal Securities if the interest
paid thereon is exempt from both federal income tax and not treated as a
preference item for purposes of the federal alternative minimum tax.
Among other types of Municipal Securities, the Exempt Funds may purchase
short-term General Obligation Notes, Tax Anticipation Notes, Bond Anticipation
Notes, Revenue Anticipation Notes, Project Notes, Tax-Exempt Commercial Paper,
Construction Loan Notes and other forms of short-term tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. In addition,
the Exempt Funds may invest in other types of tax-exempt instruments, such as
municipal bonds, private activity bonds, and pollution control bonds.
Project Notes are issued by a state or local housing agency and are sold by
the Department of Housing and Urban Development. While the issuing agency has
the primary obligation with respect to its Project Notes, they are also secured
by the full faith and credit of the United States through agreements with the
issuing authority which provide that, if required, the federal
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government will lend the issuer an amount equal to the principal of and interest
on the Project Notes.
As described in the Prospectuses of the Exempt Funds, the two principal
classifications of Municipal Securities consist of "general obligation" and
"revenue" issues. The Exempt Funds may also acquire "moral obligation" issues,
which are normally issued by special purpose authorities. There are, of course,
variations in the quality of Municipal Securities, both within a particular
classification and between classifications, and the yields on Municipal
Securities depend upon a variety of factors, including general money market
conditions, the financial condition of the issuer, general conditions of the
municipal bond market, the size of a particular offering, the maturity of the
obligation and the rating of the issue. The ratings of a nationally recognized
statistical rating organization ("NRSRO") represent its opinion as to the
quality of Municipal Securities. It should be emphasized, however, that ratings
are general and are not absolute standards of quality, and Municipal Securities
with the same maturity, interest rate and rating may have different yields,
while Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to purchase, an issue of Municipal
Securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase. Qualivest will consider such an event in
determining whether an Exempt Fund should continue to hold the obligation.
An issuer's obligations under Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the federal bankruptcy code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of Municipal Securities may be materially
adversely affected by litigation or other conditions.
Municipal Lease Obligations. The Tax-Free Bond Fund may invest up to 5% of
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its total assets in municipal lease obligations, including certificates of
participation, which finance a variety of public projects. Because of the way
these instruments are structured, they carry a greater risk than other types of
Municipal Securities. The Tax-Free Bond Fund may invest in municipal lease
obligations only when they are rated by an NRSRO or are deemed by Qualivest,
pursuant to guidelines adopted by the Board of Trustees, to be of a quality
compatible with the Fund's quality standards. Prior to purchasing a municipal
lease obligation and on a regular basis thereafter, Qualivest will evaluate the
credit quality and liquidity of the security. In making its evaluation,
Qualivest will consider various credit factors, such as the necessity of the
project, the municipality's credit quality, future borrowing plans, sources of
revenue pledged for lease repayment, general economic conditions in the region
where the security is issued, and liquidity factors, such as dealer activity.
U.S. Government Obligations. Each of the Funds may invest in obligations
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issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, including bills, notes
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and bonds issued by the U.S. Treasury, as well as "stripped" U.S. Treasury
obligations such as Treasury Receipts issued by the U.S. Treasury representing
either future interest or principal payments. 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 are supported by the full faith and credit of the U.S. Treasury;
others are supported by the right of the issuer to borrow from the Treasury;
others are supported by the discretionary authority of the U.S. Government to
purchase the agency's obligations; and still others are supported only by the
creditworthiness 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.
Taxable Obligations. As stated in the Prospectuses of each of the Exempt
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Funds, under normal market conditions, each Exempt Fund may invest up to 20% of
its net assets in Taxable Obligations. Taxable Obligations may include (1)
obligations of the U.S. Treasury; (2) obligations of agencies and instrumen-
talities of the U.S. Government; (3) money market instruments, such as
certificates of deposit issued by domestic banks, corporate commercial paper,
and bankers' acceptances; and (4) taxable instruments subject to repurchase
agreements (agreements under which the seller agrees at the time of sale to
repurchase the securities it is selling at an agreed time and price).
Certificates of deposit will be those of domestic branches of U.S. banks which
are members of the Federal Reserve System or the Federal Deposit Insurance
Corporation and which have total assets at the time of purchase in excess of
$100,000,000, or of savings and loan associations which are members of the
Federal Deposit Insurance Corporation and which have total assets at the time of
purchase in excess of $100,000,000. Bankers' acceptances will be guaranteed by
U.S. commercial banks having total assets at the time of purchase in excess of
$100,000,000.
Options Trading. The Equity Funds and the Income Funds may purchase put
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and call options. A call option gives the purchaser the right to buy, and a
writer has the obligation to sell, the underlying security or foreign currency
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price or exchange rate of the security or foreign
currency, as the case may be. The premium paid to the writer is consideration
for undertaking the obligations under the option contract. A put option gives
the purchaser the right to sell the underlying security or foreign currency at
the stated exercise price at any time prior to the expiration date of the
option, regardless of the market price or exchange rate of the security or
foreign currency, as the case may be. Put and call options purchased by the
foregoing Funds will be valued at the last sale price, or in the absence of such
a price, at the mean between bid and asked price.
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When a Fund writes an option, an amount equal to the net premium (the
premium less the commission) received by the Fund is included in the liability
section of its statement of assets and liabilities as a deferred credit. The
amount of the deferred credit will be subsequently marked-to-market to reflect
the current value of the option written. The current value of the traded option
is the last sale price or, in the absence of a sale, the average of the closing
bid and asked prices. If an option expires on the stipulated expiration date,
or if a Fund enters into a closing purchase transaction, it will realize a gain
(or a loss if the cost of a closing purchase transaction exceeds the net premium
received when the option is sold) and the deferred credit related to such option
will be eliminated. If an option is exercised, the Fund may deliver the
underlying security in the open market. In either event, the proceeds of the
sale will be increased by the net premium originally received and the Fund will
realize a gain or loss.
The Equity Funds, the Intermediate Bond Fund, and the Bond Fund also may
purchase or sell index options. Index options (or options on securities
indices) are similar in many respects to options on securities except that an
index option gives the holder the right to receive, upon exercise, cash instead
of securities, if the closing level of the securities index upon which the
option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option.
Puts. Each Exempt Fund may acquire "puts" with respect to Municipal
----
Securities held in its portfolio. A put is a right to sell a specified security
(or securities) within a specified period of time at a specified exercise price.
The Exempt Funds may sell, transfer, or assign a put only in conjunction with
the sale, transfer, or assignment of the underlying security or securities.
The amount payable to an Exempt Fund upon its exercise of a put is normally
(i) the Exempt Fund's acquisition cost of the Municipal Securities (excluding
any accrued interest which the Exempt Fund paid on the acquisition), less any
amortized market premium or plus any amortized market or original issue discount
during the period the Exempt Fund owned the securities, plus (ii) all interest
accrued on the securities since the last interest payment date during that
period.
Puts may be acquired by such Funds to facilitate the liquidity of their
respective portfolio assets. Puts may also be used to facilitate the
reinvestment of an Exempt Fund's assets at a rate of return more favorable than
that of the underlying security. Puts may, under certain circumstances, also be
used to shorten the maturity of underlying variable rate or floating rate
securities for purposes of calculating the remaining maturity of those
securities and the dollar weighted average portfolio maturity of the Tax-Free
Money Market Fund's assets pursuant to Rule 2a-7 under the Investment Company
Act of 1940, as amended ("1940 Act"). See "INVESTMENT POLICIES -- Additional
Information on Portfolio Instruments -- Variable and Floating Rate Notes" and
"NET ASSET VALUE" in this SAI.
The Exempt Funds expect that each such Fund will generally acquire puts
only where the puts are available without the payment of any direct or indirect
consideration. However, if
9
<PAGE>
necessary or advisable, the Exempt Funds may pay for puts either separately in
cash or by paying a higher price for portfolio securities which are acquired
subject to the puts (thus reducing the yield to maturity otherwise available for
the same securities).
The Exempt Funds intend to enter into puts only with banks and broker-
dealers which, in Qualivest's opinion, present minimal credit risks.
When-Issued and Delayed-Delivery Securities. Each Equity, Income and Money
-------------------------------------------
Fund may purchase securities on a "when-issued" or "delayed-delivery" basis
(i.e., for delivery beyond the normal settlement date at a stated price and
----
yield). When a Fund agrees to purchase securities on a "when-issued" or
"delayed-delivery" basis, its custodian will set aside cash or high grade liquid
debt securities equal to the amount of the commitment in a separate account.
Normally, the custodian will set aside securities to satisfy the purchase
commitment, and in such a case, the Fund may be required subsequently to place
additional assets in the separate account in order to assure that the value of
the account remains equal to the amount of the Fund's commitment. It may be
expected that the Fund's net assets will fluctuate to a greater degree when it
sets aside securities to cover such purchase commitments than when it sets aside
cash. In addition, because the Fund will set aside cash or high grade liquid
debt securities to satisfy its purchase commitments in the manner described
above, its liquidity and the ability of Qualivest to manage it might be affected
in the event its commitments to purchase "when-issued" or "delayed-delivery"
securities ever exceeded 25% of the value of its assets. Under normal market
conditions, however, a Fund's commitments to purchase "when-issued" or "delayed-
delivery" securities will not exceed 25% of the value of its assets.
If the Fund sells a "when-issued" or "delayed-delivery" security before a
delivery, any gain would not be tax-exempt. When the Fund engages in "when-
issued" or "delayed-delivery" transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in the Fund
incurring a loss or missing the opportunity to obtain a price considered to be
advantageous.
Mortgage-Related Securities. Each Fund except the Optimized Fund and the
---------------------------
International Fund may, consistent with its investment objective and policies,
invest in mortgage-related securities issued or guaranteed by the U.S.
Government or its agencies and instrumentalities. In addition, these Funds may
invest in mortgage-related securities issued by nongovernmental entities;
provided, however, that to the extent a Fund purchases mortgage-related
securities from such issuers which may, solely for purposes of the 1940 Act, be
deemed to be investment companies, its investment in such securities will be
subject to the limitations on its investment in investment company securities.
Mortgage-related securities, for purposes of the Funds' Prospectuses and
this SAI, represent pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National Mortgage
Association ("GNMA") and government-related organizations such as the Federal
National Mortgage Association ("FNMA") and the
10
<PAGE>
Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernmental
issuers such as commercial banks, savings and loan institutions, mortgage
bankers and private mortgage insurance companies. Although certain mortgage-
related securities are guaranteed by a third party or otherwise similarly
secured, the market value of the security, which may fluctuate, is not so
secured. If a Fund purchases a mortgage-related security at a premium, that
portion may be lost if there is a decline in the market value of the security,
whether resulting from changes in interest rates or prepayments in the
underlying mortgage collateral. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment, thereby shortening the average life of the security and shortening
the period of time over which income at the higher rate is received. When
interest rates are rising, though, the rate of prepayment tends to decrease,
thereby lengthening the period of time over which income at the lower rate is
received. For these and other reasons, a mortgage-related security's average
maturity may be shortened or lengthened as a result of interest rate
fluctuations and, therefore, it is not possible to predict accurately the
security's return to the Funds. In addition, regular payments received in
respect of mortgage-related securities include both interest and principal. No
assurance can be given as to the return the Funds will receive when these
amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities issued by
the GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of FNMA and are not backed by or
entitled to the full faith and credit of the United States. FNMA is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to the timely payment of the principal and
interest by FNMA. Mortgage-related securities issued by the FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "Pcs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Bank
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to the timely payment
of interest, which is guaranteed by FHLMC. FHLMC guarantees either ultimate
collection or the timely payment of all principal payments on the underlying
mortgage loans. When FHLMC does not guarantee timely payment of principal,
FHLMC may remit the amount due on account of its guarantee of ultimate payment
of principal
11
<PAGE>
at any time after default on an underlying mortgage, but in no event later than
one year after it becomes payable.
Medium-Grade Debt Securities. As stated in the Prospectuses for the Large
----------------------------
Companies Value Fund, Large Companies Growth Fund, Small Companies Fund, Micro
Cap Fund, Income Equity Fund and each Income Fund, each of these Funds may
invest in debt securities which are within the fourth highest rating group
assigned by an NRSRO (e.g., including securities rated BBB by Standard & Poor's
----
Corporation ("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's")) or,
if not rated, or are of comparable quality as determined by Qualivest.
("Medium-Grade Securities").
As with other fixed-income securities, Medium-Grade Securities are subject
to credit risk and market risk. Market risk relates to changes in a security's
value as a result of changes in interest rates. Credit risk relates to the
ability of the issuer to make payments of principal and interest. Medium-Grade
Securities are considered by Moody's to have speculative characteristics.
Medium-Grade Securities are generally subject to greater credit risk than
comparable higher-rated securities because issuers are more vulnerable to
economic downturns, higher interest rates or adverse issuer-specific
developments. In addition, the prices of Medium-Grade Securities are generally
subject to greater market risk and therefore react more sharply to changes in
interest rates. The value and liquidity of Medium-Grade Securities may be
diminished by adverse publicity and investor perceptions.
Because certain Medium-Grade Securities are traded only in markets where
the number of potential purchasers and sellers, if any, is limited, the ability
of those Funds to sell such securities at their fair market value either to meet
redemption requests or to respond to changes in the financial markets may be
limited.
Particular types of Medium-Grade Securities may present special concerns.
The prices of payment-in-kind or zero-coupon securities may react more strongly
to changes in interest rates than the prices of other Medium-Grade Securities.
Some Medium-Grade Securities in which such Funds may invest may be subject to
redemption or call provisions that may limit increases in market value that
might otherwise result from lower interest rates while increasing the risk that
those Funds may be required to reinvest redemption or call proceeds during a
period of relatively low interest rates.
The credit ratings issued by NRSROs are subject to various limitations.
For example, while such ratings evaluate credit risk, they ordinarily do not
evaluate the market risk of Medium-Grade Securities. In certain circumstances,
the ratings may not reflect in a timely fashion adverse developments affecting
an issuer. For these reasons, Qualivest conducts its own independent credit
analysis of Medium-Grade Securities.
12
<PAGE>
Restricted Securities. "Section 4(2) securities," as described in the
---------------------
Prospectuses, are securities that are issued in reliance on the "private
placement" exemption from registration which is afforded by Section 4(2) of the
Securities Act of 1933 (the "1933 Act"). The Funds will not purchase Section
4(2) securities which have not been determined to be liquid in excess of 15%
(10% in the case of the Money Funds) of the net assets of each Fund. The Board
of Trustees has delegated to Qualivest the day-to-day authority to determine
whether a particular issue of Section 4(2) securities that are eligible for
resale under Rule 144A under the 1933 Act should be treated as liquid. Rule
144A provides a safe-harbor exemption from the registration requirements of the
1933 Act for resales to "qualified institutional buyers" as defined in Rule
144A. With the exception of registered broker-dealers, a qualified
institutional buyer must generally own and invest on a discretionary basis at
least $100 million in securities.
Qualivest may deem Section 4(2) securities liquid if it believes that,
based on the trading markets for such security, such security can be disposed of
within seven days in the ordinary course of business at approximately the amount
at which an Equity, Income or Money Fund has valued the security. In making
such determination, Qualivest generally considers any and all factors that it
deems relevant, which may include (i) the credit quality of the issuer; (ii) the
frequency of trades and quotes for the security; (iii) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; (iv) dealer undertakings to make a market in the security; and (v)
the nature of the security and the nature of market-place trades.
Treatment of Section 4(2) securities as liquid could have the effect of
decreasing the level of a Fund's liquidity to the extent that qualified
institutional buyers become, for a time, uninterested in purchasing these
securities.
Guaranteed Investment Contracts. When investing in guaranteed investment
-------------------------------
contracts ("GICs"), the Intermediate Bond Fund, the Bond Fund, and each of the
Money Funds make cash contributions to a deposit fund of an insurance company's
general account. The insurance company then credits to the deposit fund on a
monthly basis guaranteed interest. The GICs provide that this guaranteed
interest will not be less than a certain minimum rate. The insurance company
may assess periodic charges against a GIC for expense and service costs
allocable to it, and the charges will be deducted from the value of the deposit
fund. The Intermediate Bond Fund and the Bond Fund may invest in GICs of
insurance companies without regard to the ratings, if any, assigned to such
insurance companies' outstanding debt securities. The Money Funds may invest in
GICs issued by insurance companies whose outstanding debt securities are rated
in the first two rating categories by an NRSRO or, if not rated, that Qualivest
deems to be of comparable quality. Because a Fund may not receive the principal
amount of a GIC from the insurance company on seven days' notice or less, the
GIC is considered an illiquid investment, and, together with other instruments
held by the Fund which are deemed to be illiquid, will not exceed a Fund's
restriction on investment in illiquid securities. In determining average
portfolio maturity, GICs will be deemed to have a maturity equal to the period
of time remaining until the next readjustment of the guaranteed interest rate.
13
<PAGE>
Repurchase Agreements. Securities held by all of the Funds except the U.S.
---------------------
Treasury Fund may be subject to repurchase agreements. Under the terms of a
repurchase agreement, a Fund acquires securities from member banks of the
Federal Reserve System and broker-dealers that Qualivest deems creditworthy
under guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. If the seller were to default on its repurchase obligation or become
insolvent, the Fund holding such obligation could suffer a loss to the extent
that the proceeds from a sale of the underlying portfolio securities were less
than the repurchase price under the agreement. Securities subject to repurchase
agreements will be held by the Fund's custodian or another qualified custodian
or in the Federal Reserve/Treasury book-entry system.
Futures Contracts. As discussed in the Prospectuses of the Equity Funds
-----------------
and the Income Funds, each of these Funds may enter into futures contracts.
This investment technique is designed primarily to hedge against anticipated
future changes in market conditions or foreign exchange rates which otherwise
might adversely affect the value of securities which a Fund holds or intends to
purchase. For example, when interest rates are expected to rise or market
values of portfolio securities are expected to fall, a Fund can seek through the
sale of futures contracts to offset a decline in the value of its portfolio
securities. When interest rates are expected to fall or market values are
expected to rise, a Fund, through the purchase of such contracts, can attempt to
secure better rates or prices for the Fund than might later be available in the
market when it effects anticipated purchases.
The acquisition of put and call options on futures contracts will,
respectively, give a Fund the right (but not the obligation), for a specified
price, to sell or to purchase the underlying futures contract, upon exercise of
the option, at any time during the option period.
Futures transactions involve brokerage costs and require a Fund to
segregate liquid assets, such as cash, U.S. Government securities or other
liquid high grade debt obligations, to cover its obligation under such
contracts. A Fund may lose the expected benefit of futures transactions if
interest rates, securities prices or foreign exchange rates move in an
unanticipated manner. Such unanticipated changes may also result in poorer
overall performance than if the Equity or Income Fund had not entered into any
futures transactions. In addition, the value of a Fund's futures positions may
not prove to be perfectly or even highly correlated with the value of its
portfolio securities and foreign currencies, limiting its ability to hedge
effectively against interest rates, foreign exchange rates and/or market risk
and giving rise to additional risks. There is no assurance of liquidity in the
secondary market for purposes of closing out futures positions.
Forward Foreign Currency Exchange Contracts. The Large Companies Value,
-------------------------------------------
Large Companies Growth, Small Companies, Micro Cap, Income Equity and
International Funds may engage in foreign currency exchange transactions. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
("Term") from the date of the contract agreed upon by the parties, at a price
14
<PAGE>
set at the time of the contract. These contracts are traded directly between
currency traders (usually large commercial banks) and their customers.
No such Fund intends to enter into such forward contracts if it would have
more than 10% of the value of its total assets committed to such contracts on a
regular or continuous basis. A Fund also will not enter into such forward
contracts or maintain a net exposure in such contracts where such Fund would be
obligated to deliver an amount of foreign currency in excess of the value of
such Fund's securities or other assets denominated in that currency. Qualivest
believes that it is important to have the flexibility to enter into such forward
contracts when it determines that to do so is in the best interests of a Fund.
Each such Fund's custodian bank segregates cash or liquid high grade debt
securities in an amount not less than the value of the Fund's total assets
committed to forward foreign currency exchange contracts entered into for the
purchase of a foreign security. If the value of the securities segregated
declines, additional cash or securities are added so that the segregated amount
is not less than the amount of such Fund's commitments with respect to such
contracts. These Funds generally do not enter into a forward contract with a
Term longer than one year.
Foreign Currency Options. A foreign currency option provides the Large
------------------------
Companies Value, Large Companies Growth, Small Companies, Micro Cap, Income
Equity or International Fund, as the option buyer, with the right to buy or sell
a stated amount of foreign currency at the exercise price at a specified date or
during the option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the right,
but not the obligation, to sell the currency. The option seller (writer) is
obligated to fulfill the terms of the option sold if it is exercised. However,
either seller or buyer may close its position during the option period in the
secondary market for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely,
a put rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect a Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if a Fund has
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in the value
of the currency but instead the currency had depreciated in value between the
date of purchase and the settlement date, such Fund would not have to exercise
its call but could acquire in the spot market the amount of foreign currency
needed for settlement.
Foreign Currency Futures Transactions. As part of its financial futures
-------------------------------------
transactions, the Large Companies Value, Large Companies Growth, Small
Companies, Micro Cap, Income Equity and International Funds may use foreign
currency futures contracts and options on such futures contracts. Through the
purchase or sale of such contracts, a Fund may be able to achieve many
15
<PAGE>
of the same objectives as through forward foreign currency exchange contracts
more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and may be traded on boards of
trade and commodities exchanges or directly with a dealer which makes a market
in such contracts and options. It is anticipated that such contracts may
provide greater liquidity and lower cost than forward foreign currency exchange
contracts.
Regulatory Restrictions. As required by the Securities and Exchange
-----------------------
Commission, when purchasing or selling a futures contract or writing a put or
call option or entering into a forward foreign currency exchange purchase, a
Fund will maintain in a segregated account cash or liquid high grade debt
securities equal to the value of such contracts.
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being classified as a "commodity pool
operator," a Fund will not enter into a futures contract or purchase an option
thereon if immediately thereafter the initial margin deposits for futures
contracts held by such Fund plus premiums paid by it for open options on futures
would exceed 5% of such Fund's total assets. A Fund will not engage in
transactions in financial futures contracts or options thereon for speculation,
but only to attempt to hedge against changes in market conditions affecting the
values of securities which such Fund holds or intends to purchase. When futures
contracts or options thereon are purchased to protect against a price increase
on securities intended to be purchased later, it is anticipated that at least
25% of such intended purchases will be completed. When other futures contracts
or options thereon are purchased, the underlying value of such contracts will at
all times not exceed the sum of: (1) accrued profit on such contracts held by
the broker; (2) cash or high quality money market instruments set aside in an
identifiable manner; and (3) cash proceeds from investments due in 30 days.
Investment Restrictions
- -----------------------
Each Fund's investment objective is fundamental and may not be changed
without a vote of the holders of a majority of the Fund's outstanding Shares.
In addition, the following investment restrictions may be changed with respect
to a particular Fund only by a vote of a majority of the outstanding Shares of
that Fund (as defined under "ADDITIONAL INFORMATION -- Vote of a Majority of the
Outstanding Shares" in this SAI).
None of the Funds will:
1. Purchase any securities which would cause more than 25% of the value
of the Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that: (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies
16
<PAGE>
or instrumentalities, domestic bank certificates of deposit or bankers'
acceptances issued by United States branches of domestic banks (for the Money
Funds), and repurchase agreements secured by obligations of the U.S. Government
or its agencies or instrumentalities; (b) wholly owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; (c) a Parent
Fund may invest more than 25% of its total assets in investment companies, or
portfolios thereof, that are Underlying Funds of the Parent Fund; and (d)
utilities will be divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry;
2. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in such issuer, or the Fund would hold more than 10% of
the outstanding voting securities of the issuer, except that 25% or less of the
value of a Fund's total assets may be invested without regard to such
limitations. There is no limit to the percentage of assets that may be invested
in U.S. Treasury bills, notes, or other obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. In addition, there is no
limit to the percentage of assets that a Parent Fund may invest in any
investment company;
3. Borrow money or issue senior securities, except that a Fund may borrow
from banks or brokers, in amounts up to 10% of the value of its total assets at
the time of such borrowing. A Fund will not purchase securities while its
borrowings exceed 5% of its total assets;
4. Make loans, except that a Fund may purchase or hold debt instruments
and lend portfolio securities in accordance with its investment objective and
policies, make time deposits with financial institutions and enter into
repurchase agreements;
5. Underwrite the securities issued by other persons, except to the
extent that a Fund may be deemed to be an underwriter under certain securities
laws in the disposition of "restricted securities;"
6. Purchase or sell commodities or commodities contracts, except to the
extent disclosed in the current Prospectus of the Fund; and
7. Purchase or sell real estate (although investments in marketable
securities of companies engaged in such activities and securities secured by
real estate or interests therein, or in Underlying Funds investing in such
securities, are not prohibited by this restriction).
For purposes only of investment limitation number 1 above, such limitation
shall not apply to Municipal Securities, and industrial development bonds or
private activity bonds that are backed only by the assets and revenues of a
nongovernmental user shall not be deemed to be Municipal Securities. For
purposes of investment limitation number 2 above, a security is considered to be
17
<PAGE>
issued by the governmental entity (or entities) whose assets and revenues back
the security and, with respect to a private activity bond that is backed only by
the assets and revenues of a nongovernmental user, a security is considered to
be issued by such nongovernmental user.
Irrespective of investment restriction number 2 above and pursuant to Rule
2a-7 under the 1940 Act, the Money Market Fund and the U.S. Treasury Fund will,
with respect to 100% of its total assets, limit its investment in the securities
of any one issuer in the manner provided by such Rule.
The following additional investment restrictions are not fundamental
policies and therefore may be changed without the vote of a majority of the
outstanding Shares of a Fund. None of the Funds may:
1. Engage in any short sales (except for short sales "against the box" by
the Large Companies Value, Large Companies Growth, Small Companies, Micro Cap,
Income Equity, International and Optimized Funds);
2. Invest more than 10% of the Fund's total assets in the securities of
issuers which, together with any predecessors, have a record of less than three
years of continuous operation, except that this limitation shall not apply to a
Parent Fund's investment in other investment companies, or portfolios thereof,
that are Underlying Funds of the Parent Fund;
3. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, acquisition or reorganization, (b) to
the extent permitted by the 1940 Act or pursuant to any exemptions therefrom,
and (c) as consistent with the investment policies of a Parent Fund;
4. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust and the officers or directors of its investment adviser
and of its administrator, who each owns beneficially more than one-half of 1% of
the outstanding securities of such issuer, together own beneficially more than
5% of such securities, except that this limitation shall not apply if the issuer
of the securities is an Underlying Fund of a Parent Fund;
5. Mortgage or hypothecate the Fund's assets in excess of one-third of
the Fund's total assets;
6. Purchase participations or direct interests in oil, gas or other
mineral exploration or development programs (although investments by the Fund in
marketable securities of companies engaged in such activities, or in securities
of Underlying Funds investing in such companies, are not prohibited by this
restriction);
7. Purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases of portfolio securities and, for the Large
Companies Value, Large
18
<PAGE>
Companies Growth, Small Companies, Micro Cap, Income Equity, International,
Intermediate Bond, Bond and Tax-Free Bond Funds, except as may be necessary to
make margin payments in connection with foreign currency futures and other
derivative securities transactions; and
8. Purchase or otherwise acquire any securities if, as a result, more
than 15% (10% of the case of the Trust's Money Funds) of the Fund's net assets
would be invested in securities that are illiquid.
In addition, the Tax-Free Money Market Fund may not:
1. Acquire a put, if, immediately after such acquisition, over 5% of the
total amortized cost value of the Fund's assets would be subject to puts from
the same institution (except that (i) up to 25% of the value of the Fund's total
assets may be subject to puts without regard to such 5% limitation and (ii) the
5% limitation is inapplicable to puts that, by their terms, would be readily
exercisable in the event of a default in payment of principal or interest on the
underlying securities). For the purpose of this investment restriction and
investment restriction number 2 below, a put will be considered to be from the
party to whom the Fund will look for payment of the exercise price; and
2. Acquire a put that, by its terms, would be readily exercisable in the
event of a default in payment of principal and interest on the underlying
security or securities if, immediately after that acquisition, the amortized
cost value of the security or securities underlying that put, when aggregated
with the amortized cost value of any other securities issued or guaranteed by
the issuer of the put, would exceed 10% of the total amortized cost value of the
Fund's assets.
The Tax-Free Bond Fund may not:
1. Acquire a put, if, immediately after such acquisition, over 5% of the
total value of the Fund's assets would be subject to puts from the same
institution (except that (i) up to 25% of the value of the Fund's total assets
may be subject to puts without regard to such 5% limitation and (ii) the 5%
limitation is inapplicable to puts that, by their terms, would be readily
exercisable in the event of a default in payment of principal or interest on the
underlying securities). For the purpose of this investment restriction and
investment restriction number 2 below, a put will be considered to be from the
party to whom the Fund will look for payment of the exercise price; and
2. Acquire a put that, by its terms, would be readily exercisable in the
event of a default in payment of principal and interest on the underlying
security or securities if, immediately after that acquisition, the value of the
security or securities underlying that put, when aggregated with the value of
any other securities issued or guaranteed by the issuer of the put, would exceed
10% of the total value of the Fund's assets.
A Parent Fund may not:
19
<PAGE>
1. Redeem Shares of any Underlying Fund representing more than 3% of such
Underlying Fund's total assets during any one-month period, except as necessary
to meet redemption requests of the Parent Fund's Shareholders.
If any percentage restriction described above is satisfied at the time of
purchase, a later increase or decrease in such percentage resulting from a
change in net asset value will not constitute a violation of such restriction.
However, should a change in net asset value or other external events cause a
Fund's investments in illiquid securities to exceed the limitation set forth in
such Fund's Prospectus, that Fund will act to cause the aggregate amount of
illiquid securities to come within such limit as soon as reasonably practicable.
In such an event, however, that Fund would not be required to liquidate any
portfolio securities where the Fund would suffer a loss on the sale of such
securities.
In accordance with the terms of an order issued by the Securities and
Exchange Commission, each Parent Fund may (i) own more than 3% of the total
outstanding Shares of an Underlying Fund, (ii) invest more than 5% of its
assets in any one Underlying Fund, and (iii) invest more than 10% of its
assets in the Underlying Funds as a group. Due to the investment policies of
the Parent Funds, each Parent Fund will concentrate more than 25% of its total
assets in the investment company industry. However, as described above, no
Underlying Fund in which the Parent Funds invest will concentrate more than
25% of its total assets in any one industry.
Portfolio Turnover
- ------------------
Changes may be made in a Fund's portfolio consistent with the investment
objective and policies of the Fund whenever such changes are believed to be in
the best interests of the Fund and its Shareholders. The portfolio turnover
rates for all of the Funds may vary greatly from year to year as well as within
a particular year, and may be affected by cash requirements for redemptions of
Shares and by requirements which enable the Funds to receive certain favorable
tax treatments. High portfolio turnover rates will generally result in higher
transaction costs to a Fund, including brokerage commissions, and may result in
additional tax consequences to a Fund's Shareholders.
The portfolio turnover rate of each Parent Fund is expected to be low, as
such Fund will purchase or sell Shares of the Underlying Funds to (i)
accommodate purchases and sales of the Parent Fund's Shares, (ii) change the
percentage of its assets invested in each Underlying Fund in which it invests in
response to market conditions, and (iii) maintain or modify the allocation of
the Parent Fund's assets between Underlying Funds within the percentage limits
described in the Parent Fund's Prospectus. The portfolio turnover rate for each
of the Large Companies Growth and the Micro Cap Funds is not expected to exceed
100%. It is anticipated that the annual portfolio turnover rate for an
Underlying Fund normally will not exceed the amount stated in such Fund's
Prospectus, although the portfolio turnover rate for each of the Bond,
International, and Optimized Funds is expected to increase as each of these
Funds expands its
20
<PAGE>
investment activities following its recent commencement of operations.
The portfolio turnover rate for each of the Funds is calculated by dividing
the lesser of a Fund's purchases or sales of portfolio securities for the year
by the monthly average value of the securities. The Securities and Exchange
Commission requires that the calculation exclude all securities whose remaining
maturities at the time of acquisition are one year or less.
NET ASSET VALUE
As indicated in the Prospectuses, the net asset value of each Fund is
determined and the Shares of each Fund are priced as of the Valuation Time(s) on
each Business Day of the Trust. A "Business Day" is a day on which the New York
Stock Exchange ("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, Veterans Day, Thanksgiving and
Christmas.
Valuation of the Trust's Money Funds
- ------------------------------------
The Money Funds have elected to use the amortized cost method of valuation
pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an instrument
at its cost initially and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price one of these Funds would receive if it sold the instrument. The
value of securities in these Funds can be expected to vary inversely with
changes in prevailing interest rates.
Pursuant to Rule 2a-7, the Money Funds will maintain a dollar-weighted
average maturity appropriate for each Fund's objective of maintaining a stable
net asset value per Share, provided that no Money Fund will purchase any
security with a remaining maturity of more than 397 days (thirteen months)
(securities subject to repurchase agreements may bear longer maturities) nor
maintain a dollar-weighted average maturity which exceeds 90 days. The Board of
Trustees has also undertaken to establish procedures reasonably designed, taking
into account current market conditions and the investment objective of each of
these Funds, to stabilize the net asset value per Share of each Money Fund for
purposes of sales and redemptions at $1.00. These procedures include review by
the Trustees, at such intervals as they deem appropriate, to determine the
extent, if any, to which the net asset value per Share of each Fund calculated
by using available market quotations deviates from $1.00 per Share. In the
event such deviation exceeds one-half of one percent, Rule 2a-7 requires that
the Board of Trustees promptly consider what action, if any, should be
initiated. If the Trustees believe that the extent of any deviation from a
Money
21
<PAGE>
Fund's $1.00 amortized cost price per Share may result in material dilution or
other unfair results to new or existing investors, they will take such steps as
they consider appropriate to eliminate or reduce, to the extent reasonably
practicable, any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity, shortening the dollar weighted
average maturity, withholding or reducing dividends, reducing the number of a
Money Fund's outstanding Shares without monetary consideration, or utilizing a
net asset value per Share determined by using available market quotations.
Valuation of the Other Funds
- ----------------------------
Portfolio securities, the principal market for which is a securities
exchange, will be valued at the closing sales price on that exchange on the day
of computation, or, if there have been no sales during such day, at the latest
bid quotation. Portfolio securities, the principal market for which is not a
securities exchange, will be valued at their latest bid quotation in such
principal market. Foreign securities are valued based on quotations from the
primary market in which they are traded and are translated from the local
currency into U.S. dollars using current exchange rates. If no such bid price
is available, then securities will be valued in good faith at their respective
fair market values using methods determined by or under the supervision of the
Board of Trustees. Portfolio securities with a remaining maturity of 60 days or
less will be valued either at amortized cost or original cost plus accrued
interest, which approximates current value.
All other assets and securities, including securities for which market
quotations are not readily available, will be valued at their fair market value
as determined in good faith under the general supervision of the Board of
Trustees.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each of the classes of Shares of the Funds is sold on a continuous basis by
the Distributor, and the Distributor has agreed to use appropriate efforts to
solicit all purchase orders. In addition to purchasing Shares directly from the
Distributor, Shares may be purchased through a broker-dealer who has established
a dealer agreement with the Distributor and certain other industry professionals
(collectively, "Entities") acting on behalf of customers for investment of funds
that are held by in a fiduciary, agency, custodial or similar capacity. Shares
of a Fund also may be purchased by other Funds of the Trust or by other
investment portfolios established by the Trust.
As stated in the relevant Prospectuses, the public offering price of Class
A Shares of the Money Funds is their net asset value per Share, which they will
seek to maintain at $1.00. The public offering price of Class A Shares of each
of the other Funds is their net asset value per Share next computed after the
sale plus a sales charge which varies based upon the quantity purchased. The
public offering price of such Class A Shares of the Trust is calculated by
dividing net asset value by the difference (expressed as a decimal) between 100%
and the sales charge percentage of offering price applicable to the purchase.
The offering price is rounded to two
22
<PAGE>
decimal places each time a computation is made. The sales charge scale set
forth in a Fund's Prospectus applies to purchases of Class A Shares of such a
Fund by an investor.
The public offering price of Class C Shares of each Parent, Equity and
Income Fund is their net asset value per Share, although Class C Shares redeemed
within one year of their purchase may be subject to a contingent deferred sales
charge of 1.00%. Purchasers of Class C Shares will have more of their initial
purchase price invested. Any positive investment return on this additional
invested amount would partially or wholly offset the expected higher annual
expenses borne by Class C Shares. Because the Trust's future returns cannot be
predicted, there can be no assurance that this will be the case. Investors in
Class C Shares would, however, own Shares that are subject to higher annual
expenses and, for Shares owned for less than one year, such Shares would be
subject to a contingent deferred sales charge of 1.00% upon redemption.
The public offering price of Class Q Shares of each Money Fund is their net
asset value per Share, which each Money Fund seeks to maintain at $1.00.
Class Y 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 United States National Bank
of Oregon ("U.S. Bank"), one of its affiliates, or other financial institutions.
With respect to Class Y 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 Y Shares of the Funds will be recorded and reflected in the
account statements provided to Customers. U.S. Bank or its affiliates may
exercise voting authority for those Class Y Shares for which it has been granted
authority by the Customer. Confirmation of purchases and redemptions of Class Y
Shares of the Funds by U.S. Bank or its affiliates on behalf of a Customer may
be obtained from U.S. Bank or the affiliate.
Depending upon the terms of a particular Customer account, Customers may be
charged account fees for services provided in connection with investment in a
Fund. Customers are urged to request information concerning these services and
charges.
Matters Affecting Redemption
- ----------------------------
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the NYSE is restricted
by applicable rules and regulations of the Securities and Exchange Commission,
(b) the NYSE is closed for other than customary weekend and holiday closings,
(c) the Securities and Exchange Commission has by order permitted such
suspension, or (d) an emergency exists as a result of which (i) disposal by the
Trust of securities owned by it is not reasonably practical or (ii) it is not
reasonably practical for the Trust to determine the fair market value of its net
assets.
23
<PAGE>
The Money Funds may redeem Shares involuntarily if redemption appears
appropriate in light of the Trust's responsibilities under the 1940 Act. See
"NET ASSET VALUE - Valuation of the Money Funds" in this SAI.
MANAGEMENT OF THE TRUST
Trustees and Officers
- ---------------------
Overall responsibility for management of the Trust rests with its Trustees,
who are elected by the Shareholders of the Trust. The Trustees elect the
officers of the Trust to supervise actively its day-to-day operations. George
R. Landreth, Stephen G. Mintos, Mark A. Dillon, J. David Huber, Mary Anne
Houlahan, Walter B. Grimm, Irimga McKay, Gregory T. Maddox and Robert L. Tuch
are the officers of the Trust. Mr. Landreth also serves as Trustee.
The names of the Trustees, their addresses and principal occupations during
the past five years are set forth below:
Principal Occupation
Name and Address During Past 5 Years
---------------- -------------------
George R. Landreth* Director of Client Services;
3435 Stelzer Road BISYS Fund Services (12/92-
Columbus, OH 43219-3035 present); Vice President, PNC
Age: 53 Financial (7/91-12/92); Senior
Vice President, The Central
Trust Company (10/84-7/91).
David F. Jones Principal, The Harvey-Jones
P.O. Box 23969 Company (real estate
Federal Way, WA 98023 management)(7/93-present);
Age: 55 Chief Executive Officer,
Pacific Nuclear Systems, Inc.
(nuclear engineering)(5/83-
9/92).
Raymond H. Lung* Retired (1/91-present).
16199 N.W. Canterwood Way
Portland, OR 97229
Age: 68
John W. Judy President, American
P. O. Box 4166 International Forest Products,
Portland, OR 97208 Inc. (7/89-present).
Age: 57
24
<PAGE>
David B. Frohnmayer President, University of
Johnson Hall Oregon (7/94-present); Dean,
University of Oregon University of Oregon Law
Eugene, OR 97403 Center (1/92-7/94); Attorney
Age: 55 General, State of Oregon
(1/81-12/91).
- ------------------
* Mr. Landreth and Mr. Lung are "interested persons" of the Trust as that
term is defined in the 1940 Act.
Remuneration of Trustees
- ------------------------
The Trust pays each Trustee an annual fee of $15,000, plus $1,000 for each
meeting of the Board of Trustees attended and reasonable out-of-pocket expenses.
For the fiscal year ended July 31, 1995, the Trust paid the following
compensation to all current Trustees of the Trust:
<TABLE><CAPTION>
Pension or Retirement Estimated Annual
Aggregate Benefits Accrued as Benefits Upon Total
Compensation Fund Expenses Retirement Compensation
------------ -------------------- ---------------- ------------
<S> <C> <C> <C> <C>
George R. Landreth $ 0 $ 0 $ 0 $ 0
David F. Jones $18,000 $ 0 $ 0 $18,000
John W. Judy $18,000 $ 0 $ 0 $18,000
Raymond H. Lung $18,000 $ 0 $ 0 $18,000
David B. Frohnmayer $14,250 $ 0 $ 0 $14,250
</TABLE>
The officers of the Trust, their addresses, and principal occupations
during the past five years are as follows:
<TABLE><CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
- ---------------- ---------------- --------------------
<S> <C> <C>
George R. Landreth President, Chief Director of Client Services,
3435 Stelzer Road Executive Officer, BISYS Fund Services
Columbus, OH 43219-3035 and Trustee (12/92-present); Vice
</TABLE>
25
<PAGE>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
- ---------------- ---------------- --------------------
Age: 53 President, PNC Financial
(7/91-12/92); Senior Vice
President, The Central
Trust Co. (10/84-7/91).
Stephen G. Mintos Vice President Executive Vice President,
3435 Stelzer Road BISYS Fund Services
Columbus, OH 43219-3035 (1/87-present).
Age: 41
Mark A. Dillon Vice President Employee of BISYS Fund
3435 Stelzer Road Services (12/86-present).
Columbus, OH 43219-3035
Age: 33
J. David Huber Vice President Employee of BISYS Fund
3435 Stelzer Road Services (6/87-present).
Columbus, OH 43219-3035
Age: 49
Mary Anne Houlahan Vice President Senior Vice President and
515 South Figueroa Street Director of Distribution
Suite 335 Services, BISYS Fund
Los Angeles, CA 90071 Services (1/93-present);
Age: 41 Senior Vice President-
Marketing, Great Western
Investment Management
(6/85-12/92).
Walter B. Grimm Vice President Employee of BISYS Fund
3435 Stelzer Road Services (6/92-present);
Columbus, OH 43219-3035 President, Leigh
Age: 50 Investments (investment
firm) (7/87-6/92).
Irimga McKay Vice President First Vice President,
Columbia Square, Suite 500 BISYS Fund Services
1230 Columbia Street (11/88 to present).
San Diego, CA 92101
Age: 35
26
<PAGE>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
- ---------------- ---------------- --------------------
Gregory T. Maddox Treasurer, Principal Employee of BISYS Fund
Columbia Squire, Suite 500 Financial and Account- Services (4/91-present).
1230 Columbia Street ing Officer, and Secretary
San Diego, CA 92101
Age: 27
Robert L. Tuch Assistant Secretary Employee of BISYS Fund
3435 Stelzer Road Services (6/91-present);
Columbus, OH 43219-3035 Vice President and
Age: 44 Associate General
Counsel, National
Securities and Research
Corp. (7/90-6/91).
The officers of the Trust receive no compensation directly from the Trust
for performing the duties of their offices. BISYS receives fees from the Trust
for acting as Administrator and for providing certain fund accounting services,
may retain all or a portion of any sales charge on the Shares and may receive
fees under the Distribution and Shareholder Service Plans described below.
BISYS Fund Services Ohio, Inc. receives fees from the Trust for acting as
transfer agent.
Investment Adviser
- ------------------
Subject to the general supervision of the Trust's Board of Trustees and in
accordance with the Funds' investment objectives, policies and restrictions,
investment advisory services are provided to the Funds by Qualivest Capital
Management, Inc., 111 S.W. Fifth Avenue, Portland, Oregon 97204, pursuant to an
Investment Advisory Agreement dated July 29, 1994 and supplemented effective May
1, 1995 and April 10, 1996.
Qualivest is a wholly owned subsidiary of U.S. Bank, which in turn is a
wholly owned subsidiary of U.S. Bancorp, a publicly held bank holding company.
John H. Coulter, a Short-Term Investments Manager at Qualivest, has primary
responsibility for management of the Money Market and U.S. Treasury Funds. Mr.
Coulter has twenty-nine years of investment management experience and has been
employed by Qualivest since 1965. He has received a Bachelor of Science degree
in Business Administration from Oregon State University.
Under the Investment Advisory Agreement, Qualivest has agreed to provide,
either directly or through one or more subadvisers, investment advisory services
for each of the Funds as described in their respective Prospectuses. For the
services provided and expenses assumed pursuant to the Investment Advisory
Agreement, each of the Funds
27
<PAGE>
pays Qualivest a fee, computed daily and paid monthly, at an annual rate as
disclosed in each Prospectus calculated as a percentage of the average daily net
assets of that Fund. Each Parent Fund, as a Shareholder in an Underlying Fund,
also indirectly bears its proportionate share of any investment advisory fees
paid by the Underlying Fund. For the fiscal period ended July 31, 1995, the
Equity, Income and Money Funds paid Qualivest the following in advisory
fees: Large Companies Value Fund - $185,314, Small Companies
Fund - $499,916, International Fund - $17,933, Optimized Fund - $104,513,
Intermediate Bond Fund - $244,351, Bond Fund - $72,657, U.S. Treasury
Fund - $0, Money Market Fund - $262,916 and Tax-Free Money Market Fund - $0.
Unless sooner terminated, the Investment Advisory Agreement continues in
effect as to a particular Fund until July 29, 1996, and thereafter for
successive one-year periods ending July 29 of each year if such continuance is
approved at least annually by the Board of Trustees or by vote of a majority of
the outstanding Shares of such Fund and a majority of the Trustees who are not
parties to the Investment Advisory Agreement or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreement by votes cast
in person at a meeting called for such purpose. The Investment Advisory
Agreement is terminable as to a particular Fund at any time on 60 days' written
notice without penalty by the Trustees, by vote of a majority of the outstanding
Shares of that Fund, or by Qualivest. Such Agreement also terminates
automatically in the event of any assignment, as defined in the 1940 Act.
The Investment Advisory Agreement provides that Qualivest shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of its duties, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of Qualivest or any sub-investment
advisers in the performance of their duties, or from reckless disregard of their
duties and obligations thereunder.
From time to time, advertisements, supplemental sales literature, and
information furnished to present or prospective Shareholders of the Funds may
include descriptions of Qualivest including, but not limited to, (i)
descriptions of Qualivest's operations; (ii) descriptions of certain personnel
and their functions; and (iii) statistics and rankings related to Qualivest's
operations.
Portfolio Transactions
- ----------------------
With respect to all Funds of the Trust, Qualivest determines, subject to
the general supervision of the Board of Trustees and in accordance with each
Fund's investment objective, policies and restrictions, which securities are to
be purchased and sold by a Fund, and which brokers are to be eligible to execute
an Equity, Income or Money Fund's portfolio transactions.
Purchases and sales of portfolio securities which are debt securities
usually are principal transactions in which portfolio securities are normally
purchased directly from the issuer or from
28
<PAGE>
an underwriter or market maker for the securities. Purchases from underwriters
of portfolio securities generally include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
may include the spread between the bid and asked price. Transactions on stock
exchanges involve the payment of negotiated brokerage commissions. Transactions
in the over-the-counter market are generally principal transactions with
dealers. With respect to the over-the-counter market, the Trust, where
possible, will deal directly with dealers who make a market in the securities
involved except in those circumstances where better price and execution are
available elsewhere.
Allocation of transactions, including their frequency, to various brokers
and dealers is determined by Qualivest in its best judgment and in a manner
deemed fair and reasonable to Shareholders. In selecting a broker, Qualivest
evaluates a wide range of criteria, including the broker's commission rate and
execution capability, the broker's positioning and distribution capabilities,
back office efficiency, ability to handle difficult trades, financial stability,
reputation, prior performance, sale of Fund Shares, and research. The primary
consideration is the broker's ability to provide prompt execution of orders in
an effective manner at the most favorable price for the security. Subject to
this consideration, brokers and dealers who provide supplemental investment
research to Qualivest may receive orders for transactions on behalf of the
Trust. Research may include brokers' analyses of specific securities,
performance and technical statistics, and information databases. It may also
include maintenance research, which is the information that keeps Qualivest
informed concerning overall economic, market, political and legal trends. Under
some circumstances, Qualivest's evaluation of research and other broker
selection criteria may result in one or a few brokers executing a substantial
percentage of an Equity, Income or Money Fund's trades. This might occur, for
example, where a broker can provide best execution at a cost that is reasonable
in relation to its services and the broker offers unique or superior research
facilities, special knowledge or expertise in a Fund's relevant markets, or
access to proprietary information about companies, like those included in the
EAFE Index, that are a majority of a Fund's investments.
Research information so received is in addition to and not in lieu of
services required to be performed by Qualivest and does not reduce the fees
payable to Qualivest by the Trust. Such information may be useful to Qualivest
in serving both the Trust and other clients and, conversely, supplemental
information obtained by the placement of business of other clients may be useful
in carrying out its obligations to the Trust. While Qualivest generally seeks
competitive commissions, the Trust may not necessarily pay the lowest commission
available on each brokerage transaction for reasons discussed above.
Some of Qualivest's other clients have investment objectives similar to
those of the Funds. Qualivest may recommend or purchase and sell the same
securities on behalf of both the Funds and its other clients. When a purchase
or sale of the same security is made at substantially the same time on behalf of
an Equity, Income or Money Fund and another Fund, portfolio, investment company
or account, the transaction will be averaged as to price and available
investments will be allocated as to amount in a manner which Qualivest believes
to be equitable to the Fund(s) and
29
<PAGE>
such other portfolio, investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by a Fund
or the size of the position obtained by a Fund. To the extent permitted by law,
Qualivest may aggregate the securities to be sold or purchased for an Equity,
Income or Money Fund with those to be sold or purchased for the other Funds or
for other portfolio, investment companies or accounts in order to obtain best
execution. As provided by the Investment Advisory Agreement, in making
investment recommendations for the Trust, Qualivest will not inquire or take
into consideration whether an issuer of securities proposed for purchase or sale
by the Trust is a customer of Qualivest, its parent or its subsidiaries or
affiliates and, in dealing with its customers, Qualivest, its parent,
subsidiaries, and affiliates will not inquire or take into consideration whether
securities of such customers are held by the Trust.
For the fiscal period ended July 31, 1995, the Equity Funds paid the
following in brokerage commissions: Large Companies Value Fund - $139,373,
Small Companies Fund - $251,933, International Fund - $182,317 and Optimized
Fund - $74,929. Of this amount, none was paid to any brokers that are
affiliated with the Trust. In addition, for the fiscal period ended July 31,
1995, the following Funds paid the indicated amounts to brokers from which
Qualivest received research services: Large Companies Value Fund - $43,422.72,
and Small Companies Fund - $122,469.00.
Glass-Steagall Act
- ------------------
In 1971, the United States Supreme Court held that the federal statute
commonly referred to as the "Glass-Steagall Act" prohibits a national bank from
operating a mutual fund for the collective investment of managing agency
accounts. Subsequently, the Board of Governors of the Federal Reserve System
(the "Board") issued a regulation and interpretation to the effect that the
Glass-Steagall Act and such decision: (a) forbid a bank holding company
registered under the Federal Bank Holding Company Act of 1956 (the "Holding
Company Act") or any non-bank affiliate thereof from sponsoring, organizing, or
controlling a registered, open-end investment company continuously engaged in
the issuance of its shares, but (b) do not prohibit such a holding company or
affiliate from acting as investment adviser, transfer agent, and custodian to
such an investment company. In 1981, the United States Supreme Court determined
that the Board did not exceed its authority under the Holding Company Act when
it adopted its regulation and interpretation authorizing bank holding companies
and their nonbank affiliates to act as investment advisers to registered
closed-end investment companies. The Supreme Court also stated that if a
national bank complied with the restrictions imposed by the Board in its
regulation and interpretation authorizing bank holding companies and their non--
bank affiliates to act as investment advisers to investment companies, a
national bank performing investment advisory services for an investment company
would not violate the Glass-Steagall Act.
Qualivest believes that it possesses the legal authority to perform the
services for the Funds contemplated by the Prospectuses, this SAI and the
Investment Advisory Agreement without violation of applicable statutes and
regulations. Counsel has pointed out, however, that there is
30
<PAGE>
presently no controlling authority regarding the performance of the combination
of investment advisory and shareholder servicing activities by national banks
and their subsidiaries. Moreover, such counsel has advised that changes in
federal banking laws and regulations related to the permissible activities of
national banks, subsidiaries of national banks, and national banks and their
subsidiaries that are affiliates of a bank holding company, as well as further
judicial or administrative decisions on interpretations of present and future
statutes and regulations, could prevent Qualivest from continuing to serve as
investment adviser to the Funds or could restrict the services which Qualivest
is permitted to perform for the Funds. In addition, such changes, decisions or
interpretations could prevent Qualivest's national bank affiliates from
performing shareholder servicing activities or from receiving compensation
therefor or could restrict the types of services such entities are permitted to
provide and the amount of compensation they are permitted to receive for such
services. Depending upon the nature of any changes in the services which could
be provided by Qualivest, the Board of Trustees would review the Trust's
relationship with Qualivest and consider taking all action necessary in the
circumstances.
Should future legislative, judicial, or administrative action prohibit or
restrict the proposed activities of Qualivest and/or U.S. Bank's affiliated
banks in connection with Customer purchases of Shares of the Trust, those banks
might be required to alter materially or discontinue the services offered by
them to Customers. It is not anticipated, however, that any change in the
Trust's method of operations would affect its daily net asset value per Share or
result in financial losses to any Customer.
Administrator
- -------------
BISYS serves as general manager and administrator to the Trust pursuant to
the Management and Administration Agreement dated July 29, 1994 and supplemented
effective May 1, 1995 and April 10, 1996 (the "Administration Agreement").
The Administrator assists in supervising all operations of each Fund (other than
those performed by Qualivest under the Investment Advisory Agreement, by U.S.
Bank and The Bank of New York under the Custody Agreements and by BISYS Fund
Services Ohio, Inc. under the Transfer Agency Agreement). The Administrator is
a broker-dealer registered with the Securities and Exchange Commission, and is a
member of the National Association of Securities Dealers, Inc. The
Administrator provides financial services to institutional clients.
Under the Administration Agreement, the Administrator has agreed to
maintain office facilities for the Trust; furnish statistical and research data,
clerical and certain bookkeeping services and stationery and office supplies;
prepare the periodic reports to the Securities and Exchange Commission on Form
N-SAR or any replacement forms therefor; compile data for, prepare for execution
by the Funds and file certain federal and state tax returns and required tax
filings; prepare compliance filings pursuant to state securities laws with the
advice of the Trust's counsel; keep and maintain the financial accounts and
records of the Funds, including calculation of daily expense accruals; in the
case of the Parent Funds, bear the costs of organizing these Funds and of
preparing and printing prospectuses and delivering prospectuses to current
Shareholders; in the case of the Money Funds, determine the actual variance
from $1.00 of a Money Fund's net asset value per Share; and generally assist
in all aspects of the
31
<PAGE>
Trust's operations other than those performed by Qualivest under the Investment
Advisory Agreement, by U.S. Bank and The Bank of New York under the Custody
Agreements and by BISYS Fund Services Ohio, Inc. under the Transfer Agency
Agreement. Under the Administration Agreement, the Administrator may delegate
all or any part of its responsibilities thereunder.
The Administrator receives a fee from each Fund for its services as
Administrator and expenses assumed pursuant to the Administration Agreement,
calculated daily and paid periodically. This fee is equal to 0.13% of each
Equity, Income and Money Fund's average daily net assets, and 0.07% of each
Parent Fund's average daily net assets, or such other fee as may from time to
time be agreed upon by the Trust and the Administrator. The Administrator may
voluntarily reduce all or a portion of its fee with respect to any Fund in order
to increase the net income of one or more of the Funds available for
distribution as dividends.
Unless sooner terminated as provided therein, the Administration Agreement
will continue in effect until July 29, 1996. The Administration Agreement
thereafter shall be renewed automatically for successive two-year terms, unless
written notice not to renew is given by the non-renewing party to the other
party at least 60 days prior to the expiration of the then-current term. The
Administration Agreement is terminable with respect to a particular Fund only
upon mutual agreement of the parties to the Administration Agreement and for
cause (as defined in the Administration Agreement) by the party alleging cause,
on no less than 60 days' written notice by the Board of Trustees or by the
Administrator.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or from the reckless disregard by
the Administrator of its obligations and duties thereunder.
Expenses
- --------
If total expenses borne by any of the Funds in any fiscal year exceed
expense limitations imposed by applicable state securities regulations,
Qualivest and the Administrator will reimburse that Fund by the amount of such
excess in proportion to their respective fees. As of the date of this SAI, the
most restrictive expense limitation applicable to the Funds limits each Fund's
aggregate annual expenses, including management and advisory fees but excluding
interest, taxes, brokerage commissions, and certain other expenses, to 2 1/2% of
the first $30 million of a Fund's average net assets, 2% of the next $70 million
of a Fund's average net assets, and 1 1/2% of a Fund's remaining average net
assets. Any expense reimbursements will be estimated daily and reconciled and
paid on a monthly basis. Fees imposed upon customer accounts by U.S. Bank or
its affiliated banks for cash management services are not included within Trust
expenses for purposes of any such expense limitation.
32
<PAGE>
Distributor
- -----------
BISYS serves as distributor to the Trust pursuant to the Distribution
Agreement dated July 29, 1995 (the "Distribution Agreement"). Unless otherwise
terminated, the Distribution Agreement will remain in effect until July 29,
1996, and thereafter continues for successive one-year periods ending July 29 of
each year if approved at least annually (i) by the Board of Trustees or by the
vote of a majority of the outstanding Shares of the Trust, and (ii) by the vote
of a majority of the Trustees who are not parties to the Distribution Agreement
or interested persons (as defined in the 1940 Act) of any party to the
Distribution Agreement, cast in person at a meeting called for the purpose of
voting on such approval. The Distribution Agreement may be terminated in the
event of any assignment, as defined in the 1940 Act.
As described in the respective Funds' Prospectuses, the Trust has adopted
Distribution and Shareholder Service Plans with respect to Class A Shares of all
Funds (the "Class A Plans"), Distribution and Shareholder Service Plans with
respect to Class C Shares of the Parent Funds, the Equity Funds and the Income
Funds (the "Class C Plans") and Distribution and Shareholder Service Plans with
respect to Class Q Shares of the Money Funds (the "Class Q Plans") (the Class A
Plans, Class C Plans and Class Q Plans together are hereinafter referred to as
the "Plans") pursuant to Rule 12b-1 under the 1940 Act under which the Funds are
authorized to pay BISYS for payments it makes to banks, including U.S. Bank,
other institutions and broker-dealers, and for expenses BISYS and any of its
affiliates or subsidiaries incur (with all of the foregoing organizations being
referred to as "Participating Organizations") for providing administration,
distribution or shareholder service assistance. Payments to such Participating
Organizations may be made pursuant to agreements entered into with BISYS or with
the Trust. The Class A Plans authorize a Fund to make payments to BISYS in an
amount not in excess, on an annual basis, of 0.25% (0.40% for the Money Funds)
of the average daily net asset value of the Class A Shares of that Fund. As
required by Rule 12b-1, the Class A Plans were approved by the holders of the
Class A Shares and by the Board of Trustees, including a majority of the
Trustees who are not interested persons of the Funds and who have no direct or
indirect financial interest in the operation of those Plans (the "Independent
Trustees"). The Class C Plans authorize a Fund to make payments to BISYS in an
amount not in excess, on an annual basis, of 1.00% of the average daily net
asset value of the Class C Shares of that Fund. Over time, the expense of the
annual Rule 12b-1 fee on the Class C Shares may equal or exceed the initial
sales charge and annual Rule 12b-1 fee applicable to Class A Shares. For
example, if net asset value remains constant, the aggregate Rule 12b-1 fees with
respect to Class C Shares of the Parent Funds and the Equity Funds would equal
or exceed the initial sales charge and aggregate Rule 12b-1 fees of Class A
Shares approximately six years after purchase, and Rule 12b-1 fees with respect
to Class C Shares of the Income Funds would equal or exceed the initial sales
charge and aggregate Rule 12b-1 fees of Class A Shares approximately four and
two-third years after purchase. This example assumes that the initial purchase
of
33
<PAGE>
Class A Shares would be subject to the maximum initial sales charge. As
required by Rule 12b-1, the Class C Plans have been approved by the Board of
Trustees, including a majority of the Independent Trustees, and the Class C
Shareholders of each Fund. The Class Q Plans authorize a Money Fund to make
payments to BISYS in an amount not in excess, on an annual basis, of 0.25% of
the average daily net asset value of the Class Q Shares of each Money Fund. As
required by Rule 12b-1, the Class Q Plans have been approved by the Board of
Trustees, including a majority of the Independent Trustees, and the Class Q
Shareholders of each Money Fund.
The Shareholder and distribution services provided by Participating
Organizations may include promoting the purchase of Shares of a Fund by their
customers; processing purchase, exchange, and redemption requests from customers
and placing orders with the Distributor or the Transfer Agent; processing
dividend and distribution payments from a Fund on behalf of customers; providing
information periodically to customers, including information showing their
positions in Shares; providing sub-accounting with respect to Shares
beneficially owned by customers or the information necessary for sub-accounting;
responding to inquiries from customers concerning their investment in Shares;
arranging for bank wires; and providing other similar services as may be
reasonably requested. A portion of this distribution fee, up to 0.25% of the
average daily net assets of each class of Shares, may be paid to the Distributor
and Participating Organizations as a "service fee," as defined in the rules of
the National Association of Securities Dealers, Inc. for personal service and
maintenance of Shareholder accounts.
The Trust understands that Participating Organizations may charge fees to
their customers who are the owners of Class A Shares for additional services
provided in connection with their customer accounts. These fees would be in
addition to any amounts which may be received by a Participating Organization
under its Rule 12b-1 Agreement with BISYS. Customers of Participating
Organizations should read the Prospectus and SAI in light of the terms governing
their accounts with their Participating Organizations.
Conflict of interest restrictions may apply to the receipt by
Participating Organizations of compensation from the Trust in connection with
the investment of fiduciary assets in Shares. Institutions, including banks
regulated by the Comptroller of the Currency, the Federal Reserve Board, or the
Federal Deposit Insurance Corporation, and investment advisers and other money
managers subject to the jurisdiction of the Securities and Exchange Commission,
the Department of Labor, or state securities commissions, are urged to consult
their legal advisers before investing such assets in Shares of the Funds.
The Plans require the officers of the Trust to provide the Board of
Trustees at least quarterly with a written report of the amounts expended
pursuant to the Plans and the purposes for which such expenditures were made.
The Board reviews these reports in connection with its decisions with respect to
the Plans. The Plans continue in effect as long as such continuance is
specifically approved at least annually by the Trustees, including a majority of
the Independent Trustees.
34
<PAGE>
The Plans may be terminated as to a Fund by vote of a majority of the
Independent Trustees, or by vote of majority of the outstanding Shares of the
particular class of the Fund. Any change in a Plan that would materially
increase the distribution cost to the Fund requires Shareholder approval. The
Trustees review quarterly a written report of such costs and the purposes for
which such costs have been incurred. The Plan may be amended by vote of the
Trustees, including a majority of the Independent Trustees, cast in person at a
meeting called for that purpose. For so long as the Plans are in effect,
selection and nomination of those Trustees who are not interested persons of the
Trust shall be committed to the discretion of such Independent Trustees. All
agreements with any person relating to the implementation of a Plan may be
terminated at any time on 60 days' written notice without payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of the
majority of the outstanding Shares of the particular class of the Fund. The
Plans will continue in effect for successive one-year periods, provided that
each such continuance is specifically approved (i) by the vote of a majority of
the Independent Trustees, and (ii) by a vote of a majority of the entire Board
of Trustees cast in person at a meeting called for that purpose. The Board of
Trustees has a duty to request and evaluate such information as may be
reasonably necessary for them to make an informed determination of whether the
Plans should be implemented or continued. In addition the Trustees in approving
the Plans must determine that there is a reasonable likelihood that the Plans
will benefit the Funds and their Shareholders.
The Board of Trustees believes that the Plans are in the best interests of
the Funds since they encourage Fund growth. As the Funds grow in size, certain
expenses, and therefore total expenses per Share, may be reduced and overall
performance per Share may be improved.
As authorized by each Plan, BISYS has entered into agreements with U.S.
Bancorp Securities, Inc. ("USBS") pursuant to which USBS has agreed to provide
certain administrative and Shareholder support services in connection with
Shares purchased and held by USBS for the accounts of its customers and Shares
purchased and held by customers of USBS directly, including, but not limited to,
advertising and marketing the Shares, answering routine questions concerning the
Funds and distributing prospectuses to persons other than Shareholders of the
Funds, and providing such office space, equipment, telephone and personnel as is
necessary and appropriate to accomplish such matters. In consideration of such
services BISYS has agreed to pay USBS a monthly fee, computed at the annual rate
of up to 0.25% (up to 0.40% for the Money Funds) of the average aggregate net
asset value of Class A Shares, up to 0.75% of the average aggregate net asset
value of Class C Shares, and up to 0.25% of the average aggregate net asset
value of Class Q Shares held during the period in customer accounts for which
USBS has provided services under an agreement. In addition, BISYS has agreed to
pay USBS a monthly fee, computed at the annual rate of up to 0.25% of the
average aggregate net asset value of Class C Shares held during the period in
accounts for which USBS has arranged for the provision of Shareholder services.
BISYS will be compensated by each Fund in an amount equal to its payments to
USBS under each agreement with respect to the Shares of each class of that Fund.
35
<PAGE>
For the fiscal period ended July 31, 1995, the Funds paid BISYS the
following fees pursuant to the Class A Plan: Large Companies Value Fund - $877,
Small Companies Fund - $1,111, International Fund - $2, Optimized Fund - $8,
Intermediate Bond Fund - $426, Bond Fund - $0, U.S. Treasury Fund - $145,467,
Money Market Fund - $586,906 and Tax-Free Money Market Fund - $80,020. For the
fiscal period ended July 31, 1995, the Funds paid BISYS the following fees
pursuant to the Class C Plan: Large Companies Value Fund - $1,110, Small
Companies Fund - $1,120, International Fund - $0, Optimized Fund - $36,
Intermediate Bond Fund - $697 and Bond Fund - $0. For the fiscal period ended
July 31, 1995, the Funds paid BISYS the following fees pursuant to the Class Q
Plan: U.S. Treasury Fund - $5,559, Money Market Fund - $12,130 and Tax-Free
Money Market Fund - $1,240. All expenditures were for compensation of BISYS for
its expenses incurred and its services provided as underwriter of the Shares of
the Funds. In addition, for the fiscal period ended July 31, 1995, BISYS
received $73,923 in aggregate commissions from the sale of Class A Shares, of
which BISYS retained $7,841 after dealer reallowances.
Custodians, Transfer Agent and Fund Accounting Services
- -------------------------------------------------------
United States National Bank of Oregon, 321 S.W. 6th, Portland, Oregon
97204, serves as custodian to the Trust with respect to all Funds other than the
International Fund pursuant to a Custody Agreement dated as of July 29, 1994 and
supplemented effective May 1, 1995 and April 10, 1996. The Bank of New York,
One Wall Street, New York, New York 10286 serves as custodian to the Trust with
respect to the International Fund pursuant to a Custody Agreement dated as of
October 12, 1995. U.S. Bank and The Bank of New York perform custodial services
including safeguarding and controlling the Funds' cash and securities, handling
the receipt and delivery of securities, and collecting interest and dividends on
such Funds' investments.
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219-
3035, serves as transfer agent and dividend disbursing agent (the "Transfer
Agent") for all Funds of the Trust pursuant to a Transfer Agency Agreement dated
as of July 29, 1994 and supplemented effective May 1, 1995 and April 10, 1996.
Pursuant to such Transfer Agency Agreement, the Transfer Agent, among other
things, performs the following services: maintenance of Shareholder records for
each of the Trust's Shareholders of record; processing Shareholder purchase and
redemption orders; processing transfers and exchanges of Shares of the Trust on
the Shareholder files and records; processing dividend payments and
reinvestments; and assistance in the mailing of Shareholder reports and proxy
solicitation materials. For such services, the Transfer Agent receives a fee
based on the number of Shareholders of record.
In addition, BISYS Fund Services Ohio, Inc. provides certain fund
accounting services to the Trust pursuant to a Fund Accounting Agreement dated
July 29, 1994 and supplemented effective May 1, 1995 and April 10, 1996. BISYS
Fund Services Ohio, Inc. receives a fee for such services, computed daily and
paid periodically at an annual rate of 0.04% of the average daily net assets of
each Exempt Fund, and 0.03% of the average daily net assets of each of the other
Funds. Under such Agreement, BISYS Fund Services Ohio, Inc. maintains the
accounting
36
<PAGE>
books and records for the Funds, including journals containing an itemized daily
record of all purchases and sales of portfolio securities, all receipts and
disbursements of cash and all other debits and credits, general and auxiliary
ledgers reflecting all asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, and other required
separate ledger accounts; maintains a monthly trial balance of all ledger
accounts; performs certain accounting services for the Funds, including
calculation of the daily net asset value per Share, calculation of the dividend
and capital gain distributions, if any, and of yield, reconciliation of cash
movements with U.S. Bank and The Bank of New York, affirmation to U.S. Bank and
The Bank of New York of portfolio trades and cash settlements, verification and
reconciliation with U.S. Bank and The Bank of New York of daily trade activity;
provides certain reports; obtains dealer quotations, prices from a pricing
service or matrix prices on all portfolio securities in order to mark the
portfolio to the market; and prepares an interim balance sheet, statement of
income and expense, and statement of changes in net assets for the Funds.
Auditors
- --------
The firm of Deloitte & Touche LLP, 1700 Courthouse Plaza N.E., Dayton, Ohio
45402, serves as independent auditors for the Trust. Its services comprise
auditing the Trust's financial statements and advising the Trust as to certain
accounting and tax matters.
Legal Counsel
- -------------
Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C. 20005 is
counsel to the Trust and has passed upon the legality of the Shares offered
hereby.
ADDITIONAL INFORMATION
Description of Shares
- ---------------------
The Trust is a Massachusetts business trust. The Trust was organized on
May 19, 1994, and the Trust's Declaration of Trust was filed with the Secretary
of State of the Commonwealth of Massachusetts on May 19, 1994 and amended
effective May 1, 1995 and April 10, 1996. The Declaration of Trust authorizes
the Board of Trustees to issue an unlimited number of Shares, which are units of
beneficial interest, without par value. The Trust currently has seventeen
series of Shares which represent interests in each series of the Trust. The
Shares of each of the Funds of the Trust, other than the Money Funds, are
offered in three separate classes: Class A Shares, Class C Shares and Class Y
Shares. Shares of the Money Funds are also offered in three separate classes:
Class A Shares, Class Q Shares and Class Y Shares. The Trust's Declaration of
Trust authorizes the Board of Trustees to divide or redivide any unissued Shares
of the Trust into one or more additional series by setting or changing in any
one or more respects their respective preferences, conversion or other rights,
voting power, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption.
37
<PAGE>
The amount of dividends payable with respect to Class Q and Class Y Shares
will exceed dividends on Class A and Class C Shares as a result of the Plan fees
applicable to Class A and Class C Shares and because Class A and Class C Shares
may bear additional retail transfer agency expenses. The amount of dividends
payable with respect to Class Y Shares will also exceed dividends on Class Q
Shares as a result of the Plan fees applicable to Class Q Shares.
Each Fund intends to seek a ruling from the Internal Revenue Service
("IRS") to the effect that differing distributions among the classes of its
Shares will not result in the Fund's dividends and other distributions being
regarded as "preferential dividends" under the Internal Revenue Code of 1986, as
amended (the "Code"). Generally, a preferential dividend is a dividend which a
Fund cannot treat as having been distributed for purposes of determining (i)
whether the Fund qualifies as a regulated investment company ("RIC") for federal
tax purposes and (ii) the Fund's tax calculations. In order to qualify as a
RIC, each Fund must satisfy certain requirements, including an income
distribution requirement. If a Fund so qualifies, it generally will not be
subject to federal tax on income timely distributed to Shareholders, and
distributions from the Fund may qualify as capital gain dividends or exempt-
interest dividends, generally depending on the type of income generated by the
Fund. While similar rulings have been issued previously by the IRS, complete
assurance cannot, of course, be given that the Funds will actually receive such
rulings. Although an adverse determination by the IRS is not currently
expected, the Funds may be required to reassess their multiple class share
structure (and reserve the right to do so) were the IRS not to rule favorably
since that could impact on the Funds' ability to qualify as RICs. In addition,
were the IRS not to rule favorably, each Fund might make additional
distributions (which could carry interest and interest-related charges to the
Fund) if doing so would assist the Funds in complying with their general
practice of distributing sufficient income to reduce or eliminate U.S. federal
taxes.
Shares have no subscription or preemptive rights and only such conversion
or exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectuses and this SAI, the Trust's
Shares will be fully paid and non-assessable. In the event of a liquidation or
dissolution of the Trust, Shareholders of a Fund are entitled to receive the
assets available for distribution belonging to that Fund, and a proportionate
distribution, based upon the relative asset values of the respective series, of
any general assets not belonging to any particular series which are available
for distribution.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding Shares of
each Fund affected by the matter. For purposes of determining whether the
approval of a majority of the outstanding Shares of a Fund will be required in
connection with a matter, a Fund will be deemed to be affected by a matter
unless it is clear that the interests of each Fund in the matter are identical,
or that the matter does not affect any interest of the Fund. Under Rule 18f-2,
the approval of an investment advisory agreement or any change in investment
policy submitted to Shareholders would be effectively acted upon with respect to
a Fund only if approved
38
<PAGE>
by a majority of the outstanding Shares of such Fund. However, Rule 18f-2 also
provides that the ratification of independent public accountants, the approval
of principal underwriting contracts, and the election of Trustees may be
effectively acted upon by Shareholders of the Trust voting without regard to
Fund.
Vote of a Majority of the Outstanding Shares
- --------------------------------------------
As used in the Funds' Prospectuses and the SAI, "vote of a majority of the
outstanding Shares of the Trust or the Fund" means the affirmative vote, at an
annual or special meeting of Shareholders duly called, of the lesser of (a) 67%
or more of the votes of Shareholders of the Trust or the Fund present at such
meeting at which the holders of more than 50% of the votes attributable to the
Shareholders of record of the Trust or the Fund are represented in person or by
proxy, or (b) the holders of more than 50% of the outstanding votes of
Shareholders of the Trust or the Fund.
Principal Shareholders
- ----------------------
As of April 5, 1996, the Trustees and officers of the Trust as a group
owned beneficially, directly or indirectly, less than one percent of the
outstanding Shares of the Trust and each of its Funds.
The following tables indicate each additional person known by the Funds to
own beneficially 5% or more of the Shares of the Funds as of April 5, 1996:
LARGE COMPANIES FUND
--------------------
CLASS C
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- ------------------ ---------
Peggy and Henry Baker 3,545.92 7.86%
P.O. Box 809
Mulino, OR 97042
Edward Kane 2,805.94 6.22%
65 Park Meadow LP N.E.
Keizer, OR 97303
IRA of Doris Miles 3,066.56 6.80%
151 North Bonair Road
Zillah, WA 98953
Trust Metallurgical 17,999.46 39.92%
Corp. ESOP
c/o Key Trust Company
P.O. Box 94871
Cleveland, OH 44101
Sam Volpentest Living 5,075.73 11.26%
Trust
365 Quailwood Place
Richland, WA 99352
Peggy's Classic Cars 3,545.92 7.86%
3905 S.E. 82nd Ave.
Portland, OR 97266
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- ------------------ ---------
Sandwell, Inc. Retirement 551,741.55 6.32%
Equity
Address Not Released
Forest City Trading 574,150.44 6.58%
Group/Equity
Address Not Released
Miller Nash Equity Fund 440,837.92 5.05%
Address Not Released
39
<PAGE>
SMALL COMPANIES FUND
--------------------
CLASS A
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
McCall Companies 38,120.90 7.35%
Salaried Employees
Retirement Plan
808 S.W. 15th Avenue
Portland, OR 97205
American Industries, Inc. 36,363.64 7.01%
1750 N.W. Front Avenue
Suite 106
Portland, OR 97209
CLASS C
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Gregory Affiliates 3,877.57 5.17%
21975 S.W. Hillsboro Hwy.
Newberg, OH 97132
Peters Office Supply Co. 7,518.80 10.02%
Profit Sharing Plan
338 N.W. 9th
Portland, OR 97209
Richard and Peggie Foy 4,009.01 5.34%
4018 Dry Creek Road
Medford, OR 97504
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Aggressive Equity Portfolio 1,578,629.88 7.78%
Blended 1
P.O. Box 2758
Portland, OR 97208
Moderate Balanced Portfolio 1,269,736.43 6.26%
Blended 4
P.O. Box 2758
Portland, OR 97208
USBC EIP Aggr. Equity 2,924,585.55 14.42%
Fund E
P.O. Box 2758
Portland, OR 97208
USBC Retirement Equity 4,347,653.75 21.44%
Fund
P.O. Box 2758
Portland, OR 97208
OPTIMIZED FUND
--------------
CLASS A
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
IRA of Pamela Kay Crary 3,147.02 7.37%
1060 Humorist Road
Pasco, WA 99301
40
<PAGE>
CLASS C
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Elmer and Norma Benson 547.49 8.68%
3641 Dayton Road
Pasco, WA 99301
Lois Davidson 444.62 7.05%
213 Park Avenue
Yakima, WA 98902
Niki Albright 558.48 8.86%
5521 32nd Avenue, N.W.
Seattle, WA 98107
IRA of Anne Bobinac 1,028.31 16.31%
1411 E. Channel View Lane
Freeland, WA 98249
IRA of Robert Bacon, Jr. 453.69 7.19%
1725 West Henry
Pasco, WA 99301
Jacquelyn and John Henderson 415.63 6.59%
P.O. Box 72
Greenbank, WA 98258
Dario C. Padilla 455.30 7.22%
420 East 3rd
Kennewick, WA 99386
SAR SEP IRA of 557.43 8.84%
Richard Sturtevant
2431 Birch Road
Pasco, WA 99301
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
USBC Retirement Equity 13,235,540.52 76.08%
Fund
P.O. Box 2758
41
<PAGE>
Portland, OR 97208
Westone Bancorp Ret. Equity 2,665,472.95 15.32%
c/o U.S. Bank of Oregon
111 S.W. Fifth Avenue
Portland, OR 97208
INTERNATIONAL FUND
------------------
CLASS A
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
David and Ruth Cohn 9,675.23 5.03%
P.O. Box 380
Mercer Island, WA 98204
Hall Family Living Trust 9,675.23 5.03%
6451 N.W. Windermer
Seattle, WA 98105
Dahlgren Logging, Inc. 9,675.23 5.03%
1666 Bogahiel Way
Forks, WA 98331
CLASS C
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
David and Julie Hathaway 561.80 52.17%
540 N. Newport
Mesa, WA 99340
Richard and Arlene Morgan 287.08 26.66%
Rt. 2, Box 103
Rosalia, WA 99170
Amrit Rupaal 193.27 17.95%
2918 Sylvan #107
Bellingham, WA 98226
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
TELCO 1,326,089.91 11.32%
c/o U.S. Bank of Oregon
555 S.W. Oak
Portland, OR 97204
Unit & Co. 10,161,564.55 86.75%
c/o U.S. Bank of Oregon
555 S.W. Oak
Portland, OR 97204
INTERMEDIATE BOND FUND
----------------------
CLASS A
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
IRA of Robert Shugert 4,395.18 6.74%
1706 W. Fairview Drive
Spokane, WA 99218
IRA of Michael Schmidt 3,877.74 5.95%
16824 S.W. Inverurie Rd.
Lake Oswego, OR 97035
IRA of Augusta Shipsey 6,701.26 10.28%
8472 Chippewa Court
West Linn, OR 97068
Criteser Family Rev. 9,056.45 13.90%
Living Trust
101 McCarver
Oregon City, OR 97405
IRA of Pamela Kay Crary 4,076.84 6.26%
1080 Humorist Road
Pasco, WA 99801
CLASS C
- -------
42
<PAGE>
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Pacific Interstate Const., Inc. 560.38 5.22%
P.O. Box 67
Hillsboro, OR 97123
Allan Goforth 840.93 7.83%
P.O. Box 125
Williams, CA 95987
IRA of Stephen Springer 1,763.25 16.41%
10265 Gould Avenue
Tillamook, OR 97141
IRA of James Fjelland 1,453.11 13.53%
2579 Pinehurst Drive
McMinville, OR 97128
IRA of Donald Small 4,193.15 39.03%
565 S. Frisco Drive
Elko, NV 89801
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
USBC EIP Fixed Income 1,269,736.43 8.33%
Fund A
P.O. Box 2758
Portland, OR 97208
Conservative Balanced 1,935,645.73 12.71%
Blended 3
P.O. Box 2758
Portland, OR 97208
Moderate Balanced Portfolio 3,453,692.20 22.68%
Blended 4
P.O. Box 2758
Portland, OR 97208
BOND FUND
---------
CLASS A
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
43
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- ---------------- -------------------- ----------
Harry Yager 4,639.81 28.03%
802 South Liberty
Burns, OR 97720
IRA of Robert Shugert 4,395.66 26.56%
1706 West Fairview Drive
Spokane, WA 99218
Burt McDowell 1,848.63 11.17%
Trust Emergicorp Ltd.
Defined Benefit Pension Plan
20560 S.W. Edy Road
Sherwood, OR 97140
Violet Phinney 1,168.04 7.06%
2518 West Grace
Spokane, WA 99205
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
USBC Retirement F.I. Fund 11,253,783.95 74.55%
P.O. Box 2758
Portland, OR 97208
MONEY MARKET FUND
-----------------
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
USBC EIP Money Market 24,484,323.00 28.92%
Fund D
P.O. Box 2758
Portland, OR 97208
44
<PAGE>
USBC EIP W/O Fund D Shadow 10,760,559.00 12.71%
P.O. Box 2758
Portland, OR 97208
TAX-FREE MONEY MARKET FUND
--------------------------
CLASS Q
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
David and Shawn Taylor 168,283.83 5.61%
5801 Third Avenue South
Seattle, WA 98108
David Taylor, Jr. 830,432.80 27.67%
5801 Third Avenue South
Seattle, WA 98108
CLASS Y
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Niles and Victoria Hanson 463,821.00 93.92%
c/o U.S. Bank of Oregon
111 S.W. Fifth Avenue
Portland, OR 97208
U.S. TREASURY FUND
------------------
CLASS Q
- -------
AMOUNT OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (SHARES) CLASS (%)
- ---------------- -------------------- ----------
Rogue Valley Medical 5,483,325.97 18.38%
Center
2650 S. Siskiyou Blvd.
Suite 200
Medford, OR 97504
Providence Newberg 1,670,093.54 5.60%
Hospital
501 Villa Road
Newberg, OR 97132
45
<PAGE>
Oregon Life & Health 2,477,008.42 8.30%
Insurance Guaranty Association
P.O. Box 4520
Salem, OR 97302
Shareholder and Trustee Liability
- ---------------------------------
Under Massachusetts law, holders of units of interest in a business trust
may, under certain circumstances, be held personally liable as partners for the
obligations of the trust. However, the Trust's Declaration of Trust provides
that Shareholders shall not be subject to any personal liability for the
obligations of the Trust. The Declaration of Trust provides for indemnification
out of the Trust's property of any Shareholder held personally liable solely by
reason of his or her being or having been a Shareholder. The Declaration of
Trust also provides that the Trust shall, upon request, reimburse any
Shareholder for all legal and other expenses reasonably incurred in the defense
of any claim made against the Shareholder for any act or obligation of the
Trust, and shall satisfy any judgment thereon. Thus, the risk of a Shareholder
incurring financial loss on account of Shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
The Declaration of Trust states further that no Trustee, officer, or agent
of the Trust shall be personally liable in connection with the administration or
preservation of the assets of the Trust or the conduct of the Trust's business;
nor shall any Trustee, officer, or agent be personally liable
46
<PAGE>
to any person for any action or failure to act except for his or her own bad
faith, willful misfeasance, gross negligence, or reckless disregard of his
duties. The Declaration of Trust also provides that all persons having any
claim against the Trustees or the Trust shall look solely to the assets of the
Trust for payment.
Additional Tax Information
- --------------------------
The following discussion sets forth additional information summarizing
certain U.S. federal tax considerations incident to an investment in a Fund.
Taxation of the Funds. Each Fund intends to qualify and elect to be
---------------------
treated as a RIC under Subchapter M of the Code. If so qualified, a Fund
generally will not be subject to federal income tax to the extent it distributes
its investment company taxable income (which includes interest on taxable
investments and the excess of net short-term capital gains over net long-term
capital losses) and net capital gains (the excess of net long-term capital gains
over net short-term capital losses) to Shareholders in a timely manner. To
qualify as a RIC, a Fund generally must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale or other
disposition of stock, securities or foreign currencies, or other income derived
with respect to its business of investing in such stock, securities or curren-
cies; (b) derive in each taxable year less than 30% of its gross income from the
sale or other disposition of certain assets held less than three months, namely:
(i) stock or securities; (ii) options, futures, or forward contracts (other than
those on foreign currencies); or (iii) foreign currencies (or options, futures,
or forward contracts on foreign currencies) that are not directly related to the
Fund's principal business of investing in stock or securities (or options and
futures with respect to stock or securities) (the "30% Limitation"); and (c)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the Fund's assets is represented by cash, U.S.
Government securities, the securities of other RICs and other securities, with
such other securities limited, in respect of any one issuer, to an amount not
greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities and the securities of other RICs).
Additionally, a Fund must, for each taxable year, distribute to Shareholders at
least 90% of its investment company taxable income and at least 90% of its net
tax-exempt interest income.
The Treasury Department is authorized to issue regulations providing that
foreign currency gains that are not directly related to a Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities) will be excluded from the income which qualifies
for purposes of the 90% gross income requirement described above. To date,
however, no regulations have been issued.
Amounts, other than tax-exempt interest, not distributed by a Fund on a
timely basis in accordance with a calendar year distribution requirement are
subject to a nondeductible 4% excise
47
<PAGE>
tax at the Fund level. To avoid the tax, each Fund must distribute during each
calendar year an amount equal to the sum of: (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses or tax-exempt
interest) for the calendar year; (2) at least 98% of its capital gains in excess
of its capital losses (adjusted for certain ordinary losses) for a one-year
period generally ending on October 31 of the calendar year; and (3) all taxable
ordinary income and capital gains for previous years that were not distributed
during such years. To avoid application of the excise tax, each Fund intends to
make distributions in accordance with the calendar year distribution
requirements. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by a Fund in October, November or
December of the year with a record date in such a month and paid by the Fund
during January of the following year. Such distributions will be treated as
received by Shareholders in the calendar year the distributions are declared,
rather than the calendar year in which the distributions are actually received.
Options, Futures and Foreign Currency Forward Contracts. Some of the
-------------------------------------------------------
options, futures and foreign currency forward contracts in which a Fund may
invest may be "section 1256 contracts." Gains (or losses) on these contracts
generally are considered to be 60% long-term and 40% short-term capital gains or
losses; however, foreign currency gains or losses arising from certain section
1256 contracts are ordinary in character. Also, section 1256 contracts held by
a Fund at the end of each taxable year (and on certain other dates prescribed in
the Code) are "marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized.
The transactions in options, futures and forward contracts undertaken by a
Fund may result in "straddles" for federal income tax purposes. The straddle
rules may affect the character of gains or losses realized by a Fund. In
addition, losses realized by a Fund on positions that are part of a straddle may
be deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the consequences of such transactions to a Fund are not
entirely clear. The straddle rules may increase the amount of short-term
capital gain realized by a Fund, which is taxed as ordinary income when
distributed to Shareholders.
The Funds may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, the amount which must be distributed to
Shareholders as ordinary income or long-term capital gain
48
<PAGE>
may be increased or decreased substantially as compared to a Fund that did not
engage in such transactions.
The 30% Limitation and the diversification requirements applicable to each
Fund's assets may limit the extent to which a Fund will be able to engage in
transactions in options, futures and forward contracts.
Currency Fluctuations -- "Section 988" Gains or Losses. Gains or losses
------------------------------------------------------
attributable to fluctuations in exchange rates which occur between the time a
Fund accrues income or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivables or pays such liabilities generally are treated as
ordinary income or ordinary loss. Similarly, on disposition of some
investments, including debt securities denominated in a foreign currency and
certain forward contracts, gains or losses attributable to fluctuations in the
value of the foreign currency between the date of acquisition of the security
and the date of disposition also are treated as ordinary gain or loss. These
gains and losses, referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of a Fund's investment company taxable income
available to be distributed to its Shareholders as ordinary income. If section
988 losses exceed other investment company taxable income during a taxable year,
a Fund would not be able to make any ordinary dividend distributions, or
distributions made before the losses were realized would be recharacterized as a
return of capital to Shareholders, rather than as an ordinary dividend, reducing
each Shareholder's basis in his or her Fund Shares.
Investments in Passive Foreign Investment Companies. A Fund may invest in
---------------------------------------------------
shares of foreign corporations which may be classified under the Code as passive
foreign investment companies ("PFICs"). In general, a foreign corporation is
classified as a PFIC if at least one-half of its assets constitute investment-
type assets, or 75% or more of its gross income is investment-type income. If a
Fund receives a so-called "excess distribution" with respect to PFIC stock, the
Fund itself may be subject to a tax on a portion of the excess distribution,
whether or not the corresponding income is distributed by the Fund to
Shareholders. In general, under the PFIC rules, an excess distribution is
treated as having been realized ratably over the period during which the Fund
held the PFIC shares. The Fund itself will be subject to tax on the portion, if
any, of an excess distribution that is so allocated to prior Fund taxable years
and an interest factor will be added to the tax, as if the tax had been payable
in such prior taxable years. Certain distributions from a PFIC, as well as gain
from the sale of PFIC shares, are treated as excess distributions. Excess
distributions are characterized as ordinary income even though, absent
application of the PFIC rules, certain excess distributions might have been
classified as capital gain.
A Fund may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some
circumstances, the Fund generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions,
49
<PAGE>
would not apply. In addition, another election may be available that would
involve marking-to-market a Fund's PFIC shares at the end of each taxable year
(and on certain other dates prescribed in the Code), with the result that
unrealized gains are treated as though they were realized. If this election
were made, tax at the Fund level under the PFIC rules would generally be
eliminated, but the Fund could, in limited circumstances, incur nondeductible
interest charges. A Fund's intention to qualify annually as a RIC may limit its
elections with respect to PFIC shares.
Because the application of the PFIC rules may affect, among other things,
the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, as well as subject the Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to Shareholders, and which will be taxed to Shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a Fund that did not invest in PFIC shares.
Foreign Taxes. Income received by a Fund from sources within a foreign
-------------
country may be subject to withholding and other income or similar taxes imposed
by that country. If more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible and may elect to "pass-through" to the Fund's Shareholders
the amount of foreign income and similar taxes paid by the Fund. Pursuant to
this election, a Shareholder will be required to include in gross income (in
addition to taxable dividends actually received) his pro rata share of the
--- ----
foreign income and similar taxes paid by a Fund, and will be entitled either to
claim a deduction (as an itemized deduction) for his pro rata share of such
--- ----
foreign taxes in computing his taxable income or to use it as a foreign tax
credit against his U.S. federal income taxes, subject to limitations. Foreign
taxes may not be deducted by a Shareholder that is an individual in computing
the alternative minimum tax. Each Shareholder will be notified within 60 days
after the close of a Fund's taxable year whether the foreign taxes paid by the
Fund will "pass-through" for that year and, if so, such notification will
designate (a) the Shareholder's portion of the foreign taxes paid to each such
country, and (b) the portion of the dividend which represents income derived
from sources within each such country.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the Shareholder's U.S. tax attributable to his total foreign
source taxable income. For this purpose, if a Fund makes the election described
in the preceding paragraph, the source of a Fund's income flows through to its
Shareholders. With respect to a Fund, gains from the sale of securities
generally will be treated as derived from U.S. sources and section 988 gains
generally will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income (as defined for purposes of the foreign tax credit), including
foreign source passive income received from a Fund. In addition, the foreign
tax credit may offset only 90% of the alternative minimum tax imposed on
corporations and individuals. If a Fund is not eligible to make the election
described above, the foreign income and similar taxes it pays generally will
reduce investment company taxable income and distributions by a Fund will be
treated as United States source income.
50
<PAGE>
The foregoing is only a general description of the foreign tax credit under
current law. Because application of the credit depends on the particular
circumstances of each Shareholder, Shareholders are advised to consult their own
tax advisers.
Debt Securities Acquired at a Discount. Some of the debt securities (with
--------------------------------------
a fixed maturity date of more than one year from the date of issuance) that may
be acquired by a Fund may be treated as debt securities that are issued
originally at a discount. Generally, the amount of the original issue discount
("OID") is treated as interest income and is included in income over the term of
the debt security, even though payment of that amount is not received until a
later time, usually when the debt security matures. A portion of the OID
includable in income with respect to certain high-yield corporate debt
securities may be treated as a dividend for purposes of the corporate dividends-
received deduction. OID on an obligation, the interest from which is exempt
from federal income tax, is not taxable.
Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Fund in the secondary
market may be treated as having market discount. Generally, gain recognized on
the disposition of, and any partial payment of principal on, a debt security
having market discount is treated as ordinary income to the extent the gain, or
principal payment, does not exceed the "accrued market discount" on such debt
security. In addition, the deduction of any interest expenses attributable to
debt securities having market discount may be deferred. Market discount
generally accrues in equal daily installments. A Fund may make one or more of
the elections applicable to debt securities having market discount, which could
affect the character and timing of the recognition of income.
Some debt securities (with a fixed maturity date of one year or less from
the date of issuance), the interest from which is taxable, that may be acquired
by a Fund may be treated as having acquisition discount, or OID in the case of
certain types of debt securities. Generally, a Fund will be required to include
the acquisition discount, or OID, in income over the term of the debt security,
even though payment of that amount is not received until a later time, usually
when the debt security matures. A Fund may make one or more of the elections
applicable to debt securities having acquisition discount, or OID, which could
affect the character and timing of recognition of income.
Each Fund generally will be required to distribute dividends to
Shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such income may not have
been received by the Fund. Cash to pay such dividends may be obtained from
sales proceeds of securities held by the Fund or by borrowing.
Disposition of Shares. Upon a redemption, sale or exchange of Shares of a
---------------------
Fund, a Shareholder will realize a taxable gain or loss depending upon the basis
of the Shares. However, dispositions of Shares of the Money Funds will not give
rise to a gain or loss if the relevant Fund maintains a net asset value per
Share of one dollar. A gain or loss will be treated as capital gain or loss if
the Shares are capital assets in the Shareholder's hands and generally will be
long-term
51
<PAGE>
or short-term, depending upon the Shareholder's holding period for the Shares.
Any loss realized on a redemption, sale or exchange will be disallowed to the
extent the Shares disposed of are replaced (including through reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after the Shares are disposed of. In such a case, the basis of the Shares
acquired will be adjusted to reflect the disallowed loss. Any loss realized by
a Shareholder on the sale of a Fund's Shares held by the Shareholder for six
months or less will be treated for tax purposes as a long-term capital loss to
the extent of any distributions of capital gain dividends received or treated as
having been received by the Shareholder with respect to such Shares.
Furthermore, a loss realized by a Shareholder of the Tax-Free Bond Fund on the
redemption, sale or exchange of Shares of the Fund with respect to which exempt-
interest dividends have been paid will, to the extent of such exempt-interest
dividends, be disallowed if such Shares have been held by the Shareholder for
six months or less at the time of their disposition.
In some cases, Shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their Shares. This prohibition generally applies where (1)
the shareholder incurs a sales charge in acquiring the stock of a RIC, (2) the
stock is disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires shares of the same or
another RIC and the otherwise applicable sales charge is reduced or eliminated
under a "reinvestment right" received upon the initial purchase of shares of
stock. In that case, the gain or loss recognized will be determined by
excluding from the tax basis of the shares exchanged all or a portion of the
sales charge incurred in acquiring those shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of having incurred a sales charge
initially. Sales charges affected by this rule are treated as if they were
incurred with respect to the stock acquired under the reinvestment right. This
provision may be applied to successive acquisitions of stock.
Backup Withholding. The Funds will be required to report to the IRS all
------------------
distributions of investment company taxable income and net capital gains, and
the gross proceeds from the redemption of Shares, except in the case of certain
exempt Shareholders. All distributions of investment company taxable income and
net capital gains, and proceeds from the redemption of Fund Shares, will be
subject to withholding of federal income tax at the rate of 31% ("backup
withholding") in the case of nonexempt Shareholders if (1) the Shareholder fails
to furnish the Fund with and to certify the Shareholder's correct taxpayer
identification number or social security number, (2) the IRS notifies the
Shareholder or the Fund that the Shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the Shareholder fails to certify
that he or she is not subject to backup withholding. It is not expected that
the gross proceeds from redemptions of Shares of the Money Funds will be
reportable to the IRS or subject to backup withholding if the Money Funds
maintain a net asset value per Share of one dollar.
The Exempt Funds. Each Exempt Fund intends to manage its portfolio so that
----------------
it will be eligible to pay "exempt-interest dividends" to Shareholders. A RIC
will so qualify if, at the close
52
<PAGE>
of each quarter of its taxable year, at least 50% of the value of its total
assets consists of state, municipal, and certain other securities, the interest
on which is exempt from the regular federal income tax. To the extent that
dividends distributed to Shareholders by an Exempt Fund are derived from such
interest income and are designated as "exempt-interest dividends" by the
distributing Fund, they will be excludable from a Shareholder's gross income for
regular federal income tax purposes. 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. Shareholders are required to report the receipt of tax-exempt
interest and exempt-interest dividends on their federal income tax returns. An
Exempt Fund would not be suitable investments for tax-exempt institutions and
may not be suitable for retirement plans qualified under the Code, including
individual retirement accounts, since such plans and accounts are generally tax-
exempt and, therefore, would not gain any additional benefit from receiving
exempt-interest dividends, and such dividends would be ultimately taxable to the
beneficiaries when distributed to them. An Exempt Fund will inform Shareholders
annually as to the portion of the distributions from the Fund which constitute
"exempt-interest dividends."
Other Taxation. Distributions and redemptions may also be subject to
--------------
additional state, local and foreign taxes depending on each Shareholder's parti-
cular situation. Non-U.S. Shareholders may be subject to U.S. tax rules that
differ significantly from those summarized herein. This discussion does not
purport to deal with all of the tax consequences applicable to the Funds or
Shareholders (for example, a Fund may be subject to state and local taxation).
Shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Fund.
Yields of the Money Funds
- -------------------------
Each of the standardized seven-day yields for each Money Fund is computed
by determining the net change, exclusive of capital changes, in the value of a
hypothetical pre-existing account in that Fund having a balance of one Share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from Shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/base period). The
net change in the account value of each Money Fund includes the value of
additional Shares purchased with dividends from the original Share, dividends
declared on both the original Share and any such additional Shares, and all
fees, other than nonrecurring account or sales charges, that are charged to all
Shareholder accounts in proportion to the length of the base period and assuming
that Fund's average account size. The capital changes to be excluded from the
calculation of the net change in account value are net realized gains and losses
from the sale of securities and unrealized appreciation and depreciation. Yield
for the seven-day period ended July 31, 1995 for Class A Shares, Class Q Shares,
and Class Y Shares of the U.S. Treasury Fund was 5.00%, 5.20% and 5.41%,
respectively, the yield for that period for Class A Shares, Class Q Shares, and
Class Y Shares of the Money Fund was 5.01%, 5.41% and 5.41%, respectively, and
the yield for the
53
<PAGE>
same period for the Class A Shares, Class Q Shares, and Class Y Shares of the
Tax-Free Money Market Fund was 2.78%, 2.93% and 3.19%, respectively.
Each of the effective yields for the Money Funds is computed by compounding
the base period return, as calculated above by adding 1 to the base period
return, raising the sum to a power equal to 365 divided by base period and
subtracting 1 from the result. Effective yield for the seven-day period ended
July 31, 1995 for Class A Shares, Class Q Shares, and Class Y Shares of the U.S.
Treasury Fund was 5.13%, 5.34% and 5.56%, respectively, the effective yield for
that period for Class A Shares, Class Q Shares, and Class Y Shares of the Money
Fund was 5.14%, 5.56% and 5.56%, respectively, and the effective yield for the
same period for the Class A Shares, Class Q Shares, and Class Y Shares of the
Tax-Free Money Market Fund was 2.82%, 2.97% and 3.24%, respectively.
Each of the 30-day yields and effective yields are calculated as described
above except than the base period is 30 days rather than seven days. Yield for
the 30-day period ended July 31, 1995 for Class A Shares, Class Q Shares, and
Class Y Shares of the U.S. Treasury Fund was 5.02%, 5.22% and 5.43%,
respectively, the yield for that period for Class A Shares, Class Q Shares, and
Class Y Shares of the Money Fund was 5.03%, 5.43% and 5.43%, respectively, and
the yield for the same period for the Class A Shares, Class Q Shares, and Class
Y Shares of the Tax-Free Money Market Fund was 2.66%, 2.81% and 3.07%,
respectively. Effective yield for the 30-day period ended July 31, 1995 for
Class A Shares, Class Q Shares, and Class Y Shares of the U.S. Treasury Fund was
5.14%, 5.35% and 5.56%, respectively, the effective yield for that period for
Class A Shares, Class Q Shares, and Class Y Shares of the Money Fund was 5.14%,
5.56% and 5.43%, respectively, and the effective yield for the same period for
the Class A Shares, Class Q Shares, and Class Y Shares of the Tax-Free Money
Market Fund was 2.70%, 2.85% and 3.12%, respectively.
The Tax-Free Money Market Fund's tax-equivalent yields are computed by
dividing that portion of the Tax-Free Money Market Fund's yield which is tax-
exempt by one minus the stated income tax rate and adding the result to that
portion, if any, of the Tax-Free Money Market Fund's yield that is not tax-
exempt. The Tax-Free Money Market Fund's tax-equivalent effective yields are
computed by dividing that portion of the effective yield which is tax-exempt by
one minus the stated income tax rate and adding to that result the portion, if
any, of the Tax-Free Money Market Fund's effective yield that is not tax-exempt.
Yields of the Parent Funds, the Equity Funds and the Income Funds.
- -----------------------------------------------------------------
Yields of each of the Parent Funds, the Equity Funds and the Income Funds
are computed by analyzing net investment income per Share for a recent 30-day
period and dividing that amount by a Share's maximum offering price (reduced by
any undeclared earned income expected to be paid shortly as a dividend) on the
last trading day of that period. Net investment income will reflect
amortization of any market value premium or discount of fixed income securities
(except for obligations backed by mortgages or other assets) and may include
recognition of a pro rata
54
<PAGE>
portion of the stated dividend rate of dividend paying portfolio securities.
The yield of each of the Equity Funds and the Income Funds will vary from time
to time depending upon market conditions, the composition of a Fund's portfolio
and operating expenses of the Trust allocated to each Fund. These factors and
possible differences in the methods used in calculating yield should be
considered when comparing a Fund's yield to yields published for other
investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of a Fund's Shares and to the
relative risks associated with the investment objective and policies of each of
the Funds. Yield for the 30-day period ended July 31, 1995 for the Large
Companies Value Fund was 1.56% (1.63% without sales charge) for Class A Shares,
0.82% for Class C Shares and 1.78% for Class Y Shares. Yield for the 30-day
period ended July 31, 1995 for the Optimized Fund was 1.55% (1.63% without sales
charge) for Class A Shares, 0.90% for Class C Shares and 1.93% for Class Y
Shares. Yield for the 30-day period ended July 31, 1995 for the Small Companies
Fund was 0.15% (0.15% without sales charge) for Class A Shares, -0.56% for Class
C Shares and 0.36% for Class Y Shares. Yield for the 30-day period ended July
31, 1995 for the Intermediate Bond Fund was 4.96% (5.14% without sales charge)
for Class A Shares, 4.38% for the Class C Shares and 5.39% for the Class Y
Shares. Yield for the 30-day period ended July 31, 1995 for the Bond Fund was
1.13% (1.17% without sales charge) for Class A Shares, 2.34% for Class C Shares
and 5.68% for Class Y Shares.
In addition, for the Tax-Free Bond Fund, tax-equivalent yields are computed
by dividing that portion of the Fund's yield (as computed above) which is tax-
exempt by one minus a stated income tax rate and adding that result to that
portion, if any, of the yield of that Fund which is not tax exempt.
At any time in the future, yields may be higher or lower than past yields
and there can be no assurance that any historical results will continue.
Investors in the Parent Funds, the Equity Funds and the Income Funds are
specifically advised that Share prices, expressed as the net asset values per
Share, will vary just as yields will vary.
Calculation of Total Return
- ---------------------------
Average annual total return is a measure of the change in value of an
investment in a Fund over the period covered, which assumes any dividends or
capital gains distributions which are reinvested in the Fund immediately rather
than paid to the investor in cash. Average annual total return will be
calculated by: (1) adding to the total number of Shares purchased by a
hypothetical $1,000 investment in the Fund and (less the maximum sales charge,
if any) all additional Shares which would have been purchased if all dividends
and distributions paid or distributed during the period had been immediately
reinvested; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of Shares
owned at the end of the period by the net asset value per Share on the last
trading day of the period; (3) assuming redemption at the end of the period; and
(4) dividing this account value for the
55
<PAGE>
hypothetical investor by the initial $1,000 investment and analyzing the result
for periods of less than one year. Aggregate total return is calculated
similarly to average annual total return except that the return figure is
aggregated over the relevant period instead of annualized. Total return for the
period from August 1, 1994 (commencement of operations) through July 31, 1995
for the Large Companies Value Fund was 19.01% (24.61% without sales charge) for
Class A Shares, 21.78% (22.78% without contingent deferred sales charge) for
Class C Shares and 25.04% for Class Y Shares. Total return for the period from
May 2, 1995 (commencement of operations) through July 31, 1995 for the Optimized
Fund was 4.72% (9.64% without sales charge) for Class A Shares, 8.41% (9.41%
without contingent deferred sales charge) for Class C Shares and 9.74% for Class
Y Shares. Total return for the period from July 3, 1995 (commencement of
operations) through July 31, 1995 for the International Fund was -0.19% (4.50%
without sales charge) for Class A Shares, 3.60% (4.60% without contingent
deferred sales charge) for Class C Shares and 4.80% for Class Y Shares. Total
return for the period from August 1, 1994 (commencement of operations) through
July 31, 1995 for the Small Companies Fund was 28.26% (34.29% without sales
charge) for Class A Shares, 32.02% (33.02% without contingent deferred sales
charge) for Class C Shares and 34.76% for Class Y Shares. Total return for the
period from May 2, 1995 (commencement of operations) through July 31, 1995 for
the Bond Fund was -0.51% (3.07% without sales charge) for Class A Shares, 2.35%
(3.35% without contingent deferred sales charge) for Class C Shares and 4.58%
for Class Y Shares. Total return for the period from August 1, 1994
(commencement of operations) through July 31, 1995 for the Intermediate Bond
Fund was 2.96% (6.67% without sales charge) for Class A Shares, 4.42% (5.42%
without contingent deferred sales charge) for Class C Shares and 8.09% for Class
Y Shares. Total return for the period from August 1, 1994 (commencement of
operations) through July 31, 1995 for the Money Market Fund was 4.97% for Class
A Shares and 5.40% for Class Y Shares. Total return for the Class Q Shares of
the Money Market Fund for the period from January 10, 1995 (commencement of
operations) through July 31, 1995 was 3.13%. Total return for the period from
January 11, 1995 (commencement of operations) through July 31, 1995 for the U.S.
Treasury Fund was 2.79% for Class A Shares, 2.90% for Class Q Shares and 3.02%
for Class Y Shares. Total return for the period from January 9, 1995
(commencement of operations) through July 31, 1995 for the Tax-Free Money Market
Fund was 1.66% for Class A Shares, 1.73% for Class Q Shares and 1.88% for Class
Y Shares.
Each Fund may also present its average annual total return, aggregate total
return and yield, as the case may be, excluding the effect of a sales charge, if
any.
Distribution Rates
- ------------------
Each of the Parent Funds, the Equity Funds and the Income Funds may from
time to time advertise current distribution rates. Distribution rates are
computed by dividing the distribution per Share of a class made by a Fund over a
twelve-month period by the maximum offering price per Share of that class. The
calculation of income in the distribution rate includes both income and capital
gain dividends and does not reflect unrealized gains or losses, although a Fund
may also present a distribution rate excluding the effect of capital gains. The
distribution rate differs
56
<PAGE>
from the yield, because it includes capital items which are often non-recurring
in nature, whereas yield does not include such items. Distribution rates may
also be presented excluding the effect of a sales charge, if any.
Performance Comparisons
- -----------------------
Investors may judge the performance of the Funds by comparing their
performance to the performance of other mutual funds or mutual fund portfolios
directly or through various mutual fund or market indices such as the EAFE Index
and those prepared by Dow Jones & Co., Inc., Standard & Poor's Corporation,
Shearson Lehman Brothers, Inc. and The Russell 2000 Index, and to data prepared
by Lipper Analytical Services, Inc., a widely recognized independent service
which monitors the performance of mutual funds, Morningstar, Inc. and the
Consumer Price Index. Comparisons may also be made to indices or data published
in various general and financial press sources, including Donoghue's MONEY FUND
REPORT of Holliston, Massachusetts 01746, a nationally recognized money market
fund reporting service, Money Magazine, Forbes, Barron's, The Wall Street
Journal, The Bond Buyer's Weekly 20-Bond Index, The Bond Buyer's Index, The Bond
Buyer, The New York Times, Business Week, Pensions and Investments, and U.S.A.
Today. In addition to performance information, general information about these
Funds that appears in a publication such as those mentioned above may be
included in advertisements and in reports to Shareholders.
From time to time, the Funds may include the following types of information
in advertisements, supplemental sales literature and reports to Shareholders:
(1) discussions of general economic or financial principles (such as the effects
of compounding, the benefits of dollar-cost averaging, and asset allocations
appropriate for various financial goals); (2) discussions of general economic
trends; (3) presentations of statistical data to supplement such discussions;
(4) descriptions of past or anticipated portfolio holdings for one or more of
the Funds; (5) descriptions of investment strategies for one or more of the
Funds; (6) descriptions or comparisons of various savings and investment
products (including, but not limited to, insured bank products, annuities,
qualified retirement plans and individual stocks and bonds), which may or may
not include the Funds; (7) comparisons of investment products (including the
Funds) with relevant market or industry indices or other appropriate benchmarks;
(8) discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons that have invested in
one or more of the Funds. The Funds may also include calculations, such as
hypothetical compounding examples, which describe hypothetical investment
results in such communications. Such performance examples will be based on an
express set of assumptions and are not indicative of the performance of any of
the Funds.
Current yields or performance will fluctuate from time to time and are not
necessarily representative of future results. Accordingly, a Fund's yield or
performance may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
performance are functions of a Fund's quality, composition, and maturity, as
57
<PAGE>
well as expenses allocated to the Fund. Fees imposed upon customer accounts for
cash management services will reduce a Fund's effective yield to customers.
Miscellaneous
- -------------
Individual Trustees are elected by the Shareholders and, subject to removal
by the vote of two-thirds of the Board of Trustees, serve for a term lasting
until the next meeting of Shareholders at which Trustees are elected. Such
meetings are not required to be held at any specific intervals. Individual
Trustees may be removed by vote of the Shareholders voting not less than a
majority of the Shares then outstanding, cast in person or by proxy at any
meeting called for that purpose, or by a written declaration signed by
Shareholders voting not less than two-thirds of the Shares then outstanding.
The Trust is registered with the Securities and Exchange Commission as a
management investment company. Such registration does not involve supervision
by the Securities and Exchange Commission of the management or policies of the
Trust.
The Prospectuses and this SAI omit certain of the information contained in
the Registration Statement filed with the Securities and Exchange Commission.
Copies of such information may be obtained from the Securities and Exchange
Commission upon payment of the prescribed fee.
The Prospectuses and this SAI are not an offering of the securities herein
described in any state in which such offering may not lawfully be made. No
salesman, dealer, or other person is authorized to give any information or make
any representation other than those contained in the Prospectuses and this SAI.
Financial Statements
- --------------------
The Trust's audited financial statements for the Funds, including the
related notes thereto, dated as of July 31, 1995, and the Trust's unaudited
financial statements for the Funds, including the related notes thereto,
dated as of January 31, 1996, are incorporated by reference in the SAI from
the Annual Report of the Trust dated as of July 31, 1995 and the Semi-Annual
Report of the Trust dated as of January 31, 1996, respectively. A copy of the
Report(s) delivered with this SAI should be retained for future reference.
58
<PAGE>
APPENDIX
DESCRIPTION OF BOND RATINGS
Description of Moody's bond ratings:
Excerpts from Moody's description of its bond ratings are listed as
follows: Aaa -judged to be the best quality and they carry the smallest degree
of investment risk; Aa -judged to be of high quality by all standards - together
with the Aaa group, they comprise what are generally known as high grade bonds;
A - possess many favorable investment attributes and are to be considered as
"upper medium grade obligations"; Baa - considered to be medium grade
obligations, i.e., they are neither highly protected nor poorly secured -
----
interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; Ba - judged to have speculative
elements, their future cannot be considered as well assured; B - generally lack
characteristics of the desirable investment; Caa - are of poor standing - such
issues may be in default or there may be present elements of danger with respect
to principal or interest; Ca - speculative in a high degree, often in default; C
- - lowest rated class of bonds, regarded as having extremely poor prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and modifier 3 indicates
a ranking toward the lower end of the category.
Description of S&P's corporate and municipal bond ratings:
Excerpts from S&P's description of its bond ratings are listed as follows:
AAA - highest grade obligations, in which capacity to pay interest and repay
principal is extremely strong; AA - has a very strong capacity to pay interest
and repay principal, and differs from AAA issues only in a small degree; A - has
a strong capacity to pay interest and repay principal, although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories; BBB - regarded as
having an adequate capacity to pay interest and repay principal; whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories. This group is the lowest which qualifies for commercial bank
investment. BB, B, CCC, CC, C - predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with terms of the
obligations; BB indicates the highest grade and C the lowest within the
speculative rating categories. D - interest or principal payments are in
default.
S&P applies indicators "+," no character, and "-" to its rating categories.
The indicators show relative standing within the major rating categories.
i
<PAGE>
Description of Moody's ratings of short-term municipal obligations:
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade, or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity. Ratings categories for securities in these
groups are as follows: MIG 1/VMIG 1 - denotes best quality, there is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing; MIG 2/VMIG 2 -
denotes high quality, margins of protection are ample although not as large as
in the preceding group; MIG 3/VMIG 3 -denotes high quality, all security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades; MIG 4/VMIG 4 - denotes adequate quality, protection commonly
regarded as required of an investment security is present, but there is specific
risk; SQ - denotes speculative quality, instruments in this category lack
margins of protection.
Description of Moody's commercial paper ratings:
Excerpts from Moody's commercial paper ratings are listed as follows:
Prime - 1 -issuers (or supporting institutions) have a superior ability for
repayment of senior short-term promissory obligations; Prime - 2 - issuers (or
supporting institutions) have a strong ability for repayment of senior short-
term promissory obligations; Prime - 3 - issuers (or supporting institutions)
have an acceptable ability for repayment of senior short-term promissory
obligations; Not Prime - issuers do not fall within any of the Prime categories.
Description of S&P's rating for municipal notes and short-term municipal demand
obligations:
Rating categories are as follows: SP-1 - has a very strong or strong
capacity to pay principal and interest - those issues determined to possess
overwhelming safety characteristics will be given a plus (+) designation; SP-2 -
has a satisfactory capacity to pay principal and interest; SP-3 - issues
carrying this designation have a speculative capacity to pay principal and
interest.
Description of S&P's ratings for short-term corporate demand obligations and
commercial paper:
An S&P commercial paper rating is a current assessment of the likelihood of
timely repayment of debt having an original maturity of no more than 365 days.
Excerpts from S&P's description of its commercial paper ratings are listed as
follows: A-1 - the degree of safety regarding timely payment is strong - those
issues determined to possess extremely strong safety characteristics will be
denoted with a plus (+) designation; A-2 - capacity for timely payment is
ii
<PAGE>
satisfactory - however, the relative degree of safety is not as high as for
issues designated "A-1"; A-3 - has adequate capacity for timely payment -
however, is more vulnerable to the adverse effects of changes in circumstances
than obligations carrying the higher designations; B - regarded as having only
speculative capacity for timely payment; C - a doubtful capacity for payment;
D - in payment default - the "D" rating category is used when interest payments
or principal payments are not made on the date due, even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace period.
iii
<PAGE>
PART C
------
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements: Audited financial statements dated as
--------------------
of July 31, 1995 and unaudited financial statements dated as of
January 31, 1996 are incorporated by reference in Part B of
the Registration Statement from the Trust's Annual Report
dated as of July 31, 1995 and the Trust's Semi-Annual Report
dated as of January 31, 1996, respectively, and include the
following:
Independent Auditors' Report
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Schedules of Portfolio Investments
Notes to Financial Statements
Financial Highlights
(b) Exhibits
--------
(1) Declaration of Trust dated May 19, 1994 and
Amended and Restated Establishment and Designation
of Series effective April 10, 1996
(2) Amended and Restated By-Laws6
(3) Not Applicable
(4) Certificates for Shares are not issued. Articles II
and V of the Registrant's Declaration of Trust define
rights of holders of Shares.
(5) (a) Form of Investment Advisory Agreement
(b) Form of Amended Schedule A to the Investment
Advisory Agreement
C-1
<PAGE>
(6) (a) Form of Distribution Agreement between Registrant
and The Winsbury Company5
(b) Form of Amended Schedule A to the Distribution
Agreement between Registrant and The Winsbury
Company
(c) Form of Amended Schedule B to the Distribution
Agreement between Registrant and The Winsbury
Company
(d) Form of Amended Schedule D to the Distribution
Agreement between Registrant and The Winsbury
Company
(e) Form of Amended Schedule F to the Distribution
Agreement between Registrant and The Winsbury
Company6
(f) Form of Amended Schedule H to the Distribution
Agreement between Registrant and The Winsbury
Company
(7) Not Applicable
(8) (a) Form of Custodian Agreement between Registrant and
United States National Bank of Oregon3
(b) Form of Amended Schedule A to the Custodian
Agreement between Registrant and United States
National Bank of Oregon
(c) Form of Amended Schedule B to the Custodian Agreement
between Registrant and United States National Bank of
Oregon
(d) Form of Custodian Agreement between Registrant and
The Bank of New York6
(e) Form of Custodian Agreement between United States
National Bank of Oregon and The Bank of New York
Trust Company of California6
(f) Form of Sub-Custodian Agreement6
C-2
<PAGE>
(9) (a) Form of Management and Administration Agreement
between Registrant and The Winsbury Company3
(b) Form of Amended Schedule A to the Management and
Administration Agreement between Registrant
and The Winsbury Company
(c) Form of Fund Accounting Agreement between
Registrant and The Winsbury Service Corporation3
(d) Form of Amended Schedule A to the Fund Accounting
Agreement between Registrant and The Winsbury
Service Corporation
(e) Form of Transfer Agency Agreement between
Registrant and The Winsbury Service Corporation3
(f) Form of Amended Schedule A to the Transfer Agency
Agreement between Registrant and The Winsbury
Service Corporation
(g) Form of Servicing Agreement for Class Y Shares With
Respect to Shareholder Services
(h) Form of Schedule A to the Servicing Agreement for
Class Y Shares With Respect to Shareholder Services
(10) (a) Opinion of Counsel for Large Companies Fund, Small
Companies Fund, Income Equity Fund, Intermediate
Bond Fund, U.S. Treasury Fund, Money Market Fund, and
Tax-Free Money Market Fund3
(b) Opinion of Counsel for Bond Fund, International Fund,
and Optimized Fund6
(c) Opinion of Counsel for Conservative Fund, Balanced
Fund, Growth Fund, and Aggressive Fund
(11) Independent Auditors' Consent
(12) (a) Annual Report dated July 31, 19958
(b) Semi-Annual Report dated January 31, 1996*
(13) (a) Form of Purchase Agreement3
(b) Form of Purchase Agreement for Class Q Shares5
(c) Form of Purchase Agreement for Bond Fund,
International Fund, and Optimized Fund6
(d) Form of Purchase Agreement for Conservative Fund,
Balanced Fund, Growth Fund, and Aggressive Fund
(14) Not Applicable
C-3
<PAGE>
(15) (a) Form of Class A Distribution and Shareholder
Services Plan3
(b) Form of Class C Distribution and Shareholder
Services Plan3
(c) Form of Class Q Distribution and Shareholder
Services Plan5
(d) Form of Servicing Agreement for Class A Shares
with Respect to Distribution Assistance and
Shareholder Services3
(e) Form of Amended Schedule A to the Servicing
Agreement for Class A Shares with Respect to
Distribution Assistance and Shareholder Services
(f) Form of Servicing Agreement for Class C Shares
with Respect to Distribution Assistance and
Shareholder Services3
(g) Form of Amended Schedule A to the Servicing
Agreement for Class C Shares with Respect to
Distribution Assistance and Shareholder Services
(h) Form of Servicing Agreement for Class Q Shares
with Respect to Distribution Assistance and
Shareholder Services5
(i) Form of Amended Schedule A to the Servicing
Agreement for Class Q Shares with Respect to
Distribution Assistance and Shareholder Services6
(16) (a) Form of Computation of Performance Evaluations5
(b) Addendum A to Form of Computation of Performance
Evaluations7
C-4
<PAGE>
(17) Financial Data Schedule (filed as Exhibit 27)
(18) Form of Amended Multiple Class Plan Pursuant to Rule 18f-3
(19) (a) Secretary's Certificate Pursuant to Rule 483(b)4
(b) Powers of Attorney4
____________________
1 Filed with Registrant's initial Registration Statement on May 20,
1994.
2 Filed with Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on July 5, 1994.
3 Filed with Pre-Effective Amendment No. 2 to Registrant's Registration
Statement on July 22, 1994.
4 Filed with Post-Effective Amendment No. 1 to Registrant's Registration
Statement on November 7, 1994.
5 Filed with Post-Effective Amendment No. 2 to Registrant's Registration
Statement on January 6, 1995.
6 Filed with Post-Effective Amendment No. 4 to Registrant's Registration
Statement on April 24, 1995.
7 Filed with Post-Effective Amendment No. 5 to Registrant's Registration
Statement on June 30, 1995.
8 Filed with Post-Effective Amendment No. 6 to Registrant's Registration
Statement on November 2, 1995.
* Incorporated by reference from File No. 811-8526 filed on Form
N-30D on April 10, 1996.
Item 25. Persons Controlled by or Under Common Control with Registrant
- -------- -------------------------------------------------------------
Not applicable.
C-5
<PAGE>
Item 26. Number of Record Holders
- -------- ------------------------
As of March 31, 1996 the number of record holders of each
operative series of Shares of the Registrant were as follows:
Number of
Series Record Holders
------ --------------
Qualivest Large Companies Value Fund 313
Qualivest Small Companies Value Fund 603
Qualivest Optimized Stock Fund 126
Qualivest International Opportunities Fund 73
Qualivest Intermediate Bond Fund 54
Qualivest Diversified Bond Fund 25
Qualivest U.S. Treasury Money Market Fund 14
Qualivest Money Market Fund 25
Qualivest Tax-Free Money Market Fund 15
Item 27. Indemnification
- -------- ---------------
Reference is made to Article IV of the Registrant's Agreement and
Declaration of Trust (Exhibit 1(a)) which is incorporated by
reference herein.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant
to the Fund's Declaration of Trust, its By-Laws or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public
policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by trustees, officers or controlling persons of
the Registrant in connection with the successful defense of any
act, suit or proceeding) is asserted by such trustees, officers
or controlling persons in connection with shares being
registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by
C-6
<PAGE>
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser and its
- -------- ------------------------------------------------------------
Officers and Directors
----------------------
The business of the Investment Adviser is summarized under
"MANAGEMENT OF THE TRUST - Investment Adviser" in the
Prospectuses constituting Part A of this Registration Statement,
which summaries are incorporated herein by reference. The
business or other connections of each director and officer of the
Investment Adviser is currently listed in the Investment
Adviser's investment adviser registration on Form ADV (File No.
801-22741) and is hereby incorporated herein by reference
thereto.
Item 29. Principal Underwriter
- -------- ---------------------
(a) BISYS Fund Services ("BISYS") acts as distributor and
administrator for Registrant. BISYS also distributes the
securities of The Coventry Group, The Victory Portfolios,
The HighMark Group, The Parkstone Group of Funds, the
Conestoga Family of Funds, the BB&T Mutual Funds Group, The
M.S.D.&T. Funds, Inc., The ARCH Fund, Inc., The Riverfront
Funds, Inc., The ARCH Tax-Exempt Trust, the American
Performance Funds, The Sessions Group, the Pacific Capital
Funds, the AmSouth Mutual Funds, the Summit Investment
Trust, the MarketWatch Funds and the MMA Praxis Mutual
Funds, each of which is an open-end management investment
company.
(b) Partners of BISYS Fund Services are as follows:
Positions and Positions and
Name and Principal Offices with Offices with
Business Address BISYS Fund Services Registrant
- ---------------- ------------------- ----------
C-7
<PAGE>
BISYS Fund Services, Inc. Sole General Partner None
3435 Stelzer Road
Columbus, Ohio 43219-3035
WC Subsidiary Corporation Sole Limited Partner None
3435 Stelzer Road
Columbus, Ohio 43219-3035
(c) Not Applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books, and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder
are in the possession of Qualivest Capital Management, Inc., 111
S.W. Fifth Avenue, Portland, Oregon 97204 (records relating to
its function as adviser for Registrant), BISYS Fund Services,
3435 Stelzer Road, Columbus, Ohio 43219-3035 (records relating to
its functions as general manager, administrator and distributor),
and BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219-3035 (records relating to its functions as transfer
agent).
Item 31. Management Services
- -------- -------------------
Not Applicable.
Item 32. Undertakings.
- -------- -------------
(a) Not Applicable.
(b) Registrant undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a
Trustee or Trustees when requested to do so by the holders
of at least 10% of the Registrant's outstanding shares of
beneficial interest and in connection with such
C-8
<PAGE>
meeting to comply with the shareholders communications
provisions of Section 16(c) of the Investment Company Act of
1940.
(c) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest Annual Report to Shareholders, upon request and
without charge.
(d) Registrant undertakes to file a post-effective amendment,
using financial statements of the Qualivest Allocated
Conservative Fund, the Qualivest Allocated Balanced Fund, the
Qualivest Allocated Growth Fund, the Qualivest Allocated
Aggressive Fund, the Qualivest Large Companies Growth Fund, and
the Qualivest Micro Cap Value Fund, which need not be certified,
within four to six months from the latter of the effective date
of Post-Effective Amendment No. 8 or the date on which Shares of
these Funds are first sold (other than Shares sold for seed
money).
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 8 to
the Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 8 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Washington, D.C., on this 10th day
of April, 1996.
Qualivest Funds
By: *
-------------------------------
George R. Landreth
President and Chief Executive Officer
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 8 to the Registration Statement on Form N-1A has
been signed below by the following persons on behalf of Qualivest Funds in
the capacity and on the date indicated:
Signatures Title Date
---------- ----- ----
* Trustee, April 10, 1996
- ---------------------------
George R. Landreth President and
Chief Executive
Officer
* Trustee April 10, 1996
- ---------------------------
David F. Jones
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<PAGE>
* Trustee April 10, 1996
- ---------------------------
John W. Judy
* Trustee April 10, 1996
- ---------------------------
Raymond H. Lung
* Trustee April 10, 1996
- ---------------------------
David B. Frohnmayer
* Treasurer April 10, 1996
- ---------------------------
Gregory T. Maddox (Principal
Financial
Officer and
Comptroller)
* By: /s/Jeffrey L. Steele
--------------------
Jeffrey L. Steele
as attorney-in-fact
* Powers of attorney are included as exhibits in Post-Effective
Amendment No. 1 filed November 7, 1994.
C-11
<PAGE>
Exhibit List
------------
Exhibit Exhibit
Number Name
- ------- -------
(1) Form of Declaration of Trust dated May 19, 1994
and Form of Amended and Restated Establishment
and Designation of Series effective
April 10, 1996
(5) (a) Form of Investment Advisory Agreement
(5) (b) Form of Amended Schedule A to the Investment
Advisory Agreement
(6) (b) Form of Amended Schedule A to the Distribution
Agreement between Registrant and The Winsbury
Company
(6) (c) Form of Amended Schedule B to the Distribution
Agreement between Registrant and The Winbury
Company
(6) (d) Form of Amended Schedule D to the Distribution
Agreement between Registrant and The Winsbury
Company
(6) (f) Form of Amended Schedule H to the Distribution
Agreement between Registrant and The Winsbury
Company
(8) (b) Form of Amended Schedule A to the Custodian
Agreement between Registrant and United States
National Bank of Oregon
(8) (c) Form of Amended Schedule B to the Custodian
Agreement between Registrant and United States
National Bank of Oregon
(9) (b) Form of Amended Schedule A to the Management
and Administration Agreement between
Registrant and The Winsbury Company
(9) (d) Form of Amended Schedule A to the Fund
Accounting Agreement between Registrant and The
Winsbury Company
(9) (f) Form of Amended Schedule A to the Transfer
Agency Agreement between Registrant and
The Winsbury Service Corporation
(9) (g) Form of Servicing Agreement for Class Y
Shares With Respect to Shareholder Services
(9) (h) Form of Schedule A to Servicing Agreement
for Class Y Shares With Respect to Shareholder
Services
(10) (c) Opinion of Counsel for Conservative Fund,
Balanced Fund, Growth Fund, and Aggresive
Fund
(11) Independent Auditors' Consent
(13) (d) Form of Purchase Agreement for Conservative
Fund, Balanced Fund, Growth Fund, and Aggressive
Fund
(15) (e) Form of Amended Schedule A to the Servicing
Agreement for Class A Shares with Respect to
Distribution Assistance and Shareholder
Services
(15) (g) Form of Amended Schedule A to the Servicing
Agreement for Class C Shares with Respect
to Distribution Assistance and Shareholder
Services
(17) Financial Data Schedule (filed as Exhibit 27)
(18) Form of Amended Multiple Class Plan Pursuant to
Rule 18f-3
Exhibit 1
QUALIVEST FUNDS
DECLARATION OF TRUST
May 19, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I -- Name and Definitions
Section 1.1 Name and Address................................
Section 1.2 Definitions.....................................
ARTICLE II -- Trustees
Section 2.1 Address.........................................
Section 2.2 General Powers..................................
Section 2.3 Investments.....................................
Section 2.4 Legal Title.....................................
Section 2.5 Issuance and Repurchase
of Securities.................................
Section 2.6 Delegation; Committees..........................
Section 2.7 Collection and Payment..........................
Section 2.8 Expenses........................................
Section 2.9 Manner of Acting; By-Laws.......................
Section 2.10 Miscellaneous Powers............................
Section 2.11 Principal Transactions..........................
Section 2.12 Number of Trustees..............................
Section 2.13 Election and Removal............................
Section 2.14 Resignation and Term............................
Section 2.15 Vacancies.......................................
Section 2.16 Delegation of Power to Other
Trustees......................................
ARTICLE III -- Contracts
Section 3.1 Underwriting Contract...........................
Section 3.2 Advisory or Management Contract.................
Section 3.3 Affiliations of Trustees or
Officers, Etc..................................
Section 3.4 Compliance with 1940 Act........................
ARTICLE IV -- Limitations of Liability of Shareholders,
Trustees and Others
Section 4.1 No Personal Liability of Shareholders,
Trustees, Etc..................................
Section 4.2 Non-Liability of Trustees, Etc..................
Section 4.3 Mandatory Indemnification.......................
Section 4.4 No Bond Required of Trustees....................
Section 4.5 No Duty of Investigation; Notice in
Trust Instruments, Etc........................
Section 4.6 Reliance on Experts, Etc........................
<PAGE>
ARTICLE V -- Shares of Beneficial Interest
Section 5.1 Beneficial Interest.............................
Section 5.2 Rights of Shareholders..........................
Section 5.3 Trust Only......................................
Section 5.4 Issuance of Shares..............................
Section 5.5 Register of Shares..............................
Section 5.6 Transfer of Shares..............................
Section 5.7 Notices.........................................
Section 5.8 Treasury Shares.................................
Section 5.9 Voting Powers...................................
Section 5.10 Meetings of Shareholders........................
Section 5.11 Series Designation..............................
ARTICLE VI -- Redemption and Repurchase of Shares
Section 6.1 Redemption of Shares............................
Section 6.2 Price...........................................
Section 6.3 Payment.........................................
Section 6.4 Effect of Suspension of
Determination of Net Asset
Value.........................................
Section 6.5 Repurchase by Agreement.........................
Section 6.6 Redemption of Shareholder's
Interest.......................................
Section 6.7 Reductions in Number of
Outstanding Shares Pursuant
to Net Asset Value Formula....................
Section 6.8 Suspension of Right of
Redemption....................................
ARTICLE VII -- Determination of Net Asset Value, Net
Income and Distributions
Section 7.1 Net Asset Value.................................
Section 7.2 Distributions to Shareholders...................
Section 7.3 Daily Dividends; Determination
of Net Income; Constant Net
Asset Value; Reduction of
Outstanding Shares............................
Section 7.4 Allocation Between Principal
and Income....................................
Section 7.5 Power to Modify Foregoing
Procedures....................................
<PAGE>
ARTICLE VIII -- Duration, Termination of Trust;
Amendment; Mergers, Etc.
Section 8.1 Duration........................................
Section 8.2 Termination of Trust ...........................
Section 8.3 Amendment Procedure ...........................
Section 8.4 Merger, Consolidation and Sale of Assets .......
Section 8.5 Incorporation ..................................
ARTICLE IX -- Reports to Shareholders
ARTICLE X -- Miscellaneous
Section 10.1 Filing..........................................
Section 10.2 Governing Law...................................
Section 10.3 Counterparts....................................
Section 10.4 Reliance by Third Parties.......................
Section 10.5 Provisions in Conflict with Law
or Regulations................................
Section 10.6 Name Reservations...............................
<PAGE>
DECLARATION OF TRUST
OF
QUALIVEST FUNDS
Dated: May 19, 1994
DECLARATION OF TRUST made May 19, 1994; WHEREAS, the Trustees
desire to establish a trust
for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, the Trustees desire that the beneficial interest in
the trust assets be divided into transferable shares of beneficial interest, as
hereinafter provided;
NOW, THEREFORE, the Trustees declare that all money and
property contributed to the trust established hereunder shall be held and
managed in trust for the benefit of the holders, from time to time, of the
shares of beneficial interest issued hereunder and subject to the provisions
hereof.
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name and Address. The name of the trust created
hereby, until and unless changed by the Trustees as provided in Section 8.3(a)
hereof, is "Qualivest Funds." The address of the trust is 1900 East
Dublin-Granville Road, Columbus, Ohio 43229.
Section 1.2. Definitions. Wherever they are
used herein, the following terms have the following respective
meanings:
(a) "By-laws" means the By-laws referred to in Section 2.9
hereof, as from time to time amended.
(b) The terms "Commission" and "Interested Person," have the
meanings given them in the 1940 Act. Except as otherwise defined by the Trustees
in conjunction with the establishment of any series of Shares, the term "vote of
a majority of the Shares outstanding and entitled to vote" shall have the same
meaning as the term "vote of a majority of the outstanding voting securities"
given it in the 1940 Act.
(c) "Custodian" means any Person other than the
Trust who has custody of any Trust Property as required by
<PAGE>
ss. 17(f) of the 1940 Act, but does not include a system for the central
handling of securities described in said ss. 17(f).
(d) "Declaration" means this Declaration of Trust as amended
from time to time. Reference in this Declaration of Trust to "Declaration",
"hereof" and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(e) "Distributor" means the party, other than the Trust, to
the contract described in Section 3.1 hereof.
(f) "His" shall include the feminine and neuter,
as well as the masculine, genders.
(g) "Municipal Bonds" means obligations issued by or on behalf
of states, territories and of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, the interest from
which is exempt from Federal income tax.
(h) The "1940 Act" means the Investment Company Act of 1940,
as amended from time to time.
(i) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(j) "Shareholder" means a record owner of
Outstanding Shares.
(k) "Shares" means the equal proportionate units of interest
into which the beneficial interest in the Trust shall be divided from time to
time, including the Shares of any and all series which may be established by the
Trustees, and includes fractions of Shares as well as whole Shares.
"Outstanding" Shares means those Shares shown from time to time on the books of
the Trust or its Transfer Agent as then issued and outstanding, but shall not
include Shares which have been redeemed or repurchased by the Trust and which
are at the time held in the Treasury of the Trust.
(l) "Transfer Agent" means any Person other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
(m) The "Trust" means the Qualivest Funds.
(n) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust or the Trustees.
<PAGE>
(o) The "Trustees" means the Persons who have signed this
Declaration, so long as they shall continue in office in accordance with the
terms hereof, and all other Persons who may from time to time be duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, and reference herein to a Trustee or the Trustees shall refer to such
Person or Persons in this capacity or their capacities as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. Address. The address of the Trustees
is Ten Post Office Square-South, Boston, MA 02109.
Section 2.2. General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they may deem necessary, proper or desirable in order to promote
the interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be executed
without order of or resort to any court.
Section 2.3. Investments. The Trustees shall have
the power:
(a) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct of
such operations.
(b) To invest in, hold for investment, or reinvest in,
securities, including common and preferred stocks; warrants; bonds; debentures;
bills; time notes and all other evidences of indebtedness; negotiable or
non-negotiable instruments; government securities, including securities of any
state, municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; and money market instruments
including bank certificates of deposit, finance paper, commercial paper,
bankers' acceptances and all kinds of repurchase agreements, of any corporation,
company, trust, association, firm or other business organization however
established, and of any country, state, municipality or other political
subdivisions, or any governmental or quasi-governmental agency or
instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to
hold, to trade in and deal in, to acquire or write any rights or options to
purchase or sell, to sell or otherwise dispose of, to lend, and to pledge any
such securities and repurchase agreements and forward foreign currency exchange
contracts, to purchase and sell futures contracts on securities, securities
indices and foreign currencies, to purchase or sell options on such contracts,
foreign currency contracts and foreign currencies and to engage in all types of
hedging and risk management transactions..
(d) To exercise all rights, powers and privileges of ownership
or interest in all securities and repurchase agreements included in the Trust
Property, including the right to vote thereon and otherwise act with respect
thereto and to do all acts for the preservation, protection, improvements and
enhancement in value of all such securities and repurchase agreements.
<PAGE>
(e) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop and dispose of (by sale or otherwise) any property, real
or personal, including cash, and any interest therein.
(f) To borrow money an in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company,
trust, association or firm, any obligation of or interest in which is included
in the Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) In general to carry on any other business in connection
with or incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment of
any object or the furtherance of any power hereinbefore set forth, either alone
or in association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.
Section 2.4. Legal Title. Legal title to all the Trust Property,
including the property of any series of the Trust, shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name of any other Person as
nominee, on such terms as the Trustees may determine, provided that the interest
of the Trust therein is deemed appropriately protected. The right, title and
interest of the Trustees in the Trust Property and the property of each series
of the Trust shall vest automatically in each Person who may hereafter become a
Trustee. Upon the termination of the term of office, resignation, removal or
death of a Trustee he shall automatically cease to have any right, title or
interest in any of the Trust Property or the property of any series of the
Trust, and the right, title and interest of such Trustee in all such property
shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveying documents have been
executed and delivered.
Section 2.5. Issuance and Repurchase of Securities. The Trustees
shall have the power to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in
Shares and, subject to the provisions set forth in Articles VI and VII and
Section 5.11 hereof, to apply to any such repurchase, redemption, retirement,
cancellation or acquisition of Shares any funds or property of the particular
series of the Trust with respect to which such Shares are issued, whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
Section 2.6. Delegation; Committees. The Trustees shall have power
to delegate from time to time to such of their number or to officers, employees
or agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the same extent as such
delegation is permitted by the 1940 Act.
<PAGE>
Section 2.7. Collection and Payment. The Trustees shall have power
to collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations, by virtue of which any property interest securing any
obligations, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
Section 2.8. Expenses. The Trustees shall have the power to incur
and pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
Section 2.9. Manner of Acting; By-Laws. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of the entire number
of Trustees then in office. The Trustees may adopt By-laws not consistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.10 Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Trust against all claims arising by reason of holding any
such position or by reason of any action taken or omitted by any such Person in
such capacity, whether or not constituting negligence, or whether or not the
Trust would have the power to indemnify such Person against such liability; (e)
establish pension, profit-sharing, Share purchase, and other retirement,
incentive and benefit plans for any Trustees, officers, employees and agents of
the Trust; (f) to the extent permitted by law, indemnify any person with whom
the Trust has dealings, including the Investment Adviser, Distributor, Transfer
Agent and selected dealers, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine and
change the fiscal year of the Trust and the method by which its accounts shall
be kept; and (i) adopt a seal for the Trust, but the absence of such seal shall
not impair the validity of any instrument executed on behalf of the Trust.
Section 2.11. Principal Transactions. Except in transactions not
permitted by the 1940 Act or rules and regulations adopted by the Commission,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with the Investment Adviser, Distributor or
Transfer Agent or with any Interested Person of such Person; and the Trust may
employ any such Person, or firm or company in which such Person is an Interested
Person, as broker, legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian upon customary terms.
Section 2.12. Number of Trustees. The number of Trustees shall
initially be two (2), and thereafter shall be such number as shall be fixed from
time to time by a written instrument signed by a majority of the Trustees,
provided, however, that the number of Trustees shall in no event be less than
one (1) nor more than fifteen (15).
Section 2.13. Election and Term. Except for the Trustees named
herein, designated by such Trustees prior to the issuance of Shares, or
appointed to fill vacancies pursuant to Section 2.15 hereof, the Trustees shall
be elected by the Shareholders owning of record a plurality of the Shares voting
at a meeting of Shareholders called for that purpose. Except in the event of
resignation or removals pursuant to Section 2.14 hereof, each Trustee shall hold
office until the next such meeting of Shareholders and until his successor is
duly elected and qualified.
<PAGE>
Section 2.14. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon such delivery, or at a later date according to the terms
of the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than three (3)) with
cause, by the action of two-thirds of the remaining Trustees. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust Property or property of any series of the Trust held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
legal representative shall execute and deliver on his behalf such documents as
the remaining Trustee shall require as provided in the preceding sentence.
Section 2.15. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing vacancy, including a vacancy existing by
reason of an increase in the number of Trustees. Subject to the provisions of
Section 16(a) of the 1940 Act, the remaining Trustees shall fill such vacancy by
the appointment of such other person as they in their discretion shall see fit,
made by a written instrument signed by a majority of the Trustees then in
office. Any such appointment shall not become effective, however, until the
person named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of the
Declaration. An appointment of a Trustee may be made in anticipation of a
vacancy to occur at a later date by reason of retirement, resignation or
increase in the number of Trustees, provided that such appointment shall not
become effective prior to such retirement, resignation or increase in the number
of Trustees. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in this Section 2.15, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by the Declaration.
A written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.16. Delegation of Power to Other Trustees. Any Trustee
may, by power of attorney, delegate his power for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees; provided that in no
case shall less than two (2) Trustees personally exercise the powers granted to
the Trustees under this Declaration, except as herein otherwise expressly
provided.
ARTICLE III
CONTRACTS
Section 3.1. Underwriting Contract. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive
underwriting contract or contracts providing for the sale of the Shares to net
the Trust not less than the amount provided for in Section 7.1 of Article VII
hereof, whereby the Trustees may either agree to sell the Shares to the other
party to the contract or appoint such other party their sales agent for the
Shares, and in either case on such terms and conditions as may be prescribed in
the By-laws, if any, and such further terms and conditions as the Trustees may
in their discretion determine not inconsistent with the provisions of this
Article III or of the By-laws; and such contract may also provide for the
repurchase of the Shares by such other party as agent of the Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in
their discretion from time to time enter into an investment advisory or
management contract whereby the other party to such contract shall undertake to
furnish to the Trust such management, investment advisory, statistical and
research facilities and services and such other facilities and services, if any,
and all upon such terms and conditions as the Trustees may in their discretion
determine, including the grant of authority to such other party to determine
what securities shall be purchased or sold by the Trust and what portion of its
assets shall be uninvested, which authority shall include the power to make
changes in the Trust's investments.
<PAGE>
Section 3.3. Affiliations of Trustees or Officers,
Etc. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization or of or for
any parent or affiliate of any organization, with which a contract
of the character described in Sections 3.1 or 3.2 above or for
services as Custodian, Transfer Agent or disbursing agent or for
related services may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a
Shareholder of or has an interest in the Trust, or that
(ii) any partnership, corporation, trust, association or other
organization with which a contract or the character described in
Sections 3.1 or 3.2 above or for services as Custodian, Transfer
Agent or disbursing agent or for related services may have been or
may hereafter be made also has any one or more of such contracts
with one or more other partnerships, corporations, trusts,
associations or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to this Trust or its
Shareholders.
Section 3.4. Compliance with 1940 Act. Any contract entered into
pursuant to Sections 3.1 or 3.2 shall be consistent with and subject to the
requirements of Section 15 of the Investment Company Act of 1940 (including any
amendment thereof or other applicable Act of Congress hereafter enacted) with
respect to its continuance in effect, its termination and the method of
authorization and approval of such contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs of
the Trust. No Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever to any Person, other than to the Trust or
its Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
<PAGE>
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the Trust is made
a party to any suit or proceeding to enforce any such liability of the Trust, he
shall not, on account thereof, be held to any personal liability. The Trust
shall indemnify and hold each Shareholder harmless from and against all claims
and liabilities, to which such Shareholder may become subject by reason of his
being or having been a Shareholder, and shall reimburse such Shareholder for all
legal and other expenses reasonably incurred by him in connection with any such
claim or liability, provided that any such expenses shall be paid solely out of
the funds and property of the series of the Trust with respect to which such
Shareholder's Shares are issued. The rights accruing to a Shareholder under this
Section 4.1 shall not exclude any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the right of the
Trust to indemnify or reimburse a Shareholder in any appropriate situation even
though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its Shareholders,
or to any Shareholder, Trustee, officer, employee, agent or service provider
thereof for any action or failure to act by him (her) or any other such Trustee,
officer, employee, agent or service provider (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office. The term
"service provider" as used in this Section 4.2 shall include any investment
adviser, principal underwriter or other person with whom the Trust has an
agreement for provision of services.
Section 4.3. Mandatory Indemnification.
(a) Subject to the exceptions and limitations
contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party
or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened; and
the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities. (b) No
indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the
Shareholders by reason of a final adjudication by the court or other
body before which the proceeding was brought that he engaged in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i)
resulting in a payment by a Trustee or officer, unless there has
been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office:
(A) by the court or other body approving
the settlement or other disposition;
<PAGE>
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote a majority
of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office
act on the matter) or (y) written opinion of independent legal
counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors, administrators
and assigns of such a person. Nothing contained herein shall affect any rights
to indemnification to which personnel of the Trust other than Trustees and
officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in paragraph (a) of
the Section 4.3 may be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 4.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust shall
be insured against losses arising out of any such advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees act
on the matter) or an independent legal counsel in a written opinion
shall determine, based upon a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the recipient ultimately will be found entitled to
indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one
who is not (A) an "Interested Person" of the Trust (including anyone
who has been exempted from being an "Interested Person" by any rule,
regulation or order of the Commission), or (B) involved in the
claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No
Trustee shall be obligated to give any bond or other security for the
performance of any of his duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments,
Etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or
undertaking, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as Trustees under this Declaration or
in their capacity as officers, employees or agents of the Trust. Every written
obligation, contract, instrument, certificate, Share, other security of the
Trust or undertaking made or issued by the Trustees may recite that the same is
executed or made by them not individually, but as Trustees under the
Declaration, and that the obligations of the Trust under any such instrument are
not binding upon any of the Trustees or Shareholders individually, but bind only
the estate of the Trust or series, as applicable, and may contain any former
recital which they or he may deem appropriate, but the omission of such recital
shall not operate to bind the Trustees individually. The Trustees shall at all
times maintain insurance for the protection of the Trust Property, its
Shareholders, Trustees, officers, employees and agents in such amount as the
Trustees shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgement shall deem advisable.
<PAGE>
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of
the beneficiaries hereunder shall be divided into transferable Shares of
beneficial interest with no par value per Share. All Shares shall be of one
class, except as provided in Section 5.11 hereof. The number of Shares of
beneficial interest authorized hereunder is unlimited. All Shares issued
hereunder including, without limitation, Shares issued in connection with a
dividend in Shares or a split of Shares, shall be fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust
Property and the property of each Series of the Trust of every description and
the right to conduct any business hereinbefore described are vested exclusively
in the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Trust nor can they be called upon to share or assume any losses
of the Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights in this
Declaration specifically set forth. The Shares shall not entitle the holder of
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine with respect to any series of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration of Trust shall be construed to make the
Shareholders, either by themselves or with the Trustees, partners or members of
a joint stock association.
Section 5.4. Issuance of Shares. The Trustees in their discretion
may, from time to time without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares and Shares held in the
treasury, and Shares may be issued in separate series as provided in Section
5.11 hereof. The Trustee may from time to time divide or combine the Shares into
a greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust or any series. Contributions to the Trust may be accepted
for, and Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share
or integral multiple thereof.
Section 5.5. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or in
the By-laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. It is not contemplated that certificates will be issued for the
Shares; however, the Trustees, in their discretion, may authorize the issuance
of share certificates and promulgate appropriate rules and regulations as to
their use.
<PAGE>
Section 5.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any Person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation
of law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder
may be entitled and any and all communications shall be deemed duly served or
given if mailed, postage pre-paid, addressed to any Shareholder of record at his
last known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall,
until reissued pursuant to Section 5.4, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Section 2.12; (ii)
with respect to any investment advisory or management contract entered into
pursuant to Section 3.2; (iii) with respect to termination of the Trust as
provided in Section 8.2; (iv) with respect to any amendment of this Declaration
to the extent and as provided in Section 8.3; (v) with respect to any merger,
consolidation or sale of assets as provided in Section 8.4; (vi) with respect to
incorporation of the Trust to the extent and as provided in Section 8.5; (vii)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders; and (viii) with respect to such additional matters relating
to the Trust as may be required by this Declaration, the By-laws or any
registration of the Trust as an investment company under the 1940 Act with the
Commission (or any successor agency) or as the Trustees may consider necessary
or desirable. Each whole Share shall be entitled to one vote for each dollar
value invested as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote, except
that the Trustees may, in conjunction with the establishment of any series of
Shares, establish conditions under which the several series shall have separate
voting rights or no voting rights. There shall be no cumulative voting in the
election of Trustees. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law, this Declaration
or the By-laws to be taken by Shareholders. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.
Section 5.10. Meetings of Shareholders. A meeting of the
Shareholders shall be held at such times, on such day and at such hour as the
Trustees may from time to time determine, or at the written request of the
holder or holders of ten percent (10%) or more of the total number of Shares
then issued and outstanding of the Trust entitled to vote as such meeting. Any
such request shall state the purpsoe of the proposed meeting. The meeting shall
be held either at the principal office of the Trust, or at such other place as
may be designated by the Trustees, for the purposes specified in Section 2.13
and for such other purposes as may be specified by the Trustees.
Section 5.11. Series Designation. The Trustees, in
their discretion, may authorize one division of Shares into two
or more series, and the different series shall be established and designated
and the variations in the relative rights and preferences as between the
different series shall be fixed and determined, by the Trustees; provided, that
all Shares shall be identical except that there may be variations so fixed and
determined between different series as to investment objective, purchase price,
right of redemption, special and relative rights as to dividends and on
liquidation, conversion rights, and conditions under which the several series
shall have separate voting rights. All references to Shares in this Declaration
shall be deemed to be Shares of any or all series as the context may require.
If the Trustee shall divide the Shares of the Trust into two or more
series, the following provisions shall be applicable:
<PAGE>
(a) All provisions herein relating to the Trust shall apply
equally to each series of the Trust except as the context requires otherwise.
(b) The number of authorized Shares and the number of Shares
of each series that may be issued shall be unlimited. The Trustees may classify
or reclassify any unissued Shares or any Shares previously issued and reacquired
of any series into one or more series that may be established and designated
from time to time. The Trustees may hold as treasury shares (of the same or some
other series), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any series acquired by the Trust at their
discretion from time to time.
(c) All consideration received by the Trust for the issue or
sale of Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that series for all purposes, subject only to the rights
of creditors of such series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular series, the Trustees shall allocate them among any
one or more of the series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon all persons for all purposes.
(d) The assets belonging to each particular series shall be
charged with the liabilities of the Trust in respect of that series and all
expenses, costs, charges and reserves attributable to that series, and any
general liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as belonging to any particular series shall be
allocated and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable and no series
shall be liable to any person except for its allocated share. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon all persons for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items are capital; and each such determination and allocation
shall be conclusive and binding upon all persons.
The assets of a particular series of the Trust shall, under no circumstances,
be charged with liabilities attributable to any other series of the Trust. All
persons extending credit to, or contracting with or having any claim against a
particular series of the Trust shall look only to the assets of that particular
series for payment of such credit, contract or claim.
(e) Each Share of a series of the Trust shall represent a
beneficial interest in the net assets of such series. Each holder of Shares of a
series shall be entitled to receive his pro rata share of distributions of
income and capital gains made with respect to such series. Upon redemption of
his Shares or indemnification for liabilities incurred by reason of his being or
having been a Shareholder of a series, such Shareholder shall be paid solely out
of the funds and property of such series of the Trust. Upon liquidation or
termination of a series of the Trust, Shareholders of such series shall be
entitled to receive a pro rata share of the net assets of such series. A
Shareholder of a particular series of the Trust shall not be entitled to
participate in a derivative or class action on behalf of any other series or the
Shareholders of any other series of the Trust.
(f) Notwithstanding any other provision hereof, on any matter
submitted to a vote of Shareholders of the Trust, all Shares then entitled to
vote shall be voted by individual series, except that (i) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual series,
and (ii) when the Trustees have determined that the matter affects only the
interests of Shareholders of a limited number of series, then only the
Shareholders of such series shall be entitled to vote thereon.
The establishment and designation of any series of Shares
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such series, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
series previously established and designated, the Trustees may by an instrument
executed by a majority of their number abolish that series and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.
<PAGE>
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. All Shares of
the Trust shall be redeemable, at the redemption price determined in the manner
set out in this Declaration. Redeemed or repurchased Shares may be resold by the
Trust.
The Trust shall redeem the Shares at the price determined as
hereinafter set forth, upon the appropriately verified written application of
the record holder thereof (or upon such other form of request as the Trustees
may determine) at such office or agency as may be designated from time to time
for that purpose by the Trustees. The Trustees may from time to time specify
additional conditions, not inconsistent with the 1940 Act, regarding the
redemption of Shares in the Trust's then effective registration statement or
prospectus under the Securities Act of 1933.
Section 6.2. Price. Shares will be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In the absence of such
resolution, the redemption price of Shares deposited shall be the net asset
value of such Shares next determined as set forth in Section 7.1 hereof after
receipt of such application.
Section 6.3. Payment. Payment for such Shares shall be made in cash
or in property out of the assets of the relevant series of the Trust to the
Shareholder of record at such time and in the manner, not inconsistent with the
1940 Act or other applicable laws, as may be specified from time to time in the
Trust's then effective registration statement or prospectus under the Securities
Act of 1933, subject to the provisions of Section 6.4 hereof.
Section 6.4. Effect of Suspension of Determination of Net Asset
Value. If, pursuant to Section 6.9 hereof, the Trustees shall declare a
suspension of the determination of net asset value, the rights of Shareholders
(including those who shall have applied for redemption pursuant to Section 6.1
hereof but who shall not yet have received payment) to have Shares redeemed and
paid for by the Trust shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right so
suspended may, during the period of such suspension, by appropriate written
notice of revocation at the office or agency where application was made, revoke
any application for redemption not honored and withdraw any certificates on
deposit. The redemption price of Shares for which redemption applications have
not been revoked shall be the net asset value of such Shares next determined as
set forth in Section 7.1 after the termination of such suspension, and payment
shall be made within seven (7) days after the date upon which the application
was made plus the period after such application during which the determination
of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase
Shares directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per Share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
<PAGE>
Section 6.6. Redemption of Shareholder's Interest. The Trust shall
have the right at any time without prior notice to the Shareholder to redeem
Shares of any Shareholder for their then current net asset value per Share if at
such time the Shareholder owns Shares having an aggregate net asset value of
less than $500 subject to such terms and conditions as the Trustees may approve,
and subject to the Trust's giving general notice to all Shareholders of its
intention to avail itself of such right, either by publication in the Trust's
prospectus, if any, or by such other means as the Trustees may determine.
Section 6.7. Reductions in Number of Outstanding
Shares Pursuant to Net Asset Value Formula. The Trust may also
reduce the number of outstanding Shares pursuant to the
provisions of Section 7.3.
Section 6.8. Suspension of Right of Redemption. The Trust may
declare a suspension of the right of redemption or postpone the date of payment
or redemption for the whole or any part of any period (i) during which the New
York Stock Exchange is closed other than customary weekend and holiday closings,
(ii) during which trading on the New York Stock Exchange is restricted, (iii)
during which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(iv) during any other period when the Commission may for the protection of
security holders of the Trust by order permit suspension of the right of
redemption or postponement of the date of payment or redemption; provided that
applicable rules and regulations of the Commission shall govern as to whether
the conditions prescribed in (ii), (iii), or (iv) exist. Such suspension shall
take effect at such time as the Trust shall specify but not later than the close
of business on the business day next following the declaration of suspension,
and thereafter there shall be no right of redemption or payment on redemption
until the Trust shall declare the suspension at an end, except that the
suspension shall terminate in any event on the first day on which said stock
exchange shall have reopened or the period specified in (ii) or (iii) shall have
expired (as to which, in the absence of an official ruling by the Commission,
the determination of the Trust shall be conclusive). In the case of a suspension
of the right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the net asset value existing after the
termination of the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The value of the assets of any series
of the Trust shall be determined by appraisal of the securities allocated to
such series, such appraisal to be on the basis of the amortized cost of such
securities or market value in the case of equity securities, or, consistent with
the rules and regulations of the Commission, by such other method as shall be
deemed to reflect the fair value thereof, determined in good faith by or under
the direction of the Trustees. From the total value of said assets, there shall
be deducted all indebtedness, interest, taxes, payable or accrued, including
estimated taxes on unrealized book profits, expenses and management charges
accrued to the appraisal date, net income determined and declared as a
distribution and all other items in the nature of liabilities attributable to
such series which shall be deemed appropriate. The resulting amount which shall
represent the total net assets of the series shall be divided by the number of
Shares of such series outstanding at the time and the quotient so obtained shall
be deemed to be the net asset value of the Shares of such series. The net asset
value of the Shares shall be determined at least once on each business day, as
of the close of trading on the New York Stock Exchange or as of such other time
or times as the Trustees shall determine. The power and duty to make the daily
calculations may be delegated by the Trustees to the Investment Adviser, the
Custodian, the Transfer Agent or such other Person as the Trustees by resolution
may determine. The Trustees may suspend the daily determination of net asset
value to the extent permitted by the 1940 Act.
Section 7.2. Distributions to Shareholders. The Trustees shall from
time to time distribute ratably among the Shareholders of a series such
proportion of the net profits, surplus (including paid-in surplus), capital, or
assets of such series held by the Trustees as they may deem proper. Such
distributions may be made in cash or property (including without limitation any
type of obligations of such series or any assets thereof), and the Trustees may
distribute ratably among the Shareholders additional Shares of such series
issuable hereunder in such manner, at such times, and on such terms as the
Trustees may deem proper. Such distributions may be among the Shareholders of
record at the time of declaring a distribution or among the Shareholders of
record at such other date or time or dates or times as the Trustees shall
determine. The Trustees may in their discretion determine that, solely for the
purposes of such distributions, Outstanding Shares shall exclude Shares for
which orders have been placed subsequent to a specified time on the date the
distribution is declared or on the next preceding day if the distribution is
declared as of a day on which Boston banks are not open for business, all as
described in the then effective registration statement or prospectus under the
Securities Act of 1933. The Trustees may always retain from the net profits such
amount as they may deem necessary to pay the debts or expenses of the series or
to meet obligations of the series, or as they may deem desirable to use in the
conduct of its affairs or to retain for future requirements or extensions of the
business. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
<PAGE>
Inasmuch as the computation of net income and gains for Federal
income tax purposes may vary from the computation thereof on the books, the
above provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust or the series to avoid or reduce liability for taxes.
Section 7.3. Daily Dividends; Determination of Net Income; Constant
Net Asset Value; Reduction of Outstanding Shares. The net income of any series
may consist of (i) all interest income accrued on portfolio assets of the
series, less (ii) all actual and accrued liabilities determined in accordance
with generally accepted accounting principles and plus or minus (iii) net
realized or net unrealized gains and losses on the assets of the series.
Interest income may include discount earned (including both original issue and
market discount) on discount paper accrued ratably to the date of maturity or
determined in such other manner as the Trustees may determine. Expenses of the
series, including the advisory or management fee, shall be accrued each day.
Such net income may be determined by or under the direction of the Trustees as
of the close of trading on the New York Stock Exchange on each day on which such
market is open or as of such other time or times as the Trustees shall
determine, and, except as provided herein, all the net income of the series, so
determined, may be declared as a dividend on the Outstanding Shares of such
series. If, for any reason, the net income of the series determined at any time
is a negative amount, the Trustees shall have the power (i) to offset each
Shareholder's pro rata share of such negative amount from the accrued dividend
account of such Shareholder, or (ii) to reduce the number of Outstanding Shares
of the series by reducing the number of Shares in the account of such
Shareholder by that number of full and factional Shares which represents the
amount of such excess negative net income, or (iii) to cause to be recorded on
the books of the series an asset account in the amount of such negative income,
which account may be reduced by the amount, provided that the same shall
thereupon become the property of the series and shall not be paid to any
Shareholder, of dividends declared thereafter upon the Outstanding Shares on the
day such negative net income is experienced, until such asset account is reduced
to zero; or (iv) to combine the methods described in clauses (i), (ii) and (iii)
of this sentence, in order to cause the net asset value per Share of the series
to remain at a constant amount per Outstanding Share immediately after each such
determination and declaration. The Trustees shall also have the power to fail to
declare a dividend out of net income for the purpose of causing the net asset
value per Share of the series to be increased to a constant amount. The Trustees
shall not be required to adopt, but may at any time adopt, discontinue or amend
the practice of maintaining the net asset value per Share of a series at a
constant amount.
<PAGE>
Section 7.4. Allocation Between Principal and Income. The Trustees
shall have full discretion to determine whether any cash or property received
shall be treated as income or as principal and whether any item of expense shall
be charged to the income or the principal account, and their determination made
in good faith shall be conclusive upon the Shareholders. In the case of stock
dividends received, the Trustees shall have full discretion to determine, in the
light of the particular circumstances, how much if any of the value thereof
shall be treated as income, the balance, if any, to be treated as principal.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VII, the Trustees may prescribe,
in their absolute discretion, such other bases and times for determining the per
Share net asset value of the series' Shares or net income, or the declaration
and payment of dividends and distributions as they may deem necessary or
desirable. Without limiting the generality of the foregoing, the Trustees may
establish several series of Shares in accordance with Section 5.11, and declare
dividends thereon in such manner as they shall determine.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
<PAGE>
Section 8.1. Duration. The Trust or the series of
the Trust shall continue without limitation of time but subject
to the provisions of this Article VIII.
Section 8.2. Termination of Trust or Series of the Trust. (a) The
Trust or any series of the Trust may be terminated by the affirmative vote of
the holders of not less than two-thirds of the Shares outstanding and entitled
to vote, at any meeting of the Shareholders or by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than two-thirds of such Shares, or by such other vote as may
be established by the Trustees with respect to any series of Shares. Upon the
termination of the Trust or any series of the Trust,
(i) The Trust or the series of the Trust shall carry on no
business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust or the series of the Trust and all of the powers of the
Trustees under this Declaration shall continue until the affairs of
the Trust or the series of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the
Trust or the series of the Trust, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part
of the remaining Trust Property or property of the series of the
Trust to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange,
transfer or other disposition of all or substantially all the Trust
Property or property of the series of the Trust shall require
Shareholder approval in accordance with Section 8.4 hereof.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection,
the Trustees may distribute the remaining Trust Property or property
of the series of the Trust, in cash or in kind or partly each, among
the Shareholders according to their respective rights.
(b) After termination of the Trust or any series of the Trust
and distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust or the series of
the Trust an instrument in writing setting forth the fact of such termination,
and the Trustees shall thereupon be discharged from all further liabilities and
duties hereunder, and the rights and interests of all Shareholders shall
thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be
amended by a vote of the holders of a majority of the Shares outstanding and
entitled to vote or by any instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of a majority of the
Shares outstanding and entitled to vote. Amendments shall be effective upon the
taking of action as provided in this section or at such later time as shall be
specified in the applicable vote or instrument. The Trustees may also amend this
Declaration without the vote or consent of Shareholders to change the name of
the Trust, to supply any omission, to cure, correct or supplement any ambiguous,
defective or inconsistent provision hereof, if they deem it necessary to conform
this Declaration to the requirements of applicable federal laws or regulations
or the requirements of the regulated investment company provisions of the
Internal Revenue Code (including those provisions of such Code relating to the
retention of the exemption from federal income tax with respect to dividends
paid by the Trust out of interest income received on Municipal Bonds), or to
make any other changes in the Declaration which do not materially adversely
affect the rights of shareholders hereunder, but the Trustees shall not be
liable for failing to do so.
<PAGE>
(b) No amendment may be made under this Section 8.3 which would
change any rights with respect to any Shares of the Trust by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares outstanding and entitled to vote, or by such
other vote as may be established by the Trustees with respect to any series of
Shares. Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth
an amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall become effective,
this Declaration may be terminated or amended in any respect by the affirmative
vote of a majority of the Trustees or by an instrument signed by a majority of
the Trustees.
<PAGE>
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its good will, upon such terms and conditions and for
such consideration when and as authorized at any meeting of Shareholders called
for the purpose by the affirmative vote of the holders of two-thirds of the
Shares outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of two-thirds of the
Shares or by such other vote as may be established by the Trustees with respect
to any series of Shares; provided, however, that if such merger, consolidation,
sale, lease or exchange is recommended by the Trustees, the vote or written
consent of the holders of a majority of the Shares outstanding and entitled to
vote, or such other vote or written consent as may be established by the
Trustees with respect to any series of Shares, shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
statutes of the Commonwealth of Massachusetts.
Section 8.5. Incorporation. With the approval of the holders of a
majority of the Shares outstanding and entitled to vote, or by such other vote
as may be established by the Trustees with respect to any series of Shares, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization in exchange for the Shares or
securities thereof or otherwise, and to lend money to, subscribe for the Shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization, or any corporation, partnership,
trust, association or organization in which the Trust holds or is about to
acquire shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organizations or
entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semiannually submit to the Shareholders
a written financial report, which may be included in the Trust's prospectus, of
the transactions of the Trust, including financial statements which shall at
least annually be certified by independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of the Commonwealth of
Massachusetts and in such other places as may be required under the laws of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its filing. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and shall, upon filing with the Secretary of the
Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may hereafter be referred to in lieu of the original
Declaration and the various amendments thereto. The restated Declaration may
include any amendment which the Trustees are empowered to adopt, whether or not
such amendment has been adopted prior to the execution of the restated
Declaration.
<PAGE>
Section 10.2. Governing Law. This Declaration is executed by the
Trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said State without regard to the choice of law rules
thereof.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by
an individual who, according to the records of the Trust appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a)
The provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
Section 10.6. Name Reservation. The Trust acknowledges that
Qualivest Capital Management, Inc. ("Qualivest") has reserved the right to grant
the non-exclusive use of the name "Qualivest" or any derivative thereof to, and
to withdraw such right from, any other investment company, investment adviser,
administrator, or distributor. In addition, Qualivest reserves the right to
grant the non-exclusive use of the name Qualivest to, and to withdraw such right
from, any other business or other enterprise. Qualivest has reserved the right
to withdraw from the Trust the use of the said name Qualivest and will withdraw
such name if Qualivest withdraws the right to the use of such name.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 19th
day of May, 1994.
as Trustee and not individually.
Ten Post Office Square-South
Boston, MA 02109
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk May 19, 1994
Then personally appeared the above-named Caroline Pearson, who
acknowledged the foregoing instrument to be her free act and deed.
Before me,
Notary Public
My commission expires:
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this instrument this 19th
day of May, 1994.
as Trustee and not individually.
Ten Post Office Square-South
Boston, MA 02109
THE COMMONWEALTH OF MASSACHUSETTS
County of Suffolk May 19, 1994
Then personally appeared the above-named Mary C. Cove, who acknowledged
the foregoing instrument to be her free act and deed.
Before me,
Notary Public
My commission expires:
<PAGE>
QUALIVEST FUNDS
Amended and Restated
Establishment and Designation of Series
The undersigned, being at least a majority of the trustees (the "Trustees") of
Qualivest Funds (the "Trust"), a Massachusetts business trust, acting pursuant
to Section 5.11 of the Declaration of Trust dated May 19, 1994, as amended (the
"Declaration of Trust"), effective April 10, 1996 hereby divide the shares of
beneficial interest of the Trust into fifteen separate series (the "Funds"),
eleven of which were previously established by a written Establishment and
Designation of Series dated May 19, 1994 and an Amended and Restated
Establishment and Designation of Series dated May 1, 1995, the Funds hereby
created having the following special and relative rights:
1. The Funds shall be designated as follows:
A. Previously Designated Series:
Qualivest Money Market Fund; Qualivest Tax-Free Money Market
Fund; Qualivest Intermediate Bond Fund; Qualivest Diversified
Bond Fund; Qualivest Tax-Free National Bond Fund; Qualivest
Large Companies Value Fund; Qualivest Small Companies Value
Fund; Qualivest Income Equity Value Fund; and Qualivest
Optimized Stock Fund.
B. Newly Designated Series:
Qualivest U.S. Treasury Money Market Fund;1 Qualivest
International Opportunities Fund;2 Qualivest Allocated
Conservative Fund; Qualivest Allocated Balanced Fund;
Qualivest Allocated Growth Fund; and Qualivest Allocated
Aggressive Fund.
- --------
1 Previously established by the May 1, 1995 Amended and
Restated Establishment and Designation of Series, in which
it was designated "Qualivest U.S. Treasury Fund."
2 Previously established by the May 1, 1995 Amended and Restated
Establishment and Designation of Series, in which it was designated
"Qualivest International Companies Fund."
<PAGE>
2. Each of Qualivest Intermediate Bond Fund, Qualivest Tax-Free National
Bond Fund, Qualivest Large Companies Value Fund, Qualivest Small Companies Value
Fund, Qualivest Income Equity Value Fund, Qualivest International Opportunities
Fund, Qualivest Optimized Stock Fund, Qualivest Diversified Bond Fund, Qualivest
Allocated Conservative Fund, Qualivest Allocated Balanced Fund, Qualivest
Allocated Growth Fund, and Qualivest Allocated Aggressive Fund shall issue its
shares of beneficial interest with respect to three classes: Class A, Class C,
and Class Y. Each of Qualivest U.S. Treasury Money Market Fund, Qualivest Money
Market Fund, and Qualivest Tax-Free Money Market Fund shall issue its shares of
beneficial interest with respect to three classes: Class A, Class Q, and Class
Y.
3. The Funds and their classes shall have the following
special and relative rights:
(a) Each Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the then
current effective prospectus and registration statement for that Fund under the
Securities Act of 1933. Each share of beneficial interest of each Fund shall be
redeemable, shall represent a pro rata beneficial interest in the assets of the
Fund, and shall be entitled to receive its pro rata share of net assets
allocable to such shares of the Fund upon liquidation of that Fund, all as
provided in the Declaration of Trust. The proceeds of sales of shares of each
Fund, together with any income and gain thereon, less any diminution or expenses
thereof, shall irrevocably belong to that Fund, unless otherwise required by
law.
(b) Each share of beneficial interest of each Fund shall be entitled to
one vote for each dollar of value invested (or fraction thereof in respect of a
fractional share) on matters which such shares shall be entitled to vote except
to the extent otherwise required by the Investment Company Act of 1940 or when
the Trustees have determined that the matter affects only the interest of
shareholders of certain Funds or classes, in which case only the shareholders of
such Funds or classes shall be entitled to vote thereon. Any matter shall be
deemed to have been effectively acted upon with respect to the Funds or classes
if acted upon as provided in Rule 18f-2 under such Act or any successor rule and
in the Declaration of Trust.
(c) The assets and liabilities of the Trust shall be allocated among the
above-referenced Funds and classes, as set forth in Section 5.11 of the
Declaration of Trust, except as described below.
- 21 -
<PAGE>
(1) Costs incurred by the Trust on behalf of the Funds in
connection with the organization and initial registration and
public offering of shares of the Funds shall be amortized for
the Funds over the lesser of the life of the Fund or the five
year period beginning with the month that each Fund commences
operations.
(2) The Trustees may from time to time in particular cases make
specific allocations of assets or liabilities among the Funds
and classes, and each allocation of liabilities, expense
costs, charges and reserves by the Trustees shall be
conclusive and binding upon the shareholders of all Funds and
classes for all purposes.
4. The Trustees (including any successor Trustee) shall have the right at
any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund or class now or hereafter created or to otherwise
change the special and relative rights of any such Fund or class, provided that
such change shall not adversely affect the rights of the shareholders of such
Fund or class.
- 22 -
<PAGE>
-------------------------------
George R. Landreth, as Trustee
-------------------------------
David F. Jones, as Trustee
-------------------------------
Raymond G. Lung, as Trustee
-------------------------------
John W. Judy, as Trustee
-------------------------------
David B. Frohnmayer, as Trustee
Date: March 14, 1996
- 23 -
Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 29th day of July, 1994, between QUALIVEST FUNDS
(the "Trust"), a Massachusetts business trust having its principal place of
business at 1900 East Dublin-Granville Road, Columbus, Ohio 43229, and
QUALIVEST CAPITAL MANAGEMENT, INC., an Oregon corporation (the "Investment
Adviser"), having its principal place of business at 111 S.W. Fifth Avenue,
Portland, Oregon 97204.
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory and administrative services to newly created investment
portfolios of the Trust and may retain the Investment Adviser to serve in such
capacity with respect to certain additional investment portfolios of the Trust,
all as now or hereafter may be identified in Schedule A hereto as such Schedule
may be amended from time to time (individually referred to herein as a "Fund"
and collectively referred to herein as the "Funds") and the Investment Adviser
represents that it is willing and possesses legal authority to so furnish such
services without violation of applicable laws and regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
-----------
as investment adviser to the Funds for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. Additional investment portfolios may
from time to time be added to those covered by this Agreement by the
parties executing a new Schedule A which shall become effective upon
its execution and shall supersede any Schedule A having an earlier date.
2. Delivery of Documents. The Trust has furnished the Investment Adviser
with copies properly certified or authenticated of each of the
following:
(a) the Trust's Agreement and Declaration of Trust, dated as of May 19,
1994, and any and all amendments thereto or restatements thereof
(such Declaration, as presently in effect and as it shall from time
to time be amended or restated, is herein called the "Declaration of
Trust");
<PAGE>
(b) the Trust's By-Laws and any amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this
Agreement;
(d) the Trust's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission (the
"Commission") on May 20, 1994, and all amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (the "1933 Act"), and under the 1940 Act as
filed with the Commission and all amendments thereto (the
"Registration Statement"); and
(f) the most recent Prospectus and Statement of Additional Information
of each of the Funds (such Prospectus and Statement of Additional
Information, as presently in effect, and all amendments and
supplements thereto, are herein collectively called the
"Prospectus").
The Trust will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Trust's Board of
----------
Trustees, the Investment Adviser will provide a continuous investment
program for the Funds, including investment research and management
with respect to all securities and investments and cash equivalents in
the Funds. The Investment Adviser will determine from time to time
what securities and other investments will be purchased, retained or
sold by the Trust with respect to the Funds. The Investment Adviser
will provide the services under this Agreement in accordance with each
of the Fund's investment objectives, policies, and restrictions as
stated in the Prospectus and resolutions of the Trust's Board of
Trustees. The Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Commission under the 1940 Act and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the
investment advisory activities of the Investment Adviser;
<PAGE>
(c) will not make loans to any person to purchase or carry units of
beneficial interest ("shares") in the Trust or make loans to the
Trust;
(d) will place or cause to be placed orders for the Funds either
directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Investment Adviser
will attempt to obtain prompt execution of orders in an effective
manner at the most favorable price. Consistent with this
obligation and to the extent permitted by the 1940 Act, when the
execution and price offered by two or more brokers or dealers are
comparable, the Investment Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and
dealers who provide the Investment Adviser with research advice
and other services. In no instance will portfolio securities be
purchased from or sold to The Winsbury Company, the Investment
Adviser, or any affiliated person of the Trust, The Winsbury
Company or the Investment Adviser, except to the extent permitted
by the 1940 Act and the Commission;
(e) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trust's Board of
Trustees with such periodic and special reports as the Board may
request;
(f) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
the Funds and prior, present, or potential shareholders, and will
not use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Trust,
which approval shall not be unreasonably withheld and may not be
withheld where the Investment Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Trust;
(g) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations
for the Funds, the Investment Adviser's personnel will not
inquire or take into consideration whether the issuers of
<PAGE>
securities proposed for purchase or sale for the Trust's account
are customers of the Investment Adviser or of its parent or its
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser and its parent, subsidiaries, and affiliates
will not inquire or take into consideration whether securities of
those customers are held by the Trust;
(h) will promptly review all (1) current security reports, (2) summary
reports of transactions and (3) current cash position reports upon
receipt thereof from the Trust and will report any errors or
discrepancies in such reports to the Trust or its designee within
three (3) business days; and
(i) will use its best efforts to obtain and provide to the Trust's fund
accountant (1) dealer quotations, (2) prices from a pricing service,
(3) matrix prices, or (4) any other price information believed to be
reliable by the Investment Adviser with respect to any security held
by a Fund, when requested to do so by the Trust's fund accountant.
4. Services Not Exclusive. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so
long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Funds are the property of the Trust
and further agrees to surrender promptly to the Trust any of such
records upon the Trust's request. The Investment Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the following records: (a) completed trade tickets for all
portfolio transactions, (b) broker confirmations for individual and
block trades, (c) credit files relating to (i) money market securities
and their issuers, (ii) repurchase agreement counterparties and (iii)
letter of credit providers, (d) transaction records indicating the
method of allocation with respect to the selection of brokers, and (e)
such other records that may be deemed necessary and appropriate by the
parties to this Agreement.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Funds.
<PAGE>
7. Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, each of the Funds will pay the Investment
Adviser and the Investment Adviser will accept as full compensation
therefor a fee as set forth on Schedule A hereto. The obligation of
each Fund to pay the above-described fee to the Investment Adviser will
begin as of the date of the initial public sale of shares in such
Fund. The fee attributable to each Fund shall be the obligation of
that Fund and not of any other Fund.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction
over the Trust) exceed the expense limitations of any such state, the
Investment Adviser will reimburse the Fund for a portion of such excess
expenses equal to such excess times the ratio of the fees otherwise
payable by the Fund to the Investment Adviser hereunder to the aggregate
fees otherwise payable by the Fund to the Investment Adviser hereunder and
to The Winsbury Company under the Management and Administration Agreement
between The Winsbury Company and the Trust. The obligation of the
Investment Adviser to reimburse the Funds hereunder is limited in any
fiscal year to the amount of its fee hereunder for such fiscal year,
provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse the Funds for such proportion of such excess
expenses regardless of the amount of fees paid to it during such fiscal
year to the extent that the securities regulations of any state having
jurisdiction over the Trust so require. Such expense reimbursement, if
any, will be estimated daily and reconciled and paid on a monthly basis.
8. Limitation of Liability. The Investment Adviser shall not be liable
-----------------------
for any error of judgment or mistake of law or for any loss suffered by
the Funds in connection with the performance of this Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the
Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. It
is further agreed that the Investment Adviser shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act and the 1933 Act,
except for information supplied by the Investment Adviser for inclusion
therein or information known by the Investment Adviser to be false or
misleading. The Trust agrees to indemnify the Investment Adviser to
the full extent permitted by the Trust's Declaration of Trust.
<PAGE>
9. Duration and Termination. This Agreement will become effective with
------------------------
respect to each Fund listed on Schedule A as of the date first written
above (or, if a particular Fund is not in existence on that date, on
the date a registration statement relating to that Fund becomes
effective with the Commission), provided that it shall have been
approved by vote of a majority of the outstanding voting securities of
such Fund, in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, shall continue in effect
until July 29, 1996. Thereafter, if not terminated, this Agreement
shall continue in effect as to a particular Fund for successive
one-year terms, only so long as such continuance is specifically
approved at least annually (a) by the vote of a majority of those
members of the Trust's Board of Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval,
and (b) by the vote of a majority of the Trust's Board of Trustees or
by the vote of a majority of all votes attributable to the outstanding
shares of such Fund. Notwithstanding the foregoing, this Agreement may
be terminated as to a particular Fund at any time on sixty days'
written notice, without the payment of any penalty, by the Trust (by
vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) or by the Investment
Adviser. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested persons" and "assignment"
shall have the same meanings as ascribed to such terms in the 1940 Act.)
10. Investment Adviser's Representations. The Investment Adviser hereby
represents and warrants that it is willing and possesses all requisite
legal authority to provide the services contemplated by this Agreement
without violation of applicable laws and regulations.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
12. Governing Law. This Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the Commonwealth of
Massachusetts.
13. Miscellaneous. It is expressly agreed that the obligations of the
-------------
Trust hereunder shall not be binding upon any of the Trustees,
<PAGE>
shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust. The
execution and delivery of this Agreement have been authorized by the
Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind
only the trust property of the Trust as provided in the Trust's
Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
[SEAL] QUALIVEST FUNDS
By:
Title:
QUALIVEST CAPITAL MANAGEMENT, INC.
[SEAL] By:
Title:
investad.agr
Exhibit 5(b)
Dated: April 10, 1996
Schedule A
to the Investment Advisory Agreement
between Qualivest Funds and
Qualivest Capital Management, Inc.
NAME OF FUND COMPENSATION
Qualivest U.S. Treasury Money Market Annual rate of thirty
Fund five one-hundredths of
one-percent (.35%) of
the average daily net
assets of such Fund.
Qualivest Money Market Fund Annual rate of
thirty five one-hundredths of
one percent (.35%) of the
average daily net assets of such
Fund.
Qualivest Tax-Free Money Market Fund Annual rate of thirty five
one-hundredths one percent
(.35%) of the average daily net
assets of such Fund.
Qualivest Intermediate Bond Fund Annual
rate of sixty one-hundredths of
one percent (.60%) of the
average daily net assets of such
Fund.
Qualivest Diversified Bond Fund Annual
rate of sixty one-hundredths of
one percent (.60%) of the
average daily net assets of such
Fund.
Qualivest Tax-Free National Bond Fund Annual rate of fifty
one-hundredths of one percent
(.50%) of the average daily net
assets of such Fund.
Qualivest Small Companies Value Fund Annual rate of eighty
one-hundredths of one percent
(.80%) of the average daily net
assets of such Fund.
A-1
<PAGE>
Qualivest Large Companies Value Fund Annual rate of seventy five
one-hundredths of one percent
(.75%) of the average daily net
assets of such Fund.
Qualivest Income Equity Value Fund Annual
rate of sixty one-hundredths of
one percent (.60%) of the
average daily net assets of such
Fund.
Qualivest International Opportunities Annual rate of sixty
Fund one-hundredths of one
percent (.60%) of the
average daily net assets
of such Fund.
Qualivest Optimized Stock Fund Annual rate
of fifty one-hundredths of one
percent (.50%) of the average
daily net assets of such Fund.
Qualivest Allocated Conservative Fund Annual rate of five
one-hundredths of one percent
(.05%) of the average daily net
assets of such Fund.
Qualivest Allocated Balanced Fund Annual
rate of five one-hundredths of
one percent (.05%) of the
average daily net assets of such
Fund.
Qualivest Allocated Growth Fund Annual
rate of five one-hundredths of
one percent (.05%) of the
average daily net assets of such
Fund.
Qualivest Allocated Aggressive Fund Annual
rate of five one-hundredths of
one percent (.05%) of the
average daily net assets of such
Fund.
All fees are computed daily and paid monthly.
A-2
<PAGE>
QUALIVEST FUNDS
By:________________________________
Name:______________________________
Title:_____________________________
QUALIVEST CAPITAL MANAGEMENT, INC.
By:________________________________
Name:______________________________
Title:_____________________________
A-3
Exhibit 6(b)
Dated: April 10, 1996
Schedule A
to the
Distribution Agreement
between Qualivest Funds and
The Winsbury Company Limited Partnership
Name of Fund
Qualivest U.S.Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
Name:
Title:
BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
General Partner
By:
Name:
Title:
A-1
Exhibit 6(c)
Dated: April 10, 1996
Schedule B
to the
Distribution Agreement
between Qualivest Funds and
The Winsbury Company Limited Partnership
Name of Class A Plan Fund
Qualivest U.S. Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
Name:
Title:
BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
General Partner
By:
Name:
Title:
B-1
Exhibit 6(d)
Dated: April 10, 1996
Schedule D
to the
Distribution Agreement
between the Qualivest Funds and
The Winsbury Company Limited Partnership
Name of Class C Plan Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
Name:
Title:
BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
General Partner
By:
Name:
Title:
D-1
Exhibit 6(f)
Dated: April 10, 1996
Schedule H
to the
Distribution Agreement
between Qualivest Funds and
The Winsbury Company Limited Partnership
Name of Load Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
Name:
Title:
BISYS FUND SERVICES
By: BISYS Fund Services, Inc.,
General Partner
By:
Name:
Title:
H-1
Exhibit 8(b)
Dated: April 10, 1996
Schedule A
to the Custodian Agreement
between Qualivest Funds and
United States National Bank of Oregon
Name of Fund
Qualivest U.S.Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
Date:
UNITED STATES NATIONAL BANK OF OREGON
By:
Date:
A-1
Exhibit 8(c)
Dated: April 10, 1996
Schedule B
to the Custodian Agreement
between Qualivest Funds and
United States National Bank of Oregon
Each of the Funds named in Schedule A to the Custodian Agreement between
the Qualivest Funds and United States National Bank of Oregon dated July 29,
1994, as supplemented, shall pay United States National Bank a fee at an annual
rate of three one-hundredths of one percent (.03%) of such Fund's average daily
net assets. United States National Bank of Oregon shall also be entitled to be
reimbursed by each Fund for its reasonable out-of-pocket expenses incurred in
the performance of its duties under the Agreement.
QUALIVEST FUNDS
By:
Date:
UNITED STATES NATIONAL BANK OF OREGON
By:
Date:
B-1
Exhibit 9(b)
Dated: April 10, 1996
Schedule A
to the
Management and Administration Agreement
between Qualivest Funds and
The Winsbury Company Limited Partnership
NAME OF FUND COMPENSATION*
Qualivest U.S. Treasury Money Market Fund Annual rate of
Qualivest Money Market Fund thirteen one-
Qualivest Tax-Free Money Market Fund hundredths of one
Qualivest Intermediate Bond Fund percent (.13%) of
Qualivest Tax-Free National Bond Fund each Fund's average
Qualivest Diversified Bond Fund daily net assets.
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund Annual rate of seven
Qualivest Allocated Balanced Fund one-hundredths of
Qualivest Allocated Growth Fund one percent (0.07%)
Qualivest Allocated Aggressive Fund of each Fund's
average daily net assets,
for which the
Administrator has agreed
to pay organizational
costs and the costs of
preparing and printing the
Funds' prospectuses in
addition to providing the
services detailed in the
attached Agreement.
- -----------------------------
*All fees are computed daily and paid periodically.
QUALIVEST FUNDS
By:________________________________
Title:_____________________________
THE WINSBURY COMPANY
LIMITED PARTNERSHIP
<PAGE>
By: BISYS Fund Services, Inc.,
General Partner
By:________________________________
Title:_____________________________
Exhibit 9(d)
Dated: April 10, 1996
Schedule A
to the Fund Accounting Agreement
between Qualivest Funds and
The Winsbury Service Corporation
NAME OF FUND
Qualivest U.S. Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:_______________________________
BISYS FUND SERVICES OHIO, INC.
By:________________________________
A-1
Exhibit 9(f)
Dated: April 10, 1996
Schedule A
to the Transfer Agency Agreement
between Qualivest Funds and
The Winsbury Service Corporation
NAME OF FUND
Qualivest U.S. Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
Qualivest Intermediate Bond Fund
Qualivest Diversified Bond Fund
Qualivest Tax-Free National Bond Fund
Qualivest Large Companies Value Fund
Qualivest Small Companies Value Fund
Qualivest Income Equity Value Fund
Qualivest International Opportunities Fund
Qualivest Optimized Stock Fund
Qualivest Allocated Conservative Fund
Qualivest Allocated Balanced Fund
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
QUALIVEST FUNDS
By:
BISYS FUND SERVICES OHIO, INC.
By:
A-1
Exhibit 9(g)
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
SERVICING AGREEMENT FOR CLASS Y SHARES WITH
RESPECT TO SHAREHOLDER SERVICES
[Name]
[Address]
[City, State and Zip Code]
Ladies and Gentlemen:
BISYS Fund Services (the "Distributor") serves as the distributor for
Qualivest Funds (the "Trust"), an open-end management investment company,
organized as a Massachusetts business trust and registered with the Securities
and Exchange Commission (the "SEC") under the Investment Company Act of 1940
(the "1940 Act"). On behalf of the holders of Class Y shares ("Shares") of each
of the investment portfolios of the Trust identified in Schedule A hereto
(individually, a "Fund" and collectively, the "Funds"), the Trustees of the
Trust have adopted a Class Y Shareholder Services Plan (the "Plan") which, among
other things, authorizes the Distributor to enter into this Agreement with
_________________ (the "Participating Organization"), concerning the provision
of support services to the Participating Organization's customers ("Customers")
who may from time to time beneficially own such Funds' Shares. The terms and
conditions of this Agreement are as follows:
1. REFERENCE TO PROSPECTUS; DETERMINATION OF NET ASSET VALUE.
1.1 Reference is made to the prospectus for the Shares of each Fund
(individually, a "Prospectus" and collectively, the "Prospectuses") as
from time to time are effective under the Securities Act of 1933 (the
"1933 Act"). Terms defined therein and not otherwise defined herein are
used herein with the meaning so defined.
1.2 For purposes of determining the fees payable to the Participating
Organization under Section 3, the average daily net asset value of a
Fund's Shares will be computed in the manner specified in the Trust's
registration statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of such Fund's
Shares for purposes of purchases and redemptions.
<PAGE>
2. SERVICES AS PARTICIPATING ORGANIZATION.
2.1 The Participating Organization is hereby authorized and may from time to
time undertake to perform the following support services to Customers in
connection with investments in the Shares of a Fund: (i) providing
Customers with a service that invests the assets of their accounts in a
Fund's Shares pursuant to specific or pre-authorized instructions; (ii)
processing dividend payments from the Trust on behalf of Customers; (iii)
providing information periodically to Customers showing their positions in
a Fund's Shares; (iv) arranging for bank wire transfers of funds to or from
a Customer's account; (v) responding to inquiries from Customers relating
to the services performed by the Participating Organization under this
Agreement; (vi) providing subaccounting with respect to a Fund's Shares
beneficially owned by Customers or the information to the Trust necessary
for subaccounting; (vii) if required by law, forwarding Shareholder
communications from the Trust (such as proxies, Shareholder reports,
annual and semi-annual financial statements, and dividend, distribution,
and tax notices) to Customers; and (viii) providing such other similar
services as Distributor may reasonably request to the extent the
Participating Organization is permitted to do so under applicable statutes,
rules, or regulations.
2.2 The Participating Organization will provide such office space and
equipment, telephone facilities, and personnel (which may be any part of
the space, equipment, and facilities currently used in the Participating
Organization's business, or any personnel employed by the Participating
Organization) as may be reasonably necessary or beneficial in order to
provide such support services with respect to a Fund's Shares.
2.3 The minimum dollar purchase of a Fund's Shares (including Shares being
acquired by Customers pursuant to the Exchange Privileges described in
the Fund's Prospectus) shall be the applicable minimum amount set
forth in the Prospectus of such Fund, and no order for less than
such amount shall be accepted by the Participating Organization.
The procedures relating to the handling of orders shall be subject to
instructions which the Distributor shall forward from time to time to
the Participating Organization. All orders for a Fund's Shares are subject
to acceptance or rejection by the Trust in its sole discretion, and the
Trust may, in its discretion and without notice, suspend or withdraw
the sale of a Fund's Shares, including the sale of such Shares to the
Participating Organization for the account of any Customer or Customers.
<PAGE>
2.4 In no transaction shall the Participating Organization act as dealer for
its own account; the Participating Organization shall act solely for, upon
the specific or pre-authorized instructions of, and for the account of,
its Customers. For all purposes of this Agreement, the Participating
Organization will be deemed to be an independent contractor, and will have
no authority to act as agent for the Distributor or the Trust in any
matter or in any respect. No person is authorized to make any
representations concerning the Distributor, the Trust, or a Fund's Shares
except those representations contained in the Fund's then-current
Prospectus and the Trust's Statement of Additional Information and in such
printed information as the Distributor or the Trust may subsequently
prepare.
2.5 The Participating Organization and its employees will, upon request, be
available during normal business hours to consult with the Distributor or
its designees concerning the performance of the Participating
Organization's responsibilities under this Agreement. Any person
authorized to direct the disposition of monies paid or payable by the
Distributor pursuant to Section 3 of this Agreement will provide to the
Distributor and the Trust's Board of Trustees, and the Trust's Trustees
will review at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
In addition, the Participating Organization will furnish to the
Distributor, the Trust or their designees such information as the
Distributor, the Trust or their designees may reasonably request
(including, without limitation, periodic certifications confirming the
rendering of support services with respect to Shares described herein),
and will otherwise cooperate with the Distributor, the Trust and their
designees (including, without limitation, any auditors designated by the
Trust), in the preparation of reports to the Trust's Board of Trustees
concerning this Agreement and the monies paid or payable by the
Distributor pursuant hereto, as well as any other reports or filings that
may be required by law.
3. FEES.
3.1 In consideration of the services and facilities provided by the
Participating Organization hereunder, the Distributor will pay to the
Participating Organization a fee calculated at the applicable annual rate
set forth on Schedule A hereto with respect to the average daily net asset
value of each Fund's Shares which are owned of record by the Participating
Organization as nominee for Customers or which are owned by Customers
whose records, as maintained by such Fund or its agent, designate the
Participating Organization as the Customer's dealer of record, which fee
<PAGE>
will be computed daily and paid monthly. The fee will not be paid to the
Participating Organization with respect to (i) Shares of a Fund that are
redeemed or repurchased by the Trust or the Distributor within seven
business days of receipt of confirmation of such sale, or (ii) a Customer
if the amount of such fee on an annual basis with respect to such Customer
shall be less than $1.00.
3.2 The fee rate with respect to any Fund or Funds stated on Schedule A hereto
may be prospectively increased or decreased by the Distributor, in its
sole discretion, at any time upon notice to the Participating
Organization.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
4.1 By written acceptance of this Agreement, the Participating Organization
represents, warrants, and agrees that: (i) the Participating Organization
will provide to Customers a schedule of the services it will perform
pursuant to this Agreement and a schedule of any fees that the
Participating Organization may charge directly to Customers for services
it performs in connection with investments in the Trust on the Customer's
behalf; and (ii) any and all compensation payable to the Participating
Organization by Customers in connection with the investment of their
assets in the Trust will be disclosed by the Participating Organization to
Customers and will be authorized by Customers and will not result in an
excessive fee to the Participating Organization.
4.2 The Participating Organization agrees to comply with all requirements
applicable to it by reason of all applicable laws, including federal and
state securities laws, the Rules and Regulations of the SEC and the Rules
of Fair Practice of the National Association of Securities Dealers, Inc.
(the "NASD"), including, without limitation, all applicable requirements
of the 1933 Act, the Securities Exchange Act of 1934, the 1940 Act, and
the provisions of Section 26 of Article III of the Rules of Fair Practice.
The Distributor has furnished the Participating Organization with a list
of the states or other jurisdictions in which the Distributor believes the
Shares of the Fund have been registered for sale or are otherwise
qualified for sale, and the Participating Organization agrees that it will
not purchase a Fund's Shares on behalf of a Customer's account in any
jurisdiction in which such Shares are not registered or otherwise
qualified for sale. The Participating Organization further agrees that it
will maintain all records required by applicable law or otherwise
reasonably requested by the Distributor relating to the services provided
by it pursuant to the terms of this Agreement.
4.3 The Participating Organization agrees that under no circumstances shall
<PAGE>
the Distributor or the Trust be liable to the Participating Organization
or any other person under this Agreement as a result of any action by the
SEC or the NASD affecting the operation or continuation of the Plan.
5. EXCULPATION; INDEMNIFICATION.
5.1 The Distributor shall not be liable to the Participating Organization and
the Participating Organization shall not be liable to the Distributor
except for acts or failures to act which constitute lack of good faith or
gross negligence and for obligations expressly assumed by either party
hereunder. Nothing contained in this Agreement is intended to operate as a
waiver by the Distributor or by the Participating Organization of
compliance with any applicable federal or state law, rule, or regulation
and the rules and regulations promulgated by the NASD.
5.2 The Participating Organization will indemnify the Distributor and hold it
harmless from any claims or assertions relating to the lawfulness of the
Participating Organization's participation in this Agreement and the
transactions contemplated hereby or relating to any activities of any
persons or entities affiliated with the Participating Organization
performed in connection with the discharge of its responsibilities under
this Agreement. If any such claims are asserted, the Distributor shall
have the right to manage its own defense, including the selection and
engagement of legal counsel of its choosing, and all costs of such defense
shall be borne by the Participating Organization.
6. EFFECTIVE DATE; TERMINATION.
6.1 This Agreement will become effective with respect to each
Fund on the date a fully executed copy of this Agreement is
received by the Distributor or its designee. Unless sooner
terminated with respect to any Fund, this Agreement will
continue with respect to a Fund until July 29, 1996 and
thereafter will continue automatically for successive
annual periods ending on July 29, provided such continuance is
specifically approved at least annually by the vote of a
majority of the members of the Board of Trustees of the
Trust who are not "interested persons" (as such term is
defined in the 1940 Act) of the Trust and who have no
direct or indirect financial interest in the Plan relating
to such Fund or any agreement relating to such Plan,
including this Agreement, cast in person at a meeting
called for the purpose of voting on such approval.
6.2 This Agreement will automatically terminate with respect to a Fund in the
<PAGE>
event of its assignment (as such term is defined in the 1940 Act). This
Agreement may be terminated with respect to any Fund by the Distributor or
by the Participating Organization, without penalty, upon sixty days' prior
written notice to the other party. This Agreement may also be terminated
with respect to any Fund at any time without penalty by the vote of a
majority of the members of the Board of Trustees of the Trust who are not
"interested persons" (as such term is defined in the 1940 Act) of the
Trust and who have no direct or indirect financial interest in the Plan
relating to such Fund or any agreement relating to such Plan, including
this Agreement, in sixty days' written notice.
7. GENERAL.
7.1 All notices and other communications to either the Participating
Organization or the Distributor will be duly given if mailed, telegraphed
or telecopied to the appropriate address set forth on page 1 hereof, or at
such other address as either party may provide in writing to the other
party.
7.2 The Distributor may enter into other similar agreements for the provision
of Shareholder support services with any other person or persons without
the Participating Organization's consent.
7.3 Upon receiving the written consent of the Distributor, the
Participating Organization may, at its expense, subcontract
with any entity or person concerning the provision of the
services contemplated hereunder; provided, however, that
the Participating Organization shall not be relieved of any of
its obligations under this Agreement by the appointment of
such subcontractor and provided further, that the
Participating Organization shall be responsible, to the
extent provided in Article 5 hereof, for all acts of such
subcontractor as if such acts were its own.
7.4 This Agreement supersedes any other agreement between the Distributor and
the Participating Organization relating to support services in connection
with a Fund's Shares and relating to any other matters discussed herein.
All covenants, agreements, representations, and warranties made herein
shall be deemed to have been material and relied on by each party,
notwithstanding any investigation made by either party or on behalf of
either party, and shall survive the execution and delivery of this
Agreement. The invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of any other term
or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof.
<PAGE>
This Agreement may be executed in any number of counterparts which
together shall constitute one instrument and shall be governed by and
construed in accordance with the laws (other than the conflict of laws
rules) of the State of Ohio and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below.
BISYS FUND SERVICES
By: BISYS Fund Services, Inc.
General Partner
By:
Title:
Date:
The foregoing Agreement is hereby accepted:
[Name of Participating Organization]
By:
Title:
Date:
class.y
1
Exhibit 9(h)
Dated: April 10, 1996
Schedule A
to the Servicing Agreement For Class Y Shares
With Respect To Shareholder Services
between BISYS Fund Services
and [Participating Organization]
NAME OF FUND COMPENSATION*
Qualivest Intermediate Bond Fund Annual rate of up to
Qualivest Diversified Bond Fund twenty-five one hundreds
Qualivest Tax-Free National Bond Fund of one percent (0.25%)
Qualivest Large Companies Value Fund of the average daily net
Qualivest Small Companies Value Fund assets of Each Fund's
Qualivest Income Equity Value Fund Class Y Shares held of
Qualivest International Opportunities record by the
Fund Participating
Qualivest Optimized Stock Fund Organization from time
Qualivest Allocated Conservative Fund to time on behalf of
Qualivest Allocated Balanced Fund Customers.
Qualivest Allocated Growth Fund
Qualivest Allocated Aggressive Fund
Qualivest U.S. Treasury Money Market Fund
Qualivest Money Market Fund
Qualivest Tax-Free Money Market Fund
- --------------------
* All fees are computed daily and paid monthly.
BISYS FUND SERVICES [PARTICIPATING ORGANIZATION]
By: BISYS Fund Services, Inc.,
General Partner
By: __________________________ By: _________________________
Title:_________________________ Title:________________________
Date:_________________________ Date:_________________________
A-1
Exhibit 10(c)
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005-1208
Telephone: (202) 626-3300
Fax: (202) 626-3334
April 10, 1996
Qualivest Funds
3435 Stelzer Road
Columbus, OH 43219-3035
Dear Sirs and Madam:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest of Qualivest Funds (the
"Trust"), we have examined such matters as we have deemed necessary to give this
opinion.
On the basis of the foregoing, it is our opinion that the shares the
Qualivest Allocated Conservative Fund, Qualivest Allocated Balanced Fund,
Qualivest Allocated Growth Fund, and Qualivest Allocated Aggressive Fund have
been duly authorized and, when paid for as contemplated by post-effective
amendment no. 8 to the Trust's Registration Statement, will be validly issued,
fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to
post-effective amendment no. 8 to the Registration Statement and to all
references to our firm therein.
Very truly yours,
/s/Dechert Price & Rhoads
Exhibit 11
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Post-Effective Amendment No. 8 to Registration
Statement under the Securities Act of 1933 and Amendment No. 10 to Registration
Statement under the Investment Company Act of 1940, both filed under
Registration Statement No. 33-79194, of our report dated September 12, 1995 on
the financial statements of the Qualivest Money Market Fund, Qualivest U.S.
Treasury Money Market Fund, Qualivest Tax-Free Money Market Fund, Qualivest
Intermediate Bond Fund, Qualivest Small Companies Value Fund, Qualivest Large
Companies Value Fund, Qualivest Optimized Stock Fund, Qualivest Diversified Bond
Fund, and Qualivest International Opportunities Fund, which are series of
Qualivest Funds, incorporated by reference in the Statement of Additional
Information, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Dayton, Ohio
April 5, 1996
Exhibit 13(d)
PURCHASE AGREEMENT
Qualivest Funds (the "Trust"), a Massachusetts business trust with
transferrable shares, and BISYS Fund Services Ohio, Inc. ("BISYS"), hereby agree
with each other as follows:
1. The Trust hereby offers BISYS and BISYS hereby purchases three (3)
shares of each of the Qualivest Allocated Conservative Fund, the Qualivest
Allocated Balanced Fund, the Qualivest Allocated Growth Fund, and the Qualivest
Allocated Aggressive Fund (each a "Fund" and collectively the "Funds") at a
price of $10.00 per share, aggregating to twelve (12) shares of the Funds (such
shares of beneficial interest in the Trust being hereinafter collectively known
as "Shares"). Such purchase shall be equally divided among the Class A Shares,
Class C Shares, and Class Y Shares of each Fund. BISYS hereby acknowledges the
purchase of the Shares and the Trust hereby acknowledges receipt from BISYS of
funds in the amount of $120.00 in full payment for the Shares.
2. BISYS represents and warrants to the Trust that the Shares are being
acquired for investment purposes and not with a view to the distribution
thereof.
3. Costs incurred by the Trust in connection with the registration and the
initial public offering of shares of the Trust, including the Shares, have been
deferred and will be amortized over a period of 24 months from commencement of
operations. In the event that any of the initial Shares purchased by BISYS
hereunder are redeemed by any holder thereof during the period that the costs
incurred by the Trust in connection with the registration and initial public
offering are amortized by the Trust, the Trust is authorized to reduce the
redemption proceeds to cover any unamortized expenses in the same proportion as
the number of initial Shares being redeemed bears to the number of initial
shares, including the Shares, outstanding at the time of redemption. If, for any
reason, said reduction of redemption proceeds is not in fact made by the Trust
in the event of such a redemption, BISYS agrees to reimburse the Trust
immediately for any unamortized expenses in the proportion stated above.
4. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and this Agreement has been signed and delivered by
an authorized officer of the Trust, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in the Trust's Agreement and Declaration of Trust, as
amended.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the ____ day of _________________, 1996.
(SEAL)
Attest: QUALIVEST FUNDS
By:
Title:
(SEAL)
Attest: BISYS FUND SERVICES OHIO, INC.
By:
Title:
2
Exhibit 15(e)
Dated: April 10, 1996
Schedule A
to the Servicing Agreement For Class A Shares
With Respect To Distribution Assistance and Shareholder
Services between The Winsbury Company Limited Partnership
and U.S. Bancorp Securities, Inc
NAME OF FUND COMPENSATION*
Qualivest U.S. Treasury Money Market Annual rate of up to
Fund forty one-hundredths
Qualivest Money Market of one percent
Qualivest Tax-Free Money Market Fund (.40%) of the
average daily net assets
of each Money Market
Fund's Class A Shares held
of record by the
Participating Organization
from time to time on
behalf of Customers.
Qualivest Intermediate Bond Fund Annual rate of up
Qualivest Diversified Bond Fund to twenty five one-
Qualivest Tax-Free National hundredths of one
Qualivest Large Companies Value Fund percent (.25%) of
Qualivest Small Companies Value Fund the average daily
Qualivest Income Equity Value Fund net assets of each
Qualivest International Opportunities Fund Bond, Equity, and
Qualivest Optimized Stock Fund Parent Fund's Class
Qualivest Allocated Conservative Fund A Shares held of
Qualivest Allocated Balanced Fund record by the
Qualivest Allocated Growth Fund Participating
Qualivest Allocated Aggressive Fund Organization from
time to time on
behalf of Customers.
- ------------------------
* All fees are computed daily and paid monthly.
BISYS FUND SERVICES U.S. BANCORP SECURITIES, INC.
By: BISYS Fund Services, Inc.,
General Partner
By: ____________________ By: _________________________
Title:___________________ Title:________________________
Date:____________________ Date:_________________________
A-1
Exhibit 15(g)
Dated: April 10, 1996
Schedule A
to the Servicing Agreement For Class C Shares
With Respect To Distribution Assistance and Shareholder
Services between The Winsbury Company Limited Partnership
and U.S. Bancorp Securities, Inc
NAME OF FUND COMPENSATION*
Qualivest Intermediate Bond Fund Annual rate of up
Qualivest Diversified Bond Fund to one percent (1.00%)
Qualivest Tax-Free National Bond Fund of the average daily
Qualivest Large Companies Value Fund net assets of each
Qualivest Small Companies Value Fund Income, Equity, and
Qualivest Income Equity Value Fund Parent Fund's Class
Qualivest International Opportunities C Shares held of
Fund record by the
Qualivest Optimized Stock Fund Participating
Qualivest Allocated Conservative Fund Organization from
Qualivest Allocated Balanced Fund time to time on
Qualivest Allocated Growth Fund behalf of
Qualivest Allocated Aggressive Fund Customers.
- --------------------
* All fees are computed daily and paid monthly.
BISYS FUND SERVICES U.S. BANCORP SECURITIES, INC.
By: BISYS Fund Services, Inc.,
General Partner
By: ____________________ By: _________________________
Title:_____________________ Title:_________________________
Date:______________________ Date:__________________________
A-1
Exhibit 18
C O M P 0 S I T E
AMENDED
MULTIPLE CLASS PLAN PURSUANT TO RULE 18f-3
FOR
QUALIVEST FUNDS
QUALIVEST LARGE COMPANIES VALUE FUND
QUALIVEST SMALL COMPANIES VALUE FUND
QUALIVEST INCOME EQUITY VALUE FUND
QUALIVEST INTERNATIONAL OPPORTUNITIES FUND
QUALIVEST OPTIMIZED STOCK FUND
QUALIVEST INTERMEDIATE BOND FUND
QUALIVEST DIVERSIFIED BOND FUND
QUALIVEST TAX-FREE NATIONAL BOND FUND
QUALIVEST U.S. TREASURY MONEY MARKET FUND
QUALIVEST MONEY MARKET FUND
QUALIVEST TAX-FREE MONEY MARKET FUND
QUALIVEST ALLOCATED CONSERVATIVE FUND
QUALIVEST ALLOCATED BALANCED FUND
QUALIVEST ALLOCATED GROWTH FUND
QUALIVEST ALLOCATED AGGRESSIVE FUND
WHEREAS, Qualivest Funds (the "Trust") engages in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of beneficial interest of the Trust are currently divided
into a number of separate series (the "Funds"), including the Qualivest Large
Companies Value Fund, Qualivest Small Companies Value Fund, Qualivest Income
Equity Value Fund, Qualivest International Opportunities Fund, and Qualivest
Optimized Stock Fund (collectively, the "Equity Funds"); Qualivest Intermediate
Bond Fund, Qualivest Diversified Bond Fund, and Qualivest Tax-Free National Bond
Fund (collectively, the "Income Funds"); Qualivest U.S. Treasury Money Market
Fund, Qualivest Money Market Fund, and Qualivest Tax-Free Money Market Fund
(collectively, the "Money Funds") and Qualivest Allocated Conservative Fund,
Qualivest Allocated Balanced Fund, Qualivest Allocated Growth Fund, and
Qualivest Allocated Aggressive Fund (collectively, the "Funds of Funds");
WHEREAS, the Trust desires to adopt, on behalf of each of the Funds, a
Multiple Class Plan pursuant to Rule 18f-3 under the Act (the "Plan") with
respect to each of the Funds; and
WHEREAS, pursuant to a Distribution Agreement dated July 29, 1994, as
supplemented from time to time, the Trust employs BISYS Fund Services ("BISYS"
or the "Distributor") as distributor of the securities of which it is the
issuer.
<PAGE>
NOW, THEREFORE, the Trust hereby adopts, on behalf of the Funds, the Plan,
in accordance with Rule 18f-3 under the Act on the following terms and
conditions:
1. Features of the Classes. Each of the Equity Funds, the Income Funds,
and the Funds of Funds issues its shares of beneficial interest in three
classes: "Class A Shares," "Class C Shares" and "Class Y Shares." Each of the
Money Funds also issues its shares of beneficial interest in three classes:
"Class A Shares," "Class Q Shares" and "Class Y Shares." Shares of each class of
a Fund shall represent an equal pro rata interest in such Fund and, generally,
shall have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications and terms and
conditions, except that: (a) each class shall have a different designation; (b)
each class of shares shall bear any Class Expenses, as defined in Section 4
below; (c) each class shall have exclusive voting rights on any matter submitted
to shareholders that relates solely to its distribution arrangement; and (d)
each class shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class. In addition, Class A, Class C, Class Q and Class Y shares shall
have the features described in Sections 2, 3, 4 and 5 below.
2. Sales Charge Structure.
(a) Class A Shares. Class A shares of each of the Equity Funds, the
Income Funds, and the Funds of Funds shall be offered at the then-current net
asset value plus a front-end sales charge. The front-end sales charge shall be
in such amount as is disclosed in each Fund's current prospectus or prospectus
supplement and shall be subject to reductions for larger purchases and such
waivers or reductions as are determined or approved by the Board of Trustees.
Class A shares of each Money Fund shall be offered at net asset value without
the imposition of a front-end sales charge. Class A shares generally shall not
be subject to a contingent deferred sales charge provided, however, that such a
charge may be imposed in such cases as the Board may approve and as disclosed in
a future prospectus or prospectus supplement of a Fund.
(b) Class C Shares. Class C shares of each of the Equity Funds, the
Income Funds, and the Funds of Funds shall be offered at the then-current net
asset value without the imposition of a front-end sales charge. A contingent
deferred sales charge in such amount as is described in each Fund's current
prospectus or prospectus supplement shall be imposed on Class C shares subject
to such waivers or reductions as are determined or approved by the Board of
Trustees.
(c) Class Q Shares. Class Q shares of each of the Money Funds shall
be offered at the then-current net asset value without the imposition of a
front-end or contingent deferred sales charge.
- 2 -
<PAGE>
(d) Class Y Shares. Class Y shares of each of the Funds shall be
offered at the then-current net asset value without the imposition of a
front-end or contingent deferred sales charge.
3. Service and Distribution Plans. Each class of shares,
other than the Class Y shares, of the Funds has adopted a Rule
12b- 1 plan, each with the following terms:
(a) Class A Shares. Class A shares of all Funds pay BISYS a monthly
fee at an annual rate of up to 0.25% (up to 0.40% in the case of each of the
Money Funds) of the average daily net assets of the Fund's Class A shares for
distribution services or service activities (each as defined in paragraph (e),
below), as designated by the Distributor.
(b) Class C Shares. Class C shares of each of the Equity Funds, the
Income Funds, and the Funds of Funds pay the Distributor a monthly fee for
distribution services (as defined in paragraph (e), below) at the annual rate of
up to 0.75% of the average daily net assets of the Fund's Class C shares. Class
C shares of each of the Equity Funds, the Income Funds, and the Funds of Funds
also pay BISYS a monthly fee at the annual rate of up to 0.25% of the average
daily net assets of the Fund's Class C shares for service activities (as defined
in paragraph (e), below) rendered to Class C shareholders.
(c) Class Q Shares. Class Q shares of each of the Money Funds pay
the Distributor a monthly fee at an annual rate of up to 0.25% of the average
daily net assets of the Fund's Class Q shares for distribution services or
service activities (each as defined in paragraph (e), below), as designated by
the Distributor.
(d) Class Y Shares. Class Y shares of each of the Funds do not pay
the Distributor a fee for distribution services (as defined in paragraph (e),
below), although Class Y shares of each of the Fund may pay the Distributor a
monthly fee at an annual rate of up to 0.25% of the average daily net assets of
the Fund's Class Y shares for service activities (as defined in paragraph (e),
below).
(e) Distribution Services and Service Activities.
(i) As used herein, the term "distribution services" shall include
services rendered by BISYS as distributor of the shares of a Fund in connection
with any activities or expenses primarily intended to result in the sale of
shares of a Fund, including, but not limited to, compensation to registered
representatives or other employees of BISYS and to other broker-dealers that
have entered into a Servicing Agreement with Respect to Distribution Assistance
and Shareholder Services with BISYS; compensation to and expenses of employees
of BISYS who engage in or support distribution of the Funds' shares; telephone
expenses; interest expense; printing of prospectuses and reports for other than
existing shareholders; preparation, printing and distribution of sales
literature and advertising materials; and profit and overhead on the foregoing.
(ii) As used herein, the term "service activities" shall mean
activities in connection with the provision of personal, continuing services to
investors in each Fund, excluding transfer agent and subtransfer agent services
for beneficial owners of shares of a Fund, aggregating and processing purchase
and redemption orders, providing beneficial owners with account statements,
processing dividend payments, providing subaccounting services for Fund shares
held beneficially, forwarding shareholder communications to beneficial owners
and receiving, tabulating and transmitting proxies executed by beneficial
owners; provided, however, that if the National Association of Securities
Dealers Inc. ("NASD") adopts a definition of "service fee" for purposes of
Section 26(d) of the Rules of Fair Practice of the NASD that differs from the
definition of "service activities" hereunder, or if the NASD adopts a related
definition intended to define the same concept, the definition of "service
activities" in this paragraph shall be automatically amended, without further
action of the Board of Trustees, to conform to such NASD definition. Overhead
and other expenses of BISYS related to its "service activities," including
telephone and other communications expenses, may be included in the information
regarding amounts expended for such activities.
4. Allocation of Income and Expenses. (a) The gross income of each Fund
generally shall be allocated to each class on the basis of net assets. To the
extent practicable, certain expenses (other than Class Expenses as defined
below, which shall be allocated more specifically) shall be subtracted from the
gross income on the basis of the net assets of each class of the Fund. These
expenses include:
(1) Expenses incurred by the Trust (including, but not limited to,
fees of Trustees, insurance and legal counsel) not attributable to a particular
Fund or to a particular class of shares of a Fund ("Corporate Level Expenses");
and
(2) Expenses incurred by a Fund not attributable to any particular
class of the Fund's shares (for example, advisory fees, custodial fees, or other
expenses relating to the management of the Fund's assets) ("Fund Expenses").
(b) Expenses attributable to a particular class ("Class Expenses") shall
be limited to: (i) payments made pursuant to a Rule 12b-1 plan ("12b-1 Plan
Fee") or a shareholder services plan; (ii) transfer agent fees attributable to a
specific class; (iii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and proxies to
current shareholders of a specific class; (iv) Blue Sky registration fees
incurred by a class; (v) Securities and Exchange Commission registration fees
incurred by a class; (vi) the expense of administrative personnel and services
to support the shareholders of a specific class; (vii) litigation or other legal
expenses relating solely to one class; and (viii) Trustees' fees incurred as a
result of issues relating to one class. Expenses in category (i) above must be
allocated to the class for which such expenses are incurred. All other "Class
Expenses" listed in categories (ii)-(viii) above may be allocated to a class,
but only if the President and Chief Financial Officer have determined, subject
to Board approval or ratification, which of such categories of expenses will be
treated as Class Expenses, consistent with applicable legal principles under the
Act and the Internal Revenue Code of 1986, as amended (the "Code").
Therefore, expenses of a Fund shall be apportioned to each class of shares
depending on the nature of the expense item. Corporate Level Expenses and Fund
Expenses will be allocated among the classes of shares based on their relative
net asset values in relation to the net asset value of the Trust. Approved Class
Expenses shall be allocated to the particular class to which they are
attributable. In addition, certain expenses may be allocated differently if
their method of imposition changes. Thus, if a Class Expense can no longer be
attributed to a class, it shall be charged to a Fund for allocation among
classes, as determined by the Board of Trustees. Any additional Class Expenses
not specifically identified above which are subsequently identified and
determined to be properly allocated to one class of shares shall not be so
allocated until approved by the Board of Trustees of the Trust in light of the
requirements of the Act and the Code.
5. Exchange Privileges. Shareholders may exchange shares of one class of a
Fund at net asset value without any sales charge for shares of the same class
offered with the same or lower sales charge by another Fund, provided that the
amount to be exchanged meets the applicable minimum investment requirements and
the exchange is made in states where it is legally authorized. Shareholders may
exchange shares of a Fund for shares of the same class of a Fund with a higher
sales charge upon payment of the sales charge differential. Exchanges from one
class of shares into another class of shares presently are not permitted.
Where a shareholder seeks to exchange Class A shares of a Money Fund for
Class A shares of an Equity Fund, an Income Fund, for a Fund of Fund subject to
a front-end sales charge, the shareholder ordinarily must redeem the Class A
shares of the Money Fund and reinvest in such other Fund upon payment of the
appropriate sales charge, unless the shareholder has previously paid a sales
charge with respect to such shares.
Class C shares of a Fund may be exchanged for Class C shares of another
Fund at the net asset value next computed without the imposition of a contingent
deferred sales charge; the sales charge will be assessed, if applicable, when
the shareholder redeems his shares or has them repurchased without a
corresponding purchase of shares of another Fund.
6. Conversion Features. Eight years after purchase, Class C Shares of the
Equity Funds, the Income Funds, and the Funds of Funds will convert
automatically to Class A Shares of such Funds. The conversion from Class C
Shares to Class A Shares takes place at net asset value, as a result of which an
investor receives dollar- for-dollar the same value of Class A Shares as he or
she had of Class C Shares. The conversion occurs eight years after the beginning
of the calendar month in which the Shares are purchased. As a result of the
conversion, the converted Shares are relieved of the Rule 12b-1 fees borne by
Class C Shares, although they are subject to the Rule 12b-1 fees borne by Class
A Shares.
7. Quarterly and Annual Reports. The Trustees shall receive quarterly and
annual statements concerning all allocated Class Expenses and distribution and
servicing expenditures complying with paragraph (b)(3)(ii) of Rule 12b-1, as it
may be amended from time to time. In the statements, only expenditures properly
attributable to the sale or servicing of a particular class of shares will be
used to justify any distribution or servicing fee or other expenses charged to
that class. Expenditures not related to the sale or servicing of a particular
class shall not be presented to the Trustees to justify any fee attributable to
that class. The statements concerning expenditures made pursuant to a Rule 12b-1
plan, including the allocations upon which they are based, shall be subject to
the review and approval of those Trustees of the Trust who are not "interested
persons" of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan (the "Independent Trustees") in
the exercise of their fiduciary duties.
8. Accounting Methodology. (a) The following procedures
shall be implemented in order to meet the objective of properly
allocating income and expenses among the Funds:
(1) On a daily basis, a fund accountant shall calculate the 12b-1
Plan Fee to be charged to each 12b-1 class of shares and the shareholder
services fee to be charged to the Class Y shares by calculating the average
daily net asset value of such shares outstanding and applying the applicable fee
rate of the respective class to the result of that calculation.
(2) The fund accountant will allocate all other designated Class
Expenses, if any, to the respective classes.
(3) The fund accountant shall allocate income and Corporate Level
and Fund Expenses among the respective classes of shares based on the net asset
value of each class in relation to the net asset value of the Fund for Fund
Expenses, and in relation to the net asset value of the Trust for Corporate
Level Expenses. These calculations shall be based on net asset values for
non-Money Funds, and based on the relative value of settled shares for any Money
Fund.
(4) The fund accountant shall then complete a worksheet developed
for purposes of complying with Section 8 of this Plan, using the allocated
income and expense calculations from paragraph (3) above, and the additional
fees calculated from paragraphs (1) and (2) above.
(5) The fund accountant shall develop and use appropriate internal
control procedures to assure the accuracy of its calculations and appropriate
allocation of income and expenses in accordance with this Plan.
9. Waiver or Reimbursement of Expenses. Expenses may be
waived or reimbursed by any adviser to the Trust, by the Trust's
underwriter or any other provider of services to the Trust
without the prior approval of the Trust's Board of Trustees.
10. Effectiveness of Plan. This Plan shall not take
effect until it has been approved by votes of a majority of both (a)
the Trustees of the Trust and (b) the Independent Trustees.
11. Material Modifications. This Plan may not be amended
to modify materially its terms unless such amendment is approved
in the manner provided for initial approval in paragraph 10
hereof.
12. Limitation of Liability. The Trustees of the Trust and the
shareholders of each Fund shall not be liable for any obligations of the Trust
or any Fund under this Plan, and BISYS or any other person, in asserting any
rights or claims under this Plan, shall look only to the assets and property of
the Trust or such Funds in settlement of such right or claim, and not to such
Trustees or shareholders.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the Trust, on behalf of the Funds, has adopted this
Amended Multiple Class Plan as of April 10, 1996.
QUALIVEST FUNDS
By:
Title: Secretary
- 4 -
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 11
<NAME> QUALIVEST MONEY MARKET FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 386799198
<INVESTMENTS-AT-VALUE> 386799198
<RECEIVABLES> 376841
<ASSETS-OTHER> 42772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 387218811
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1850499
<TOTAL-LIABILITIES> 1850499
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 385368312
<SHARES-COMMON-STOCK> 385368312
<SHARES-COMMON-PRIOR> 338508660
<ACCUMULATED-NII-CURRENT> 0
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<NET-INVESTMENT-INCOME> 9400284
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<NET-CHANGE-FROM-OPS> 9400284
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<DISTRIBUTIONS-OF-INCOME> 9400284
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<SHARES-REINVESTED> 7347483
<NET-CHANGE-IN-ASSETS> 46859461
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 191
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<GROSS-ADVISORY-FEES> 651830
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1686625
<AVERAGE-NET-ASSETS> 73020500<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .027<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .027<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .510<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 12
<NAME> QUALIVEST MONEY MARKET FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 386799198
<INVESTMENTS-AT-VALUE> 386799198
<RECEIVABLES> 376841
<ASSETS-OTHER> 42772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 387218811
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1850499
<TOTAL-LIABILITIES> 1850499
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 385368312
<SHARES-COMMON-STOCK> 385368312
<SHARES-COMMON-PRIOR> 338508660
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-INVESTMENT-INCOME> 9400284
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9400284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9400284
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 695524253
<NUMBER-OF-SHARES-REDEEMED> 656012275
<SHARES-REINVESTED> 7347483
<NET-CHANGE-IN-ASSETS> 46859461
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 191
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 651830
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1686625
<AVERAGE-NET-ASSETS> 221772109<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .025<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .025<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .920<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 13
<NAME> QUALIVEST MONEY MARKET FUND, CLASS Q
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 386799198
<INVESTMENTS-AT-VALUE> 386799198
<RECEIVABLES> 376841
<ASSETS-OTHER> 42772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 387218811
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1850499
<TOTAL-LIABILITIES> 1850499
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 385368312
<SHARES-COMMON-STOCK> 385368312
<SHARES-COMMON-PRIOR> 338508660
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 385368312
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10805326
<OTHER-INCOME> 0
<EXPENSES-NET> 1405042
<NET-INVESTMENT-INCOME> 9400284
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9400284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9400284
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 695524253
<NUMBER-OF-SHARES-REDEEMED> 656012275
<SHARES-REINVESTED> 7347483
<NET-CHANGE-IN-ASSETS> 46859461
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 191
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 651830
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1686625
<AVERAGE-NET-ASSETS> 74645401<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .027<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .027<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .510<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Q Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 21
<NAME> QUALIVEST U.S. TREASURY MONEY MARKET, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 103173032
<INVESTMENTS-AT-VALUE> 103173032
<RECEIVABLES> 710958
<ASSETS-OTHER> 10837
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103894827
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 522809
<TOTAL-LIABILITIES> 522809
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103372018
<SHARES-COMMON-STOCK> 103372018
<SHARES-COMMON-PRIOR> 83085689
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 103372018
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3099340
<OTHER-INCOME> 0
<EXPENSES-NET> 371617
<NET-INVESTMENT-INCOME> 2727723
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2727723
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2727723
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 166312173
<NUMBER-OF-SHARES-REDEEMED> 148655363
<SHARES-REINVESTED> 2619519
<NET-CHANGE-IN-ASSETS> 20276329
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 196021
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 574299
<AVERAGE-NET-ASSETS> 84943569<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .024<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .024<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .710<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 22
<NAME> QUALIVEST U.S. TREASURY MONEY MARKET, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 103173032
<INVESTMENTS-AT-VALUE> 103173032
<RECEIVABLES> 710958
<ASSETS-OTHER> 10837
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103894827
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 522809
<TOTAL-LIABILITIES> 522809
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103372018
<SHARES-COMMON-STOCK> 103372018
<SHARES-COMMON-PRIOR> 83085689
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 103372018
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3099340
<OTHER-INCOME> 0
<EXPENSES-NET> 371617
<NET-INVESTMENT-INCOME> 2727723
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2727723
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2727723
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 166312173
<NUMBER-OF-SHARES-REDEEMED> 148655363
<SHARES-REINVESTED> 2619519
<NET-CHANGE-IN-ASSETS> 20276329
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 196021
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 574299
<AVERAGE-NET-ASSETS> 13846<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .026<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .026<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .300<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 23
<NAME> QUALIVEST U.S. TREASURY MONEY MARKET, CLASS Q
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 103173032
<INVESTMENTS-AT-VALUE> 103173032
<RECEIVABLES> 710958
<ASSETS-OTHER> 10837
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103894827
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 522809
<TOTAL-LIABILITIES> 522809
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 103372018
<SHARES-COMMON-STOCK> 103372018
<SHARES-COMMON-PRIOR> 83085689
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 103372018
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3099340
<OTHER-INCOME> 0
<EXPENSES-NET> 371617
<NET-INVESTMENT-INCOME> 2727723
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2727723
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2727723
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 166312173
<NUMBER-OF-SHARES-REDEEMED> 148655363
<SHARES-REINVESTED> 2619519
<NET-CHANGE-IN-ASSETS> 20276329
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 196021
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 574299
<AVERAGE-NET-ASSETS> 26141355<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .025<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .025<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .510<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Q Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 31
<NAME> QUALIVEST TAX-FREE MONEY MARKET FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 37670893
<INVESTMENTS-AT-VALUE> 37670893
<RECEIVABLES> 256446
<ASSETS-OTHER> 3028
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37930367
<PAYABLE-FOR-SECURITIES> 551838
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58474
<TOTAL-LIABILITIES> 697494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37232873
<SHARES-COMMON-STOCK> 37232873
<SHARES-COMMON-PRIOR> 34832318
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 37232873
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 719637
<OTHER-INCOME> 0
<EXPENSES-NET> 170588
<NET-INVESTMENT-INCOME> 549049
<REALIZED-GAINS-CURRENT> 2297
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 551346
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 549049
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46078897
<NUMBER-OF-SHARES-REDEEMED> 44225217
<SHARES-REINVESTED> 544402
<NET-CHANGE-IN-ASSETS> 2400379
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 176
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64225
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234813
<AVERAGE-NET-ASSETS> 34661106<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .015<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .015<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .940<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 32
<NAME> QUALIVEST TAX-FREE MONEY MARKET FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 37670893
<INVESTMENTS-AT-VALUE> 37670893
<RECEIVABLES> 256446
<ASSETS-OTHER> 3028
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37930367
<PAYABLE-FOR-SECURITIES> 551838
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58474
<TOTAL-LIABILITIES> 697494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37232873
<SHARES-COMMON-STOCK> 37232873
<SHARES-COMMON-PRIOR> 34832318
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 37232873
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 719637
<OTHER-INCOME> 0
<EXPENSES-NET> 170588
<NET-INVESTMENT-INCOME> 549049
<REALIZED-GAINS-CURRENT> 2297
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 551346
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 549049
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46078897
<NUMBER-OF-SHARES-REDEEMED> 44225217
<SHARES-REINVESTED> 544402
<NET-CHANGE-IN-ASSETS> 2400379
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 176
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64225
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234813
<AVERAGE-NET-ASSETS> 33731<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .017<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .017<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .510<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 33
<NAME> QUALIVEST TAX-FREE MONEY MARKET FUND, CLASS Q
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 37670893
<INVESTMENTS-AT-VALUE> 37670893
<RECEIVABLES> 256446
<ASSETS-OTHER> 3028
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37930367
<PAYABLE-FOR-SECURITIES> 551838
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58474
<TOTAL-LIABILITIES> 697494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37232873
<SHARES-COMMON-STOCK> 37232873
<SHARES-COMMON-PRIOR> 34832318
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 37232873
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 719637
<OTHER-INCOME> 0
<EXPENSES-NET> 170588
<NET-INVESTMENT-INCOME> 549049
<REALIZED-GAINS-CURRENT> 2297
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 551346
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 549049
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46078897
<NUMBER-OF-SHARES-REDEEMED> 44225217
<SHARES-REINVESTED> 544402
<NET-CHANGE-IN-ASSETS> 2400379
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 176
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 64225
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 234813
<AVERAGE-NET-ASSETS> 1706041<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> .016<F1>
<PER-SHARE-GAIN-APPREC> .000<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .016<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> .780<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Q Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 41
<NAME> QUALIVEST INTERMEDIATE BOND FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 146232408
<INVESTMENTS-AT-VALUE> 151666482
<RECEIVABLES> 2092812
<ASSETS-OTHER> 26507
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153785801
<PAYABLE-FOR-SECURITIES> 2000000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95354
<TOTAL-LIABILITIES> 2095354
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145427413
<SHARES-COMMON-STOCK> 14520131
<SHARES-COMMON-PRIOR> 13975236
<ACCUMULATED-NII-CURRENT> 353809
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2565602
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3343623
<NET-ASSETS> 151690447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4608408
<OTHER-INCOME> 0
<EXPENSES-NET> 548223
<NET-INVESTMENT-INCOME> 4060185
<REALIZED-GAINS-CURRENT> 993468
<APPREC-INCREASE-CURRENT> 3083920
<NET-CHANGE-FROM-OPS> 8137573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4013416
<DISTRIBUTIONS-OF-GAINS> 33885
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2835181
<NUMBER-OF-SHARES-REDEEMED> 2679623
<SHARES-REINVESTED> 389337
<NET-CHANGE-IN-ASSETS> 9777707
<ACCUMULATED-NII-PRIOR> 307040
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 484433
<GROSS-ADVISORY-FEES> 434933
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 657968
<AVERAGE-NET-ASSETS> 473191<F1>
<PER-SHARE-NAV-BEGIN> 10.060<F1>
<PER-SHARE-NII> .290<F1>
<PER-SHARE-GAIN-APPREC> .280<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .280<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.35<F1>
<EXPENSE-RATIO> 1.010<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 42
<NAME> QUALIVEST INTERMEDIATE BOND FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 146232408
<INVESTMENTS-AT-VALUE> 151666482
<RECEIVABLES> 2092812
<ASSETS-OTHER> 26507
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153785801
<PAYABLE-FOR-SECURITIES> 2000000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95354
<TOTAL-LIABILITIES> 2095354
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145427413
<SHARES-COMMON-STOCK> 14520131
<SHARES-COMMON-PRIOR> 13975236
<ACCUMULATED-NII-CURRENT> 353809
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2565602
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3343623
<NET-ASSETS> 151690447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4608408
<OTHER-INCOME> 0
<EXPENSES-NET> 548223
<NET-INVESTMENT-INCOME> 4060185
<REALIZED-GAINS-CURRENT> 993468
<APPREC-INCREASE-CURRENT> 3083920
<NET-CHANGE-FROM-OPS> 8137573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4013416
<DISTRIBUTIONS-OF-GAINS> 33885
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2835181
<NUMBER-OF-SHARES-REDEEMED> 2679623
<SHARES-REINVESTED> 389337
<NET-CHANGE-IN-ASSETS> 9777707
<ACCUMULATED-NII-PRIOR> 307040
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 484433
<GROSS-ADVISORY-FEES> 434933
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 657968
<AVERAGE-NET-ASSETS> 143180644<F1>
<PER-SHARE-NAV-BEGIN> 10.160<F1>
<PER-SHARE-NII> .290<F1>
<PER-SHARE-GAIN-APPREC> .290<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .290<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.45<F1>
<EXPENSE-RATIO> .750<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 43
<NAME> QUALIVEST INTERMEDIATE BOND FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 146232408
<INVESTMENTS-AT-VALUE> 151666482
<RECEIVABLES> 2092812
<ASSETS-OTHER> 26507
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 153785801
<PAYABLE-FOR-SECURITIES> 2000000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95354
<TOTAL-LIABILITIES> 2095354
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145427413
<SHARES-COMMON-STOCK> 14520131
<SHARES-COMMON-PRIOR> 13975236
<ACCUMULATED-NII-CURRENT> 353809
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2565602
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3343623
<NET-ASSETS> 151690447
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4608408
<OTHER-INCOME> 0
<EXPENSES-NET> 548223
<NET-INVESTMENT-INCOME> 4060185
<REALIZED-GAINS-CURRENT> 993468
<APPREC-INCREASE-CURRENT> 3083920
<NET-CHANGE-FROM-OPS> 8137573
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4013416
<DISTRIBUTIONS-OF-GAINS> 33885
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2835181
<NUMBER-OF-SHARES-REDEEMED> 2679623
<SHARES-REINVESTED> 389337
<NET-CHANGE-IN-ASSETS> 9777707
<ACCUMULATED-NII-PRIOR> 307040
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 484433
<GROSS-ADVISORY-FEES> 434933
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 657968
<AVERAGE-NET-ASSETS> 141874<F1>
<PER-SHARE-NAV-BEGIN> 9.96<F1>
<PER-SHARE-NII> .240<F1>
<PER-SHARE-GAIN-APPREC> .290<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .240<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.25<F1>
<EXPENSE-RATIO> 1.750<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 51
<NAME> QUALIVEST SMALL COMPANIES VALUE FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 219304407
<INVESTMENTS-AT-VALUE> 266504422
<RECEIVABLES> 265393
<ASSETS-OTHER> 25267
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 266795082
<PAYABLE-FOR-SECURITIES> 1983090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 220012
<TOTAL-LIABILITIES> 2204102
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211230791
<SHARES-COMMON-STOCK> 19839770
<SHARES-COMMON-PRIOR> 15933555
<ACCUMULATED-NII-CURRENT> 11053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6149121
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 47200015
<NET-ASSETS> 264590980
<DIVIDEND-INCOME> 456717
<INTEREST-INCOME> 1314432
<OTHER-INCOME> 0
<EXPENSES-NET> 1266491
<NET-INVESTMENT-INCOME> 504658
<REALIZED-GAINS-CURRENT> 12232603
<APPREC-INCREASE-CURRENT> 8048404
<NET-CHANGE-FROM-OPS> 20785665
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 696843
<DISTRIBUTIONS-OF-GAINS> 18198109
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4962828
<NUMBER-OF-SHARES-REDEEMED> 2525151
<SHARES-REINVESTED> 1468537
<NET-CHANGE-IN-ASSETS> 53396362
<ACCUMULATED-NII-PRIOR> 203238
<ACCUMULATED-GAINS-PRIOR> 12114627
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 929546
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1266491
<AVERAGE-NET-ASSETS> 3280062<F1>
<PER-SHARE-NAV-BEGIN> 13.230<F1>
<PER-SHARE-NII> .030<F1>
<PER-SHARE-GAIN-APPREC> 1.230<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.140<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 13.350<F1>
<EXPENSE-RATIO> 1.330<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 52
<NAME> QUALIVEST SMALL COMPANIES VALUE FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 219304407
<INVESTMENTS-AT-VALUE> 266504422
<RECEIVABLES> 265393
<ASSETS-OTHER> 25267
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 266795082
<PAYABLE-FOR-SECURITIES> 1983090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 220012
<TOTAL-LIABILITIES> 2204102
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211230791
<SHARES-COMMON-STOCK> 19839770
<SHARES-COMMON-PRIOR> 15933555
<ACCUMULATED-NII-CURRENT> 11053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6149121
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 47200015
<NET-ASSETS> 264590980
<DIVIDEND-INCOME> 456717
<INTEREST-INCOME> 1314432
<OTHER-INCOME> 0
<EXPENSES-NET> 1266491
<NET-INVESTMENT-INCOME> 504658
<REALIZED-GAINS-CURRENT> 12232603
<APPREC-INCREASE-CURRENT> 8048404
<NET-CHANGE-FROM-OPS> 20785665
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 696843
<DISTRIBUTIONS-OF-GAINS> 18198109
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4962828
<NUMBER-OF-SHARES-REDEEMED> 2525151
<SHARES-REINVESTED> 1468537
<NET-CHANGE-IN-ASSETS> 53396362
<ACCUMULATED-NII-PRIOR> 203238
<ACCUMULATED-GAINS-PRIOR> 12114627
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 929546
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1266491
<AVERAGE-NET-ASSETS> 227538640<F1>
<PER-SHARE-NAV-BEGIN> 13.260<F1>
<PER-SHARE-NII> .030<F1>
<PER-SHARE-GAIN-APPREC> 1.200<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.150<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 13.340<F1>
<EXPENSE-RATIO> 1.080<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 53
<NAME> QUALIVEST SMALL COMPANIES VALUE FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 219304407
<INVESTMENTS-AT-VALUE> 266504422
<RECEIVABLES> 265393
<ASSETS-OTHER> 25267
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 266795082
<PAYABLE-FOR-SECURITIES> 1983090
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 220012
<TOTAL-LIABILITIES> 2204102
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211230791
<SHARES-COMMON-STOCK> 19839770
<SHARES-COMMON-PRIOR> 15933555
<ACCUMULATED-NII-CURRENT> 11053
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6149121
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 47200015
<NET-ASSETS> 264590980
<DIVIDEND-INCOME> 456717
<INTEREST-INCOME> 1314432
<OTHER-INCOME> 0
<EXPENSES-NET> 1266491
<NET-INVESTMENT-INCOME> 504658
<REALIZED-GAINS-CURRENT> 12232603
<APPREC-INCREASE-CURRENT> 8048404
<NET-CHANGE-FROM-OPS> 20785665
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 696843
<DISTRIBUTIONS-OF-GAINS> 18198109
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4962828
<NUMBER-OF-SHARES-REDEEMED> 2525151
<SHARES-REINVESTED> 1468537
<NET-CHANGE-IN-ASSETS> 53396362
<ACCUMULATED-NII-PRIOR> 203238
<ACCUMULATED-GAINS-PRIOR> 12114627
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 929546
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1266491
<AVERAGE-NET-ASSETS> 603434<F1>
<PER-SHARE-NAV-BEGIN> 13.140<F1>
<PER-SHARE-NII> (.010)<F1>
<PER-SHARE-GAIN-APPREC> 1.150<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.110<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 13.170<F1>
<EXPENSE-RATIO> 2.070<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 61
<NAME> QUALIVEST LARGE COMPANIES VALUE FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 91126300
<INVESTMENTS-AT-VALUE> 107092335
<RECEIVABLES> 1183324
<ASSETS-OTHER> 9942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108285601
<PAYABLE-FOR-SECURITIES> 657249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78916
<TOTAL-LIABILITIES> 736165
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88759301
<SHARES-COMMON-STOCK> 8948130
<SHARES-COMMON-PRIOR> 8129615
<ACCUMULATED-NII-CURRENT> 151153
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2672947
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15966035
<NET-ASSETS> 107549436
<DIVIDEND-INCOME> 1075274
<INTEREST-INCOME> 300588
<OTHER-INCOME> 0
<EXPENSES-NET> 466264
<NET-INVESTMENT-INCOME> 909598
<REALIZED-GAINS-CURRENT> 5564189
<APPREC-INCREASE-CURRENT> 1537061
<NET-CHANGE-FROM-OPS> 8010848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1091817
<DISTRIBUTIONS-OF-GAINS> 7925198
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1475135
<NUMBER-OF-SHARES-REDEEMED> 1443554
<SHARES-REINVESTED> 786934
<NET-CHANGE-IN-ASSETS> 8095079
<ACCUMULATED-NII-PRIOR> 333372
<ACCUMULATED-GAINS-PRIOR> 5033956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 371849
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 541579
<AVERAGE-NET-ASSETS> 1552136<F1>
<PER-SHARE-NAV-BEGIN> 12.200<F1>
<PER-SHARE-NII> .100<F1>
<PER-SHARE-GAIN-APPREC> .790<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.120<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 11.970<F1>
<EXPENSE-RATIO> 1.180<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 62
<NAME> QUALIVEST LARGE COMPANIES VALUE FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 91126300
<INVESTMENTS-AT-VALUE> 107092335
<RECEIVABLES> 1183324
<ASSETS-OTHER> 9942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108285601
<PAYABLE-FOR-SECURITIES> 657249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78916
<TOTAL-LIABILITIES> 736165
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88759301
<SHARES-COMMON-STOCK> 8948130
<SHARES-COMMON-PRIOR> 8129615
<ACCUMULATED-NII-CURRENT> 151153
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2672947
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15966035
<NET-ASSETS> 107549436
<DIVIDEND-INCOME> 1075274
<INTEREST-INCOME> 300588
<OTHER-INCOME> 0
<EXPENSES-NET> 466264
<NET-INVESTMENT-INCOME> 909598
<REALIZED-GAINS-CURRENT> 5564189
<APPREC-INCREASE-CURRENT> 1537061
<NET-CHANGE-FROM-OPS> 8010848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1091817
<DISTRIBUTIONS-OF-GAINS> 7925198
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1475135
<NUMBER-OF-SHARES-REDEEMED> 1443554
<SHARES-REINVESTED> 786934
<NET-CHANGE-IN-ASSETS> 8095079
<ACCUMULATED-NII-PRIOR> 333372
<ACCUMULATED-GAINS-PRIOR> 5033956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 371849
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 541579
<AVERAGE-NET-ASSETS> 96438391<F1>
<PER-SHARE-NAV-BEGIN> 12.230<F1>
<PER-SHARE-NII> .110<F1>
<PER-SHARE-GAIN-APPREC> .810<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.130<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 12.020<F1>
<EXPENSE-RATIO> .930<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 63
<NAME> QUALIVEST LARGE COMPANIES VALUE FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 91126300
<INVESTMENTS-AT-VALUE> 107092335
<RECEIVABLES> 1183324
<ASSETS-OTHER> 9942
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108285601
<PAYABLE-FOR-SECURITIES> 657249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 78916
<TOTAL-LIABILITIES> 736165
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88759301
<SHARES-COMMON-STOCK> 8948130
<SHARES-COMMON-PRIOR> 8129615
<ACCUMULATED-NII-CURRENT> 151153
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2672947
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15966035
<NET-ASSETS> 107549436
<DIVIDEND-INCOME> 1075274
<INTEREST-INCOME> 300588
<OTHER-INCOME> 0
<EXPENSES-NET> 466264
<NET-INVESTMENT-INCOME> 909598
<REALIZED-GAINS-CURRENT> 5564189
<APPREC-INCREASE-CURRENT> 1537061
<NET-CHANGE-FROM-OPS> 8010848
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1091817
<DISTRIBUTIONS-OF-GAINS> 7925198
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1475135
<NUMBER-OF-SHARES-REDEEMED> 1443554
<SHARES-REINVESTED> 786934
<NET-CHANGE-IN-ASSETS> 8095079
<ACCUMULATED-NII-PRIOR> 333372
<ACCUMULATED-GAINS-PRIOR> 5033956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 371849
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 541579
<AVERAGE-NET-ASSETS> 360922<F1>
<PER-SHARE-NAV-BEGIN> 12.040<F1>
<PER-SHARE-NII> .080<F1>
<PER-SHARE-GAIN-APPREC> .760<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> 1.070<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 11.810<F1>
<EXPENSE-RATIO> 1.920<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 91
<NAME> QUALIVEST DIVERSIFIED BOND FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 141489949
<INVESTMENTS-AT-VALUE> 145670102
<RECEIVABLES> 2144257
<ASSETS-OTHER> 18691
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147833050
<PAYABLE-FOR-SECURITIES> 526053
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63882
<TOTAL-LIABILITIES> 589935
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141240585
<SHARES-COMMON-STOCK> 13907719
<SHARES-COMMON-PRIOR> 9616506
<ACCUMULATED-NII-CURRENT> 353157
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1469219
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4180154
<NET-ASSETS> 147243115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3719393
<OTHER-INCOME> 0
<EXPENSES-NET> 360276
<NET-INVESTMENT-INCOME> 3359117
<REALIZED-GAINS-CURRENT> 1934859
<APPREC-INCREASE-CURRENT> 2567415
<NET-CHANGE-FROM-OPS> 7861391
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3227782
<DISTRIBUTIONS-OF-GAINS> 1725165
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4193249
<NUMBER-OF-SHARES-REDEEMED> 372746
<SHARES-REINVESTED> 470710
<NET-CHANGE-IN-ASSETS> 47896570
<ACCUMULATED-NII-PRIOR> 221822
<ACCUMULATED-GAINS-PRIOR> 1259526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 352464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 537382
<AVERAGE-NET-ASSETS> 41164<F1>
<PER-SHARE-NAV-BEGIN> 10.180<F1>
<PER-SHARE-NII> .410<F1>
<PER-SHARE-GAIN-APPREC> .250<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .440<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.400<F1>
<EXPENSE-RATIO> .860<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 92
<NAME> QUALIVEST DIVERSIFIED BOND FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 141489949
<INVESTMENTS-AT-VALUE> 145670102
<RECEIVABLES> 2144257
<ASSETS-OTHER> 18691
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147833050
<PAYABLE-FOR-SECURITIES> 526053
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63882
<TOTAL-LIABILITIES> 589935
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141240585
<SHARES-COMMON-STOCK> 13907719
<SHARES-COMMON-PRIOR> 9616506
<ACCUMULATED-NII-CURRENT> 353157
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1469219
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4180154
<NET-ASSETS> 147243115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3719393
<OTHER-INCOME> 0
<EXPENSES-NET> 360276
<NET-INVESTMENT-INCOME> 3359117
<REALIZED-GAINS-CURRENT> 1934859
<APPREC-INCREASE-CURRENT> 2567415
<NET-CHANGE-FROM-OPS> 7861391
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3227782
<DISTRIBUTIONS-OF-GAINS> 1725165
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4193249
<NUMBER-OF-SHARES-REDEEMED> 372746
<SHARES-REINVESTED> 470710
<NET-CHANGE-IN-ASSETS> 47896570
<ACCUMULATED-NII-PRIOR> 221822
<ACCUMULATED-GAINS-PRIOR> 1259526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 352464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 537382
<AVERAGE-NET-ASSETS> 116488924<F1>
<PER-SHARE-NAV-BEGIN> 10.330<F1>
<PER-SHARE-NII> .300<F1>
<PER-SHARE-GAIN-APPREC> .420<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .460<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.590<F1>
<EXPENSE-RATIO> .610<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 93
<NAME> QUALIVEST DIVERSIFIED BOND FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 141489949
<INVESTMENTS-AT-VALUE> 145670102
<RECEIVABLES> 2144257
<ASSETS-OTHER> 18691
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147833050
<PAYABLE-FOR-SECURITIES> 526053
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63882
<TOTAL-LIABILITIES> 589935
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141240585
<SHARES-COMMON-STOCK> 13907719
<SHARES-COMMON-PRIOR> 9616506
<ACCUMULATED-NII-CURRENT> 353157
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1469219
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4180154
<NET-ASSETS> 147243115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3719393
<OTHER-INCOME> 0
<EXPENSES-NET> 360276
<NET-INVESTMENT-INCOME> 3359117
<REALIZED-GAINS-CURRENT> 1934859
<APPREC-INCREASE-CURRENT> 2567415
<NET-CHANGE-FROM-OPS> 7861391
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3227782
<DISTRIBUTIONS-OF-GAINS> 1725165
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4193249
<NUMBER-OF-SHARES-REDEEMED> 372746
<SHARES-REINVESTED> 470710
<NET-CHANGE-IN-ASSETS> 47896570
<ACCUMULATED-NII-PRIOR> 221822
<ACCUMULATED-GAINS-PRIOR> 1259526
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 352464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 537382
<AVERAGE-NET-ASSETS> 10<F1>
<PER-SHARE-NAV-BEGIN> 10.220<F1>
<PER-SHARE-NII> .000<F1>
<PER-SHARE-GAIN-APPREC> .280<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .410<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.090<F1>
<EXPENSE-RATIO> .400<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 101
<NAME> QUALIVEST OPTIMIZED STOCK FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 177783167
<INVESTMENTS-AT-VALUE> 205475641
<RECEIVABLES> 304714
<ASSETS-OTHER> 25132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205805487
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86580
<TOTAL-LIABILITIES> 86580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176069580
<SHARES-COMMON-STOCK> 17039413
<SHARES-COMMON-PRIOR> 13593734
<ACCUMULATED-NII-CURRENT> 211512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1745342
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27692473
<NET-ASSETS> 205718907
<DIVIDEND-INCOME> 1965022
<INTEREST-INCOME> 81562
<OTHER-INCOME> 0
<EXPENSES-NET> 497918
<NET-INVESTMENT-INCOME> 1548666
<REALIZED-GAINS-CURRENT> 3860823
<APPREC-INCREASE-CURRENT> 16050165
<NET-CHANGE-FROM-OPS> 21459654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1862279
<DISTRIBUTIONS-OF-GAINS> 2704958
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3816241
<NUMBER-OF-SHARES-REDEEMED> 764498
<SHARES-REINVESTED> 393936
<NET-CHANGE-IN-ASSETS> 56881445
<ACCUMULATED-NII-PRIOR> 525124
<ACCUMULATED-GAINS-PRIOR> 589477
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 415119
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 668755
<AVERAGE-NET-ASSETS> 162788<F1>
<PER-SHARE-NAV-BEGIN> 10.940<F1>
<PER-SHARE-NII> .100<F1>
<PER-SHARE-GAIN-APPREC> 1.340<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .330<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 12.050<F1>
<EXPENSE-RATIO> .850<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 102
<NAME> QUALIVEST OPTIMIZED STOCK FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 177783167
<INVESTMENTS-AT-VALUE> 205475641
<RECEIVABLES> 304714
<ASSETS-OTHER> 25132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205805487
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86580
<TOTAL-LIABILITIES> 86580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176069580
<SHARES-COMMON-STOCK> 17039413
<SHARES-COMMON-PRIOR> 13593734
<ACCUMULATED-NII-CURRENT> 211512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1745342
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27692473
<NET-ASSETS> 205718907
<DIVIDEND-INCOME> 1965022
<INTEREST-INCOME> 81562
<OTHER-INCOME> 0
<EXPENSES-NET> 497918
<NET-INVESTMENT-INCOME> 1548666
<REALIZED-GAINS-CURRENT> 3860823
<APPREC-INCREASE-CURRENT> 16050165
<NET-CHANGE-FROM-OPS> 21459654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1862279
<DISTRIBUTIONS-OF-GAINS> 2704958
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3816241
<NUMBER-OF-SHARES-REDEEMED> 764498
<SHARES-REINVESTED> 393936
<NET-CHANGE-IN-ASSETS> 56881445
<ACCUMULATED-NII-PRIOR> 525124
<ACCUMULATED-GAINS-PRIOR> 589477
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 415119
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 668755
<AVERAGE-NET-ASSETS> 164493669<F1>
<PER-SHARE-NAV-BEGIN> 10.950<F1>
<PER-SHARE-NII> .110<F1>
<PER-SHARE-GAIN-APPREC> 1.340<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .330<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 12.070<F1>
<EXPENSE-RATIO> .600<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 103
<NAME> QUALIVEST OPTIMIZED STOCK FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 177783167
<INVESTMENTS-AT-VALUE> 205475641
<RECEIVABLES> 304714
<ASSETS-OTHER> 25132
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205805487
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 86580
<TOTAL-LIABILITIES> 86580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 176069580
<SHARES-COMMON-STOCK> 17039413
<SHARES-COMMON-PRIOR> 13593734
<ACCUMULATED-NII-CURRENT> 211512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1745342
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27692473
<NET-ASSETS> 205718907
<DIVIDEND-INCOME> 1965022
<INTEREST-INCOME> 81562
<OTHER-INCOME> 0
<EXPENSES-NET> 497918
<NET-INVESTMENT-INCOME> 1548666
<REALIZED-GAINS-CURRENT> 3860823
<APPREC-INCREASE-CURRENT> 16050165
<NET-CHANGE-FROM-OPS> 21459654
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1862279
<DISTRIBUTIONS-OF-GAINS> 2704958
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3816241
<NUMBER-OF-SHARES-REDEEMED> 764498
<SHARES-REINVESTED> 393936
<NET-CHANGE-IN-ASSETS> 56881445
<ACCUMULATED-NII-PRIOR> 525124
<ACCUMULATED-GAINS-PRIOR> 589477
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 415119
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 668755
<AVERAGE-NET-ASSETS> 37462<F1>
<PER-SHARE-NAV-BEGIN> 10.920<F1>
<PER-SHARE-NII> .050<F1>
<PER-SHARE-GAIN-APPREC> 1.360<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .290<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 12.040<F1>
<EXPENSE-RATIO> 1.590<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 111
<NAME> QUALIVEST INTERNATIONAL OPPORTUNITIES FUND, CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 144648420
<INVESTMENTS-AT-VALUE> 118816582
<RECEIVABLES> 75962
<ASSETS-OTHER> 197023
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119089567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49829
<TOTAL-LIABILITIES> 49829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114999108
<SHARES-COMMON-STOCK> 11228860
<SHARES-COMMON-PRIOR> 5734060
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 67467
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 57693
<ACCUM-APPREC-OR-DEPREC> 4165790
<NET-ASSETS> 119039738
<DIVIDEND-INCOME> 651426
<INTEREST-INCOME> 102542
<OTHER-INCOME> (105968)
<EXPENSES-NET> 359253
<NET-INVESTMENT-INCOME> 288747
<REALIZED-GAINS-CURRENT> (238413)
<APPREC-INCREASE-CURRENT> 1607181
<NET-CHANGE-FROM-OPS> 1657515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 222493
<DISTRIBUTIONS-OF-GAINS> 1642
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5945088
<NUMBER-OF-SHARES-REDEEMED> 470352
<SHARES-REINVESTED> 20063
<NET-CHANGE-IN-ASSETS> 58946690
<ACCUMULATED-NII-PRIOR> 48989
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 347
<GROSS-ADVISORY-FEES> 256535
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469916
<AVERAGE-NET-ASSETS> 1927464<F1>
<PER-SHARE-NAV-BEGIN> 10.450<F1>
<PER-SHARE-NII> .010<F1>
<PER-SHARE-GAIN-APPREC> .130<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .020<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.570<F1>
<EXPENSE-RATIO> 1.090<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class A Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 112
<NAME> QUALIVEST INTERNATIONAL OPPORTUNITIES FUND, CLASS Y
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 144648420
<INVESTMENTS-AT-VALUE> 118816582
<RECEIVABLES> 75543
<ASSETS-OTHER> 75962
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119089567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49829
<TOTAL-LIABILITIES> 49829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114999108
<SHARES-COMMON-STOCK> 11228860
<SHARES-COMMON-PRIOR> 5734060
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 67467
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 57693
<ACCUM-APPREC-OR-DEPREC> 4165790
<NET-ASSETS> 119039738
<DIVIDEND-INCOME> 651426
<INTEREST-INCOME> 102542
<OTHER-INCOME> (105968)
<EXPENSES-NET> 359253
<NET-INVESTMENT-INCOME> 288747
<REALIZED-GAINS-CURRENT> (238413)
<APPREC-INCREASE-CURRENT> 1607181
<NET-CHANGE-FROM-OPS> 1657515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 222493
<DISTRIBUTIONS-OF-GAINS> 1642
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5945088
<NUMBER-OF-SHARES-REDEEMED> 470352
<SHARES-REINVESTED> 20063
<NET-CHANGE-IN-ASSETS> 58946690
<ACCUMULATED-NII-PRIOR> 48989
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 347
<GROSS-ADVISORY-FEES> 256535
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469916
<AVERAGE-NET-ASSETS> 82886451<F1>
<PER-SHARE-NAV-BEGIN> 10.480<F1>
<PER-SHARE-NII> .020<F1>
<PER-SHARE-GAIN-APPREC> .130<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .030<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.600<F1>
<EXPENSE-RATIO> .830<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class Y Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923499
<NAME> QUALIVEST FUNDS
<SERIES>
<NUMBER> 113
<NAME> QUALIVEST INTERNATIONAL OPPORTUNITIES FUND, CLASS C
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<INVESTMENTS-AT-COST> 144648420
<INVESTMENTS-AT-VALUE> 118816582
<RECEIVABLES> 75543
<ASSETS-OTHER> 75962
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 119089567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49829
<TOTAL-LIABILITIES> 49829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 114999108
<SHARES-COMMON-STOCK> 11228860
<SHARES-COMMON-PRIOR> 5734060
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 67467
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 57693
<ACCUM-APPREC-OR-DEPREC> 4165790
<NET-ASSETS> 119039738
<DIVIDEND-INCOME> 651426
<INTEREST-INCOME> 102542
<OTHER-INCOME> (105968)
<EXPENSES-NET> 359253
<NET-INVESTMENT-INCOME> 288747
<REALIZED-GAINS-CURRENT> (238413)
<APPREC-INCREASE-CURRENT> 1607181
<NET-CHANGE-FROM-OPS> 1657515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 222493
<DISTRIBUTIONS-OF-GAINS> 1642
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5945088
<NUMBER-OF-SHARES-REDEEMED> 470352
<SHARES-REINVESTED> 20063
<NET-CHANGE-IN-ASSETS> 58946690
<ACCUMULATED-NII-PRIOR> 48989
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 347
<GROSS-ADVISORY-FEES> 256535
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469916
<AVERAGE-NET-ASSETS> 665<F1>
<PER-SHARE-NAV-BEGIN> 10.460<F1>
<PER-SHARE-NII> .000<F1>
<PER-SHARE-GAIN-APPREC> .140<F1>
<PER-SHARE-DIVIDEND> .000<F1>
<PER-SHARE-DISTRIBUTIONS> .010<F1>
<RETURNS-OF-CAPITAL> .000<F1>
<PER-SHARE-NAV-END> 10.590<F1>
<EXPENSE-RATIO> 1.790<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class C Shares
</FN>
</TABLE>
