-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VU8zCjAJhWcOTKNeSIEO4RV06CO3g2u3BDpFHxbiHbjSIRTVwYVThI7DWwgGPBqv 9vLXSQo2UdZUFex65S5jBA== /in/edgar/work/0000912057-00-045856/0000912057-00-045856.txt : 20001026 0000912057-00-045856.hdr.sgml : 20001026 ACCESSION NUMBER: 0000912057-00-045856 CONFORMED SUBMISSION TYPE: N-14AE PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20001025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUTUAL FUND TRUST CENTRAL INDEX KEY: 0000919034 STANDARD INDUSTRIAL CLASSIFICATION: [ ] STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-14AE SEC ACT: SEC FILE NUMBER: 333-48570 FILM NUMBER: 745608 BUSINESS ADDRESS: STREET 1: 1 CHASE MANHATTAN PLAZA STREET 2: 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10081 MAIL ADDRESS: STREET 1: ONE CHASE SQUARE 7TH FLOOR CITY: ROCHESTER STATE: NY ZIP: 14643 N-14AE 1 a2027167zn-14ae.txt N-14AE As filed with the Securities and Exchange Commission on October 25, 2000 Registration No. 33-75250/811-8358 ================================================================================ U.S. Securities and Exchange Commission Washington, DC 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. ___ Post-Effective Amendment No___ (Check appropriate box or boxes) Exact Name of Registrant as Specified in Charter: MUTUAL FUND TRUST Area Code and Telephone Number: 1-800-34-VISTA Address of Principal Executive Offices: 1211 Avenue of the Americas 41st Floor New York, NY 10036 Name and Address of Agent for Service: LISA HURLEY BISYS Fund Services, Inc. 3435 Stelzer Road Columbus, OH 43219 Copies to: CYNTHIA G. COBDEN, ESQ. Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017-3954 ================================================================================ Approximate Date of Proposed Public Offering: As soon as practicable after the Registration Statement becomes effective under the Securities Act of 1933. It is proposed that this filing will become effective on November 27, 2000 pursuant to Rule 488 under the Securities Act of 1933. Calculation of Registration Fee under the Securities Act of 1933: No filing fee is required because an indefinite number of shares have previously been registered on Form N-1A (Registration No. 33-75250/811-8358 pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. The Registrant's Form 24f-2 for the fiscal year ended October 31, 1999 was filed on November 20, 1999. Pursuant to Rule 429, this Registration Statement relates to the aforesaid Registration Statement on Form N-1A. MUTUAL FUND TRUST FORM N-14 CROSS REFERENCE SHEET PURSUANT TO RULE 481(a)
ITEM NO. HEADING - --------- -------- PART A - --------- 1. Beginning of Registration Statement and Outside Front Cover Page of Prospectus ................................ Cover Page 2. Beginning and Outside Back Cover Page of Prospectus ............................. Table of Contents 3. Synopsis and Risk Factors ................. Summary; Risk Factors 4. Information About the Transaction ......... Summary; Information Relating to the Proposed Conversion 5. Information About the Registrant .......... Summary; Information Relating to the Proposed Reorganization; Investment Policies; Additional Information About Chase Vista Prime Money Market Fund 6. Information About the Company Being Acquired .................................. Summary; Information Relating to the Proposed Reorganization; Investment Policies; Additional Information About Chase Money Market Fund 7. Voting Information ....................... Summary; Information Relating to Voting Matters 8. Interest of Certain Persons and Experts ................................... Information Relating to Voting Matters 9. Additional Information Required for Reoffering by Persons Deemed to be Underwriters .............................. Inapplicable PART B - --------- 10. Cover Page ............................... Statement of Additional Information; Cover Page 11. Table of Contents ........................ Table of Contents 12. Additional Information ................... Statement of Additional Information dated December 29, 1999 13. Additional Information About the Company Being Acquired ................... Inapplicable 14. Financial Statements ..................... Financial Statements; Pro Forma Financial Statements
PART C - --------- Items 15-17. Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C of this Registration Statement. -i- CHASE MONEY MARKET FUND A SERIES OF MUTUAL FUND INVESTMENT TRUST 1211 AVENUE OF THE AMERICAS 41ST FLOOR NEW YORK, NEW YORK 10036 [December 1,] 2000 Dear Shareholder: A special meeting of the shareholders of Chase Money Market Fund, a series of Mutual Fund Investment Trust ("MFIT"), will be held on January 26, 2001 at 9:00 a.m., Eastern time. Formal notice of the meeting appears on the next page, followed by materials regarding the meeting. At the special meeting (the "Meeting"), shareholders will be asked to consider and vote upon the proposed reorganization of Chase Money Market Fund into Chase Vista Prime Money Market Fund, a series of Mutual Fund Trust ("MFT") (the "Reorganization"). After the Reorganization, shareholders will hold an interest in Chase Vista Prime Money Market Fund, which is also advised by The Chase Manhattan Bank ("Chase"). The investment objective and policies of the Funds are similar. MFT is comprised of 11 portfolios, each managed by Chase, consisting of income and money market funds. [In connection with the Reorganization, Chase Vista Prime Money Market Fund will be renamed "Chase Prime Money Market Fund."] After the proposed Reorganization, your investment would be in a larger combined fund with similar investment policies, allowing the resulting fund to take advantage of the operational and administrative efficiencies that size offers. The current investment adviser for both Chase Money Market Fund and Chase Vista Prime Money Market Fund is Chase. The sub-adviser for Chase Vista Prime Money Market Fund is Chase Fleming Asset Management (USA) Inc. ("CFAM"). Chase Money Market Fund has no sub-adviser. The two Funds are managed by the same portfolio management team. After the Reorganization, this team will continue to be responsible for the day-to-day investment decisions for your portfolio. Please see the enclosed Combined Prospectus/Proxy Statement for detailed information regarding the proposed Reorganization and a comparison of Chase Vista Prime Money Market Fund and MFT to Chase Money Market Fund and MFIT. The cost and expenses associated with the Reorganization, including costs of soliciting proxies, will be borne by Chase and not by Chase Money Market Fund, MFIT, Chase Vista Prime Money Market Fund, MFT or their shareholders. If approval of the Reorganization is obtained, you will automatically receive shares of Chase Vista Prime Money Market Fund. The Proposal has been carefully reviewed by the Board of Trustees of MFIT, which has approved the Proposal. THE BOARD OF TRUSTEES OF MFIT UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATION. Attached to this letter is a list of commonly asked questions. If you have any additional questions on voting of proxies and/or the meeting agenda, please call us at 1-800-5-CHASE-0 A proxy card is enclosed for your use in the shareholder meeting. This card represents shares you held as of the record date, November 10, 2000. IT IS IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE. This will ensure that your shares will be represented at the Meeting to be held on January 26, 2001. Please read the enclosed materials carefully. You may, of course, attend the meeting in person if you wish, in which case the proxy can be revoked by you at the Meeting. Sincerely, /s/ Fergus Reid Fergus Reid Chairman SPECIAL NOTE: You may receive a telephone call from us to answer any questions you may have or to provide assistance in voting. Remember, your vote is important! Please sign, date and promptly mail your proxy card(s) in the return envelope provided. WHY IS THE REORGANIZATION BEING PROPOSED? The Reorganization is being proposed to increase operational and administrative efficiencies by combining two funds with similar investment policies and which are managed by the same portfolio management team. IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN? Under the Reorganization, Chase Money Market Fund would transfer all of its assets and liabilities to Chase Vista Prime Money Market Fund and would receive, in exchange, shares of Chase Vista Prime Money Market Fund. Chase Money Market Fund would then be liquidated and the shares of Chase Vista Prime Money Market Fund would be distributed to shareholders such as you. After the Reorganization, you would own shares in Chase Vista Prime Money Market Fund rather than Chase Money Market Fund. Holders of Investor Class Shares would receive Vista Class Shares in Chase Vista Prime Money Market Fund and holders of Premier Class Shares would receive Premier Class Shares in Chase Vista Prime Money Market Fund. WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED? The investment objective and policies of the Funds are similar. The only difference in the investment policies is that the dollar weighted average maturity of the Chase Vista Prime Money Market Fund must be 60 days or less whereas the dollar weighted average maturity of Chase Money Market Fund must be 90 days or less. Accordingly, the Reorganization is not intended to have an immediate significant impact on the investment strategy implemtented in respect of your investment HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED? The contractual (or pre-waiver) and actual (or post-waiver) total expense ratios are expected to be the same or less for Chase Vista Prime Money Market Fund than they are for Chase Money Market Fund. If an increase does arise, Chase has committed to waive fees payable to it and reimburse expenses so that the total expense ratio will remain the same for at least one year after the Reorganization. WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT? The same portfolio management team which manages the day-to-day investment activities of Chase Vista Prime Money Market Fund also manages Chase Money Market Fund. WHO WILL PAY FOR THE REORGANIZATION? The cost and expenses associated with the Reorganization, including costs of soliciting proxies, will be borne by Chase and not by either Chase Money Market Fund or Chase Vista Prime Money Market Fund (or shareholders of either fund). HOW WILL SHAREHOLDER SERVICES CHANGE? Substantially similar services are available to shareholders of both Chase Money Market Fund and Chase Vista Prime Money Market Fund. You would continue to be able to purchase or redeem your investment on a daily basis. WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE REORGANIZATION IS OBTAINED? You will automatically receive shares in Chase Vista Prime Money Market Fund. AS A HOLDER OF SHARES OF CHASE MONEY MARKET FUND, WHAT DO I NEED TO DO? Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your vote is important! Accordingly, please sign, date and mail the proxy card(s) promptly in the enclosed return envelope as soon as possible after reviewing the enclosed Combined Prospectus/Proxy Statement. MAY I ATTEND THE MEETING IN PERSON? Yes, you may attend the Meeting in person. If you complete a proxy card and subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure that your vote is counted, we strongly urge you to mail us your signed, dated and completed proxy card(s) even if you plan to attend the Meeting. CHASE MONEY MARKET FUND, A SERIES OF MUTUAL FUND INVESTMENT TRUST 1211 AVENUE OF THE AMERICAS 41ST FLOOR NEW YORK, NEW YORK 10036 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 26, 2001 To the Shareholders of Chase Money Market Fund: NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders ("Shareholders") of Chase Money Market Fund ("Chase Money Market Fund"), a series of Mutual Fund Investment Trust ("MFIT"), will be held at the offices of The Chase Manhattan Bank, One Chase Square, Third Floor Garden Room, Rochester, New York 14643, on January 26, 2001 at 9:00 a.m., (Eastern time) for the following purposes: ITEM 1. To consider and act upon a proposal to approve an Agreement and Plan of Reorganization (the "Reorganization Plan") by and between MFIT, on behalf of Chase Money Market Fund, and Mutual Fund Trust ("MFT"), on behalf of Chase Vista Prime Money Market Fund, and the transactions contemplated thereby, including (a) the transfer of all of the assets and liabilities of Chase Money Market Fund to Chase Vista Prime Money Market Fund, a series of MFT ("Chase Vista Prime Money Market Fund") in exchange for (i) Vista Class Shares of Chase Vista Prime Money Market Fund (the "Vista Class Shares") and (ii) Premier Class Shares of Chase Vista Prime Money Market Fund ("Premier Class Shares" and together with the Vista Class Shares, the "Chase Vista Prime Money Market Fund Shares"), as applicable; and (b) the distribution of such Chase Vista Prime Money Market Fund Shares to the Shareholders of Chase Money Market Fund in connection with its liquidation. ITEM 2. To transact such other business as may properly come before the Special Meeting or any adjournment(s) thereof. YOUR FUND TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF ITEM 1. The proposal is described in the attached Combined Prospectus/Proxy Statement. Attached as Appendix A to the Combined Prospectus/Proxy Statement is a copy of the Reorganization Plan. Shareholders of record as of the close of business on November 10, 2000 are entitled to notice of, and to vote at, the Special Meeting or any adjournment(s) thereof. SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF MFIT. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO CHASE MONEY MARKET FUND A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON. /s/ Lisa M. Hurley Lisa M. Hurley Secretary [December 1,] 2000 COMBINED PROSPECTUS/PROXY STATEMENT DATED [DECEMBER 1,] 2000 ACQUISITION OF THE ASSETS AND LIABILITIES OF CHASE MONEY MARKET FUND, A SERIES OF MUTUAL FUND INVESTMENT TRUST 1211 AVENUE OF THE AMERICAS 41ST FLOOR NEW YORK, NEW YORK 10036 (800) 5-CHASE-0 BY AND IN EXCHANGE FOR SHARES OF CHASE VISTA PRIME MONEY MARKET FUND, A SERIES OF MUTUAL FUND TRUST 1211 AVENUE OF THE AMERICAS 41ST FLOOR NEW YORK, NEW YORK 10036 (800) 34-VISTA This Combined Prospectus/Proxy Statement relates to the proposed reorganization of Chase Money Market Fund ("Chase Money Market Fund"), a series of Mutual Fund Investment Trust ("MFIT"), into Chase Vista Prime Money Market Fund ("Chase Vista Prime Money Market Fund"), a series of Mutual Fund Trust ("MFT"). If approved by Shareholders, the proposed reorganization would be effected by transferring all of the assets and liabilities of Chase Money Market Fund, which is a series of MFIT, to Chase Vista Prime Money Market Fund, a series of MFT, in exchange for shares of Chase Vista Prime Money Market Fund (the "Reorganization"). MFIT and MFT are both open-end management investment companies offering shares in several portfolios, and, in most cases, multiple classes of shares in each such portfolio. [In connection with the Reorganization, Chase Vista Prime Money Market Fund will be renamed "Chase Prime Money Market Fund."] Under the proposed Reorganization, each shareholder of Chase Money Market Fund (the "Chase Money Market Fund Shareholders") would receive Shares (the "Chase Vista Prime Money Market Fund Shares") of Chase Vista Prime Money Market Fund with a value equal to such Chase Money Market Fund Shareholder's holdings in Chase Money Market Fund. Holders of Investor Class Shares would receive Vista Class Shares (the "Vista Class Shares") in Chase Vista Prime Money Market Fund and holders of Premier Class Shares would receive Premier Class Shares (the "Premier Class Shares") in Chase Vista Prime Money Market Fund. Therefore, as a result of the proposed Reorganization, current Shareholders of Chase Money Market Fund will become shareholders of Chase Vista Prime Money Market Fund ("Chase Vista Prime Money Market Fund Shareholders"). MFIT is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") and currently has 11 series of mutual fund portfolios. MFT is registered as an open-end management investment company under the 1940 Act and currently has 11 series of mutual fund portfolios. The Chase Manhattan Bank ("Chase") currently serves as investment adviser for both Chase Money Market Fund and Chase Vista Prime Money Market Fund. Chase Fleming Asset Management (USA) Inc. ("CFAM") serves as sub-adviser for Chase Vista Prime Money Market Fund. There is no sub-adviser for Chase Money Market Fund. The two Funds are managed by the same portfolio management team. After the Reorganization, this team will continue to be responsible for the day-to-day investment decisions for your portfolio. Prior to August 1, 2000, Chase Bank of Texas, N.A. ("Chase Texas") was the sub-adviser for Chase Money Market Fund. On August 1, 2000, Chase Texas became a part of Chase through an unrelated reorganization. The terms and conditions of these transactions are more fully described in this Combined Prospectus/ Proxy Statement and in the Agreement and Plan of Reorganization (the "Reorganization Plan") between MFIT, on behalf of Chase Money Market Fund, and MFT, on behalf of Chase Vista Prime Money Market Fund, attached to this Combined Prospectus/Proxy Statement as Appendix A. The Board of Trustees of MFIT is soliciting proxies in connection with a Special Meeting (the "Meeting") of Shareholders to be held on January 26, 2001 at 9:00 a.m., Eastern time, at the offices of The Chase Manhattan Bank, One Chase Square, Third Floor Garden Room, Rochester, New York 14643, at which meeting shareholders in Chase Money Market Fund will be asked to consider and approve the proposed Reorganization Plan and certain transactions contemplated by the Reorganization Plan. This Combined Prospectus/Proxy Statement constitutes the proxy statement of Chase Money Market Fund for the meeting of its Shareholders and also constitutes MFT's prospectus for Chase Vista Prime Money Market Fund Shares that have been registered with the Securities and Exchange Commission (the "Commission") and are to be issued in connection with the Reorganization. This Combined Prospectus/Proxy Statement, which should be retained for future reference, sets forth concisely the information about MFIT and MFT that a prospective investor should know before voting on the Proposal. The current prospectuses for Chase Money Market Fund and Chase Vista Prime Money Market Fund are incorporated herein by reference and are enclosed with this Combined Prospectus/Proxy Statement. A statement of additional information relating to this Combined Prospectus/Proxy Statement dated [December 1,] 2000 (the "Statement of Additional Information") containing additional information about MFIT and MFT has been filed with the Commission and is incorporated by reference into this Combined Prospectus/Proxy Statement. A copy of the Statement of Additional Information may be obtained without charge by writing to MFIT at its address noted above or by calling 1-800-5-CHASE-0. This Combined Prospectus/Proxy Statement is expected to first be sent to shareholders on or about [December 1,] 2000. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY STATEMENT/ PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MFIT OR MFT. INVESTMENTS IN CHASE VISTA PRIME MONEY MARKET FUND ARE SUBJECT TO RISK-- INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NO SHARES IN CHASE VISTA PRIME MONEY MARKET FUND ARE BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE CHASE MANHATTAN BANK OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY INSURED BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. TABLE OF CONTENTS
Page ----- INTRODUCTION...................................... 1 SUMMARY........................................... 1 RISK FACTORS...................................... 5 INFORMATION RELATING TO THE PROPOSED REORGANIZATION................................... 6 INVESTMENT POLICIES............................... 9 PURCHASES, REDEMPTIONS AND EXCHANGES.............. 11 DISTRIBUTIONS AND TAXES........................... 14 COMPARISON OF CHASE MONEY MARKET FUND'S AND CHASE VISTA PRIME MONEY MARKET FUND'S ORGANIZATION STRUCTURES....................................... 14 INFORMATION RELATING TO THE ADVISORY CONTRACTS.... 16 BOARD OF TRUSTEES................................. 19 INFORMATION RELATING TO VOTING MATTERS............ 20 ADDITIONAL INFORMATION ABOUT MFIT................. 22 ADDITIONAL INFORMATION ABOUT MFT.................. 22 FINANCIAL STATEMENTS AND EXPERTS.................. 23 OTHER BUSINESS.................................... 23 LITIGATION........................................ 23 SHAREHOLDER INQUIRIES............................. 23 Appendix A--Agreement and Plan of Reorganization.................................. A-1
INTRODUCTION This Combined Prospectus/Proxy Statement is being furnished to the shareholders of Chase Money Market Fund, a portfolio of Mutual Fund Investment Trust ("MFIT"), an open-end management investment company, in connection with the solicitation by the Board of Trustees of MFIT ("MFIT Board") of proxies to be used at a Special Meeting of Shareholders of Chase Money Market Fund to be held on January 26, 2001 at 9:00 a.m., Eastern time, at the offices of The Chase Manhattan Bank, One Chase Square, Third Floor Garden Room, Rochester, New York 14643 (together with any adjournments thereof, the "Meeting"). It is expected that the mailing of this Combined Prospectus/Proxy Statement will be made on or about [December 1], 2000. At the Meeting, Chase Money Market Fund shareholders (the "Chase Money Market Fund Shareholders") will consider and vote upon an Agreement and Plan of Reorganization (the "Reorganization Plan") dated October 31, 2000 between MFIT, on behalf of Chase Money Market Fund, and MFT, on behalf of Chase Vista Prime Money Market Fund ("Chase Vista Prime Money Market Fund," together with Chase Money Market Fund, the "Funds"), pursuant to which all of the assets and liabilities of Chase Money Market Fund will be transferred to Chase Vista Prime Money Market Fund in exchange for shares (the "Chase Vista Prime Money Market Fund Shares") of Chase Vista Prime Money Market Fund. As a result of this transaction (the "Reorganization"), Chase Money Market Fund Shareholders will become shareholders of Chase Vista Prime Money Market Fund and will receive Chase Vista Prime Money Market Fund Shares equal in value to their holdings in Chase Money Market Fund on the date of the Reorganization. Holders of Investor Class Shares in Chase Money Market Fund would receive Vista Class Shares ("Vista Class Shares") in Chase Vista Prime Money Market Fund and holders of Premier Class Shares in Chase Money Market Fund would receive Premier Class Shares ("Premier Class Shares") in Chase Vista Prime Money Market Fund. [In connection with the Reorganization, Chase Vista Prime Money Market Fund will be renamed "Chase Prime Money Market Fund."] Further information relating to Chase Vista Prime Money Market Fund is set forth herein. The proposed Reorganization is occasionally referred to herein as the "Proposal." THE MFIT BOARD HAS RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL. Approval of the Reorganization Plan by Chase Money Market Fund requires the affirmative vote of the lesser of (i) 67% or more of the Chase Money Market Fund Shares present at the Meeting and (ii) more than 50% of all outstanding Chase Money Market Fund Shares. If the Reorganization Plan is not approved by Chase Money Market Fund Shareholders, the MFIT Board will consider other appropriate courses of action. SUMMARY The following is a summary of certain information relating to the proposed Reorganization, the parties thereto and the transactions contemplated thereby, and is qualified by reference to the more complete information contained elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus and Statement of Additional Information in respect of the Chase Vista Prime Money Market Fund Shares, and the Reorganization Plan attached to this Combined Prospectus/Proxy Statement as Appendix A. Chase Money Market Fund's Semi-Annual Reports to Shareholders and Chase Money Market Fund's and Chase Vista Prime Money Market Fund's Annual Report to Shareholders are enclosed with this Combined Prospectus/Proxy Statement. PROPOSED TRANSACTION Pursuant to the proposed Reorganization Plan, Chase Money Market Fund, an existing series of MFIT, will transfer all of its assets and liabilities to Chase Vista Prime Money Market Fund in exchange for shares of Chase Vista Prime Money Market Fund, a series of MFT. Under the proposed Reorganization, each Chase Money Market Fund Shareholder would receive a number of Chase Vista Prime Money Market Fund Shares with an aggregate net asset value equal on the date of the exchange to the aggregate net asset value of such shareholder's Chase Money Market Fund Shares on such date. Therefore, following the proposed Reorganization, Chase Money Market Fund Shareholders will be Chase Vista Prime Money Market Fund Shareholders. The contractual (or pre-waiver) and actual (or post-waiver) total expense ratios are expected to be the same or less for Chase Vista Prime Money Market Fund than they are for Chase Money Market Fund. 1 Based upon their evaluation of the relevant information presented to them, including an analysis of the operation of Chase Vista Prime Money Market Fund both before and after the Reorganization, and in consideration of the fact that the Reorganization will be tax-free, and in light of their fiduciary duties under federal and state law, the MFIT Board and the MFT Board, including a majority of each Board's members who are not "interested persons" within the meaning of the 1940 Act, have each determined that the proposed Reorganization is in the best interests of each Fund's respective shareholders and that the interests of such shareholders will not be diluted as a result of such Reorganization. INVESTMENT ADVISERS The investment adviser to both Chase Money Market Fund and Chase Vista Prime Money Market Fund is The Chase Manhattan Bank ("Chase"). Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation. In addition, Chase Fleming Asset Management (USA) Inc. ("CFAM"), a wholly-owned subsidiary of Chase, serves as the sub-investment adviser to Chase Vista Prime Money Market Fund pursuant to an agreement with Chase and manages Chase Vista Prime Money Market Fund on a day-to-day basis. The same portfolio management team which manages the Chase Money Market Fund manages and will continue to manage the Chase Vista Prime Money Market Fund. Prior to August 1, 2000, Chase Bank of Texas, N.A. ("Chase Texas") was the sub-adviser for Chase Money Market Fund. On August 1, 2000, Chase Texas became a part of Chase through an unrelated reorganization. It is anticipated that during the first quarter of 2001, Chase will transfer its investment advisory business to CFAM and, thereafter, CFAM will be the sole investment adviser to Chase Vista Prime Money Market Fund and Chase Money Market Fund. REASONS FOR THE REORGANIZATION The MFIT Board and MFT Board decided to reorganize Chase Money Market Fund into Chase Vista Prime Money Market Fund to increase operational and administrative efficiencies and since the investment objectives and policies of the two Funds are similar and are managed by the same portfolio management team. In addition, Chase Money Market Fund Shareholders will have a greater variety of investment opportunities available since they can exchange Chase Vista Prime Money Market Fund Shares for shares in other Chase Vista funds at net asset value, subject to certain restrictions described in this Combined Prospectus/Proxy Statement. FEDERAL INCOME TAX CONSEQUENCES Simpson Thacher & Bartlett, counsel to MFIT, will issue an opinion (based on certain assumptions) as of the effective time of the Reorganization to the effect that the transaction will not give rise to the recognition of income, gain or loss for federal income tax purposes to Chase Money Market Fund, Chase Vista Prime Money Market Fund or their respective shareholders. The holding period and tax basis of Chase Vista Prime Money Market Fund Shares will be the same as the holding period and tax cost basis of the shareholder's shares of Chase Money Market Fund. In addition, the holding period and tax basis of those assets owned by Chase Money Market Fund transferred to Chase Vista Prime Money Market Fund will be identical for Chase Money Market Fund. See "Information Relating to the Proposed Reorganization -- Federal Income Tax Consequences." INVESTMENT OBJECTIVE AND POLICIES The investment objective of each Fund is to seek the highest possible level of current income while still maintaining liquidity and preserving capital. The investment policies of the Funds are similar except that the dollar weighted average maturity of the Chase Vista Prime Money Market Fund is required to be 60 days or less whereas the dollar weighted average maturity of Chase Money Market Fund is required to be 90 days or less. ADDITIONAL TRUST PORTFOLIOS In addition to Chase Money Market Fund, MFIT currently offers ten additional portfolios: Balanced Fund Income Fund Core Equity Fund Intermediate Bond Fund Equity Growth Fund Short-Intermediate Term U.S. Government Securities Fund Equity Growth Fund II Small Capitalization Fund Equity Income Fund U.S. Government Securities Fund
Detailed descriptions of each MFIT portfolio can be found in the MFIT prospectuses and Statement of Additional Information. MFIT may add or subtract additional portfolios from time to time in the future. 2 However, in connection with other concurrent reorganizations, it is anticipated that some of these portfolios will be liquidated. In addition to Chase Vista Prime Money Market Fund, MFT currently offers ten additional portfolios: 100% U.S. Treasury Securities Money Market Fund Tax Free Money Market Fund Treasury Plus Money Market Fund New York Tax Free Money Market Fund Federal Money Market Fund California Tax Free Money Market Fund U.S. Government Money Market Fund Tax Free Income Fund New York Tax Free Income Fund California Intermediate Tax Free Fund
Detailed descriptions of each MFT portfolio can be found in the MFT prospectuses and Statement of Additional Information. MFT may add or subtract portfolios from time to time in the future. However, in connection with other concurrent reorganizations, it is anticipated that some of these portfolios will be liquidated. PRINCIPAL RISKS OF INVESTING IN CHASE VISTA PRIME MONEY MARKET FUND The following discussion highlights the principal risk factors associated with an investment in Chase Vista Prime Money Market Fund. Chase Vista Prime Money Market Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise. Repurchase agreements involve some risk to Chase Vista Prime Money Market Fund if the other party does not live up to its obligations under the agreement. Chase Vista Prime Money Market Fund's ability to concentrate its investments in the banking industry could increase risks. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS __ADVISORY SERVICES The investment adviser for both Chase Money Market Fund and Chase Vista Prime Money Market Fund is Chase. Chase oversees the asset management and administration of both Funds. As compensation for its services, Chase receives a management fee from each of Chase Money Market Fund and Chase Vista Prime Money Market Fund at an annual rate of 0.30% and 0.10%, respectively, of their respective average daily net assets. A portion of the fee generated with respect to Chase Vista Prime Money Market Fund is used to pay CFAM, Chase Vista Prime Money Market Fund's sub-adviser. Pursuant to the terms of advisory agreements between Chase and MFIT and between Chase and MFT (each, an "Advisory Agreement"), Chase is responsible for making decisions with respect to, and placing orders for, all purchases and sales of the portfolio securities of Chase Money Market Fund, subject to the general supervision of the MFIT Board, and Chase Vista Prime Money Market Fund, subject to the general supervision of the MFT Board. Pursuant to an investment sub-advisory agreement between Chase and CFAM (the "Subadvisory Agreement"), Chase delegates certain of these responsibilities to CFAM with respect to Chase Vista Prime Money Market Fund. For the investment sub-advisory services rendered to Chase Vista Prime Money Market Fund and Chase, CFAM is entitled to receive from Chase an annual fee of 0.03% of Chase Vista Prime Money Market Fund's average net assets. It is anticipated that during the first quarter of 2001, Chase will transfer its investment advisory business to CFAM and, thereafter, CFAM will be the sole investment adviser to Chase Vista Prime Money Market Fund and Chase Money Market Fund. __OTHER SERVICES Vista Fund Distributors, Inc. ("VFD"), a wholly-owned, indirect subsidiary of BISYS Fund Services, Inc. ("BISYS") is the distributor for Chase Vista Prime Money Market Fund. CFD Fund Distributors, Inc. ("CFD"), another wholly-owned indirect subsidiary of BISYS, is the distributor for Chase Money Market Fund. VFD and CFD are unaffiliated with Chase. [In connection with the Reorganization, VFD will change its name to Chase Fund Distributors, Inc.] Chase serves as administrator, fund accountant and custodian for both Chase Money Market Fund and Chase Vista Prime Money Market Fund. The services provided by Chase include day-to-day maintenance of certain books and records, calculation of the offering price of the shares and preparation of reports. In its role as custodian, Chase is responsible for the daily safekeeping of securities and cash held by both Chase Money Market Fund and Chase Vista Prime Money Market Fund. 3 PricewaterhouseCoopers LLP ("PwC") serves as both Chase Money Market Fund's and Chase Vista Prime Money Market Fund's independent accountants, auditing and reporting on the annual financial statements of each Fund and preparing each Fund's federal income tax returns. PwC also performs other professional accounting, auditing, tax and advisory services when MFIT or MFT engages it to do so. ORGANIZATION Each of MFIT and MFT is organized as a Massachusetts business trust. Chase Money Market Fund is organized as a series of MFIT and Chase Vista Prime Money Market Fund is organized as a series of MFT. PURCHASES, REDEMPTIONS AND EXCHANGES The procedures for making purchases, redemptions and exchanges of shares of Chase Vista Prime Money Market Fund are substantially similar to those with respect to shares of Chase Money Market Fund. COMPARATIVE FEE AND EXPENSE TABLES The table below shows (i) information regarding the fees and expenses paid by each of Chase Money Market Fund and Chase Vista Prime Money Market Fund that reflect current expense arrangements, and (ii) estimated fees and expenses on a pro forma basis for Chase Vista Prime Money Market Fund after giving effect to the proposed Reorganization. Under the proposed Reorganization, holders of Investor Class Shares in Chase Money Market Fund would receive Vista Class Shares in Chase Vista Prime Money Market Fund and holders of Premier Class Shares in Chase Money Market Fund would receive Premier Class Shares in Chase Vista Prime Money Market Fund. The table indicates that both contractual (pre-waiver) and actual (post-waiver) total expense ratios for current holders of Chase Money Market Fund are anticipated to be the same or less following the Reorganization. In addition, Chase has agreed to waive certain fees and/or reimburse certain expenses to ensure that actual total operating expenses do not increase for at least one year.
CHASE Chase MONEY MARKET FUND(a) Vista Prime Money Market Fund(b) -------------------- -------------------------------- INVESTOR PREMIER VISTA PREMIER CLASS CLASS CLASS CLASS SHARES SHARES SHARES SHARES --------- --------- --------------- --------------- ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees 0.30% 0.30% 0.10% 0.10% Distribution (12b-1) Fees 0.10% None None None Other Expenses 0.35% 0.25% 0.50% 0.38% Total Annual Fund Operating Expenses 0.75% 0.55% 0.60% 0.48%
CHASE VISTA PRIME MONEY MARKET FUND (COMBINED)(c) -------------------------------------------------------- PRO FORMA VISTA CLASS PRO FORMA PREMIER CLASS SHARES --------------------- --------------------------------- ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) Management Fees 0.10% 0.10% Distribution (12b-1) Fees None None Other Expenses 0.50% 0.38% Total Annual Fund Operating Expenses 0.60% 0.48%
- --------------------- (a) The actual Management Fees for Chase Money Market Fund are expected to be 0.25%, actual Distribution Fees for Investor Class Shares are expected to be 0.00% and Total Annual Fund Operating Expenses for Investor and Premier Class Shares are not expected to exceed 0.60% and 0.50%, respectively. That is because Chase and some of the other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. 4 (b) The actual Other Expenses for Vista and Premier Class shares of Chase Vista Prime Money Market Fund, prior to the reorganization, are expected to be 0.49% and 0.35%, respectively, and Total Annual Fund Operating Expenses for Vista and Premier Class shares are not expected to exceed 0.59% and 0.45%, respectively. That is because Chase and some of the other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. (c) The actual Other Expenses for Vista and Premier Class shares of Chase Vista Prime Money Market Fund, subsequent to the reorganization, are expected to be 0.49% and 0.35%, respectively, and Total Annual Fund Operating Expenses for Vista and Premier Class shares are not expected to exceed 0.59% and 0.45%, respectively. That is because Chase and some of the other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE: This example helps investors compare the cost of investing in the Funds with the cost of investing in other mutual funds. The example assumes: - you invest $10,000; - you sell all of your shares at the end of the period; - your investment has a 5% return each year; and - each Fund's operating expenses are not waived and remain the same as shown above. Although actual costs may be higher or lower, based upon these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------- ---------------------- ---------------------- ---------------------- CHASE MONEY MARKET FUND INVESTOR CLASS SHARES $ 77 $ 240 $ 417 $ 930 PREMIER CLASS SHARES $ 56 $ 176 $ 307 $ 689 CHASE VISTA PRIME MONEY MARKET FUND VISTA CLASS SHARES $ 61 $ 192 $ 335 $ 750 PREMIER CLASS SHARES $ 49 $ 154 $ 269 $ 604 PRO FORMA CHASE VISTA PRIME MONEY MARKET FUND VISTA CLASS SHARES $ 61 $ 192 $ 335 $ 750 PREMIER CLASS SHARES $ 49 $ 154 $ 269 $ 604
RISK FACTORS The following discussion highlights the principal risk factors associated with an investment in Chase Vista Prime Money Market Fund. Chase Vista Prime Money Market Fund has similar investment objectives and policies to Chase Money Market Fund. Accordingly, there should be no material difference in the risk factors associated with them. This discussion is qualified in its entirety by the more extensive discussion of risk factors set forth in the Prospectus and Statement of Additional Information of Chase Vista Prime Money Market Fund, which are incorporated herein by reference. Chase Vista Prime Money Market Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to Chase Vista Prime Money Market Fund if the other party does not live up to its obligations under the agreement. Chase Vista Prime Money Market Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. 5 Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although Chase Vista Prime Money Market Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance. INFORMATION RELATING TO THE PROPOSED REORGANIZATION GENERAL The terms and conditions under which the Reorganization may be consummated are set forth in the Reorganization Plan. Significant provisions of the Reorganization Plan are summarized below; however, this summary is qualified in its entirety by reference to the Reorganization Plan, a copy of which is attached as Appendix A to this Combined Prospectus/Proxy Statement and which is incorporated herein by reference. DESCRIPTION OF THE REORGANIZATION PLAN The Reorganization Plan provides that at the Effective Time (as defined in the Reorganization Plan) of the Reorganization, the assets and liabilities of Chase Money Market Fund will be transferred to and assumed by Chase Vista Prime Money Market Fund. In exchange for the transfer of the assets, and the assumption of the liabilities, of Chase Money Market Fund, MFT will issue at the Effective Time of the Reorganization full and fractional (a) Vista Class Shares of Chase Vista Prime Money Market Fund equal in aggregate dollar value to the aggregate net asset value of full and fractional outstanding Investor Class Shares of Chase Money Market Fund and (b) Premier Class Shares of Chase Vista Prime Money Market Fund equal in aggregate dollar value to the aggregate net asset value of full and fractional outstanding Premier Class Shares of Chase Money Market Fund, in each case as determined at the valuation time specified in the Reorganization Plan. The Reorganization Plan provides that Chase Money Market Fund will declare a dividend or dividends prior to the Effective Time of the Reorganization which, together with all previous dividends, will have the effect of distributing to the Chase Money Market Fund Shareholders all undistributed net investment income earned and net capital gains realized up to and including the Effective Time of the Reorganization. Following the transfer of assets to, and the assumption of the liabilities of Chase Money Market Fund by Chase Vista Prime Money Market Fund, Chase Money Market Fund will distribute Chase Vista Prime Money Market Fund Shares received from MFT to the Chase Money Market Fund Shareholders in liquidation of Chase Money Market Fund. Each Chase Money Market Fund Shareholder at the Effective Time of the Reorganization will receive an amount of Vista Class Shares or Premier Class Shares, as the case may be, with a total net asset value equal to the net asset value of their Chase Money Market Fund Shares plus the right to receive any dividends or distributions which were declared before the Effective Time of the Reorganization but that remained unpaid at that time with respect to the shares of Chase Money Market Fund. Chase Vista Prime Money Market Fund expects to maintain most of the portfolio investments of Chase Money Market Fund in light of the similar investment policies of Chase Money Market Fund and the investment strategies of its investment adviser. After the Reorganization all of the issued and outstanding shares of Chase Money Market Fund Shares will be canceled on the books of Chase Money Market Fund and the stock transfer books of Chase Money Market Fund will be permanently closed. The Reorganization is subject to a number of conditions, including without limitation: approval of the Reorganization Plan and the transactions contemplated thereby described in this Combined Prospectus/Proxy Statement by the Chase Money Market Fund Shareholders; the receipt of a legal opinion from Simpson Thacher & Bartlett with respect to certain tax issues, as more fully described in "Federal Income Tax Consequences" below; and the parties' performance in all material respects of their respective agreements and undertakings in the Reorganization Plan. Assuming satisfaction of the conditions in the Reorganization Plan, the Effective Time of the Reorganization will be on February 19, 2001 or such other date as is agreed to by the parties. The expenses of Chase Money Market Fund and Chase Vista Prime Money Market Fund in connection with the Reorganization will be borne by Chase. 6 The Reorganization Plan and the Reorganization described herein may be abandoned at any time prior to the Effective Time of the Reorganization by either party if a material condition to the performance of such party under the Reorganization Plan or a material covenant of the other party is not fulfilled by the date specified in the Reorganization Plan or if there is a material default or material breach of the Reorganization Plan by the other party. In addition, either party may terminate the Reorganization Plan if its trustees determine that proceeding with the Reorganization Plan is not in the best interests of their fund's shareholders. BOARD CONSIDERATIONS In its consideration and approval of the Reorganization at meetings held on October 24, 2000, the MFIT Board considered and discussed the future of Chase Money Market Fund and how to best serve the Chase Money Market Fund Shareholders' interests. The Trustees discussed the size of Chase Money Market Fund's investment portfolio (approximately $[343] million as of [August 31, 2000]) and the increasing advantages of reorganizing Chase Money Market Fund into Chase Vista Prime Money Market Fund. The Trustees reviewed the Proposal. After discussions, it was decided to pursue the Reorganization with Chase Vista Prime Money Market Fund. In its consideration and approval of the Reorganization, the MFIT Board considered, among other things: the terms of the Reorganization Plan; a comparison of each fund's historical and projected expense ratios; the comparative investment performance of Chase Money Market Fund and Chase Vista Prime Money Market Fund; the effect of such Reorganization on Chase Money Market Fund and its shareholders; the fact that the day-to-day portfolio management would be unchanged by the Reorganization; the investment advisory services supplied by Chase and its affiliates; the management and other fees payable by Chase Vista Prime Money Market Fund; the similarities and differences in the investment objective and policies of the Funds; the opportunity to combine Chase Money Market Fund with Chase Vista Prime Money Market Fund in an effort to realize operational and administrative efficiencies; the recommendations of Chase with respect to the proposed Reorganization and the fact that the Reorganization would constitute a tax-free reorganization. After considering the foregoing factors, together with such information as they believed to be relevant, the MFIT Board determined that the proposed Reorganization is in the best interests of Chase Money Market Fund and that the interests of the Chase Money Market Fund Shareholders would not be diluted as a result of the Reorganization and approved the Reorganization Plan and directed that the Reorganization Plan be submitted to the Chase Money Market Fund Shareholders for approval. The MFT Board considered the proposed Reorganization from the perspective of Chase Vista Prime Money Market Fund. The MFIT Board considered, among other things; the terms of the Reorganization Plan; the opportunity to combine the two Funds in an effort to realize operational and administrative efficiencies; and the fact that the Reorganization would consititute a tax-free reorganization. Based upon its evaluation of the relevant information provided to it, and in light of its fiduciary duties under federal and state law, the MFT Board determined that (i) the proposed Reorganization is in the best interests of the shareholders of Chase Vista Prime Money Market Fund and (ii) the interests of Chase Vista Prime Money Market Fund's Shareholders would not be diluted as a result of the Reorganization. After considering the foregoing factors, together with such other information as it believed to be relevant, the MFT Board approved the Reorganization Plan. THE MFIT BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL. The MFIT Board has not determined what action Chase Money Market Fund will take in the event shareholders fail to approve the Reorganization Plan or for any reason the Reorganization is not consummated. In either such event, the Board will consider other appropriate courses of action. FEDERAL INCOME TAX CONSEQUENCES Consummation of the Reorganization is subject to the condition that MFIT receive an opinion from Simpson Thacher & Bartlett to the effect that for federal income tax purposes: (i) the transfer of all of the assets and liabilities of Chase Money Market Fund to Chase Vista Prime Money Market Fund in exchange for Chase Vista Prime Money Market Fund Shares and the liquidating distributions to Shareholders of Chase Vista Prime Money Market Fund Shares so received, as described in the Reorganization Plan, will constitute a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and with respect to the Reorganization, Chase Money Market Fund and Chase Vista Prime Money Market Fund will each be considered "a party to a reorganization" within the meaning of 7 Section 368(b) of the Code; (ii) no gain or loss will be recognized by Chase Money Market Fund as a result of such transaction; (iii) no gain or loss will be recognized by Chase Vista Prime Money Market Fund as a result of such transaction; (iv) no gain or loss will be recognized by the Chase Money Market Fund Shareholders on the distribution to Chase Money Market Fund Shareholders of the Chase Vista Prime Money Market Fund Shares in exchange for their Chase Money Market Fund Shares; (v) the aggregate basis of Shares of Chase Vista Prime Money Market Fund received by a Shareholder of Chase Money Market Fund will be the same as the aggregate basis of such Chase Money Market Fund Shareholder's Chase Money Market Fund Shares immediately prior to the Reorganization; (vi) the basis of Chase Vista Prime Money Market Fund in the assets of Chase Money Market Fund received pursuant to such transaction will be the same as the basis of such assets in the hands of Chase Money Market Fund immediately before such transaction; (vii) a Chase Money Market Fund Shareholder's holding period for Chase Vista Prime Money Market Fund Shares will be determined by including the period for which each Chase Money Market Fund Shareholder held Chase Money Market Fund Shares exchanged therefor, provided that the Shareholder held such Shares in Chase Money Market Fund Shares as a capital asset; and (viii) Chase Vista Prime Money Market Fund's holding period with respect to the assets received in the Reorganization will include the period for which such assets were held by Chase Money Market Fund. MFIT has not sought a tax ruling from the Internal Revenue Service (the "IRS"), but is acting in reliance upon the opinion of counsel discussed in the previous paragraph. That opinion is not binding on the IRS and does not preclude the IRS from adopting a contrary position. Shareholders should consult their own advisers concerning the potential tax consequences to them, including state and local income taxes. CAPITALIZATION Because Chase Money Market Fund will be combined with Chase Vista Prime Money Market Fund in the Reorganization, the total capitalization of Chase Vista Prime Money Market Fund after the Reorganization is expected to be greater than the current capitalization of Chase Money Market Fund. The following table sets forth as of August 31, 2000: (i) the capitalization of Chase Money Market Fund; (ii) the capitalization of Chase Vista Prime Money Market Fund; and (iii) the pro forma capitalization of Chase Vista Prime Money Market Fund as adjusted to give effect to the proposed Reorganization. There is, of course, no assurance that the Reorganization will be consummated. Moreover, if consummated, the capitalizations of Chase Vista Prime Money Market Fund and Chase Money Market Fund are likely to be 8 different at the Effective Time of the Reorganization as a result of fluctuations in the value of portfolio securities of each Fund and daily share purchase and redemption activity in each fund.
CHASE MONEY CHASE VISTA PRIME PRO FORMA MARKET FUND MONEY MARKET FUND COMBINED ------------ ----------------- --------------- Total Net Assets Vista Class Shares............... $ -- $ 1,475,054,000 $ 1,475,280,918 Premier Class Shares............. -- 1,841,253,000 2,185,031,554 Institutional Class Shares....... -- 9,430,011,000 9,430,011,000 B Class Shares................... -- 10,939,000 10,939,000 C Class Shares................... -- 44,000 44,000 Reserve Class Shares............. -- 1,205 1,205 Investor Class Shares............ 226,918 -- -- Premier Class Shares............. 343,778,554 -- -- ------------ --------------- --------------- $344,005,472 $12,757,302,205 $13,101,307,677 ============ =============== =============== Shares Outstanding Vista Class Shares............... -- 1,478,705,831 1,478,932,746 Premier Class Shares............. -- 1,841,212,524 2,184,990,632 Institutional Class Shares....... -- 9,426,519,136 9,426,519,136 B Class Shares................... -- 10,940,645 10,940,645 C Class Shares................... -- 43,677 43,677 Reserve Class Shares............. -- 1,205 1,205 Investor Class Shares............ 226,915 -- -- Premier Class Shares............. 343,778,108 -- -- ------------ --------------- --------------- 344,005,023 12,757,423,018 13,101,428,041 ============ =============== =============== Net Asset Value Per Share Vista Class Shares............... -- $1.00 $1.00 Premier Class Shares............. -- $1.00 $1.00 Institutional Class Shares....... -- $1.00 $1.00 B Class Shares................... -- $1.00 $1.00 C Class Shares................... -- $1.00 $1.00 Reserve Class Shares............. -- $1.00 $1.00 Investor Class Shares............ $1.00 -- -- Premier Class Shares............. $1.00 -- --
INVESTMENT POLICIES The following discussion summarizes some of the investment policies of Chase Vista Prime Money Market Fund. Chase Vista Prime Money Market Fund has similar investment policies to Chase Money Market Fund; however, certain differences are described below. This section is qualified in its entirety by the discussion in the Prospectus and Statement of Additional Information of Chase Vista Prime Money Market Fund, which are incorporated herein by reference. OBJECTIVE Chase Vista Prime Money Market Fund seeks to provide the highest possible level of income while still maintaining liquidity and preserving capital. MAIN INVESTMENT STRATEGY Chase Vista Prime Money Market Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. Chase Vista Prime Money Market Fund principally invests in high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations, debt securities issued or guaranteed by qualified banks. These are: U.S. banks with more than $1 billion in total assets, and foreign branches of these banks; foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S.; other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing; securities issued or 9 guaranteed by the U.S. Government, its agencies or authorities; asset-backed securities and repurchase agreements. The dollar weighted average maturity of Chase Vista Prime Money Market Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. THE DOLLAR WEIGHTED AVERAGE MATURITY OF CHASE MONEY MARKET FUND WILL BE 90 DAYS OR LESS. Chase Vista Prime Money Market Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and banker's acceptances. Chase Vista Prime Money Market Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. Chase Vista Prime Money Market Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. Chase Vista Prime Money Market Fund seeks to maintain a net asset value of $1.00 per share. Chase Vista Prime Money Market Fund may change any of its investment policies (except its investment objective) without shareholder approval. CHASE MONEY MARKET FUND MAY CHANGE ITS INVESTMENT OBJECTIVE WITHOUT SHAREHOLDER APPROVAL. INVESTMENT RESTRICTIONS Chase Vista Prime Money Market Fund and Chase Money Market Fund have each adopted the following investment restrictions which may not be changed without approval by a "majority of the outstanding shares" of a Fund which means the vote of the lesser of (i) 67% or more of the shares of a Fund present at a meeting, if the holders of more than 50% of the outstanding shares of a Fund are present or represented by proxy, or (ii) more than 50% of the outstanding shares of a Fund. Neither Fund may: (1) borrow money, except that each Fund may borrow money for temporary or emergency purposes, or by engaging in reverse repurchase transactions, in an amount not exceeding 33 1/3% of the value of its total assets at the time when the loan is made and may pledge, mortgage or hypothecate no more than 1/3 of its net assets to secure such borrowings. Any borrowings representing more than 5% of a Fund's total assets must be repaid before the Fund may make additional investments; (2) make loans, except that each Fund may: (i) purchase and hold debt instruments (including without limitation, bonds, notes, debentures or other obligations and certificates of deposit, bankers' acceptances and fixed time deposits) in accordance with its investment objectives and policies; (ii) enter into repurchase agreements with respect to portfolio securities; and (iii) lend portfolio securities with a value not in excess of one-third of the value of its total assets; (3) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, or repurchase agreements secured thereby) if, as a result, more than 25% of a Fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; (4) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments but this shall not prevent either Fund from (i) purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities or (ii) engaging in forward purchases or sales of foreign currencies or securities; (5) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business). Investments by either Fund in securities backed by mortgages on real estate or in marketable securities of companies engaged in such activities are not hereby precluded; (6) issue any senior security (as defined in the 1940 Act), except that (a) each Fund may engage in transactions that may result in the issuance of senior securities to the extent permitted under applicable 10 regulations and interpretations of the 1940 Act or an exemptive order; (b) each Fund may acquire other securities, the acquisition of which may result in the issuance of a senior security, to the extent permitted under applicable regulations or interpretations of the 1940 Act; and (c) subject to the restrictions set forth above, each Fund may borrow money as authorized by the 1940 Act; and (7) underwrite securities issued by other persons except insofar as a Fund may technically be deemed to be an underwriter under the Securities Act of 1933 in selling a portfolio security. In addition, as a matter of fundamental policy, notwithstanding any other investment policy or restriction, each Fund may seek to achieve its investment objective by investing all of its investable assets in another investment company having substantially the same investment objective and policies as that Fund. For purposes of investment restriction (5) above, real estate includes real estate limited partnerships. For purposes of investment restriction (3) above, industrial development bonds, where the payment of principal and interest is the ultimate responsibility of companies within the same industry, are grouped together as an "industry." Investment restriction (3) above, however, is not applicable to investments by either Fund in municipal obligations where the issuer is regarded as a state, city, municipality or other public authority since such entities are not members of any "industry." Supranational organizations are collectively considered to be members of a single "industry" for purposes of restriction (3) above. In addition, each Fund is subject to the following nonfundamental investment restrictions which may be changed without shareholder approval: (1) Each Fund may not, with respect to 75% of its assets, hold more than 10% of the outstanding voting securities of any issuer or invest more than 5% of its assets in the securities of any one issuer (other than obligations of the U.S. Government, its agencies and instrumentalities). (2) Each Fund may not make short sales of securities, other than short sales "against the box," or purchase securities on margin except for short-term credits necessary for clearance of portfolio transactions, provided that this restriction will not be applied to limit the use of options, futures contracts and related options, in the manner otherwise permitted by the investment restrictions, policies and investment program of a Fund. The Funds have no current intention of making short sales against the box. (3) Each Fund may not purchase or sell interests in oil, gas or mineral leases. (4) Each Fund may not invest more than 10% of its net assets in illiquid securities. (5) Each Fund may not write, purchase or sell any put or call option or any combination thereof. (6) Each Fund may invest up to 5% of its total assets in the securities of any one investment company, but may not own more than 3% of the securities of any one investment company or invest more than 10% of its total assets in the securities of other investment companies. For purposes of investment restriction (4) above, illiquid securities includes securities restricted as to resale unless they are determined to be readily marketable in accordance with procedures established by the Board of Trustees. PURCHASES, REDEMPTIONS AND EXCHANGES The procedures for purchases, redemptions and exchanges of shares of Chase Vista Prime Money Market Fund are similar to those of Chase Money Market Fund. SALES CHARGES AND 12B-1 FEES There is no sales charge (sometimes called a "load") to buy Vista Class or Premier Class Shares of Chase Vista Prime Money Market Fund. Unlike with Investor Class Shares of Chase Money Market Fund, there are no ongoing charges (sometimes called "12b-1 fees") that holders of Vista Class or Premier Class Shares of Chase Vista Prime Money Market Fund pay as long as they own their shares. BUYING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF CHASE VISTA PRIME MONEY MARKET FUND SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION. The price shareholders pay for their shares is the net asset value per share (NAV). NAV is the value of everything the Fund owns, minus everything it owes, divided by the number of shares held by investors. The Fund seeks to maintain a stable NAV of $1.00. Each Fund uses the amortized cost method to value its portfolio of securities. This method provides more stability in valuations. However, it may also result in 11 periods during which the stated value of a Fund's security is different than the price such Fund would receive if it sold the investment. The NAV of each class of the Fund's shares is generally calculated by 6:00 pm Eastern time each day such Fund is accepting purchase orders. A shareholder will pay the next NAV calculated after the [Chase Vista] Funds Service Center (the "Center") receives that shareholder's order in proper form. An order is in proper form only after funds are converted into federal funds. The Center accepts purchase orders on any business day that the Federal Reserve Bank of New York and the New York Stock Exchange are open. If an order is received in proper form by 4:00 p.m. (Eastern time), it will be processed at that day's price and the purchaser will be entitled to all dividends declared on that day. If an order is received after 4:00 p.m., it will generally be processed at the next day's price. If a purchaser pays by check for the Fund's shares before 4:00 p.m., it will generally be processed the next day the Fund is open for business. A later cut-off time may be permitted for investors buying the Fund's shares (through Chase or a bank affiliate of Chase) so long as such later cut-off time is before the Fund's NAV is calculated. If a shareholder buys through an agent and not directly from the Center, the agent could set earlier cut-off times. The Fund may close earlier a few days each year if the Public Securities Association recommends that the U.S. Government securities market close trading early. Each shareholder must provide a Social Security Number or Taxpayer Identification Number when opening an account. The Fund has the right to reject any purchase order. Chase Vista Prime Money Market Fund's minimum investment and eligibility requirements will be waived for shareholders of Chase Money Market Fund who receive Chase Vista Prime Money Market Fund Shares in the Reorganization. For Vista Class and Premier Class Shares, checks should be made out to Chase Vista Funds in U.S. dollars. Credit cards, cash, or checks from a third party will not be accepted. Shares bought by check may not be sold for 15 calendar days. Shares bought through an Automated Clearing House cannot be sold until the payment clears. This could take more than seven business days. Purchase orders will be canceled if a check does not clear and the investor will be responsible for any expenses and losses to the Fund. Orders by wire will be canceled if the Center does not receive payment by 4:00 p.m., Eastern time, on the day the shareholder buys. Shareholders seeking to buy Vista Class and Premier Class Shares through an investment representative should instruct their representative to contact the Fund. Such representatives may charge investors a fee and may offer additional services, such as special purchase and redemption programs, "sweep" programs, cash advances and redemption checks. Such representative may set different minimum investments and earlier cut-off times. A systematic investment plan is available for Vista Class Shares. SELLING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO SALES OF CHASE VISTA PRIME MONEY MARKET FUND SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION. Shares of the Fund may be sold on any day the Center is open for trading, either directly to the Fund or through an investment representative. Shareholders of the Fund will receive the next NAV calculated after the Center accepts his or her sale order. Under normal circumstances, if a request is received before 4:00 p.m., Eastern time, the Fund will send the proceeds the same business day. An order to sell shares will not be accepted if the Fund has not collected payment for the shares. The Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit. Generally, proceeds are sent by electronic transfer or wire for Vista Class Shares and by wire only for Premier Class Shares. However, for Vista Class, if a shareholder's address of record has changed within the 30 days prior to the sale request or if more than $25,000 of shares is sold by phone, proceeds will be sent only to the bank account on the Fund's records. 12 For Vista Class Shares, a shareholder will need to have his or her signature guaranteed if he or she wants payment to be sent to an address other than the one in the Fund's records. Additional documents or a letter from a surviving joint owner may also be needed. A shareholder who purchased through an investment representative, or in the case of Premier Class Shares, through a financial service firm, should contact that representative, who will send the necessary documents to the Center. The representative might charge a fee for this service. Shareholders may also sell their shares by contacting the Center directly. Vista Class shareholders may contact 1-800-34-VISTA while Premier Class shareholders may contact 1-800-62-CHASE. A systematic withdrawal plan is available for Vista Class Shares. EXCHANGING FUND SHARES THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF CHASE VISTA PRIME MONEY MARKET FUND SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION. Shares of Chase Vista Prime Money Market Fund may be exchanged for shares in certain other Chase Vista Funds. For tax purposes, an exchange is treated as a sale of those shares. Shareholders should carefully read the prospectus of the fund into which they want to exchange. Shareholders who exchange must meet any minimum investment requirements and may have to pay a sales commission. The exchange privilege is not a means of short-term trading as this could increase management cost and affect all shareholders of MFT. The Fund reserves the right to limit the number of exchanges or refuse an exchange. Each exchange privilege may also be terminated. The Fund charges an administration fee of $5 for each exchange if an investor makes more than 10 exchanges in a year or three in a quarter. OTHER INFORMATION CONCERNING CHASE VISTA PRIME MONEY MARKET FUND For Vista Class Shares, Chase Vista Prime Money Market Fund may close an account if the balance falls below $500. Chase Vista Prime Money Market Fund may also close the account if an investor is in the Systematic Investment Plan and fails to meet investment minimums over a 12-month period. For Premier Class Shares, Chase Vista Prime Money Market Fund may close an account if the balance falls below $100,000 because the investor has sold Shares. At least 60 days' notice will be given before closing the account. Unless a shareholder indicates otherwise on his or her account application, the Fund is authorized to act on redemption and transfer instructions received by phone. If someone trades on an account by phone, the Fund will ask that person to confirm the account registration and address to make sure they match those in the Fund records. If they do correspond, the Fund is generally authorized to follow that person's instructions. The Fund will take all reasonable precautions to confirm that the instructions are genuine. Investors agree that they will not hold the Fund liable for any loss or expenses from any sales request, if that Fund takes reasonable precautions. The Fund will be liable for any losses to a shareholder from an unauthorized sale or fraud against such shareholder if the Fund does not follow reasonable procedures. It may not always be possible to reach the Center by telephone. This may be true at times of unusual market changes and shareholder activity. In that event, shareholders can mail instructions to the Fund or contact their investment representative or agent. The Fund may modify or cancel the sale of shares by phone without notice. MFT has agreements with certain shareholder servicing agents (including Chase) under which the shareholder servicing agents have agreed to provide certain support services to their customers. For performing these services, each shareholder servicing agent receives an annual fee of up to 0.35% of the average daily net assets of the Vista Class Shares and up to 0.25% of the average daily net assets of the Premier Class Shares held by investors serviced by the shareholder servicing agent. The MFT Board has determined that the amount payable for "service fees" (as defined by the National Association of Securities Dealers) for the Fund does not exceed 0.25% of the average annual net assets attributable to the Vista Class Shares of such Fund. MFIT DOES NOT HAVE SIMILAR AGREEMENTS WITH SHAREHOLDER SERVICING AGENTS. ACCORDINGLY, CHASE MONEY MARKET FUND DOES NOT PAY SHAREHOLDER SERVICING FEES. Chase and/or VFD may, at their own expense, make additional payments to certain selected dealers or other shareholder servicing agents for performing administrative services for their customers. The amount 13 may be up to an additional 0.10% annually of the average net assets of the fund attributable to shares of the Fund held by customers of those shareholder servicing agents. Chase Vista Prime Money Market Fund issues multiple classes of shares. Each class may have different requirements for who may invest, and may have different sales charges and expense levels. A person who gets compensated for selling Fund shares may receive a different amount for each class. Chase and its affiliates and the Funds and their affiliates, agents and subagents may share information about shareholders and their accounts with each other and with others unless this sharing is prohibited by contract. This information can be used for a variety of purposes, including offering investment and insurance products to shareholders. VFD is the distributor for Chase Vista Prime Money Market Fund, rather than CFD (which acts as distributor for Chase Money Market Fund). [Please note that it is intended that VFD will change its name to Chase Fund Distributors, Inc. in connection with the Reorganization.] DISTRIBUTIONS AND TAXES Each Fund can earn income and realize capital gain. Each Fund will deduct from these earnings any expenses and then pay to shareholders the distributions. Each Fund declares dividends on a daily basis, so shares can start earning dividends on the day they are purchased. The Fund distributes the dividends monthly in the form of additional shares, unless the Fund is informed by the shareholder that he or she wants payment in cash or deposited in a pre-assigned bank account. The taxation of dividends will not be affected by the form in which they are received. The Fund distributes any short-term capital gain at least annually. The Funds do not expect to realize long-term capital gain Dividends of net investment income are usually taxable as ordinary income at the federal, state and local levels. The state or municipality where you live may not charge you state and local taxes on tax-exempt interest earned on certain bonds. Dividends earned on bonds issued by the U.S. government and its agencies may also be exempt from some types of state and local taxes. If you receive distributions of net capital gain, the tax rate will be based on how long a Fund held a particular asset, not on how long you have owned your shares. If you buy shares just before a distribution, you will pay tax on the entire amount of the taxable distribution you receive, even though the NAV will be higher on that date because it includes the distribution amount. Early in each calendar year, each Fund will send its shareholders a notice showing the amount of distributions received in the preceding year and the tax status of those distributions. The above is only a general summary of tax implications of investing in these Funds. Shareholders should consult their tax advisors to see how investing in the Funds will affect their own tax situation. COMPARISON OF CHASE MONEY MARKET FUND'S AND CHASE VISTA PRIME MONEY MARKET FUND'S ORGANIZATION STRUCTURES There are no differences in the organizational structure of Chase Money Market Fund and Chase Vista Prime Money Market Fund. Set forth below are descriptions of the structure, voting rights, shareholder liability and the liability of Trustees. STRUCTURE OF CHASE MONEY MARKET FUND Chase Money Market Fund is organized as a series of MFIT, which is organized under the law of the Commonwealth of Massachusetts. As a Massachusetts business trust, MFIT's operations are governed by MFIT's Declaration of Trust and By-Laws (the "MFIT Trust Documents") and applicable Massachusetts law. The operations of Chase Money Market Fund are also subject to the provisions of the 1940 Act and the rules and regulations thereunder. STRUCTURE OF CHASE VISTA PRIME MONEY MARKET FUND Chase Vista Prime Money Market Fund is organized as a series of MFT, which is organized under the law of the Commonwealth of Massachusetts. As a Massachusetts business trust, MFT's operations are governed by MFT's Declaration of Trust and By-Laws (the "MFT Trust Documents") and applicable 14 Massachusetts law. The operations of Chase Vista Prime Money Market Fund are also subject to the provisions of the 1940 Act and the rules and regulations thereunder. TRUSTEES AND OFFICERS Subject to the provisions of the Trust Documents, the business of Chase Money Market Fund is managed by MFIT's Trustees and the business of Chase Vista Prime Money Market Fund is managed by MFT's Trustees, who serve indefinite terms and have all powers necessary or convenient to carry out their responsibilities. The Trustees and officers of MFIT and MFT are identical. Information concerning the current Trustees of the MFIT Board and the MFT Board is set forth later in this document. SHARES OF FUNDS Each of MFIT and MFT is a trust with an unlimited number of authorized shares of beneficial interest, par value $0.001 per share, which may be divided into portfolios or series and classes thereof. Each Fund is one portfolio of a trust, and may issue multiple classes of shares. Each share of a portfolio or class of a trust represents an equal proportionate interest in that portfolio or class with each other share of that portfolio or class. The shares of each portfolio or class of either MFIT or MFT participate equally in the earnings, dividends and assets of the particular portfolio or class. Fractional shares have proportionate rights to full shares. Expenses of MFIT or MFT that are not attributable to a specific portfolio or class will be allocated to all the portfolios of that trust in a manner believed by its management to be fair and equitable. Generally, shares of each portfolio will be voted separately, for example, to approve an investment advisory agreement and shares of each class of each portfolio will be voted separately, for example, to approve a distribution plan, but shares of all series and classes vote together, to the extent required by the 1940 Act, including the election or selection of Trustees and independent accountants. Neither MFIT nor MFT is required to hold regular annual meetings of shareholders, but may hold special meetings from time to time. There are no conversion or preemptive rights in connection with shares of either MFIT or MFT. SHAREHOLDER VOTING RIGHTS A vacancy in the Board of either MFIT or MFT resulting from the resignation of a Trustee or otherwise may be filled similarly by a vote of a majority of the remaining Trustees then in office, subject to the 1940 Act. In addition, Trustees may be removed from office by a vote of holders of shares representing two-thirds of the outstanding shares of each portfolio of that trust at a meeting duly called for the purpose. A meeting of shareholders shall be held upon the written request of the holders of shares representing not less than 10% of the outstanding shares entitled to vote on the matters specified in the written request. Upon written request by the holders of shares representing at least $25,000 or 1% of the outstanding shares of that trust stating that such shareholders wish to communicate with the other shareholders for the purpose of obtaining the signatures necessary to demand a meeting to consider removal of a Trustee, the Trustees will, within five business days after receipt of such request, either provide a list of shareholders or inform such applicants as to the approximate number of shareholders and the approximate costs of mailing the request to them. If the second option is chosen by the Trustees, then the Trustees are generally obligated, upon written request of the applicants, to mail the requested materials to all shareholders of record (at the expense of the requesting shareholders). Except as set forth above, the Trustees may continue to hold office and may appoint successor Trustees. SHAREHOLDER LIABILITY Under Massachusetts law, shareholders of either MFIT or MFT could, under certain circumstances, be held personally liable as partners for the obligations of that trust. However, the Declaration of Trust of each of MFIT and MFT disclaims shareholder liability for acts or obligations of that trust and provides for indemnification and reimbursement of expenses out of trust property for any shareholder held personally liable for the obligations of that trust. The Declaration of Trust of each of MFIT and MFT also provides that the trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of that trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the trust itself was unable to meet its obligations. LIABILITY OF DIRECTORS AND TRUSTEES Under the Declaration of Trust of each of MFIT and MFT, the Trustees of that trust are personally liable only for bad faith, willful misfeasance, gross negligence or reckless disregard of their duties as Trustees. Under the Declaration of Trust of each of MFIT and MFT, a Trustee or officer will generally be indemnified against all liability and against all expenses reasonably incurred or paid by such person in connection with 15 any claim, action, suit or proceeding in which such person becomes involved as a party or otherwise by virtue of such person being or having been a Trustee or officer and against amounts paid or incurred by such person in the settlement thereof. The foregoing is only a summary of certain organizational and governing documents and Massachusetts business trust law. It is not a complete description. Shareholders should refer to the provisions of these documents and state law directly for a more thorough comparison. Copies of the Declaration of Trust and Bylaws of each of MFIT and MFT are available without charge upon written request to that trust. INFORMATION RELATING TO THE ADVISORY CONTRACTS GENERAL INFORMATION As noted above, Chase Money Market Fund and Chase Vista Prime Money Market Fund are both managed by Chase pursuant to the Advisory Agreements. Chase has delegated most of its responsibilities with respect to Chase Vista Prime Money Market Fund to CFAM pursuant to a Subadvisory Agreement between Chase and CFAM. As a result, CFAM is responsible for most of the day-to-day management functions for Chase Vista Prime Money Market Fund. In addition, the same portfolio management team is responsible for the day-to-day management for both Chase Vista Prime Money Market Fund and Chase Money Market Fund. It is anticipated that during the first quarter of 2001, Chase will transfer its investment advisory business to CFAM and, thereafter, CFAM will be the sole investment adviser to Chase Vista Prime Money Market Fund and Chase Money Market Fund. DESCRIPTION OF CHASE Chase is an indirect wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank holding company ("CMC"). Chase's principal executive offices are located at 270 Park Avenue, New York, New York 10017. Chase is a New York State chartered bank that provides commercial banking and trust services. As of June 30, 2000, Chase and certain of its affiliates provided investment management services with respect to assets of approximately $250 billion. CMC's principal executive offices are located at 270 Park Avenue, New York, New York 10017. On September 13, 2000, CMC and J.P. Morgan & Co. Incorporated announced that they have agreed to merge. The transaction is expected to close in the first quarter of 2001 and is subject to approval by shareholders of both companies, as well as by U.S. Federal and state and foreign regulatory authorities. Under each Advisory Agreement, Chase is responsible for making decisions with respect to, and placing orders for, all purchases and sales of the portfolio securities of the Funds. Chase's responsibilities under each Advisory Agreement including supervising the Funds' investments and maintaining a continuous investment program, placing purchase and sale orders and paying costs of certain clerical and administrative services involved in managing and servicing the Funds' investments and complying with regulatory reporting requirements. Chase delegates certain of these responsibilities with respect to Chase Vista Prime Money Market Fund to CFAM. Under each Advisory Agreement, Chase is obligated to furnish employees, office space and facilities required for operation of the Funds. EXPENSES AND ADVISORY FEES. Each Advisory Agreement provides that each of Chase Money Market Fund and Chase Vista Prime Money Market Fund, as the case may be, will pay Chase a monthly advisory fee based upon the average daily net assets of such Fund. The annual rate of the advisory fee is 0.30% for Chase Money Market Fund and 0.10% for Chase Vista Prime Money Market Fund. Chase may waive fees from time to time to assist the Funds in maintaining competitive yields. Under each Advisory Agreement, except as indicated above, each Fund is responsible for its operating expenses including, but not limited to, taxes; interest; fees (including fees paid to its Trustees who are not affiliated with Chase or any of their affiliates); fees payable to the SEC; state securities qualification fees; association membership dues; costs of preparing and printing prospectuses for regulatory purposes and for distribution to existing shareholders; advisory and administrative fees; charges of the custodian and transfer agent; insurance premiums; auditing and legal expenses; costs of shareholders' reports and shareholder meetings; any extraordinary expenses; and brokerage fees and commissions, if any, in connection with the purchase or sale of portfolio securities. For the twelve months ended August 31, 2000, Chase accrued management fees and management fee waivers of approximately $887,000 and $179,000, respectively, for Chase Money Market Fund. For the fiscal year ended August 31, 2000, Chase accrued management fees of approximately $10,633,000 for Chase Vista Prime Money Market Fund. 16 SUBCONTRACTING. Chase is authorized by each Advisory Agreement to employ or associate with such other persons or entities as it believes to be appropriate to assist it in the performance of its duties. Any such person is required to be compensated by Chase, not by the Trusts or the relevant Fund, and to be approved by the shareholders of that Fund as required by the 1940 Act. LIMITATION ON LIABILITY. Each Advisory Agreement provides that Chase will not be liable for any error of judgment or mistake of law or for any act or omission or loss suffered by MFIT, MFT or either Fund, as the case may be, in connection with the performance of that Advisory Agreement except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or from willful misfeasance, bad faith, or gross negligence in the performance of its duties or reckless disregard of its obligations and duties under the Advisory Agreement. Chase would be as fully responsible to MFIT, MFT or either Fund, as the case may be, or a Fund for the acts of any sub-adviser as it is for its own acts. DURATION AND TERMINATION. Each Advisory Agreement continues in effect from year to year with respect to Chase Money Market Fund or Chase Vista Prime Money Market Fund, as the case may be, only so long as such continuation is approved at least annually by (i) the Board of Trustees of either MFIT or MFT, as the case may be, or the majority vote of the outstanding voting securities of such Fund, and (ii) a majority of those Trustees who are neither parties to that Advisory Agreement nor "interested persons," as defined in the 1940 Act, of any such party, acting in person at a meeting called for the purpose of voting on such approval. Each Advisory Agreement will terminate automatically in the event of its "assignment," as defined in the 1940 Act. In addition, each Advisory Agreement is terminable at any time as to either Fund without penalty by either the MFIT or MFT Board, as the case may be, or by vote of the majority vote of such Fund's outstanding voting securities upon 60 days' written notice to Chase, and by Chase on 60 days' written notice to MFIT or MFT, as the case may be. DESCRIPTION OF CFAM CFAM is a wholly-owned subsidiary of Chase. CFAM is located at 1211 Avenue of the Americas, 41st Floor, New York, New York 10036. DESCRIPTION OF THE SUBADVISORY AGREEMENT Pursuant to the Subadvisory Agreement, Chase delegates to CFAM portfolio management duties. With respect to the day-to-day management of Chase Vista Prime Money Market Fund, CFAM makes decisions concerning, and places all orders for, purchases and sales of securities and helps maintain the records relating to such purchases and sales. CFAM may, in its discretion, provide such services through its own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser to Chase Vista Prime Money Market Fund under applicable laws and are under the common control of Chase; PROVIDED that (i) all persons, when providing services under the Subadvisory Agreement, are functioning as part of an organized group of persons, and (ii) such organized group of persons is managed at all times by authorized officers of CFAM. Chase and CFAM bear all expenses in connection with the performance of their respective services under the Subadvisory Agreement. As investment adviser, Chase oversees the management of Chase Vista Prime Money Market Fund under the Subadvisory Agreement, and, subject to the general supervision of the MFT Board, makes recommendations and provides guidelines to CFAM based on general economic trends and macroeconomic factors. Among the recommendations that may be provided by Chase to CFAM are guidelines and benchmarks against which Chase Vista Prime Money Market Fund would be managed. From the fee paid by Chase Vista Prime Money Market Fund under the Advisory Agreement to Chase, Chase bears responsibility for payment of subadvisory fees to CFAM. Therefore, Chase Vista Prime Money Market Fund does not bear any increase in advisory fee rates resulting from the Subadvisory Agreement. The Subadvisory Agreement provides that CFAM is entitled to receive from Chase, out of its advisory fee, a monthly management fee as disclosed below under "Subadvisory Fee." DURATION AND TERMINATION. The Subadvisory Agreement will continue for successive one-year periods, provided that such continuation is specifically approved at least annually (i) by the MFT Board, or by a majority of the outstanding voting securities of Chase Vista Prime Money Market Fund and, in each case, (ii) by a majority of the Trustees who are not interested persons of the Fund, Chase or CFAM, by vote cast in person at a meeting called for such purposes. The Subadvisory Agreement is terminable at any time, without penalty, by vote of the MFT Board, by Chase by the majority of the outstanding voting securities of 17 Chase Vista Prime Money Market Fund, or by CFAM upon 60 days' written notice. The Subadvisory Agreement will terminate automatically in the event of its assignment, as defined under the 1940 Act. SUBADVISORY FEE. As compensation for its services, CFAM receives a fee from Chase. The fee is at the annual rate of 0.03% of the average daily net assets of Chase Vista Prime Money Market Fund. The fee, which is accrued daily and payable monthly, is calculated for each day by multiplying the fraction of one over the number of calendar days in the year by the 0.03% annual subadvisory fee percentage rate and multiplying this product by the value of the net assets of Chase Vista Prime Money Market Fund at the close of business on the previous business day of MFT. For the fiscal year ended August 31, 2000, Chase paid approximately $3,190,000 in subadvisory fees to CFAM. THIS FEE WAS PAID BY CHASE OUT OF THE ADVISORY FEE IT RECEIVED FOR CHASE VISTA PRIME MONEY MARKET FUND AND WAS NOT AN ADDITIONAL CHARGE TO THE FUND. PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS Chase, as the investment adviser to both Chase Money Market Fund and Chase Vista Prime Money Market Fund, has responsibilities with respect to each Fund's portfolio transactions and brokerage arrangements pursuant to the Fund's policies, subject to the overall authority of either the MFIT or MFT Board, as the case may be. In addition, the Subadvisory Agreement with CFAM currently provides that CFAM's responsibilities with respect to portfolio transactions and brokerage arrangements will be equivalent to those of Chase under the Advisory Agreements. Accordingly, the description below of Chase's responsibilities under each Advisory Agreement would also apply to the subadviser's responsibilities under the Subadvisory Agreement. Under each Advisory Agreement, Chase, subject to the general supervision of the applicable Board, is responsible for the placement of orders for the purchase and sale of portfolio securities for each of Chase Money Market Fund and Chase Vista Prime Money Market Fund with brokers and dealers selected by Chase. These brokers and dealers may include brokers or dealers affiliated with Chase to the extent permitted by the 1940 Act and that trust's policies and procedures applicable to the Funds. Chase shall use its best efforts to seek to execute portfolio transactions at prices which, under the circumstances, result in total costs or proceeds being the most favorable to such Fund. In assessing the best overall terms available for any transaction, Chase shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, research services provided to Chase, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In no event shall Chase be under any duty to obtain the lowest commission or the best net price for a Fund on any particular transaction, nor shall Chase be under any duty to execute any order in a fashion either preferential to such Fund relative to other accounts managed by Chase or otherwise materially adverse to such other accounts. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) to Chase, a Fund and/or the other accounts over which Chase exercises investment discretion. Chase is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for a Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if Chase determines in good faith that the total commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities of Chase with respect to accounts over which it exercises investment discretion. Chase shall report to the MFIT Board or the MFT Board, as the case may be, regarding overall commissions paid by a Fund and their reasonableness in relation to the benefits to such Fund. In executing portfolio transactions for Chase Money Market Fund or Chase Vista Prime Money Market Fund, Chase may, to the extent permitted by applicable laws and regulations, but shall not be obligated to, aggregate the securities to be sold or purchased with those of other funds or its other clients if, in Chase's reasonable judgment, such aggregation (i) will result in an overall economic benefit to such fund, taking into consideration the advantageous selling or purchase price, brokerage commission and other expenses, and trading requirements, and (ii) is not inconsistent with the policies set forth in MFIT's or MFT's registration statement, as the case may be, and such Fund's Prospectus and Statement of Additional Information. In such event, Chase will allocate the securities so purchased or sold, and the expenses incurred in the transaction, in an equitable manner, consistent with its fiduciary obligations to such Fund and such other clients. 18 It is possible that certain of the brokerage and research services received will primarily benefit one or more other investment companies or other accounts for which Chase exercises investment discretion. Conversely, MFIT or any of its portfolios, including Chase Money Market Fund and MFT or any of its portfolios, including Chase Vista Prime Money Market Fund, may be the primary beneficiary of the brokerage or research services received as a result of portfolio transactions effected for such other accounts or investment companies. BOARD OF TRUSTEES The Trustees for MFIT and MFT are identical. Set forth below are the current members of the MFIT Board and the MFT Board.
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION - ---- ------------------------------------------ Fergus Reid, III Chairman of the Trust. Chairman and Chief Executive Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley Funds. Age: 67. Address: 202 June Road, Stamford, CT 06903. *H. Richard Vartabedian Trustee and President of the Trust. Investment Management Consultant, formerly, Senior Investment Officer, Division Executive of the Investment Management Division of The Chase Manhattan Bank, N.A., 1980 through 1991. Age: 64. Address: P.O. Box 296, Beach Road, Hendrick's Head, Southport, ME 04576. William J. Armstrong Trustee. Retired; formerly Vice President and Treasurer, Ingersoll-Rand Company. Age: 58. Address: 287 Hampshire Ridge, Park Ridge, NJ 07656. John R.H. Blum Trustee. Attorney in private practice; formerly, partner in the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture -- State of Connecticut, 1992-1995. Age: 70. Address: 322 Main Street, Lakeville, CT 06039. Roland R. Eppley, Jr. Trustee. Retired; formerly President and Chief Executive Officer, Eastern States Bankcard Association Inc., (1971-1988); Director, Jenel Hydraulics, Inc.; Director of The Hanover Funds, Inc. Age: 67. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418. Stuart W. Cragin, Jr. Trustee. Retired; formerly President, Fairfield Testing Laboratory, Inc. He has previously served in a variety of marketing, manufacturing and general management positions with Union Camp Corp., Trinity Paper & Plastics Corp., and Conover Industries. Age: 66. Address: 108 Valley Road, Cos Cob, CT 06807. Joseph J. Harkins Trustee. Retired; formerly Commercial Sector Executive and Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through 1989. He had been employed by Chase in numerous capacities and offices from 1954 through 1989. Director of Blessings Corporation, Jefferson Insurance Company of New York, Monticello Insurance Company and National. Age: 68. Address: 257 Plantation Circle South, Ponte Vedra Beach, FL 32082. *Sarah E. Jones Trustee. President and Chief Operating Officer of Chase Mutual Funds Corp.; formerly Managing Director for the Global Asset Management and Private Banking Division of The Chase Manhattan Bank. Age: 47. Address: Chase Mutual Funds Corp., 1211 Avenue of the Americas, 41st Floor, New York, New York 10081. W.D. MacCallan Trustee. Director of The Adams Express Co. and Petroleum & Resources Corp. Retired; formerly Chairman of the Board and Chief Executive Officer of The Adams Express Co. and Petroleum & Resources Corp.; Director of The Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 72. Address: 624 East 45th Street, Savannah, GA 31405. George E. McDavid Trustee. President, Houston Chronicle Publishing Company. Age: 69. Address: P.O. Box 2558, Houston, TX 77252. W. Perry Neff Trustee. Retired; Independent Financial Consultant; Director of North America Life Assurance Co., Petroleum & Resources Corp. and The Adams Express Co.; Director and Chairman of The Hanover Funds, Inc.; Director, Chairman and President of The Hanover Investment Funds, Inc. Age: 72. Address: RR 1 Box 102, Weston, VT 05181. *Leonard M. Spalding, Jr. Trustee. Retired; formerly Chief Executive Officer of Chase Mutual Funds Corp.; formerly President and Chief Executive Officer of Vista Capital Management; Chief Investment Executive of The Chase Manhattan Bank. Age: 64. Address: 2025 Lincoln Park Road, Springfield, KY 40069. Richard E. Ten Haken Trustee. Chairman of the Audit Committee. Formerly District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New York; Chairman of the Board and President, New York State Teachers' Retirement System. Age: 65. Address: 4 Barnfield Road, Pittsford, NY 14534.
19
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION - ---- ------------------------------------------ Irving L. Thode Trustee. Retired; formerly Vice President of Quotron Systems. He has previously served in a number of executive positions with Control Data Corp., including President of its Latin American Operations, and General Manager of its Data Services business. Age: 69. Address: 80 Perkins Road, Greenwich, CT 06830.
- ------------------------ * Asterisks indicate those Trustees that are "Interested Persons" (as defined in the 1940 Act). Mr. Reid is not an interested person of the Trust's investment advisers or principal underwriter, but may be deemed an interested person of either Trust solely by reason of being an officer of either Trust. The executive officers of MFIT and MFT are identical. Set forth below as to each executive officer of MFIT and MFT is his or her name, age, principal occupation during the past five years and other directorships held in public companies.
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION - ----------------- --- ------------------------------------------ Martin R. Dean 37 Treasurer and Assistant Secretary. Vice President, Administration Services, BISYS Fund Services, Inc.; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Address: 3435 Stelzer Road, Columbus, OH 43219. Lisa Hurley 45 Secretary. Senior Vice President and General Counsel, BISYS Fund Services, Inc.; formerly Counsel to Moore Capital Management and General Counsel to Global Asset Management and Northstar Investments Management. Address: 90 Park Avenue, New York, NY 10016. Vicky M. Hayes 37 Assistant Secretary. Vice President and Global Marketing Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President, Alliance Capital Management and held various positions with J. & W. Seligman & Co. Address: 1211 Avenue of the Americas, 41st Floor, New York, NY 10081. Alaina Metz 33 Assistant Secretary. Chief Administrative Officer, BISYS Fund Services, Inc.; formerly Supervisor, Blue Sky Department, Alliance Capital Management L.P. Address: 3435 Stelzer Road, Columbus, OH 43219.
The Trustees and officers of MFIT and MFT appearing in the tables above also serve in the same capacities with respect to Mutual Fund Group, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio (these entities, together with MFIT and MFT, are referred to as the "Chase Vista Funds"). TRANSACTIONS WITH AND REMUNERATION OF TRUSTEES AND OFFICERS No compensation, direct or otherwise, other than through fees paid to Chase or CFAM, is payable by either MFIT or MFT to any of its officers or Trustees who are affiliated with Chase or CFAM (or any of their affiliates). Those Trustees who are not affiliated with Chase or its affiliates will be paid an annual fee plus a fee for each meeting of the Board of Trustees or any committee thereof that such Trustee attends, together with reimbursement for reasonable expenses incurred in attending such meetings. Chase, CFAM and their affiliates have had, and expect in the future to have, banking and other business transactions in the ordinary course of business with corporations of which those Trustees who are not "interested persons" of Chase or CFAM are directors or officers. Any such transactions are made on substantially the same terms as those prevailing at the time for comparable transactions with other persons, including, where applicable, interest rates, collateral, fees and other charges, and do not involve more than the normal risk of collectibility (in the case of loans) or present other unfavorable features. INFORMATION RELATING TO VOTING MATTERS GENERAL INFORMATION This Combined Prospectus/Proxy Statement is being furnished in connection with the solicitation of proxies by the MFIT Board for use at the Meeting. It is expected that the solicitation of proxies will be primarily by mail. MFIT's officers and service providers may also solicit proxies by telephone, facsimile machine, telegraph, the Internet or personal interview. In addition MFIT may retain the services of professional solicitors to aid in the solicitation of proxies for a fee. It is anticipated that banks, brokerage houses and other custodians will be requested on behalf of MFIT to forward solicitation materials to their principals to obtain authorizations for the execution of proxies. Any Chase Money Market Fund Shareholder 20 giving a proxy may revoke it at any time before it is exercised by submitting to MFIT a written notice of revocation or a subsequently executed proxy or by attending the Meeting and electing to vote in person. Only Chase Money Market Fund Shareholders of record at the close of business on November 10, 2000 will be entitled to vote at the Meeting. On that date, there were outstanding and entitled to be voted [____________] Chase Money Market Fund Shares. Each share or fraction thereof is entitled to one vote or fraction thereof. The presence in person or by proxy of Shareholders that own a majority of the outstanding Chase Money Market Fund Shares will constitute a quorum for purposes of transacting all business at the Meeting. If a quorum is not present at the Meeting, sufficient votes in favor of the proposals are not received by the time scheduled for the Meeting, or the Chase Money Market Fund Shareholders determine to adjourn the Meeting for any other reason, the Chase Money Market Fund Shareholders present (in person or proxy) may adjourn the Meeting from time to time, without notice other than announcement at the Meeting. Any such adjournment will require the affirmative vote of Chase Money Market Fund Shareholders holding a majority of the Chase Money Market Fund Shares present, in person or by proxy, at the Meeting. The persons named in the Proxy will vote in favor of such adjournment those Chase Money Market Fund Shares that they are entitled to vote if such adjournment is necessary to obtain a quorum or if they determine such an adjournment is desirable for any other reason. Business may be conducted once a quorum is present and may continue until adjournment of the Meeting notwithstanding the withdrawal or temporary absence of sufficient Chase Money Market Fund Shares to reduce the number present to less than a quorum. If the accompanying proxy is executed and returned in time for the Meeting, the shares covered thereby will be voted in accordance with the proxy on all matters that may properly come before the meeting (or any adjournment thereof). PROXIES All Chase Money Market Fund Shares represented by each properly signed proxy received prior to the Meeting will be voted at the Meeting. If a Chase Money Market Fund Shareholder specifies how the proxy is to be voted on any of the business to come before the Meeting, it will be voted in accordance with such specifications. If a Chase Money Market Fund Shareholder returns its proxy but no direction is made on the proxy, the proxy will be voted FOR the Proposal described in this Combined Prospectus/Proxy Statement. Chase Money Market Fund Shareholders voting to ABSTAIN on the Proposal will be treated as present for purposes of achieving a quorum and in determining the votes cast on the Proposal, but not as having voted FOR the Proposal. A properly signed proxy on which a broker has indicated that it has no authority to vote on the Proposal on behalf of the beneficial owner (a "broker non-vote") will be treated as present for purposes of achieving a quorum but will not be counted in determining the votes cast on the Proposal. A proxy granted by any Chase Money Market Fund Shareholder may be revoked by such Chase Money Market Fund Shareholder at any time prior to its use by written notice to MFIT, by submission of a later dated Proxy or by voting in person at the Meeting. If any other matters come before the Meeting, Proxies will be voted by the persons named as proxies in accordance with their best judgment. EXPENSES OF PROXY SOLICITATION Chase, and not Chase Money Market Fund or Chase Vista Prime Money Market Fund (or shareholders of either fund), will bear the cost of solicitation of proxies, including the cost of printing, preparing, assembling and mailing the Notice of Meeting, Combined Prospectus/Proxy Statement and form of proxy. In addition to solicitations by mail, proxies may also be solicited by officers and regular employees of MFIT by personal interview, by telephone or by telegraph without additional remuneration thereof. Professional solicitors may also be retained. SHAREHOLDER APPROVALS Approval of the Reorganization Plan (and the transactions contemplated thereby) requires the affirmative vote of the lesser of (i) 67% or more of the Chase Money Market Fund Shares present at the Meeting and (ii) more than 50% of all outstanding Chase Money Market Fund Shares. In tallying Chase Money Market Fund Shareholder votes, abstentions and broker non-votes (i.e., proxies sent in by brokers and other nominees that cannot be voted on a proposal because instructions have not been received from the beneficial owners) will be counted for purposes of determining whether or not a quorum is present for purposes of convening the Meeting. Abstentions and broker non-votes will be considered to be a vote against each proposal. 21 INTERESTED PARTIES On the Record Date, the Trustees and officers of Chase Money Market Fund as a group owned less than 1% of the outstanding shares of Chase Money Market Fund. On the Record Date, the name, address and percentage ownership of the persons who owned beneficially more than 5% of any class or series of shares of Chase Money Market Fund and the percentage of any class or series of shares of Chase Vista Prime Money Market Fund that would be owned by such persons upon consummation of the Reorganization based upon their holdings at November 10, 2000 are as follows:
PERCENTAGE OF PERCENTAGE OF CLASS OF CHASE MONEY CHASE VISTA PRIME CHASE AMOUNT OF MARKET FUND MONEY MARKET FUND MONEY SHARES SHARES OWNED ON OWNED UPON MARKET FUND NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION - ----------- ------------------------------ ---------- ----------------- -----------------------
At November 10, 2000 the Trustees and officers of MFT as a group owned less than 1% of the outstanding shares of Chase Vista Prime Money Market Fund. At November 10, 2000 the name, address and share ownership of the persons who owned beneficially more than 5% of any class of Chase Vista Prime Money Market Fund and the percentage of shares that would be owned by such person upon consummation of the Reorganization based upon their holdings at November 10, 2000 were as follows:
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF VISTA CLASSND CLASS OWNED FUND SHARES CLASS OWNED CHASE VISTA PRIME NAME AND AMOUNT OF ON RECORD OWNED ON UPON MONEY MARKET FUND ADDRESS SHARES OWNED DATE RECORD DATE CONSUMMATION - ----------------- ------------------------- ------------- ------------- ------------- --------------
ADDITIONAL INFORMATION ABOUT MFIT Information about Chase Money Market Fund is included in the Prospectus dated April 30, 2000, which is incorporated by reference and enclosed herein. Additional information about Chase Money Market Fund is also included in MFIT's Statement of Additional Information dated April 30, 2000 which has been filed with the SEC and which is incorporated herein by reference. Copies of the Statement of Additional information may be obtained without charge by calling 1-800-5-CHASE-0. MFIT is subject to the requirements of the 1940 Act and, in accordance with such requirements, files reports and other information with the SEC. These materials can be inspected and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, NY 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates, and is also available on the SEC's web site at http://www.sec.gov. ADDITIONAL INFORMATION ABOUT MFT Information about Chase Vista Prime Money Market Fund is included in the Prospectus dated December 29, 1999, which is incorporated by reference and enclosed herein. Additional information about Chase Vista Prime Money Market Fund is also included in MFT's Statement of Additional Information dated December 29, 1999, which has been filed with the SEC and which is incorporated herein by reference. Copies of the Statement of Additional information may be obtained without charge by calling 1-800-34-VISTA. MFT is subject to the requirements of the 1940 Act and, in accordance with such requirements, files reports and other information with the SEC. These materials can be inspected and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, 22 and at the SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, NY 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can also be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates, and are also available on the SEC's web site at http://www.sec.gov. FINANCIAL STATEMENTS AND EXPERTS The unaudited financial statements and financial highlights and notes thereto of Chase Money Market Fund for the six-month period ended June 30, 2000 and the audited financial statements and financial highlights and notes thereto of Chase Money Market Fund for the fiscal year ended December 31, 1999 and Chase Vista Prime Money Market Fund for the fiscal year ended August 31, 2000, are incorporated by reference herein and into the Statement of Additional Information related to this Combined Prospectus/ Proxy Statement. The audited financial statements and financial highlights for Chase Money Market Fund and Chase Vista Prime Money Market Fund have been incorporated herein by reference in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on their authority as experts in auditing and accounting. OTHER BUSINESS The MFIT Board knows of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, it is the intention of the MFIT Board that proxies that do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy. LITIGATION Neither MFIT nor MFT is involved in any litigation that would have any material adverse effect upon either Chase Money Market Fund or Chase Vista Prime Money Market Fund. SHAREHOLDER INQUIRIES Shareholder inquiries may be addressed to MFIT in writing at the address on the cover page of this Combined Prospectus/Proxy Statement or by telephoning 1-800-5-CHASE-0. * * * SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. 23 APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this 31st day of October, 2000 by and between Mutual Fund Investment Trust (the "Transferor Trust"), a Massachusetts business trust, on behalf of the Chase Money Market Fund (the "Transferor Portfolio") and Mutual Fund Trust (the "Acquiring Trust") and the Chase Vista Prime Money Market Fund (the "Acquiring Portfolio"). WHEREAS, the Board of Trustees of each of the Transferor Trust and the Acquiring Trust has determined that the transfer of all of the assets and liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the best interests of the Transferor Portfolio and the Acquiring Portfolio, as well as the best interests of shareholders of the Transferor Portfolio and the Acquiring Portfolio, and that the interests of existing shareholders would not be diluted as a result of this transaction; WHEREAS, each of the Transferor Trust and the Acquiring Trust intends to provide for the reorganization of the Transferor Portfolio (the "Reorganization") through the acquisition by the Acquiring Portfolio of all of the assets, subject to all of the liabilities, of the Transferor Portfolio in exchange for shares of beneficial interest, par value $.001 per share, of the Acquiring Portfolio (the "Acquiring Portfolio Shares"), the liquidation of the Transferor Portfolio and the distribution to Transferor Portfolio shareholders of such Acquiring Portfolio Shares, all pursuant to the provisions of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows: 1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR THE ACQUIRING PORTFOLIO SHARES AND LIQUIDATION OF THE TRANSFEROR PORTFOLIO (a) PLAN OF REORGANIZATION. (i) The Transferor Trust on behalf of the Transferor Portfolio listed above, will convey, transfer and deliver to the Acquiring Portfolio all of the then existing assets of the Transferor Portfolio (consisting, without limitation, of portfolio securities and instruments, dividend and interest receivables, cash and other assets). In consideration thereof, the Acquiring Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the extent that they exist on or after the Effective Time of the Reorganization (as defined in Section 1(b)(i) hereof), all of the obligations and liabilities of the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio full and fractional shares of beneficial interest of the Acquiring Portfolio, with respect to the Acquiring Portfolio equal to that number of full and fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio shall be of the Premier Class share class, in exchange for Premier Class Shares of the Transferor Portfolio, and the Vista Class share class, in exchange for Investor Class Shares of the Transferor Portfolio, with the amounts of shares of each class to be determined by the parties. Any shares of capital stock (if any), par value $.001 per share, of the Transferor Portfolio ("Transferor Portfolio Shares") held in the treasury of the Transferor Trust at the Effective Time of the Reorganization shall thereupon be retired. Such transactions shall take place on the date provided for in Section 1(b) hereof (the "Exchange Date"). All computations for the Transferor Portfolio and the Acquiring Portfolio shall be performed by The Chase Manhattan Bank (the "Custodian"), as custodian and pricing agent for the Transferor Portfolio and the Acquiring Portfolio. The determination of said Custodian shall be conclusive and binding on all parties in interest. (ii) As of the Effective Time of the Reorganization, the Transferor Trust will liquidate and distribute pro rata to its shareholders of record ("Transferor Portfolio Shareholders") as of the Effective Time of the Reorganization the Acquiring Portfolio Shares received by such Transferor Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the shares of the Transferor Portfolio held by the Transferor Portfolio shareholders. Such liquidation and distribution will be accomplished by the transfer of the Acquiring Portfolio Shares then credited to the account of each Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts on the share records of the Acquiring Portfolio in the names of the Transferor Portfolio shareholders and representing the respective pro rata number of the Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will not issue certificates representing the Acquiring Portfolio Shares in connection with such exchange. A-1 (iii) As soon as practicable after the Effective Time of the Reorganization, the Transferor Trust shall take all the necessary steps under Massachusetts law, the Transferor Trust's Declaration of Trust and any other applicable law to effect a complete dissolution of the Transferor Portfolio. (b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION. (i) Subject to the satisfaction of the conditions to the Reorganization specified in this Plan, the Reorganization shall occur as of the close of regularly scheduled trading on the New York Stock Exchange (the "Effective Time of the Reorganization") on February 19, 2001, or such later date as may be agreed upon by the parties (the "Exchange Date"). (ii) All acts taking place on the Exchange Date shall be deemed to take place simultaneously as of the Effective Time of the Reorganization unless otherwise provided. (iii) In the event that on the proposed Exchange Date (A) the New York Stock Exchange shall be closed to trading or trading thereon shall be restricted, or (B) trading or the reporting of trading on said Exchange or elsewhere shall be disrupted so that accurate valuation of the net assets of the Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored. (iv) On the Exchange Date, portfolio securities of the Transferor Portfolio shall be transferred by the Custodian to the accounts of the Acquiring Portfolio duly endorsed in proper form for transfer, in such condition as to constitute good delivery thereof in accordance with the custom of brokers, and shall be accompanied by all necessary federal and state stock transfer stamps or a check for the appropriate purchase price thereof. (c) VALUATION. (i) The net asset value of the shares of the Acquiring Portfolio and the net value of the assets of the Transferor Portfolio to be transferred in exchange therefore shall be determined as of the Effective Time of the Reorganization. The net asset value of the Acquiring Portfolio Shares shall be computed by the Custodian in the manner set forth in the Acquiring Trust's Declaration of Trust or By-laws and then current prospectus and statement of additional information and shall be computed to not less than two decimal places. The net value of the assets of the Transferor Portfolio to be transferred shall be computed by the Custodian by calculating the value of the assets transferred by the Transferor Portfolio and by subtracting therefrom the amount of the liabilities assigned and transferred to the Acquiring Portfolio, said assets and liabilities to be valued in the manner set forth in the Transferor Trust's Declaration of Trust or By-laws and then current prospectus and statement of additional information. (ii) The number of Premier Class shares of the Acquiring Portfolio Shares to be issued (including fractional shares, if any) by the Acquiring Portfolio in exchange for the Transferor Portfolio's assets attributable to the Transferor Portfolio's Premier Class shares shall be determined by an exchange ratio computed by dividing the net value of the Transferor Portfolio's assets attributable to Premier Class shares by the net asset value per share of the Premier Class shares of the Acquiring Portfolio, both as determined in accordance with Section 1(c)(i). The number of Vista Class shares of the Acquiring Portfolio Shares to be issued (including fractional shares, if any) by the Acquiring Portfolio in exchange for the Transferor Portfolio's assets attributable to the Transferor Portfolio's Investor Class shares shall be determined by an exchange ratio computed by dividing the net value of the Transferor Portfolio's assets attributable to Investor Class shares by the net asset value per share of the Vista Class shares of the Acquiring Portfolio, both as determined in accordance with Section 1(c)(i). (iii) All computations of value shall be made by the Custodian in accordance with its regular practice as pricing agent for the Acquiring Portfolio and the Transferor Portfolio. 2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST The Acquiring Trust represents and warrants as follows: (a) ORGANIZATION, EXISTENCE, ETC. The Acquiring Trust is a business trust that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has the power to carry on its business as it is now being conducted. The Acquiring Portfolio is a validly existing series of shares of such business trust representing interests therein under the laws of Massachusetts. Each of the A-2 Acquiring Portfolio and the Acquiring Trust have all necessary federal, state and local authorization to own all of its properties and assets and to carry on its business as now being conducted. (b) REGISTRATION AS INVESTMENT COMPANY. The Acquiring Trust is registered under the Investment Company Act of 1940, as amended (the "Act") as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. (c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of additional information of the Acquiring Trust, as amended, included in the Acquiring Trust's registration statement on Form N-1A filed with the Securities and Exchange Commission, comply in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act") and the Act and do not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) CAPITALIZATION. The Acquiring Trust has an unlimited number of authorized shares of beneficial interest, par value $.001 per share, of which as of [August 31, 2000] there were outstanding 1,478,705,831 Vista Class Shares, 1,841,212,524 Premier Class Shares, 9,426,519,136 Institutional Class Shares, 10,940,645 B Class Shares, 43,677 C Class Shares and 1,205 Reserve Class Shares of the Acquiring Portfolio, and no shares of such Portfolio were held in the treasury of the Acquiring Trust. All of the outstanding shares of the Acquiring Trust have been duly authorized and are validly issued, fully paid and nonassessable (except as disclosed in the Acquiring Trust's prospectus and recognizing that under Massachusetts law, shareholders of an Acquiring Trust portfolio could, under certain circumstances, be held personally liable for the obligations of such Acquiring Trust portfolio). Because the Acquiring Trust is an open-end investment company engaged in the continuous offering and redemption of its shares, the number of outstanding shares may change prior to the Effective Time of the Reorganization. All of the issued and outstanding shares of the Acquiring Portfolio have been offered and sold in compliance in all material respects with applicable registration requirements of the Securities Act and applicable state securities laws. (e) FINANCIAL STATEMENTS. The financial statements of the Acquiring Trust with respect to the Acquiring Portfolio for the fiscal year ended August 31, 2000 which have been audited by PricewaterhouseCoopers LLP, fairly present the financial position of the Acquiring Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with generally accepted accounting principles ("GAAP"). (f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio Shares to be issued in connection with the Reorganization will be duly authorized and upon consummation of the Reorganization will be validly issued, fully paid and nonassessable (except as disclosed in the Trust's prospectus and recognizing that under Massachusetts law, shareholders of an Acquiring Trust portfolio could, under certain circumstances, be held personally liable for the obligations of such portfolio). (g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf of the Acquiring Portfolio, has the power to enter into this Plan and to carry out its obligations hereunder. The execution and delivery of this Plan and the consummation of the transactions contemplated hereby have been duly authorized by the Acquiring Trust's Board of Trustees and no other proceedings by the Acquiring Trust other than those contemplated under this Plan are necessary to authorize its officers to effectuate this Plan and the transactions contemplated hereby. The Acquiring Trust is not a party to or obligated under any provision of its Declaration of Trust or By-laws, or under any indenture or contract provision or any other commitment or obligation, or subject to any order or decree, which would be violated by or which would prevent its execution and performance of this Plan in accordance with its terms. (h) LIABILITIES. There are no liabilities of the Acquiring Portfolio, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the Acquiring Trust's financial statements with respect to the Acquiring Portfolio and liabilities incurred in the ordinary course of business subsequent to August 31, 2000 or otherwise previously disclosed to the Acquiring Trust with respect to the Acquiring Portfolio, none of which has been materially adverse to the business, assets or results of operations of the Acquiring Portfolio. (i) NO MATERIAL ADVERSE CHANGE. Since August 31, 2000, there has been no material adverse change in the financial condition, results of operations, business, properties or assets of the Acquiring Portfolio, other than those occurring in the ordinary course of business (for these purposes, a decline in net asset value and a decline in net assets due to redemptions do not constitute a material adverse change). A-3 (j) LITIGATION. There are no claims, actions, suits or proceedings pending or, to the knowledge of the Acquiring Trust, threatened which would adversely affect the Acquiring Trust or the Acquiring Portfolio's assets or business or which would prevent or hinder consummation of the transactions contemplated hereby, there are no facts which would form the basis for the institution of administrative proceedings against the Acquiring Trust or the Acquiring Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory investigations of the Acquiring Trust or the Acquiring Portfolio, pending or threatened, other than routine inspections and audits. (k) CONTRACTS. No default exists under any material contract or other commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio, is subject. (l) TAXES. The federal income tax returns of the Acquiring Trust with respect to the Acquiring Portfolio, and all other income tax returns required to be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have been filed for all taxable years to and including August 31, 1999, and all taxes payable pursuant to such returns have been paid. To the knowledge of the Acquiring Trust, no such return is under audit and no assessment has been asserted in respect of any such return. All federal and other taxes owed by the Acquiring Trust with respect to the Acquiring Portfolio have been paid so far as due. (m) NO APPROVALS REQUIRED. Except for the Registration Statement (as defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's shareholders (referred to in Section 6(a) hereof), no consents, approvals, authorizations, registrations or exemptions under federal or state laws are necessary for the consummation by the Acquiring Trust of the Reorganization, except such as have been obtained as of the date hereof. 3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST The Transferor Trust represents and warrants as follows: (a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a business trust that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has the power to carry on its business as it is now being conducted. The Transferor Portfolio is a validly existing series of shares of such business trust representing interests therein under the laws of Massachusetts. Each of Transferor Portfolio and the Transferor Trust has all necessary federal, state and local authorization to own all of its properties and assets and to carry on its business as now being conducted. (b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is registered under the Act as an open-end investment company of the management type; such registration has not been revoked or rescinded and is in full force and effect. (c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of additional information of the Transferor Trust, as amended, included in the Transferor Trust's registration statement on Form N-1A filed with the Commission, comply in all material respects with the requirements of the Securities Act and the Act and do not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) CAPITALIZATION. The Transferor Trust has an unlimited number of authorized shares of beneficial interest, par value $.001 per share, of which as of August 31, 2000 there were outstanding 226,915 Investor Class shares and 343,778,108 Premier Class shares of the Transferor Portfolio, and no shares of such Portfolio were held in the treasury of the Transferor Trust. All of the outstanding shares of the Transferor Trust have been duly authorized and are validly issued, fully paid and nonassessable (except as disclosed in the Transferor Trust's prospectus and recognizing that under Massachusetts law, shareholders of a Trust portfolio could, under certain circumstances, be held personally liable for the obligations of such Trust portfolio). Because the Transferor Trust is an open-end investment company engaged in the continuous offering and redemption of its shares, the number of outstanding shares may change prior to the Effective Time of the Reorganization. All such shares will, at the Exchange Date, be held by the shareholders of record of the Transferor Portfolio as set forth on the books and records of the Transferor Trust in the amounts set forth therein, and as set forth in any list of shareholders of record provided to the Acquiring Portfolio for purposes of the Reorganization, and no such shareholders of record will have any preemptive rights to purchase any Transferor Portfolio shares, and the Transferor Portfolio does not have outstanding any options, warrants or other rights to subscribe for or purchase any Transferor Portfolio shares (other than any existing dividend reinvestment plans of the Transferor Portfolio or as set forth in this Plan), nor are there outstanding any securities convertible into any shares of the Transferor Portfolio (except pursuant to any existing exchange privileges described in the current prospectus and statement of additional information A-4 of the Transferor Trust). All of the Transferor Portfolio's issued and outstanding shares have been offered and sold in compliance in all material respects with applicable registration requirements of the Securities Act and applicable state securities laws. (e) FINANCIAL STATEMENTS. The financial statements for the Transferor Trust with respect to the Transferor Portfolio for the fiscal year ended December 31, 1999, which have been audited by PricewaterhouseCoopers LLP, and the unaudited financial statements for the Trust with respect to the Transferor Portfolio for the six months ended June 30, 2000 fairly present the financial position of the Transferor Portfolio as of the dates thereof and the respective results of operations and changes in net assets for each of the periods indicated in accordance with GAAP. (f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of the Transferor Portfolio, has the power to enter into this Plan and to carry out its obligations hereunder. The execution and delivery of this Plan and the consummation of the transactions contemplated hereby have been duly authorized by the Transferor Trust's Board of Trustees and no other proceedings by the Transferor Trust other than those contemplated under this Plan are necessary to authorize its officers to effectuate this Plan and the transactions contemplated hereby. The Transferor Trust is not a party to or obligated under any provision of its Declaration of Trust or By-laws, or under any indenture or contract provision or any other commitment or obligation, or subject to any order or decree, which would be violated by or which would prevent its execution and performance of this Plan in accordance with its terms. (g) LIABILITIES. There are no liabilities of the Transferor Portfolio, whether actual or contingent and whether or not determined or determinable, other than liabilities disclosed or provided for in the Transferor Trust's Financial Statements with respect to the Transferor Portfolio and liabilities incurred in the ordinary course of business subsequent to June 30, 2000 or otherwise previously disclosed to the Transferor Trust with respect to the Transferor Portfolio, none of which has been materially adverse to the business, assets or results of operations of the Transferor Portfolio. (h) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been no material adverse change in the financial condition, results of operations, business, properties or assets of the Transferor Portfolio, other than those occurring in the ordinary course of business (for these purposes, a decline in net asset value and a decline in net assets due to redemptions do not constitute a material adverse change). (i) LITIGATION. There are no claims, actions, suits or proceedings pending or, to the knowledge of the Transferor Trust, threatened which would adversely affect the Transferor Trust or the Transferor Portfolio' assets or business or which would prevent or hinder consummation of the transactions contemplated hereby, there are no facts which would form the basis for the institution of administrative proceedings against the Transferor Trust or the Transferor Portfolio and, to the knowledge of the Transferor Trust, there are no regulatory investigations of the Transferor Trust or the Transferor Portfolio, pending or threatened, other than routine inspections and audits. (j) CONTRACTS. The Transferor Trust, on behalf of the Transferor Portfolio, is not subject to any contracts or other commitments (other than this Plan) which will not be terminated with respect to the Transferor Portfolio without liability to the Transferor Trust or the Transferor Portfolio as of or prior to the Effective Time of the Reorganization. (k) TAXES. The federal income tax returns of the Transferor Trust with respect to the Transferor Portfolio, and all other income tax returns required to be filed by the Transferor Trust with respect to each Transferor Portfolio, have been filed for all taxable years to and including December 31, 1999, and all taxes payable pursuant to such returns have been paid. To the knowledge of the Transferor Trust, no such return is under audit and no assessment has been asserted in respect of any such return. All federal and other taxes owed by the Transferor Trust with respect to the Transferor Portfolio have been paid so far as due. (l) NO APPROVALS REQUIRED. Except for the Registration Statement (as defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's shareholders referred to in Section 6(a) hereof, no consents, approvals, authorizations, registrations or exemptions under federal or state laws are necessary for the consummation by the Transferor Trust of the Reorganization, except such as have been obtained as of the date hereof. A-5 4. COVENANTS OF THE ACQUIRING TRUST The Acquiring Trust covenants to the following: (a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio, the Acquiring Trust shall file with the Commission a Registration Statement on Form N-14 (the "Registration Statement") under the Securities Act relating to the Acquiring Portfolio Shares issuable hereunder and the proxy statement of the Transferor Portfolio relating to the meeting of the Transferor Portfolio's shareholders referred to in Section 5(a) herein. At the time the Registration Statement becomes effective, the Registration Statement (i) will comply in all material respects with the provisions of the Securities Act and the rules and regulations of the Commission thereunder (the "Regulations") and (ii) will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at the time the Registration Statement becomes effective, at the time of the Transferor Portfolio shareholders' meeting referred to in Section 5(a) hereof, and at the Effective Time of the Reorganization, the prospectus/proxy statement (the "Prospectus") and statement of additional information (the "Statement of Additional Information") included therein, as amended or supplemented by any amendments or supplements filed by the Trust, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust agrees to use all reasonable efforts to effectuate the Reorganization, to continue in operation thereafter, and to obtain any necessary regulatory approvals for the Reorganization. The Acquiring Trust shall furnish such data and information relating to the Acquiring Trust as shall be reasonably requested for inclusion in the information to be furnished to the Transferor Portfolio shareholders in connection with the meeting of the Transferor Portfolio's shareholders for the purpose of acting upon this Plan and the transactions contemplated herein. (c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by this Plan, the Acquiring Trust shall conduct the business of the Transferor Portfolio in the ordinary course until the consummation of the Reorganization, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions. 5. COVENANTS OF THE TRANSFEROR TRUST The Transferor Trust covenants to the following: (a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor Trust shall call and hold a meeting of the shareholders of the Transferor Portfolio for the purpose of acting upon this Plan and the transactions contemplated herein. (b) PORTFOLIO SECURITIES. With respect to the assets to be transferred in accordance with Section 1(a), the Transferor Portfolio's assets shall consist of all property and assets of any nature whatsoever, including, without limitation, all cash, cash equivalents, securities, claims and receivables (including dividend and interest receivables) owned, and any deferred or prepaid expenses shown as an asset on the Trust's books. At least five (5) business days prior to the Exchange Date, the Transferor Portfolio will provide the Trust, for the benefit of the Acquiring Portfolio, with a list of its assets and a list of its stated liabilities. The Transferor Portfolio shall have the right to sell any of the securities or other assets shown on the list of assets prior to the Exchange Date but will not, without the prior approval of the Trust, on behalf of the Acquiring Portfolio, acquire any additional securities other than securities which the Acquiring Portfolio is permitted to purchase, pursuant to its investment objective and policies or otherwise (taking into consideration its own portfolio composition as of such date). In the event that the Transferor Portfolio holds any investments that the Acquiring Portfolio would not be permitted to hold, the Transferor Portfolio will dispose of such securities prior to the Exchange Date to the extent practicable, to the extent permitted by its investment objective and policies and to the extent that its shareholders would not be materially affected in an adverse manner by such a disposition. In addition, the Trust will prepare and deliver immediately prior to the Effective Time of the Reorganization, a Statement of Assets and Liabilities of the Transferor Portfolio, prepared in accordance with GAAP (each, a "Schedule"). All securities to be listed in the Schedule for the Transferor Portfolio as of the Effective Time of the Reorganization will be owned by the Transferor Portfolio free and clear of any liens, claims, charges, options and encumbrances, except as indicated in such Schedule, and, except as so indicated, none of such securities is or, after the Reorganization as contemplated hereby, will be subject to any restrictions, legal or contractual, on the disposition thereof (including restrictions as to the public A-6 offering or sale thereof under the Securities Act) and, except as so indicated, all such securities are or will be readily marketable. (c) REGISTRATION STATEMENT. In connection with the preparation of the Registration Statement, the Transferor Trust will cooperate with the Acquiring Trust and will furnish to the Acquiring Trust the information relating to the Transferor Portfolio required by the Securities Act and the Regulations to be set forth in the Registration Statement (including the Prospectus and Statement of Additional Information). At the time the Registration Statement becomes effective, the Registration Statement, insofar as it relates to the Transferor Portfolio, (i) will comply in all material respects with the provisions of the Securities Act and the Regulations and (ii) will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at the time the Registration Statement becomes effective, at the time of the Transferor Portfolio's shareholders' meeting referred to in Section 5(a) and at the Effective Time of the Reorganization, the Prospectus and Statement of Additional Information, as amended or supplemented by any amendments or supplements filed by the Transferor Trust, insofar as they relate to the Transferor Portfolio, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall apply only to statements in or omissions from the Registration Statement, Prospectus or Statement of Additional Information made in reliance upon and in conformity with information furnished by the Transferor Portfolio for use in the registration statement, prospectus or statement of additional information as provided in this Section 5(c). (d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to use all reasonable efforts to effectuate the Reorganization and to obtain any necessary regulatory approvals for the Reorganization. (e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by this Plan, the Transferor Trust shall conduct the business of the Transferor Portfolio in the ordinary course until the consummation of the Reorganization, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions. (f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any case within 60 days after the Exchange Date, the Transferor Trust on behalf of the Transferor Portfolio, shall prepare a statement of the earnings and profits of the Transferor Portfolio for federal income tax purposes, and of any capital loss carryovers and other items that the Acquiring Portfolio will succeed to and take into account as a result of Section 381 of the Code. 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST The obligations of the Transferor Portfolio with respect to the consummation of the Reorganization are subject to the satisfaction of the following conditions: (a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and the transactions contemplated by the Reorganization shall have been approved by the requisite vote of the shares of the Transferor Portfolio entitled to vote on the matter ("Transferor Shareholder Approval"). (b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust shall have complied with each of its covenants contained herein, each of the representations and warranties contained herein shall be true in all material respects as of the Effective Time of the Reorganization (except as otherwise contemplated herein), and there shall have been no material adverse change (as described in Section 2(i)) in the financial condition, results of operations, business, properties or assets of each of the Acquiring Portfolio since August 31, 2000. (c) REGULATORY APPROVAL. The Registration Statement shall have been declared effective by the Commission and no stop orders under the Securities Act pertaining thereto shall have been issued, and all other approvals, registrations, and exemptions under federal and state laws considered to be necessary shall have been obtained (collectively, the "Regulatory Approvals"). (d) TAX OPINION. The Transferor Trust shall have received the opinion of Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to and in form and substance satisfactory to the Transferor Trust, as to certain of the federal income tax consequences under the Code of the Reorganization, insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio, and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may rely exclusively and without independent verification, as to factual matters, upon the statements made in this A-7 Plan, the Prospectus and Statement of Additional Information, and upon such other written representations as the President or Treasurer of the Transferor Trust will have verified as of the Effective Time of the Reorganization. The Tax Opinion will be to the effect that, based on the facts and assumptions stated therein, for federal income tax purposes: (i) the Reorganization will constitute a reorganization within the meaning of section 368(a)(1) of the Code with respect to the Transferor Portfolio and the Acquiring Portfolio; (ii) no gain or loss will be recognized by any of the Transferor Portfolio or the Acquiring Portfolio upon the transfer of all the assets and liabilities, if any, of the Transferor Portfolio to the Acquiring Portfolio solely in exchange for shares of the Acquiring Portfolio or upon the distribution of the shares of the Acquiring Portfolio to the holders of the shares of the Transferor Portfolio solely in exchange for all of the shares of the Transferor Portfolio; (iii) no gain or loss will be recognized by shareholders of the Transferor Portfolio upon the exchange of shares of such Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the holding period and tax basis of the shares of the Acquiring Portfolio received by each holder of shares of the Transferor Portfolio pursuant to the Reorganization will be the same as the holding period and tax basis of shares of the Transferor Portfolio held by the shareholder (provided the shares of the Transferor Portfolio were held as a capital asset on the date of the Reorganization) immediately prior to the Reorganization; and (v) the holding period and tax basis of the assets of the Transferor Portfolio acquired by the Acquiring Portfolio will be the same as the holding period and tax basis of those assets to the Transferor Portfolio immediately prior to the Reorganization. 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST The obligations of the Acquiring Trust with respect to the consummation of the Reorganization are subject to the satisfaction of the following conditions: (a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor Shareholder Approval shall have been obtained. (b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor Trust shall have complied with each of its covenants contained herein, each of the representations and warranties contained herein shall be true in all material respects as of the Effective Time of the Reorganization (except as otherwise contemplated herein), and there shall have been no material adverse change (as described in Section 3(h) in the financial condition, results of operations, business, properties or assets of the Transferor Portfolio since December 31, 1999. (c) PORTFOLIO SECURITIES. All securities to be acquired by the Acquiring Portfolio in the Reorganization shall have been approved for acquisition by The Chase Manhattan Bank, in its capacity as investment adviser to the Acquiring Portfolio, as consistent with the investment policies of the Acquiring Portfolio. (d) REGULATORY APPROVAL. The Regulatory Approvals shall have been obtained. (e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on behalf of the Transferor Portfolio shall have distributed to the shareholders of the Transferor Portfolio all of the Transferor Portfolio's investment company taxable income (without regard to the deductions for dividends paid) as defined in Section 852(b)(2) of the Code for its taxable year ending on the Exchange Date and all of its net capital gain as such term is used in Section 852(b)(3) of the Code, after reduction by any capital loss carry forward, for its taxable year ending on the Exchange Date. (f) TAX OPINION. The Acquiring Trust shall have received the Tax Opinion. 8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS (a) AMENDMENTS. The parties hereto may, by agreement in writing authorized by the Board of Trustees amend this Plan at any time before or after approval hereof by the shareholders of the Transferor Portfolio, but after such approval, no amendment shall be made which substantially changes the terms hereof. (b) WAIVERS. At any time prior to the Effective Time of the Reorganization, either the Transferor Trust or the Acquiring Trust may by written instrument signed by it (i) waive any inaccuracies in the representations and warranties made to it contained herein and (ii) waive compliance with any of the covenants or conditions made for its benefit contained herein, except that conditions set forth in Sections 6(c) and 7(d) may not be waived. (c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on behalf of the Transferor Portfolio, may terminate this Plan with respect to the Transferor Portfolio at any time prior to the Effective Time of the A-8 Reorganization by notice to the Acquiring Portfolio and The Chase Manhattan Bank if (i) a material condition to the performance of the Transferor Trust hereunder or a material covenant of the Acquiring Trust contained herein shall not be fulfilled on or before the date specified for the fulfillment thereof or (ii) a material default or material breach of this Plan shall be made by the Acquiring Trust. (d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on behalf of the Acquiring Portfolio, may terminate this Plan with respect to the Acquiring Portfolio at any time prior to the Effective Time of the Reorganization by notice to the Transferor Trust and The Chase Manhattan Bank if (i) a material condition to the performance of the Acquiring Trust hereunder or a material covenant of the Transferor Trust contained herein shall not be fulfilled on or before the date specified for the fulfillment thereof or (ii) a material default or material breach of this Plan shall be made by the Transferor Trust. (e) TERMINATION BY THE TRANSFEROR TRUST. This Plan may be terminated by the Transferor Trust at any time prior to the Effective Time of the Reorganization, whether before or after approval of this Plan by the shareholders of the Transferor Portfolio, without liability on the part of any party hereto, its Trustees, officers or shareholders or The Chase Manhattan Bank on notice to the other parties in the event that the Board of Trustees determines that proceeding with this Plan is not in the best interests of the shareholders of the Transferor Portfolio. (f) TERMINATION BY THE ACQUIRING TRUST. This Plan may be terminated by the Acquiring Trust at any time prior to the Effective Time of the Reorganization, whether before or after approval of this Plan by the shareholders of the Transferor Portfolio, without liability on the part of any party hereto, its Trustees, officers or shareholders or The Chase Manhattan Bank on notice to the other parties in the event that the Board of Trustees determines that proceeding with this Plan is not in the best interests of the shareholders of the Acquiring Portfolio. (g) SURVIVAL. No representations, warranties or covenants in or pursuant to this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan, shall survive the Reorganization. 9. EXPENSES (a) The expenses of the Reorganization will be borne by The Chase Manhattan Bank. Such expenses include, without limitation, (i) expenses incurred in connection with the entering into and the carrying out of the provisions of this Plan; (ii) expenses associated with the preparation and filing of the Registration Statement; (iii) fees and expenses of preparing and filing such forms as are necessary under any applicable state securities laws in connection with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees; (vii) legal fees and (viii) solicitation costs relating to the Reorganization. 10. NOTICES Any notice, report, statement or demand required or permitted by any provision of this Plan shall be in writing and shall be given by hand, certified mail or by facsimile transmission, shall be deemed given when received and shall be addressed to the parties hereto at their respective addresses listed below or to such other persons or addresses as the relevant party shall designate as to itself from time to time in writing delivered in like manner: if to the Transferor Trust (for itself or on behalf of the Transferor Portfolio) or the Acquiring Trust (for itself or on behalf of the Acquiring Portfolio): 1211 Avenue of the Americas 41st Floor New York, New York 10036 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: Cynthia G. Cobden, Esq. 11. RELIANCE All covenants and agreements made under this Plan shall be deemed to have been material and relied upon by the Transferor Trust and the Acquiring Trust notwithstanding any investigation made by such party or on its behalf. A-9 12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT (a) The section and paragraph headings contained in this Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of this Plan. (b) This Plan may be executed in any number of counterparts, each of which shall be deemed an original. (c) This Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. (d) This Plan shall bind and inure to the benefit of the Transferor Trust, the Transferor Portfolio, the Acquiring Trust and the Acquiring Portfolio and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Plan. (e) The name "Mutual Fund Investment Trust" is the designation of its Trustees under a Declaration of Trust dated October 1, 1997, as amended, and all persons dealing with the Transferor Trust must look solely to the Transferor Trust's property for the enforcement of any claims against the Transferor Trust, as neither the Transferor Trustees, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Transferor Trust. No series of the Transferor Trust shall be liable for claims against any other series of the Transferor Trust. (f) The name "Mutual Fund Trust" is the designation of its Trustees under a Declaration of Trust dated December 1, 1994, as amended, and all persons dealing with the Acquiring Trust must look solely to the Acquiring Trust's property for the enforcement of any claims against the Acquiring Trust, as neither the Acquiring Trustees, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Acquiring Trust. No series of the Acquiring Trust shall be liable for claims against any other series of the Acquiring Trust. A-10 IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date first above written. MUTUAL FUND INVESTMENT TRUST on behalf of Chase Money Market Fund By: ________________________________________ Name: Title: MUTUAL FUND TRUST on behalf of Chase Vista Prime Money Market Fund By: ________________________________________ Name: Title: Agreed and acknowledged with respect to Section 9: THE CHASE MANHATTAN BANK By: ________________________________________ Name: Title: A-11 [LOGO] STATEMENT OF ADDITIONAL INFORMATION (SPECIAL MEETING OF SHAREHOLDERS OF CHASE MONEY MARKET FUND, A SERIES OF MUTUAL FUND INVESTMENT TRUST) CHASE MONEY MARKET FUND, A SERIES OF MUTUAL FUND INVESTMENT TRUST 1211 AVENUE OF THE AMERICAS, 41ST FLOOR, NEW YORK, NY 10036 (800) 5-CHASE-0 CHASE VISTA PRIME MONEY MARKET FUND, A SERIES OF MUTUAL FUND TRUST 1211 AVENUE OF THE AMERICAS, 41ST FLOOR, NEW YORK, NY 10036 (800) 34-VISTA This Statement of Additional Information is not a prospectus but should be read in conjunction with the Combined Prospectus/Proxy Statement dated [December 1,] 2000 for the Special Meeting of Shareholders of Chase Money Market Fund ("Chase Money Market Fund"), a series of Mutual Fund Investment Trust ("MFIT"), to be held on January 26, 2001. Copies of the Combined Prospectus/Proxy Statement may be obtained at no charge by calling Chase Money Market Fund at 1-800-5-CHASE-0. Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Combined Prospectus/Proxy Statement. Further information about Chase Vista Prime Money Market Fund is contained in MFT's Statement of Additional Information dated February 28, 2000 which is incorporated herein by reference. The date of this Statement of Additional Information is [December 1,] 2000. GENERAL INFORMATION The Shareholders of Chase Money Market Fund are being asked to consider and vote on one proposal. With respect to an Agreement and Plan of Reorganization (the "Reorganization Plan") dated as of October 31, 2000 by and between MFIT, on behalf of Chase Money Market Fund, and MFT, on behalf of Chase Vista Prime Money Market Fund, and the transactions contemplated thereby. The Reorganization Plan contemplates the transfer of all of the assets and liabilities of Chase Money Market Fund to Chase Vista Prime Money Market Fund in exchange for shares issued by MFT in Chase Vista Prime Money Market Fund that will have an aggregate net asset value equal to the aggregate net asset value of the shares of Chase Money Market Fund that are outstanding immediately before the Effective Time of the Reorganization. Following the exchange, Chase Money Market Fund will make a liquidating distribution of Chase Vista Prime Money Market Fund shares to its Shareholders, so that (a) a holder of Investor Class Shares in Chase Money Market Fund will receive Vista Class Shares of Chase Vista Prime Money Market Fund and (b) a holder of Premier Class shares in Chase Money Market Fund will receive Institutional Class Shares of Chase Vista Prime Money Market Fund, in each case of equal value, plus the right to receive any unpaid dividends and distributions that were declared before the Effective Time of the Reorganization. A Special Meeting of Shareholders of Chase Money Market Fund to consider the proposals and the related transaction will be held at the offices of The Chase Manhattan Bank, One Chase Square, Third Floor Garden Room, Rochester, New York 14643, on January 26, 2001 at 9:00 a.m., Eastern time. For further information about the transaction, see the Combined Prospectus/Proxy Statement. 2 FINANCIAL STATEMENTS The unaudited financial statements and notes thereto of Chase Money Market Fund contained in its Semi-Annual Report to Shareholders dated June 30, 2000 and the audited financial statements and notes thereto of Chase Money Market Fund contained in its Annual Report to Shareholders dated December 31, 1999 are incorporated by reference into this Statement of Additional Information related to this Combined Prospectus/Proxy Statement. The audited financial statements and notes thereto of Chase Vista Prime Money Market Fund contained in its Annual Report to Shareholders dated August 31, 2000 are incorporated by reference into this Statement of Additional Information related to this Combined Prospectus/Proxy Statement. The financial statements and notes thereto which appear in each of Chase Money Market Fund's and Chase Vista Prime Money Market Fund's Annual Report to Shareholders have been audited by PricewaterhouseCoopers LLP, whose reports thereon also appear in such Annual Reports and are also incorporated herein by reference. No other parts of the Semi-Annual or Annual Reports are incorporated herein by reference. The financial statements and notes thereto for Chase Money Market Fund for the fiscal year ended December 31, 1999 and for Chase Vista Prime Money Market Fund for the fiscal year ended August 31, 2000 have been incorporated herein by reference in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on their authority as experts in auditing and accounting. 3 PRO FORMA FINANCIAL STATEMENTS [TO COME] 4 FORM N-14 PART C - OTHER INFORMATION Item 15. Indemnification. --------------- Reference is hereby made to Article V of the Registrant's Declaration of Trust. The Trustees and officers of the Registrant and the personnel of the Registrant's investment adviser, administrator and distributor are insured under an errors and omissions liability insurance policy. The Registrant and its officers are also insured under the fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940. Under the terms of the Registrant's Declaration of Trust, the Registrant may indemnify any person who was or is a Trustee, officer or employee of the Registrant to the maximum extent permitted by law; provided, however, that any such indemnification (unless ordered by a court) shall be made by the Registrant only as authorized in the specific case upon a determination that indemnification of such persons is proper in the circumstances. Such determination shall be made (i) by the Trustees, by a majority vote of a quorum which consists of Trustees who are neither in Section 2(a)(19) of the Investment Company Act of 1940, nor parties to the proceeding, or (ii) if the required quorum is not obtainable or, if a quorum of such Trustees so directs, by independent legal counsel in a written opinion. No indemnification will be provided by the Registrant to any Trustee or officer of the Registrant for any liability to the Registrant or shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty. Insofar as the conditional advancing of indemnification monies for actions based upon the Investment Company Act of 1940 may be concerned, such payments will be made only on the following conditions: (i) the advances must be limited to amounts used, or to be used, for the preparation or presentation of a defense to the action, including costs connected with the preparation of a settlement; (ii) advances may be made only upon receipt of a written promise by, or on behalf of, the recipient to repay that amount of the advance which exceeds that amount to which it is ultimately determined that he is entitled to receive from the Registrant by reason of indemnification; and (iii) (a) such promise must be secured by a surety bond, other suitable insurance or an equivalent form of security which assures that any repayments may be obtained by the Registrant without delay or litigation, which bond, insurance or other form of security must be provided by the recipient of the advance, or (b) a majority of a quorum of the Registrant's disinterested, non-party Trustees, or an independent legal counsel in a written opinion, shall determine, based upon a review of readily available facts, that the recipient of the advance ultimately will be found entitled to indemnification. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Part C-1 Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 16. Exhibits. --------------- 1 Declaration of Trust. (1) 2 By-laws. (1) 3 None 4 Plan of Reorganization filed herewith as Appendix A to the Combined Prospectus/Proxy Statement. 5 Declaration of Trust and By-laws. (1) 6(a) Form of Investment Advisory Agreement. (3) 6(b) Form of Investment Sub-Advisory Agreement between The Chase Manhattan Bank and Chase Asset Management, Inc. (3) 7 Distribution and Sub-Administration Agreement dated August 21, 1995. (3) 8(a) Retirement Plan for Eligible Trustees. (3) 8(b) Deferred Compensation Plan for Eligible Trustees. (3) 9 Form of Custodian Agreement. (1) 10(a) Forms of Rule 12b-1 Distribution Plans including Selected Dealer Agreements and Shareholder Service Agreements. (1) and (2) 10(b) Form of Rule 12b-1 Distribution Plan (including forms of Selected Dealer Agreement and Shareholder Servicing Agreement). (3) 10(c) Form of Rule 12b-1 Plan - Class C Shares (including forms of Shareholder Servicing Agreements). (4) Part C-2 11 None 12 Opinion and Consent of Simpson Thacher & Bartlett as to Tax Consequences. (6) 13(a) Form of Transfer Agency Agreement. (1) 13(b) Form of Shareholder Servicing Agreement. (3) 13(c) Form of Administration Agreement. (3) 14 Consent of PricewaterhouseCoopers LLP. (5) 15 None 16 None 17(a) Form of Proxy Card. (5) 17(b) Prospectus for Chase Vista Prime Money Market Fund. (5) 17(c) Prospectus for Chase Money Market Fund. (5) 17(d) Statement of Additional Information of MFT. (5) 17(e) Statement of Additional Information of MFIT. (5) 17(f) Annual Report to Shareholders of Chase Vista Prime Money Market Fund dated August 31, 2000. (5) 17(g) Annual Report to Shareholders of Chase Money Market Fund dated December 31, 1999. (5) 17(h) Semi-Annual Report to Shareholders of Chase Money Market Fund dated June 30, 2000. (5) (1) Filed as an Exhibit to the Registration Statement on Form N-1A on February 14, 1994. (2) Filed as an Exhibit to Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A on August 29, 1994. (3) Filed as an Exhibit to Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A on December 28, 1995. (4) Filed as an Exhibit to Post-Effective Amendment No. 10 to the Registration Statement on Form N-1A on October 27, 1997. (5) Filed herewith. Part C-3 (6) To be filed by amendment. Item 17. Undertakings. --------------- (1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended (the "1933 Act"), the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1), above, will be filed as part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. Part C-4 SIGNATURES As required by the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the City of New York and the State of New York, on the 25th day of October, 2000. MUTUAL FUND TRUST Registrant By: ------------------------------- H. Richard Vartabedian President As required by the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. * - ----------------------------------- Fergus Reid, III Chairman and Trustee October 25, 2000 /s/ H. Richard Vartabedian - ----------------------------------- H. Richard Vartabedian President and Trustee October 25, 2000 * - ----------------------------------- William J. Armstrong Trustee October 25, 2000 * - ----------------------------------- John R. H. Blum Trustee October 25, 2000 * - ----------------------------------- Stuart W. Cragin, Jr. Trustee October 25, 2000 * - ----------------------------------- Roland R. Eppley, Jr. Trustee October 25, 2000 * - ----------------------------------- Joseph J. Harkins Trustee October 25, 2000
* - ----------------------------------- Sarah E. Jones Trustee October 25, 2000 * - ----------------------------------- W.D. MacCallan Trustee October 25, 2000 * - ----------------------------------- George E. McDavid Trustee October 25, 2000 * - ----------------------------------- W. Perry Neff Trustee October 25, 2000 * - ----------------------------------- Leonard M. Spalding, Jr. Trustee October 25, 2000 * - ----------------------------------- Irv Thode Trustee October 25, 2000 * - ----------------------------------- Richard E. Ten Haken Trustee October 25, 2000 - ----------------------------------- Martin R. Dean Treasurer and October 25, 2000 /s/ H. Richard Vartabedian - ----------------------------------- H. Richard Vartabedian Attorney in Fact October 25, 2000
EXHIBITS
ITEM DESCRIPTION - ---- ----------- (14) Consent of PricewaterhouseCoopers LLP. (17) (a) Form of Proxy Card. (b) Prospectus for Chase Vista Prime Money Market Fund. (c) Prospectus for Chase Money Market Fund. (d) Statement of Additional Information of MFT. (e) Statement of Additional Information of MFIT. (f) Annual Report to Shareholders of Chase Vista Prime Money Market Fund dated August 31, 2000. (g) Annual Report to Shareholders of Chase Money Market Fund dated December 31, 1999. (h) Semi-Annual Report to Shareholders of Chase Money Market Fund dated June 30, 2000.
EX-99.(14) 2 a2027167zex-99_14.txt EXHIBIT 99(14) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form N-14 of our report dated October 11, 2000, relating to the financial statements and financial highlights of Chase Vista Prime Money Market Fund which appear in the August 31, 2000 Annual Report to Shareholders of Chase Vista Money Market Funds, and of our report dated February 10, 2000, relating to the financial statements and financial highlights of Chase Money Market Fund which appear in the December 31, 1999 Annual Report to Shareholders of Chase Funds, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Certain Arrangements with Service Providers", "Financial Statements and Experts", "Representations and Warranties of the Acquiring Trust", "Representations and Warranties of the Transferor Trust" and "Financial Statements" in such Registration Statement. PricewaterhouseCoopers LLP New York, New York October 25, 2000 EX-99.(17)(A) 3 a2027167zex-99_17a.txt EXHIBIT 99(17)(A) [FORM OF PROXY] [Preliminary Proxy Material] MUTUAL FUND INVESTMENT TRUST CHASE MONEY MARKET FUND This proxy is solicited on behalf of the Board of Trustees of Mutual Fund Investment Trust for the Special Meeting of the Shareholders to be held on January 26, 2001. The undersigned hereby appoints [___, ___ AND ___], and each of them, attorneys and proxies for the undersigned, with full power of substitution, and revocation to represent the undersigned and to vote on behalf of the undersigned all shares of Chase Money Market Fund which the undersigned is entitled to vote at the Special Meeting of Shareholders to be held at One Chase Square, Third Floor Garden Room, Rochester, New York on January 26, 2001, at 9:00 a.m., and at any adjournments thereof. The undersigned hereby acknowledges receipt of the Notice of the Special Meeting of Shareholders and hereby instructs said attorneys and proxies to vote said shares as indicated hereon. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Special Meeting of Shareholders in person or by substitute (or, if only one shall be so present, then that one) shall have and may exercise all of the power and authority of said proxies hereunder. The undersigned hereby revokes any proxy previously given. NOTE: Please sign exactly as your name appears on this proxy. If joint owners, EITHER may sign this proxy. When signing as attorney, executor, administrator, trustee, guardian or corporate officer, please give your full title. DATE , ---------- ---- -------- ---------------------------- ---------------------------- Signature(s), Title(s) (if applicable) PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE MUTUAL FUND INVESTMENT TRUST CHASE MONEY MARKET FUND PLEASE INDICATE YOUR VOTE BY AN "X" ON THE APPROPRIATE LINE BELOW. This proxy, if properly executed, will be voted in the manner directed by the shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL. Please refer to the Proxy Statement for a discussion of the Proposal. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL. Proposal: To approve or disapprove of the Reorganization. For Against Abstain -------- -------- --------- EX-99.(17)(B) 4 a2027167zex-99_17b.txt EXHIBIT 99(17)(B) PROSPECTUS DECEMBER 29, 1999 - -------------------------------------------------------------------------------- 100% U.S. TREASURY SECURITIES MONEY MARKET FUND TREASURY PLUS MONEY MARKET FUND FEDERAL MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND CASH MANAGEMENT FUND PRIME MONEY MARKET FUND TAX FREE MONEY MARKET FUND NEW YORK TAX FREE MONEY MARKET FUND CALIFORNIA TAX FREE MONEY MARKET FUND Chase Vista Money Market Funds THIS PROSPECTUS OFFERS: VISTA SHARES OF ALL FUNDS PLUS CLASS B AND CLASS C SHARES OF PRIME MONEY MARKET FUND The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. [CHASE VISTA LOGO] XXXX-1-1299 100% U.S. TREASURY SECURITIES MONEY MARKET FUND 1 TREASURY PLUS MONEY MARKET FUND 5 FEDERAL MONEY MARKET FUND 9 U.S. GOVERNMENT MONEY MARKET FUND 13 CASH MANAGEMENT FUND 17 PRIME MONEY MARKET FUND 22 TAX FREE MONEY MARKET FUND 28 NEW YORK TAX FREE MONEY MARKET FUND 33 CALIFORNIA TAX FREE MONEY MARKET FUND 38 THE FUNDS' INVESTMENT ADVISER AND YEAR 2000 43 HOW YOUR ACCOUNT WORKS 44 BUYING FUND SHARES 44 SELLING FUND SHARES 46 DISTRIBUTION ARRANGEMENTS 47 OTHER INFORMATION CONCERNING THE FUNDS 48 DISTRIBUTIONS AND TAXES 49 SHAREHOLDER SERVICES 51 WHAT THE TERMS MEAN 53 FINANCIAL HIGHLIGHTS 54 HOW TO REACH US Back cover
CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and providing maximum safety of principal. The Fund's main investment strategy The Fund invests solely in direct debt securities of the U.S. Treasury, includ- ing Treasury bills, bonds and notes. These investments carry different inter- est rates, maturities and issue dates. The Fund does not buy securities issued or guaranteed by agencies of the U.S. government and it does not enter into repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those investments which have remaining maturities of 397 days or less. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities and market sectors. The Fund seeks to maintain a net asset value of $1.00 per share. 1 CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the 100% U.S. Treasury Securities Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 2 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. On May 3, 1996, the Hanover 100% Treasury Securities Money Market Fund merged into the 100% U.S. Treasury Securities Money Market Fund. The Fund's performance figures for the period before that date are for the Hanover fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPH PLOT POINTS] 1992 3.35% 1993 2.60% 1994 3.50% 1995 5.17% 1996 4.73% 1997 4.91% 1998 4.84%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.10%. - ---------------------------------------- BEST QUARTER 1.32% - ---------------------------------------- 2nd quarter, 1995 - ---------------------------------------- WORST QUARTER 0.63% - ---------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 11/30/91 VISTA SHARES 4.84% 4.62% 4.15%
3 CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ----------------------------------------------------------------------- VISTA SHARES 0.10% NONE 0.51% 0.71% - -----------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual 12b-1 Fee is currently expected to be 0.07%, Other Expenses are expected to be 0.42% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ------------------------------------------------------ COSTS: $ 73 $ 227 $ 395 $ 883 - ------------------------------------------------------
4 CHASE VISTA TREASURY PLUS MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests at least 65% of its assets in direct debt securities of the U.S. Treasury, including Treasury bills, bonds and notes, and repurchase agree- ments collateralized by these invest- ments. These debt securities carry dif- ferent interest rates, maturities and issue dates. The Fund also seeks to enhance its performance by investing in repurchase agreements, using debt securities guaranteed by the U.S. Treasury as collateral. The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be 5 CHASE VISTA TREASURY PLUS MONEY MARKET FUND considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Treasury plus Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 6 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Vista Class shares were launched in May 1996 is based upon performance for Premier Class shares of the Fund. The actual returns of Vista shares would have been lower than shown because Vista shares have higher expenses than Premier shares. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. The bars for 1995 and 1996 are based upon performance for Premier Class shares of the Fund. [GRAPHIC PLOT POINTS] 1995 5.43% 1996 4.90% 1997 4.99% 1998 4.89%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.22%. - --------------------------------------- BEST QUARTER 1.36% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 1.11% - --------------------------------------- 4th quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS, For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR 4/20/94 - ------------------------------------------------------ VISTA SHARES 4.89% 4.92% - ------------------------------------------------------
7 CHASE VISTA TREASURY PLUS MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.50%# 0.70%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.39% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 72 $ 224 $ 390 $ 871 - ----------------------------------------------------
8 CHASE VISTA FEDERAL MONEY MARKET FUND The Fund's objective The Fund aims to provide current income while still preserving capital and maintaining liquidity. The Fund's main investment strategy The Fund invests primarily in: o direct debt securities of the U.S. Treasury, including Treasury bills, bonds and notes, and o debt securities that certain U.S. government agencies or authorities have either issued or guaranteed as to principal and interest. The Fund does not enter into repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. 9 CHASE VISTA FEDERAL MONEY MARKET FUND The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Federal Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 10 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPHIC PLOT POINTS] 1995 5.31% 1996 4.81% 1997 4.98% 1998 4.87%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.28%. - --------------------------------------- BEST QUARTER 1.33% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 1.12% - --------------------------------------- 4th quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS, For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR 4/20/94 - ------------------------------------------------------ VISTA SHARES 4.87% 4.88% - ------------------------------------------------------
11 CHASE VISTA FEDERAL MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ---------------------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.56%# 0.76%# - ----------------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.50% and the Total Annual Fund Operating Expenses are expected not to exceed 0.70%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 78 $ 243 $ 422 $ 942 - ----------------------------------------------------
12 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests substantially all its assets in: o debt securities issued or guaranteed by the U.S. Treasury or agencies or authorities of the U.S. Government, and o repurchase agreements using these securities as collateral. The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. 13 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the U.S. Government Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 14 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Vista Class shares were launched in January 1993 is based upon performance for Premier Class shares of the Fund. The actual returns of Vista shares would have been lower than shown because Vista shares have higher expenses than Premier shares. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. The bars for 1989-1992 are based upon performance for Premier Class Shares of the Fund. [GRAPHIC PLOT POINTS] 1989 8.72% 1990 7.70% 1991 5.81% 1992 3.40% 1993 2.44% 1994 3.58% 1995 5.28% 1996 4.90% 1997 5.09% 1998 5.00%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.35%. - --------------------------------------- BEST QUARTER 2.21% - --------------------------------------- 2nd quarter, 1989 - --------------------------------------- WORST QUARTER 0.59% - --------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - ---------------------------------------------------------- VISTA SHARES 5.00% 4.76% 5.17% - ----------------------------------------------------------
15 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ----------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.49% 0.69% - -----------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual Other Expenses are currently expected to be 0.39% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 70 $ 221 $ 384 $ 859 - ----------------------------------------------------
16 CHASE VISTA CASH MANAGEMENT FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. banks with more than $1 billion in total assets and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. 17 CHASE VISTA CASH MANAGEMENT FUND The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] 18 The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Cash Management Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 19 CHASE VISTA CASH MANAGEMENT FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. On May 3, 1996, the Hanover Cash Management Fund merged into Cash Management Fund. The Fund's performance figures for the periods before that date are for the Hanover fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURN Past performance does not predict how this Fund will perform in the future. [GRAPHIC PLOT POINTS] 1992 3.40% 1993 2.72% 1994 3.84% 1995 5.50% 1996 5.00% 1997 5.17% 1998 5.13%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.46%. - --------------------------------------- BEST QUARTER 1.39% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.66% - --------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 11/30/91 - ------------------------------------------------------- VISTA SHARES 5.13% 4.92% 4.39% - -------------------------------------------------------
20 Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- VISTA SHARES 0.10% NONE 0.51%# 0.61%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.49% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 62 $ 195 $ 340 $ 762 - ----------------------------------------------------
21 CHASE VISTA PRIME MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. banks with more than $1 billion in total assets, and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. 22 The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] 23 CHASE VISTA PRIME MONEY MARKET FUND The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Prime Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 24 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Class B shares were launched in 1994 is based upon performance for Premier Class shares of the Fund. The actual returns of Class B shares would have been lower than shown because Class B shares have higher expenses than Premier shares. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown. YEAR-BY-YEAR RETURNS (Class B shares) Past performance does not predict how this Fund will perform in the future. The bar for 1994 is based upon performance for Premier Class shares of the Fund. The performance figures in the bar chart do not reflect any deduction for the contingent deferred sales charge which is assessed on Class B shares. If the load were reflected, the performance figures would have been lower. [START CHART] 1994 3.39% 1995 4.59% 1996 4.13% 1997 4.49% 1998 4.48% [END CHART] The total return for the Fund from January 1, 1999 to September 30, 1999 was 2.98%. - --------------------------------------- BEST QUARTER 1.16% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.75% - --------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS (11/15/93) - --------------------------------------------------------------------- VISTA SHARES 4.60% 4.24% 4.21% - --------------------------------------------------------------------- CLASS B SHARES -0.52% 3.87% 4.17% - --------------------------------------------------------------------- CLASS C SHARES 3.33% 4.18% 4.14% - ---------------------------------------------------------------------
Class C shares were first offered on January 2, 1998. Vista Class shares were first offered on November 2, 1998. The performance for the period before Class C and Vista Class shares were launched is based on performance for Premier Class and Class B shares of the Fund. The actual returns of Class C and Vista Class shares would have been lower than shown because Class C and Vista Class shares have higher expenses than Premier Class shares. The performance for Class B and Class C shares reflect the imposition of the applicable contingent deferred sales load. 25 CHASE VISTA PRIME MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT):
MAXIMUM DEFERRED SALES MAXIMUM SALES CHARGE (LOAD) CHARGE (LOAD) SHOWN AS WHEN YOU BUY SHARES, SHOWN LOWER OF % OF THE OFFERING AS % OF THE OFFERING PRICE1 PRICE1 OR REDEMPTION PROCEEDS - ----------------------------------------------------------------------------- VISTA SHARES NONE NONE - ----------------------------------------------------------------------------- CLASS B SHARES NONE 5.00% - ----------------------------------------------------------------------------- CLASS C SHARES NONE 1.00% - -----------------------------------------------------------------------------
1 The offering price is the net asset value of the shares bought plus any sales charge. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL FUND MANAGEMENT DISTRIBUTION OTHER FEES AND CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- VISTA SHARES 0.10% NONE 0.53%# 0.63%# - -------------------------------------------------------------------------- CLASS B SHARES 0.10% 0.75% 0.43%# 1.28%# - -------------------------------------------------------------------------- CLASS C SHARES 0.10% 0.75% 0.43%# 1.28%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual Other Expenses for the Vista Shares currently are expected to be 0.49% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. The actual other expenses for Class B Shares are expected to be 0.40% and the total annual Fund operating expenses are currently expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. 26 EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: IF YOU SELL YOUR SHARES YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ------------------------------------------------------ VISTA SHARES $ 64 $ 202 $ 351 $ 786 - ------------------------------------------------------ CLASS B SHARES $ 630 $ 706 $ 902 $ 1,366 - ------------------------------------------------------ CLASS C SHARES $ 230 $ 406 $ 702 $ 1,545 - ------------------------------------------------------
IF YOU DON'T SELL YOUR SHARES YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ------------------------------------------------------ VISTA SHARES NONE NONE NONE NONE - ------------------------------------------------------ CLASS B SHARES $ 130 $ 406 $ 702 $ 1,366 - ------------------------------------------------------ CLASS C SHARES $ 130 $ 406 $ 702 $ 1,545 - ------------------------------------------------------
27 CHASE VISTA TAX FREE MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income which is excluded from gross income (for federal income tax purposes), while still preserving capital and maintaining liquidity. The Fund's main investment strategy Under normal market conditions, the Fund will try to invest 100% of its assets in municipal obligations, the interest on which is excluded from gross income (for federal income tax purposes) and which is not subject to the alternative minimum tax on individuals. As a fundamental policy, the Fund will invest at least 80% of its assets in municipal obligations. The remaining 20% of total assets may be invested in securities which are subject to federal income tax or the federal alternative minimum tax for individuals. To temporarily defend its assets, the Fund may exceed this limit. The Fund may also invest in municipal lease obligations. These provide participation in municipal lease agreements and installment purchase contracts. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. 28 The dollar-weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those investments which have remaining maturities of 397 days or less. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its non-fundamental investment policies (except its investment objective) without shareholder approval.[logo] The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Changes in a municipality's financial health may make it difficult for the municipality to make interest and principal payments when due. A number of municipalities have had significant financial problems recently. This could decrease the Fund's income or hurt its ability to preserve capital and liquidity. Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other gov- ernment agency. Although the Tax Free Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 29 CHASE VISTA TAX FREE MONEY MARKET FUND Under some circumstances, municipal obligations might not pay interest unless the state or municipal legislature authorizes money for that purpose. Some securities, including municipal lease obligations, carry additional risks. For example, they may be difficult to trade or interest payments may be tied only to a specific stream of revenue. Since some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund could increase if the banking or financial sector suffers an economic downturn. Interest on certain municipal obligations is subject to the federal alternate minimum tax. Normally, up to 20% of the Fund's total assets may be invested in securities that are subject to this tax. Consult your tax professional for more information. The Fund may invest in municipal obligations backed by foreign institutions. This could carry more risk than securities backed by U.S. institutions because of political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. The Fund is not diversified. It may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. That makes it more susceptible to economic problems among the institutions issuing the securities. In addition, more than 25% of the Fund's assets may be invested in securities which rely on similar projects for their income stream. As a result, the Fund could be more susceptible to developments which affect those projects. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] 30 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPHIC PLOT POINTS] 1989 5.82% 1990 5.45% 1991 4.07% 1992 2.52% 1993 1.82% 1994 2.15% 1995 3.13% 1996 2.91% 1997 3.16% 1998 2.99%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 1.99%. - --------------------------------------- BEST QUARTER 1.51% - --------------------------------------- 2nd quarter, 1989 - --------------------------------------- WORST QUARTER 0.41% - --------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - ----------------------------------------------------------- VISTA SHARES 2.99% 2.87% 3.39% - -----------------------------------------------------------
31 CHASE VISTA TAX FREE MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.55%# 0.75%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.39% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - --------------------------------------------------- COSTS: $ 77 $ 240 $ 417 $ 930 - ---------------------------------------------------
32 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income which is excluded from gross income and exempt from New York State and New York City personal income taxes, while still preserving capital and maintaining liquidity. The Fund's main investment strategy The Fund will generally invest at least 65% of its assets in New York munici- pal obligations, the interest of which is exempt from gross income and exempt from New York State and New York City personal income taxes. The exact percentage will vary from time to time. New York municipal obligations are municipal obligations issued by New York State, its political subdivisions, Puerto Rico, other U.S. territories and their political subdivisions. When suitable New York municipal obligations are unavailable, the Fund may buy municipal obligations issued by other states. These are generally subject to New York State and New York City personal income taxes. As a fundamental policy, under normal market conditions, the Fund will invest at least 80% of its assets in municipal obligations, the interest on which is excluded from gross income and which is not subject to the federal alternate minimum tax on individuals. The remaining 20% of its total assets may be invested in securities paying interest which is subject to federal income tax or to the alternate minimum tax on individuals. To temporarily defend its assets, the Fund may exceed this limit. The Fund may also invest in municipal lease obligations. These provide participation in municipal lease agreements and installment purchase contracts. 33 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest or second-highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The dollar-weighted average maturity of the Fund will be 90 days or less. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its non-fundamental investment policies (except its investment objective) without shareholder approval.[logo] 34 The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. The Fund will be particularly susceptible to difficulties affecting New York State and its municipalities. Changes in a municipality's financial health may make it difficult for the municipality to make interest and principal payments when due. A number of municipal issuers, including the State of New York and New York City, have a history of financial problems. Such problems could decrease the Fund's income or hurt its ability to preserve capital and liquidity. Under some circumstances, municipal obligations might not pay interest unless the state or municipal legislature authorizes money for that purpose. Some securities, including municipal lease obligations, carry additional risks. For example, they may be difficult to trade or interest payments may be tied only to a specific stream of revenue. Since some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund could increase if the banking or financial sector suffers an economic downturn. Interest on certain municipal obligations is subject to the federal alternate minimum tax. Normally, up to 20% of the Fund's total assets may be invested in securities that are subject to this tax. Consult your tax professional for more information. The Fund may invest in municipal obligations backed by foreign institutions. This could carry more risk than securities backed by U.S. institutions because of political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. The Fund is not diversified. It may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. That makes it more susceptible to economic problems among the institutions issuing the securities. In addition, more than 25% of the Fund's assets may be invested in securities which rely on similar projects for their income stream. As a result, the Fund could be more susceptible to developments which affect those projects. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the New York Tax Free Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 35 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPHIC PLOT POINTS] 1989 5.36% 1990 4.94% 1991 3.64% 1992 2.30% 1993 1.67% 1994 2.07% 1995 3.03% 1996 2.81% 1997 3.09% 1998 2.90%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 1.95%. - --------------------------------------- BEST QUARTER 1.38% - --------------------------------------- 2nd quarter, 1989 - --------------------------------------- WORST QUARTER 0.38% - --------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - ---------------------------------------------------------- VISTA SHARES 2.90% 2.78% 3.17% - ----------------------------------------------------------
36 Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ----------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.51% 0.71% - -----------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual Distribution (12b-1) Fees are expected to be 0.03%. Other Expenses are currently expected to be 0.46% and the Total Annual Fund Operating Expenses are expected not to exceed 0.59%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 73 $ 227 $ 395 $ 883 - ----------------------------------------------------
37 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income which is exempt from federal income taxes, while still preserving capital and maintaining liquidity. The Fund's main investment strategy As a fundamental policy, except when it is temporarily defending its assets, the Fund will invest at least 65% of its total assets in California municipal obligations, the interest of which is excluded from gross income and and California personal exempt from California personal income taxes. California municipal obligations are issued by the State of California, its political subdivisions, authorities and corporations. When suit- able California municipal obligations are unavailable, the Fund may buy municipal obligations from other states. These would generally be subject to California personal income tax. As a fundamental policy, under normal market conditions, the Fund will invest at least 80% of its net assets in municipal obligations, the interest on which is excluded from gross income and which is not subject to the federal alternate minimum tax on individuals. However, up to 20% of its total assets may be invested in securities paying interest which is subject to federal income tax or to the alternate minimum tax on individuals. To temporarily defend its assets, the Fund may exceed this limit. The Fund may also invest in municipal lease obligations. These provide participation in municipal lease agreements and installment purchase contracts. 38 The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest or second-highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The dollar-weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those investments with remaining maturities of 397 days or less. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its non-fundamental investment policies (except its investment objective) without shareholder approval.[logo] 39 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND The Fund's main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. The Fund will be particularly susceptible to difficulties affecting California and its municipalities. Changes in a municipality's financial health may make it difficult for the municipality to make interest and principal payments when due. A number of municipal issuers, including the State of California and certain California counties, have a recent history of financial problems. California's Orange County recently defaulted on its debt. Such problems could decrease the Fund's income or hurt its ability to preserve capital and liquidity. Under some circumstances, municipal obligations might not pay interest unless the state or municipal legislature authorizes money for that purpose. Some securities, including municipal lease obligations, carry additional risks. For example, they may be difficult to trade or interest payments may be tied only to a specific stream of revenue. Since some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund could increase if the banking or financial sector suffers an economic downturn. Interest on certain municipal obligations is subject to the federal alternate minimum tax. Normally, up to 20% of the Fund's assets may be invested in securities that are subject to this tax. Consult your tax professional for more information. The Fund may invest in municipal obligations backed by foreign institutions. This could carry more risk than securities backed by U.S. institutions because of political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. The Fund is not diversified. It may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. That makes it more susceptible to economic problems among the institutions issuing the securities. In addition, more than 25% of the Fund's assets may be invested in securities which rely on similar projects for their income stream. As a result, the Fund could be more susceptible to developments which affect those projects. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the California Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 40 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPHIC PLOT POINTS] 1993 2.21% 1994 2.52% 1995 3.38% 1996 2.95% 1997 3.09% 1998 2.87%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 1.90%. - --------------------------------------- BEST QUARTER 0.88% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.49% - --------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 3/5/92 - ------------------------------------------------------- VISTA SHARES 2.87% 2.96% 2.84% - -------------------------------------------------------
41 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- VISTA SHARES 0.10% 0.10% 0.72%# 0.92%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.00%, the 12b-1 Distribution Fee is expected to be 0.05%, Other Expenses are expected to be 0.50% and the Total Annual Fund Operating Expenses are expected not to exceed 0.55%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ------------------------------------------------------ COSTS: $ 94 $ 293 $ 509 $ 1,131 - ------------------------------------------------------
42 THE FUNDS' INVESTMENT ADVISER THE YEAR 2000 The Fund, like any business, could be affected if the computer systems on which it relies fail to properly pro- cess information beginning on January 1, 2000. The Fund's advisers are updating their own systems and encouraging service providers to do the same, but there's no guarantee these systems will work properly. Year 2000 problems could also hurt issuers whose securities the Funds hold or securities markets generally. The Funds' investment adviser The Chase Manhattan Bank (Chase) is the investment adviser to the Fund. Chase is a wholly owned subsidiary of The Chase Manhattan Corporation (CMC), a bank holding company. Chase provides the Funds with investment advice and supervision. Chase and its predecessors have more than a century of money management experience. Chase is located at 270 Park Avenue, New York, New York 10017. For the fiscal year ended August 31, 1999, Chase was paid a management fee of 0.10% of the average daily net assets of each Fund other than the California Tax Free Money Market Fund. Chase was not paid an advisory fee with respect to the California Tax Free Money Market Fund. Chase Asset Management, Inc. (CAM) is the sub-adviser to every Fund except the Cash Management Fund and the Tax Free Money Market Fund. CAM is a wholly-owned subsidiary of Chase. It makes the day-to-day investment decisions for the Funds. CAM provides discretionary investment advisory services to institutional clients. CAM is located at 1211 Avenue of the Americas, New York, New York 10036. 43 HOW YOUR ACCOUNT WORKS Buying Fund shares You don't pay any sales charge (sometimes called a load) when you buy shares in these funds. Unlike the other money market funds in the prospectus, the Prime Money Market Fund also offers two additional classes of shares: Class B and Class C. You may have to pay a deferred sales charge when you sell Class B or Class C shares of the Prime Money Market Fund, depending on how long you've held them. You may buy B shares of the Prime Money Market Fund by exchanging from Class B shares of another Chase Vista Fund. You may buy them directly if you establish a program to systematically exchange into Class B shares of one or more Chase Vista Funds within 24 months. The price you pay for your shares is the net asset value per share (NAV). NAV is the value of everything the Fund owns, minus everything it owes, divided by the number of shares held by investors. All of these Funds seek to maintain a stable NAV of $1.00. Each Fund uses the amortized cost to value its portfolio of securities. This method provides more stability in valuations. However, it may also result in periods during which the stated value of a security is different than the price the Fund would receive if it sold the investment. 44 The NAV of each class of shares is generally calculated by 6:00 pm Eastern time each day the funds are accepting purchase orders. You'll pay the next NAV calculated after the Chase Vista Funds Service Center receives your order in proper form. An order is in proper form only after funds are converted into federal funds. The center accepts purchase orders on any business day that the Federal Reserve Bank of New York and the New York Stock Exchange are open. If you send us an order in proper form by the Fund's cut-off time, we'll process your order at that day's price and you'll be entitled to all dividends declared on that day. If we receive your order after the cut-off time, we'll generally process it at the next day's price, but for 100% U.S. Treasury Securities, Tax Free and Federal Money Market Fund orders we may process it the same day if we receive it after cut off but before 4:00 p.m. (Eastern time). If you pay by check before the cut-off time, we'll generally process your order the next day the Fund is open for business. Normally, the cut-off (in Eastern time) is: - ------------------------------------ 100% U.S. TREASURY SECURITIES MONEY MARKET FUND NOON - ------------------------------------ TAX FREE MONEY MARKET FUND NOON - ------------------------------------ FEDERAL MONEY MARKET FUND 2:00 P.M. - ------------------------------------ U.S. GOVERNMENT MONEY MARKET FUND 4:00 P.M. - ------------------------------------ CASH MANAGEMENT FUND 4:00 P.M. - ------------------------------------ PRIME MONEY MARKET FUND 4:00 P.M. - ------------------------------------ TREASURY PLUS MONEY MARKET FUND 4:00 P.M. - ------------------------------------
A later cut-off time may be permitted for investors buying shares (through Chase or a bank affiliate of Chase) so long as such later cut-off time is before the Fund's NAV is calculated. If you buy through an agent and not directly from the Chase Vista Funds Service Center, the agent could set earlier cut-off times. The Funds may close earlier a few days each year if the Public Securities Association recommends that the U.S. Government securities market close trading early. You must provide a SSN or Taxpayer Identification Number when you open an account. The Funds have the right to reject any purchase order. TO OPEN AN ACCOUNT, BUY OR SELL SHARES OR GET FUND INFORMATION, CALL: - ----------------------------------------- CHASE VISTA FUNDS SERVICE CENTER - ----------------------------------------- 1-800-34-VISTA - ----------------------------------------- 45 HOW YOUR ACCOUNT WORKS MINIMUM INVESTMENTS FOR EACH FUND
TYPE OF INITIAL ADDITIONAL ACCOUNT INVESTMENT INVESTMENTS - ----------------------------------------- REGULAR ACCOUNT $ 2,500 $ 100 - ----------------------------------------- SYSTEMATIC INVESTMENT PLAN $ 1,000 $ 100 - ----------------------------------------- IRAs $ 1,000 $ 100 - ----------------------------------------- SEP-IRAs $ 1,000 $ 100 - ----------------------------------------- EDUCATION IRAS $ 500 $ 100 - -----------------------------------------
Make your check out to Chase Vista Funds in U.S. dollars. We won't accept credit cards, cash, or checks from a third party. You cannot sell shares you bought by check for 15 calendar days. If you buy through an Automated Clearing House, you can't sell your shares until the payment clears. This could take more than seven business days. Your purchase will be canceled if your check doesn't clear and you'll be responsible for any expenses and losses to the Funds. Orders by wire will be canceled if the Chase Vista Funds Service Center doesn't receive payment by 4:00 Eastern time on the day you buy. OPENING YOUR ACCOUNT AND BUYING SHARES Through your investment representative Tell your representative which Funds you want to buy and he or she will contact us. Your representative may charge you a fee and may offer additional services, such as special purchase and redemption programs, "sweep" programs, cash advances and redemption checks. Your representative may set different minimum investments and earlier cut-off times. Through the Chase Vista Funds Service Center Complete the enclosed application form and mail it along with a check for the amount you want to invest to: Chase Vista Funds Service Center, P.O. Box 419392 Kansas City, MO 64141-6392 Through a Systematic Investment Plan You can make regular automatic purchases of at least $100. See Shareholder Services for details.[logo] Selling Fund shares You can sell your shares on any day the Chase Vista Funds Service Center is open for trading, either directly to the Fund or through your investment representative. You'll receive the next NAV calculated after the Chase Vista Funds Service Center accepts your order. Under normal circumstances, if your request is received before the Fund's cut-off time, the Fund will send you the proceeds the same business day. We won't accept an order to sell shares if the Fund hasn't collected your payment for the shares. The Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit. 46 You'll need to have your signature guaranteed if you want your payment sent to an address other than the one we have in our records. We may also need additional documents or a letter from a surviving joint owner before selling the shares. SELLING SHARES Through your investment representative Tell your representative which Funds you want to sell. He or she will send the necessary documents to the Chase Vista Funds Service Center. Your representative might charge you for this service. Through the Chase Vista Funds Service Center Call 1-800-34-VISTA. We will mail you a check or send the proceeds via electronic transfer or wire. If you have changed your address of record within the previous 30 days or if you sell $25,000 or more worth of Funds by phone, we'll send the proceeds by electronic transfer or wire only to the bank account on our records. We charge $10 for each transaction by wire. Or Send a signed letter with your instructions to: Chase Vista Funds Service Center, P.O. Box 419392 Kansas City, MO 64141-6392 Through a Systematic Withdrawal Plan You can automatically sell as little as $50 worth of shares. See Shareholder Services for details.[logo] Distribution Arrangements CLASS B SHARES There is no initial sales charge to buy Class B shares, but you may have to pay a deferred sales charge. The deferred sales charge is deducted directly from your assets when you sell your shares. It's a percentage of the original purchase price or the current value of the shares, whichever is lower. As the table shows, the deferred sales charge gets lower the longer you hold the shares and disappears altogether after six years. Class B shares automatically convert into Vista shares at the beginning of the ninth year after you bought them.
YEAR DEFERRED SALES CHARGE - ----------------- 1 5% - ----------------- 2 4% - ----------------- 3 3% - ----------------- 4 3% - ----------------- 5 2% - ----------------- 6 1% - ----------------- 7 NONE - ----------------- 8 NONE - -----------------
We calculate the deferred sales charge from the month you buy your shares. We always sell the shares with the lowest deferred sales charge first. Shares acquired by reinvestment of distribution can be sold without a deferred sales charge. CLASS C SHARES There is no initial sales charge to buy Class C shares, but you will have to pay a deferred sales charge of 1% if you sell your shares within one year of buying them. The deferred sales charge is deducted directly from your assets when you 47 HOW YOUR ACCOUNT WORKS sell your shares. It's a percentage of the original purchase price or the current value of the shares, whichever is lower. Class C shares are not converted into any other class of shares so you pay a higher distribution fee for as long as you own your shares. GENERAL These shares have higher expenses each year, so you should only buy Class B and Class C shares in conjunction with a plan to invest in Chase Vista's stock and bond Funds. Vista Fund Distributors Inc. (VFD) is the distributor for the Funds. It is a subsidiary of The BISYS Group, Inc. and is not affiliated with Chase. With the exception of the Cash Management Fund and the Prime Money Market Fund, all of the Funds have adopted Rule 12b-1 distribution plans under which they pay up to 0.10% of their Vista Class assets in distributor fees. The Prime Money Market Fund has adopted Rule 12b-1 distribution plans under which it pays annual distributor fees of up to 0.75% of the average daily net assets attributed to Class B and Class C shares. These payments cover such things as payments for services provided by broker-dealers and expenses connected to sale of shares. Payments are not tied to the amount of actual expenses incurred. Because 12b-1 expenses are paid out of a fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than other types of sales charges.[logo] Other information concerning the funds We may close your account if the balance falls below $500 because you've sold shares. We may also close the account if you are in the Systematic Investment Plan and fail to meet investment minimums over a 12-month period. We'll give you 60 days notice before closing your account. Unless you indicate otherwise on your account application, we are authorized to act on redemption and transfer instructions received by phone. If someone trades on your account by phone, we'll ask that person to confirm your account registration and address to make sure they match those you provided us. If they give us the correct information, we are generally authorized to follow that person's instructions. We'll take all reasonable precautions to confirm that the instructions are genuine. Investors agree that they will not hold the Fund liable for any loss or expenses from any sales request, if the Fund takes reasonable precautions. The Fund will be liable for any losses to you from an unauthorized sale or fraud against you if we do not follow reasonable procedures. Telephone redemption requests of more than $25,000 will only be sent by electronic transfer or wire to the bank account you have on record with the Fund. There is a $10 charge for each wire transaction. 48 You may not always reach the Chase Vista Funds Service Center by telephone. This may be true at times of unusual market changes and shareholder activity. You can mail us your instructions or contact your investment representative or agent. We may modify or cancel the sale of shares by phone without notice. The Trust has agreements with certain shareholder servicing agents (including Chase) under which the shareholder servicing agents have agreed to provide certain support services to their customers. For performing these services, each shareholder servicing agent receives an annual fee of up to 0.35% of the average daily net assets of the Vista Shares of each Fund, and up to 0.25% of the average daily net assets of the Class B and Class C shares of Prime Money Market Fund, held by investors serviced by the shareholder servicing agent. The Board of Trustees has determined that the amount payable for "service fees" (as defined by the NASD) does not exceed 0.25% of the average annual net assets attributable to the Vista Shares of each Fund. Chase and/or VFD may, at their own expense, make additional payments to certain selected dealers or other shareholder servicing agents for performing administrative services for their customers. The amount may be up to an additional 0.10% annually of the average net assets of the fund attributable to shares of the Fund held by customers of those shareholder servicing agents. Each Fund may issue multiple classes of shares. This prospectus relates only to Vista Class shares of the Funds and Class B and Class C shares of the Prime Money Market Fund. Each class may have different requirements for who may invest, and may have different sales charges and expense levels. A person who gets compensated for selling Fund shares may receive a different amount for each class. Chase and its affiliates and the Funds and their affiliates, agents and subagents may share information about shareholders and their accounts with each other and with others unless this sharing is prohibited by contract. This information can be used for a variety of purposes, including offering investment and insurance products to shareholders.[logo] Distributions and taxes The Funds can earn income and they can realize capital gain. The Funds will deduct from these earnings any expenses and then pay to shareholders the distributions. The Funds declare dividends daily, so your shares can start earning dividends on the day you buy them. We distribute the dividends monthly in the form of additional shares, unless you tell us that you want payment in cash or deposited in a pre-assigned bank account. The taxation of dividends won't be affected by the form in which you receive them. We distribute any short-term capital gain at least 49 HOW YOUR ACCOUNT WORKS annually. The Funds do not expect to realize long-term capital gain. Dividends are usually taxable as ordinary income at the federal, state and local levels. Dividends of tax-exempt interest income by the Tax Free Funds are not subject to federal income taxes but will generally be subject to state and local taxes. The state or municipality where you live may not charge you state and local taxes on tax-exempt interest earned on certain bonds. Dividends earned on bonds issued by the U.S. government and its agencies may also be exempt from some types of state and local taxes. If you receive distributions of net capital gain, the tax rate will be based on how long the Fund held a particular asset, not on how long you have owned your shares. Early in each calendar year, the Funds will send you a notice showing the amount of distributions you received in the preceding year and the tax status of those distributions. The above is only a general summary of tax implications of investing in these Funds. Please consult your tax advisor to see how investing in the Funds will affect your own tax situation.[logo] 50 SHAREHOLDER SERVICES CHECK WRITING Check writing privileges are available for the Vista shares. Each check you write must be for at least $500. Checks written on joint accounts require only one signature. SYSTEMATIC INVESTMENT PLAN This is an easy way to make regular investments. The minimum investment in any one fund is $100. You decide which Funds you want and how much to invest and the amount is automatically deducted from your bank account, either monthly or quarterly. You can set up a plan when you open an account by completing Section 8 of the application. Current shareholders can join by sending a signed letter and a deposit slip or void check from their bank account to the Chase Vista Funds Service Center. Call 1-800-34-VISTA for complete instructions. SYSTEMATIC WITHDRAWAL PLAN This plan lets you make regular withdrawals from your Chase Vista Funds account. For Class A, you must sell at least $50 worth of shares at a time. For Class B or C shares, you must sell a minimum of $100. You can have automatic withdrawals made monthly, quarterly or semiannually. Your account must contain at least $5,000 of Class A shares or $20,000 of Class B or C shares to start the plan. Call 1-800-34-VISTA for complete instructions. 51 SHAREHOLDER SERVICES You can sell up to 12% of the value of Class B shares each year through the Systematic Withdrawal Plan without paying a deferred sales charge. Your Class B account must have a minimum balance of $20,000 when the plan is set up to enjoy this privilege. EXCHANGE PRIVILEGES You can exchange your Vista shares for shares in certain other Chase Vista funds. You can exchange Class B and C shares of the Prime Money Market Fund for shares of the same class of another Chase Vista Fund. For tax purposes, an exchange is treated as a sale of Fund shares. Carefully read the prospectus of the fund you want to buy before making an exchange. You'll need to meet any minimum investment requirements and may have to pay a sales charge. Call 1-800-34-VISTA for details. You can also set up a systematic exchange program to automatically exchange shares on a regular basis. It's a free service. You should not exchange shares as means of short-term trading as this could increase management cost and affect all shareholders. We reserve the right to limit the number of exchanges or to refuse an exchange. We may also terminate this privilege. We charge an administration fee of $5 for each exchange if you make more than 10 exchanges in a year or three in a quarter. See the Statement of Additional Information to find out more about the exchange privilege. You cannot have simultaneous plans for the systematic investment or exchange and the systematic withdrawal or exchange for the same fund. EXCHANGE BY PHONE You may also use our Telephone Exchange Privilege. You can get information by contacting the Chase Vista Funds Service Center or your investment representative.[logo] 52 What the terms mean COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which are issued by banks, corporations and others. DEMAND NOTES: A debt security with no set maturity date. The investor can generally demand payment of the principal at any time. DISTRIBUTION FEE: Covers the cost of the distribution system used to sell shares to the public. DOLLAR WEIGHTED AVERAGE MATURITY: The average maturity of the Fund is the average amount of time until the organizations that issued the debt securities in the Fund's portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of debt security in the Fund, the more weight it gets in calculating this average. FLOATING RATE SECURITIES: Securities whose interest rates adjust automatically whenever a particular interest rate changes. LIQUIDITY: Liquidity is the ability to easily convert investments into cash without losing a significant amount of money in the process. MANAGEMENT FEE: A fee paid to the investment adviser to manage the Fund and make decisions about buying and selling the Fund's investments. MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease agreements and installment purchase contracts, but are not part of the general obligations of the municipality. MUNICIPAL OBLIGATIONS: Debt securities issued by or on behalf of states, territories and possessions or by their agencies or other groups with authority to act for them. For securities to qualify as municipal obligations, the municipality's lawyers must give an opinion that the interest on them is not considered gross income for federal income tax purposes. OTHER EXPENSES: Miscellaneous items, including transfer agency, administration, shareholder servicing, custody and registration fees. REPURCHASE AGREEMENTS: A special type of a short-term investment. A dealer sells securities to a Fund and agrees to buy them back later for a set price. This set price includes interest. In effect, the dealer is borrowing the Fund's money for a short time, using the securities as collateral. SHAREHOLDER SERVICE FEE: A fee to cover the cost of paying shareholder servicing agents to provide certain support services for your account. VARIABLE RATE SECURITIES: Securities whose interest rates are periodically adjusted.[logo] 53 FINANCIAL HIGHLIGHTS Chase Vista 100% U.S. Treasury Securities Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). On May 3, 1996, the Hanover 100% U.S. Treasury Securities Money Market Fund ("Hanover 100% Treasury Fund") merged into Vista 100% U.S. Treasury Securities Money Market Fund, which was created to be the successor to the Hanover 100% Treasury Fund. The table set forth below provides selected per share data and ratios for one Hanover 100% Treasury Fund share outstanding through May 3, 1996 and one Vista Share of the Vista 100% U.S. Treasury Securities Money Market Fund outstanding for periods thereafter. This information is supplemented by financial statements including accompanying notes appearing in the the Fund's Annual Report to Shareholders for the year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, for each of the years in the three year period ended August 31, 1999 and the period from December 1, 1995 through August 31, 1996 have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Fund's Annual Report to Shareholders. Periods ended prior to December 1, 1995 were audited by other independent accountants. 54
Year Year Year 12/01/95 Year Year ended ended ended through ended ended 8/31/99 8/31/98 8/31/97 8/31/96** 11/30/95 11/30/94 PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.04 0.05 0.05 0.04 0.05 0.03 Less distributions: Dividends from net investment income 0.04 0.05 0.05 0.04 0.05 0.03 - ------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.31% 4.92% 4.87% 3.50% 5.15% 3.32% - ------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (millions) $3,312 $3,051 $2,376 $1,672 $1,338 $1,024 - ------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets# 0.59% 0.59% 0.59% 0.60% 0.58% 0.59% - ------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets# 4.15% 4.78% 4.74% 4.58% 4.99% 3.26% - ------------------------------------------------------------------------------------------------------------------------ Ratio of expenses without waivers and assumption of expenses to average net assets# 0.71% 0.71% 0.71% 0.68% 0.61% 0.62% - ------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income without waivers and assumption of expenses to average net assets# 4.03% 4.66% 4.62% 4.50% 4.96% 3.23% - ------------------------------------------------------------------------------------------------------------------------
**In 1996, the Fund changed its fiscal year end from November 30 to August 31. #Short periods have been annualized. 55 FINANCIAL HIGHLIGHTS Chase Vista Treasury Plus Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year 5/6/96* ended ended ended through 8/31/99 8/31/98 8/31/97 8/31/96 PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04 0.05 0.05 0.02 Less dividends from net investment income 0.04 0.05 0.05 0.02 - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.39% 5.05% 4.89% 1.50% - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $1,734 $1,316 $1,606 $1,382 - ----------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets# 0.59% 0.59% 0.59% 0.59% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets# 4.27% 4.92% 4.79% 4.63% - ----------------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets# 0.69% 0.70% 0.70% 0.73% - ----------------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets# 4.17% 4.81% 4.68% 4.49% - -----------------------------------------------------------------------------------------------------------
*Commencement of offering shares. #Short periods have been annualized. 56 Chase Vista Federal Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.04 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.04 0.05 0.05 0.05 0.05 - ------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.46% 4.94% 4.91% 4.83% 5.20% - ------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------ Net assets, end of period (millions) $ 550 $ 359 $ 301 $ 353 $ 203 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 0.70% 0.70% 0.70% 0.70% 0.69% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets 4.35% 4.88% 4.79% 4.79% 5.16% - ------------------------------------------------------------------------------------------------------ Ratio of expenses without waivers and assumption of expenses to average net assets 0.78% 0.84% 0.82% 0.93% 0.93% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income without waivers and assumption of expenses to average net assets 4.27% 4.74% 4.67% 4.56% 4.92% - ------------------------------------------------------------------------------------------------------
57 FINANCIAL HIGHLIGHTS Chase Vista U.S. Government Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.04 0.05 0.05 0.05 0.05 - ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.55% 5.14% 5.04% 4.97% 5.05% - ---------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $3,538 $3,033 $2,139 $2,057 $ 341 - ---------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.59% 0.59% 0.59% 0.65% 0.80% - ---------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 4.46% 5.01% 4.93% 4.83% 4.93% - ---------------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.69% 0.70% 0.72% 0.73% 0.80% - ---------------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 4.36% 4.90% 4.80% 4.75% 4.93% - ----------------------------------------------------------------------------------------------------------
58 Chase Vista Cash Management Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). On May 3, 1996, the Hanover Cash Management Fund merged into Vista Cash Management Fund. The table set forth below provides selected per share data and ratios for one Hanover Cash Management Fund share (the accounting survivor of the merger) outstanding through May 3, 1996 and one Vista Share of the Vista Cash Management Fund outstanding for periods thereafter. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, for each of the years in the three year period ended August 31, 1999 and the period from December 1, 1995 through August 31, 1996 have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Fund's Annual Report to Shareholders. Periods ended prior to December 1, 1995 were audited by other independent accountants.
Year Year Year 12/1/95 Year Year ended ended ended through ended ended 8/31/99 8/31/98 8/31/97 8/31/96* 11/30/95 11/30/94 PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.05 0.05 0.05 0.04 0.05 0.04 Less distributions: Dividends from net investment income 0.05 0.05 0.05 0.04 0.05 0.04 - ----------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.74% 5.23% 5.09% 3.69% 5.49% 3.62% - ----------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $5,679 $3,642 $2,576 $1,621 $1,634 $ 990 - ----------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets# 0.59% 0.59% 0.59% 0.60% 0.58% 0.58% - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets# 4.61% 5.09% 4.99% 4.91% 5.35% 3.62% - ----------------------------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets# 0.62% 0.61% 0.62% 0.63% 0.62% 0.62% - ----------------------------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets# 4.58% 5.07% 4.96% 4.88% 5.31% 3.58% - -----------------------------------------------------------------------------------------------------------------------
*In 1996, the Fund changed its fiscal year end from November 30 to August 31. #Short periods have been annualized. 59 FINANCIAL HIGHLIGHTS Chase Vista Prime Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Class B Share and one Class C Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this Annual Report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
CLASS B SHARES Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE: - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.04 0.05 0.04 0.04 0.04 Less distributions: Dividends from net investment income 0.04 0.05 0.04 0.04 0.04 - ------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.07% 4.60% 4.33% 4.25% 4.37% - ------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------------ Net assets, end of period (millions) $ 36 $ 29 $ 10 $ 16 $ 5 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 1.25% 1.25% 1.35% 1.47% 1.47% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets 4.00% 4.49% 4.27% 4.17% 4.33% - ------------------------------------------------------------------------------------------------------ Ratio of expenses without waivers and assumption of expenses to average net assets 1.47% 1.50% 1.53% 1.71% 2.53% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income without waivers and assumption of expenses to average net assets 3.78% 4.24% 4.09% 3.93% 3.27% - ------------------------------------------------------------------------------------------------------
60
CLASS C SHARES VISTA SHARES Year 5/14/98* 10/1/98* ended Through Through 8/31/99 8/31/98 8/31/99 PER SHARE OPERATING PERFORMANCE: - -------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04 0.01 0.04 Less distributions: Dividends from net investment income 0.04 0.01 0.04 - -------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------------------------------------------- TOTAL RETURN 3.85% 1.29% 4.26% - -------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 1 $ 1 $ 515 - -------------------------------------------------------------------------------------- Ratio of expenses to average net assets# 1.45% 1.50% 0.59% - -------------------------------------------------------------------------------------- Ratio of net investment income to average net assets# 3.75% 4.21% 4.61% - -------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets# 1.45% 1.50% 0.72% - -------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets# 3.75% 4.21% 4.48% - --------------------------------------------------------------------------------------
*Commencement of offering shares. #Short periods have been annualized. 61 FINANCIAL HIGHLIGHTS Chase Vista Tax Free Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders can obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set a forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year PER SHARE ended ended ended ended ended OPERATING PERFORMANCE 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 - -------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.03 0.03 0.03 0.03 Less distributions: Dividends from net investment income 0.03 0.03 0.03 0.03 0.03 - -------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - -------------------------------------------------------------------------------------------------- TOTAL RETURN 2.73% 3.10% 3.12% 2.92% 2.99% - -------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 754 $ 733 $ 566 $ 574 $ 167 - -------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.59% 0.59% 0.59% 0.69% 0.86% - -------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 2.68% 3.05% 3.08% 2.89% 2.96% - -------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.73% 0.72% 0.73% 0.80% 0.94% - -------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 2.54% 2.92% 2.94% 2.78% 2.88% - --------------------------------------------------------------------------------------------------
62 Chase Vista New York Tax Free Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders can obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year PER SHARE ended ended ended ended ended OPERATING PERFORMANCE 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - --------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.03 0.03 0.03 0.03 Less distributions: Dividends from net investment income 0.03 0.03 0.03 0.03 0.03 - --------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - --------------------------------------------------------------------------------------------------- TOTAL RETURN 2.66% 3.03% 3.02% 2.85% 2.88% - --------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $1,505 $1,372 $ 957 $ 890 $ 378 - --------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.59% 0.59% 0.59% 0.74% 0.86% - --------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 2.61% 2.97% 2.97% 2.79% 2.84% - --------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.71% 0.72% 0.73% 0.83% 0.95% - --------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 2.49% 2.84% 2.83% 2.70% 2.75% - ---------------------------------------------------------------------------------------------------
63 FINANCIAL HIGHLIGHTS Chase Vista California Tax Free Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Vista Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders can obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year PER SHARE ended ended ended ended ended OPERATING PERFORMANCE 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 - ------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.03 0.03 0.03 0.03 Less distributions: Dividends from net investment income 0.03 0.03 0.03 0.03 0.03 - ------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------- TOTAL RETURN 2.66% 2.97% 3.02% 3.06% 3.32% - ------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 68 $ 50 $ 46 $ 43 $ 58 - ------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.55% 0.55% 0.56% 0.56% 0.48% - ------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 2.55% 2.89% 2.99% 3.03% 3.25% - ------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.94% 0.93% 0.86% 1.02% 1.07% - ------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 2.16% 2.51% 2.69% 2.57% 2.66% - -------------------------------------------------------------------------------------------------
64 HOW TO REACH US More information You'll find more information about the Funds in the following documents: ANNUAL AND SEMI-ANNUAL REPORTS Our annual and semi-annual reports contain more information about each Fund's investments and performance. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information about the Funds and their policies. It is incorporated by reference into this prospectus. That means, by law, it's considered to be part of this prospectus. You can get a free copy of these documents and other information, or ask us any questions, by calling us at 1-800-62-CHASE or writing to: Chase Vista Funds Service Center P.O. Box 419392 Kansas City, MO 64141-6392 If you buy your shares through The Chase Manhattan Bank or another institution, you should contact that institution directly for more information. You can also find information online at www.chasevista.com on the internet. You can write or e-mail the SEC's Public Reference Room and ask them to mail you information about the Funds, including the SAI. They'll charge you a copying fee for this service. You can also visit the Public Reference Section and copy the documents while you're there. Public Reference Section of the SEC Washington, DC 20549-0102. 1-202-942-8090 E-maill:publicinfo@sec.gov Reports, a copy of the SAI and other information about the Funds is also available on the SEC's website at http://www.sec.gov. The Fund's Investment Company Act File No. is 811-8358. Chase Vista Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 PROSPECTUS DECEMBER 29, 1999 - -------------------------------------------------------------------------------- 100% U.S. TREASURY SECURITIES MONEY MARKET FUND TREASURY PLUS MONEY MARKET FUND FEDERAL MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND CASH MANAGEMENT FUND PRIME MONEY MARKET FUND TAX FREE MONEY MARKET FUND Chase Vista Money Market Funds THIS PROSPECTUS OFFERS: PREMIER SHARES Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of securities of any of the Funds or determined if this prospectus is accurate or complete. It is a crime to indicate otherwise. [CHASE VISTA LOGO] XXXX-1-1299 100% U.S. TREASURY SECURITIES MONEY MARKET FUND 1 TREASURY PLUS MONEY MARKET FUND 5 FEDERAL MONEY MARKET FUND 9 U.S. GOVERNMENT MONEY MARKET FUND 13 CASH MANAGEMENT FUND 17 PRIME MONEY MARKET FUND 22 TAX FREE MONEY MARKET FUND 27 THE FUND'S INVESTMENT ADVISER AND THE YEAR 2000 32 HOW YOUR ACCOUNT WORKS 33 BUYING FUND SHARES 33 SELLING FUND SHARES 35 DISTRIBUTION ARRANGEMENTS 36 OTHER INFORMATION CONCERNING THE FUNDS 36 DISTRIBUTIONS AND TAXES 37 SHAREHOLDER SERVICES 38 WHAT THE TERMS MEAN 39 FINANCIAL HIGHLIGHTS 40 HOW TO REACH US Back cover
CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and providing maximum safety of principal. The Fund's main investment strategy The Fund invests solely in direct debt securities of the U.S. Treasury, including Treasury bills, bonds and notes. These investments carry different interest rates, maturities and issue dates. The Fund does not buy securities issued or guaranteed by agencies of the U.S. government and it does not enter into repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those investments which have remaining maturities of 397 days or less. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities and market sectors. The Fund seeks to maintain a net asset value of $1.00 per share. 1 CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the 100% U.S. Treasury Securities Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 2 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Premier Class Shares were launched in June of 1996 is based upon the performance for the Vista Class Shares of the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. The bars for 1992, 1993, 1994, 1995, and 1996 are based upon the performance for the Vista Class Shares of the Fund. [GRAPH CHART PLOT POINTS] 1992 3.35% 1993 2.60% 1994 3.50% 1995 5.17% 1996 4.75% 1997 4.95% 1998 4.93%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.17%. - --------------------------------------- BEST QUARTER 1.32% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.63% - --------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 11/30/91 - ---------------------------------------------------------- PREMIER SHARES 4.93% 4.66% 4.18% - ----------------------------------------------------------
3 CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.44%# 0.54%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.40% and the Total Annual Fund Operating Expenses are expected not to exceed 0.50%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - --------------------------------------------------- COSTS: $ 55 $ 173 $ 302 $ 677 - ---------------------------------------------------
4 CHASE VISTA TREASURY PLUS MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests at least 65% of its assets in direct debt securities of the U.S. Treasury, including Treasury bills, bonds and notes, and repurchase agree- ments collateralized by these invest- ments. These debt securities carry different interest rates, maturities and issue dates. The Fund also seeks to enhance its performance by investing in repurchase agreements, using debt securities guaranteed by the U.S. Treasury as collateral. The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be 5 CHASE VISTA TREASURY PLUS MONEY MARKET FUND considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Treasury Plus Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 6 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPH CHART PLOT POINTS] 1995 5.43% 1996 4.90% 1997 5.09% 1998 5.04%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.33%. - --------------------------------------- BEST QUARTER 1.36% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 1.14% - --------------------------------------- 4th quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR 4/20/94 - ------------------------------------------------------ PREMIER SHARES 5.04% 4.98% - ------------------------------------------------------
7 CHASE VISTA TREASURY PLUS MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.40% 0.50% - --------------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual Other Expenses are currently expected to be 0.35% and the Total Annual Fund Operating Expenses are expected not to exceed 0.45%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 51 $ 160 $ 280 $ 628 - ----------------------------------------------------
8 CHASE VISTA FEDERAL MONEY MARKET FUND The Fund's objective The Fund aims to provide current income while still preserving capital and maintaining liquidity. The Fund's main investment strategy The Fund invests primarily in: o direct debt securities of the U.S. Treasury, including Treasury bills, bonds and notes, and o debt securities that certain U.S. government agencies or authorities have either issued or guaranteed as to principal and interest. The Fund does not enter into repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. 9 CHASE VISTA FEDERAL MONEY MARKET FUND The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval[logo] The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Federal Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 10 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPH CHART PLOT POINTS] 1995 5.52% 1996 5.02% 1997 5.19% 1998 5.08%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.43%. - --------------------------------------- BEST QUARTER 1.38% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 1.18% - --------------------------------------- 4th quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR 4/20/94 - ---------------------------------------------- PREMIER SHARES 5.08% 5.09% - ----------------------------------------------
11 CHASE VISTA FEDERAL MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.40% 0.50% - --------------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 51 $ 160 $ 280 $ 628 - ----------------------------------------------------
12 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests substantially all its assets in: o debt securities issued or guaranteed by the U.S. Treasury or agencies or authorities of the U.S. Government, and o repurchase agreements using these securities as collateral. The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may invest significantly in securities with floating or variable rates of interest. Their yields will vary as interest rates change. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the 13 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the U.S. Government Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 14 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPH CHART PLOT POINTS] 1989 8.72% 1990 7.70% 1991 5.81% 1992 3.40% 1993 2.71% 1994 3.83% 1995 5.54% 1996 5.02% 1997 5.13% 1998 5.14%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.46%. - --------------------------------------- BEST QUARTER 2.21% - --------------------------------------- 2nd quarter, 1989 - --------------------------------------- WORST QUARTER 0.66% - --------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the period ending December 31, 1998
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - ------------------------------------------------------------------- PREMIER SHARES 5.14% 4.93% 5.28% - -------------------------------------------------------------------
15 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER SHARES 0.10% 0.10% 0.38% 0.58% - --------------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual 12b-1 fee is currently expected to be 0.06%, Other Expenses are expected to be 0.29% and the Total Annual Fund Operating Expenses are expected not to exceed 0.45%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 59 $ 186 $ 324 $ 726 - ----------------------------------------------------
16 CHASE VISTA CASH MANAGEMENT FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. bank with more than $1 billion in total assets and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. 17 CHASE VISTA CASH MANAGEMENT FUND The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (except its investment objective) without shareholder approval.[logo] 18 The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Cash Management Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower- quality securities. 19 CHASE VISTA CASH MANAGEMENT FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Premier Class Shares were launched in May of 1996 is based upon the performance for the Vista Class Shares of the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. The bars for 1992, 1993, 1994, 1995, and 1996 are based upon the performance for the Vista Class Shares of the Fund. [GRAPH CHART PLOT POINTS] 1992 3.40% 1993 2.72% 1994 3.84% 1995 5.50% 1996 4.99% 1997 5.26% 1998 5.28%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.57%. - --------------------------------------- BEST QUARTER 1.39% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.66% - --------------------------------------- 2nd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 11/30/91 - --------------------------------------------------------- PREMIER SHARES 5.28% 4.97% 4.42% - ---------------------------------------------------------
20 Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ----------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.40% 0.50% - -----------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. The actual Other Expenses are currently expected to be 0.35% and the Total Annual Fund Operating Expenses are expected not to exceed 0.45%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 51 $ 160 $ 280 $ 628 - ----------------------------------------------------
21 CHASE VISTA PRIME MONEY MARKET FUND The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. banks with more than $1 billion in total assets, and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements The dollar weighted average maturity of the Fund will be 60 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. 22 CHASE VISTA PRIME MONEY MARKET FUND The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its investment policies (except its investment objective) without shareholder approval[logo] 23 CHASE VISTA PRIME MONEY MARKET FUND The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Prime Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower- quality securities. 24 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [GRAPH CHART PLOT POINTS] 1994 4.10% 1995 5.66% 1996 5.20% 1997 5.37% 1998 5.32%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 3.59%. - --------------------------------------- BEST QUARTER 1.41% - --------------------------------------- 2nd quarter, 1995 - --------------------------------------- WORST QUARTER 0.75% - --------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
SINCE INCEPTION PAST 1 YEAR PAST 5 YEARS 11/15/93 - --------------------------------------------------------- PREMIER SHARES 5.32% 5.13% 5.06% - ---------------------------------------------------------
25 CHASE VISTA PRIME MONEY MARKET FUND Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - ---------------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.40%# 0.50%# - ----------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.35% and the Total Annual Fund Operating Expenses are expected not to exceed 0.45%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ---------------------------------------------------- COSTS: $ 51 $ 160 $ 280 $ 628 - ----------------------------------------------------
26 CHASE VISTA TAX FREE MONEY MARKET FUND The Fund's main investment strategy The Fund's objective The Fund aims to provide the highest possible level of current income which is excluded from gross income, while still preserving capital and maintaining liquidity. Under normal market conditions, the Fund will try to invest 100% of its assets in municipal obligations, the interest on which is excluded from gross income and which is not subject to the alternative minimum tax on individuals. As a fundamental policy, the Fund will invest at least 80% of its assets in municipal obligations. The remaining 20% of total assets may be invested in securities which are subject to federal income tax or the federal alternative minimum tax for individuals. To temporarily defend its assets, the Fund may exceed this limit. The Fund may also invest in municipal lease obligations. These provide participation in municipal lease agreements and installment purchase contracts. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest possible short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, some securities may have additional third party guarantees in order to meet the rating requirements mentioned above. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The dollar-weighted average maturity of the Fund will be 90 days or less and 27 CHASE VISTA TAX FREE MONEY MARKET FUND the Fund will buy only those investments which have remaining maturities of 397 days or less. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund may change any of its non-fundamental investment policies (except its investment objective) without shareholder approval.[logo] The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Changes in a municipality's financial health may make it difficult for the municipality to make interest and principal payments when due. A number of municipalities have had significant financial problems recently. This could decrease the Fund's income or hurt its ability to preserve capital and liquidity. Investments in the Fund are not bank deposits or obligations of, or guaranteed or endorsed by, The Chase Manhattan Bank or any of its affiliates and are not insured by the FDIC, the Federal Reserve Board or any other government agency. Although the Tax Free Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. Securities in the Fund's portfolio may not earn as high a current income as longer term or lower-quality securities. 28 Under some circumstances, municipal obligations might not pay interest unless the state or municipal legislature authorizes money for that purpose. Some securities, including municipal lease obligations, carry additional risks. For example, they may be difficult to trade or interest payments may be tied only to a specific stream of revenue. Since some municipal obligations may be secured or guaranteed by banks and other institutions, the risk to the Fund could increase if the banking or financial sector suffers an economic downturn. Interest on certain municipal obligations is subject to the federal alternate minimum tax. Normally, up to 20% of the Fund's total assets may be invested in securities that are subject to this tax. Consult your tax professional for more information. The Fund may invest in municipal obligations backed by foreign institutions. This could carry more risk than securities backed by U.S. institutions because of political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. The Fund is not diversified. It may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. That makes it more susceptible to economic problems among the institutions issuing the securities. In addition, more than 25% of the Fund's assets may be invested in securities which rely on similar projects for their income stream. As a result, the Fund could be more susceptible to developments which affect those projects. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] 29 CHASE VISTA TAX FREE MONEY MARKET FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The performance for the period before Premier Class Shares were launched in October of 1990 is based upon the performance for the Vista Class Shares of the Fund. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than those shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. The bars for 1989 and 1990 are based on the performance of the Vista Class Shares. [GRAPH CHART PLOT POINTS] 1989 5.82% 1990 5.50% 1991 4.38% 1992 2.83% 1993 2.13% 1994 2.46% 1995 3.42% 1996 3.04% 1997 3.23% 1998 3.05%
[END PLOT POINTS] The total return for the Fund from January 1, 1999 to September 30, 1999 was 2.03%. BEST QUARTER 1.51% - -------------------------------------- 2nd quarter, 1989 - -------------------------------------- WORST QUARTER 0.48% - -------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1998
PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS - -------------------------------------------------------------- PREMIER SHARES 3.05% 3.04% 3.58% - --------------------------------------------------------------
30 Fees and expenses This table describes the fees and expenses you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT): None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS):*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING CLASS OF SHARES FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------- PREMIER SHARES 0.10% NONE 0.49%# 0.59%# - --------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. #Restated from most recent fiscal year to reflect current expense arrangements. The actual Other Expenses are currently expected to be 0.45% and the Total Annual Fund Operating Expenses are expected not to exceed 0.55%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may terminate this arrangement at any time. The table does not reflect charges or credits which investors might incur if they invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your costs may be higher or lower, based on these assumptions: YOUR COSTS WOULD BE:
NUMBER OF YEARS: 1 3 5 10 - ----------------------------------------------------- COSTS: $60 $189 $329 $738 - -----------------------------------------------------
31 THE FUND'S INVESTMENT ADVISER The Fund's investment adviser The Chase Manhattan Bank (Chase) is the investment adviser to the Fund. Chase is a wholly owned subsidiary of The Chase Manhattan Corporation (CMC), a bank holding company. Chase provides the Funds with investment advice and supervision. Chase and its predecessors have more than a century of money management experience. Chase is located at 270 Park Avenue, New York, New York 10017. For the fiscal year ended August 31, 1999, Chase was paid a management fee of 0.10% of the average daily net assets of each Fund. Chase Asset Management, Inc. (CAM) is the sub-adviser to every Fund except the Cash Management Fund and the Tax Free Money Market Fund. CAM is a wholly-owned subsidiary of Chase. It makes the day-to-day investment decisions for the Funds. CAM provides discretionary investment advisory services to institutional clients. CAM is located at 1211 Avenue of the Americas, New York, New York 10036. THE YEAR 2000 The Fund, like any business, could be affected if the computer systems on which it relies fail to properly process information beginning on January 1, 2000. The Fund's advisers are updating their own systems and encouraging service providers to do the same, but there's no guarantee these systems will work properly. Year 2000 problems could also hurt issuers whose securities the Funds hold or securities markets generally. 32 HOW YOUR ACCOUNT WORKS Buying Fund shares You don't pay any sales charge (sometimes called a load) when you buy shares in these funds. The price you pay for your shares is the net asset value per share (NAV). NAV is the value of everything the Fund owns, minus everything it owes, divided by the number of shares held by investors. All of these Funds seek to maintain a stable NAV of $1.00. Each Fund uses the amortized cost to value its portfolio of securities. This method provides more stability in valuations. However, it may also result in periods during which the stated value of a security is different than the price the Fund would receive if it sold the investment. The NAV of each class of shares is generally calculated as of 6:00 p.m. eastern time each day the Funds are accepting purchase orders. You'll pay the next NAV calculated after the Chase Vista Funds Service Center receives your order in proper form. An order is in proper form only after funds are converted into federal funds. The center accepts purchase orders on any business day that the Federal Reserve Bank of New York and the New York Stock Exchange are open. If you send us an order in proper form by the Fund's cut-off time, we'll process your order at that day's price and you'll be entitled to all dividends declared on that day. If we receive your order after the cut-off time, we'll 33 HOW YOUR ACCOUNT WORKS we'll generally process it at the next day's price, but we may process it that day if we receive it before 4:00 p.m. (Eastern time). If you pay by check before the cut-off time, we'll generally process your order the next day the Fund is open for business. Normally, the cut-off (in Eastern time) is: - ----------------------------------- 100% U.S. TREASURY SECURITIES MONEY MARKET FUND NOON - ----------------------------------- TAX FREE MONEY MARKET FUND NOON - ----------------------------------- FEDERAL MONEY MARKET FUND 2:00 P.M. - ----------------------------------- U.S. GOVERNMENT MONEY MARKET FUND 4:00 P.M. - ----------------------------------- CASH MANAGEMENT FUND 4:00 P.M. - ----------------------------------- PRIME MONEY MARKET FUND 4:00 P.M. - ----------------------------------- TREASURY PLUS MONEY MARKET FUND 4:00 P.M. - -----------------------------------
A later cut-off time may be permitted for investors buying their shares (through Chase or a bank affiliate of Chase) so long as such later cut-off time is before the Fund's NAV is calculated. If you buy through an agent and not directly from the Chase Vista Funds Service Center, the agent could set earlier cut-off times. Each Fund can set an earlier cut-off time if the Public Securities Association recommends that the U.S. Government securities market close trading early. You must provide a Taxpayer Identification Number when you open an account. The Funds have the right to reject any purchase order.[logo] TO OPEN AN ACCOUNT, BUY OR SELL SHARES OR GET FUND INFORMATION, CALL: - ----------------------------------------- THE VISTA SERVICE CENTER - ----------------------------------------- 1-800-62-CHASE - ----------------------------------------- QUALIFIED INVESTORS Premier shares are available only to qualified investors. These are defined as institutions, trusts, partnerships, corporations and certain retirement plans and fiduciary accounts opened by a bank, trust company or thrift institution which has investment authority over such accounts, as well as individuals who meet a Fund's minimum investment requirements for Premier shares. Your agent may not offer these shares to all types of qualified investors and may set additional investor qualification requirements for these shares.[logo] MINIMUM INVESTMENTS First time investors must buy a minimum $100,000 worth of Premier Shares in a Fund to open an account. There are no minimum levels for subsequent purchases, but you must always have at least $100,000 in your account. Make your check out to Chase Vista Funds in U.S. dollars. We won't accept credit cards, cash, or checks from a third party. You cannot sell your shares until your check has cleared, which could take 15 calendar days. If you buy through an Automated Clearing House, you can't sell your shares until the payment clears. That could take more than seven business days. Your purchase will be canceled if your check 34 doesn't clear and you'll be responsible for any expenses and losses to the Funds. Orders by wire will be canceled if the Chase Vista Funds Service Center doesn't receive payment by 4:00 Eastern time on the day you buy.[logo] OPENING YOUR ACCOUNT AND BUYING SHARES Through your investment representative Tell your representative which Funds you want to buy and he or she will contact us. Your representative may charge you a fee and may offer additional services, such as special purchase and redemption programs, "sweep" programs, cash advances and redemption checks. Your representative may set different minimum investments and earlier cut-off times.[logo] Selling Fund shares You can sell your shares on any day the Chase Vista Funds Service Center is open for trading, either directly to the Fund or through your investment representative. You'll receive the next NAV calculated after the Chase Vista Funds Service Center accepts your order. Under normal circumstances, if your request is received before the Fund's cut-off time, the Fund will send you the proceeds the next business day. We won't accept an order to sell shares if the Fund hasn't collected your payment for the shares. The Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit. You'll need to have your signature guaranteed if you want your payment sent to an address other than the one we have in our records. We may also need additional documents or a letter from a surviving joint owner before selling the shares.[logo] SELLING SHARES Through your investment representative Tell your representative which Funds you want to sell. He or she will send the necessary documents to the Fund. Your representative might charge you for this service. Through The Chase Vista Funds Service Center Call 1-800-62-CHASE. We will mail you a check or send the proceeds via electronic transfer or wire. If you have changed your address of record within the previous 30 days or if you sell $25,000 or more worth of Funds by phone, we'll send the proceeds by electronic transfer or by wire only to the bank account on our records. We charge $10 for each transaction by wire. Or Send a signed letter with your instructions to: Chase Vista Funds Service Center P.O. Box 419392 Kansas City, MO 64141-6392 35 HOW YOUR ACCOUNT WORKS Distribution arrangements Vista Fund Distributors Inc. (VFD) is the distributor for the Funds. It is a subsidiary of The BISYS Group, Inc. and is not affiliated with Chase. The U.S. Government Money Market Fund has adopted a Rule 12b-1 distribution plan under which it pays up to 0.10% of its Premier Class assets in distributor fees. This payment covers such things as payments for services provided by broker-dealers and expenses connected to sale of shares. Payments are not tied to the amount of actual expenses incurred. Because 12b-1 expenses are paid out of a fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than other types of sales charges.[logo] Other information concerning the funds We may close your account if the balance falls below $100,000 because you've sold shares. We may also close the account if you fail to meet investment minimums in 12 months. We'll give you 60 days notice before closing your account. Unless you indicate otherwise on your account application, we are authorized to act on redemption and transfer instructions received by phone. If someone trades on your account by phone, we'll ask that person to confirm your account registration and address to make sure they match those you provided us. If they give us the correct information, we are generally authorized to follow that person's instructions. We'll take all reasonable precautions to confirm that the instructions are genuine. Investors agree that they will not hold the Fund liable for any loss or expenses from any sales request, if the Fund takes reasonable precautions. The Fund will be liable for any losses to you from an unauthorized sale or fraud against you if we do not follow reasonable procedures. You may not always reach the Chase Vista Funds Service Center by telephone. This may be true at times of unusual market changes and shareholder activity. You can mail us your instructions or contact your investment representative or agent. We may modify or cancel the sale of shares by phone without notice. The Trust has agreements with certain shareholder servicing agents (including Chase) under which the shareholder servicing agents have agreed to provide certain support services to their customers. For performing these services, each shareholder servicing agent receives an annual fee of up to 0.25% of the average daily net assets of the Premier Shares of each Fund held by investors serviced by the shareholder servicing agent. Chase and/or VFD may, at their own expense, make additional payments to certain selected dealers or other shareholder servicing agents for performing administrative ser- 36 vices for their customers. The amount may be up to an additional 0.10% annually of the average net assets of the fund attributable to shares of the Fund held by customers of those shareholder servicing agents. Each Fund may issue multiple classes of shares. This prospectus relates only to Premier shares of the Funds. Each class may have different requirements for who may invest, and may have different sales charges and expense levels. A person who gets compensated for selling Fund shares may receive different amount for each class. Chase and its affiliates and the Funds and their affiliates, agents and subagents may share information about shareholders and their accounts with each other and with others unless this sharing is prohibited by contract. This information can be used for a variety of purposes, including offering investment and insurance products to shareholders.[logo] Distributions and taxes The Funds can earn income and they can realize capital gain. The Funds deduct any expenses then pay out these earnings to shareholders as distributions. The Funds declare dividends daily, so your shares can start earning dividends on the day you buy them. We distribute the dividends monthly in the form of additional shares, unless you tell us that you want payment in cash or deposited in a pre-assigned bank account. The taxation of dividends won't be affected by the form in which you receive them. We distribute any short-term capital gain at least annually. The Funds do not expect to realize long-term capital gain. Dividends are usually taxable as ordinary income at the federal, state and local levels. Dividends of tax-exempt interest income by the Tax Free Funds are not subject to federal income taxes but will generally be subject to state and local taxes. The state or municipality where you live may not charge you state and local taxes on tax-exempt interest earned on certain bonds. Dividends earned on bonds issued by the U.S. government and its agencies may also be exempt from some types of state and local taxes. If you receive distributions of net capital gain, the tax rate will be based on how long the Fund held a particular asset, not on how long you have owned your shares. Early in each calendar year, the Funds will send you a notice showing the amount of distributions you received in the preceding year and the tax status of those distributions. The above is only a general summary of tax implications of investing in these Funds. Please consult your tax adviser to see how investing in the Funds will affect your own tax situation.[logo] 37 SHAREHOLDER SERVICES CHECK WRITING Check writing privileges are available for the Premier shares. Each check you write must be for at least $2,500. Checks written on joint accounts require only one signature. EXCHANGE PRIVILEGES You can exchange your Premier shares for shares in certain other Chase Vista funds. For tax purposes, an exchange is treated as a sale of Fund shares. Carefully read the prospectus of the fund you want to buy before making an exchange. You'll need to meet any minimum investment requirements and may have to pay a sales charge. Call 1-800-62-CHASE for details. SYSTEMATIC INVESTMENT You can also set up a systematic exchange program to automatically exchange shares on a regular basis. It's a free service. You should not exchange shares as means of short-term trading as this could increase management cost and affect all shareholders. We reserve the right to limit the number of exchanges or to refuse an exchange. We may also terminate this privilege. We charge an administration fee of $5 for each exchange if you make more than 10 exchanges in a year or three in a quarter. See the Statement of Additional Information to find out more about the exchange privilege. 38 You cannot have simultaneous plans for the systematic investment or exchange and the systematic withdrawal or exchange for the same fund. EXCHANGE BY PHONE You may also use our Telephone Exchange Privilege. You can get information by contacting the Chase Vista Funds Service Center or your investment representative.[logo] What the terms mean COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which are issued by banks, corporations and others. DEMAND NOTES: A debt security with no set maturity date. The investor can generally demand payment of the principal at any time. DISTRIBUTION FEE: Covers the cost of the distribution system used to sell shares to the public. DOLLAR WEIGHTED AVERAGE MATURITY: The average maturity of the Fund is the average amount of time until the organizations that issued the debt securities in the Fund's portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of debt security in the Fund, the more weight it gets in calculating this average. FLOATING RATE SECURITIES: Securities whose interest rates adjust automatically whenever a particular interest rate changes. LIQUIDITY: Liquidity is the ability to easily convert investments into cash without losing a significant amount of money in the process. MANAGEMENT FEE: A fee paid to the investment adviser to manage the Fund and make decisions about buying and selling the Fund's investments. MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease agreements and installment purchase contracts, but are not part of the general obligations of the municipality. MUNICIPAL OBLIGATIONS: Debt securities issued by or on behalf of states, territories and possessions or by their agencies or other groups with authority to act for them. For securities to qualify as municipal obligations, the municipality's lawyers must give an opinion that the interest on them is not considered gross income for federal income tax purposes. OTHER EXPENSES: Miscellaneous items, including transfer agency, administration, shareholder servicing, custody and registration fees. REPURCHASE AGREEMENTS: A special type of a short-term investment. A dealer sells securities to a Fund and agrees to buy them back later for a set price. In effect, the dealer is borrowing the Fund's money for a short time, using the securities as collateral. SHAREHOLDER SERVICE FEE: A fee to cover the cost of paying shareholder servicing agents to provide certain support services for your account. VARIABLE RATE SECURITIES: Securities whose interest rates are periodically adjusted. 39 FINANCIAL HIGHLIGHTS Chase Vista 100% U.S. Treasury Securities Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year 6/3/96 ended ended ended through 8/31/99 8/31/98 8/31/97 8/31/96* PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04 0.05 0.05 0.01 Less distributions: Dividends from net investment income 0.04 0.05 0.05 0.01 - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------- TOTAL RETURN 4.40% 5.00% 4.91% 1.11% ===================================================================================================== RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 24 $ 22 $ 6 $ 1 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets# 0.50% 0.51% 0.55% 0.42% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets# 4.22% 4.99% 4.80% 3.45% - ----------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets# 0.56% 0.78% 0.80% 0.42% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets# 4.16% 4.72% 4.55% 3.45% - -----------------------------------------------------------------------------------------------------
*Commencement of offering shares. #Short periods have been annualized. 40 Chase Vista Treasury Plus Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.04 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.04 0.05 0.05 0.05 0.05 - ---------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.54% 5.18% 4.98% 5.07% 5.17% ================================================================================================================ RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 476 $ 155 $ 131 $ 106 $ 19 - ---------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.45% 0.46% 0.51% 0.52% 0.50% - ---------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 4.42% 5.06% 4.88% 4.85% 5.23% - ---------------------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.50% 0.50% 0.53% 0.63% 1.57% - ---------------------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 4.37% 5.02% 4.86% 4.74% 4.16% - ----------------------------------------------------------------------------------------------------------------
41 FINANCIAL HIGHLIGHTS Chase Vista Federal Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.05 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.05 0.05 0.05 0.05 0.05 - ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.67% 5.22% 5.12% 5.14% 5.40% ============================================================================================================ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------ Net assets, end of period (millions) $ 298 $ 313 $ 400 $ 249 $ 149 - ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 0.50% 0.50% 0.50% 0.50% 0.49% - ------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets 4.56% 5.07% 5.01% 4.99% 5.32% - ------------------------------------------------------------------------------------------------------------ Ratio of expenses without waivers and assumption of expenses to average net assets 0.50% 0.51% 0.52% 0.52% 0.59% - ------------------------------------------------------------------------------------------------------------ Ratio of net investment income without waivers and assumption of expenses to average net assets 4.56% 5.06% 4.99% 4.97% 5.22% - ------------------------------------------------------------------------------------------------------------
42 Chase Vista U.S. Government Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.05 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.05 0.05 0.05 0.05 0.05 - ------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------ TOTAL RETURN 4.70% 5.25% 5.08% 5.15% 5.31% ====================================================================================================== RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------ Net assets, end of period (millions) $ 922 $1,084 $ 837 $ 802 $ 764 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 0.45% 0.48% 0.55% 0.55% 0.55% - ------------------------------------------------------------------------------------------------------ Ratio of net income to average net assets 4.60% 5.12% 4.97% 5.04% 5.22% - ------------------------------------------------------------------------------------------------------ Ratio of expenses without waivers and assumption of expenses to average net assets 0.58% 0.60% 0.60% 0.59% 0.59% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income without waivers and assumption of expenses to average net assets 4.47% 5.00% 4.92% 5.00% 5.18% - ------------------------------------------------------------------------------------------------------
43 FINANCIAL HIGHLIGHTS Chase Vista Cash Management Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout the period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year 5/6/96* ended ended ended through 8/31/99 8/31/98 8/31/97 8/31/96 PER SHARE OPERATING PERFORMANCE - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.05 0.05 0.05 0.02 Less dividends from net investment income 0.05 0.05 0.05 0.02 - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ----------------------------------------------------------------------------------------------------- TOTAL RETURN 4.89% 5.35% 5.18% 1.61% ===================================================================================================== RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 463 $ 415 $ 375 $ 433 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets# 0.45% 0.47% 0.50% 0.50% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets# 4.77% 5.22% 5.07% 4.93% - ----------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets# 0.50% 0.52% 0.51% 0.52% - ----------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets# 4.72% 5.17% 5.06% 4.91% - -----------------------------------------------------------------------------------------------------
*Commencement of offering shares. #Short periods have been annualized. 44 Chase Vista Prime Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the periods since shares were first offered. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year ended ended ended ended ended 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 PER SHARE OPERATING PERFORMANCE - ------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.05 0.05 0.05 0.05 0.05 Less distributions: Dividends from net investment income 0.05 0.05 0.05 0.05 0.05 - ------------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.90% 5.44% 5.34% 5.32% 5.44% ============================================================================================================= RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $1,094 $ 590 $ 499 $ 419 $ 63 - ------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.45% 0.45% 0.45% 0.45% 0.45% - ------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 4.77% 5.29% 5.17% 5.18% 5.24% - ------------------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.49% 0.51% 0.53% 0.51% 0.65% - ------------------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 4.73% 5.23% 5.09% 5.12% 5.04% - -------------------------------------------------------------------------------------------------------------
45 FINANCIAL HIGHLIGHTS Chase Vista Tax Free Money Market Fund The Financial Highlights table is intended to help you understand the Fund's financial performance for the past five years. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). The table set forth below provides selected per share data and ratios for one Premier Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Fund's Annual Report to Shareholders for the fiscal year ended August 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Fund or their Shareholder Servicing Agent. The financial statements which include the financial information set forth in the table below have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.
Year Year Year Year Year PER SHARE ended ended ended ended ended OPERATING PERFORMANCE 8/31/99 8/31/98 8/31/97 8/31/96 8/31/95 Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.03 0.03 0.03 0.03 Less distributions: Dividends from net investment income 0.03 0.03 0.03 0.03 0.03 - ------------------------------------------------------------------------------------------------- Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------------- TOTAL RETURN 2.78% 3.17% 3.19% 3.12% 3.29% ================================================================================================= RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Net assets, end of period (millions) $ 130 $ 133 $ 105 $ 145 $ 148 - ------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.54% 0.53% 0.53% 0.58% 0.56% - ------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 2.74% 3.10% 3.13% 3.08% 3.21% - ------------------------------------------------------------------------------------------------- Ratio of expenses without waivers and assumption of expenses to average net assets 0.56% 0.53% 0.53% 0.73% 0.84% - ------------------------------------------------------------------------------------------------- Ratio of net investment income without waivers and assumption of expenses to average net assets 2.72% 3.10% 3.13% 2.93% 2.93% - -------------------------------------------------------------------------------------------------
46 THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK HOW TO REACH US More information You'll find more information about the Funds in the following documents: ANNUAL AND SEMI-ANNUAL REPORTS Our annual and semi-annual reports contain more information about each Fund's investments and performance. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information about the Funds and their policies. It is incorporated by reference into this prospectus. This means, by law, it's considered to be part of this prospectus. You can get a free copy of these documents and other information, or ask us any questions, by calling us at 1-800-34-VISTA or writing to: Chase Vista Funds Service Center P.O. Box 419392 Kansas City, MO 64141-6392 If you buy your shares through The Chase Manhattan Bank or another institution, you should contact that institution directly for more information. You can also find information online at www.chasevista.com on the internet. You can write or e-mail the SEC's Public Reference Room and ask them to mail you information about the Funds, including the SAI. They'll charge you a copying fee for this service. You can also visit the Public Reference Section and copy the documents while you're there. Public Reference Section of the SEC Washington, DC 20549-0102 1-202-942-8090 Email: publicinfo@sec.gov Reports, a copy of the SAI and other information about the Funds is also available on the SEC's website at http://www.sec.gov. The Fund's Investment Company Act File No. is 811-8358. Chase Vista Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 EX-99.(17)(C) 5 a2027167zex-99_17c.txt EXHIBIT 99(17)(C) PROSPECTUS APRIL 28, 2000 Chase Funds INVESTOR SHARES CHASE MONEY MARKET FUND CHASE SHORT- INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND CHASE U.S. GOVERNMENT SECURITIES FUND CHASE INTERMEDIATE TERM BOND FUND CHASE INCOME FUND CHASE BALANCED FUND CHASE EQUITY INCOME FUND CHASE EQUITY GROWTH FUND CHASE SMALL CAPITALIZATION FUND The Securities and Exchange Commission has not approved or disapproved these securites or determined if this prospectus is truthful or complete. Any represetation to the contrary is a criminal offense. [Graphic; CHASE THE RIGHT RELATIONSHIP IS EVERYTHING.{RegTM}] PSCF1-1-400 CHASE MONEY MARKET FUND 1 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND 6 CHASE U.S. GOVERNMENT SECURITIES FUND 12 CHASE INTERMEDIATE TERM BOND FUND 18 CHASE INCOME FUND 25 CHASE BALANCED FUND 31 CHASE EQUITY INCOME FUND 39 CHASE CORE EQUITY FUND 45 CHASE EQUITY GROWTH FUND 51 CHASE SMALL CAPITALIZATION FUND 57 FUND MANAGEMENT 63 THE FUNDS' INVESTMENT ADVISER 63 HOW YOUR ACCOUNT WORKS 66 BUYING FUND SHARES 66 SELLING FUND SHARES 68 EXCHANGING FUND SHARES 68 OTHER INFORMATION CONCERNING THE FUNDS 69 DISTRIBUTIONS AND TAXES 70 SHAREHOLDER SERVICES 71 FINANCIAL HIGHLIGHTS 73 WHAT THE TERMS MEAN 77
CHASE MONEY MARKET FUND [Begin sidebar] The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. [End sidebar] The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. banks with more than $1billion in total assets and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. 1 CHASE MONEY MARKET FUND [Begin sidebar] FREQUENCY OF TRADING How frequently the Fund buys and sells securities will vary from year to year, depending on market conditions. High trading activity generally means higher transaction costs. [End sidebar] The Fund seeks to maintain a net asset value of $1.00 per share. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, the security may have a guarantee that has such a rating. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (including its investment objective) without shareholder approval.[logo] 2 The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] [Begin sidebar] Securities in the Fund's portfolio may not earn as high a current income as longer term or lower quality securities An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Cash Management Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. [End sidebar] 3 CHASE MONEY MARKET FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. The Fund began offering Investor Class shares on November 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1990 7.80% 1991 6.01% 1992 3.51% 1993 2.60% 1994 3.77% 1995 5.57% 1996 5.06% 1997 5.18% 1998 5.20% 1999 4.78%
- ----------------------------------- BEST QUARTER 1.91% - ----------------------------------- 1st quarter, 1990 - ----------------------------------- WORST QUARTER 0.62% - ----------------------------------- 2nd quarter, 1993 3rd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ------------------------------------------------------ INVESTOR CLASS SHARES 4.78% 5.15% 4.94% - ------------------------------------------------------
4 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ + There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.30% 0.10% 1.86%# 2.26%# - --------------------------------------------------------------------------------
*The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.24%, the distribution fees are expected to be 0.00%, other expenses for Investor Class shares are expected to be 0.36% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 0.60%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $229 $706 $1,210 $2,595 - ---------------------------------------------------------
5 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND [Begin sidebar] The Fund's objective The Fund aims to provide as high a level of current income as is consistent with preservation of capital. [End sidebar] The Fund's main investment strategy Under normal market conditions, the Fund will invest at least 70% of its total assets in debt securities issued or guaranteed by the U.S. Government and its agencies or authorities, and in repurchase agreements involving these securities. The Fund may invest in mortgage-related securities issued or guaranteed by certain agencies of the U.S. Government. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. To reduce volatility, under normal market conditions, the Fund maintains a dollar-weighted average maturity for the overall portfolio of between two and five years. This is because the prices of shorter-term securities tend to be less volatile than the prices of longer-term securities. There is no restriction on the maturity of any individual security in the portfolio. The Fund's adviser adjusts the average maturity of the Fund based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis 6 [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 7 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in Short-Intermediate Term U.S. Government Securities Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 8 result, the value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage-backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. While the principal and payments on certain of the Fund's portfolio securities may be guaranteed, this does not mean that the market value of the security, or the value of Fund shares, is guaranteed. The Fund's performance will depend on the credit quality of its investments. While U.S. Government securities are generally of high quality, a government security that is not backed by the full faith and credit of the U.S. Treasury may be affected by the creditworthiness of the agency or authority that issued it. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund temporarily departs from its investment policies to defend its assets, it may not achieve its investment objectives.[logo] 9 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman 1-3 Year Government Index and the Lehman Intermediate Government Index, widely recognized market benchmarks, and the Lipper Short-Intermediate Term U.S. Government Funds Index. The Fund began offering Investor Class shares on November 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The Lehman 1-3 Year Government Index consists of U.S. Treasury and agency securities with maturities of one to three years. The Lehman Intermediate Government Index consists of U.S. Treasury and agency securities with maturities of one to 10 years. The Lipper Short-Intermediate Term U.S. Government Funds Index represents the performance of the 30 largest short-intermediate term debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1994 -1.05% 1995 12.01% 1996 2.68% 1997 6.30% 1998 7.22% 1999 0.48%
- ----------------------------------- BEST QUARTER 4.21% - ----------------------------------- 3rd quarter, 1998 - ----------------------------------- WORST QUARTER -1.35% - ----------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ---------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.48% 5.67% 4.37% - ---------------------------------------------------------------------------- LEHMAN 1-3 YEAR GOV'T INDEX 2.97% 6.47% 5.31% - ---------------------------------------------------------------------------- LEHMAN INT GOV'T INDEX 0.49% 6.93% 5.62% - ---------------------------------------------------------------------------- LIPPER SHORT-INT TERM US GOV'T FUNDS INDEX 0.82% 6.04% 4.73% - ----------------------------------------------------------------------------
10 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ + There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.50% 0.25% 2.40%# 3.15%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.10%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.90% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and O the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $318 $971 $1,649 $3,457 - ---------------------------------------------------------
11 CHASE U.S. GOVERNMENT SECURITIES FUND [Begin sidebar] The Fund's objective The Fund aims to provide current income while emphasizing preservation of capital. [End sidebar] The Fund's main investment strategy Under normal market conditions, the Fund will invest at least 70% of its total assets in debt securities issued or guaranteed by the U.S. Government and its agencies or authorities, and in repurchase agreements involving these securities. The Fund may invest in mortgage-related securities issued or guaranteed by certain agencies of the U.S. Government. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. Under normal market conditions, the average portfolio maturity of the Fund is between five and 15 years. There is no restriction on the maturity of any individual security in the portfolio. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. 12 CHASE U.S. GOVERNMENT SECURITIES FUND [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 13 CHASE U.S. GOVERNMENT SECURITIES FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in U.S. Government Securities Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 14 value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage-backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. While the principal and payments on certain of the Fund's portfolio securities may be guaranteed, this does not mean that the market value of the security, or the value of Fund shares, is guaranteed. The Fund's performance will depend on the credit quality of its investments. While U.S. Government securities are generally of high quality, a government security that is not backed by the full faith and credit of the U.S. Treasury may be affected by the creditworthiness of the agency or authority that issued it. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund temporarily departs from its investment policies to defend its assets, it may not achieve its investment objectives.[logo] 15 CHASE U.S. GOVERNMENT SECURITIES FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman Government Index, a widely recognized market benchmark, and the Lipper General U.S. Government Funds Index. The Fund began offering Investor Class shares on November 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The Lehman Government Index consists of the Lehman Treasury Bond Index and the Lehman Agency Bond Index. It includes Treasury bonds and fixed income securities issued by the U.S. Government and its agencies. The Lipper General U.S. Government Funds Index represents the performance of the 30 largest U.S. government securities funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1994 -8.39% 1995 30.11% 1996 -1.89% 1997 9.55% 1998 9.25% 1999 -2.79%
- ------------------------------------ BEST QUARTER 10.36% - ------------------------------------ 2nd quarter, 1995 - ------------------------------------ WORST QUARTER -6.79% - ------------------------------------ 1st quarter, 1996
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ---------------------------------------------------------------------- INVESTOR CLASS SHARES -2.79% 8.22% 6.03% - ---------------------------------------------------------------------- LEHMAN GOVERNMENT INDEX -2.23% 7.44% 5.81% - ---------------------------------------------------------------------- LIPPER GENERAL US GOV'T FUNDS INDEX -2.66% 6.47% 4.70% - ----------------------------------------------------------------------
16 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ + There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.50% 0.25% 3.15%# 3.90%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.00%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 1.00% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ----------------------------------------------------------- INVESTOR CLASS SHARES $392 $1,189 $2,004 $4,121 - -----------------------------------------------------------
17 CHASE INTERMEDIATE TERM BOND FUND [Begin sidebar] The Fund's objective The Fund aims to invest in securities that earn current income while also considering stability of principal. [End sidebar] The Fund's main investment strategy The Fund seeks current income by investing primarily in fixed income securities. Under normal market conditions, the Fund will invest at least 70% of its total assets in bonds and notes of domestic and foreign issuers, U.S. Government securities and mortgage-related securities. To help reduce the risk of loss of principal, all of the Fund's investments in debt securities will be investment grade, which means a rating of Baa or higher by Moody's Investors Service, Inc., BBB or higher by Standard & Poor's Corporation, or the equivalent by another national rating organization or unrated securities of comparable quality. The average portfolio maturity of the Fund is between three and 10 years. When the Fund purchases fixed income securities, they usually will have a maturity of greater than one year. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell 18 [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. The Fund may invest in mortgage-related securities issued by governmental entities and private issuers. These may include investments in col-lateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may invest up to 30% of its total assets in foreign debt securities, including Depositary Receipts. These investments may include debt securities issued or guaranteed by foreign governments and international organizations such as The World Bank. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 19 CHASE INTERMEDIATE TERM BOND FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in the Intermediate Term Bond Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 20 result, the value of some classes in which the Fund invests are more volatile. The value of interest-only and principal-only mortgage-backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Investments in foreign securities may be riskier than investments in the U.S. They may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. If the Fund were to invest in a security which is not denominated in U.S. dollars, it also would be subject to currency exchange risk. These risks increase when investing in issuers located in developing countries. The Fund's performance will depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund departs from its investment policies during temporary defensive periods, it may not achieve its investment objective.[logo] 21 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risk of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman Brothers Intermediate Government/Corporate Index and the Lehman Aggregate Index, widely recognized market benchmarks, and the Lipper Intermediate Grade Debt Funds Index. The Fund began offering Investor Class shares on November 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The Lehman Intermediate Government/Corporate Index consists of U.S. Treasury and agency securities, corporate and Yankee bonds with maturities of 1-10 years. The Lehman Aggregate Index consists of the Lehman Government/Corporate Index, U.S. Treasury and agency securities, corporate bonds and mortgage-backed securities with maturities of 1-30 years. The Lipper Intermediate Grade Debt Funds Index represents the performance of the 30 largest intermediate investment grade debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1995 16.79% 1996 1.86% 1997 7.26% 1998 7.59% 1999 -1.36%
- ----------------------------------- BEST QUARTER 5.99% - ----------------------------------- 2nd quarter, 1995 - ----------------------------------- WORST QUARTER -2.15% - ----------------------------------- 1st quarter, 1996
22 CHASE INTERMEDIATE TERM BOND FUND AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST 5 INCEPTION 1 YEAR YEARS (10/3/94) - ------------------------------------------------------------------------ INVESTOR CLASS SHARES -1.36% 6.26% 5.94% - ------------------------------------------------------------------------ LEHMAN INTERMEDIATE GOV'T/CORP INDEX -0.39% 7.10% 6.73% - ------------------------------------------------------------------------ LEHMAN AGGREGATE INDEX -0.82% 7.73% 7.43% - ------------------------------------------------------------------------ LIPPER INT GRADE DEBT FUNDS INDEX -0.98% 7.08% 6.75% - ------------------------------------------------------------------------
Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.50% 0.25% 2.25%# 3.00%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.25%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.75% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and 23 o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual cost may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $303 $927 $1,577 $3,318 - ---------------------------------------------------------
24 CHASE INCOME FUND [Begin sidebar] The Fund's objective The Fund aims to invest in securities that earn a high level of current income, while also considering safety of principal. [End sidebar] The Fund's main investment strategy The Fund seeks a high level of current income by investing in fixed income securities. Under normal market conditions, the Fund will invest at least 70% of its total assets in bonds and notes of domestic and foreign issuers, U.S. Government securities and mortgage-related securities. To help reduce the risk of loss of principal, all of the Fund's investments in debt securities will be investment grade, which means a rating of Baa or higher by Moody's Investors Service, Inc., BBB or higher by Standard & Poor's Corporation, or the equivalent by another national rating organization or unrated securities of comparable quality. The average portfolio maturity of the Fund is between five and 15 years. When the Fund purchases fixed income securities, they usually will have a maturity of greater than one year. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell 25 [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. The Fund may invest in mortgage-related securities issued by governmental entities and private issuers. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. These investments may include debt securities issued or guaranteed by foreign governments and international organizations such as The World Bank. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 26 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in the Income Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the value of some classes in which the Fund invests are more volatile. [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 27 CHASE INCOME FUND The value of interest-only and principal-only mortgage-backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Investments in foreign securities may be riskier than investments in the U.S. They may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. If the Fund were to invest in a security which is not denominated in U.S. dollars, it also would be subject to currency exchange risk. These risks increase when investing in issuers located in developing countries. The Fund's performance will depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund departs from its investment policies during temporary defensive periods, it may not achieve its investment objective.[logo] 28 CHASE INCOME FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the Lehman Government/Corporate Index, a widely recognized market benchmark, and the Lipper Corporate Debt A Rated Funds Index. The Fund began offering Investor Class shares on November 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The Lehman Government/Corporate Index is an unmanaged index that consists of U.S. Treasury and agency securities, and corporate and Yankee bonds with maturities of 1-30 years. The Lipper Corporate Debt A Rated Funds Index represents the performance of the largest 30 A rated corporate debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1990 6.60% 1991 13.73% 1992 5.13% 1993 10.18% 1994 -4.47% 1995 18.38% 1996 1.91% 1997 8.73% 1998 9.38% 1999 -2.92%
- ----------------------------------- BEST QUARTER 5.69% - ----------------------------------- 3rd quarter, 1991 - ----------------------------------- WORST QUARTER -3.38% - ----------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ----------------------------------------------------------------------- INVESTOR CLASS SHARES -2.92% 6.84% 6.45% - ----------------------------------------------------------------------- LEHMAN GOV'T/CORP INDEX -2.15% 7.61% 7.65% - ----------------------------------------------------------------------- LIPPER CORP. DEBT A RATED FUNDS INDEX -2.04% 7.25% 7.36% - -----------------------------------------------------------------------
29 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.50% 0.25% 2.20%# 2.95%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.30%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.70% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $298 $913 $1,552 $3,271 - ---------------------------------------------------------
30 CHASE BALANCED FUND [Begin sidebar] The Fund's objective The Fund aims to provide a balance of current income and growth of capital. [End sidebar] The Fund's main investment strategy The Fund seeks a balance of current income and growth by using the following strategies: o an active equity management style that focuses on strong earnings momentum and profitability within the universe of growth-oriented stocks, and o an active fixed income management style that focuses primarily on domestic fixed income securities. The Fund's adviser may adjust the portion of the Fund's assets that are invested in equity and fixed income securities depending on its analysis of general market and economic conditions and trends, yields, interest rates and changes in monetary policies. The Fund seeks growth of capital by normally investing 30% to 70% of its total assets in equity securities. The Fund invests primarily in companies with one or more of the following characteristics: o a projected rate of earnings growth that's equal to or greater than the equity markets o a return on assets and equity that's equal to or greater than the equity markets o above-average price/earnings ratios o below-average dividend yield 31 o above-average market volatility o a market capitalization of more than $500 million. Market capitalization is the total market value of a company's shares. Equity securities include common stocks and preferred stocks and securities that are convertible into common stocks. The Fund will focus on companies with strong earnings growth and high profitability levels. The Fund will also examine industry and company specific characteristics. The Fund's equity portion will emphasize growth sectors of the economy. The Fund seeks current income by normally investing at least 25% of its total assets in U.S. government securities and other fixed income securities, including mortgage-backed securities. The Fund invests in fixed income securities only if they are rated as investment grade or the adviser considers them to be comparable to investment grade. There is no restriction on the maturity of the Fund's debt portfolio or on any individual security in the portfolio. The Fund's advisers will adjust the maturity based on its outlook for the economy. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may also include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund's equity holdings may also include real estate investment trusts (REITs), which are pools of investments primarily in income-producing real estate or loans related to real estate. The Fund may invest in mortgage-related securities issued by governmental entities and 32 CHASE BALANCED FUND [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] private issuers. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may enter into "dollar rolls," in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 33 CHASE BALANCED FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Balanced Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 34 "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The value of the Fund's fixed income securities tends to fall when prevailing interest rates rise. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-related securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be higher or lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, while the value of fixed-income securities will generally increase when interest rates decline, the value of mortgage-related securities with prepayment features may not increase as much as securities without prepayment features. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage-backed securities are more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. The Fund's performance will also depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. 35 CHASE BALANCED FUND Because the interest rate changes on floating and variable rate securities, the Fund's yield may decline and it may lose the opportunity for capital appreciation when interest rates decline. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The market value of convertible securities tends to decline as interest rates increase. Their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. The value of REITs will depend on the value of the underlying properties or the underlying loans or interest. The value of REITs may decline when interest rates rise. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 36 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P 500 Index and Lehman Government/Corporate Index, widely recognized market benchmarks, and the Lipper Balanced Funds Index. The Fund began offering Investor Class shares on October 16, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The Lehman Government/ Corporate Index is an unmanaged index that consists of the Lehman government and corporate bond indices, including U.S. Treasury and agency securities, and corporate and Yankee bonds. The Lipper Balanced Funds Index represents the performance of the 30 largest balanced funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1990 1.34% 1991 24.16% 1992 5.32% 1993 6.01% 1994 -2.27% 1995 23.83% 1996 11.31% 1997 23.67% 1998 25.04% 1999 13.94%
- ------------------------------------ BEST QUARTER 13.24% - ------------------------------------ 4th quarter, 1998 - ------------------------------------ WORST QUARTER -5.37% - ------------------------------------ 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - --------------------------------------------------------------- INVESTOR CLASS SHARES 13.94% 19.42% 12.80% - --------------------------------------------------------------- S&P 500 INDEX 21.03% 28.54% 18.19% - --------------------------------------------------------------- LEHMAN GOV'T/CORP INDEX -2.15% 7.61% 7.65% - --------------------------------------------------------------- LIPPER BALANCED FUNDS INDEX 8.98% 16.33% 12.26% - ---------------------------------------------------------------
37 CHASE BALANCED FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.75% 0.25% 2.10%# 3.10%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.65%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.60% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $313 $957 $1,625 $3,411 - ---------------------------------------------------------
38 CHASE EQUITY INCOME FUND [Begin sidebar] The Fund's objective The Fund aims to invest in securities that provide both capital appreciation and current income. [End sidebar] The Fund's main investment strategy The Fund uses an active equity management style which focuses on both earnings momentum and value within the universe of income-oriented stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by targeting companies with attractive earnings momentum. It seeks current income by emphasizing companies with above-average dividend yield and a consistent dividend record. The Fund also emphasizes securities of companies with below-average market volatility and price/earnings ratios or a market capitalization of more than $500 million. The Fund combines growth and value styles of investing. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may also include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. 39 CHASE EQUITY INCOME FUND [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] The Fund's equity holdings may also include real estate investment trusts (REITs), which are pools of investments primarily in income-producing real estate or loans related to real estate. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 40 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Equity Income Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 41 CHASE EQUITY INCOME FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. The value of REITs will depend on the value of the underlying properties or the underlying loans or interest. The value of REITs may decline when interest rates rise. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 42 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P 500 Index, a widely recognized market benchmark, and the Lipper Large Cap Value Funds Index. The Fund began offering Investor Class shares on August 24, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The S&P 500 Index is an unmanaged, broad-based index of 500 companies that is generally considered to represent the U.S. market. The Lipper Large Cap Value Funds Index consists of funds that invest in large-cap value stocks. These funds usually have a below-average price-to-book ratio and three-year earnings growth figure compared to the diversified U.S. large cap funds universe. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1990 -4.40% 1991 22.10% 1992 5.61% 1993 12.34% 1994 -3.37% 1995 33.72% 1996 17.87% 1997 31.05% 1998 26.12% 1999 13.70%
- ------------------------------------ BEST QUARTER 18.81% - ------------------------------------ 4th quarter, 1998 - ------------------------------------ WORST QUARTER -10.93% - ------------------------------------ 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ---------------------------------------------------------------------- INVESTOR CLASS SHARES 12.70% 24.03% 14.66% - ---------------------------------------------------------------------- S&P 500 INDEX 21.03% 28.54% 18.19% - ---------------------------------------------------------------------- LIPPER LARGE CAP VALUE FUNDS INDEX 10.78% 22.11% 15.42% - ----------------------------------------------------------------------
43 CHASE EQUITY INCOME FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.75% 0.25% 1.55%# 2.55%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.70%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.55% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $258 $793 $1,355 $2,885 - ---------------------------------------------------------
44 CHASE CORE EQUITY FUND [Begin sidebar] The Fund's objective The Fund aims to maximize total investment return with an emphasis on long-term capital appreciation and current income while taking reasonable risk. [End sidebar] The Fund's main investment strategy The Fund seeks to achieve its objective by investing all of its assets in Core Equity Portfolio, an open-end investment company which has identical investment objectives and policies as the Fund. As a result, the strategies and risk outlined below apply to Core Equity Portfolio as well as to the Fund. The Fund uses an active equity management style which focuses on strong earnings momentum and profitability within the universe of S&P 500 stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by emphasizing companies with a superior record of earnings growth relative to the equity markets in general or a projected rate of earnings growth that's greater than or equal to the equity markets. The Fund seeks to earn current income and manage risk by focusing on larger companies with a stable record of earnings growth. In addition, it diversifies its portfolio across all sectors of the S&P 500. The Fund also emphasizes companies with return on assets and return on equity equal to or greater than the equity markets. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible 45 [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [End sidebar] securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 46 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Core Equity Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 47 CHASE CORE EQUITY FUND the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 48 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the S&P 500 Index, a widely recognized market benchmark, and the Lipper Large Cap Core Funds Index. The Fund began offering Investor Class shares on September 10, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The Lipper Large Cap Core Funds Index consists of funds that invest in both growth and value stocks. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1994 -4.03% 1995 25.53% 1996 22.54% 1997 33.33% 1998 30.80% 1999 23.59%
- ------------------------------------ BEST QUARTER 22.85% - ------------------------------------ 4th quarter, 1998 - ------------------------------------ WORST QUARTER -9.57% - ------------------------------------ 3rd quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ---------------------------------------------------------------------- INVESTOR CLASS SHARES 23.59% 27.09% 20.05% - ---------------------------------------------------------------------- S&P 500 INDEX 21.03% 28.54% 19.01% - ---------------------------------------------------------------------- LIPPER LARGE CAP CORE FUNDS INDEX 19.35% 25.32% 19.18% - ----------------------------------------------------------------------
49 CHASE CORE EQUITY FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.75% 0.25% 0.55%# 1.55%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.70%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.55% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ------------------------------------------------------- INVESTOR CLASS SHARES $158 $490 $845 $1,845 - -------------------------------------------------------
50 CHASE EQUITY GROWTH FUND [Begin sidebar] The Fund's objective The Fund aims to provide capital appreciation. Producing current income is a secondary objective. [End sidebar] Investment strategy The Fund seeks to achieve its objective by investing all of its assets in Equity Growth Portfolio, an open-end investment company which has identical investment objectives and policies as the Fund. As a result, the strategies and risk outlined below apply to Equity Growth Portfolio as well as to the Fund. The Fund uses an active equity man- agement style which focuses on strong earnings momentum and profitability within the universe of growth-oriented stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by emphasizing the growth sectors of the economy. It looks for companies with one or more of the following characteristics: o a projected earnings growth rate that's greater than or equal to the equity markets in general o a return on assets and return on equity equal to or greater than the equity markets o above market average price-earnings ratios o below-average dividend yield o above-average market volatility o a market capitalization of more than $500 million. The Fund focuses on companies with strong earnings and high levels of 51 [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and thus lower performance) and increase your taxable dividends. [End sidebar] profitability as well as positive industry or company characteristics. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 52 CHASE EQUITY GROWTH FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Equity Growth Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 53 CHASE EQUITY GROWTH FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 54 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P/Barra Growth Index, a widely recognized market benchmark, and the Lipper Large Cap Growth Funds Index. The Fund began offering Investor Class shares on August 13, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The S&P/Barra Growth Index includes S&P 500 Index securities that have high price-to-book ratios, low dividend yields and high price/earnings ratios. It's a market-weighted index, which means each stock affects the index in proportion to its market value. Funds in the Lipper Large Cap Growth Funds Index normally invest in companies with long-term earnings expected to grow significantly faster than the earnings of the stocks represented in the major unmanaged stock indices. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1990 -1.45% 1991 31.69% 1992 6.43% 1993 2.48% 1994 -0.90% 1995 25.78% 1996 20.52% 1997 37.20% 1998 41.19% 1999 31.54%
- ------------------------------------ BEST QUARTER 27.32% - ------------------------------------ 4th quarter, 1998 - ------------------------------------ WORST QUARTER -15.53% - ------------------------------------ 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ----------------------------------------------------------------------- INVESTOR CLASS SHARES 31.54% 31.04% 18.41% - ----------------------------------------------------------------------- S&P/BARRA GROWTH INDEX 28.25% 33.61% 20.59% - ----------------------------------------------------------------------- LIPPER LARGE CAP GROWTH FUNDS INDEX 34.82% 30.73% 19.70% - -----------------------------------------------------------------------
55 CHASE EQUITY GROWTH FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.75% 0.25% 0.53%# 1.53%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.72%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.53% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ------------------------------------------------------- INVESTOR CLASS SHARES $156 $483 $834 $1,824 - -------------------------------------------------------
56 CHASE SMALL CAPITALIZATION FUND [Begin sidebar] The Fund's objective The Fund aims to provide capital appreciation. [End sidebar] The Fund's main investment strategy The Fund seeks capital appreciation by using an active equity management style that focuses on delivering risk and return characteristics representative of a small capitalization asset class. The Fund normally invests at least 70% of its total assets in equity-based securities of small cap issuers. It primarily targets companies with market capitalizations of $100 million to $1 billion. The Fund emphasizes companies with above market average price/earnings ratios and price/book ratios, below-average dividend yield and above-average market volatility. The Fund will focus on companies with high-quality management, a leading or dominant position in a major product line, new or innovative products, services or processes, a strong financial position and a relatively high rate of return of invested capital so that they can finance future growth without having to borrow extensively from outside sources. The adviser uses a disciplined stock selection process which focuses on identifying attractively valued companies with positive business fundamentals. The Fund combines growth and value styles of investing. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. 57 CHASE SMALL CAPITALIZATION FUND [Begin sidebar] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and lower performance) and increase your taxable dividends. [End sidebar] The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 58 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Small Capitalization Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of small cap companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Smaller companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the [Begin sidebar] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [End sidebar] 59 CHASE SMALL CAPITALIZATION FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 60 CHASE SMALL CAPITALIZATION FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the S&P 500 Index and the S&P 600 Index, widely recognized market benchmarks, and the Lipper Small Cap Core Funds Index. The Fund began offering Investor Class shares on August 12, 1998. Performance figures for Investor Class shares before that date are based on Premier Class shares of the Fund. Since Investor Class shares have higher expenses, their performance figures would have been lower. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The S&P 600 is an unmanaged index of 600 small capitalization companies. In the past, the Fund has compared its performance to the S&P 500 Index, but in the future, the Fund intends to compare its performance to the S&P 600 Index instead. It is believed that the new benchmark is more appropriate since it more accurately reflects the Fund's investment strategy. The Lipper Small Cap Core Funds Index consists of funds that invest at least 75% of their equity assets in companies with three-year weighted average market capitalizations of less than 250% of the dollar weighted median market capitalization of the S&P Small Cap 600 Index. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [Bar chart data] 1994 -6.12% 1995 31.14% 1996 30.88% 1997 24.08% 1998 -1.93% 1999 12.89%
- ------------------------------------ BEST QUARTER 17.04% - ------------------------------------ 2nd quarter, 1997 - ------------------------------------ WORST QUARTER -18.14% - ------------------------------------ 3rd quarter, 1998
61 CHASE SMALL CAPITALIZATION FUND AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ---------------------------------------------------------------------- INVESTOR CLASS SHARES 12.89% 18.71% 13.92% - ---------------------------------------------------------------------- S&P 500 INDEX 21.03% 28.54% 19.01% - ---------------------------------------------------------------------- S&P 600 INDEX 12.41% 17.05% 13.84% - ---------------------------------------------------------------------- LIPPER SMALL CAP CORE FUNDS INDEX 20.17% 17.05% 13.91% - ----------------------------------------------------------------------
Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None+ +There is a $10 fee for each wire transaction. ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- INVESTOR CLASS SHARES 0.75% 0.25% 2.15%# 3.15%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.60%, the distribution fees are expected to be 0.00%, the other expenses for Investor Class shares are expected to be 0.65% and the total annual fund operating expenses for Investor Class shares are expected not to exceed 1.25%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. 62 EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- INVESTOR CLASS SHARES $318 $971 $1,649 $3,457 - ---------------------------------------------------------
63 THE FUNDS' INVESTMENT ADVISER The Chase Manhattan Bank (Chase) is the investment adviser to the Fund. Chase is a wholly owned subsidiary of The Chase Manhattan Corporation, a bank holding company. Chase provides the Funds with investment advice and supervision. Chase and its predecessors have more than a century of money management experience. Chase is located at 270 Park Avenue, New York, New York 10017. Chase is entitled to receive an annual fee for its services. The following chart shows the maximum fee as a percentage of each Fund's average daily net assets:
FUND FEE - --------------------------------- MONEY MARKET FUND 0.30% - --------------------------------- SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND 0.50% - --------------------------------- U.S. GOVERNMENT SECURITIES FUND 0.50% - --------------------------------- INTERMEDIATE TERM BOND FUND 0.50% - --------------------------------- INCOME FUND 0.50% - --------------------------------- BALANCED FUND 0.75% - --------------------------------- EQUITY INCOME FUND 0.75% - --------------------------------- CORE EQUITY FUND 0.75% - --------------------------------- EQUITY GROWTH FUND 0.75% - --------------------------------- SMALL CAPITALIZATION FUND 0.75% - ---------------------------------
Chase Bank of Texas, N.A. (Chase Texas) is the sub-advisor to the Funds. Chase Texas is a wholly owned subsidiary of The Chase Manhattan Corporation. It makes the day-to-day investment decisions for these funds. Chase Texas is located at 712 Main Street, Houston, Texas 77002.[logo] 64 The portfolio managers CHASE MONEY MARKET FUND The portfolio manager is Thomas Nelson, Head of Short Term Investments at Chase. He has managed the portfolio since October 1999. Prior to this position, he was responsible for the cash reinvestment of the Securities Lending Division. Mr. Nelson joined Chase in 1987 as a portfolio manager and trader for individual fixed income accounts. CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND The portfolio managers are Michael Bennis, Vice President and Senior Portfolio Manager at Chase, Timothy Neumann, Head of the Taxable Core Investment Group at Chase and Lynn J. Chen, Vice President and Portfolio Manager at Chase. Mr. Bennis and Mr. Neumann have been responsible for the Fund since October 1999. Ms. Chen has been responsible for the Fund since April 2000. Before joining Chase in 1996, Mr. Bennis was a senior analyst and trader at Union Bank of Switzerland Asset Management. Prior to joining Union Bank of Switzerland, he was a fixed income analyst at Donaldson, Lufkin & Jenrette. Before joining Chase in 1997, Mr. Neumann was the portfolio manager at Lehman Brothers Global Asset Management mortgage-backed securities accounts. Prior to joining Lehman, he managed fixed income portfolios at Allstate Insurance. Before joining Chase in 1997, Ms. Chen spent seven years as both a portfolio manager and an analyst at Nippon Life Insurance Company. CHASE U.S. GOVERNMENT SECURITIES FUND The portfolio managers are Mr. Bennis and Mr. Neumann. They have been responsible for the Fund since October 1999. CHASE INTERMEDIATE TERM BOND FUND The portfolio managers are Leonard Lovito, a Vice President and Senior Portfolio Manager at Chase and Mr. Neumann. They have managed the Fund since October 1999. Mr. Lovito joined Chase in 1998. Prior to joining Chase, from 1984 to 1998, Mr. Lovito was Vice President at J. & W. Seligman & Co., Inc. where he managed a number of fixed income portfolios and mutual funds. Prior to joining Seligman, Mr. Lovito was a senior Securities Administrator in the investment department of the Dime Savings Bank of New York. CHASE INCOME FUND The portfolio managers are Andrew Russell, a Vice President and Portfolio Manager at Chase and Mr. Neumann. They have been responsible for the Fund since October 1999. Mr. Russell joined Chase in 1990 and has held several positions within the U.S. fixed income area, including portfolio analyst, taxable fixed-income trader and assistant trader. Mr. Russell is a member of the U.S. fixed income area's quantitative research team. CHASE BALANCED FUND Henry Lartigue, Executive Vice President and Chief Investment Officer at Chase, and Jeff Phelps, Portfolio Manager at Chase are responsible for the equity portion of the portfolio. H. Mitchell Harper, Senior Vice President and Portfolio Manager at Chase is responsible for the fixed income portion of the portfolio. Mr. Lartigue has managed the equity portion of the portfolio since July of 1994. He began his career as a securities analyst at Chase in 1984. Mr. Lartigue then worked as 65 an Equity Fund Manager until 1992. From July 1992 to June 1994, he worked as an independent registered investment adviser. He returned to Chase in 1994. Mr. Phelps has managed the equity portion of the portfolio since October 1999. Mr. Phelps joined Chase in 1997. Prior to joining Chase, he was employed by Houston Industries. Mr. Harper has managed the fixed income portion of the portfolio since October 1999. Mr. Harper has been with Chase since 1987. Previously he worked at John Alden Life Insurance Co. from 1985-1987, as Vice President, Portfolio Management. Prior to that he was Vice President, Department Head-Investments at Bank Life & Casualty. CHASE EQUITY INCOME FUND The portfolio manager is Robert Heintz, a Senior Investment Officer at Chase. He has managed the portfolio since its inception on March 29, 1988. Mr. Heintz has worked for Chase Texas since 1983. CHASE CORE EQUITY FUND Mr. Lartigue has managed the portfolio since January of 1996. Since January 1999 the funds have been co-managed with Mr. Phelps. CHASE EQUITY GROWTH FUND Mr. Lartigue has managed the portfolio since July of 1994. CHASE SMALL CAPITALIZATION FUND The portfolio manager is Juliet Ellis, a Senior Investment Officer at Chase. She has managed the portfolio since September of 1993. Ms. Ellis has worked at Chase Texas since 1987. Before becoming portfolio manager for the Small Capitalization Fund, Ms. Ellis was the director of research and an equity analyst at Chase Texas.[logo] 66 HOW YOUR ACCOUNT WORKS Buying Fund Shares There is no commission or sales charge to buy Investor Class shares.[logo] MINIMUM INVESTMENTS
TYPE OF INITIAL ADDITIONAL ACCOUNT INVESTMENT INVESTMENTS - ----------------------------------------- REGULAR ACCOUNT $2,500 $100 - ----------------------------------------- SYSTEMATIC INVESTMENT PLAN $1,000 $100 - ----------------------------------------- INDIVIDUAL RETIREMENT ACCOUNTS (IRAs) AND ROTH IRAs $1,000 $100 - ----------------------------------------- SEP-IRAs $1,000 $100 - ----------------------------------------- EDUCATION IRAs $ 500 $100 - ----------------------------------------- SIMPLE IRAs $ 25 $ 25 - -----------------------------------------
You can buy shares three ways: Through the Chase Funds Service Center Call 1-888-524-2730 or Complete the enclosed application form and mail it along with a check for the amount you want to invest to: Chase Funds Service Center, P.O. Box 419392 Kansas City, MO 64141-6392 67 Through your investment representative Tell your representative which Funds you want to buy and he or she will contact us. Your representative may charge you a fee and may offer additional services, such as special purchase and redemption programs. Some representatives charge a single fee that covers all services. Your adviser may impose different minimum investments and earlier deadlines to buy and sell shares. Through a Systematic Investment Plan You can make regular automatic purchases of at least $100. For information about the Systematic Investment Plan, see the Shareholder services section of this prospectus. Investment Details The price of the shares is the net asset value per share (NAV). NAV is the value of everything a Fund owns, minus everything it owes, divided by the number of shares held by investors. You'll pay the public offering price, which is based on the next NAV calculated after the Chase Funds Service Center receives your instructions. Each Fund calculates its NAV once each day at the close of regular trading on the New York Stock Exchange. Each Fund other than the Money Market Fund generally values its assets at their market value but may use fair value if market prices are unavailable. The Money Market Fund seeks to maintain a stable NAV of $1.00. It uses the amortized cost method to value its portfolio of securities. This method provides more stability in valuations. However, it may also result in periods during which the stated value of a security is different than the price the Fund would receive if it sold the investment. The center accepts purchase orders on any business day that the New York Stock Exchange is open. Normally, if the Chase Funds Service Center receives your order in proper form by the close of regular trading on the New York Stock Exchange, we'll process your order at that day's price. An order is in proper form only after payment is converted into federal funds. You must provide a Taxpayer Identification Number or Social Security Number when you open an account. The Fund has the right to refuse any purchase order or to stop offering shares for sale at any time. Make your check out to Chase Funds in U.S. dollars. We won't accept credit cards, cash, or checks from a third party. You cannot sell your shares until your check has cleared, which could take more than 15 calendar days. If you buy through an Automated Clearing House, you can't sell your shares until the payment clears. That could take more than seven business days. Your purchase will be cancelled if your check doesn't clear and you'll be responsible for any expenses and losses to the Funds. Orders by wire will be cancelled if the Chase Funds Service Center doesn't receive payment by 4:00 p.m. Eastern time on the day you buy. If you're planning to exchange, sell or transfer shares to another person 68 HOW YOUR ACCOUNT WORKS shortly after buying the shares, you should pay by certified check to avoid delays. The Fund will not issue certifi- cates for Fund shares. Selling Fund shares There is no commission or charge to sell Investor Class shares of the Funds. You can sell your shares three ways: Through the Chase Funds Service Center Call 1-888-524-2730. We will mail you a check or send the proceeds via electronic transfer or wire. You cannot sell by phone if you have changed your address of record within the previous 30 days. If you sell $25,000 or more worth of Funds by phone, we'll send the money by wire only to a bank account on our records. We charge $10 for each transaction by wire. Or Send a signed letter with your instructions to: Chase Funds Service Center, P.O. Box 419392 Kansas City, MO 64141-6392 Through your investment representative Tell your representative which Funds you want to sell. He or she will send the necessary documents to the Chase Funds Service Center. Your representative might charge you for this service. Through a Systematic Withdrawal Plan You can automatically sell as little as $50 worth of shares. For information about the Systematic Withdrawal Plan, see the Shareholder services section of this prospectus. You can sell your Investor Class shares on any day the Funds are accepting purchase orders. You'll receive the next NAV calculated after the Chase Funds Service Center receives your order. Under normal circumstances, if the Chase Funds Service Center receives your order before the close of regular trading on the New York Stock Exchange, each Fund will send you the proceeds the next business day. We won't accept an order to sell shares if the Fund hasn't collected your payment for the shares. Each Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit.[logo] Signature guarantees Before you sell, you'll need signatures guaranteed for all registered owners or their legal representative if: o you want to sell shares with a net asset value of $100,000 or more o you want your payment sent to an address other than the one we have in our records. We may also need additional documents or a letter from a surviving joint owner before selling the shares. Contact the Chase Funds Service Center for more details. Exchanging Fund shares You can exchange your shares for shares of certain other Chase Funds at net asset value, beginning 15 days after you buy your shares. 69 HOW YOUR ACCOUNT WORKS You can exchange your shares three ways: Through your investment representative Tell your representative which Funds you want to exchange from and to. He or she will send the necessary documents to the Chase Funds Service Center. Your representative might charge you for this service. Through the Chase Funds Service Center Call 1-888-524-2730 to ask for details. Through a Systematic Exchange Plan You can automatically exchange money from one Chase account to another of the same class. Call the Chase Funds Service Center for details. You should not exchange shares as means of short-term trading as this could increase management cost and affect all shareholders. We reserve the right to limit the number of exchanges or to refuse an exchange. We may also terminate this privilege. We charge an administration fee of $5 for each exchange if you make more than 10 exchanges in a year or three exchanges in a quarter. See the Statement of Additional Information to find out more about the exchange privilege.[logo] Other information concerning the Funds We may close your account if the bal- ance falls below $500 because you've sold shares. We may also close the account if you are in the Systematic Investment Plan and fail to meet investment minimums over a 12-month period. We'll give you 60 days notice before closing your account. Unless you indicate otherwise on your account application, we may act on redemption and transfer instructions we receive by phone. If someone trades on your account by phone, we'll ask that person to confirm your account registration and address to make sure they match those you gave us. If they supply the correct information, we are generally authorized to follow that person's instructions. We'll take all reasonable precautions to confirm that the instructions are genuine. You agree that you will not hold a Fund liable for any loss or expenses from any sales request, if the Fund has taken reasonable precautions. The Fund will be liable for any losses to you from an unauthorized sale or fraud against you only if it does not follow reasonable procedures. You may not always reach the Chase Funds Service Center by telephone. This may be true at times of unusual market changes and shareholder activity. You can mail us your instructions or contact your investment representative or agent. We may modify or cancel the sale of shares by phone without notice. Chase and its affiliates and the Funds and their affiliates, agents and subagents may share information about shareholders and their accounts with each other and with others unless this sharing is prohibited by contract. The information can be used for a variety of purposes, including offering investment and insurance products to shareholders.[logo] 70 HOW YOUR ACCOUNT WORKS For shareholders that bank with Chase, Chase may aggregate investments in the Chase Funds with balances held in Chase bank accounts for purposes of determining eligibility for certain bank privileges that are based on specified minimum balance requirements, such as reduced or no fees for certain banking services or preferred rates on loans and deposits. Chase and certain other financial institutions may, at their own expense, provide gifts, such as computer software packages, guides and books related to investment or additional Fund shares valued up to $250 to their customers that invest in the Chase Funds. Distribution arrangements The Funds' distributor is CFD Fund Distributors Inc., which we call CFD in this prospectus. CFD is a subsidiary of The BISYS Group, Inc. and is not affiliated with Chase. Each Fund has adopted a Rule 12b-1 distribution plan for Investor Class shares. It provides for payment of distribution fees at an annual rate of up to: o 0.10% of the average daily net assets attributed to Investor Class shares of the Money Market Fund o 0.25% of the average daily net assets attributed to Investor Class shares of each other Fund described in this prospectus. The money from these payments is used to compensate the Funds' distributor and broker-dealers for the services they provide and the expenses they incur selling Investor Class shares. Payments are not tied to the actual expenses incurred. Because 12b-1 expenses are paid out of a Fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than other types of sales charges.[logo] Distributions and taxes The Funds can earn income and they can realize capital gains. The Funds deduct any expenses and pay these earnings out to shareholders as distributions. The Chase Money Market Fund declares dividends daily, so your shares can start earning dividends on the day you buy them. We distribute the dividends monthly. We distribute any short-term capital gain at least annually. The Chase Money Market Fund does not expect to realize long-term capital gain. The Chase Short-Intermediate Term U.S. Government Securities Fund, Chase U.S. Government Securities Fund, Chase Intermediate Term Bond Fund and Chase Income Fund (the Fixed Income Funds) declare dividends daily and distribute the net investment income monthly. The Chase Balanced Fund, Chase Equity Income Fund, Chase Core Equity Fund, Chase Equity Growth Fund and Chase Small Capitalization Fund distribute any net investment income at least quarterly. Net capital gain is distributed at least annually. You have three options for your distributions if your financial services firm offers them. You may: 71 o reinvest all of them in additional Fund shares; o take distributions of net investment income in cash or as a deposit in a pre-assigned bank account and o reinvest distributions of net capital gain in additional shares; or o take all distributions in cash or as a deposit in a pre-assigned bank account. If you don't select an option when you open your account, we'll reinvest all distributions. If we reinvest your distributions, they will be in the same class of shares. The taxation of dividends won't be affected by the form in which you receive them. Dividends of net investment income are usually taxable as ordinary income at the federal, state and local levels. The state or municipality where you live may not charge you state and local taxes on dividends earned on certain bonds. Dividends earned on bonds issued by the U.S. government and its agencies may also be exempt from some types of state and local taxes. If you receive distributions of net capital gain, the tax rate will be based on how long the Fund held a particular asset, not on how long you have owned your shares. If you buy shares just before a distribution, you will pay tax on the entire amount of the taxable distribution you receive, even though the NAV will be higher on that date because it includes the distribution amount. The Fixed Income Funds, the Chase Balanced Fund and Chase Equity Income Fund expect that their distri butions will consist primarily of ordinary income. The Chase Core Equity Fund, Chase Equity Growth Fund and Chase Small Capitalization Fund expect that their distributions will consist primarily of capital gains. Early in each calendar year, each Fund will send you a notice showing the amount of distributions you received in the preceding year and the tax status of those distributions. For tax purposes, an exchange is treat- ed as selling Fund shares. This will generally result in a capital gain or loss to you. The above is a general summary of tax implications of investing in the Funds. Please consult your tax adviser to see how investing in a Fund will affect your own tax situation.[logo] Shareholder services Systematic investment plan You can regularly invest $100 or more in the first or third week of any month. The money is automatically debited from your checking or savings account. You must make an initial deposit of at least $1,000 to start the plan. You can set up a plan when you open an account by completing the appro- priate section of the application. Current shareholders can join by send- ing a signed letter and a deposit slip or void check to the Chase Funds Service Center. Call 1-888-524-2730 for complete instructions. 72 HOW YOUR ACCOUNT WORKS Systematic Withdrawal Plan You can make regular withdrawals of $50 or more. You can have automatic withdrawals made monthly, quarterly or semiannually. Your account must contain at least $5,000 to start the plan. Call 1-888-524-2730 for complete instructions. Systematic exchange You can transfer assets automatically from one Chase account to another on a regular basis. It's a free service.[logo] Telephone privileges You can buy, sell and exchange your shares by calling the Chase Funds Service Center. Telephone privileges are provided automatically, unless you tell us otherwise on your account application.[logo] 73 FINANCIAL HIGHLIGHTS The Financial Highlights tables are intended to help you understand the Funds' financial performance for the periods since Investor Class shares were first offered. The total returns in the tables represent the rate an investor would have earned or lost on an investment in the Funds (assuming reinvestment of all dividends and distributions). The following tables provide selected per share data and ratios for one Investor Class Share outstanding throughout each period shown. This information is supplemented by financial statements including accompanying notes appearing in the Funds' Annual Report to Shareholders for the year ended December 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Funds or their Shareholder Servicing Agent. The financial statements, which include the financial highlights, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders. 74 FINANCIAL HIGHLIGHTS
Chase Short-Intermediate Term U.S. Chase Money Market Fund Government Securities Fund --------------------------- --------------------------- Year 11/10/98* Year 11/10/98* Ended Through Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 12/31/99 12/31/98 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $1.00 $1.00 $12.59 $12.64 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income 0.05 0.01 0.57 0.08 Net Gains or Losses in Investments (both realized and unrealized) -- -- (0.51) -- -------- --------- -------- -------- Total from Investment Operations 0.05 0.01 0.06 0.08 Less Distributions: Dividends from Net Investment Income 0.05 0.01 0.57 0.09 Distributions from Capital Gains -- -- 0.04 0.04 In Excess of Realized Capital Gains -- -- -- -- -------- -------- -------- -------- Total Distributions 0.05 0.01 0.61 0.13 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $1.00 $1.00 $12.04 $12.59 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.78% 0.69% 0.48% 0.60% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $+ $+ $+ $+ - ----------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - ----------------------------------------------------------------------------------------------------------------------------- Expenses 0.60% 0.60% 0.99% 1.03% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income 4.71% 4.72% 4.58% 4.47% - ----------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 25.25% 0.80% 57.39% 1.58% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (19.94%) 4.52% (51.82%) 3.92% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate -- -- 91% 87% - ----------------------------------------------------------------------------------------------------------------------------- Chase U.S. Government Securities Fund --------------------------- Year 11/10/98* Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $13.83 $14.42 - ------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income 0.61 0.09 Net Gains or Losses in Investments (both realized and unrealized) (0.99) 0.10 -------- -------- Total from Investment Operations (0.38) 0.19 Less Distributions: Dividends from Net Investment Income 0.61 0.09 Distributions from Capital Gains -- 0.68 In Excess of Realized Capital Gains -- 0.01 -------- -------- Total Distributions 0.61 0.78 - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.84 $13.83 - ------------------------------------------------------------------------------------------------- TOTAL RETURN (2.79%) 1.37% ================================================================================================= RATIOS/SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $+ $+ - ------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - ------------------------------------------------------------------------------------------------- Expenses 1.00% 1.03% - ------------------------------------------------------------------------------------------------- Net Investment Income 4.62% 4.45% - ------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 45.80% 1.92% - ------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (40.18%) 3.56% - ------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 19% 110% - -------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. 75
Chase Intermediate Term Bond Fund Chase Income Fund --------------------------- --------------------------- Year 11/10/98* Year 11/10/98* Ended Through Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 12/31/99 12/31/98 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.87 $12.91 $20.46 $20.77 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income 0.63 0.09 0.98 0.14 Net Gains or Losses in Investments (both realized and unrealized) (0.80) 0.11 (1.57) 0.18 -------- -------- -------- -------- Total from Investment Operations (0.17) 0.20 (0.59) 0.32 Less Distributions: Dividends from Net Investment Income 0.63 0.09 0.98 0.15 Distributions from Capital Gains 0.01 0.15 0.17 0.48 -------- -------- -------- -------- Total Distributions 0.64 0.24 1.15 0.63 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.06 $12.87 $18.72 $20.46 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (1.36%) 1.52% (2.92%) 1.54% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $+ $+ $1 $1 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - ----------------------------------------------------------------------------------------------------------------------------- Expenses 0.99% 1.03% 0.99% 1.03% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income 5.09% 4.64% 5.04% 4.72% - ----------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 9.79% 1.72% 6.22% 1.44% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (3.71%) 3.95% (0.19%) 4.31% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 85% 135% 120% 54% - ----------------------------------------------------------------------------------------------------------------------------- Chase Balanced Fund --------------------------- Year 10/16/98* Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $34.51 $31.87 - ------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income 0.70@ 0.10 Net Gains or Losses in Investments (both realized and unrealized) 4.05 3.95 -------- -------- Total from Investment Operations 4.75 4.05 Less Distributions: Dividends from Net Investment Income 0.61 0.16 Distributions from Capital Gains 0.19 1.25 -------- -------- Total Distributions 0.80 1.41 - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $38.46 $34.51 - ------------------------------------------------------------------------------------------------- TOTAL RETURN 13.94% 12.78% ================================================================================================= RATIOS/SUPPLEMENTAL DATA: - ------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $2 $1 - ------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - ------------------------------------------------------------------------------------------------- Expenses 1.25% 1.25% - ------------------------------------------------------------------------------------------------- Net Investment Income 1.94 1.84% - ------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 3.34% 107.16% - ------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (0.15%) (104.07%) - ------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 45% 58% - -------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding + Amount rounds to less than one million. 76 FINANCIAL HIGHLIGHTS
Chase Equity Income Fund Chase Core Equity Fund -------------------------- -------------------------- Year 8/24/98* Year 9/10/98* Ended Through Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 12/31/99 12/31/98 - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $46.23 $40.49 $26.52 $21.49 - --------------------------------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income 0.20@ 0.06 (0.05)@ -- Net Gains or Losses in Investments (both realized and unrealized) 5.63 5.89 6.28 6.22 -------- -------- -------- -------- Total from Investment Operations 5.83 5.95 6.23 6.22 Less Distributions: Dividends from Net Investment Income 0.23 0.07 0.01 0.02 Distributions from Capital Gains 2.00 0.14 0.55 1.17 -------- -------- -------- -------- Total Distributions 2.23 0.21 0.56 1.19 - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $49.83 $46.23 $32.19 $26.52 - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 12.70% 14.70% 23.59% 29.08% =========================================================================================================================== RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $4 $1 $6 $1 - --------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - --------------------------------------------------------------------------------------------------------------------------- Expenses 1.24% 1.18% 1.24% 1.23% - --------------------------------------------------------------------------------------------------------------------------- Net Investment Income 0.42% 0.57% (0.13%) (0.03%) - --------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 3.33% 37.61% 3.02% 140.46% - --------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (1.67%) (35.86%) (1.89%) (139.26%) - --------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 16% 3% 11%+ 32% - --------------------------------------------------------------------------------------------------------------------------- Chase Small Chase Equity Growth Fund Capitalization Fund -------------------------- -------------------------- Year 8/13/98* Year 8/12/98* Ended Through Ended Through PER SHARE OPERATING PERFORMANCE: 12/31/99 12/31/98 12/31/99 12/31/98 - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $52.30 $45.57 $19.94 $19.86 - --------------------------------------------------------------------------------------------------------------------------- Income from Investments Operations: Net Investment Income (0.29)@ (0.02) (0.08)@ (0.01) Net Gains or Losses in Investments (both realized and unrealized) 16.75 8.53 2.65 1.44 -------- -------- -------- -------- Total from Investment Operations 16.46 8.51 2.57 1.43 Less Distributions: Dividends from Net Investment Income -- -- -- 0.71 Distributions from Capital Gains 0.91 1.78 -- 0.64 -------- -------- -------- -------- Total Distributions 0.91 1.78 -- 1.35 - --------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $67.85 $52.30 $22.51 $19.94 - --------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 31.54% 18.80% 12.89% 7.56% =========================================================================================================================== RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $15 $1 $1 $1 - --------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS:# - --------------------------------------------------------------------------------------------------------------------------- Expenses 1.24% 1.25% 1.24% 1.24% - --------------------------------------------------------------------------------------------------------------------------- Net Investment Income (0.48%) (0.19%) (0.37%) (0.18%) - --------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 2.34% 5.88% 6.02% 74.81% - --------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (1.58%) 4.82% (5.15%) (73.75%) - --------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 15%- 35% 60% 45% - ---------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. - - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in Equity Growth Portfolio. + Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in Core Equity Portfolio. @ Calculated based upon average shares outstanding. 77 What The Terms Mean COLLATERALIZED MORTGAGE OBLIGATIONS: debt securities that are collateralized by a portfolio of mortgages or mortgage backed securities. DEBT SECURITIES: securities used by issuers, such as governmental entities and corporations, to borrow money. The issuer usually pays a fixed, variable or floating rate of interest and repays the amount borrowed at the maturity date of the security. However, if a borrower issues a zero coupon debt security, it does not make regular interest payments. DEPOSITORY RECEIPTS: instruments which are typically issued by financial institutions and which represent ownership of securities of foreign corporations. Depository receipts are usually designed for use on U.S. and European securities exchanges. DISTRIBUTION FEE: a fee that covers the cost of the distribution system used to sell shares to the public. DOLLAR-WEIGHTED AVERAGE MATURITY: The average maturity of the Fund is the average amount of time until the issuers of the debt securities in the Fund's portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of the debt security in the Fund's portfolio, the more weight it gets in calculating this average. DURATION: A mathematical calculation of the average life of a bond that serves as a useful measure of its price risk. Each year of duration represents an expected 1% change in interest rates. For example, if a bond has an average duration of 4 years, its price will move 4% when interest rates move 1%. FUNDAMENTAL RESEARCH: method which concentrates on "fundamental" information about an issuer, such as its financial statements, history, management, etc. GROWTH APPROACH: approach which focuses on identifying securities of companies whose earnings growth potential appears to the manager to be greater than the market in general and whose growth in revenue is expected to continue for an extended period. MANAGEMENT FEE: a fee paid to the investment adviser to manage the Fund and make decisions about buying and selling the Fund's investments. MORTGAGE-RELATED SECURITIES: securities that directly or indirectly represent an interest in, or are secured by and paid from, mortgage loans secured by real property. OTHER EXPENSES: miscellaneous items, including transfer agency, custody and registration fees. REPURCHASE AGREEMENTS: a type of short-term investment in which a dealer sells securities to the Fund and agrees to buy them back later at a set price. In effect, the dealer is borrowing the Fund's money for a short time, using the securities as collateral. SHAREHOLDER SERVICE FEE: a fee to cover the cost of paying shareholder servicing agents to provide certain support services for your account. 78 STRIPPED OBLIGATIONS: debt securities which are separately traded interest-only or principal-only components of an underlying obligation. TECHNICAL ANALYSIS: method which focuses on historical price trends in an attempt to predict future price movements. VALUE APPROACH: approach which focuses on identifying securities that the adviser believes are undervalued by the market, as measured by certain financial formulas. YIELD CURVE: measure showing relationship among yields of similar bonds with different maturities.[logo] 79 HOW TO REACH US More information You'll find more information about the Funds in the following documents: ANNUAL AND SEMI-ANNUAL REPORTS Our annual and semi-annual reports contain more information about each Fund's investments and performance. The annual report also includes details about the market conditions and investment strategies that had a significant effect on each Fund's performance during the last fiscal year. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information about the Funds and their policies. By law, it's considered to be part of this prospectus. You can get a free copy of these documents and other information, or ask us any questions, by calling us at 1-888-524-2730 or writing to: Chase Funds Service Center P.O. Box 419392 Kansas City, MO 64141-6392 If you buy your shares through The Chase Manhattan Bank or another institution, you should contact that institution directly for more information. You can also find information on-line at www.chasefunds.com on the internet. You can write or e-mail the SEC's Public Reference Room and ask them to mail you information about the Funds, including the SAI. They'll charge you a copying fee for this service. You can also visit the Public Reference Section and copy the documents while you're there. Public Reference Section of the SEC Washington, DC 20549-0102. 1-202-942-8090 E-mail: publicinfo@sec.gov Reports, a copy of the SAI and other information about the Funds is also available on the SEC's website at http://www.sec.gov. The Fund's Investment Company Act File No. is 811-5526 Chase Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 PROSPECTUS APRIL 28, 2000 Chase Funds CHASE MONEY MARKET FUND CHASE SHORT- INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND CHASE U.S. GOVERNMENT SECURITIES FUND CHASE INTERMEDIATE TERM BOND FUND CHASE INCOME FUND CHASE BALANCED FUND CHASE EQUITY INCOME FUND CHASE CORE EQUITY FUND CHASE EQUITY GROWTH FUND CHASE SMALL CAPITALIZATION FUND The Securities and Exchange Commission has not approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. [CHASE THE RIGHT RELATIONSHIP IS EVERYTHING.[RegTM] LOGO] PSCF2-1-400 CHASE MONEY MARKET FUND 1 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT 6 SECURITIES FUND CHASE U.S. GOVERNMENT SECURITIES FUND 12 CHASE INTERMEDIATE TERM BOND FUND 18 CHASE INCOME FUND 24 CHASE BALANCED FUND 30 CHASE EQUITY INCOME FUND 38 CHASE CORE EQUITY FUND 44 CHASE EQUITY GROWTH FUND 50 CHASE SMALL CAPITALIZATION FUND 56 FUND MANAGEMENT 62 THE FUNDS' INVESTMENT ADVISOR 62 HOW YOUR ACCOUNT WORKS 65 BUYING FUND SHARES 65 SELLING FUND SHARES 66 EXCHANGING FUND SHARES 66 OTHER INFORMATION CONCERNING THE FUNDS 67 DISTRIBUTIONS AND TAXES 67 FINANCIAL HIGHLIGHTS 69 WHAT THE TERMS MEAN 80 HOW TO REACH US Back cover
CHASE MONEY MARKET FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide the highest possible level of current income while still maintaining liquidity and preserving capital. [END SIDE BAR] The Fund's main investment strategy The Fund invests in high quality, short-term money market instruments which are issued and payable in U.S. dollars. The Fund principally invests in: o high quality commercial paper and other short-term debt securities, including floating and variable rate demand notes of U.S. and foreign corporations o debt securities issued or guaranteed by qualified banks. These are: o U.S. banks with more than $1 billion in total assets and foreign branches of these banks o foreign banks with the equivalent of more than $10 billion in total assets and which have branches or agencies in the U.S. o other U.S. or foreign commercial banks which the Fund's advisers judge to have comparable credit standing o securities issued or guaranteed by the U.S. Government, its agencies or authorities o asset-backed securities o repurchase agreements. The dollar weighted average maturity of the Fund will be 90 days or less and the Fund will buy only those instruments which have remaining maturities of 397 days or less. 1 CHASE MONEY MARKET FUND The Fund may invest any portion of its assets in debt securities issued or guaranteed by U.S. banks and their foreign branches. These include certificates of deposit, time deposits and bankers' acceptances. The Fund seeks to maintain a net asset value of $1.00 per share. The Fund invests only in securities issued and payable in U.S. dollars. Each investment must have the highest short-term rating from at least two national rating organizations, or one such rating if only one organization rates that security. Alternatively, the security may have a guarantee that has such a rating. If the security is not rated, it must be considered of comparable quality by the Fund's advisers. The Fund seeks to develop an appropriate portfolio by considering the differences in yields among securities of different maturities, market sectors and issuers. The Fund may change any of its investment policies (including its investment objective) without shareholder approval.[logo] [START SIDE BAR] FREQUENCY OF TRADING How frequently the Fund buys and sells securities will vary from year to year, depending on market conditions. High trading activity generally means higher transaction costs. [END SIDE BAR] 2 The main investment risks The Fund attempts to keep its net asset value constant, but there's no guarantee it will be able to do so. The value of money market investments tends to fall when prevailing interest rates rise, although they're generally less sensitive to interest rate changes than longer-term securities. Repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The Fund's ability to concentrate its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and can't repay their loans. Investments in foreign banks and other foreign issuers may be riskier than investments in the United States. That could be, in part, because of difficulty converting investments into cash, political and economic instability, the imposition of government controls, or regulations that don't match U.S. standards. Although the Fund seeks to be fully invested, it may at times hold some of its assets in cash. This would hurt the Fund's performance.[logo] [BEGIN SIDE BAR] Securities in the Fund's portfolio may not earn as high a current income as longer term or lower quality securities. An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Cash Management Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. [END SIDE BAR] 3 CHASE MONEY MARKET FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1990 7.80% 1991 6.01% 1992 3.51% 1993 2.60% 1994 3.77% 1995 5.57% 1996 5.06% 1997 5.18% 1998 5.20% 1999 4.89% [END BAR CHART] - ------------------------------------- BEST QUARTER 1.91% - ------------------------------------- 1st quarter, 1990 - ------------------------------------- WORST QUARTER 0.62% - ------------------------------------- 2nd quarter, 1993 3rd quarter, 1993
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ---------------------------------------------------------- PREMIER CLASS SHARES 4.89% 5.18% 4.95% - ----------------------------------------------------------
4 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.30% NONE 0.26%# 0.56%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.24% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 0.50%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ------------------------------------------------------ PREMIER CLASS SHARES $57 $179 $313 $701 - ------------------------------------------------------
5 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide as high a level of current income as is consistent with preservation of capital. [END SIDE BAR] The Fund's main investment strategy Under normal market conditions, the Fund will invest at least 70% of its total assets in debt securities issued or guaranteed by the U.S. Government and its agencies or authorities, and in repurchase agreements involving these securities. The Fund may invest in mortgage-related securities issued or guaranteed by certain agencies of the U.S. Government. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. To reduce volatility, under normal market conditions, the Fund maintains a dollar-weighted average maturity for the overall portfolio of between two and five years. This is because the prices of shorter-term securities tend to be less volatile than the prices of longer-term securities. There is no restriction on the maturity of any individual security in the portfolio. The Fund's adviser adjusts the average maturity of the Fund based on its outlook for the economy. 6 When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [END SIDE BAR] 7 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in Short-Intermediate Term U.S. Government Securities Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 8 value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. While the principal and payments on certain of the Fund's portfolio securities may be guaranteed, this does not mean that the market value of the security, or the value of Fund shares, is guaranteed. The Fund's performance will depend on the credit quality of its investments. While U.S. Government securities are generally of high quality, a government security that is not backed by the full faith and credit of the U.S. Treasury may be affected by the creditworthiness of the agency or authority that issued it. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund temporarily departs from its investment policies to defend its assets, it may not achieve its investment objectives.[logo] 9 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman 1-3 Year Government Index and the Lehman Intermediate Government Index, widely recognized market benchmarks, and the Lipper Short-Intermediate Term U.S. Government Funds Index. The Lehman 1-3 Year Government Index consists of U.S. Treasury and agency securities with maturities of one to three years. The Lehman Intermediate Government Index consists of U.S. Treasury and agency securities with maturities of one to 10 years. The Lipper Short-Intermediate Term U.S. Government Funds Index represents the performance of the 30 largest short-intermediate term debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1994 -1.05% 1995 12.01% 1996 2.68% 1997 6.30% 1998 7.35% 1999 0.72% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 4.21% - ------------------------------------- 3rd quarter, 1998 - ------------------------------------- WORST QUARTER -1.35% - ------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST 1 PAST 5 INCEPTION YEAR YEARS (4/1/93) - ------------------------------------------------------------------- PREMIER CLASS SHARES 0.72% 5.75% 4.43% - ------------------------------------------------------------------- LEHMAN 1-3 YEAR GOV'T INDEX 2.97% 6.47% 5.31% - ------------------------------------------------------------------- LEHMAN INT GOV'T INDEX 0.49% 6.93% 5.62% - ------------------------------------------------------------------- LIPPER SHORT-INT TERM US GOV'T FUNDS INDEX 0.82% 6.04% 4.73% - -------------------------------------------------------------------
10 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.50% NONE 0.65%# 1.15%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.10% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 0.75%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- PREMIER CLASS SHARES $117 $365 $633 $1,398 - ---------------------------------------------------------
11 CHASE U.S. GOVERNMENT SECURITIES FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide current income while emphasizing preservation of capital. [END SIDE BAR] The Fund's main investment strategy Under normal market conditions, the Fund will invest at least 70% of its total assets in debt securities issued or guaranteed by the U.S. Government and its agencies or authorities, and in repurchase agreements involving these securities. The Fund may invest in mortgage-related securities issued or guaranteed by certain agencies of the U.S. Government. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. Under normal market conditions, the average portfolio maturity of the Fund is between five and 15 years. There is no restriction on the maturity of any individual security in the portfolio. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be short-term differences in market values or yields. 12 CHASE U.S. GOVERNMENT SECURITIES FUND [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [END SIDE BAR] The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] 13 CHASE U.S. GOVERNMENT SECURITIES FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in U.S. Government Securities Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 14 value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage-backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. While the principal and payments on certain of the Fund's portfolio securities may be guaranteed, this does not mean that the market value of the security, or the value of Fund shares, is guaranteed. The Fund's performance will depend on the credit quality of its investments. While U.S. Government securities are generally of high quality, a government security that is not backed by the full faith and credit of the U.S. Treasury may be affected by the creditworthiness of the agency or authority that issued it. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund temporarily departs from its investment policies to defend its assets, it may not achieve its investment objectives.[logo] 15 CHASE U.S. GOVERNMENT SECURITIES FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman Government Index, a widely recognized market benchmark, and the Lipper General U.S. Government Funds Index. The Lehman Government Index consists of the Lehman Treasury Bond Index and the Lehman Agency Bond Index. It includes Treasury bonds and fixed income securities issued by the U.S. Government and its agencies. The Lipper General U.S. Government Funds Index represents the performance of the 30 largest U.S. government securities funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1994 -8.39% 1995 30.11% 1996 -1.89% 1997 9.55% 1998 9.28% 1999 -2.55% [END PLOT POINTS] - -------------------------------------- BEST QUARTER 10.36% - -------------------------------------- 2nd quarter, 1995 - -------------------------------------- WORST QUARTER -6.79% - -------------------------------------- 1st quarter, 1996
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST 1 PAST 5 INCEPTION YEAR YEARS (4/1/93) - ------------------------------------------------------------------ PREMIER CLASS SHARES -2.55% 8.28% 6.07% - ------------------------------------------------------------------ LEHMAN GOVERNMENT INDEX -2.23% 7.44% 5.81% - ------------------------------------------------------------------ LIPPER GENERAL US GOV'T FUNDS INDEX -2.66% 6.47% 4.70% - ------------------------------------------------------------------
16 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.50% NONE 1.40%# 1.90%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.00%, other expenses for Premier Class shares are expected to be 0.75%, and total annual fund operating expenses for Premier Class shares are expected not to exceed 0.75%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ----------------------------------------------------------- PREMIER CLASS SHARES $193 $597 $1,026 $2,222 - -----------------------------------------------------------
17 CHASE INTERMEDIATE TERM BOND FUND [START SIDE BAR] The Fund's objective The Fund aims to invest in securities that earn current income while also considering stability of principal. [END SIDE BAR] The Fund's main investment strategy The Fund seeks current income by investing primarily in fixed income securities. Under normal market conditions, the Fund will invest at least 70% of its total assets in bonds and notes of domestic and foreign issuers, U.S. Government securities and mortgage-related securities. To help reduce the risk of loss of principal, all of the Fund's investments in debt securities will be investment grade, which means a rating of Baa or higher by Moody's Investors Service, Inc., BBB or higher by Standard & Poor's Corporation, or the equivalent by another national rating organization or unrated securities of comparable quality. The average portfolio maturity of the Fund is between three and 10 years. When the Fund purchases fixed income securities, they usually will have a maturity of greater than one year. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be 18 short-term differences in market values or yields. The Fund may invest in mortgage-related securities issued by governmental entities and private issuers. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may invest up to 30% of its total assets in foreign debt securities, including Depositary Receipts. These investments may include debt securities issued or guaranteed by foreign governments and international organizations such as The World Bank. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [END SIDE BAR] 19 CHASE INTERMEDIATE TERM BOND FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in the Intermediate Term Bond Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 20 value of some classes in which the Fund invests are more volatile. The value of interest-only and principal-only mortgage backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Investments in foreign securities may be riskier than investments in the U.S. They may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. If the Fund were to invest in a security which is not denominated in U.S. dollars, it also would be subject to currency exchange risk. These risks increase when investing in issuers located in developing countries. The Fund's performance will depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund departs from its investment policies during temporary defensive periods, it may not achieve its investment objective.[logo] 21 CHASE INTERMEDIATE TERM BOND FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risk of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the Lehman Intermediate Government/Corporate Index and the Lehman Aggregate Index, widely recognized market benchmarks, and the Lipper Intermediate Grade Debt Funds Index. The Lehman Brothers Intermediate Government/Corporate Index consists of U.S. Treasury and agency securities, corporate and Yankee bonds with maturities of 1-10 years. The Lehman Aggregate Index consists of the Lehman Brothers Government/Corporate Index U.S. Treasury and agency securities, corporate bonds and mortgage-backed securities with maturities of 1-30 years. The Lipper Intermediate Grade Debt Funds Index represents the performance of the 30 largest intermediate investment grade debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1995 16.79% 1996 1.86% 1997 7.26% 1998 7.63% 1999 -1.11% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 5.99% - ------------------------------------- 2nd quarter, 1995 - ------------------------------------- WORST QUARTER -2.15% - ------------------------------------- 1st quarter, 1996
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST 1 PAST 5 INCEPTION YEAR YEARS (10/3/94) - ------------------------------------------------------------------------- PREMIER CLASS SHARES -1.11% 6.32% 6.00% - ------------------------------------------------------------------------- LEHMAN INTERMEDIATE GOV'T/CORP INDEX -0.39% 7.10% 6.73% - ------------------------------------------------------------------------- LEHMAN AGGREGATE INDEX -0.82% 7.73% 7.43% - ------------------------------------------------------------------------- LIPPER INT GRADE DEBT FUNDS INDEX -0.98% 7.08% 6.75% - -------------------------------------------------------------------------
22 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.50% NONE 0.50%# 1.00%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.25% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 0.75%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- PREMIER CLASS SHARES $102 $318 $552 $1,225 - ---------------------------------------------------------
23 CHASE INCOME FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to invest in securities that earn a high level of current income, while also considering safety of principal. [END SIDE BAR] The Fund's main investment strategy The Fund seeks a high level of current income by investing in fixed income securities. Under normal market conditions, the Fund will invest at least 70% of its total assets in bonds and notes of domestic and foreign issuers, U.S. Government securities and mortgage-related securities. To help reduce the risk of loss of principal, all of the Fund's investments in debt securities will be investment grade, which means a rating of Baa or higher by Moody's Investors Service, Inc., BBB or higher by Standard & Poor's Corporation, or the equivalent by another national rating organization or unrated securities of comparable quality. The average portfolio maturity of the Fund is between five and 15 years. When the Fund purchases fixed income securities, they usually will have a maturity of greater than one year. The Fund's adviser will adjust the maturity based on its outlook for the economy. When making investment decisions for the Fund, the Fund's adviser considers many factors in addition to current yield, including preservation of capital, maturity and yield to maturity. The Fund's adviser will adjust the Fund's investments in certain securities or types of securities based on its analysis of changing economic conditions and trends. The Fund's adviser may sell one security and buy another security of comparable quality and maturity to take advantage of what it believes to be 24 short-term differences in market values or yields. The Fund may invest in mortgage-related securities issued by governmental entities and private issuers. These may include investments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. These investments may include debt securities issued or guaranteed by foreign governments and international organizations such as The World Bank. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may enter into "dollar rolls" in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may also invest in high-quality, short-term money market instruments, repurchase agreements and derivatives, which are investments that have a value based on another investment, exchange rate or index. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. To temporarily defend its assets during unusual market conditions, the Fund may invest any portion of its assets in high quality money market instruments and repurchase agreements. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [END SIDE BAR] 25 CHASE INCOME FUND The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some specific risks of investing in the Income Fund. The value of fixed income investments such as bonds tends to fall when prevailing interest rates rise. Such a drop in value could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed-income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-backed securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage-related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, the value of mortgage-related securities with prepayment features may not increase as much as other fixed-income securities when interest rates fall. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a result, the value of some classes in which the Fund invests are more volatile. [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 26 The value of interest-only and principal-only mortgage backed securities is more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. Investments in foreign securities may be riskier than investments in the U.S. They may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. If the Fund were to invest in a security which is not denominated in U.S. dollars, it also would be subject to currency exchange risk. These risks increase when investing in issuers located in developing countries. The Fund's performance will depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. If the interest rate on floating and variable rate securities falls, the Fund's yield may decline and it may lose the opportunity for capital appreciation. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its part of the agreement. Derivatives may be more risky than other types of investment because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment. If the Fund departs from its investment policies during temporary defensive periods, it may not achieve its investment objective.[logo] 27 CHASE INCOME FUND The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the Lehman Government/Corporate Index, a widely recognized market benchmark, and the Lipper Corporate Debt A Rated Funds Index. The Lehman Government/Corporate Index is an unmanaged index that consists of U.S. Treasury and agency securities, and corporate and Yankee bonds with maturities of 1-30 years. The Lipper Corporate Debt A Rated Funds Index represents the performance of the largest 30 A rated corporate debt funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1990 6.60% 1991 13.73% 1992 5.13% 1993 10.18% 1994 -4.47% 1995 18.38% 1996 1.91% 1997 8.73% 1998 9.47% 1999 -2.78% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 5.69% - ------------------------------------- 3rd quarter, 1991 - ------------------------------------- WORST QUARTER -3.38% - ------------------------------------- 1st quarter, 1994
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS - ------------------------------------------------------------------ PREMIER CLASS SHARES -2.78% 6.89% 6.47% - ------------------------------------------------------------------ LEHMAN GOV'T/CORP INDEX -2.15% 7.61% 7.65% - ------------------------------------------------------------------ LIPPER CORP DEBT A RATED FUNDS INDEX -2.04% 7.25% 7.36% - ------------------------------------------------------------------
28 Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.50% NONE 0.45%# 0.95%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.30% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 0.75%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - ------------------------------------------------------- PREMIER CLASS SHARES $97 $303 $525 $1,166 - -------------------------------------------------------
29 CHASE BALANCED FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide a balance of current income and growth of capital. [END SIDE BAR] The Fund's main investment strategy The Fund seeks a balance of current income and growth by using the following strategies: o an active equity management style that focuses on strong earnings momentum and profitability within the universe of growth-oriented stocks, and o an active fixed income management style that focuses primarily on domestic fixed income securities. The Fund's adviser may adjust the portion of the Fund's assets that are invested in equity and fixed income securities depending on its analysis of general market and economic conditions and trends, yields, interest rates and changes in monetary policies. The Fund seeks growth of capital by normally investing 30% to 70% of its total assets in equity securities. The Fund invests primarily in companies with one or more of the following characteristics: o a projected rate of earnings growth that's equal to or greater than the equity markets o a return on assets and equity that's equal to or greater than the equity markets o above-average price/earnings ratios o below-average dividend yield o above-average market volatility 30 o a market capitalization of more than $500 million. Market capitalization is the total market value of a company's shares. Equity securities include common stocks and preferred stocks and securities that are convertible into common stocks. The Fund will focus on companies with strong earnings growth and high profitability levels. The Fund will also examine industry and company specific characteristics. The Fund's equity portion will emphasize growth sectors of the economy. The Fund seeks current income by normally investing at least 25% of its total assets in U.S. government securities and other fixed income securities, including mortgage-backed securities. The Fund invests in fixed income securities only if they are rated as investment grade or the adviser considers them to be comparable to investment grade. There is no restriction on the maturity of the Fund's debt portfolio or on any individual security in the portfolio. The Fund's advisers will adjust the maturity based on its outlook for the economy. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may also include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund's equity holdings may also include real estate investment trusts (REITs), which are pools of investments primarily in income-producing real estate or loans related to real estate. The Fund may invest in mortgage-related securities issued by governmental entities and private issuers. These may include invest- 31 CHASE BALANCED FUND ments in collateralized mortgage obligations and principal-only and interest-only stripped mortgage-backed securities. The Fund may enter into "dollar rolls," in which the Fund sells mortgage-backed securities and at the same time contracts to buy back very similar securities on a future date. It may also buy asset-backed securities. These receive a stream of income from a particular asset, such as credit card receivables. The Fund may invest in floating rate securities, whose interest rate adjusts automatically whenever a specified interest rate changes, and in variable rate securities, whose interest rates are changed periodically. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs, thus lowering performance, and increase your taxable dividends. [END SIDE BAR] 32 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Balanced Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the 33 CHASE BALANCED FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The value of the Fund's fixed income securities tends to fall when prevailing interest rates rise. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. That's because long-term debt securities are more sensitive to interest rate changes than other fixed income securities. When the Fund invests in mortgage-related securities, the value of the Fund could change more often and to a greater degree than if it did not buy mortgage-related securities. That's because the prepayment features on some mortgage-related securities make them more sensitive to interest rate changes. Mortgage related securities are subject to scheduled and unscheduled principal payments as property owners pay down or prepay their mortgages. As these payments are received, they must be reinvested when interest rates may be higher or lower than on the original mortgage security. When interest rates are rising, the value of fixed-income securities with prepayment features are likely to decrease as much or more than securities without prepayment features. In addition, while the value of fixed-income securities will generally increase when interest rates decline, the value of mortgage-related securities with prepayment features may not increase as much as securities without prepayment features. Collateral mortgage obligations are issued in multiple classes, and each class may have its own interest rate and/or final payment date. A class with an earlier final payment date may have certain preferences in receiving principal payments or earning interest. As a [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 34 result, the value of some classes in which the Fund invests may be more volatile. The value of interest-only and principal-only mortgage backed securities are more volatile than other types of mortgage-related securities. That's because they are very sensitive not only to changes in interest rates, but also to the rate of prepayments. A rapid or unexpected increase in prepayments can significantly depress the price of interest-only securities, while a rapid or unexpected decrease could have the same effect on principal-only securities. In addition, these instruments may be illiquid. Certain securities which the Fund may hold, such as stripped obligations and zero coupon securities, are more sensitive to changes in interest rates than ordinary interest-paying securities. The Fund's performance will also depend on the credit quality of its investments. Securities which are rated Baa by Moody's or BBB by S&P may have fewer protective provisions and are generally more risky than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. Some asset-backed securities may have additional risk because they may receive little or no collateral protection from the underlying assets. Because the interest rate changes on floating and variable rate securities, the Fund's yield may decline and it may lose the opportunity for capital appreciation when interest rates decline. Dollar rolls, forward commitments and repurchase agreements involve some risk to the Fund if the other party does not live up to its obligations under the agreement. The market value of convertible securities tends to decline as interest rates increase. Their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. The value of REITs will depend on the value of the underlying properties or the underlying loans or interest. The value of REITs may decline when interest rates rise. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] 35 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P 500 Index and Lehman Government/Corporate Index, widely recognized market benchmarks, and the Lipper Balanced Funds Index. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The Lehman Government/ Corporate Index is an unmanaged index that consists of the Lehman government and corporate bond indices, including U.S. Treasury and agency securities, and corporate and Yankee bonds. The Lipper Balanced Funds Index represents the performance of the 30 largest balanced funds. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1990 1.34% 1991 24.16% 1992 5.32% 1993 6.01% 1994 -2.27% 1995 23.83% 1996 11.31% 1997 23.67% 1998 25.15% 1999 14.23% [END PLOT POINTS] - -------------------------------------- BEST QUARTER 13.34% - -------------------------------------- 4th quarter, 1998 - -------------------------------------- WORST QUARTER -5.37% - -------------------------------------- 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ------------------------------------------------------------------ PREMIER CLASS SHARES 14.23% 19.51% 12.84% - ------------------------------------------------------------------ S&P 500 INDEX 21.03% 28.54% 18.19% - ------------------------------------------------------------------ LEHMAN GOV'T/CORP INDEX -2.15% 7.61% 7.65% - ------------------------------------------------------------------ LIPPER BALANCED FUNDS INDEX 8.98% 16.33% 12.26% - ------------------------------------------------------------------
36 CHASE BALANCED FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.75% NONE 0.35%# 1.10%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.65% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - -------------------------------------------------------- PREMIER CLASS SHARES $112 $350 $606 $1,340 - --------------------------------------------------------
37 CHASE EQUITY INCOME FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to invest in securities that provide both capital appreciation and current income. [END SIDE BAR] The Fund's main investment strategy The Fund uses an active equity management style which focuses on both earnings momentum and value within the universe of income-oriented stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by targeting companies with attractive earnings momentum. It seeks current income by emphasizing companies with above- average dividend yield and a consistent dividend record. The Fund also emphasizes securities of companies with below-average market volatility and price/earnings ratios or a market capitalization of more than $500 million. The Fund combines growth and value styles of investing. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may also include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. 38 CHASE EQUITY INCOME FUND The Fund's equity holdings may also include real estate investment trusts (REITs), which are pools of investments primarily in income-producing real estate or loans related to real estate. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and lower performance) and increase your taxable dividends. [END SIDE BAR] 39 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Equity Income Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the 40 CHASE EQUITY INCOME FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a large portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. The value of REITs will depend on the value of the underlying properties or the underlying loans or interest. The value of REITs may decline when interest rates rise. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 41 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P 500 Index, a widely recognized market benchmark, and the Lipper Large Cap Value Funds Index. The S&P 500 Index is an unmanaged, broad-based index of 500 companies that is generally considered to represent the U.S. market. The Lipper Large Cap Value Funds Index consists of funds that invest in large-cap value stocks. These funds usually have a below-average price-to-book ratio and three-year earnings growth figure compared to the diversified U.S. large cap funds universe. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1990 -4.40% 1991 22.10% 1992 5.61% 1993 12.34% 1994 -3.37% 1995 33.72% 1996 17.87% 1997 31.05% 1998 26.20% 1999 13.06% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 18.89% - ------------------------------------- 4th quarter, 1998 - ------------------------------------- WORST QUARTER -10.93% - ------------------------------------- 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ----------------------------------------------------------------------- PREMIER CLASS SHARES 13.06% 24.13% 14.70% - ----------------------------------------------------------------------- S&P 500 INDEX 21.03% 28.54% 18.19% - ----------------------------------------------------------------------- LIPPER LARGE CAP VALUE FUNDS INDEX 10.78% 22.11% 15.42% - -----------------------------------------------------------------------
42 CHASE EQUITY INCOME FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.75% NONE 0.30%# 1.05%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.70% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - -------------------------------------------------------- PREMIER CLASS SHARES $107 $334 $579 $1,283 - --------------------------------------------------------
43 CHASE CORE EQUITY FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to maximize total investment return with an emphasis on long-term capital appreciation and current income while taking reasonable risk. [END SIDE BAR] The Fund's main investment strategy The Fund seeks to achieve its objective by investing all of its assets in Core Equity Portfolio, an open-end investment company which has identical investment objectives and policies as the Fund. As a result, the strategies and risk outlined below apply to Core Equity Portfolio as well as the Fund. The Fund uses an active equity management style which focuses on strong earnings momentum and profitability within the universe of S&P 500 stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by emphasizing companies with a superior record of earnings growth relative to the equity markets in general or a projected rate of earnings growth that's greater than or equal to the equity markets. The Fund seeks to earn current income and manage risk by focusing on larger companies with a stable record of earnings growth. In addition, it diversifies its portfolio across all sectors of the S&P 500. The Fund also emphasizes companies with return on assets and return on equity equal to or greater than the equity markets. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. 44 The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and lower performance) and increase your taxable dividends. [END SIDE BAR] 45 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Core Equity Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the 46 CHASE CORE EQUITY FUND Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 47 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the S&P 500 Index, a widely recognized market benchmark, and the Lipper Large Cap Core Funds Index. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The Lipper Large Cap Core Funds Index consists of funds that invest in both growth and value stocks. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1994 -4.03% 1995 25.53% 1996 22.54% 1997 33.33% 1998 30.95% 1999 23.89% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 22.97% - ------------------------------------- 4th quarter, 1998 - ------------------------------------- WORST QUARTER -9.55% - ------------------------------------- 3rd quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ------------------------------------------------------------------------ PREMIER CLASS SHARES 23.89% 27.18% 20.11% - ------------------------------------------------------------------------ S&P 500 INDEX 21.03% 28.54% 19.01% - ------------------------------------------------------------------------ LIPPER LARGE CAP CORE FUNDS INDEX 19.35% 25.32% 19.18% - ------------------------------------------------------------------------
48 CHASE CORE EQUITY FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
TOTAL ANNUAL MANAGEMENT DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.75% NONE 0.30%# 1.05%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.70% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- PREMIER CLASS SHARES $107 $334 $579 $1,283 - ---------------------------------------------------------
49 CHASE EQUITY GROWTH FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide capital appreciation. Producing current income is a secondary objective. [END SIDE BAR] Investment strategy The Fund seeks to achieve its objective by investing all of its assets in Equity Growth Portfolio, an open-end investment company which has identical investment objectives and policies as the Fund. As a result, the strategies and risk outlined below apply to Equity Growth Portfolio as well as the Fund. The Fund uses an active equity management style which focuses on strong earnings momentum and profitability within the universe of growth-oriented stocks. The Fund normally invests at least 70% of its total assets in equity securities. The Fund seeks capital appreciation by emphasizing the growth sectors of the economy. It looks for companies with one or more of the following characteristics: o a projected earnings growth rate that's greater than or equal to the equity markets in general o a return on assets and return on equity equal to or greater than the equity markets o above market average price-earnings ratios o below-average dividend yield o above-average market volatility o a market capitalization of more than $500 million. The Fund focuses on companies with strong earnings and high levels of 50 profitability as well as positive industry or company characteristics. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and thus lower performance) and increase your taxable dividends. [END SIDE BAR] 51 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Equity Growth Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of mid-capitalization companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Mid-sized companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the 52 "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 53 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and ten years. It compares that performance to the S&P/Barra Growth Index, a widely recognized market benchmark, and the Lipper Large Cap Growth Funds Index. The S&P/Barra Growth Index includes S&P 500 Index securities that have high price-to-book ratios, low dividend yields and high price/earnings ratios. It's a market-weighted index, which means each stock affects the index in proportion to its market value. Funds in the Lipper Large Cap Growth Funds Index normally invest in companies with long-term earnings expected to grow significantly faster than the earnings of the stocks represented in the major unmanaged stock indices. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1990 -1.45% 1991 31.69% 1992 6.43% 1993 2.48% 1994 -0.90% 1995 25.78% 1996 20.52% 1997 37.20% 1998 41.38% 1999 31.85% [END PLOT POINTS] - -------------------------------------- BEST QUARTER 27.40% - -------------------------------------- 4th quarter, 1998 - -------------------------------------- WORST QUARTER -15.53% - -------------------------------------- 3rd quarter, 1990
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
PAST PAST PAST 1 YEAR 5 YEARS 10 YEARS - ------------------------------------------------------------------------ PREMIER CLASS SHARES 31.85% 31.14% 18.45% - ------------------------------------------------------------------------ S&P/BARRA GROWTH INDEX 28.25% 33.61% 20.59% - ------------------------------------------------------------------------ LIPPER LARGE CAP GROWTH FUNDS INDEX 34.82% 30.73% 19.70% - ------------------------------------------------------------------------
54 CHASE EQUITY GROWTH FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
INVESTMENT TOTAL ANNUAL ADVISORY DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARE 0.75% NONE 0.28%# 1.03%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.72% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE:
NUMBER OF YEARS 1 3 5 10 - -------------------------------------------------------- PREMIER CLASS SHARES $105 $328 $569 $1,259 - --------------------------------------------------------
55 CHASE SMALL CAPITALIZATION FUND [BEGIN SIDE BAR] The Fund's objective The Fund aims to provide capital appreciation. [END SIDE BAR] The Fund's main investment strategy The Fund seeks capital appreciation by using an active equity management style that focuses on delivering risk and return characteristics representative of a small capitalization asset class. The Fund normally invests at least 70% of its total assets in equity-based securities of small cap issuers. It primarily targets companies with market capitalizations of $100 million to $1 billion. The Fund emphasizes companies with above market average price/earnings ratios and price/book ratios, below-average dividend yield and above-average market volatility. The Fund will focus on companies with high-quality management, a leading or dominant position in a major product line, new or innovative products, services or processes, a strong financial position and a relatively high rate of return of invested capital so that they can finance future growth without having to borrow extensively from outside sources. The adviser uses a disciplined stock selection process which focuses on identifying attractively valued companies with positive business fundamentals. The Fund combines growth and value styles of investing. The Fund may invest up to 30% of its total assets in foreign securities, including Depositary Receipts. Its equity investments may include convertible 56 CHASE SMALL CAPITALIZATION FUND securities, which generally pay interest or dividends and which can be converted into common or preferred stock. The Fund may also invest in investment grade debt securities. When the adviser wishes to limit the Fund's equity investments because of adverse market conditions, the Fund may temporarily invest any amount in investment grade debt securities. There is no restriction on the Fund's debt portfolio or on any individual security in the portfolio. The Fund may invest any portion of its assets that aren't in stocks or fixed income securities in high quality money market instruments and repurchase agreements. To temporarily defend its assets, the Fund may put any amount of its assets in these types of investments. The Fund may invest in derivatives, which are financial instruments whose value is based on another security, index or exchange rate. The Fund may use derivatives to hedge various market risks or to increase the Fund's income or gain. The Fund may change any of these investment policies (including its investment objective) without shareholder approval.[logo] [BEGIN SIDE BAR] FREQUENCY OF TRADING The Fund may trade securities actively, which could increase transaction costs (and lower performance) and increase your taxable dividends. [END SIDE BAR] 57 The main investment risks All mutual funds carry a certain amount of risk. You may lose money on your investment in the Fund. Here are some of the specific risks of investing in Small Capitalization Fund. The value of shares of the Fund will be influenced by conditions in stock markets as well as the performance of the companies selected for the Fund's portfolio. The securities of small cap companies may trade less frequently and in smaller volumes than securities of larger, more established companies. As a result, share price changes may be more sudden or more erratic. Smaller companies may have limited product lines, markets or financial resources, and they may depend on a small management group. Investments in foreign securities may be riskier than investments in the U.S. Because foreign securities are usually denominated in foreign currencies, the value of the Fund's portfolio may be influenced by currency exchange rates and exchange control regulations. Foreign securities may be affected by political, social and economic instability. Some securities may be harder to trade without incurring a loss and may be difficult to convert into cash. There may be less public information available, differing settlement procedures, or regulations and standards that don't match U.S. standards. Some countries may nationalize or expropriate assets or impose exchange controls. These risks increase when investing in issuers located in developing countries. Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. In early 1999, the European Monetary Union implemented a new currency called the 58 CHASE SMALL CAPITALIZATION FUND "euro." It is possible that the euro could increase volatility in financial markets, which could have a negative effect on the strength and value of the U.S. dollar and, as a result, the value of shares of the Fund. The market value of convertible securities and debt securities tends to decline as interest rates increase. Such a drop could be worse if the Fund invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. If the Fund invests a substantial portion of its assets in money market instruments, repurchase agreements and U.S. Government obligations, including where the Fund is investing for temporary defensive purposes, it could reduce the Fund's potential return. Derivatives may be more risky than other types of investments because they may respond more to changes in economic conditions than other types of investments. If they are used for non-hedging purposes, they could cause losses that exceed the Fund's original investment.[logo] [BEGIN SIDE BAR] An investment in the Fund isn't a deposit of The Chase Manhattan Bank and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. [END SIDE BAR] 59 The Fund's past performance This section shows the Fund's performance record. The bar chart shows how the performance of the Fund's Premier Class shares has varied from year to year. This provides some indication of the risks of investing in the Fund. The table shows the average annual return over the past year, five years and since inception. It compares that performance to the S&P 500 Index and the S&P 600 Index, widely recognized market benchmarks, and the Lipper Small Cap Core Funds Index. The S&P 500 Index is an unmanaged, broad-based index of 500 companies and is generally considered to represent the U.S. market. The S&P 600 is an unmanaged index of 600 small capitalization companies. In the past, the Fund has compared its performance to the S&P 500 Index, but in the future, the Fund intends to compare its performance to the S&P 600 Index instead. It is believed that the new benchmark is more appropriate since it more accurately reflects the Fund's investment strategy. The Lipper Small Cap Core Funds Index consists of funds that invest at least 75% of their equity assets in companies with three-year weighted average market capitalizations of less than 250% of the dollar weighted median market capitalization of the S&P Small Cap 600 Index. The calculations assume that all dividends and distributions are reinvested in the Fund. Some of the companies that provide services to the Fund have agreed not to collect some expenses and to reimburse others. Without these agreements, the performance figures would be lower than shown.[logo] YEAR-BY-YEAR RETURNS Past performance does not predict how this Fund will perform in the future. [BAR CHART PLOT POINTS] 1994 -6.12% 1995 31.14% 1996 30.88% 1997 24.08% 1998 -1.83% 1999 13.23% [END PLOT POINTS] - ------------------------------------- BEST QUARTER 17.04% - ------------------------------------- 2nd quarter, 1997 - ------------------------------------- WORST QUARTER -18.10% - ------------------------------------- 3rd quarter, 1998
AVERAGE ANNUAL TOTAL RETURNS For the periods ending December 31, 1999
SINCE PAST PAST INCEPTION 1 YEAR 5 YEARS (4/1/93) - ------------------------------------------------------------------------ PREMIER CLASS SHARES 13.23% 18.80% 13.99% - ------------------------------------------------------------------------ S&P 500 INDEX 21.03% 28.54% 19.01% - ------------------------------------------------------------------------ S&P 600 INDEX 12.41% 17.05% 13.84% - ------------------------------------------------------------------------ LIPPER SMALL CAP CORE FUNDS INDEX 20.17% 17.05% 13.91% - ------------------------------------------------------------------------
60 CHASE SMALL CAPITALIZATION FUND Fees and expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) None ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)*
INVESTMENT TOTAL ANNUAL ADVISORY DISTRIBUTION OTHER FUND OPERATING FEE (12B-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------- PREMIER CLASS SHARES 0.75% NONE 0.40%# 1.15%# - --------------------------------------------------------------------------------
* The table is based on expenses incurred in the most recent fiscal year. # Restated from the most recent fiscal year to reflect current expense arrangements. The actual management fee is currently expected to be 0.60% and the total annual fund operating expenses for Premier Class shares are expected not to exceed 1.00%. That's because The Chase Manhattan Bank (Chase) and some of the Fund's other service providers have volunteered not to collect a portion of their fees and to reimburse others. Chase and these other service providers may end this arrangement at any time. The table does not reflect charges or credits which you might incur if you invest through a financial institution. EXAMPLE This example helps you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes: o you invest $10,000 o you sell all your shares at the end of the period o your investment has a 5% return each year, and o the Fund's operating expenses are not waived and remain the same as shown above. Although your actual costs may be higher or lower, based on these assumptions: YOUR COST WOULD BE
NUMBER OF YEARS 1 3 5 10 - --------------------------------------------------------- PREMIER CLASS SHARES $117 $365 $633 $1,398 - ---------------------------------------------------------
61 FUND MANAGEMENT The investment adviser The Chase Manhattan Bank (Chase) is the investment adviser to the Fund. Chase is a wholly owned subsidiary of The Chase Manhattan Corporation, a bank holding company. Chase provides the Funds with investment advice and supervision. Chase and its predecessors have more than a century of money management experience. Chase is located at 270 Park Avenue, New York, New York 10017. Chase is entitled to receive an annual fee for its services. The following chart shows the maximum fee as a percentage of each Fund's average daily net assets:
- ------------------------------- FUND FEE - ------------------------------- MONEY MARKET FUND 0.30% - ------------------------------- SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND 0.50% - ------------------------------- U.S. GOVERNMENT SECURITIES FUND 0.50% - ------------------------------- INTERMEDIATE TERM BOND FUND 0.50% - ------------------------------- INCOME FUND 0.50% - ------------------------------- BALANCED FUND 0.75% - ------------------------------- EQUITY INCOME FUND 0.75% - ------------------------------- CORE EQUITY FUND 0.75% - ------------------------------- EQUITY GROWTH FUND 0.75% - ------------------------------- SMALL CAPITALIZATION FUND 0.75% - -------------------------------
Chase Bank of Texas, N.A. (Chase Texas) is the sub-advisor to the Funds. Chase Texas is a wholly owned subsidiary of The Chase Manhattan Corporation. It makes the day-to-day investment decisions for these funds. Chase Texas is located at 712 Main Street, Houston, Texas 77002.[logo] 62 The Portfolio Managers CHASE MONEY MARKET FUND The portfolio manager is Thomas Nelson, Head of Short Term Investments at Chase. He has managed the portfolio since October 1999. Prior to this position, he was responsible for the cash reinvestment of the Securities Lending Division. Mr. Nelson joined Chase in 1987 as a portfolio manager and trader for individual fixed income accounts. CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND The portfolio managers are Michael Bennis, Vice President and Senior Portfolio Manager at Chase, Timothy Neumann, Head of the Taxable Core Investment Group at Chase and Lynn J. Chen, Vice President and Portfolio Manager at Chase. Mr. Bennis and Mr. Neumann have been responsible for the Fund since October 1999. Ms. Chen has been responsible for the Fund since April 2000. Before joining Chase in 1996, Mr. Bennis was a senior analyst and trader at Union Bank of Switzerland Asset Management. Prior to joining Union Bank of Switzerland, he was a fixed income analyst at Donaldson, Lufkin & Jenrette. Before joining Chase in 1997, Mr. Neumann was a portfolio manager for Lehman Brothers Global Asset Management mortgage-backed securities accounts. Prior to joining Lehman, he managed fixed income portfolios at Allstate Insurance. Before joining Chase in 1997, Ms. Chen spent seven years as both a portfolio manager and an analyst at Nippon Life Insurance Company. CHASE U.S. GOVERNMENT SECURITIES FUND The portfolio managers are Mr. Bennis and Mr. Neumann. They have been responsible for the Fund since October 1999. CHASE INTERMEDIATE TERM BOND FUND The portfolio managers are Leonard Lovito, a Vice President and Senior Portfolio Manager at Chase and Mr. Neumann. They have managed the Fund since October 1999. Mr. Lovito joined Chase in 1998. Prior to joining Chase, from 1984 to 1998, Mr. Lovito was Vice President at J. & W. Seligman & Co., Inc. where he managed a number of fixed income portfolios and mutual funds. Prior to joining Seligman, Mr. Lovito was a senior Securities Administrator in the investment department of the Dime Savings Bank of New York. CHASE INCOME FUND The portfolio managers are Andrew Russell, a Vice President and Portfolio Manager at Chase and Mr. Neumann. They have been responsible for the Fund since October 1999. Mr. Russell joined Chase in 1990 and has held several positions within the U.S. fixed income area, including portfolio analyst, taxable fixed-income trader and assistant trader. Mr. Russell is a member of the U.S. fixed income area's quantitative research team. CHASE BALANCED FUND Henry Lartique, Executive Vice President and Chief Investment Officer at Chase, and Jeff Phelps, Portfolio Manager at Chase are responsible for the equity portion of the portfolio. H. Mitchell Harper, 63 FUND MANAGEMENT Senior Vice President, and Portfolio Manager at Chase is responsible for the fixed income portion of the portfolio. Mr. Lartique has managed the equity portion of the portfolio since July of 1994. He began his career as a securities analyst at Chase in 1984. Mr. Lartigue then worked as an Equity Fund Manager until 1992. From July 1992 to June 1994, he worked as an independent registered investment adviser. He returned to Chase in 1994. Mr. Phelps has managed the equity portion of the portfolio since October 1999. Mr. Phelps joined Chase in 1997. Prior to joining Chase, he was employed by Houston Industries. Mr. Harper has managed the fixed income portion of the portfolio since October 1999. Mr. Harper has been with Chase since 1987. Previously he worked at John Alden Life Insurance Co. from 1985-1987, as Vice President, Portfolio Management. Prior to that he was Vice President, Department Head-Investments at Bank Life & Casualty. CHASE EQUITY INCOME FUND The portfolio manager is Robert Heintz, a Senior Investment Officer at Chase. He has managed the portfolio since its inception on March 29, 1988. Mr. Heintz has worked for Chase Texas since 1983. CHASE CORE EQUITY FUND Mr. Lartigue has managed the portfolio since January of 1996. Since January 1999 the funds have been co-managed with Mr. Phelps. CHASE EQUITY GROWTH FUND Mr. Lartigue has managed the portfolio since July of 1994. CHASE SMALL CAPITALIZATION FUND The portfolio manager is Juliet Ellis, a Senior Investment Officer at Chase. She has managed the portfolio since September of 1993. Ms. Ellis has worked at Chase Texas since 1987. Before becoming portfolio manager for the Small Capitalization Fund, Ms. Ellis was the director of research and an equity analyst at Chase Texas.[logo] 64 HOW YOUR ACCOUNT WORKS Buying Fund shares There is no commission or sales charge to buy Premier Class shares. You can buy shares through financial service firms, such as broker-dealers and banks, if they have an agreement with the Funds' distributor. Your financial service firm is responsible for promptly forwarding your order to the Chase Funds Service Center. Minimum investments The minimum initial investment is $250,000. Registered investment advisors and broker dealers offering fee-based programs may aggregate client fund balances to meet this investment minimum provided that individual client fund balances meet an investment minimum of $25,000. In addition, any registered investment advisors or broker dealers who aggregate client balances in order to meet the investment minimum must maintain an average balance of $250,000 per fund. The Distributor reserves the right to redeem or convert to investor shares at its prevailing net asset value accounts that do not meet the minimum investment after one year. Investment details The price of the shares is the net asset value per share (NAV). NAV is the value of everything a Fund owns, 65 HOW YOUR ACCOUNT WORKS minus everything it owes, divided by the number of shares held by investors. You'll pay the next NAV calculated after your financial service firm receives your instructions, provided that the order is received by the Chase Funds Service Center before it closes for business that day. Each Fund calculates its NAV once each day at the close of regular trading on the New York Stock Exchange. Each Fund other than the Money Market Fund generally values its assets at their market value but may use fair value if market prices are unavailable. The Money Market Fund seeks to maintain a stable NAV of $1.00. It uses the amortized cost method to value its portfolio of securities. This method provides more stability in valuations. However, it may also result in periods during which the stated value of a security is different than the price the Fund would receive if it sold the investment. Your financial service firm will not accept your order until it is in proper form. An order is in proper form only after payment is converted into federal funds. You can buy shares on any business day that the New York Stock Exchange and the Federal Reserve Bank of New York are open. You must provide a Taxpayer Identification Number or Social Security Number when you open an account. The Funds reserve the right to refuse any purchase order or to stop offering shares for sale at any time.[logo] Selling Fund shares There is no commission or charge to sell Premier Class shares of the Funds. You can sell your shares on any day that the Funds are accepting purchase orders. Your financial service firm will forward your order to the Chase Funds Service Center. Your financial service firm will be responsible for sending the Funds all the documentation that they need, and your firm might charge you for this service. You'll receive the next NAV calculated after the Chase Funds Service Center receives your order in proper form. Under normal circumstances, if the Chase Funds Service Center receives your order before the close of regular trading on the New York Stock Exchange, each Fund will send your financial service firm the proceeds the next business day. Under unusual circumstances, each Fund may stop accepting orders to sell and may postpone payments for more than seven days, as federal securities laws permit.[logo] Exchanging Fund shares You can exchange your shares for Premier shares of other Chase Funds at net asset value, if your financial service firm allows exchanges. To exchange shares, contact your financial service firm. You should carefully read the prospectus of the Fund you want to change to before making any exchanges.[logo] 66 Other information concerning the Funds If you have authorized your financial service firm to act upon instructions received by phone and the firm fails to take reasonable steps to confirm that the instructions are genuine, it may be liable for any losses due to unauthorized or fraudulent instructions. You agree that you will not hold a Fund, your financial service firm or their agents liable for any loss or expenses from any sales request, including a fraudulent or unauthorized request, if the financial service firm has taken reasonable precautions.[logo] For shareholders that bank with Chase, Chase may aggregate investments in the Chase Funds with balances held in Chase bank accounts for purposes of determining eligibility for certain bank privileges that are based on specified minimum balance requirements, such as reduced or no fees for certain banking services or preferred rates on loans and deposits. Chase and certain other financial institutions may, at their own expense, provide gifts, such as computer software packages, guides and books related to investment or additional Fund shares valued up to $250 to their customers that invest in the Chase Funds. Distribution arrangements The Funds' distributor is CFD Fund Distributors Inc., which we call CFD in this prospectus. CFD is a subsidiary of The BISYS Group, Inc. and is not affiliated with Chase. Each Fund may issue multiple classes of shares. This prospectus relates only to Premier Class shares of the Funds. Each class may have different requirements for who may invest, and may have different sales charges and expense levels. A person who gets compensated for selling Fund shares may receive a different amount for each class. Chase and its affiliates and the Funds and their affiliates, agents and sub-agents may share information about shareholders and their accounts with each other and with others unless this sharing is prohibited by contract. The information can be used for a variety of purposes, including offering investment and insurance products to shareholders.[logo] Distributions and taxes The Funds can earn income and they can realize capital gains. The Funds deduct any expenses and pay these earnings out to shareholders as distributions. The Chase Money Market Fund declares dividends daily, so your shares can start earning dividends on the day you buy them. We distribute the dividends monthly. We distribute any short-term capital gain at least annually. The Chase Money Market Fund does not expect to realize long-term capital gain. The Chase Short-Intermediate Term U.S. Government Securities Fund, Chase U.S. Government Securities Fund, Chase Intermediate Term 67 HOW YOUR ACCOUNT WORKS Bond Fund and Chase Income Fund (the Fixed Income Funds) declare dividends daily and distribute the net investment income monthly. The Chase Balanced Fund, Chase Equity Income Fund, Chase Core Equity Fund, Chase Equity Growth Fund and Chase Small Capitalization Fund distribute any net investment income at least quarterly. Net capital gain is distributed at least annually. You have three options for your distributions if your financial services firm offers them. You may: o reinvest all of them in additional Fund shares; o take distributions of net investment income in cash or as a deposit in a pre-assigned bank account and reinvest distributions of net capital gain in additional shares; or o take all distributions in cash or as a deposit in a pre-assigned bank account. If you don't select an option when you open your account, we'll reinvest all distributions. If we reinvest your distributions, they will be in the same class of shares. The taxation of dividends won't be affected by the form in which you receive them. Dividends of net investment income are usually taxable as ordinary income at the federal, state and local levels. The state or municipality where you live may not charge you state and local taxes on dividends earned on certain bonds. Dividends earned on bonds issued by the U.S. government and its agencies may also be exempt from some types of state and local taxes. If you receive distributions of net capital gain, the tax rate will be based on how long the Fund held a particular asset, not on how long you have owned your shares. If you buy shares just before a distribution, you will pay tax on the entire amount of the taxable distribution you receive, even though the NAV will be higher on that date because it includes the distribution amount. The Fixed Income Funds, the Chase Balanced Fund and Chase Equity Income Fund expect that their distributions will consist primarily of ordinary income. The Chase Core Equity Fund, Chase Equity Growth Fund and Chase Small Capitalization Fund expect that their distributions will consist primarily of capital gains. Early in each calendar year, each Fund will send you a notice showing the amount of distributions you received in the preceding year and the tax status of those distributions. For tax purposes, an exchange is treated as selling Fund shares. This will generally result in a capital gain or loss to you. The above is a general summary of tax implications of investing in the Funds. Please consult your tax adviser to see how investing in a Fund will affect your own tax situation.[logo] 68 FINANCIAL HIGHLIGHTS The Financial Highlights tables are intended to help you understand the Funds' financial performance for the periods for the past five years. The total returns in the tables represent the rate an investor would have earned or lost on an investment in the Funds (assuming reinvestment of all dividends and distributions). The following tables provide selected per share data and ratios for one unit of each Fund's predecessor fund for the periods prior to January 1, 1998 and one Premier share of the Funds for each period since conversion. This information is supplemented by financial statements including accompanying notes appearing in the Funds' Annual Report to Shareholders for the year ended December 31, 1999, which is incorporated by reference into the SAI. Shareholders may obtain a copy of this annual report by contacting the Funds or their Shareholder Servicing Agent. The financial statements, which include the financial highlights, have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report thereon is included in the Annual Report to Shareholders.[logo] 69 Chase Money Market Fund
Premier Shares ------------------------------------------------------ For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.05 0.05 0.05 0.05 0.05 Net Gains or Losses in Investments (both realized and unrealized) -- -- -- -- -- ------- ------- ------- ------- ------- Total from Investment Operations 0.05 0.05 0.05 0.05 0.05 Less Distributions: Dividends from Net Investment Income 0.05 0.05 0.05 0.05 0.05 Distributions from Capital Gains -- -- -- -- -- ------- ------- ------- ------- ------- Total Distributions 0.05 0.05 0.05 0.05 0.05 - ---------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 - ---------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 4.89% 5.20% 5.18% 5.06% 5.57% ============================================================================================================================ RATIOS/SUPPLEMENTAL DATA: - ---------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 296 $ 195 $ 135 $ 119 $ 71 - ---------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ---------------------------------------------------------------------------------------------------------------------------- Expenses 0.50% 0.50% 0.50% 0.50% 0.50% - ---------------------------------------------------------------------------------------------------------------------------- Net Investment Income 4.81% 5.07% 5.09% 4.93% 5.43% - ---------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 0.58% 0.60% 0.74% 0.72% 0.72% - ---------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 4.73% 4.97% 4.85% 4.71% 5.21% - ----------------------------------------------------------------------------------------------------------------------------
70 FINANCIAL HIGHLIGHTS Chase Short-Intermediate Term U.S. Government Securities Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 12.60 $ 12.39 $ 11.66 $ 11.35 $ 10.14 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.60 0.63 0.67 0.60 0.58 Net Gains or Losses in Investments (both realized and unrealized) (0.51) 0.25 0.06 (0.29) 0.63 -------- ------- ------- -------- ------- Total from Investment Operations 0.09 0.88 0.73 0.31 1.21 Less Distributions: Dividends from Net Investment Income 0.60 0.63 -- -- -- Distributions from Capital Gains 0.04 0.04 -- -- -- -------- ------- ------- ------- ------- Total Distributions 0.64 0.67 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 12.05 $ 12.60 $ 12.39 $ 11.66 $ 11.35 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 0.72% 7.35% 6.30% 2.68% 12.01% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 31 $ 31 $ 24 $ 29 $ 29 - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------------------- Expenses 0.75% 0.75% 0.75% 0.75% 0.75% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 4.82% 5.06% 5.40% 5.26% 5.38% - --------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.12% 1.12% 1.01% 0.88% 0.91% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 4.45% 4.69% 5.14% 5.13% 5.22% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 91% 87% 63% 177% 187% - ---------------------------------------------------------------------------------------------------------------------------------
71 Chase U.S. Government Securities Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 13.83 $ 13.98 $ 12.76 $ 13.01 $ 10.00 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.64 0.72 0.75 0.74 0.73 Net Gains or Losses in Investments (both realized and unrealized) ( 0.99) 0.54 0.47 ( 0.99) 2.28 ------- ------- ------- ------- ------- Total from Investment Operations ( 0.35) 1.26 1.22 (0.25) 3.01 Less Distributions: Dividends from Net Investment Income 0.64 0.72 -- -- -- Distributions from Capital Gains -- 0.68 -- -- -- In Excess of Realized Capital Gains -- 0.01 -- -- -- ------- ------- ------- ------- ------- Total Distributions 0.64 1.41 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 12.84 $ 13.83 $ 13.98 $ 12.76 $ 13.01 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (2.55%) 9.28% 9.55% (1.89%) 30.11% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 8 $ 4 $ 3 $ 3 $ 3 - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------------------- Expenses 0.75% 0.75% 0.75% 0.75% 0.75% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 4.87% 5.07% 5.73% 6.01% 6.38% - --------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 2.44% 3.85%* 3.15% 2.09% 2.22% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 3.18% 1.97%* 3.33% 4.67% 4.91% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 19% 110% 87% 48% 17% - ---------------------------------------------------------------------------------------------------------------------------------
*Restated. 72 FINANCIAL HIGHLIGHTS Chase Intermediate Term Bond Fund
Premier Shares ---------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 12.87 $ 12.75 $ 11.89 $ 11.67 $ 9.99 - -------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.66 0.68 0.56 0.61 0.64 Net Gains or Losses in Investments (both realized and unrealized) (0.80) 0.27 0.30 (0.39) 1.04 ------- ------- ------- ------- ------- Total from Investment Operations (0.14) 0.95 0.86 0.22 1.68 Less Distributions: Dividends from Net Investment Income 0.66 0.68 -- -- -- Distributions from Capital Gains 0.01 0.15 -- -- -- ------- ------- -------- -------- ------- Total Distributions 0.67 0.83 -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 12.06 $ 12.87 $ 12.75 $ 11.89 $ 11.67 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (1.11%) 7.63% 7.26% 1.86% 16.79% ================================================================================================================================ RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 39 $ 33 $ 19 $ 7 $ 5 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - -------------------------------------------------------------------------------------------------------------------------------- Expenses 0.75% 0.75% 0.75% 0.75% 0.75% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 5.33% 5.25% 5.61% 5.32% 5.89% - -------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.18% 1.27% 1.25% 1.42% 1.43% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 4.90% 4.73% 5.11% 4.65% 5.21% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 85% 135% 14% 134% 198% - --------------------------------------------------------------------------------------------------------------------------------
73 Chase Income Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 20.47 $ 20.18 $ 18.56 $ 18.21 $ 15.39 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 1.03 1.09 1.14 1.00 0.97 Net Gains or Losses in Investments (both realized and unrealized) (1.59) 0.77 0.48 (0.65) 1.85 ------- ------- ------- ------- ------- Total from Investment Operations (0.56) 1.86 1.62 0.35 2.82 Less Distributions: Dividends from Net Investment Income 1.03 1.09 -- -- -- Distributions from Capital Gains 0.17 0.48 -- -- -- ------- ------- -------- ------- -------- Total Distributions 1.20 1.57 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 18.71 $ 20.47 $ 20.18 $ 18.56 $ 18.21 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN (2.78%) 9.47% 8.73% 1.91% 18.38% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 65 $ 60 $ 51 $ 54 $ 57 - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------------------- Expenses 0.75% 0.75% 0.75% 0.75% 0.75% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 5.28% 5.28% 5.82% 5.58% 5.77% - --------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 0.93% 0.94% 1.14% 1.07% 1.08% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 5.10% 5.09% 5.43% 5.26% 5.44% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 120% 54% 97% 72% 93% - ---------------------------------------------------------------------------------------------------------------------------------
74 FINANCIAL HIGHLIGHTS Chase Balanced Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 34.54 $ 29.26 $ 23.66 $ 21.25 $ 17.16 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.78@ 0.73 0.74 0.63 0.57 Net Gains or Losses in Investments (both realized and unrealized) 4.07 6.53 4.86 1.78 3.52 ------- ------- ------- ------- ------- Total from Investment Operations 4.85 7.26 5.60 2.41 4.09 Less Distributions: Dividends from Net Investment Income 0.70 0.73 -- -- -- Distributions from Capital Gains 0.19 1.25 -- -- -- ------- ------- ------- ------- -------- Total Distributions 0.89 1.98 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 38.50 $ 34.54 $ 29.26 $ 23.66 $ 21.25 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 14.23% 25.15% 23.67% 11.31% 23.83% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 103 $ 59 $ 36 $ 23 $ 21 - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------------------- Expenses 1.00% 1.00% 1.00% 1.00% 1.00% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 2.19% 2.32% 2.73% 2.82% 2.94% - --------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.19% 1.28% 1.28% 1.17% 1.17% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 2.00% 2.04% 2.45% 2.65% 2.77% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 45% 58% 64% 70% 98% - ---------------------------------------------------------------------------------------------------------------------------------
@ Calculated based upon average shares outstanding. 75 Chase Equity Income Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 46.14 $ 36.97 $ 28.21 $ 23.93 $ 17.90 - --------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.32@ 0.33 0.40 0.43 0.44 Net Gains or Losses in Investments (both realized and unrealized) 5.65 9.32 8.36 3.85 5.59 ------- ------- ------- ------- ------- Total from Investment Operations 5.97 9.65 8.76 4.28 6.03 Less Distributions: Dividends from Net Investment Income 0.31 0.34 -- -- -- Distributions from Capital Gains 2.00 0.14 -- -- -- ------- ------- -------- -------- -------- Total Distributions 2.31 0.48 -- -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 49.80 $ 46.14 $ 36.97 $ 28.21 $ 23.93 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 13.06% 26.20% 31.05% 17.87% 33.72% ================================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - --------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 170 $ 128 $ 75 $ 63 $ 55 - --------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - --------------------------------------------------------------------------------------------------------------------------------- Expenses 1.00% 1.00% 1.00% 1.00% 1.00% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income 0.66% 0.82% 1.67% 1.67% 2.10% - --------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.09% 1.10% 1.11% 1.07% 1.09% - --------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 0.57% 0.72% 1.56% 1.60% 2.01% - --------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 16% 3% 14% 24% 11% - ---------------------------------------------------------------------------------------------------------------------------------
@ Calculated based upon average shares outstanding. 76 FINANCIAL HIGHLIGHTS Chase Core Equity Fund
Premier Shares ------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $26.52 $21.25 $15.94 $13.01 $10.36 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income 0.04@ 0.09 0.14 0.16 0.17 Net Gains or Losses in Investments (both realized and unrealized) 6.27 6.44 5.17 2.77 2.48 ------ ------ ------ ------ ------ Total from Investment Operations 6.31 6.53 5.31 2.93 2.65 Less Distributions: Dividends from Net Investment Income 0.04 0.09 -- -- -- Distributions from Capital Gains 0.55 0.17 -- -- -- ------ ------ ------ ------ ------ Total Distributions 0.59 1.26 -- -- -- - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $32.24 $26.52 $21.25 $15.94 $13.01 - ----------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 23.89% 30.95% 33.33% 22.54% 25.53% ============================================================================================================================= RATIOS/SUPPLEMENTAL DATA: - ----------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 181 $ 89 $ 51 29 $ 24 - ----------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - ----------------------------------------------------------------------------------------------------------------------------- Expenses 1.00% 1.00% 1.00% 1.00% 1.00% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income 0.13% 0.39% 0.74% 1.10% 1.44% - ----------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.11% 1.18% 1.20% 1.14% 1.17% - ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses 0.02% 0.21% 0.54% 0.96% 1.27% - ----------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 11%- 32% 24% 29% 133% - -----------------------------------------------------------------------------------------------------------------------------
- - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in Core Equity Portfolio. @ Calculated based upon average shares outstanding. 77 Chase Equity Growth Fund
Premier Shares ---------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 52.36 $ 38.36 $ 27.95 $ 23.20 $ 18.44 - -------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income (0.14)@ 0.03 0.07 0.10 0.17 Net Gains or Losses in Investments (both realized and unrealized) 16.78 15.78 10.34 4.65 4.59 ------- ------- ------- ------- ------- Total from Investment Operations 16.64 15.81 10.41 4.75 4.76 Less Distributions: Dividends from Net Investment Income -- 0.03 -- -- -- Distributions from Capital Gains 0.91 1.78 -- -- -- ------- ------- ------- ------- ------- Total Distributions 0.91 1.81 -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 68.09 $ 52.36 $ 38.36 $ 27.95 $ 23.20 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 31.85% 41.38% 37.20% 20.52% 25.78% ================================================================================================================================ RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 320 $ 179 $ 74 $ 57 $ 46 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - -------------------------------------------------------------------------------------------------------------------------------- Expenses 1.00% 1.00% 1.00% 1.00% 1.00% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income (0.24%) 0.05% 0.20% 0.41% 0.78% - -------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.03% 1.09% 1.11% 1.08% 1.10% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (0.27%) (0.04%) 0.09% 0.33% 0.68% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 15%- 35% 35% 62% 99% - --------------------------------------------------------------------------------------------------------------------------------
- Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in Equity Growth Portfolio. @ Calculated based upon average shares outstanding. 78 FINANCIAL HIGHLIGHTS Chase Small Capitalization Fund
Premier Shares ----------------------------------------------------------- For the Years Ended December 31, PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 19.96 $ 21.78 $ 17.55 $ 13.41 $ 10.23 - -------------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net Investment Income (0.02)@ (0.01) 0.02 0.01 0.05 Net Gains or Losses in Investments (both realized and unrealized) 2.66 (0.46) 4.21 4.13 3.13 ------- ------- ------- ------- ------- Total from Investment Operations 2.64 (0.47) 4.23 4.14 3.18 Less Distributions: Dividends from Capital Gains -- 0.71 -- -- -- In Excess of Net Realized Gain on Investment -- 0.64 -- -- -- ------- ------- ------- ------- ------- Total Distributions -- 1.35 -- -- -- - -------------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 22.60 $ 19.96 $ 21.78 $ 17.55 $ 13.41 - -------------------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 13.23% (1.83%) 24.08% 30.88% 31.14% ================================================================================================================================ RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (millions) $ 93 $ 65 $ 40 $ 21 $ 13 - -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS: - -------------------------------------------------------------------------------------------------------------------------------- Expenses 1.00% 1.00% 1.00% 1.22% 1.35% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income (0.13%) (0.03%) 0.13% 0.04% 0.46% - -------------------------------------------------------------------------------------------------------------------------------- Expenses without waivers and assumption of expenses 1.21% 1.26% 1.40% 1.37% 1.50% - -------------------------------------------------------------------------------------------------------------------------------- Net Investment Income without waivers and assumption of expenses (0.34%) (0.29%) (0.27%) (0.11%) 0.31% - -------------------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 60% 45% 43% 68% 89% - --------------------------------------------------------------------------------------------------------------------------------
@ Calculated based upon average shares outstanding. 79 What the terms mean COLLATERALIZED MORTGAGE OBLIGATIONS: debt securities that are collateralized by a portfolio of mortgages or mortgage backed securities. DEBT SECURITIES: securities used by issuers, such as governmental entities and corporations, to borrow money. The issuer usually pays a fixed, variable or floating rate of interest and repays the amount borrowed at the maturity date of the security. However, if a borrower issues a zero coupon debt security, it does not make regular interest payments. DEPOSITARY RECEIPTS: instruments which are typically issued by financial institutions and which represent ownership of securities of foreign corporations. Depositary receipts are usually designed for use on U.S. and European securities exchanges. DISTRIBUTION FEE: a fee that covers the cost of the distribution system used to sell shares to the public. DOLLAR-WEIGHTED AVERAGE MATURITY: The average maturity of the Fund is the average amount of time until the issuers of the debt securities in the Fund's portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of the debt security in the Fund's portfolio, the more weight it gets in calculating this average. DURATION: A mathematical calculation of the average life of a bond that serves as a useful measure of its price risk. Each year of duration represents an expected 1% change in interest rates. For example, if a bond has an average duration of 4 years, its price will move 4% when interest rates move 1%. FUNDAMENTAL RESEARCH: method which concentrates on "fundamental" information about an issuer, such as its financial statements, history, management, etc. GROWTH APPROACH: approach which focuses on identifying securities of companies whose earnings growth potential appears to the manager to be greater than the market in general and whose growth in revenue is expected to continue for an extended period. MANAGEMENT FEE: a fee paid to the investment adviser to manage the Fund and make decisions about buying and selling the Fund's investments. MORTGAGE-RELATED SECURITIES: securities that directly or indirectly represent an interest in, or are secured by and paid from, mortgage loans secured by real property. OTHER EXPENSES: miscellaneous items, including transfer agency, custody and registration fees. REPURCHASE AGREEMENTS: a type of short-term investment in which a dealer sells securities to the Fund and agrees to buy them back later at a set price. In effect, the dealer is borrowing the Fund's money for a short time, using the securities as collateral. 80 SHAREHOLDER SERVICE FEE: a fee to cover the cost of paying shareholder servicing agents to provide certain support services for your account. STRIPPED OBLIGATIONS: debt securities which are separately traded interest-only or principal-only components of an underlying obligation. TECHNICAL ANALYSIS: method which focuses on historical price trends in an attempt to predict future price movements. VALUE APPROACH: approach which focuses on identifying securities that the adviser believes are undervalued by the market, as measured by certain financial formulas. YIELD CURVE: measure showing relationship among yields of similar bonds with different maturities.[logo] 81 HOW TO REACH US - -------------------------------------------------------------------------------- More information You'll find more information about the Funds in the following documents: ANNUAL AND SEMI-ANNUAL REPORTS Our annual and semi-annual reports contain more information about each Fund's investments and performance. The annual report also includes details about the market conditions and investment strategies that had a significant effect on each Fund's performance during the last fiscal year. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information about the Funds and their policies. By law, it's considered to be part of this prospectus. You can get a free copy of these documents and other information, or ask us any questions, by calling us at 1-888-524-2730 or writing to: Chase Funds Service Center P.O. Box 419392 Kansas City, MO 64141-6392 If you buy your shares through The Chase Manhattan Bank or another institution, you should contact that institution directly for more information. You can also find information on-line at www.chasefunds.com on the internet. You can write or e-mail the SEC's Public Reference Room and ask them to mail you information about the Funds, including the SAI. They'll charge you a copying fee for this service. You can also visit the Public Reference Section and copy the documents while you're there. Public Reference Section of the SEC Washington, DC 20549-0102. 1-202-942-8090 E-mail: publicinfo@sec.gov Reports, a copy of the SAI and other information about the Funds is also available on the SEC's website at http://www.sec.gov. The Fund's Investment Company Act File No. is 811-5526 Chase Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 EX-99.(17)(D) 6 a2027167zex-99_17d.txt EXHIBIT 99(17)(D) [logo] CHASE VISTA FUNDS STATEMENT OF ADDITIONAL INFORMATION December 29, 1999 U.S. GOVERNMENT MONEY MARKET FUND 100% U.S. TREASURY SECURITIES MONEY MARKET FUND CASH MANAGEMENT FUND PRIME MONEY MARKET FUND FEDERAL MONEY MARKET FUND TREASURY PLUS MONEY MARKET FUND TAX FREE MONEY MARKET FUND CALIFORNIA TAX FREE MONEY MARKET FUND NEW YORK TAX FREE MONEY MARKET FUND TAX FREE INCOME FUND NEW YORK TAX FREE INCOME FUND CALIFORNIA INTERMEDIATE TAX FREE FUND One Chase Manhattan Plaza, Third Floor, New York, New York 10081 This Statement of Additional Information sets forth information which may be of interest to investors but which is not necessarily included in the Prospectuses offering shares of the Funds. This Statement of Additional Information should be read in conjunction with the Prospectuses offering shares of Chase Vista Tax Free Income Fund, Chase Vista California Intermediate Tax Free Fund and Chase Vista New York Tax Free Income Fund (collectively the "Income Funds"), and Chase Vista U.S. Government Money Market Fund, Chase Vista 100% U.S. Treasury Securities Money Market Fund, Chase Vista Cash Management Fund, Chase Vista Prime Money Market Fund, Chase Vista Federal Money Market Fund, Chase Vista Treasury Plus Money Market, Chase Vista Tax Free Money Market Fund, Chase Vista California Tax Free Money Market Fund and Chase Vista New York Tax Free Money Market Fund (collectively the "Money Market Funds"). Any reference to a "Prospectus" in this Statement of Additional Information is a reference to one or more of the foregoing Prospectuses, as the context requires. Copies of each Prospectus may be obtained by an investor without charge by contacting Vista Fund Distributors, Inc. ("VFD"), the Funds' distributor (the "Distributor"), at the above-listed address. This Statement of Additional Information is NOT a prospectus and is authorized for distribution to prospective investors only if preceded or accompanied by an effective prospectus. For more information about your account, simply call or write the Chase Vista Service Center at: 1-800-622-4273 Chase Vista Service Center P.O. Box 419392 Kansas City, MO 64141 MFT-SAI Table of Contents Page - ----------------------------------------------------------------------------------------------- The Funds ................................................................................ 3 Investment Policies and Restrictions ..................................................... 4 Performance Information .................................................................. 23 Determination of Net Asset Value ......................................................... 29 Purchases, Redemptions and Exchanges ..................................................... 30 Distributions; Tax Matters ............................................................... 34 Management of the Trust and Funds ........................................................ 39 Independent Accountants .................................................................. 56 Certain Regulatory Matters ............................................................... 56 General Information ...................................................................... 57 Appendix A--Description of Certain Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities ............................................................ A-1 Appendix B--Description of Ratings ....................................................... B-1 Appendix C--Special Investment Considerations Relating to New York Municipal Obligations . C-1 Appendix D--Special Investment Considerations Relating to California Municipal D-1 Obligations
2 THE FUNDS Mutual Fund Trust (the "Trust") is an open-end management investment company which was organized as a business trust under the laws of the Commonwealth of Massachusetts on February 4, 1994. The Trust presently consists of 12 separate series (the "Funds"). Certain of the Funds are diversified and other Funds are non-diversified, as such term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"). The shares of the Funds are collectively referred to in this Statement of Additional Information as the "Shares." The Income Funds, Tax Free Money Market Fund, New York Tax Free Money Market Fund and California Tax Free Money Market Fund are collectively referred to herein as the "Tax Free Funds." On August 25, 1994, the shareholders of each of the existing classes of Shares of the Vista U.S. Government Money Market Fund, Vista Global Money Market Fund, Vista Prime Money Market Fund, Vista Tax Free Money Market Fund, Vista California Money Market Fund, Vista New York Tax Free Money Market Fund, Vista Tax Free Income Fund, Vista New York Tax Free Income Fund and the Vista California Intermediate Tax Free Fund approved the reorganization of each of such Funds into newly-created series of Mutual Fund Trust, effective October 28, 1994. Prior to such approvals, each of such Funds were series of Mutual Fund Group, an affiliated investment company. On December 4, 1992, the shareholders of each of the existing classes of Shares of Vista Global Money Market Fund and Vista U.S. Government Money Market Fund approved the reorganization of each of such Funds into newly-created series of Mutual Fund Group, effective January 1, 1993. Prior to such approvals, on December 4, 1992, the shareholders of each of the five existing series of Trinity Assets Trust (Trinity Money Market Fund, Trinity Government Fund, Trinity Bond Fund, Trinity Short-Term Bond Fund and Trinity Equity Fund) (collectively, the "Trinity Funds") approved the reorganization of each of the Trinity Funds into newly-created series of the Trust, effective January 1, 1993. Vista Global Money Market Fund and Trinity Money Market Fund were reorganized into classes of Shares of "Vista Worldwide Money Market Fund", which changed its name to "Vista Global Money Market Fund" as of December 31, 1992. Vista U.S. Government Money Market Fund and Trinity Government Fund were reorganized into classes of Shares of "Vista Government Cash Fund", which changed its name to "Vista U.S. Government Money Market Fund" as of December 31, 1992. On May 3, 1996, The U.S. Treasury Money Market Fund of The Hanover Funds, Inc. ("Hanover") merged into the Vista Shares of Treasury Plus Money Market Fund, The Government Money Market Fund of Hanover merged into the Vista Shares of U.S. Government Money Market Fund, The Cash Management Fund of Hanover merged into the Vista Shares of Vista Global Money Market Fund (The Cash Management Fund of Hanover was the accounting survivor of this merger), The Tax Free Money Market Fund of Hanover merged into the Vista Shares of Tax Free Money Market Fund, The New York Tax Free Money Market Fund of Hanover merged into the Vista Shares of New York Tax Free Money Market Fund, and The 100% U.S. Treasury Securities Money Market Fund of Hanover merged into the Vista Shares of The 100% U.S. Treasury Securities Money Market Fund. The foregoing mergers are referred to herein as the "Hanover Reorganization." Effective as of May 6, 1996, Vista Global Money Market Fund changed its name to Vista Cash Management Fund. The Board of Trustees of the Trust provides broad supervision over the affairs of the Trust including the Funds. The Chase Manhattan Bank ("Chase") is the investment adviser for the Funds. Chase also serves as the Trust's administrator (the "Administrator") and supervises the overall administration of the Trust, including the Funds. A majority of the Trustees of the Trust are not affiliated with the investment adviser or sub-advisers. 3 INVESTMENT POLICIES AND RESTRICTIONS Investment Policies The Prospectuses set forth the various investment policies applicable to each Fund. The following information supplements and should be read in conjunction with the related sections of each Prospectus. As used in this Statement of Additional Information, with respect to those Funds and policies for which they apply, the terms "Municipal Obligations" and "tax-exempt securities" have the meanings given to them in the relevant Fund's Prospectus. For descriptions of the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see Appendix B. For a general discussion of special investment considerations relating to investing in (i) New York and (ii) California Municipal Obligations, see Appendices C and D, respectively. The Money Market Funds invest only in U.S. dollar-denominated high-quality obligations which are determined to present minimal credit risks. This credit determination must be made in accordance with procedures established by the Board of Trustees. The management style used for the Funds emphasizes several key factors. Portfolio managers consider the security quality that is, the ability of the debt issuer to make timely payments of principal and interest. Also important in the analysis is the relationship of a bond's yield and its maturity, in which the managers evaluate the risks of investing in long-term higher-yielding securities. Managers also use a computer model to simulate possible fluctuations in prices and yields if interest rates change. Another step in the analysis is comparing yields on different types of securities to determine relative risk/reward profiles. U.S. Government Securities. Each Fund may invest in direct obligations of the U.S. Treasury. Each Fund other than the 100% U.S. Treasury Securities Money Market Fund and the Treasury Plus Money Market Fund may also invest in other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities (collectively, "U.S. Government Securities.") U.S. Government Securities include (1) U.S. Treasury obligations, which generally differ only in their interest rates, maturities and times of issuance, including U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury bonds (generally maturities of greater than ten years); and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow any amount listed to a specific line of credit from the U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase certain obligations of the U.S. Government agency or instrumentality or (d) the credit of the agency or instrumentality. Agencies and instrumentalities of the U.S. Government include but are not limited to: Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Student Loan Marketing Association, United States Postal Service, Chrysler Corporate Loan Guarantee Board, Small Business Administration, Tennessee Valley Authority and any other enterprise established or sponsored by the U.S. Government. Certain U.S. Government Securities, including U.S. Treasury bills, notes and bonds, Government National Mortgage Association certificates and Federal Housing Administration debentures, are supported by the full faith and credit of the United States. Other U.S. Government Securities are issued or guaranteed by federal agencies or government sponsored enterprises and are not supported by the full faith and credit of the United States. In the case of securities not backed by the "full faith and credit" of the U.S. Government, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment and may not be able to assert a claim against the U.S. Government itself in the event the agency or instrumentality does not meet its commitment. These securities include obligations that are supported by the right of the issuer to borrow from the U.S. Treasury, such as obligations of Federal Home Loan Banks, and obligations that are supported by the creditworthiness of the particular instrumentality, such as obligations of the Federal 4 National Mortgage Association or Federal Home Loan Mortgage Corporation. Vista Federal Money Market Fund generally limits its investments in agency and instrumentality obligations to obligations the interest on which is generally not subject to state and local income taxes by reason of federal law. Agencies and instrumentalities issuing such obligations include the Farm Credit System Financial Assistance Corporation, the Federal Financing Bank, The General Services Administration, Federal Home Loan Banks, the Tennessee Valley Authority and the Student Loan Marketing Association. For a description of certain obligations issued or guaranteed by U.S. Government agencies and instrumentalities, see Appendix A. In addition, certain U.S. Government agencies and instrumentalities issue specialized types of securities, such as guaranteed notes of the Small Business Administration, Federal Aviation Administration, Department of Defense, Bureau of Indian Affairs and Private Export Funding Corporation, which often provide higher yields than are available from the more common types of government- backed instruments. However, such specialized instruments may only be available from a few sources, in limited amounts, or only in very large denominations; they may also require specialized capability in portfolio servicing and in legal matters related to government guarantees. While they may frequently offer attractive yields, the limited-activity markets of many of these securities means that, if a Fund were required to liquidate any of them, it might not be able to do so advantageously; accordingly, each Fund investing in such securities intends normally to hold such securities to maturity or pursuant to repurchase agreements, and would treat such securities (including repurchase agreements maturing in more than seven days) as illiquid for purposes of its limitation on investment in illiquid securities. Bank Obligations. The Cash Management Fund, the Prime Money Market Fund and the Income Funds may invest in bank obligations, when consistent with their overall objectives and policies. The Tax Free Money Market Fund, the New York Tax Free Money Market Fund and the California Tax Free Money Market Fund may invest without limitation in Municipal Obligations (as defined below) secured by letters of credit or guarantees from U.S. banks (including their foreign branches) and may also invest in Municipal Obligations backed by foreign institutions. Each of the Income Funds may invest up to 25% of its total assets in such Municipal Obligations. Investments in bank obligations are limited to those of U.S. banks (including their foreign branches) which have total assets at the time of purchase in excess of $1 billion and the deposits of which are insured by either the Bank Insurance Fund or the Savings and Loan Insurance Fund of the Federal Deposit Insurance Corporation, and foreign banks (including their U.S. branches) having total assets in excess of $10 billion (or the equivalent in other currencies), and such other U.S. and foreign commercial banks which are judged by the advisers to meet comparable credit standing criteria. Bank obligations include negotiable certificates of deposit, bankers' acceptances, fixed time deposits and deposit notes. A certificate of deposit is a short-term negotiable certificate issued by a commercial bank against funds deposited in the bank and is either interest-bearing or purchased on a discount basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by a borrower, usually in connection with an international commercial transaction. The borrower is liable for payment as is the bank, which unconditionally guarantees to pay the draft at its face amount on the maturity date. Fixed time deposits are obligations of branches of United States banks or foreign banks which are payable at a stated maturity date and bear a fixed rate of interest. Although fixed time deposits do not have a market, there are no contractual restrictions on the right to transfer a beneficial interest in the deposit to a third party. Fixed time deposits subject to withdrawal penalties and with respect to which a Fund cannot realize the proceeds thereon within seven days are deemed "illiquid" for the purposes of its restriction on investments in illiquid securities. Deposit notes are notes issued by commercial banks which generally bear fixed rates of interest and typically have original maturities ranging from eighteen months to five years. The dependence on the banking industry may involve certain credit risks, such as defaults or downgrades, if at some future date adverse economic conditions prevail in such industry. Banks are subject to 5 extensive governmental regulations that may limit both the amounts and types of loans and other financial commitments that may be made and the interest rates and fees that may be charged. The profitability of this industry is largely dependent upon the availability and cost of capital funds for the purpose of financing lending operations under prevailing money market conditions. Also, general economic conditions play an important part in the operations of this industry and exposure to credit losses arising from possible financial difficulties of borrowers might affect a bank's ability to meet its obligations. Bank obligations may be general obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulation. Investors should also be aware that securities of foreign banks and foreign branches of United States banks may involve foreign investment risks in addition to those relating to domestic bank obligations. These investment risks may involve, among other considerations, risks relating to future political and economic developments, more limited liquidity of foreign obligations than comparable domestic obligations, the possible imposition of withholding taxes on interest income, the possible seizure or nationalization of foreign assets and the possible establishment of exchange controls or other restrictions. There may be less publicly available information concerning foreign issuers, there may be difficulties in obtaining or enforcing a judgment against a foreign issuer (including branches) and accounting, auditing and financial reporting standards and practices may differ from those applicable to U.S. issuers. In addition, foreign banks are not subject to regulations comparable to U.S. banking regulations. Changes in the credit quality of banks or other financial institutions backing a Fund's securities could cause losses to these Funds and affect their share price. Credit enhancements which are supplied by foreign or domestic banks are not subject to federal deposit insurance. Commercial Paper and Other Short-Term Obligations. The Income Funds may invest in commercial paper of domestic and foreign issuers. The commercial paper and other short-term obligations of U.S. and foreign corporations which may be purchased by the Vista Prime Money Market Fund and the Vista Cash Management Fund, other than those of bank holding companies, include obligations which are (i) rated Prime-1 by Moody's, A-1 by S&P, or F-1 by Fitch, or comparably rated by another NRO; or (ii) determined by the advisers to be of comparable quality to those rated obligations which may be purchased by the Vista Prime Money Market Fund and the Vista Cash Management Fund at the date of purchase or which at the date of purchase have an outstanding debt issue rated in the highest rating category by Moody's, S&P, Fitch or another NRO. The commercial paper and other short-term obligations of U.S. banks holding companies which may be purchased by the Vista Prime Money Market Fund and the Vista Cash Management Fund include obligations issued or guaranteed by bank holding companies with total assets exceeding $1 billion. For purposes of the size standards with respect to banks and bank holding companies, "total deposits" and "total assets" are determined on an annual basis by reference to an institution's then most recent annual financial statements. Repurchase Agreements. Each Fund other than the 100% U.S. Treasury Securities Money Market Fund and the Federal Money Market Fund may enter into agreements to purchase and resell securities at an agreed-upon price and time. A Fund will enter into repurchase agreements only with member banks of the Federal Reserve System and securities dealers believed creditworthy, and only if fully collateralized by securities in which such Fund is permitted to invest. Under the terms of a typical repurchase agreement, a Fund would acquire an underlying debt instrument for a relatively short period (usually not more than one week) subject to an obligation of the seller to repurchase the instrument and the Fund to resell the instrument at a fixed price and time, thereby determining the yield during the Fund's holding period. This procedure results in a fixed rate of return insulated from market fluctuations during such period. A repurchase agreement is subject to the risk that the seller may fail to repurchase the security. Repurchase agreements are considered under the 1940 Act to be loans collateralized by the underlying securities. All repurchase agreements entered into by a Fund will be fully collateralized at all times during the period of the agreement in that the value of the underlying security will be at least equal to 6 100% of the amount of the loan, including the accrued interest thereon, and the Fund or its custodian or sub-custodian will have possession of the collateral, which the Board of Trustees believes will give it a valid, perfected security interest in the collateral. Whether a repurchase agreement is the purchase and sale of a security or a collateralized loan has not been conclusively established. This might become an issue in the event of the bankruptcy of the other party to the transaction. In the event of default by the seller under a repurchase agreement construed to be a collateralized loan, the underlying securities would not be owned by a Fund, but would only constitute collateral for the seller's obligation to pay the repurchase price. Therefore, a Fund may suffer time delays and incur costs in connection with the disposition of the collateral. The Board of Trustees believes that the collateral underlying repurchase agreements may be more susceptible to claims of the seller's creditors than would be the case with securities owned by a Fund. Repurchase agreements will give rise to income which will not qualify as tax-exempt income when distributed by a Tax Free Fund. Repurchase agreements maturing in more than seven days are treated as illiquid for purposes of the Funds' restrictions on purchases of illiquid securities. Repurchase agreements are also subject to the risks described below with respect to stand-by commitments. Borrowings and Reverse Repurchase Agreements. Each Fund may borrow money from banks for temporary or short-term purposes, but will not borrow to buy additional securities, known as "leveraging." Reverse repurchase agreements involve sales of portfolio securities of a Fund to member banks of the Federal Reserve System or securities dealers believed creditworthy, concurrently with an agreement by such Fund to repurchase the same securities at a later date at a fixed price which is generally equal to the original sales price plus interest. A Fund retains record ownership and the right to receive interest and principal payments on the portfolio security involved. A Fund may use this practice to generate cash for shareholder redemptions without selling securities during unfavorable market conditions. Whenever a Fund enters into a reverse repurchase agreement, it will establish a segregated account in which it will maintain liquid assets on a daily basis in an amount at least equal to the repurchase price (including accrued interest.) A Fund would be required to pay interest on amounts obtained through reverse repurchase agreements, which are considered borrowings under federal securities laws. Municipal Obligations. The Cash Management Fund, the Prime Money Market Fund, the Tax Free Income Fund, the New York Tax Free Income Fund and the California Intermediate Tax Free Fund may invest in Municipal Obligations. The Cash Management Fund and the Prime Money Market Fund may invest in high-quality, short-term municipal obligations that carry yields that are competitive with those of other types of money market instruments in which they may invest. Dividends paid by these Funds that are derived from interest on municipal obligations will be taxable to shareholders for federal income tax purposes. "Municipal Obligations" are obligations issued by or on behalf of states, territories and possessions of the United States, and their authorities, agencies, instrumentalities and political subdivisions, the interest on which, in the opinion of the bond counsel, is excluded from gross income for federal tax purposes (without regard to whether the interest thereon is exempt from the personal income taxes of any state or whether the interest thereon constitutes a preference item for purposes of the federal alternative minimum tax.) "California Municipal Obligations" are obligations of the State of California, its local governments and political subdivisions, the interest on which, in the opinion of bond counsel, is exempt from federal income taxes and California personal income taxes and is not subject to the alternative minimum tax for noncorporate investors. "New York Municipal Obligations" are Municipal Obligations of the State of New York and its political subdivisions and of Puerto Rico, other U.S. territories and their political subdivisions, the interest on which, in the opinion of bond counsel, is exempt from New York State and New York City personal income taxes. Municipal Obligations are issued to obtain funds for various public purposes, such as the construction of public facilities, the payment of general operating expenses or the refunding of outstanding debts. They may also be issued to finance various private activities, including the lending of funds to public or private institutions for the construction of housing, educational or medical facilities, and may include certain types of industrial development bonds, private activity bonds or notes issued by public authorities to finance privately owned or operated facilities, or to fund short-term cash requirements. Short-term Municipal Obligations may be issued as interim financing in anticipation of tax collections, revenue receipts or bond sales to finance various public 7 purposes. The Municipal Obligations in which the Fund invests may consist of municipal notes, municipal commercial paper and municipal bonds maturing or deemed to mature in 397 days or less. The two principal classifications of Municipal Obligations are general obligation and revenue obligation securities. General obligation securities involve a pledge of the credit of an issuer possessing taxing power and are payable from the issuer's general unrestricted revenues. Their payment may depend on an appropriation by the issuer's legislative body. The characteristics and methods of enforcement of general obligation securities vary according to the law applicable to the particular issuer. Revenue obligation securities are payable only from the revenues derived from a particular facility or class of facilities, or a specific revenue source, and generally are not payable from the unrestricted revenues of the issuer. Industrial development bonds and private activity bonds are in most cases revenue obligation securities, the credit quality of which is directly related to the private user of the facilities. The Tax Free Funds may also invest in industrial development bonds that are backed only by the assets and revenues of the non-governmental issuers such as hospitals or airports, provided, however, that the Funds may not invest more than 25% of the value of their total assets in such bonds if the issuers are in the same industry. Interest on certain Municipal Obligations (including certain industrial development bonds), while exempt from federal income tax, is a preference item for the purpose of the alternative minimum tax. Where a mutual fund receives such interest, a proportionate share of any exempt-interest dividend paid by the mutual fund may be treated as such a preference item to shareholders. Federal tax legislation enacted over the past few years has limited the types and volume of bonds which are not AMT Items and the interest on which is not subject to federal income tax. This legislation may affect the availability of Municipal Obligations for investment by the Tax Free Funds. Investments by the Tax Free Money Market Funds will be made in unrated Municipal Obligations only if they are determined to be of comparable quality to permissable rated investments on the basis of the advisers' credit evaluation of the obligor or of the bank issuing a participation certificate, letter of credit or guaranty, or insurance issued in support of the obligation. High Quality instruments may produce a lower yield than would be available from less highly rated instruments. The Board of Trustees has determined that Municipal Obligations which are backed by the credit of the U.S. Government will be considered to have a rating equivalent to Moody's Aaa. If, subsequent to purchase by a Tax Free Money Market Fund, (a) an issue of rated Municipal Obligations ceases to be rated in the highest short-term rating category (the two highest categories in the case of the New York and California Tax Free Money Market Funds) by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization) or the Board of Trustees determines that it is no longer of comparable quality or (b) a Money Market Fund's advisers become aware that any portfolio security not so highly rated or any unrated security has been given a rating by any rating organization below the rating organization's second highest rating category, the Board of Trustees will reassess promptly whether such security presents minimal credit risk and will cause such Money Market Fund to take such action as it determines is in its best interest and that of its shareholders; provided that the reassessment required by clause (b) is not required if the portfolio security is disposed of or matures within five business days of the advisers becoming aware of the new rating and the Fund's Board is subsequently notified of the adviser's actions. To the extent that a rating given by Moody's, S&P or Fitch for Municipal Obligations may change as a result of changes in such organizations or their rating systems, the Funds will attempt to use comparable ratings as standards for their investments in accordance with the investment policies contained in the Prospectuses and this Statement of Additional Information. The ratings of Moody's, S&P and Fitch represent their opinions as to the quality of the Municipal Obligations which they undertake to rate. It should be emphasized, however, that ratings are relative and subjective and are not absolute standards of quality. Although 8 these ratings may be an initial criterion for selection of portfolio investments, the advisers also will evaluate these securities and the creditworthiness of the issuers of such securities. Municipal Lease Obligations. The Tax Free Funds may invest in municipal lease obligations. These typically provide a premium interest rate. Municipal lease obligations do not constitute general obligations of the municipality. Certain municipal lease obligations in which the Tax Free Funds may invest contain "non-appropriation" clauses which provide that the municipality has no obligation to make lease or installment payments in future years unless money is later appropriated for such purpose. The Funds will limit their investments in non-appropriation leases to 10% of its assets. Although "non-appropriation" lease obligations are secured by the leased property, disposition of the property in the event of foreclosure might prove difficult. Certain investments in municipal lease obligations may be illiquid. Forward Commitments. Each Fund may purchase securities for delivery at a future date, which may increase its overall investment exposure and involves a risk of loss if the value of the securities declines prior to the settlement date. In order to invest a Fund's assets immediately, while awaiting delivery of securities purchased on a forward commitment basis, short-term obligations that offer same-day settlement and earnings will normally be purchased. Although, with respect to any Tax Free Fund, short-term investments will normally be in tax-exempt securities or Municipal Obligations, short-term taxable securities or obligations may be purchased if suitable short-term tax-exempt securities or Municipal Obligations are not available. When a commitment to purchase a security on a forward commitment basis is made, procedures are established consistent with the General Statement of Policy of the Securities and Exchange Commission concerning such purchases. Since that policy currently recommends that an amount of the respective Fund's assets equal to the amount of the purchase be held aside or segregated to be used to pay for the commitment, a separate account of such Fund consisting of cash, cash equivalents or high quality debt securities equal to the amount of such Fund's commitments will be established at such Fund's custodian bank. For the purpose of determining the adequacy of the securities in the account, the deposited securities will be valued at market value. If the market value of such securities declines, additional cash, cash equivalents or highly liquid securities will be placed in the account daily so that the value of the account will equal the amount of such commitments by the respective Fund. Although it is not intended that such purchases would be made for speculative purposes, purchases of securities on a forward commitment basis may involve more risk than other types of purchases. Securities purchased on a forward commitment basis and the securities held in the respective Fund's portfolio are subject to changes in value based upon the public's perception of the creditworthiness of the issuer and changes, real or anticipated, in the level of interest rates. Purchasing securities on a forward commitment basis can involve the risk that the yields available in the market when the delivery takes place may actually be higher or lower than those obtained in the transaction itself. On the settlement date of the forward commitment transaction, the respective Fund will meet its obligations from then available cash flow, sale of securities held in the separate account, sale of other securities or, although it would not normally expect to do so, from sale of the forward commitment securities themselves (which may have a value greater or lesser than such Fund's payment obligations). The sale of securities to meet such obligations may result in the realization of capital gains or losses, which, for consideration by investors in the Tax Free Funds, are not exempt from federal, state or local taxation. Forward commitments involve some risk to a Fund if the other party should default on its obligation and the Fund is delayed or prevented from recovering the collateral in completing the transaction. To the extent a Fund engages in forward commitment transactions, it will do so for the purpose of acquiring securities consistent with its investment objective and policies and not for the purpose of investment leverage, and settlement of such transactions will be within 90 days from the trade date. Illiquid Securities. For purposes of its limitation on investments in illiquid securities, each Fund may elect to treat as liquid, in accordance with procedures established by the Board of Trustees, certain invest- 9 ments in restricted securities for which there may be a secondary market of qualified institutional buyers as contemplated by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and commercial obligations issued in reliance on the so-called "private placement" exemption from registration afforded by Section 4(2) of the Securities Act ("Section 4(2) paper"). Rule 144A provides an exemption from the registration requirements of the Securities Act for the resale of certain restricted securities to qualified institutional buyers. Section 4(2) paper is restricted as to disposition under the federal securities laws, and generally is sold to institutional investors such as a Fund who agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale of Section 4(2) paper by the purchaser must be in an exempt transaction. One effect of Rule 144A and Section 4(2) is that certain restricted securities may now be liquid, though there is no assurance that a liquid market for Rule 144A securities or Section 4(2) paper will develop or be maintained. The Trustees have adopted policies and procedures for the purpose of determining whether securities that are eligible for resale under Rule 144A and Section 4(2) paper are liquid or illiquid for purposes of the limitation on investment in illiquid securities. Pursuant to those policies and procedures, the Trustees have delegated to the advisers the determination as to whether a particular instrument is liquid or illiquid, requiring that consideration be given to, among other things, the frequency of trades and quotes for the security, the number of dealers willing to sell the security and the number of potential purchasers, dealer undertakings to make a market in the security, the nature of the security and the time needed to dispose of the security. The Trustees will periodically review the Funds' purchases and sales of Rule 144A securities and Section 4(2) paper. Stand-by Commitments. When a Fund purchases securities it may also enter into put transactions, including those referred to as stand-by commitments, with respect to such securities. Under a stand-by commitment, a bank, broker-dealer or other financial institution agrees to purchase at a Fund's option a specified security at a specified price within a specified period prior to its maturity date. A put transaction will increase the cost of the underlying security and consequently reduce the available yield. The amount payable to a Money Market Fund upon its exercise of a stand-by commitment with respect to a Municipal Obligation normally would be (i) the acquisition cost of the Municipal Obligation (excluding any accrued interest paid by the Fund on the acquisition), less any amortized market premium or plus any amortized market or original issue discount during the period the Fund owned the security, plus (ii) all interest accrued on the security since the last interest payment date during the period the security was owned by the Fund. Absent unusual circumstances relating to a change in market value, a Money Market Fund would value the underlying Municipal Obligation at amortized cost. Accordingly, the amount payable by a bank or dealer during the time a stand-by commitment is exercisable would be substantially the same as the market value of the underlying Municipal Obligation. The Money Market Funds value stand-by commitments at zero for purposes of computing their net asset value per share. The stand-by commitments that may be entered into by the Funds are subject to certain risks, which include the ability of the issuer of the commitment to pay for the securities at the time the commitment is exercised, the fact that the commitment is not marketable by a Fund, and that the maturity of the underlying security will generally be different from that of the commitment. Not more than 10% of the total assets of a Money Market Fund will be invested in Municipal Obligations that are subject to stand-by commitments from the same bank or broker-dealer. Floating and Variable Rate Securities; Participation Certificates. Each Fund other than the 100% U.S. Treasury Securities Money Market Fund and the Treasury Plus Money Market Fund may invest in floating and variable rate securities. Floating and variable rate demand instruments permit the holder to demand payment upon a specified number of days' notice of the unpaid principal balance plus accrued interest either from the issuer or by drawing on a bank letter of credit, a guarantee or insurance issued with respect 10 to such instrument. Investments by the Income Funds in floating or variable rate securities normally will involve industrial development or revenue bonds that provide for a periodic adjustment in the interest rate paid on the obligation and may, but need not, permit the holder to demand payment as described above. While there is usually no established secondary market for issues of these types of securities, the dealer that sells an issue of such security frequently will also offer to repurchase the securities at any time at a repurchase price which varies and may be more or less than the amount the holder paid for them. The floating or variable rate demand instruments in which the Money Market Funds may invest are payable on demand on not more than seven calendar days' notice. The terms of these types of securities provide that interest rates are adjustable at intervals ranging from daily to up to six months and the adjustments are based upon the prime rate of a bank or other short-term rates, such as Treasury Bills or LIBOR (London Interbank Offered Rate), as provided in the respective instruments. The Funds will decide which floating or variable rate securities to purchase in accordance with procedures prescribed by Board of Trustees of the Trust in order to minimize credit risks. In the case of a Money Market Fund, the Board of Trustees may determine that an unrated floating or variable rate security meets the Fund's high quality criteria if it is backed by a letter of credit or guarantee or is insured by an insurer that meets such quality criteria, or on the basis of a credit evaluation of the underlying obligor. If the credit of the obligor is of "high quality", no credit support from a bank or other financial institution will be necessary. The Board of Trustees will re-evaluate each unrated floating or variable rate security on a quarterly basis to determine that it continues to meet a Money Market Fund's high quality criteria. If an instrument is ever deemed to fall below a Money Market Fund's high quality standards, either it will be sold in the market or the demand feature will be exercised. The securities in which the Tax Free Funds, the Cash Management Fund and the Prime Money Market Fund may invest include participation certificates, issued by a bank, insurance company or other financial institution, in securities owned by such institutions or affiliated organizations ("Participation Certificates"), and, in the case of the Cash Management Fund and the Prime Money Market Fund, certificates of indebtedness or safekeeping. Participation Certificates are pro rata interests in securities held by others; certificates of indebtedness or safekeeping are documentary receipts for such original securities held in custody by others. A Participation Certificate gives a Fund an undivided interest in the security in the proportion that the Fund's participation interest bears to the total principal amount of the security and generally provides the demand feature described below. Each Participation Certificate is backed by an irrevocable letter of credit or guaranty of a bank (which may be the bank issuing the Participation Certificate, a bank issuing a confirming letter of credit to that of the issuing bank, or a bank serving as agent of the issuing bank with respect to the possible repurchase of the certificate of participation) or insurance policy of an insurance company that the Board of Trustees of the Trust has determined meets the prescribed quality standards for a particular Fund. A Fund may have the right to sell the Participation Certificate back to the institution and draw on the letter of credit or insurance on demand after the prescribed notice period, for all or any part of the full principal amount of the Fund's participation interest in the security, plus accrued interest. The institutions issuing the Participation Certificates would retain a service and letter of credit fee and a fee for providing the demand feature, in an amount equal to the excess of the interest paid on the instruments over the negotiated yield at which the Participation Certificates were purchased by a Fund. The total fees would generally range from 5% to 15% of the applicable prime rate or other short-term rate index. With respect to insurance, a Fund will attempt to have the issuer of the Participation Certificate bear the cost of any such insurance, although the Funds retain the option to purchase insurance if deemed appropriate. Obligations that have a demand feature permitting a Fund to tender the obligation to a foreign bank may involve certain risks associated with foreign investment. A Fund's ability to receive payment in such circumstances under the demand feature from such foreign banks may involve certain risks such as future political and economic developments, the pos- 11 sible establishments of laws or restrictions that might adversely affect the payment of the bank's obligations under the demand feature and the difficulty of obtaining or enforcing a judgment against the bank. The advisers have been instructed by the Board of Trustees to monitor on an ongoing basis the pricing, quality and liquidity of the floating and variable rate securities held by the Funds, including Participation Certificates, on the basis of published financial information and reports of the rating agencies and other bank analytical services to which the Funds may subscribe. Although these instruments may be sold by a Fund, it is intended that they be held until maturity. The Internal Revenue Service has not ruled on whether interest on participations in floating or variable rate Municipal Obligations is tax exempt. Participation Certificates will only be purchased by a Tax Free Fund if, in the opinion of counsel to the issuer, interest income on such instruments will be tax-exempt when distributed as dividends to shareholders of such Fund. Past periods of high inflation, together with the fiscal measures adopted to attempt to deal with it, have seen wide fluctuations in interest rates, particularly "prime rates" charged by banks. While the value of the underlying floating or variable rate securities may change with changes in interest rates generally, the floating or variable rate nature of the underlying floating or variable rate securities should minimize changes in value of the instruments. Accordingly, as interest rates decrease or increase, the potential for capital appreciation and the risk of potential capital depreciation is less than would be the case with a portfolio of fixed rate securities. A Fund's portfolio may contain floating or variable rate securities on which stated minimum or maximum rates, or maximum rates set by state law, limit the degree to which interest on such floating or variable rate securities may fluctuate; to the extent it does, increases or decreases in value may be somewhat greater than would be the case without such limits. Because the adjustment of interest rates on the floating or variable rate securities is made in relation to movements of the applicable banks' "prime rates" or other short-term rate adjustment indices, the floating or variable rate securities are not comparable to long-term fixed rate securities. Accordingly, interest rates on the floating or variable rate securities may be higher or lower than current market rates for fixed rate obligations of comparable quality with similar maturities. The maturity of variable rate securities is deemed to be the longer of (i) the notice period required before a Fund is entitled to receive payment of the principal amount of the security upon demand or (ii) the period remaining until the security's next interest rate adjustment. With respect to a Money Market Fund, the maturity of a variable rate demand instrument will be determined in the same manner for purposes of computing the Fund's dollar-weighted average portfolio maturity. With respect to the Income Funds, if variable rate securities are not redeemed through the demand feature, they mature on a specified date which may range up to thirty years from the date of issuance. Tender Option Floating or Variable Rate Certificates. The Money Market Funds may invest in tender option bonds. A tender option bond is a synthetic floating or variable rate security issued when long term bonds are purchased in the secondary market and are then deposited into a trust. Custodial receipts are then issued to investors, such as the Funds, evidencing ownership interests in the trust. The trust sets a floating or variable rate on a daily or weekly basis which is established through a remarketing agent. These types of instruments, to be money market eligible under Rule 2a-7, must have a liquidity facility in place which provides additional comfort to the investors in case the remarketing fails. The sponsor of the trust keeps the difference between the rate on the long term bond and the rate on the short term floating or variable rate security. Securities of Foreign Governments and Supranational Agencies. The Cash Management Fund and the Prime Money Market Fund may invest a portion of their assets from time to time in securities of foreign governments and supranational agencies. The Funds will limit their investments in foreign government obligations to commercial paper and other short-term notes issued or guaranteed by the governments of Western Europe, Australia, New Zealand, Japan and Canada. Supranational agencies include organizations such as The World Bank, which was chartered to finance development projects in developing member countries; the European Community, which is a twelve- 12 nation organization engaged in cooperative economic activities; the European Coal and Steel Community, which is an economic union of various European nations steel and coal industries; and the Asian Development Bank, which is an international development bank established to lend funds, promote investment and provide technical assistance to member nations of the Asian and Pacific regions. Obligations of supranational agencies are supported by subscribed, but unpaid, commitments of member countries. There is no assurance that these commitments will be undertaken or complied with in the future, and foreign and supranational securities are subject to certain risks associated with foreign investing. Securities Loans. Each Fund other than the Tax Free Funds is permitted to lend its securities to broker-dealers and other institutional investors in order to generate additional income. Such loans of portfolio securities may not exceed 30% of the value of a Fund's total assets. In connection with such loans, a Fund will receive collateral consisting of cash, cash equivalents, U.S. Government securities or irrevocable letters of credit issued by financial institutions. Such collateral will be maintained at all times in an amount equal to at least 100% of the current market value plus accrued interest of the securities loaned. A Fund can increase its income through the investment of such collateral. A Fund continues to be entitled to the interest payable or any dividend-equivalent payments received on a loaned security and, in addition, to receive interest on the amount of the loan. However, the receipt of any dividend-equivalent payments by a Fund on a loaned security from the borrower will not qualify for the dividends-received deduction. Such loans will be terminable at any time upon specified notice. A Fund might experience risk of loss if the institutions with which it has engaged in portfolio loan transactions breach their agreements with such Fund. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delays in receiving additional collateral or in the recovery of the securities or the possible loss of rights in the collateral should the borrower experience financial difficulty. Loans will be made only to firms deemed by the advisers to be of good standing and will not be made unless, in the judgment of the advisers, the consideration to be earned from such loans justifies the risk. Zero Coupon and Stripped Obligations. Each Fund, other than the 100% U.S. Treasury Securities Money Market Fund, may invest up to 20% of its total assets in such stripped obligations. The principal and interest components of United States Treasury bonds with remaining maturities of longer than ten years are eligible to be traded independently under the Separate Trading of Registered Interest and Principal of Securities ("STRIPS") program. Under the STRIPS program, the principal and interest components are separately issued by the United States Treasury at the request of depository financial institutions, which then trade the component parts separately. The interest component of STRIPS may be more volatile than that of United States Treasury bills with comparable maturities. The Cash Management Fund, Prime Money Market Fund and the Tax Free Funds may also invest in zero coupon obligations. Zero coupon obligations are sold at a substantial discount from their value at maturity and, when held to maturity, their entire return, which consists of the amortization of discount, comes from the difference between their purchase price and maturity value. Because interest on a zero coupon obligation is not distributed on a current basis, the obligation tends to be subject to greater price fluctuations in response to changes in interest rates than are ordinary interest-paying securities with similar maturities. As with STRIPS, the risk is greater when the period to maturity is longer. The value of zero coupon obligations appreciates more than such ordinary interest-paying securities during periods of declining interest rates and depreciates more than such ordinary interest-paying securities during periods of rising interest rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as amended, investments in zero coupon obligations will result in the accrual of interest income on such investments in advance of the receipt of the cash corresponding to such income. Zero coupon securities may be created when a dealer deposits a U.S. Treasury or federal agency security with a custodian and then sells the coupon payments and principal payment that will be generated by this security separately. Proprietary receipts, such as Certificates of Accrual on Treasury Securities, Trea- 13 sury Investment Growth Receipts and generic Treasury Receipts, are examples of stripped U.S. Treasury securities separated into their component parts through such custodial arrangements. Custodial Receipts. The Cash Management Fund and the Prime Money Market Fund may acquire securities in the form of custodial receipts that evidence ownership of future interest payments, principal payments or both on certain U.S. Treasury notes or bonds in connection with programs sponsored by banks and brokerage firms. These are not deemed U.S. Government securities. These notes and bonds are held in custody by a bank on behalf of the owners of the receipts. Funding Agreements. Each Fund may invest in short-term funding agreements. A funding agreement is a contract between an issuer and a purchaser that obligates the issuer to pay a guaranteed rate of interest on a principal sum deposited by a purchaser. Funding agreements generally will also guarantee the return of principal and may guarantee a stream of payments over time. A funding agreement has a fixed maturity date and may have either a fixed or variable interest rate that is based on an index and guaranteed for a set time period. Because there generally is no active secondary market for these investments, a funding agreement may be deemed to be illiquid. Temporary Defensive Positions. For temporary defensive purposes, each Tax Free Fund may invest without limitation in high quality money market instruments and repurchase agreements, the interest income from which may be taxable to shareholders as ordinary income for federal income tax purposes. Other Investment Companies. In lieu of investing directly, each Fund is authorized to seek to achieve its objectives by investing all of its investable assets in an investment company having substantially the same investment objective and policies as the applicable Fund. Each Money Market Fund other than 100% U.S. Treasury Securities Money Market Fund may invest up to 10% of its total assets in shares of other money market funds when consistent with its investment objective and policies, subject to applicable regulatory limitations. Each Income Fund may invest up to 10% of their total assets in shares of other investment companies, when consistent with its investment objective and policies, subject to applicable regulatory limitations. Additional fees may be charged by other investment companies, including other money market funds. Additional Policies Regarding Derivative and Related Transactions Introduction. As explained more fully below, the Income Funds may employ derivative and related instruments as tools in the management of portfolio assets. Put briefly, a "derivative" instrument may be considered a security or other instrument which derives its value from the value or performance of other instruments or assets, interest or currency exchange rates, or indexes. For instance, derivatives include futures, options, forward contracts, structured notes and various other over-the-counter instruments. Like other investment tools or techniques, the impact of using derivatives strategies or similar instruments depends to a great extent on how they are used. Derivatives are generally used by portfolio managers in three ways: First, to reduce risk by hedging (offsetting) an investment position. Second, to substitute for another security particularly where it is quicker, easier and less expensive to invest in derivatives. Lastly, to speculate or enhance portfolio performance. When used prudently, derivatives can offer several benefits, including easier and more effective hedging, lower transaction costs, quicker investment and more profitable use of portfolio assets. However, derivatives also have the potential to significantly magnify risks, thereby leading to potentially greater losses for a Fund. Each Income Fund may invest its assets in derivative and related instruments subject only to the Fund's investment objective and policies and the requirement that the Fund maintain segregated accounts consisting of liquid assets, such as cash, U.S. Government securities, or other high-grade debt obligations (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under 14 such instruments with respect to positions where there is no underlying portfolio asset so as to avoid leveraging the Fund. The value of some derivative or similar instruments in which the Income Funds invest may be particularly sensitive to changes in prevailing interest rates or other economic factors, and like other investments of the Funds the ability of a Fund to successfully utilize these instruments may depend in part upon the ability of the advisers to forecast interest rates and other economic factors correctly. If the advisers accurately forecast such factors and has taken positions in derivative or similar instruments contrary to prevailing market trends, the Funds could be exposed to the risk of a loss. The Funds might not employ any or all of the strategies described herein, and no assurance can be given that any strategy used will succeed. Set forth below is an explanation of the various derivatives strategies and related instruments the Funds may employ along with risks or special attributes associated with them. This discussion is intended to supplement the Funds' current prospectuses as well as provide useful information to prospective investors. Risk Factors. As explained more fully below and in the discussions of particular strategies or instruments, there are a number of risks associated with the use of derivatives and related instruments. There can be no guarantee that there will be a correlation between price movements in a hedging vehicle and in the portfolio assets being hedged. An incorrect correlation could result in a loss on both the hedged assets in a Fund and the hedging vehicle so that the portfolio return might have been greater had hedging not been attempted. The advisers may accurately forecast interest rates, market values or other economic factors in utilizing a derivatives strategy. In such a case, the Fund may have been in a better position had it not entered into such strategy. Hedging strategies, while reducing risk of loss, can also reduce the opportunity for gain. In other words, hedging usually limits both potential losses as well as potential gains. Strategies not involving hedging may increase the risk to a Fund. Certain strategies, such as yield enhancement, can have speculative characteristics, involve leverage and may result in losses that exceed the original investment of the fund. There can be no assurance that a liquid market will exist at a time when a Fund seeks to close out an option, futures contract or other derivative or related position. Many exchanges and boards of trade limit the amount of fluctuation permitted in option or futures contract prices during a single day; once the daily limit has been reached on particular contract, no trades may be made that day at a price beyond that limit. In addition, certain instruments are relatively new and without a significant trading history. As a result, there is no assurance that an active secondary market will develop or continue to exist. Finally, over-the-counter instruments typically do not have a liquid market. Lack of a liquid market for any reason may prevent a Fund from liquidating an unfavorable position. Activities of large traders in the futures and securities markets involving arbitrage, "program trading," and other investment strategies may cause price distortions in these markets. In certain instances, particularly those involving over-the-counter transactions on forward contracts, there is a greater potential that a counterparty or broker may default or be unable to perform on its commitments. In the event of such a default, a Fund may experience a loss. Specific Uses and Strategies. Set forth below are explanations various strategies involving derivatives and related instruments which may be used by the Income Funds. Options on Securities and Securities Indexes. The Funds may PURCHASE, SELL or EXERCISE call and put options on (i) securities, (ii) securities indexes, and (iii) debt instruments. Although in most cases these options will be exchange-traded, the Funds may also purchase, sell or exercise over-the-counter options. Over-the-counter options differ from exchange-traded options in that they are two-party contracts with price and other terms negotiated between buyer and seller. As such, over-the-counter options generally have much less market liquidity and carry the risk of default or nonperformance by the other party. One purpose of purchasing put options is to protect holdings in an underlying or related security against a substantial decline in market value. One purpose of purchasing call options is to protect against 15 substantial increases in prices of securities a Fund intends to purchase pending its ability to invest in such securities in an orderly manner. A Fund may also use combinations of options to minimize costs, gain exposure to markets or take advantage of price disparities or market movements. For example, a Fund may sell put or call options it has previously purchased or purchase put or call options it has previously sold. These transactions may result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. A Fund may write a call or put option in order to earn the related premium from such transactions. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of a similar option. In addition to the general risk factors noted above, the purchase and writing of options involve certain special risks. During the option period, a fund writing a covered call (i.e., where the underlying securities are held by the fund) has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying securities above the exercise price, but has retained the risk of loss should the price of the underlying securities decline. The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying securities at the exercise price. The Funds will not write uncovered options. If a put or call option purchased by a Fund is not sold when it has remaining value, and if the market price of the underlying security, in the case of a put, remains equal to or greater than the exercise price or, in the case of a call, remains less than or equal to the exercise price, such Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more or less than the price of the related security. There can be no assurance that a liquid market will exist when a Fund seeks to close out an option position. Furthermore, if trading restrictions or suspensions are imposed on the options markets, a Fund may be unable to close out a position. Futures Contracts and Options on Futures Contracts. The Funds may purchase or sell (i) interest-rate futures contracts, (ii) futures contracts on specified instruments or indices, and (iii) options on these futures contracts ("futures options"). The futures contracts and futures options may be based on various instruments or indices in which the Funds may invest such as foreign currencies, certificates of deposit, Eurodollar time deposits, securities indices, economic indices (such as the Consumer Price Indices compiled by the U.S. Department of Labor). Futures contracts and futures options may be used to hedge portfolio positions and transactions as well as to gain exposure to markets. For example, a Fund may sell a futures contract or buy a futures option to protect against a decline in value, or reduce the duration, of portfolio holdings. Likewise, these instruments may be used where a Fund intends to acquire an instrument or enter into a position. For example, a Fund may purchase a futures contract or buy a futures option to gain immediate exposure in a market or otherwise offset increases in the purchase price of securities or currencies to be acquired in the future. Futures options may also be written to earn the related premiums. When writing or purchasing options, the Funds may simultaneously enter into other transactions involving futures contracts or futures options in order to minimize costs, gain exposure to markets, or take advantage of price disparities or market movements. Such strategies may entail additional risks in certain instances. Funds may engage in cross-hedging by purchasing or selling futures or options on a security different from the security position being hedged to take advantage of relationships between the two securities. Investments in futures contracts and options thereon involve risks similar to those associated with options transactions discussed above. The Funds will only enter into futures contracts or options on futures 16 contracts which are traded on a U.S. or foreign exchange or board of trade, or similar entity, or quoted on an automated quotation system. Forward Contracts. A Fund may also use forward contracts to hedge against changes in interest-rates, increase exposure to a market or otherwise take advantage of such changes. An interest-rate forward contract involves the obligation to purchase or sell a specific debt instrument at a fixed price at a future date. Interest Rate Transactions. The Income Funds may employ interest rate management techniques, including transactions in options (including yield curve options), futures, options on futures, forward exchange contracts, and interest rate swaps. An Income Fund will only enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Income Fund receiving or paying, as the case may be, only the net amount of the two payments. Interest rate swaps do not involve the delivery of securities, other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that an Income Fund is contractually obligated to make. If the other party to and interest rate swap defaults, an Income Fund's risk of loss consists of the net amount of interest payments that the Fund is contractually entitled to receive. Since interest rate swaps are individually negotiated, each Income Fund expects to achieve an acceptable degree of correlation between its portfolio investments and its interest rate swap position. An Income Fund may enter into interest rate swaps to the maximum allowed limits under applicable law. An Income Fund will typically use interest rate swaps to shorten the effective duration of its portfolio. Interest rate swaps involve the exchange by an Income Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. Asset-Backed Securities. The Cash Management Fund and the Prime Money Market Fund may also invest in asset-backed securities. Asset-backed securities represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, most often a pool of assets similar to one another, such as motor vehicle receivables or credit card receivables. Structured Products. The Income Funds may invest in interests in entities organized and operated solely for the purpose of restructuring the investment characteristics of certain debt obligations. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, or specified instruments (such as commercial bank loans) and the issuance by that entity of one or more classes of securities ("structured products") backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued structured products to create securities with different investment characteristics such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to structured products is dependent on the extent of the cash flow on the underlying instruments. A Fund may invest in structured products which represent derived investment positions based on relationships among different markets or asset classes. The Income Funds may also invest in other types of structured products, including, among others, inverse floaters, spread trades and notes linked by a formula to the price of an underlying instrument. Inverse floaters have coupon rates that vary inversely at a multiple of a designated floating rate (which typically is determined by reference to an index rate, but may also be determined through a dutch auction or a remarketing agent or by reference to another security) (the "reference rate"). As an example, inverse floaters may constitute a class of CMOs with a coupon rate that moves inversely to a designated index, such as LIBOR (London Interbank Offered Rate) or the cost of Funds Index. Any rise in the reference rate of an inverse floater (as a consequence of an increase in interest rates) causes a drop in the coupon rate while any drop in the 17 reference rate of an inverse floater causes an increase in the coupon rate. A spread trade is an investment position relating to a difference in the prices or interest rates of two securities where the value of the investment position is determined by movements in the difference between the prices or interest rates, as the case may be, of the respective securities. When an Income Fund invests in notes linked to the price of an underlying instrument, the price of the underlying security is determined by a multiple (based on a formula) of the price of such underlying security. A structured product may be considered to be leveraged to the extent its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. Because they are linked to their underlying markets or securities, investments in structured products generally are subject to greater volatility than an investment directly in the underlying market or security. Total return on the structured product is derived by linking return to one or more characteristics of the underlying instrument. Because certain structured products of the type in which the Income Fund anticipates it will invest may involve no credit enhancement, the credit risk of those structured products generally would be equivalent to that of the underlying instruments. An Income Fund is permitted to invest in a class of structured products that is either subordinated or unsubordinated to the right of payment of another class. Subordinated structured products typically have higher yields and present greater risks than unsubordinated structured products. Although an Income Fund's purchase of subordinated structured products would have similar economic effect to that of borrowing against the underlying securities, the purchase will not be deemed to be leverage for purposes of an Income Fund's fundamental investment limitation related to borrowing and leverage. Certain issuers of structured products may be deemed to be "investment companies" as defined in the 1940 Act. As a result, an Income Fund's investments in these structured products may be limited by the restrictions contained in the 1940 Act. Structured products are typically sold in private placement transactions, and there currently is no active trading market for structured products. As a result, certain structured products in which the Income Funds invest may be deemed illiquid and subject to their limitation on illiquid investments. Investments in structured products generally are subject to greater volatility than an investment directly in the underlying market or security. In addition, because structured products are typically sold in private placement transactions, there currently is no active trading market for structured products. Additional Restrictions on the Use of Futures and Option Contracts. None of the Funds is a "commodity pool" (i.e., a pooled investment vehicle which trades in commodity futures contracts and options thereon and the operator of which is registered with the CFTC and futures contracts and futures options will be purchased, sold or entered into only for bona fide hedging purposes, provided that a Fund may enter into such transactions for purposes other than bona fide hedging if, immediately thereafter, the sum of the amount of its initial margin and premiums on open contracts and options would not exceed 5% of the liquidation value of the Fund's portfolio, provided, further, that, in the case of an option that is in-the-money, the in-the-money amount may be excluded in calculating the 5% limitation. When an Income Fund purchases a futures contract, an amount of cash or cash equivalents or high quality debt securities will be deposited in a segregated account with such Fund's custodian so that the amount so segregated, plus the initial deposit and variation margin held in the account of its broker, will at all times equal the value of the futures contract, thereby insuring that the use of such futures is unleveraged. The Income Funds' ability to engage in the transactions described herein may be limited by the current federal income tax requirement that a Fund derive less than 30% of its gross income from the sale or other disposition of securities held for less than three months. In addition to the foregoing requirements, the Board of Trustees has adopted an additional restriction on the use of futures contracts and options thereon, requiring that the aggregate market value of the futures 18 contracts held by an Income Fund not exceed 50% of the market value of its total assets. Neither this restriction nor any policy with respect to the above-referenced restrictions, would be changed by the Board of Trustees without considering the policies and concerns of the various federal and state regulatory agencies. Investment Restrictions The Funds have adopted the following investment restrictions which may not be changed without approval by a "majority of the outstanding shares" of a Fund which, as used in this Statement of Additional Information, means the vote of the lesser of (i) 67% or more of the shares of a Fund present at a meeting, if the holders of more than 50% of the outstanding shares of a Fund are present or represented by proxy, or (ii) more than 50% of the outstanding shares of a Fund. Each Fund may not: (1) borrow money, except that each Fund may borrow money for temporary or emergency purposes, or by engaging in reverse repurchase transactions, in an amount not exceeding 331/3% of the value of its total assets at the time when the loan is made and may pledge, mortgage or hypothecate no more than 1/3 of its net assets to secure such borrowings. Any borrowings representing more than 5% of a Fund's total assets must be repaid before the Fund may make additional investments; (2) make loans, except that each Fund may: (i) purchase and hold debt instruments (including without limitation, bonds, notes, debentures or other obligations and certificates of deposit, bankers' acceptances and fixed time deposits) in accordance with its investment objectives and policies; (ii) enter into repurchase agreements with respect to portfolio securities; and (iii) lend portfolio securities with a value not in excess of one-third of the value of its total assets; (3) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, or repurchase agreements secured thereby) if, as a result, more than 25% of the Fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry. Notwithstanding the foregoing, (i) with respect to a Fund's permissible futures and options transactions in U.S. Government securities, positions in options and futures shall not be subject to this restriction; (ii) the Money Market Funds may invest more than 25% of their total assets in obligations issued by banks, including U. S. banks; (iii) New York Tax Free Money Market Fund, California Tax Free Money Market Fund and Tax Free Money Market Fund may invest more than 25% of their respective assets in municipal obligations secured by bank letters of credit or guarantees, including participation certificates and (iv) more than 25% of the assets of California Intermediate Tax Free Fund may be invested in municipal obligations secured by bank letters of credit or guarantees; (4) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments but this shall not prevent a Fund from (i) purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities or (ii) engaging in forward purchases or sales of foreign currencies or securities; (5) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business). Investments by a Fund in securities backed by mortgages on real estate or in marketable securities of companies engaged in such activities are not hereby precluded; (6) issue any senior security (as defined in the 1940 Act), except that (a) a Fund may engage in transactions that may result in the issuance of senior securities to the extent permitted under appli- 19 cable regulations and interpretations of the 1940 Act or an exemptive order; (b) a Fund may acquire other securities, the acquisition of which may result in the issuance of a senior security, to the extent permitted under applicable regulations or interpretations of the 1940 Act; and (c) subject to the restrictions set forth above, a Fund may borrow money as authorized by the 1940 Act. For purposes of this restriction, collateral arrangements with respect to a Fund's permissible options and futures transactions, including deposits of initial and variation margin, are not considered to be the issuance of a senior security; or (7) underwrite securities issued by other persons except insofar as a Fund may technically be deemed to be an underwriter under the Securities Act of 1933 in selling a portfolio security. The investment objective of each Money Market Fund and the Tax Free Income Fund is fundamental. In addition, as a matter of fundamental policy, notwithstanding any other investment policy or restriction, a Fund may seek to achieve its investment objective by investing all of its investable assets in another investment company having substantially the same investment objective and policies as the Fund. For purposes of investment restriction (5) above, real estate includes Real Estate Limited Partnerships. For purposes of investment restriction (3) above, industrial development bonds, where the payment of principal and interest is the ultimate responsibility of companies within the same industry, are grouped together as an "industry." Investment restriction (3) above, however, is not applicable to investments by a Fund in municipal obligations where the issuer is regarded as a state, city, municipality or other public authority since such entities are not members of any "industry." Supranational organizations are collectively considered to be members of a single "industry" for purposes of restriction (3) above. In addition, each Fund is subject to the following nonfundamental investment restrictions which may be changed without shareholder approval: (1) Each Fund other than the Tax Free Funds may not, with respect to 75% of its assets, hold more than 10% of the outstanding voting securities of any issuer or invest more than 5% of its assets in the securities of any one issuer (other than obligations of the U.S. Government, its agencies and instrumentalities); each Tax Free Fund may not, with respect to 50% of its assets, hold more than 10% of the outstanding voting securities of any issuer. (2) Each Fund may not make short sales of securities, other than short sales "against the box," or purchase securities on margin except for short-term credits necessary for clearance of portfolio transactions, provided that this restriction will not be applied to limit the use of options, futures contracts and related options, in the manner otherwise permitted by the investment restrictions, policies and investment program of a Fund. The Funds have no current intention of making short sales against the box. (3) Each Fund may not purchase or sell interests in oil, gas or mineral leases. (4) Each Income Fund may not invest more than 15% of its net assets in illiquid securities; each Money Market Fund may not invest more than 10% of its net assets in illiquid securities. (5) Each Fund may not write, purchase or sell any put or call option or any combination thereof, provided that this shall not prevent (i) the writing, purchasing or selling of puts, calls or combinations thereof with respect to portfolio securities or (ii) with respect to a Fund's permissible futures and 20 options transactions, the writing, purchasing, ownership, holding or selling of futures and options positions or of puts, calls or combinations thereof with respect to futures. (6) Each Fund may invest up to 5% of its total assets in the securities of any one investment company, but may not own more than 3% of the securities of any one investment company or invest more than 10% of its total assets in the securities of other investment companies. For purposes of investment restriction (4) above, illiquid securities includes securities restricted as to resale unless they are determined to be readily marketable in accordance with procedures established by the Board of Trustees. For purposes of the Funds' investment restrictions, the issuer of a tax-exempt security is deemed to be the entity (public or private) ultimately responsible for the payment of the principal of and interest on the security. As a nonfundamental operating policy, the Money Market Funds will not invest more than 25% of their respective total assets in obligations issued by foreign banks (other than foreign branches of U.S. banks). As a nonfundamental operating policy, the Tax Free Money Market Funds will not invest in obligations secured by letters of credit or guarantees from foreign banks (other than foreign branches of U.S. banks) if, after giving effect to such investment, the value attributable to such letters of credit or guarantees, as determined by the respective Funds' advisers, would exceed 25% of the respective Funds' total assets. If a percentage or rating restriction on investment or use of assets set forth herein or in a Prospectus is adhered to at the time, later changes in percentage or ratings resulting from any cause other than actions by a Fund will not be considered a violation. If the value of a Fund's holdings of illiquid securities at any time exceeds the percentage limitation applicable at the time of acquisition due to subsequent fluctuations in value or other reasons, the Board of Trustees will consider what actions, if any, are appropriate to maintain adequate liquidity. Portfolio Transactions and Brokerage Allocation Specific decisions to purchase or sell securities for a Fund are made by a portfolio manager who is an employee of the adviser or sub-adviser to such Fund and who is appointed and supervised by senior officers of such adviser or sub-adviser. Changes in the Funds' investments are reviewed by the Board of Trustees. The Funds' portfolio managers may serve other clients of the advisers in a similar capacity. Money market instruments are generally purchased in principal transactions; thus, the Money Market Funds generally pay no brokerage commissions. The frequency of an Income Fund's portfolio transactions the portfolio turnover rate will vary from year to year depending upon market conditions. Because a high turnover rate may increase transaction costs and the possibility of taxable short-term gains, the advisers will weigh the added costs of short-term investment against anticipated gains. Each Income Fund will engage in portfolio trading if its advisers believe a transaction, net of costs (including custodian charges), will help it achieve its investment objective. For the fiscal years ended August 31, 1997, 1998 and 1999, the annual rates of portfolio turnover for the following Funds were as follows: The Tax Free Income Fund: 147%, 172% and 102%, respectively; The New York Tax Free Income Fund: 107%, 91% and 65%, respectively; The California Intermediate Tax Free Fund: 66%, 44% and 111%, respectively. 21 Under the advisory agreement and the sub-advisory agreements, the adviser and sub-advisers shall use their best efforts to seek to execute portfolio transactions at prices which, under the circumstances, result in total costs or proceeds being the most favorable to the Funds. In assessing the best overall terms available for any transaction, the adviser and sub-advisers consider all factors they deem relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, research services provided to the adviser or sub-advisers, and the reasonableness of the commissions, if any, both for the specific transaction and on a continuing basis. The adviser and sub-advisers are not required to obtain the lowest commission or the best net price for any Fund on any particular transaction, and are not required to execute any order in a fashion either preferential to any Fund relative to other accounts they manage or otherwise materially adverse to such other accounts. Debt securities are traded principally in the over-the-counter market through dealers acting on their own account and not as brokers. In the case of securities traded in the over-the-counter market (where no stated commissions are paid but the prices include a dealer's markup or markdown), the adviser or sub-adviser to a Fund normally seeks to deal directly with the primary market makers unless, in its opinion, best execution is available elsewhere. In the case of securities purchased from underwriters, the cost of such securities generally includes a fixed underwriting commission or concession. From time to time, soliciting dealer fees are available to the adviser or sub-adviser on the tender of a Fund's portfolio securities in so-called tender or exchange offers. Such soliciting dealer fees are in effect recaptured for the Funds by the adviser and sub-advisers. At present, no other recapture arrangements are in effect. Under the advisory and sub-advisory agreements and as permitted by Section 28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may cause the Funds to pay a broker-dealer which provides brokerage and research services to the adviser or sub-advisers, the Funds and/or other accounts for which they exercise investment discretion an amount of commission for effecting a securities transaction for the Funds in excess of the amount other broker-dealers would have charged for the transaction if they determine in good faith that the total commission is reasonable in relation to the value of the brokerage and research services provided by the executing broker-dealer viewed in terms of either that particular transaction or their overall responsibilities to accounts over which they exercise investment discretion. Not all of such services are useful or of value in advising the Funds. The adviser and sub-advisers report to the Board of Trustees regarding overall commissions paid by the Funds and their reasonableness in relation to the benefits to the Funds. The term "brokerage and research services" includes advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or of purchasers or sellers of securities, furnishing analyses and reports concerning issues, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts, and effecting securities transactions and performing functions incidental thereto such as clearance and settlement. The management fees that the Funds pay to the adviser will not be reduced as a consequence of the adviser's or sub-advisers' receipt of brokerage and research services. To the extent the Funds' portfolio transactions are used to obtain such services, the brokerage commissions paid by the Funds will exceed those that might otherwise be paid by an amount which cannot be presently determined. Such services would be useful and of value to the adviser or sub-advisers in serving one or more of their other clients and, conversely, such services obtained by the placement of brokerage business of other clients would be useful to the adviser and sub-advisers in carrying out their obligations to the Funds. While such services are not expected to reduce the expenses of the adviser or sub-advisers, they would, through use of the services, avoid the additional expenses which would be incurred if they should attempt to develop comparable information through their own staff. In certain instances, there may be securities that are suitable for one or more of the Funds as well as one or more of the adviser's or sub-advisers' other clients. Investment decisions for the Funds and for other clients are made with a view to achieving their respective investment objectives. It may develop that the same 22 investment decision is made for more than one client or that a particular security is bought or sold for only one client even though it might be held by, or bought or sold for, other clients. Likewise, a particular security may be bought for one or more clients when one or more clients are selling that same security. Some simultaneous transactions are inevitable when several clients receive investment advice from the same investment adviser, particularly when the same security is suitable for the investment objectives of more than one client. In executing portfolio transactions for a Fund, the adviser or sub-advisers may, to the extent permitted by applicable laws and regulations, but shall not be obligated to, aggregate the securities to be sold or purchased with those of other Funds or their other clients if, in the adviser's or sub-advisers' reasonable judgment, such aggregation (i) will result in an overall economic benefit to the Fund, taking into consideration the advantageous selling or purchase price, brokerage commission and other expenses, and trading requirements, and (ii) is not inconsistent with the policies set forth in the Trust's registration statement and the Fund's Prospectus and Statement of Additional Information. In such event, the adviser or a sub- adviser will allocate the securities so purchased or sold, and the expenses incurred in the transaction, in an equitable manner, consistent with its fiduciary obligations to the Fund and such other clients. It is recognized that in some cases this system could have a detrimental effect on the price or volume of the security as far as a Fund is concerned. However, it is believed that the ability of the Funds to participate in volume transactions will generally produce better executions for the Funds. PERFORMANCE INFORMATION From time to time, a Fund may use hypothetical investment examples and performance information in advertisements, shareholder reports or other communications to shareholders. Performance is calculated separately for each class of shares. Because such performance information is based on past investment results, it should not be considered as an indication or representation of the performance of any classes of a Fund in the future. From time to time, the performance and yield of classes of a Fund may be quoted and compared to those of other mutual funds with similar investment objectives, unmanaged investment accounts, including savings accounts, or other similar products and to stock or other relevant indices or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the performance of a Fund or its classes may be compared to data prepared by Lipper Analytical Services, Inc. or Morningstar Mutual Funds on Disc, widely recognized independent services which monitor the performance of mutual funds. Performance and yield data as reported in national financial publications including, but not limited to, Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or in local or regional publications, may also be used in comparing the performance and yield of a Fund or its classes. A Fund's performance may be compared with indices such as the Lehman Brothers Government/Corporate Bond Index, the Lehman Brothers Government Bond Index, the Lehman Government Bond 1-3 Year Index and the Lehman Aggregate Bond Index; the S&P 500 Index, the Dow Jones Industrial Average or any other commonly quoted index of common stock prices; and the Russell 2000 Index and the NASDAQ Composite Index. Additionally, a Fund may, with proper authorization, reprint articles written about such Fund and provide them to prospective shareholders. A Fund may provide period and average annual "total rates of return." The "total rate of return" refers to the change in the value of an investment in a Fund over a period (which period shall be stated in any advertisement or communication with a shareholder) based on any change in net asset value per share including the value of any shares purchased through the reinvestment of any dividends or capital gains distributions declared during such period. For Class A shares, the average annual total rate of return figures will assume payment of the maximum initial sales load at the time of purchase. For Class B and Class C shares, the average annual total rate of return figures will assume deduction of the applicable contingent deferred sales charge imposed on a total redemption of shares held for the period. One-, five-, and ten-year periods will be shown, unless the class has been in existence for a shorter-period. Unlike some bank deposits or other investments which pay a fixed yield for a stated period of time, the yields and the net asset values (in the case of the Income Funds) of the classes of shares of a Fund will vary 23 based on market conditions, the current market value of the securities held by a Fund and changes in the Fund's expenses. The advisers, Shareholder Servicing Agents, the Administrator, the Distributor and other service providers may voluntarily waive a portion of their fees on a month-to-month basis. In addition, the Distributor may assume a portion of a Fund's operating expenses on a month-to-month basis. These actions would have the effect of increasing the net income (and therefore the yield and total rate of return) of the classes of shares of a Fund during the period such waivers are in effect. These factors and possible differences in the methods used to calculate the yields and total rates of return should be considered when comparing the yields or total rates of return of the classes of shares of a Fund to yields and total rates of return published for other investment companies and other investment vehicles (including different classes of shares). The Trust is advised that certain Shareholder Servicing Agents may credit to the accounts of their customers from whom they are already receiving other fees amounts not exceeding the Shareholder Servicing Agent fees received, which will have the effect of increasing the net return on the investment of customers of those Shareholder Servicing Agents. Such customers may be able to obtain through their Shareholder Servicing Agents quotations reflecting such increased return. In connection with the Hanover Reorganization, the Vista 100% U.S. Treasury Securities Money Market Fund was established to receive the assets of The 100% U.S. Treasury Securities Money Market Fund of Hanover, and the Vista Cash Management Fund (formerly known as the Vista Global Money Market Fund), which received the assets of The Cash Management Fund of Hanover, adopted the financial history of The Cash Management Fund of Hanover. Performance results presented for each class of the Vista 100% U.S. Treasury Securities Money Market Fund and the Vista Cash Management Fund will be based upon the performance of The 100% U.S. Treasury Securities Money Market Fund and The Cash Management Fund of Hanover, respectively, for periods prior to the consummation of the Hanover Reorganization. Each Fund presents performance information for each class thereof since the commencement of operations of that Fund, rather than the date such class was introduced. Performance information for each class introduced after the commencement of operations of the related Fund is therefore based on the performance history of a predecessor class or classes. Performance information is restated to reflect the current maximum front-end sales charge (in the case of Class A Shares) or the maximum contingent deferred sales charge (in the case of Class B Shares) when presented inclusive of sales charges. Additional performance information may be presented which does not reflect the deduction or sales charges. Historical expenses reflected in performance information are based upon the distribution, shareholder servicing fees and other expenses actually incurred during the period presented and have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. Advertising or communications to shareholders may contain the views of the advisers as to current market, economic, trade and interest rate trends, as well as legislative, regulatory and monetary developments, and may include investment strategies and related matters believed to be of relevance to a Fund. Advertisements for the Vista funds may include references to the asset size of other financial products made available by Chase, such as the offshore assets of other funds. Total Rate of Return A Fund's or class's total rate of return for any period will be calculated by (a) dividing (i) the sum of the net asset value per share on the last day of the period and the net asset value per share on the last day of the period of shares purchasable with dividends and capital gains declared during such period with respect to a share held at the beginning of such period and with respect to shares purchased with such dividends and capital gains distributions, by (ii) the public offering price per share on the first day of such period, and (b) subtracting 1 from the result. The average annual rate of return quotation will be calculated by (x) adding 1 to the period total rate of return quotation as calculated above, (y) raising such sum to a power which is equal to 365 divided by the number of days in such period, and (z) subtracting 1 from the result. 24 Average Annual Total Returns* (excluding sales charges) The average annual total rate of return figures for the following Funds, reflecting the initial investment and assuming the reinvestment of all distributions (but excluding the effects of any applicable sales charges) for the one, five and ten year periods ended August 31, 1999, and for the period from commencement of business operations to August 31, 1999, were as follows:
Since Date of Date of One Five Ten Fund Fund Class Fund Year Years Years Inception Inception Introduction - -------------- ----------- ---------- ---------- ----------- ----------- ------------- Tax Free 9/8/97 Income Fund A Shares -1.33% 5.65% 7.59% N/A 9/8/87 B Shares+ -2.23% 4.79% 7.06% N/A 11/4/93 New York Tax 9/8/97 Free Income Fund A Shares -1.60% 5.38% 6.94% N/A 9/8/87 B Shares+ -2.47% 4.56% 6.46% N/A 11/4/93 California Intermediate Tax Free Fund A Shares 0.28% 5.58% N/A 4.79% 7/16/93 7/16/93
- ---------- * The ongoing fees and expenses borne by Class B Shares are greater than those borne by Class A Shares. As indicated above, the performance information for each class introduced after the commencement of operations of the related Fund is based on the performance history of a predecessor class or classes and historical expenses have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. Accordingly, the performance information presented in the table above and in each table that follows may be used in assessing each Fund's performance history but does note reflect how the distinct classes would have performed on a relative basis prior to the introduction of those classes which would require an adjustment to the ongoing expenses. The performance quoted reflects fee waivers that subsidize and reduce the total operating expenses of certain Funds (or classes thereof). Returns on these Funds (or classes) would have been lower if there were no such waivers. With respect to certain Funds, Chase and/or other service providers are obligated to waive certain fees and/or reimburse expenses. Each Fund's Prospectus discloses the extent of any agreements to waive fees and/or reimburse expenses. + Performance information presented in the table above and in each table that follows for this class of the Funds prior to the date this class was introduced does not reflect distribution fees and certain other expenses borne by this class which, if reflected, would reduce the performance quoted. 25 Average Annual Total Returns* (including sales charges) With the current maximum sales charge for Class A shares (4.50%) reflected and the currently applicable CDSC for Class B shares for each period length, the average annual total rate of return figures for the same periods would be as follows:
Since One Five Ten Fund Fund Year Years Years Inception - -------------------------------------- ----------- ---------- ---------- ---------- Tax Free Income Fund A Shares -5.77% 4.68% 7.10% N/A B Shares+ -6.95% 4.46% 7.06% N/A New York Tax Free Income Fund A Shares -6.03% 4.42% 6.45% N/A B Shares+ -7.14% 4.22% 6.46% N/A California Intermediate Tax Free Fund A Shares -4.23% 4.61% N/A 4.01%
- ---------- *See the notes to the preceding table. The Funds may also from time to time include in advertisements or other communications a total return figure that is not calculated according to the formula set forth above in order to compare more accurately the performance of a Fund with other measures of investment return. Yield Quotations Any current "yield" quotation for a class of shares of an Income Fund shall consist of an annualized hypothetical yield, carried at least to the nearest hundredth of one percent, based on a thirty calendar day period and shall be calculated by (a) raising to the sixth power the sum of 1 plus the quotient obtained by dividing the Fund's net investment income earned during the period by the product of the average daily number of shares outstanding during the period that were entitled to receive dividends and the maximum offering price per share on the last day of the period, (b) subtracting 1 from the result, and (c) multiplying the result by 2. Any current "yield" for a class of shares of a Money Market Fund which is used in such a manner as to be subject to the provisions of Rule 482(d) under the Securities Act of 1933, as amended, shall consist of an annualized historical yield, carried at least to the nearest hundredth of one percent, based on a specific seven calendar day period and shall be calculated by dividing the net change in the value of an account having a balance of one Share at the beginning of the period by the value of the account at the beginning of the period and multiplying the quotient by 365/7. For this purpose, the net change in account value would reflect the value of additional Shares purchased with dividends declared on the original Share and dividends declared on both the original Share and any such additional Shares, but would not reflect any realized gains or losses from the sale of securities or any unrealized appreciation or depreciation on portfolio securities. In addition, any effective yield quotation for a class of shares of a Money Market Fund so used shall be calculated by compounding the current yield quotation for such period by multiplying such quotation by 7/365, adding 1 to the product, raising the sum to a power equal to 365/7, and subtracting 1 from the result. A portion of a Tax Free Money Market Fund's income used in calculating such yields may be taxable. Any taxable equivalent yield quotation of a class of shares of a Tax Free Fund, whether or not it is a Money Market Fund, shall be calculated as follows. If the entire current yield quotation for such period is tax-exempt, the tax equivalent yield will be the current yield quotation (as determined in accordance with the appropriate calculation described above) divided by 1 minus a stated income tax rate or rates. If a portion of 26 the current yield quotation is not tax-exempt, the tax equivalent yield will be the sum of (a) that portion of the yield which is tax-exempt divided by 1 minus a stated income tax rate or rates and (b) the portion of the yield which is not tax-exempt.
Current Effective Compound Annualized Yield Annualized Yield as of 8/31/99 as of 8/31/99 ------------------ ------------------- U. S. Government Money Market Fund Vista Shares 4.72% 4.83% Premier Shares 4.86% 4.97% Institutional Shares 5.05% 5.17% Prime Money Market Fund B Shares 4.17% 4.26% C Shares 4.13% 4.22% Vista Shares 4.83% 4.95% Premier Shares 4.97% 5.10% Institutional Shares 5.16% 5.30% Federal Money Market Fund Vista Shares 4.61% 4.72% Premier Shares 4.81% 4.93% Institutional Shares 5.05% 5.18% Treasury Plus Money Market Fund Vista Shares 4.57% 4.67% Premier Shares 4.71% 4.82% Institutional Shares 4.91% 5.03% 100% U.S. Treasury Securities Money Market Fund Vista Shares 4.21% 4.30% Premier Shares 4.30% 4.39% Institutional Shares 4.55% 4.65% Cash Management Fund Vista Shares 4.86% 4.98% Premier Shares 5.00% 5.13% Institutional Shares 5.19% 5.33%
Current Effective Annualized Annualized Compound Tax Equivalent Yield Annualized Yield Yield** as of 8/31/99 as of 8/31/99 as of 8/31/99 --------------- ------------------ --------------- Tax Free Money Market Fund Vista Shares 2.71% 2.75% 4.49% Premier Shares 2.75% 2.79% 4.55% Institutional Shares 3.04% 3.09% 5.03% California Tax Free Money Market Fund 2.47% 2.51% 4.51% New York Tax Free Money Market Fund 2.65% 2.69% 4.95%
27
Thirty-Day Tax Equivalent Yield Thirty-Day Yield** as of 8/31/99 as of 8/31/99 --------------- ------------------- Tax Free Income Fund Class A Shares 4.13% 6.84% Class B Shares 3.44% 5.70% New York Tax Free Income Fund Class A Shares 4.31% 8.05% Class B Shares 3.62% 6.76% California Intermediate Tax Free Fund 3.91% 7.14%
- ---------- * The tax equivalent yields assume a federal income tax rate of 39.6% for the Tax Free Money Market Fund and Tax Free Income Fund, a combined New York State, New York City and federal income tax rate of 46.43% for the New York Tax Free Money Market Fund and New York Tax Free Income Fund and a combined California State and federal income tax rate of 45.22% for the California Tax Free Money Market Fund and California Intermediate Tax Free Fund. Non-Standardized Performance Results* (excluding sales charges) The table below reflects the net change in the value of an assumed initial investment of $10,000 in the following Funds (excluding the effects of any applicable sales charges) for the period from the commencement date of business for each such Fund (i.e., either September 8, 1987 for the Tax Free Income and New York Tax Free Income Funds or July 16, 1993 for the California Intermediate Tax Free Fund.) The values reflect an assumption that capital gain distributions and income dividends, if any, have been invested in additional shares of the same class. From time to time, the Funds may provide these performance results in addition to the total rate of return quotations required by the Securities and Exchange Commission. As discussed more fully in the Prospectuses, neither these performance results, nor total rate of return quotations, should be considered as representative of the performance of the Funds in the future. These factors and the possible differences in the methods used to calculate performance results and total rates of return should be considered when comparing such performance results and total rate of return quotations of the Funds with those published for other investment companies and other investment vehicles.
Fund Period Ended Total Inception August 31, 1999 Value Date - ------------------------------------------- ---------- ---------- The Tax Free Income Fund: A Shares $20,788 9/8/87 B Shares+ 19,788 The New York Tax Free Income Fund: A Shares 19,569 9/8/87 B Shares+ 18,700 The California Intermediate Tax Free Fund 13,323 7/15/93
- ---------- * See the notes to the table captioned "Average Annual Total Return (excluding sales charges)" above. The table above assumes an initial investment of $10,000 in a particular class of a Fund for the period from the Fund's commencement of operations, although the particular class may have been introduced at a subsequent date. As indicated above, performance information for each class introduced after the commencement of operations of the related Fund is based on the performance history of a predecessor class or classes, and historical expenses have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. 28 Non-Standardized Performance Results* (includes sales charges) With the current maximum sales charge of 4.50% for Class A shares, and the currently applicable CDSC for Class B shares for each period length, reflected, the figures for the same periods would be as follows:
Period Ended Total August 31, 1999 Value - ------------------------------------------- ---------- The Tax Free Income Fund: A Shares $19,853 B Shares+ 19,788 The New York Tax Free Income Fund: A Shares 18,688 B Shares+ 18,700 The California Intermediate Tax Free Fund 12,723
- ---------- * See the notes to the table captioned "Average Annual Total Return (excluding sales charges)" above. The table above assumes an initial investment of $10,000 in a particular class of a Fund for the period from the Fund's commencement of operations, although the particular class may have been introduced at a subsequent date. As indicated above, performance information for each class introduced after the commencement of operations of the related Fund is based on the performance history of a predecessor class or classes, and historical expenses have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. DETERMINATION OF NET ASSET VALUE As of the date of this Statement of Additional Information, the New York Stock Exchange is open for trading every weekday except for the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. In addition,to the days listed above (other than Good Friday), the Funds are closed for business on the following holidays: Martin Luther King Day, Columbus Day, and Veteran's Day. The Money Market Funds' portfolio securities are valued at their amortized cost. Amortized cost valuation involves valuing an instrument at its cost and thereafter accrediting discounts and amortizing premiums at a constant rate to maturity. This method increases stability in valuation, but may result in periods during which the stated value of a portfolio security is higher or lower than the price a Fund would receive if the instrument were sold. Pursuant to the rules of the Securities and Exchange Commission, the Board of Trustees has established procedures to stabilize the net asset value of each Money Market Fund at $1.00 per share. However, no assurance can be given that the Money Market Funds will be able to do so on a continuous basis. These procedures include a review of the extent of any deviation of net asset value per share, based on available market rates (and appropriate substitutes which reflect current market conditions), from the $1.00 amortized cost price per share. If fluctuating interest rates cause the market value of a Money Market Fund's portfolio to approach a deviation of more than 1/2 of 1% from the value determined on the basis of amortized cost, the Board of Trustees will consider what action, if any, should be initiated. Such action may include redemption of shares in kind (as described in greater detail below), selling portfolio securities prior to maturity, reducing or withholding dividends and utilizing a net asset value per share as determined by using available market quotations. The Money Market Funds have established procedures designed to ensure that their portfolio securities meet their high quality criteria. Bonds and other fixed income securities (other than short-term obligations) in a Fund's portfolio are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the 29 Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques that take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Short- term obligations which mature in 60 days or less are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. Futures and option contracts that are traded on commodities or securities exchanges are normally valued at the settlement price on the exchange on which they are traded. Portfolio securities (other than short-term obligations) for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees. Interest income on long-term obligations in an Income Fund's portfolio is determined on the basis of coupon interest accrued plus amortization of discount (the difference between acquisition price and stated redemption price at maturity) and premiums (the excess of purchase price over stated redemption price at maturity). Interest income on short-term obligations is determined on the basis of interest and discount accrued less amortization of premium. PURCHASES, REDEMPTIONS AND EXCHANGES The Fund has established certain procedures and restrictions, subject to change from time to time, for purchase, redemption, and exchange orders, including procedures for accepting telephone instructions and effecting automatic investments and redemptions. The Funds' Transfer Agent may defer acting on a shareholder's instructions until it has received them in proper form. In addition, the privileges described in the Prospectuses are not available until a completed and signed account application has been received by the Transfer Agent. Telephone transaction privileges are made available to shareholders automatically upon opening an account unless the privilege is declined in Section 6 of the Account Application. The Telephone Exchange Privilege is not available if you were issued certificates for shares that remain outstanding. Upon receipt of any instructions or inquiries by telephone from a shareholder or, if held in a joint account, from either party, or from any person claiming to be the shareholder, a Fund or its agent is authorized, without notifying the shareholder or joint account parties, to carry out the instructions or to respond to the inquiries, consistent with the service options chosen by the shareholder or joint shareholders in his or their latest account application or other written request for services, including purchasing, exchanging, or redeeming shares of such Fund and depositing and withdrawing monies from the bank account specified in the Bank Account Registration section of the shareholder's latest account application or as otherwise properly specified to such Fund in writing. Subject to compliance with applicable regulations, each Fund has reserved the right to pay the redemption price of its Shares, either totally or partially, by a distribution in kind of readily marketable portfolio securities (instead of cash). The securities so distributed would be valued at the same amount as that assigned to them in calculating the net asset value for the shares being sold. If a shareholder received a distribution in kind, the shareholder could incur brokerage or other charges in converting the securities to cash. The Trust has filed an election under Rule 18f-1 committing to pay in cash all redemptions by a shareholder of record up to amounts specified by the rule (approximately $250,000). Investors in Class A shares may qualify for reduced initial sales charges by signing a statement of intention (the "Statement"). This enables the investor to aggregate purchases of Class A shares in the Fund with purchases of Class A shares of any other Fund in the Trust (or if a Fund has only one class, shares of such Fund), excluding shares of any Vista money market fund, during a 13-month period. The sales charge is based on the total amount to be invested in Class A shares during the 13-month period. All Class A or other qualifying shares of these funds currently owned by the investor will be credited as purchases (at their current offering prices on the date the Statement is signed) toward completion of the Statement. A 90-day back-dating period can be used to include earlier purchases at the investor's cost. The 13-month period would then begin on the date of the first purchase during the 90-day period. No retroactive adjustment will be made if 30 purchases exceed the amount indicated in the Statement. A shareholder must notify the Transfer Agent or Distributor whenever a purchase is being made pursuant to a Statement. The Statement is not a binding obligation on the investor to purchase the full amount indicated; however, on the initial purchase, if required (or subsequent purchases if necessary), 5% of the dollar amount specified in the Statement will be held in escrow by the Transfer Agent in Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) registered in the shareholder's name in order to assure payment of the proper sales charge. If total purchases pursuant to the Statement (less any dispositions and exclusive of any distributions on such shares automatically reinvested) are less than the amount specified, the investor will be requested to remit to the Transfer Agent an amount equal to the difference between the sales charge paid and the sales charge applicable to the aggregate purchases actually made. If not remitted within 20 days after written request, an appropriate number of escrowed shares will be redeemed in order to realize the difference. This privilege is subject to modification or discontinuance at any time with respect to all shares purchased thereunder. Reinvested dividend and capital gain distributions are not counted toward satisfying the Statement. Class A shares of a Fund may also be purchased by any person at a reduced initial sales charge which is determined by (a) aggregating the dollar amount of the new purchase and the greater of the purchaser's total (i) net asset value or (ii) cost of any shares acquired and still held in the Fund, or any other Vista fund excluding any Vista money market fund, and (b) applying the initial sales charge applicable to such aggregate dollar value (the "Cumulative Quantity Discount"). The privilege of the Cumulative Quality Discount is subject to modification or discontinuance at any time with respect to all Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) purchased thereafter. An individual who is a member of a qualified group (as hereinafter defined) may also purchase Class A shares of a Fund (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) at the reduced sales charge applicable to the group taken as a whole. The reduced initial sales charge is based upon the aggregate dollar value of Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) previously purchased and still owned by the group plus the securities currently being purchased and is determined as stated in the preceding paragraph. In order to obtain such discount, the purchaser or investment dealer must provide the Transfer Agent with sufficient information, including the purchaser's total cost, at the time of purchase to permit verification that the purchaser qualifies for a cumulative quantity discount, and confirmation of the order is subject to such verification. Information concerning the current initial sales charge applicable to a group may be obtained by contacting the Transfer Agent. A "qualified group" is one which (i) has been in existence for more than six months, (ii) has a purpose other than acquiring Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) at a discount and (iii) satisfies uniform criteria which enables the Distributor to realize economies of scale in its costs of distributing Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund). A qualified group must have more than 10 members, must be available to arrange for group meetings between representatives of the Fund and the members, must agree to include sales and other materials related to the Fund in its publications and mailings to members at reduced or no cost to the Distributor, and must seek to arrange for payroll deduction or other bulk transmission of investments in the Fund. This privilege is subject to modification or discontinuance at any time with respect to all Class A shares (or if a Fund has only one class and is subject to an initial sales charge, shares of such Fund) purchased thereafter. Investors may be eligible to buy Class A shares at reduced sales charges. One's investment representative or the Chase Vista Funds Service Center should be consulted for details about Chase Vista's combined purchase privilege, cumulative quantity discount, statement of intention, group sales plan, employee benefit plans and other plans. Sales charges are waived if an investor is using redemption proceeds received within the prior ninety days from non-Chase Vista mutual funds to buy the shares, and on which he or she paid a front-end or contingent deferred sales charge. Some participant-directed employee benefit plans participate in a "multi-fund" program which offers both Chase Vista and non-Chase Vista mutual funds. The money that is invested in Chase Vista Funds may 31 be combined with the other mutual funds in the same program when determining the plan's eligibility to buy Class A shares for purposes of the discount privileges and programs described above. No initial sales charge will apply to the purchase of a Fund's Class A shares if (i) one is investing proceeds from a qualified retirement plan where a portion of the plan was invested in the Chase Vista Funds, (ii) one is investing through any qualified retirement plan with 50 or more participants or (iii) the investor is a participant in certain qualified retirement plans and is investing (or reinvesting) the proceeds from the repayment of a plan loan made to him or her. Purchases of a Fund's Class A shares may be made with no initial sales charge through an investment adviser or financial planner that charges a fee for its services. Purchases of a Fund's Class A shares may be made with no initial sales charge (i) by an investment adviser, broker or financial planner, provided arrangements are preapproved and purchases are placed through an omnibus account with the Fund or (ii) by clients of such investment adviser or financial planner who place trades for their own accounts, if such accounts are linked to a master account of such investment adviser or financial planner on the books and records of the broker or agent. Such purchases may also be made for retirement and deferred compensation plans and trusts used to fund those plans. Purchases of a Fund's Class A shares may be made with no initial sales charge in accounts opened by a bank, trust company or thrift institution which is acting as a fiduciary exercising investment discretion, provided that appropriate notification of such fiduciary relationship is reported at the time of the investment to the Fund, the Fund's distributor or the Chase Vista Funds Service Center. A Fund may sell Class A shares without an initial sales charge to the current and retired Trustees (and their immediate families), current and retired employees (and their immediate families) of Chase, the Fund's distributor and transfer agent or any affiliates or subsidiaries thereof, registered representatives and other employees (and their immediate families) of broker-dealers having selected dealer agreements with the Fund's distributor, employees (and their immediate families) of financial institutions having selected dealer agreements with the Fund's distributor (or otherwise having an arrangement with a broker-dealer or financial institution with respect to sales of Chase Vista Fund shares) and financial institution trust departments investing an aggregate of $1 million or more in the Chase Vista Funds. Shareholders of record of any Chase Vista fund as of November 30, 1990 and certain immediate family members may purchase a Fund's Class A shares with no initial sales charge for as long as they continue to own Class A shares of any Chase Vista fund, provided there is no change in account registration. Shareholders of other Chase Vista Funds may be entitled to exchange their shares for, or reinvest distributions from their funds in, shares of the Fund at net asset value. The Funds reserve the right to change any of these policies at any time and may reject any request to purchase shares at a reduced sales charge. Investors may incur a fee if they effect transactions through a broker or agent. Reinstatement Privilege. Upon written request, Class A shareholders of the Tax Free Income Fund, the New York Tax Free Income Fund, as well as all shareholders of the California Intermediate Tax Free Fund, have a one time privilege of reinstating their investment in the Fund at net asset value next determined subject to written request within 90 calendar days of the redemption. The reinstatement request must be accompanied by payment for the shares (not in excess of the redemption), and shares will be purchased at the next determined net asset value. Class B shareholders of the Prime Money Market Fund, Tax Free Income Fund and the New York Tax Free Income Fund who have redeemed their shares and paid a CDSC with such redemption may purchase Class A shares with no initial sales charge (in an amount not in excess of their redemption proceeds) if the purchase occurs within 90 days of the redemption of the Class B (or C) shares. 32 Under the Exchange Privilege, shares may be exchanged for shares of another fund only if shares of the fund exchanged into are registered in the state where the exchange is to be made. Shares of a Fund may only be exchanged into another fund if the account registrations are identical. With respect to exchanges from any Vista money market fund, shareholders must have acquired their shares in such money market fund by exchange from one of the Vista non-money market funds or the exchange will be done at relative net asset value plus the appropriate sales charge. Any such exchange may create a gain or loss to be recognized for federal income tax purposes. Normally, shares of the fund to be acquired are purchased on the redemption date, but such purchase may be delayed by either fund for up to five business days if a fund determines that it would be disadvantaged by an immediate transfer of the proceeds. The contingent deferred sales charge for Class B shares will be waived for certain exchanges and for redemptions in connection with a Fund's systematic withdrawal plan, subject to the conditions described in the Prospectuses. In addition, subject to confirmation of a shareholder's status, the contingent deferred sales charge will be waived for: (i) a total or partial redemption made within one year of the shareholder's death or initial qualification for Social Security disability payments; (ii) a redemption in connection with a Minimum Required Distribution form an IRA, Keogh or custodial account under section 403(b) of the Internal Revenue Code or a mandatory distribution from a qualified plan; (iii) redemptions made from an IRA, Keogh or custodial account under section 403(b) of the Internal Revenue Code through an established Systematic Redemption Plan; (iv) a redemption resulting from an over-contribution to an IRA; (v) distributions from a qualified plan upon retirement; and (vi) an involuntary redemption of an account balance under $500. Up to 12% of the value of Class B shares subject to a systematic withdrawal plan may also be redeemed each year without a CDSC, provided that the Class B account had a minimum balance of $20,000 at the time the systematic withdrawal plan was established. Class B shares automatically convert to Class A shares (and thus are then subject to the lower expenses borne by Class A shares) after a period of time specified below has elapsed since the date of purchase (the "CDSC Period"), together with the pro rata portion of all Class B shares representing dividends and other distributions paid in additional Class B shares attributable to the Class B shares then converting. The conversion of Class B shares purchased on or after May 1, 1996, will be effected at the relative net asset values per share of the two classes on the first business day of the month following the eighth anniversary of the original purchase. The conversion of Class B shares purchased prior to May 1, 1996, will be effected at the relative net asset values per share of the two classes on the first business day of the month following the seventh anniversary of the original purchase. If any exchanges of Class B shares during the CDSC Period occurred, the holding period for the shares exchanged will be counted toward the CDSC Period. At the time of the conversion the net asset value per share of the Class A shares may be higher or lower than the net asset value per share of the Class B shares; as a result, depending on the relative net asset values per share, a shareholder may receive fewer or more Class A shares than the number of Class B shares converted. A Fund may require signature guarantees for changes that shareholders request be made in Fund records with respect to their accounts, including but not limited to, changes in bank accounts, for any written requests for additional account services made after a shareholder has submitted an initial account application to the Fund, and in certain other circumstances described in the Prospectuses. A Fund may also refuse to accept or carry out any transaction that does not satisfy any restrictions then in effect. A signature guarantee may be obtained from a bank, trust company, broker-dealer or other member of a national securities exchange. Please note that a notary public cannot provide a signature guarantee. 33 DISTRIBUTIONS; TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the respective Fund's Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Funds or their shareholders, and the discussions here and in each Fund's Prospectus are not intended as substitutes for careful tax planning. Qualification as a Regulated Investment Company Each Fund has elected to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and to meet all other requirements that are necessary for it to be relieved of federal taxes on income and gains it distributes to shareholders. Net investment income for each Fund consists of all interest accrued and discounts earned, less amortization of any market premium on the portfolio assets of the Fund and the accrued expenses of the Fund. As a regulated investment company, each Fund is not subject to federal income tax on the portion of its net investment income (i.e., its investment company taxable income, as that term is defined in the Code, without regard to the deduction for dividends paid) and net capital gain (i.e., the excess of net long-term capital gain over net short-term capital loss) that it distributes to shareholders, provided that it distributes at least 90% of its net investment income and at least 90% of its tax-exempt income (net of expenses allocable thereto) for the taxable year (the "Distribution Requirement"), and satisfies certain other requirements of the Code that are described below. Because certain Funds invest all of their assets in Portfolios which will be classified as partnerships for federal income tax purposes, such Funds will be deemed to own a proportionate share of the income of the Portfolio into which each contributes all of its assets for purposes of determining whether such Funds satisfy the Distribution Requirement and the other requirements necessary to qualify as a regulated investment company (e.g., Income Requirement (hereinafter defined), etc.). In addition to satisfying the Distribution Requirement, a regulated investment company must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are directly related to the regulated investment company's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement"). In addition to satisfying the requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a regulated investment company. Under this test, at the close of each quarter of a Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses. Each non-Money Market Fund may engage in hedging or derivatives transactions involving foreign currencies, forward contracts, options and futures contracts (including options, futures and forward contracts on foreign currencies) and short sales. See "Additional Policies Regarding Derivative and Related Transactions." Such transactions will be subject to special provisions of the Code that, among other things, may affect the character of gains and losses realized by the Fund (that is, may affect whether gains or losses are ordinary or capital), accelerate recognition of income of the Fund and defer recognition of certain of the Fund's losses. These rules could therefore affect the character, amount and timing of distributions to shareholders. In addition, these provisions (1) will require a Fund to "mark-to-market" certain types of positions in its portfolio (that is, treat them as if they were closed out) and (2) may cause a Fund to recognize income without receiving cash with which to pay dividends or make distributions in amounts necessary to satisfy the Distribution Requirement and avoid the 4% 34 excise tax (described below). Each Fund intends to monitor its transactions, will make the appropriate tax elections and will make the appropriate entries in its books and records when it acquires any option, futures contract, forward contract or hedged investment in order to mitigage the effect of these rules. If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable to the shareholders as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends-received deduction in the case of corporate shareholders. Excise Tax on Regulated Investment Companies A 4% non-deductible excise tax is imposed on a regulated investment company that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income for the one-year period ended on October 31 of such calendar year (or, at the election of a regulated investment company having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election"))(Tax-exempt interest on municipal obligations is not subject to the excise tax). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. Fund Distributions Each Fund anticipates distributing substantially all of its net investment income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will not qualify for the 70% dividends-received deduction for corporations only to the extent described below. Dividends paid on Class A, Class B and Class C shares are calculated at the same time. In general, dividends on Class B and Class C shares are expected to be lower than those on Class A shares due to the higher distribution expenses borne by the Class B and Class C shares. Dividends may also differ between classes as a result of differences in other class specific expenses. If a check representing a Fund distribution is not cashed by a shareholder within a specified period, the Chase Vista Service Center will notify the shareholder that he or she has the option of requesting another check or reinvesting the distribution in the Fund or in an established account of another Chase Vista Fund. If the Chase Vista Service Center does not receive the shareholder's election, the distribution will be reinvested in the Fund. Similarly, if the Fund or the Chase Vista Service Center sends the shareholder correspondence returned as "undeliverable," distributions will automatically be reinvested in the Fund. A Fund may either retain or distribute to shareholders its net capital gain for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a capital gain dividend, it will be taxable to shareholders as long-term capital gain, regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Under recently enacted legislation, the maximum rate of tax on long-term capital gains of individuals will generally be reduced from 28% to 20% (10% for gains otherwise taxed at 15%) for long-term capital gains realized after July 28, 1997 with respect to capital assets held for more than 18 months. Additionally, begin- 35 ning after December 31, 2000, the maximum tax rate for capital assets with a holding period beginning after that date and held for more than five years will be 18%. Under a literal reading of the legislation, capital gain dividends paid by a regulated investment company would not appear eligible for the reduced capital gain rates. However, the legislation authorizes the Treasury Department to promulgate regulations that would apply the new rates to capital gain dividends paid by a regulated investment company. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it is expected that the Fund also will elect to have shareholders of record on the last day of its taxable year treated as if each received a distribution of his pro rata share of such gain, with the result that each shareholder will be required to report his pro rata share of such gain on his tax return as long-term capital gain, will receive a refundable tax credit for his pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for his shares by an amount equal to the deemed distribution less the tax credit. Ordinary income dividends paid by a Fund with respect to a taxable year will qualify for the 70% dividends-received deduction generally available to corporations to the extent of the amount of qualifying dividends received by a Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a qualifying dividend (1) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 90 day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 180 day period beginning 90 days before such date in the case of certain preferred stock) under the Rules of the Code section 246(c)(3) and (4); (2) to the extent that a fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property; or (3) to the extent the stock on which the dividend is paid is treated as debt-financed under the rules of Code Section 246A. Moreover, the dividends-received deduction for a corporate shareholder may be disallowed or reduced if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of a Fund. In the case where a Fund invests all of its assets in a Portfolio and the Fund satisfies the holding period rules pursuant to Code Section 256(C) as to its interest in the Portfolio, a corporate shareholder which satisfies the foregoing requirements with respect to its shares of the Fund should receive the dividends-received deduction. For purposes of the Corporate AMT, the corporate dividends-received deduction is not itself an item of tax preference that must be added back to taxable income or is otherwise disallowed in determining a corporation's AMT. However, corporate shareholders will generally be required to take the full amount of any dividend received from a Fund into account (without a dividends-received deduction) in determining its adjusted current earnings. Each Tax Free Fund intends to qualify to pay exempt-interest dividends by satisfying the requirement that at the close of each quarter of the Tax Free Fund's taxable year at least 50% of the its total assets consists of tax-exempt municipal obligations. Distributions from a Tax Free Fund will constitute exempt-interest dividends to the extent of its tax-exempt interest income (net of expenses and amortized bond premium). Exempt-interest dividends distributed to shareholders of a Tax Free Fund are excluded from gross income for federal income tax purposes. However, shareholders required to file a federal income tax return will be required to report the receipt of exempt-interest dividends on their returns. Moreover, while exempt-interest dividends are excluded from gross income for federal income tax purposes, they may be subject to alternative minimum tax ("AMT") in certain circumstances and may have other collateral tax consequences as discussed below. Distributions by a Tax Free Fund of any investment company taxable income or of any net capital gain will be taxable to shareholders as discussed above. AMT is imposed in addition to, but only to the extent it exceeds, the regular tax and is computed at a maximum marginal rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount. In addition, under the Superfund Amendments and Reauthorization Act of 1986, a tax is imposed for taxable years beginning 36 after 1986 and before 1996 at the rate of 0.12% on the excess of a corporate taxpayer's AMTI (determined without regard to the deduction for this tax and the AMT net operating loss deduction) over $2 million. Exempt-interest dividends derived from certain "private activity" municipal obligations issued after August 7, 1986 will generally constitute an item of tax preference includable in AMTI for both corporate and noncorporate taxpayers. In addition, exempt-interest dividends derived from all municipal obligations, regardless of the date of issue, must be included in adjusted current earnings, which are used in computing an additional corporate preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings over its AMTI (determined without regard to this item and the AMT net operating loss deduction)) includable in AMTI. Exempt-interest dividends must be taken into account in computing the portion, if any, of social security or railroad retirement benefits that must be included in an individual shareholder's gross income and subject to federal income tax. Further, a shareholder of a Tax Free Fund is denied a deduction for interest on indebtedness incurred or continued to purchase or carry shares of the Fund. Moreover, a shareholder who is (or is related to) a "substantial user" of a facility financed by industrial development bonds held by a Tax Free Fund will likely be subject to tax on dividends paid by the Tax Free Fund which are derived from interest on such bonds. Receipt of exempt-interest dividends may result in other collateral federal income tax consequences to certain taxpayers, including financial institutions, property and casualty insurance companies and foreign corporations engaged in a trade or business in the United States. Prospective investors should consult their own tax advisers as to such consequences. Net investment income that may be received by certain of the Funds from sources within foreign countries may be subject to foreign taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle any such Fund to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of any such Fund's assets to be invested in various countries is not known. Distributions by a Fund that do not constitute ordinary income dividends, exempt-interest dividends or capital gain dividends will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below. Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or of another fund). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. In addition, if the net asset value at the time a shareholder purchases shares of a Fund reflects undistributed net investment income or recognized capital gain net income, or unrealized appreciation in the value of the assets of the Fund, distributions of such amounts will be taxable to the shareholder in the manner described above, although such distributions economically constitute a return of capital to the shareholder. Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year. A Fund will be required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the IRS for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Fund that it is not subject to backup withholding or that it is a corporation or other "exempt recipient." 37 Sale or Redemption of Shares Each Money Market Fund seeks to maintain a stable net asset value of $1.00 per share; however, there can be no assurance that a Money Market Fund will do this. In such a case and any case involving the Income Funds, a shareholder will recognize gain or loss on the sale or redemption of shares of a Fund in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. All or a portion of any loss so recognized may be disallowed if the shareholder purchases other shares of the Fund within 30 days before or after the sale or redemption. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of a Fund will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. However, any capital loss arising from the sale or redemption of shares held for six months or less will be disallowed to the extent of the amount of exempt-interest dividends received on such shares and (to the extent not disallowed) will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. Foreign Shareholders Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from a Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, paid to a foreign shareholder from net investment income will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale of shares of the Fund and capital gain dividends and amounts retained by the Fund that are designated as undistributed capital gains. If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends, and any gains realized upon the sale of shares of the Fund will be subject to U.S. federal income tax at the rates applicable to U.S. citizens or domestic corporations. In the case of foreign noncorporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of their foreign status. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign taxes. State and Local Tax Matters Depending on the residence of the shareholder for tax purposes, distributions may also be subject to state and local taxes or withholding taxes. Most states provide that a RIC may pass through (without restriction) to its shareholders state and local income tax exemptions available to direct owners of certain types of U.S. government securities (such as U.S. Treasury obligations). Thus, for residents of these states, distributions derived from a Fund's investment in certain types of U.S. government securities should be free from state and local income taxes to the extent that the interest income from such investments would have been exempt from state and local income taxes if such securities had been held directly by the respective shareholders themselves. Certain states, however, do not allow a RIC to pass through to its shareholders the state and local income tax exemptions available to direct owners of certain types of U.S. government securities unless the RIC holds at least a required amount of U.S. government securities. Accordingly, for residents of these states, distributions derived from a 38 Fund's investment in certain types of U.S. government securities may not be entitled to the exemptions from state and local income taxes that would be available if the shareholders had purchased U.S. government securities directly. Shareholders' dividends attributable to a Fund's income from repurchase agreements generally are subject to state and local income taxes, although states and regulations vary in their treatment of such income. The exemption from state and local income taxes does not preclude states from asserting other taxes on the ownership of U.S. government securities. To the extent that a Fund invests to a substantial degree in U.S. government securities which are subject to favorable state and local tax treatment, shareholders of such Fund will be notified as to the extent to which distributions from the Fund are attributable to interest on such securities. Rules of state and local taxation of ordinary income dividends and capital gain dividends from RICs may differ from the rules for U.S. federal income taxation in other respects. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in a Fund. Effect of Future Legislation The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the Treasury Regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. MANAGEMENT OF THE TRUST AND THE FUNDS Trustees and Officers The Trustees and of the Trust officers and their principal occupations for at least the past five years are set forth below. Their titles may have varied during that period. Fergus Reid, III--Chairman of the Trust. Chairman and Chief Executive Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley Funds. Age: 67. Address: 202 June Road, Stamford, CT 06903. *H. Richard Vartabedian--Trustee and President of the Trust. Investment Management Consultant; formerly, Senior Investment Officer, Division Executive of the Investment Management Division of The Chase Manhattan Bank, N.A., 1980-1991. Age: 63. Address: P.O. Box 296, Beach Road, Hendrick's Head, Southport, ME 04576. William J. Armstrong--Trustee. Vice President and Treasurer, Ingersoll-Rand Company. Age: 58. Address: 49 Aspen Way, Upper Saddle River, NJ 07458. John R.H. Blum--Trustee. Attorney in private practice; formerly a Partner in the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture State of Connecticut, 1992-1995. Age: 70. Address: 322 Main Street, Lakeville,CT 06039. Stuart W. Cragin, Jr.--Trustee. Retired; formerly President, Fairfield Testing Laboratory, Inc. He has previously served in a variety of marketing, manufacturing and general management positions with Union Camp Corp., Trinity Paper & Plastics Corp., and Conover Industries. Age: 66. Address: 108 Valley Road, Cos Cob, CT 06807. Roland R. Eppley, Jr.--Trustee. Retired; formerly President and Chief Executive Officer, Eastern States Bankcard Association Inc. (1971-1988); Director, Janel Hydraulics, Inc.; formerly Director of The Hanover Funds, Inc. Age: 67. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418. 39 Joseph J. Harkins--Trustee. Retired; Commercial Sector Executive and Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through 1989. He has been employed by Chase in numerous capacities and offices from 1954 through 1989. Director of Blessings Corporation, Jefferson Insurance Company of New York, Monticello Insurance Company and National. Age: 68. Address: 257 Plantation Circle South, Ponte Vedra Beach, FL 32082. *Sarah E. Jones--Trustee. President and Chief Operating Officer of Chase Mutual Funds Corp.; formerly Managing Director for the Global Asset Management and Private Banking Division of the Chase Manhattan Bank. Age: 47. Address: One Chase Manhattan Plaza, Third Floor, New York, New York 10081. W.D. MacCallan--Trustee. Director of The Adams Express Co. and Petroleum & Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of The Adams Express Co. and Petroleum & Resources Corp.; Director of The Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 72. Address: 624 East 45th Street, Savannah, GA 31405. W. Perry Neff--Trustee. Independent Financial Consultant; Director of North America Life Assurance Co., Petroleum & Resources Corp. and The Adams Express Co.; formerly Director and Chairman of The Hanover Funds, Inc.; formerly Director, Chairman and President of The Hanover Investment Funds, Inc. Age: 72. Address: RR 1 Box 102, Weston, VT 05181. *Leonard M. Spalding, Jr.--Trustee. Chief Executive Officer of Chase Mutual Funds Corp.; formerly President and Chief Executive Officer of Vista Capital Management; and formerly Chief Investment Executive of the Chase Manhattan Private Bank. Age: 64. Address: One Chase Manhattan Plaza, Third Floor, New York, New York 10081. Richard E. Ten Haken--Trustee; Chairman of the Audit Committee. Formerly District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New York; Chairman of the Board and President, New York State Teachers' Retirement System. Age: 65. Address: 4 Barnfield Road, Pittsford, NY 14534. Irving L. Thode--Trustee. Retired; formerly Vice President of Quotron Systems. He has previously served in a number of executive positions with Control Data Corp., including President of its Latin American Operations, and General Manager of its Data Services business. Age: 68. Address: 80 Perkins Road, Greenwich, CT 06830. Martin R. Dean--Treasurer. Associate Director, Accounting Services, BISYS Fund Services; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Age: 34. Address: 3435 Stelzer Road, Columbus, OH 43219. Lisa Hurley--Secretary. Senior Vice President and General Counsel, BISYS Fund Services; formerly Counsel to Moore Capital Management and General Counsel to Global Asset Management and Northstar Investments Management. Age: 44. Address: 90 Park Avenue, New York, NY 10016. Vicky M. Hayes--Assistant Secretary. Vice President and Global Marketing Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President, Alliance Capital Management and held various positions with J. & W. Seligman & Co. Age: 37. Address: One Chase Manhattan Plaza, 3rd Fl., New York, NY 10081. Alaina Metz--Assistant Secretary. Chief Administrative Officer, BISYS Fund Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management L.P. Age: 31. Address: 3435 Stelzer Road, Columbus, OH 43219. 40 - ---------- *Asterisks indicate those Trustees that are "interested persons" (as defined in the 1940 Act). Mr. Reid is not an interested person of the Trust's investment advisers or principal underwriter, but may be deemed an interested person of the Trust solely by reason of being chairman of the Trust. The Board of Trustees of the Trust presently has an Audit Committee. The members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong, Eppley, MacCallan and Thode. The function of the Audit Committee is to recommend independent auditors and monitor accounting and financial matters. The Audit Committee met two times during the fiscal period ended August 31, 1999. The Board of Trustees of the Trust has established an Investment Committee. The members of the Investment Committee are Messrs. Vartabedian (Chairman), Reid and Spalding. The function of the Investment Committee is to review the investment management process of the Trust. The Trustees and officers of the Trust appearing in the table above also serve in the same capacities with respect to Mutual Fund Group, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income Portfolio, and International Equity Portfolio (these entities, together with the Trust, are referred to below as the "Vista Funds"). Remuneration of Trustees and Certain Executive Officers: Each Trustee is reimbursed for expenses incurred in attending each meeting of the Board of Trustees or any committee thereof. Each Trustee who is not an affiliate of the advisers is compensated for his or her services according to a fee schedule which recognizes the fact that each Trustee also serves as a Trustee of other investment companies advised by the advisers. Each Trustee receives a fee, allocated among all investment companies for which the Trustee serves, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued during the fiscal year ended August 31, 1999 for each Trustee of the Trust:
U.S. New York California Government Cash Tax Free Prime Tax Free Tax Free Money Management Money Money Money Money Market Fund Fund Market Fund Market Fund Market Fund Market Fund --------------- --------------- ------------- --------------- ------------- ------------ Fergus Reid, III, Trustee $24,618.96 $21,752.43 $4,440.35 $24,526.38 $4,810.42 $153.42 H. Richard Vartabedian, Trustee 18,468.53 16,311.64 3,332.05 18,399.28 3,609.71 115.76 William J. Armstrong, Trustee 12,312.35 10,874.42 2,221.37 12,266.19 2,406.47 77.17 John R.H. Blum, Trustee 13,184.05 11,803.65 2,388.94 13,342.51 2,582.09 79.87 Stuart W. Cragin, Jr., Trustee 12,694.66 11,281.96 2,294.86 12,738.21 2,483.49 78.97 Roland R. Eppley, Jr., Trustee 12,312.35 10,874.42 2,221.37 12,266.19 2,406.47 77.17 Joseph J. Harkins, Trustee 12,694.66 11,281.96 2,294.86 12,738.21 2,483.49 78.97 Sarah E. Jones, Trustee -- -- -- -- -- -- W.D. MacCallan, Trustee 12,312.35 10,874.43 2,221.36 12,266.24 2,406.47 77.17 W. Perry Neff, Trustee 12,329.23 10,850.55 2,219.50 12,261.73 2,404.79 76.88 Leonard M. Spalding, Jr., Trustee 12,312.35 10,874.42 2,221.37 12,266.19 2,406.47 77.17 Richard E. Ten Haken, Trustee 12,610.55 11,192.49 2,278.70 12,634.58 2,466.54 77.17 Irving L. Thode, Trustee 12,312.35 10,874.42 2,221.37 12,266.19 2,406.47 77.17
41
100% U.S. Treasury California Treasury Federal Plus New York Tax Intermediate Securities Money Money Tax Free Free Tax Free Money Market Market Fund Market Fund Income Fund Income Fund Fund Fund ------------- ------------- ------------- ------------- -------------- --------------- Fergus Reid, III, Trustee $3,383.50 $9,305.45 $422.70 $253.65 $81.89 $15,369.70 H. Richard Vartabedian, Trustee 2,538.89 6,981.47 317.27 190.34 61.78 11,531.38 William J. Armstrong, Trustee 1,692.59 4,654.31 211.52 126.89 41.19 7,687.59 John R.H. Blum, Trustee 1,826.86 5,002.88 221.08 132.69 43.07 8,250.93 Stuart W. Cragin, Jr. Trustee 1,751.48 4,807.18 217.90 130.76 42.45 7,934.66 Roland R. Eppley, Jr. Trustee 1,692.59 4,654.31 211.52 126.89 41.19 7,687.59 Joseph J. Harkins, Trustee 1,751.48 4,807.18 217.90 130.76 42.45 7,934.66 Sarah E. Jones, Trustee -- -- -- -- -- -- W.D. MacCallan, Trustee 1,692.59 4,654.31 211.51 126.90 41.19 7,687.59 W. Perry Neff, Trustee 1,691.62 4,645.90 212.11 127.02 41.27 7,708.01 Leonard M. Spalding, Jr., Trustee 1,692.59 4,654.31 211.52 126.89 41.19 7,687.59 Richard E. Ten Haken, Trustee 1,738.57 4,773.63 211.50 126.95 41.19 7,880.32 Irving L. Thode, Trustee 1,692.59 4,654.31 211.52 126.89 41.19 7,687.59
Pension or Total Retirement Compensation Benefits Accrued From as Fund Expenses (1) "Fund Complex" (2) ---------------------- ------------------- Fergus Reid, III, Trustee $108,490 $160,000 H. Richard Vartabedian, Trustee 69,858 120,000 William J. Armstrong, Trustee 35,695 80,000 John R.H. Blum, Trustee 70,084 87,500 Stuart W. Cragin, Jr., Trustee 42,785 82,500 Roland R. Eppley, Jr., Trustee 52,102 80,000 Joseph J. Harkins, Trustee 60,009 82,500 Sarah E. Jones, Trustee -- -- W.D. MacCallan, Trustee 73,291 80,000 W. Perry Neff, Trustee 70,365 80,000 Leonard M. Spalding, Jr., Trustee 25,509 80,000 Richard E. Ten Haken, Trustee 55,162 83,750 Irving L. Thode, Trustee 50,414 80,000
- ---------- (1) Data reflects total benefits accrued by Mutual Fund Group, Mutual Fund Select Group, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio for the fiscal year ended October 31, 1999 and by the Trust, Mutual Fund Select Trust, and Mutual Fund Variable Annuity Trust for the fiscal year ended August 31, 1999. (2) Data reflects total estimated compensation earned during the period January 1, 1999 to December 31, 1999 for service as a Trustee to the Trust, Mutual Fund Group, Mutual Fund Variable Annuity Trust, Mutual Select Group, Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio. As of October 31, 1999, the Trustees and officers as a group owned less than 1% of each Fund's outstanding shares, all of which were acquired for investment purposes. For the fiscal year ended August 31, 1999, the Trust paid its disinterested Trustees fees and expenses for all the meetings of the Board and any committees attended in the aggregate amount of approximately $801,520 which amount was then apportioned among the Funds comprising the Trust. 42 Vista Funds Retirement Plan for Eligible Trustees Effective August 21, 1995, the Trustees also instituted a Retirement Plan for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an employee of any of the Funds, the advisers, administrator or distributor or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, the normal retirement date is the date on which the eligible Trustee has attained age 65 and has completed at least five years of continuous service with one or more of the investment companies advised by the adviser (collectively, the "Covered Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an annual benefit commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to the sum of (i) 8% of the highest annual compensation received from the Covered Funds multiplied by the number of such Trustee's years of service (not in excess of 10 years) completed with respect to any of the Covered Funds and (ii) 4% of the highest annual compensation received from the Covered Funds for each year of Service in excess of 10 years, provided that no Trustee's annual benefit will exceed the highest annual compensation received by that Trustee from the Covered Funds. Such benefit is payable to each eligible Trustee in monthly installments for the life of the Trustee. Set forth below in the table are the estimated annual benefits payable to an eligible Trustee upon retirement assuming various compensation and years of service classifications. As of October 31, 1999, the estimated credited years of service for Messrs.Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley, Harkins, Neff, MacCallan, Spalding, TenHaken, Thode and Ms. Jones are 15, 7, 12, 15, 6, 10, 9, 9, 15, 1, 14, 6 and 0, respectively.
Highest Annual Compensation Paid by All Vista Funds --------------------------------------------------------------------- $80,000 $100,000 $120,000 $140,000 $160,000 Years of Service Estimated Annual Benefits Upon Retirement ------- --------------------------------------------------------------------- 16 $80,000 $100,000 $120,000 $140,000 $160,000 14 76,800 96,000 115,200 134,400 153,600 12 70,400 88,000 105,600 123,200 140,800 10 64,000 80,000 96,000 112,000 128,000 8 51,200 64,000 76,800 89,600 102,400 6 38,400 48,000 57,600 67,200 76,800 4 25,600 32,000 38,400 44,800 51,200
Effective August 21, 1995, the Trustees instituted a Deferred Compensation Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which each Trustee (who is not an employee of any of the Funds, the advisers, administrator or distributor or any of their affiliates) may enter into agreements with the Funds whereby payment of the Trustee's fees are deferred until the payment date elected by the Trustee (or the Trustee's termination of service). The deferred amounts are invested in shares of Vista funds selected by the Trustee. The deferred amounts are paid out in a lump sum or over a period of several years as elected by the Trustee at the time of deferral. If a deferring Trustee dies prior to the distribution of amounts held in the deferral account, the balance of the deferral account will be distributed to the Trustee's designated beneficiary in a single lump sum payment as soon as practicable after such deferring Trustee's death. Messrs. Eppley, Ten Haken, Thode and Vartabedian have each executed a deferred compensation agreement for the 1999 calendar year and as of October 31, 1999 they had contributed $52,400, $27,700, $58,950, and $98,250, respectively. The Declaration of Trust provides that the Trust will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust, unless, as to liability to the Trust or its shareholders, it is finally adjudicated that they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices or with respect to any matter unless it is finally adjudicated that they did not act in good faith in the reasonable belief that their actions were in the best interest of the Trust. In the case of settlement, such 43 indemnification will not be provided unless it has been determined by a court or other body approving the settlement or other disposition, or by a reasonable determination based upon a review of readily available facts, by vote of a majority of disinterested Trustees or in a written opinion of independent counsel, that such officers or Trustees have not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of their duties. Adviser and Sub-Advisers Chase acts as investment adviser to the Funds pursuant to an Investment Advisory Agreement, dated as of May 6, 1996 (the "Advisory Agreement"). Subject to such policies as the Board of Trustees may determine, Chase is responsible for investment decisions for the Funds. Pursuant to the terms of the Advisory Agreement, Chase provides the Funds with such investment advice and supervision as it deems necessary for the proper supervision of the Funds' investments. The advisers continuously provide investment programs and determine from time to time what securities shall be purchased, sold or exchanged and what portion of the Funds' assets shall be held uninvested. The advisers to the Funds furnish, at their own expense, all services, facilities and personnel necessary in connection with managing the investments and effecting portfolio transactions for the Funds. The Advisory Agreement for the Funds will continue in effect from year to year only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of a Fund's outstanding voting securities and by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party, at a meeting called for the purpose of voting on such Advisory Agreement. Under the Advisory Agreement, the adviser may utilize the specialized portfolio skills of all its various affiliates, thereby providing the Funds with greater opportunities and flexibility in accessing investment expertise. Pursuant to the terms of the Advisory Agreement and the sub-advisers' agreements with the adviser, the adviser and sub-advisers are permitted to render services to others. Each advisory agreement is terminable without penalty by the Trust on behalf of the Funds on not more than 60 days', nor less than 30 days', written notice when authorized either by a majority vote of a Fund's shareholders or by a vote of a majority of the Board of Trustees of the Trust, or by the adviser or sub-adviser on not more than 60 days', nor less than 30 days', written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act). The advisory agreements provide that the adviser or sub-adviser under such agreement shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution of portfolio transactions for the respective Fund, except for wilful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties thereunder. In the event the operating expenses of the Funds, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to the Funds imposed by the securities laws or regulations thereunder of any state in which the shares of the Funds are qualified for sale, as such limitations may be raised or lowered from time to time, the adviser shall reduce its advisory fee (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by the adviser shall be deducted from the monthly advisory fee otherwise payable with respect to the Funds during such fiscal year; and if such amounts should exceed the monthly fee, the adviser shall pay to a Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. Under the Advisory Agreement, Chase may delegate a portion of its responsibilities to a sub-adviser. In addition, the Advisory Agreement provides that Chase may render services through its own employees or 44 the employees of one or more affiliated companies that are qualified to act as an investment adviser of the Fund and are under the common control of Chase as long as all such persons are functioning as part of an organized group of persons, managed by authorized officers of Chase. Chase, on behalf of the Funds (other than the Cash Management Fund and the Tax Free Money Market Fund), has entered into an investment sub-advisory agreement dated as of May 6, 1996 with Chase Asset Management, Inc. ("CAM"). Chase Bank of Texas, National Association ("Chase Texas") is the sub-investment adviser to the Cash Management Fund and the Tax Free Money Market Fund pursuant to a separate sub-investment advisory agreement between Chase and TCB dated as of May 6, 1996. With respect to the day- to-day management of the Funds, under the sub-advisory agreements, the sub-advisers make decisions concerning, and place all orders for, purchases and sales of securities and help maintain the records relating to such purchases and sales. The sub-advisers may, in their discretion, provide such services through their own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser to the Company under applicable laws and are under the common control of Chase; provided that (i) all persons, when providing services under the sub-advisory agreement, are functioning as part of an organized group of persons, and (ii) such organized group of persons is managed at all times by authorized officers of the sub-adviser. This arrangement will not result in the payment of additional fees by the Funds. Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank holding company, is a commercial bank offering a wide range of banking and investment services to customers throughout the United States and around the world. Also included among the Chase accounts are commingled trust funds and a broad spectrum of individual trust and investment management portfolios. These accounts have varying investment objectives. Chase is located at 270 Park Avenue, New York, New York 10017. CAM is a wholly-owned operating subsidiary of the Adviser. CAM is registered with the Securities and Exchange Commission as an investment adviser and provides discretionary investment advisory services to institutional clients, and the same individuals who serve as portfolio managers for CAM also serve as portfolio managers for Chase. CAM is located at 1211 Avenue of the Americas, New York, New York 10036. Chase Texas has been in the investment counselling business since 1987 and is ultimately controlled and owned by Chase Manhattan Corporation. Chase Texas renders investment advice to a wide variety of corporations, pension plans, foundations, trusts and individuals. Chase Texas is located at 600 Travis, Houston, Texas 77002. In consideration of the services provided by the adviser pursuant to the Advisory Agreement, the adviser is entitled to receive from each Fund an investment advisory fee computed daily and paid monthly based on a rate equal to a percentage of such Fund's average daily net assets specified in the relevant Prospectuses. However, the adviser may voluntarily agree to waive a portion of the fees payable to it on a month-to-month basis. For its services under its sub-advisory agreement, CAM (or Chase Texas in the case of the Cash Management Fund and the Tax Free Money Market Fund) will be entitled to receive with respect to each such Fund, such compensation, payable by the adviser out of its advisory fee, as is described in the relevent Prospectuses. The contractual Advisory and Sub-Advisory fees for the Funds are as follows:
Fund Advisory Fee Sub-Advisory Fee - -------------------- -------------- ----------------- Money Market Funds 0.10% 0.03% Income Funds 0.30% 0.15%
45 For the fiscal years ended August 31, 1997, 1998 and 1999, respectively, Chase was paid or accrued the following investment advisory fees with respect to the following Funds, and voluntarily waived the amounts in parentheses following such fees with respect to each such period:
Fiscal Year- Fiscal Year- Fiscal Year- ended ended ended Fund 8/31/97 8/31/98 8/31/99 - -------------------------------- ------------------- -------------- ------------- Tax Free Money Market Fund Paid or Accrued $ 898,976 $1,120,701 $1,317,375 Waived none none -- New York Tax Free Money Market Fund Paid or Accrued 895,216 1,106,906 1,445,267 Waived -- -- -- Tax Free Income Fund Paid or Accrued 248,543 225,980 219,766 Waived (124,746) (128,813) (167,402) New York Tax Free Income Fund Paid or Accrued 320,945 322,126 364,260 Waived (40,479) (79,555) (69,793) Federal Money Market Fund Paid or Accrued 782,294 793,764 1,034,981 Waived -- -- -- Treasury Plus Money Market Fund Paid or Accrued 1,983,716 2,384,985 2,850,010 Waived -- -- -- Prime Money Market Fund Paid or Accrued 1,595,402 3,711,416 7,769,214 Waived -- -- -- California Intermediate Tax Fee Fund Paid or Accrued 79,332 72,053 71,188 Waived (66,295) (69,045) (71,188) California Tax Free Money Market Fund Paid or Accrued 44,776 49,823 46,278 Waived (31,249) (47,823) (46,278) U.S. Government Money Market Fund Paid or Accrued 5,173,975 6,498,006 7,265,199 Waived -- -- -- 100% Treasury Securities Money Market Fund Paid or Accrued 2,010,632 3,534,288 4,439,996 Waived -- -- -- Cash Management Fund Paid or Accrued 3,165,847 4,595,098 6,766,578 Waived -- -- --
46 Administrator Pursuant to an Administration Agreement (the "Administration Agreement"), Chase serves as administrator of the Funds. Chase provides certain administrative services to the Funds, including, among other responsibilities, coordinating the negotiation of contracts and fees with, and the monitoring of performance and billing of, the Funds' independent contractors and agents; preparation for signature by an officer of the Trust of all documents required to be filed for compliance by the Trust with applicable laws and regulations excluding those of the securities laws of various states; arranging for the computation of performance data, including net asset value and yield; responding to shareholder inquiries; and arranging for the maintenance of books and records of the Funds and providing, at its own expense, office facilities, equipment and personnel necessary to carry out its duties. Chase in its capacity as administrator does not have any responsibility or authority for the management of the Funds, the determination of investment policy, or for any matter pertaining to the distribution of Fund shares. Under the Administration Agreement Chase is permitted to render administrative services to others. The Administration Agreement will continue in effect from year to year with respect to each Fund only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of such Fund's outstanding voting securities and, in either case, by a majority of the Trustees who are not parties to the Administration Agreement or "interested persons" (as defined in the 1940 Act) of any such party. The Administration Agreement is terminable without penalty by the Trust on behalf of each Fund on 60 days' written notice when authorized either by a majority vote of such Fund's shareholders or by vote of a majority of the Board of Trustees, including a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust, or by Chase on 60 days' written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act). The Administration Agreement also provides that neither Chase nor its personnel shall be liable for any error of judgment or mistake of law or for any act or omission in the administration of the Funds, except for willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless disregard of its or their obligations and duties under the Administration Agreement. In addition, the Administration Agreement provides that, in the event the operating expenses of any Fund, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to that Fund imposed by the securities laws or regulations thereunder of any state in which the shares of such Fund are qualified for sale, as such limitations may be raised or lowered from time to time, Chase shall reduce its administration fee (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by Chase shall be deducted from the monthly administration fee otherwise payable to Chase during such fiscal years; and if such amounts should exceed the monthly fee, Chase shall pay to such Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. In consideration of the services provided by Chase pursuant to the Administration Agreement, Chase receives from each Fund a fee computed daily and paid monthly at an annual rate equal to 0.05% of each Money Market Fund's average daily net assets, and 0.10% of each Income Fund's average daily net assets, on an annualized basis for the Fund's then-current fiscal year. Chase may voluntarily waive a portion of the fees payable to it with respect to each Fund on a month-to-month basis. 47 For the years ended August 31, 1997, 1998 and 1999, respectively, Chase was paid or accrued administration fees, and voluntarily waived the amounts in parentheses for the following Funds:
Fiscal Year- Fiscal Year- Fiscal Year- ended ended ended 8/31/97 8/31/98 8/31/99 -------------- -------------- ------------- Federal Money Market Fund Paid or Accrued $ 391,147 $ 396,882 $ 517,491 Waived -- -- -- Treasury Plus Money Market Fund Paid or Accrued 991,858 1,192,493 1,425,005 Waived -- -- -- Prime Money Market Fund Paid or Accrued 797,701 1,855,708 3,884,607 Waived -- -- -- California Intermediate Tax Fee Fund Paid or Accrued 26,444 24,018 23,729 Waived (19,912) (8,043) (3,642) California Tax Free Money Market Fund Paid or Accrued 22,388 24,911 23,139 Waived -- -- -- U.S. Government Money Market Fund Paid or Accrued 2,586,987 3,249,003 3,632,599 Waived -- -- -- 100% U.S. Treasury Securities Money Market Fund Paid or Accrued 1,005,316 1,767,144 2,219,998 Waived -- -- -- Tax Free Money Market Fund Paid or Accrued 449,487 560,350 658,688 Waived -- -- -- New York Tax Free Money Market Fund Paid or Accrued 447,608 552,144 722,634 Waived -- -- -- Tax Free Income Fund Paid or Accrued 82,848 75,327 73,255 Waived -- -- -- New York Tax Free Income Fund Paid or Accrued 106,982 107,375 121,420 Waived -- -- -- Cash Management Fund Paid or Accrued 1,582,924 2,297,549 3,383,289 Waived -- -- --
48 Distribution Plans The Trust has adopted separate plans of distribution pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan") including Distribution Plans on behalf of the Class A and Class B shares of the Tax Free Income Fund and the New York Tax Free Income Fund, the Class B and Class C shares of the Prime Money Market Fund, the shares of the California Intermediate Tax Free Fund, the Vista Shares of the Money Market Funds (except the Cash Management Fund and Prime Money Market Fund), and the Premier Shares of the U.S. Government Money Market Fund, which provides that each of such classes of such Funds shall pay for distribution services a distribution fee (the "Distribution Fee"), including payments to the Distributor, at annual rates not to exceed the amounts set forth in their respective Prospectuses. There is no distribution plan for the Cash Management Fund. The Distributor may use all or any portion of such Distribution Fee to pay for Fund expenses of printing prospectuses and reports used for sales purposes, expenses of the preparation and printing of sales literature and other such distribution-related expenses. Promotional activities for the sale of each class of shares of each Fund will be conducted generally by the Chase Vista Funds, and activities intended to promote one class of shares of a Fund may also benefit the Fund's other shares and other Chase Vista Funds. Class B and Class C shares pay a Distribution Fee of up to 0.75% of average daily net assets. The Distributor currently expects to pay sales commissions to a dealer at the time of sale of Class B shares of the Income Funds of up to 4.00% of the purchase price of the shares sold by such dealer. The Distributor will use its own funds (which may be borrowed or otherwise financed) to pay such amounts. Because the Distributor will receive a maximum Distribution Fee of 0.75% of average daily net assets with respect to Class B and Class C shares, it will take the Distributor several years to recoup the sales commissions paid to dealers and other sales expenses. No class of shares of a Fund will make payments or be liable for any distribution expenses incurred by other classes of shares of such Fund. The Institutional Shares of the Money Market Funds have no distribution plan. There is no distribution plan for Premier Shares for any Money Market Fund other than the U.S. Government Money Market Fund. Some payments under the Distribution Plans may be used to compensate broker-dealers with trail or maintenance commissions in an amount not to exceed 0.25% annualized of the average net asset value of Class A shares, 0.25% annualized of the average net asset value of the Class B shares, 0.75% annualized of the average net asset value of Class C shares or 0.25% annualized of the average daily net asset value of the shares of the California Intermediate Tax Free Fund maintained in a Fund by such broker-dealers' customers. Trail or maintenance commissions will be paid to broker-dealers beginning the 13th month following the purchase of such shares. Since the distribution fees are not directly tied to expenses, the amount of distribution fees paid by a class of a Fund during any year may be more or less than actual expenses incurred pursuant to the Distribution Plans. For this reason, this type of distribution fee arrangement is characterized by the staff of the Securities and Exchange Commission as being of the "compensation variety" (in contrast to "reimbursement" arrangements by which a distributor's payments are directly linked to its expenses). With respect to Class B shares of the Income Funds, because of the 0.75% annual limitation on the compensation paid to the Distributor during a fiscal year, compensation relating to a large portion of the commissions attributable to sales of Class B shares in any one year will be accrued and paid by a Fund to the Distributor in fiscal years subsequent thereto. However, the Shares are not liable for any distribution expenses incurred in excess of the Distribution Fee paid. In determining whether to purchase Class B shares of the Income Funds, investors should consider that compensation payments could continue until the Distributor has been fully reimbursed for the commissions paid on sales of Class B shares. Each class of shares is entitled to exclusive voting rights with respect to matters concerning its Distribution Plan. 49 Each Distribution Plan provides that it will continue in effect indefinitely if such continuance is specifically approved at least annually by a vote of both a majority of the Trustees and a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Distribution Plan or in any agreement related to such Plan ("Qualified Trustees"). The continuance of each Distribution Plan was most recently approved on October 13, 1995. Each Distribution Plan requires that the Trust shall provide to the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended (and the purposes therefor) under the Distribution Plan. Each Distribution Plan further provides that the selection and nomination of Qualified Trustees shall be committed to the discretion of the disinterested Trustees (as defined in the 1940 Act) then in office. Each Distribution Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or, with respect to a particular Fund, by vote of a majority of the outstanding voting Shares of the class of such Fund to which it applies (as defined in the 1940 Act). Each Distribution Plan may not be amended to increase materially the amount of permitted expenses thereunder without the approval of shareholders and may not be materially amended in any case without a vote of the majority of both the Trustees and the Qualified Trustees. Each of the Funds will preserve copies of any plan, agreement or report made pursuant to a Distribution Plan for a period of not less than six years from the date of the Distribution Plan, and for the first two years such copies will be preserved in an easily accessible place. For the fiscal year ended August 31, 1999, the Distributor was paid or accrued the following Distribution Fees and voluntarily waived the amounts in parenthesis following such fees with respect to the Shares of each Fund:
9/1/98 9/1/98 through through 8/31/99 8/31/99 Paid/Accrued Waived -------------- ------------ Federal Money Market Fund Vista Shares $ 474,586 $ -- Treasury Plus Money Market Fund Vista Shares 1,535,196 -- Prime Money Market Fund B Shares 176,547 -- C Shares 1,414 -- California Intermediate Tax Free Fund 59,323 59,323 California Tax Free Money Market Fund 46,278 23,139 U.S. Government Money Market Fund Vista Shares 3,305,827 -- Premier Shares 1,069,247 427,699 100% Treasury Securities Money Market Fund Vista Shares 3,471,883 1,041,565 Tax Free Money Market Fund Vista Shares 784,763 -- New York Tax Free Money Market Fund Vista Shares 1,445,267 1,011,687 Tax Free Income Fund A Shares 146,243 146,124 B Shares 110,686 -- New York Tax Free Income Fund A Shares 265,753 265,478 B Shares 113,394 --
50 Expenses paid by the Distributor related to the distribution of Trust shares during the year ended August 31, 1999 were as follows: Advertising and sales literature $1,396,534 Printing, production and mailing of prospectuses and shareholder reports to other than current shareholders 585,276 Compensation to dealers 825,666 Compensation to sales personnel 1,822,900 B share financing charges 354,313 Equipment, supplies and other indirect distribution-related expenses 531,967
With respect to the Class B shares of the Funds, the Distribution Fee was paid to FEP Capital L.P. for acting as finance agent. Distribution and Sub-Administration Agreement The Trust has entered into a Distribution and Sub-Administration Agreement dated August 24, 1995 (prior to such date, the Distributor served the Trust pursuant to a contract dated August 23, 1994 (April 15, 1994 with respect to the Treasury Plus Money Market Fund and Federal Money Market Fund)) (the "Distribution Agreement") with the Distributor, pursuant to which the Distributor acts as the Funds' exclusive underwriter, provides certain administration services and promotes and arranges for the sale of each class of Shares. The Fund's distributor is Vista Fund Distributors, Inc. ("VFD"). VFD is a subsidiary of The BISYS Group, Inc. and is unaffiliated with Chase. The Distribution Agreement provides that the Distributor will bear the expenses of printing, distributing and filing prospectuses and statements of additional information and reports used for sales purposes, and of preparing and printing sales literature and advertisements not paid for by the Distribution Plans. The Trust pays for all of the expenses for qualification of the shares of each Fund for sale in connection with the public offering of such shares, and all legal expenses in connection therewith. In addition, pursuant to the Distribution Agreement, the Distributor provides certain sub-administration services to the Trust, including providing officers, clerical staff and office space. Payments may also be used to compensate broker-dealers with trail or maintenance commissions at an annual rate of up to 0.25% of the average daily net asset value of Class A or Class B shares invested in the Fund by customers of these broker-dealers. Trail or maintenance commissions are paid to broker-dealers beginning the 13th month following the purchase of shares by their customers. Promotional activities for the sale of Class A and Class B shares will be conducted generally by the Chase Vista Funds, and activities intended to promote the Fund's Class A or Class B shares may also benefit the Fund's other shares and other Chase Vista Funds. 51 VFD may provide promotional incentives to broker-dealers that meet specified sales targets for one or more Vista Funds. These incentives may include gifts of up to $100 per person annually; an occasional meal, ticket to a sponsoring event or theater for entertainment for broker-dealers and their guests; and, payment or reimbursement for travel expenses, including lodging and meals, in connection with attendance at training and educational meetings within and outside the U.S. VFD may from time to time, pursuant to objective criteria established by it, pay additional compensation to qualifying authorized broker-dealers for certain services or activities which are primarily intended to result in the sale of shares of the Fund. In some instances, such compensation may be offered only to certain broker-dealers who employ registered representatives who have sold or may sell significant amounts of shares of the Fund and/or other Chase Vista Funds during a specified period of time. Such compensation does not represent an additional expense to the Fund or its shareholders, since it will be paid by VFD out of compensation retained by it from the Fund or other sources available to it. The Distribution Agreement is currently in effect and will continue in effect with respect to each Fund only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of such Fund's outstanding voting securities and, in either case, by a majority of the Trustees who are not parties to the Distribution Agreement or "interested persons" (as defined in the 1940 Act) of any such party. The Distribution Agreement is terminable without penalty by the Trust on behalf of each Fund on 60 days' written notice when authorized either by a majority vote of such Fund's shareholders or by vote of a majority of the Board of Trustees of the Trust, including a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days' written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act). The Distribution Agreement also provides that neither the Distributor nor its personnel shall be liable for any act or omission in the course of, or connected with, rendering services under the Distribution Agreement, except for willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations or duties. In the event the operating expenses of any Fund, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to that Fund imposed by the securities laws or regulations thereunder of any state in which the shares of such Fund are qualified for sale, as such limitations may be raised or lowered from time to time, the Distributor shall reduce its sub-administration fee with respect to such Fund (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by the Distributor shall be deducted from the monthly sub-administration fee otherwise payable with respect to such Fund during such fiscal year; and if such amounts should exceed the monthly fee, the Distributor shall pay to such Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. In consideration of the sub-administration services provided by the Distributor pursuant to the Distribution Agreement, the Distributor receives an annual fee, payable monthly, of 0.05% of the net assets of each Fund. The Distributor may voluntarily agree to from time to time waive a portion of the fees payable to it under the Distribution Agreement with respect to each Fund on a month-to-month basis. For the fiscal years ended August 31, 1997, 1998 and 1999, respectively, the Distributor was paid or accrued the following sub- administration fees under the Distribution Agreement, and voluntarily waived the amounts in parentheses following such fees: 52
Fiscal Year- Fiscal Year- Fiscal Year- Ended Ended Ended 8/31/97 8/31/98 8/31/99 ------------- -------------- -------------- Federal Money Market Fund Paid or Accrued $ 391,147 $ 396,882 $ 517,491 Waived -- -- -- Treasury Plus Money Market Fund Paid or Accrued 991,858 1,192,493 1,425,005 Waived -- 771,344 (883,470) Prime Money Market Fund Paid or Accrued 797,701 1,855,708 3,884,607 Waived -- -- -- California Intermediate Tax Fee Fund Paid or Accrued 13,222 12,009 11,865 Waived -- 9,979 (11,865) California Tax Free Money Market Fund Paid or Accrued 22,388 24,911 23,139 Waived -- -- -- U.S. Government Money Market Fund Paid or Accrued 2,586,987 3,249,003 3,632,599 Waived -- -- -- 100% Treasury Securities Money Market Fund Paid or Accrued 1,005,316 1,767,144 2,219,998 Waived -- 375,973 (1,775,598) Cash Management Fund Paid or Accrued 1,582,924 2,297,549 3,383,289 Waived -- -- -- Tax Free Money Market Fund Paid or Accrued 449,488 560,350 658,688 Waived -- -- (93,598) New York Tax Free Money Market Fund Paid or Accrued 447,608 554,762 722,634 Waived -- (554,762) (722,634) Tax Free Income Fund Paid or Accrued 41,424 37,663 36,628 Waived -- -- -- New York Tax Free Income Fund Paid or Accrued 53,491 53,688 60,710 Waived -- -- --
53 Shareholder Servicing Agents, Transfer Agent and Custodian The Trust has entered into a shareholder servicing agreement (a "Servicing Agreement") with each Shareholder Servicing Agent to provide certain services including but not limited to the following: answer customer inquiries regarding account status and history, the manner in which purchases and redemptions of shares may be effected for the Fund as to which the Shareholder Servicing Agent is so acting and certain other matters pertaining to the Fund; assist shareholders in designating and changing dividend options, account designations and addresses; provide necessary personnel and facilities to establish and maintain shareholder accounts and records; assist in processing purchase and redemption transactions; arrange for the wiring of funds; transmit and receive funds in connection with customer orders to purchase or redeem shares; verify and guarantee shareholder signatures in connection with redemption orders and transfers and changes in shareholder-designated accounts; furnish (either separately or on an integrated basis with other reports sent to a shareholder by a Shareholder Servicing Agent) quarterly and year-end statements and confirmations of purchases and redemptions; transmit, on behalf of the Fund, proxy statements, annual reports, updated prospectuses and other communications to shareholders of the Fund; receive, tabulate and transmit to the Fund proxies executed by shareholders with respect to meetings of shareholders of the Fund; and provide such other related services as the Fund or a shareholder may request. Shareholder servicing agents may be required to register pursuant to state securities law. Shareholder Servicing Agents may subcontract with other parties for the provision of shareholder support services. Each Shareholder Servicing Agent may voluntarily agree from time to time to waive a portion of the fees payable to it under its Servicing Agreement with respect to each Fund on a month-to-month basis. Fees payable to the Shareholder Servicing Agents (all of which currently are related parties) and the amounts voluntarily waived for the following periods were as follows:
9/1/98 9/1/96 9/1/97 through through through 8/31/99 8/31/97 8/31/98 ---------------------------- Fund payable waived paid/accrued waived paid/accrued waived - ----------------------- ------------- ------------- -------------- ------------- -------------- ------------- U.S. Government Money Market Fund Vista Shares $7,190,397 $ -- $ 9,506,976 $3,059,131 $11,570,394 $3,300,442 Premier Shares 2,262,869 -- 2,442,154 820,776 2,673,117 1,009,497 Institutional Shares -- -- -- -- 2,421,472 1,636,525 100% Treasury Securities Money Market Fund Vista Shares 6,668,735 $2,256,995 9,271,804 3,178,487 12,151,590 1,735,341 Premier Shares 7,214 7,214 27,550 25,671 78,128 5,658 Institutional Shares -- -- -- -- 766,951 384,468 Cash Management Fund Vista Shares 6,991,098 613,426 10,706,072 610,876 17,300,790 1,381,862 Premier Shares 997,708 46,586 1,110,928 234,424 1,040,482 205,708 Institutional Shares -- -- -- -- 1,213,107 863,084 Treasury Plus Money Market Fund Vista Shares 5,261,249 1,664,171 5,711,537 1,344,998 5,373,186 1,078,231 Premier Shares 308,459 -- 490,819 -- 620,423 30,514 Institutional Shares -- -- -- -- 898,550 437,527
54
9/1/98 9/1/96 9/1/97 through through through 8/31/99 8/31/97 8/31/98 --------------------------- Fund payable waived paid/accrued waived paid/accrued waived - ----------------------- ------------- ------------ -------------- ----------- -------------- ------------ Federal Money Market Fund Vista Shares $1,182,562 $ 396,234 $1,037,279 $417,602 $1,661,050 $ 363,304 Premier Shares 803,743 61,730 786,613 26,504 713,973 -- Institutional Shares -- -- -- -- 234,161 206,517 Prime Money Market Fund Vista Shares -- -- -- -- 380,370 138,642 Premier Shares 1,148,882 339,705 1,790,841 437,878 2,457,774 408,608 Institutional Shares -- -- -- -- 5,798,758 4,615,353 B Shares 26,977 17,624 33,276 33,276 58,849 47,684 C Shares -- -- -- -- 471 -- Tax Free Money Market Fund Vista Shares 1,989,537 768,241 2,400,200 873,791 2,746,672 1,000,326 Premier Shares 323,826 -- 287,238 -- 298,470 10,480 Institutional Shares -- -- -- -- 345,784 343,502 N.Y. Tax Free Money Market Fund 3,133,258 1,253,304 3,874,170 922,612 5,058,436 -- California Tax Free Money Market Fund 156,716 102,864 174,380 117,795 161,973 112,997 Tax Free Income Fund A Shares 171,088 163,770 152,484 106,509 146,243 82,155 B Shares 36,031 -- 35,833 -- 36,895 -- N.Y. Tax Free Income Fund A Shares 234,149 226,909 233,063 159,478 265,752 148,164 B Shares 33,305 -- 35,376 -- 37,798 -- California Intermediate Tax Free Fund 66,110 66,110 60,045 60,045 59,323 59,323
Shareholder servicing agents may offer additional services to their customers, including specialized procedures and payment for the purchase and redemption of Fund shares, such as pre-authorized or systematic purchase and redemption programs, "sweep" programs, cash advances and redemption checks. Each Shareholder Servicing Agent may establish its own terms and conditions, including limitations on the amounts of subsequent transactions, with respect to such services. Certain Shareholder Servicing Agents may (although they are not required by the Trust to do so) credit to the accounts of their customers from whom they are already receiving other fees amounts not exceeding such other fees or the fees for their services as Shareholder Servicing Agents. For shareholders that bank with Chase, Chase may aggregate investments in the Chase Vista Funds with balances held in Chase bank accounts for purposes of determining eligibility for certain bank privileges that are based on specified minimum balance requirements, such as reduced or no fees for certain banking services or preferred rates on loans and deposits. Chase and certain broker-dealers and other Shareholder Servicing Agents may, at their own expense, provide gifts, such as computer software packages, guides and 55 books related to investment or additional Fund shares valued up to $250 to their customers that invest in the Chase Vista Funds. Chase and/or the Distributor may from time to time, at their own expense out of compensation retained by them from the Fund or other sources available to them, make additional payments to certain selected dealers or other Shareholder Servicing Agents for performing administrative services for their customers. These services include maintaining account records, processing orders to purchase, redeem and exchange Fund shares and responding to certain customer inquiries. The amount of such compensation may be up to an additional 0.10% annually of the average net assets of the Fund attributable to shares if the Fund held by customers of such Shareholder Servicing Agents. Such compensation does not represent an additional expense to the Fund or its shareholders, since it will be paid by Chase and/or the Distributor. The Trust has also entered into a Transfer Agency Agreement with DST Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105. Pursuant to a Custodian Agreement, Chase acts as the custodian of the assets of each Fund for which Chase receives such compensation as is from time to time agreed upon by the Trust and Chase. As custodian, Chase provides oversight and record keeping for the assets held in the portfolios of each Fund. Chase also provides fund accounting services for the income, expenses and shares outstanding for the Funds. Chase is located at 3 Metrotech Center, Brooklyn, NY 11245. For additional information, see the Prospectuses. INDEPENDENT ACCOUNTANTS The financial statements incorporated herein by reference from the Trust's Annual Reports to Shareholders for the fiscal year ended August 31, 1999, and the related financial highlights which appear in the Prospectuses, have been incorporated herein and included in the Prospectuses in reliance on the reports of PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York 10036, independent accountants of the Funds, given on the authority of said firm as experts in accounting and auditing. PricewaterhouseCoopers LLP provides the Funds with audit services, tax return preparation and assistance and consultation with respect to the preparation of filings with the Securities and Exchange Commission. CERTAIN REGULATORY MATTERS Banking laws, including the Glass-Steagall Act as currently interpreted, prohibit bank holding companies and their affiliates from sponsoring, organizing, controlling, or distributing shares of, mutual funds, and generally prohibit banks from issuing, underwriting, selling or distributing securities. These laws do not prohibit banks or their affiliates from acting as investment adviser, administrator or custodian to mutual funds or from purchasing mutual fund shares as agent for a customer. Chase and the Trust believe that Chase (including its affiliates) may perform the services to be performed by it as described in the Prospectus and this Statement of Additional Information without violating such laws. If future changes in these laws or interpretations required Chase to alter or discontinue any of these services, it is expected that the Board of Trustees would recommend alternative arrangements and that investors would not suffer adverse financial consequences. State securities laws may differ from the interpretations of banking law described above and banks may be required to register as dealers pursuant to state law. Chase and its affiliates may have deposit, loan and other commercial banking relationships with the issuers of securities purchased on behalf of any of the Funds, including outstanding loans to such issuers which may be repaid in whole or in part with the proceeds of securities so purchased. Chase and its affiliates deal, trade and invest for their own accounts in U.S. Government obligations, municipal obligations and commercial paper and are among the leading dealers of various types of U.S. Government obligations and municipal obligations. Chase and its affiliates may sell U.S. Government obligations and municipal obligations to, and purchase them from, other investment companies sponsored by the Funds' distributor or affiliates of the distributor. Chase will not 56 invest any Fund assets in any U.S. Government obligations, municipal obligations or commercial paper purchased from itself or any affiliate, although under certain circumstances such securities may be purchased from other members of an underwriting syndicate in which Chase or an affiliate is a non-principal member. This restriction my limit the amount or type of U.S. Government obligations, municipal obligations or commercial paper available to be purchased by any Fund. Chase has informed the Funds that in making its investment decision, it does not obtain or use material inside information in the possession of any other division or department of Chase, including the division that performs services for the Trust as custodian, or in the possession of any affiliate of Chase. Shareholders of the Funds should be aware that, subject to applicable legal or regulatory restrictions, Chase and its affiliates may exchange among themselves certain information about the shareholder and his account. Transactions with affiliated broker-dealers will only be executed on an agency basis in accordance with applicable federal regulations. GENERAL INFORMATION Expenses Each Fund pays the expenses incurred in its operations, including its pro rata share of expenses of the Trust. These expenses include investment advisory and administrative fees; the compensation of the Trustees; registration fees; interest charges; taxes; expenses connected with the execution, recording and settlement of security transactions; fees and expenses of the Funds' custodian for all services to the funds, including safekeeping of funds and securities and maintaining required books and accounts; expenses of preparing and mailing reports to investors and to government offices and commissions; expenses of meetings of investors; fees and expenses of independent accountants, of legal counsel and of any transfer agent, registrar or dividend disbursing agent of the Trust; insurance premiums; and expenses of calculating the net asset value of, and the net income on, shares of the Funds. Shareholder servicing and distribution fees are all allocated to specific classes of the Funds. In addition, the Funds may allocate transfer agency and certain other expenses by class. Service providers to a Fund may, from time to time, voluntarily waive all or a portion of any fees to which they are entitled. Description of Shares, Voting Rights and Liabilities Mutual Fund Trust is an open-end, management investment company organized as Massachusetts business trust under the laws of the Commonwealth of Massachusetts on February 4, 1994. Because certain of the Funds comprising the Trust are "non-diversified", more than 5% of any of the assets of any such Fund may be invested in the obligations of any single issuer, which may make the value of the shares in such a Fund more susceptible to certain risks than shares of a diversified mutual fund. The fiscal year-end of the Funds in the Trust is August 31. The Trust currently consists of 12 series of shares of beneficial interest, par value $.001 per share. With respect to the Money Market Funds and certain of the Income Funds, the Trust may offer more than one class of shares. The Trust has reserved the right to create and issue additional series or classes. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class. The shares of each series or class participate equally in the earnings, dividends and assets of the particular series or class. Expenses of the Trust which are not attributable to a specific series or class are allocated amount all the series in a manner believed by management of the Trust to be fair and equitable. Shares have no pre-emptive or conversion rights. Shares when issued are fully paid and non-assessable, except as set forth below. Shareholders are entitled to one vote for each whole share held, and each fractional share shall be entitled to a proportionate fractional vote, except that Trust shares held in the treasury of the Trust shall not be voted. Shares of each series or class generally vote together, except when required under federal securities laws to vote separately on matters that may affect a particular class, such as the approval of distribution plans for a particular class. With respect to shares purchased through a Shareholder Servicing Agent and, in the event written proxy instructions are not received by a Fund or its 57 designated agent prior to a shareholder meeting at which a proxy is to be voted and the shareholder does not attend the meeting in person, the Shareholder Servicing Agent for such shareholder will be authorized pursuant to an applicable agreement with the shareholder to vote the shareholder's outstanding shares in the same proportion as the votes cast by other Fund shareholders represented at the meeting in person or by proxy. The categories of investors that are eligible to purchase shares and minimum investment requirements may differ for each class of the Funds' shares. In addition, other classes of Fund shares may be subject to differences in sales charge arrangements, ongoing distribution and service fee levels, and levels of certain other expenses, which will affect the relative performance of the different classes. Investors may call 1-800-622-4273 to obtain additional information about other classes of shares of the Funds that are offered. Any person entitled to receive compensation for selling or servicing shares of a Fund may receive different levels of compensation with respect to one class of shares over another. Shareholders of the Vista Shares, Premier Shares and Institutional Shares of the Money Market Funds bear the fees and expenses described herein and in the Prospectuses. The fees paid by the Vista Shares to the Distributor and Shareholder Servicing Agent under the distribution plans and shareholder servicing arrangements for distribution expenses and shareholder services provided to investors by the Distributor and Shareholder Servicing Agents, absent waivers, generally are more than the respective fees paid under distribution plans and shareholder servicing arrangements adopted for the Premier Shares. The Institutional Shares pay no distribution or Shareholder Servicing fee. As a result, absent waivers, at any given time, the net yield on the Vista Shares will be lower than the yield on the Premier Shares and the yield on the Premier Shares will be lower than the yield on Institutional Shares. Standardized yield quotations will be computed separately for each class of shares of a Fund. The Vista Tax Free Income Fund and Vista New York Tax Free Income Fund offer both Class A and Class B shares. The classes of shares have several different attributes relating to sales charges and expenses, as described herein and in the Prospectuses. In addition to such differences, expenses borne by each class of a Fund may differ slightly because of the allocation of other class-specific expenses. For example, a higher transfer agency fee may be imposed on Class B shares than on Class A shares. The relative impact of initial sales charges, contingent deferred sales charges, and ongoing annual expenses will depend on the length of time a share is held. The Vista Prime Money Market Fund offers both Class B and Class C shares. The classes of shares have different attributes relating to sales charges and expenses as described in the Prospectus. The relative impact of contingent deferred sales charges will depend upon the length of time a share is held. Selected dealers and financial consultants may receive different levels of compensation for selling one particular class of shares rather than another. The business and affairs of the Trust are managed under the general direction and supervision of the Trust's Board of Trustees. The Trust is not required to hold annual meetings of shareholders but will hold special meetings of shareholders of a series or class when, in the judgment of the Trustees, it is necessary or desirable to submit matters for a shareholder vote. Shareholders have, under certain circumstances, the right to communicate with other shareholders in connection with requesting a meeting of shareholders for the purpose of removing one or more Trustees. Shareholders also have, in certain circumstances, the right to remove one or more Trustees without a meeting. No material amendment may be made to the Trust's Declaration of Trust without the affirmative vote of the holders of a majority of the outstanding shares of each portfolio affected by the amendment. The Trust's Declaration of Trust provides that, at any meeting of shareholders of the Trust or of any series or class, a Shareholder Servicing Agent may vote any shares as to which such Shareholder Servicing Agent is the agent of record and which are not represented in person or by proxy 58 at the meeting, proportionately in accordance with the votes cast by holders of all shares of that portfolio otherwise represented at the meeting in person or by proxy as to which such Shareholder Servicing Agent is the agent of record. Any shares so voted by a Shareholder Servicing Agent will be deemed represented at the meeting for purposes of quorum requirements. Shares have no preemptive or conversion rights. Shares, when issued, are fully paid and non-assessable, except as set forth below. Any series or class may be terminated (i) upon the merger or consolidation with, or the sale or disposition of all or substantially all of its assets to, another entity, if approved by the vote of the holders of two-thirds of its outstanding shares, except that if the Board of Trustees recommends such merger, consolidation or sale or disposition of assets, the approval by vote of the holders of a majority of the series' or class' outstanding shares will be sufficient, or (ii) by the vote of the holders of a majority of its outstanding shares, or (iii) by the Board of Trustees by written notice to the series' or class' shareholders. Unless each series and class is so terminated, the Trust will continue indefinitely. Certificates are issued only upon the written request of a shareholder, subject to the policies of the investor's Shareholder Servicing Agent, but the Trust will not issue a stock certificate with respect to shares that may be redeemed through expedited or automated procedures established by a Shareholder Servicing Agent. No certificates are issued for shares of the Money Market Funds or Class B shares of the Income Funds. Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Trust's Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides for indemnification and reimbursement of expenses out of the Trust property for any shareholder held personally liable for the obligations of the Trust. The Trust's Declaration of Trust also provides that the Trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations. The Trust's Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, errors of judgment or mistakes of fact or law, but nothing in the Declaration of Trust protects a Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. The Board of Trustees has adopted a code of ethics addressing personal securities transactions by investment personnel and access persons and other related matters. The code has been designated to address potential conflicts of interest that can arise in connection with personal trading activities of such persons. Persons subject to the code are generally permitted to engage in personal securities transactions, subject to certain prohibitions, pre-clearance requirements and blackout periods. 59 Principal Holders As of December 13, 1999, the following persons owned of record, directly or indirectly, 5% or more of the outstanding shares of the following classes of the following Funds: U.S. Government Money Market Fund--Vista Chase Manhattan Bank ........................... 20.43% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Obie & Co. ..................................... 14.55% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 U.S. Government Money Market Fund--Institutional Chase Manhattan Bank N/A ....................... 17.46% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Chase Manhattan Bank ........................... 13.02% Client Services Bank Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Chase Manhattan Bank NA ........................ 10.32% Attn: Deborah Derenzo 4 New York Plaza 9th Floor New York, NY 10004-2413 Chase Manhattan Bank N/A ....................... 8.76% Global SEC Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001
60 Obie & Co. ................................................... 7.00% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 U.S. Government Money Market Fund--Premier Penlin & Co. ................................................. 24.06% Chase Lincoln First Bank Attn: P. Whalen PO Box 1412 Rochester, NY 14603-1412 Chase Manhattan Bank NA ...................................... 14.52% Attn: Deborah Derenzo 4 New York Plaza 9th Floor New York, NY 10004-2413 Syracuse Ida/Syracuse University ............................. 7.78% 1999 Ser A&B Construction Fund Chase Manhattan Trust Co. NA Attn: Christopher Inman 73 Tremont St. Boston, MA 02108-3916 National Financial Serv. Corp. ............................... 7.29% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 100% U.S. Treasury Securities Money Market Fund--Vista Chase Manhattan Bank ......................................... 12.46% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 100% U.S. Treasury Securities Money Market Fund--Institutional Chase Manhattan Bank ......................................... 24.77% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401
61 Obie & Co. ............................................. 16.18% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Missionaries of Charity ................................ 9.05% 335 East 145th Street Bronx, NY 10451-5899 100% U.S. Treasury Securities Money Market Fund--Premier Warner Asset Management AS Advisory .................... 19.91% FBO Belle Vernon Area School District 20206 Route 19, Ste 300 Cranberry Township, PA 16066-6106 Column Financial Inc. AS Secured ....................... 15.97% Party FBO Clift Holdings LLC Renovation Reserve CMB Global TR Attn: Bruce Vecchio 450 West 33rd Street 10th Floor New York, NY 10001-2603 E/A Exelon Shareholders ................................ 8.42% Chase Manhattan Trust Co. NA Attn: Joseph Progar One Liberty Place, 52nd Floor 1650 Market St., Ste 5210 Philadelphia, PA 19103-7301 The Breast Cancer ...................................... 7.76% Research Foundation Attn: J. Krupskas 767 5th Avenue 40th Floor New York, NY 10153-0023 Peter J. Durwood TTEE .................................. 5.84% Peter J. Durwood Family TR DTD 4/8/98 Attn: Howard Grossman 10960 Wilshire Blvd., Ste. 2150 Los Angeles, CA 90024-3803
62 Cash Management Money Market Fund--Vista Client Services ................................ 9.38% Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th floor New York, NY 10005-1401 National Financial Serv. Corp. ................. 5.57% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 Cash Management Money Market Fund--Institutional Chase Manhattan Bank N/A ....................... 47.61% Global Sec Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Obie & Co. ..................................... 5.53% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Cash Management Money Market Fund--Premier National Financial Serv. Corp. ................. 15.22% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 Chase Manhattan Bank ........................... 8.69% FBO IMA Customers Attn: Barbara Licata 1985 Marcus Avenue 2nd Floor New Hyde Park, NY 11042-1053 Chase Manhattan Bank N/A ....................... 7.00% Global Sec Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001
63 Starwood Capital Group LLC ............................... 5.60% 591 W. Putnam Ave. Greenwich, CT 06830-6005 Prime Money Market Fund--Vista Obie & Co. ............................................... 22.48% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Prime Money Market Fund--C Shares Raymond James Assoc., Inc. CSDN .......................... 26.03% Buel A. Dyer IRA 105 Heron Drive Kathleen, GA 31047-2534 J. Timothy Wesley ........................................ 17.29% 102 Ash Run Road Louisville, KY 40245-6114 Raymond James & Assoc. Inc. Cust. ........................ 9.24% FBO Gary L. Barber S/D IRA 220 Westwood Dr. Warner Robins, GA 31088-5855 Grace B. Wyman ........................................... 8.81% 7623 S. Ivanhoe Way Englewood, CO 80112-6524 Ned Alexander & Marianne Jurkowicz-Alexander ............. 8.61% JT/WROS 654 Hartford St. Worthington, OH 43085-4122 Walter L. Weaver ......................................... 7.35% PO Box 128 Allenwood, NJ 08720-0128 Donaldson Lufkin Jenrette Securities Corp., Inc. ......... 5.75% PO Box 2052 Jersey City, NJ 07303-2052 Donaldson Lufkin Jenrette Securities Corp., Inc. ......... 5.13% PO Box 2052 Jersey City, NJ 07303-2052
64 Prime Money Market Fund--Institutional Chase Manhattan Bank N/A ................... 32.30% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Chase Manhattan Bank ....................... 5.85% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Prime Money Market Fund--Premier Chase Manhattan Bank NA .................... 19.64% Attn: Deborah Derenzo 4 New York Plaza 9th Floor New York, NY 10004-2413 Obie & Co. ................................. 17.55% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Chase Manhattan Bank N/A ................... 5.73% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Associates MH Mortgage Pass Thru Certs Series 99-1 Prefunding Acct. ......... 13.06% The Chase Manhattan Bank Attn: Karen Dobres 450 West 33rd St. New York, NY 10001-2603
65 Federal Money Market Fund--Vista Client Services ........................ 8.62% Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th floor New York, NY 10005-1401 Federal Money Market Fund--Institutional Chase Manhattan Bank ................... 61.55% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Chase Manhattan Bank N/A ............... 8.94% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 National City Bank Custodian For Customers of Mid Atlantic .............. 6.35% Capital Corporation Attn: Trust Operations MNY MKT #5312 PO Box 94777 Cleveland, OH 44101-4777 Federal Money Market Fund--Premier National Financial Serv. Corp. ......... 44.71% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 Chase Manhattan Bank ................... 26.64% FBO IMA Customers Attn: Barbara Licata 1985 Marcus Ave. 2nd Floor New Hyde Park, NY 11042-1053
66 Treasury Plus Money Market Fund--Vista Prime Credit Card Receivables Master Trust ......... 22.56% Attn: Darren Liss Chase Manhattan Bank Global Trust 450 West 33rd St. 14th Floor New York, NY 10001-2603 Obie & Co. ......................................... 11.38% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Client Services .................................... 6.32% Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th floor New York, NY 10005-1401 Treasury Plus Money Market Fund--Institutional Chase Manhattan Bank N/A ........................... 34.27% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Chase Manhattan Bank N/A ........................... 12.65% Global SEC Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Obie & Co. ......................................... 7.23% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Chase Manhattan Bank NA ............................ 7.11% Attn: Deborah Derenzo 4 New York Plaza 9th Floor New York, NY 10004-2413
67 Treasury Plus Money Market Fund--Premier Obie & Co. ............................. 50.82% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558 Chase Manhattan Bank NA ................ 21.36% Attn: Deborah Derenzo 4 New York Plaza 9th Floor New York, NY 10004-2413 Chase Manhattan Bank ................... 5.60% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Chase Manhattan Bank N/A ............... 5.52% Global Investor Services Omnibus AC Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Tax Free Money Market Fund--Vista Chase Manhattan Bank ................... 44.50% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Obie & Co. ............................. 11.39% Chase Bank of Texas Attn: STIF Unit 18 HCB 340 PO Box 2558 Houston, TX 77252-2558
68 Tax Free Money Market Fund--Institutional Chase Manhattan Bank .............................. 47.43% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 John M. Utley ..................................... 8.73 Katherine J. Utley 5601 Willow Bend Ct. Plano, TX 75093-4206 Chase Manhattan Bank N/A .......................... 8.06% Global SEC Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001 Kelley & Ryan, A Professional Corporation ......... 5.91% Attn: Joe Ryan 10000 Memorial Drive, Ste. 210 Houston, TX 77024-3409 Parfums De Coeur, LTD ............................. 5.17% Attn: Edward J. Kaminski 85 Old Kings Highway North Darien, CT 06820-4724 Tax Free Money Market Fund--Premier Chase Manhattan Bank .............................. 33.06% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Andrew Stone ...................................... 18.25% 740 Park Ave. New York, NY 10021-4251 Joel E. Smilow .................................... 10.63% Joan L. Smilow JTWROS 100 Beachside Ave. Greens Farm, CT 06436
69 Ivans ...................................... 6.19% 777 West Putnam Ave. Attn: R. Payne Greenwich, CT 06830-5091 National Financial Serv. Corp. ............. 5.32% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 Chase Manhattan Bank ....................... 5.25% FBO IMA Customers Attn: Barbara Licata 1985 Marcus Ave. 2nd Floor New Hyde Park, NY 11042-1053 California Tax Free Money Market Fund--Vista Chase Manhattan Bank ....................... 53.69% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 National Financial Serv. Corp. ............. 15.66% For the Excl Ben of our Cust Church Street Station PO Box 3752 New York, NY 10008-3752 Gilbert Meyer TTEE ......................... 10.76% Carol Meyer TTEE U/A DTD Jan 7, 97 FBO The Meyer Family Trust 135 S. State College Blvd. Brea, CA 92821-5823 Chase Manhattan Bank N/A ................... 6.52% Global SEC Services Omnibus Attn: Barrington A. Miller 3 Chase Metro Tech Center 7th Floor Brooklyn, NY 11245-0001
70 New York Tax Free Money Market Fund--Vista Chase Manhattan Bank ................................. 27.34% Client Services Department Attn: Sevan Marinos 1 Chase Manhattan Plaza 16th Floor New York, NY 10005-1401 Chase Manhattan Bank ................................. 8.49% FBO IMA Customers Attn: Barbara Licata 1985 Marcus Avenue 2nd Floor New Hyde Park, NY 11042-1053 National Financial Serv. Corp. ....................... 7.03% For the Excl Ben of our Cust Church Street Station 2375 Catob Road Harbor Springs, MI 49740-9380 New York Tax Free Income Fund--A Shares Balsa & Co. .......................................... 9.04% PO Box 1768 Grand Central Station New York, NY 10163-1768 Balsa & Co. .......................................... 8.59% PO Box 1768 Grand Central Station New York, NY 10163-1768 Tax Free Income Fund--A Shares NFSC FEBO # C1B-286109 ............................... 7.10% JGL Partners L P JGL Partners L P 23 Cornell Way Montclair, NJ 07043-2505 Tax Free Income Fund--B Shares MLPF&S for the sole benefit of ITS Customers ......... 5.11% Attn: Fund Administration SEC# 97FC2 4800 Deer Lake Drive East 2nd Floor Jacksonville, FL 32246-6484
71 Financial Statements The 1999 Annual Report to Shareholders of each Fund including the reports of independent accountants, financial highlights and financial statements for the fiscal year ended August 31, 1999 contained therein, are incorporated herein by reference. Specimen Computations of Offering Prices Per Share
New York Tax Free Income Fund (specimen computations) Net Asset Value and Redemption Price per Share of Beneficial Interest at August 31, 1999 ....................................................... $ 11.36 Maximum Offering Price per Share ($11.36 divided by .955) (reduced on purchases of $100,000 or more)......................................... $ 11.90 New York Tax Free Income Fund B Shares (specimen computations) Net Asset Value and Redemption Price per Share of Beneficial Interest at August 31, 1999 ....................................................... $ 11.34 Tax Free Income Fund (specimen computations) Net Asset Value and Redemption Price per Share of Beneficial Interest at August 31, 1999 ....................................................... $ 12.17 Maximum Offering Price per Share ($12.17 divided by .955) (reduced on purchases of $100,000 or more) ........................................ $ 12.74 Tax Free Income Fund B Shares (specimen computations) Net Asset Value and Redemption Price per Share of Beneficial Interest at August 31, 1999 ....................................................... $ 12.10 California Intermediate Tax Free Fund (specimen computations) Net Asset Value and Redemption Price per Share of Beneficial Interest at August 31, 1999 ....................................................... $ 9.79 Maximum Offering Price per Share ($9.79 divided by .955) (reduced on purchases of $100,000 or more) ........................................ $ 10.25
The Shares of the Money Market Funds are offered for sale at Net Asset Value. 72 APPENDIX A DESCRIPTION OF CERTAIN OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES Federal Farm Credit System Notes and Bonds--are bonds issued by a cooperatively owned nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government. These bonds are not guaranteed by the U.S. Government. Maritime Administration Bonds--are bonds issued and provided by the Department of Transportation of the U.S. Government and are guaranteed by the U.S. Government. FNMA Bonds--are bonds guaranteed by the Federal National Mortgage Association. These bonds are not guaranteed by the U.S. Government. FHA Debentures--are debentures issued by the Federal Housing Administration of the U.S. Government and are guaranteed by the U.S. Government. FHA Insured Notes--are bonds issued by the Farmers Home Administration of the U.S. Government and are guaranteed by the U.S. Government. GNMA Certificates--are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration and therefore guaranteed by the U.S. Government. As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates. The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures may result in the return of the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose no risk to principal investment because of the GNMA guarantee. As the prepayment rate of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. The yield which will be earned on GNMA Certificates may vary form their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by the prepayment of mortgages included in the mortgage pool underlying the Certificates. Principal which is so prepaid will be reinvested, although possibly at a lower rate. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium could result in a loss to a Fund. Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate. If agency securities are purchased at a premium above principal, the premium is not guaranteed by the issuing agency and a decline in the market value to par may result in a loss of the premium, which may be particularly likely in the event of a prepayment. When and if available, U.S. Government obligations may be purchased at a discount from face value. FHLMC Certificates and FNMA Certificates--are mortgage-backed bonds issued by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, respectively, and are guaranteed by the U.S. Government. GSA Participation Certificates--are participation certificates issued by the General Services Administration of the U.S. Government and are guaranteed by the U.S. Government. A-1 New Communities Debentures--are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which is guaranteed by the U.S. Government. Public Housing Bonds--are bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government. Penn Central Transportation Certificates--are certificates issued by Penn Central Transportation and guaranteed by the U.S. Government. SBA Debentures--are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government. Washington Metropolitan Area Transit Authority Bonds--are bonds issued by the Washington Metropolitan Area Transit Authority. Some of the bonds issued prior to 1993 are guaranteed by the U.S. Government. FHLMC Bonds--are bonds issued and guaranteed by the Federal Home Loan Mortgage Corporation. These bonds are not guaranteed by the U.S. Government. Federal Home Loan Bank Notes and Bonds--are notes and bonds issued by the Federal Home Loan Bank System and are not guaranteed by the U.S. Government. Student Loan Marketing Association ("Sallie Mae") Notes and Bonds--are notes and bonds issued by the Student Loan Marketing Association and are not guaranteed by the U.S. Government. D.C. Armory Board Bonds--are bonds issued by the District of Columbia Armory Board and are guaranteed by the U.S. Government. Export-Import Bank Certificates--are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the U.S. and are guaranteed by the U.S. Government. In the case of securities not backed by the "full faith and credit" of the U.S. Government, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the U.S. Government itself in the event the agency or instrumentality does not meet its commitments. Investments may also be made in obligations of U.S. Government agencies or instrumentalities other than those listed above. A-2 APPENDIX B DESCRIPTION OF RATINGS* The ratings of Moody's and Standard & Poor's represent their opinions as to the quality of various Municipal Obligations. It should be emphasized, however, that ratings are not absolute standards of quality. Consequently, Municipal Obligations with the same maturity, coupon and rating may have different yields while Municipal Obligations of the same maturity and coupon with different ratings may have the same yield. Description of Moody's four highest municipal bond ratings Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities, or fluctuation of protective elements may be of greater amplitude, or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa--Bonds which are rated Baa are considered as medium grade obligations; i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Description of Moody's three highest ratings of state and municipal notes Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade ("MIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run. A short-term rating may also be assigned on an issue having a demand feature-variable rate demand obligation or commercial paper programs; such ratings will be designated as "VMIG." Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Symbols used are as follows: MIG-1/VMIG-1--Notes bearing this designation are of the best quality, enjoying strong protection from established cash flows of funds for their servicing or from established and broad-based access to the market for refinancing, or both. MIG-2/VMIG-2--Notes bearing this designation are of high quality, with margins of protection ample although not so large as in the preceding group. - ---------- * As described by the rating agencies. Ratings are generally given to securities at the time of issuance. While the rating agencies may from time to time revise such ratings, they undertake no obligation to do so. B-1 MIG-3/VMIG-3--Notes bearing this designation are of favorable quality, where all security elements are accounted for but there is lacking the undeniable strength of the preceding grade, liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. Description of Standard & Poor's four highest municipal bond ratings AAA--Bonds rated AAA have the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. AA--Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in small degree. A--Bonds rated A have 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--Bonds rated BBB are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit 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. Plus (+) or Minus ( ): The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. Description of Standard & Poor's ratings of municipal notes and tax-exempt demand bonds A Standard & Poor's note rating reflects the liquidity concerns and market access risks unique to notes. Notes due in 3 years or less will likely receive a note rating. Notes maturing beyond 3 years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment. --Amortization schedule (the larger the final maturity relative to other maturities the more likely it will be treated as a note). --Source of Payment (the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note). Note rating symbols are as follows: SP-1--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--Satisfactory capacity to pay principal and interest. SP-3--Speculative capacity to pay principal and interest. Standard & Poor's assigns "dual" ratings to all long-term debt issues that have as part of their provisions a demand or double feature. The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols are used to denote the put option (for B-2 example, "AAA/B-1+"). For the newer "demand notes," S&P's note rating symbols, combined with the commercial paper symbols, are used (for example, "SP-1+/A-1+"). Description of Standard & Poor's two highest commercial paper ratings A Issues assigned this highest rating are regarded as having the greatest capacity for timely payment. Issues in this category are delineated with the numbers 1, 2 and 3 to indicate the relative degree of safety. B-1--This designation indicates that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics will be denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is not as high as for issues designated A-1. Description of Moody's two highest commercial paper ratings Moody's Commercial Paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months. Moody's employs three designations, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers: Prime-1, Prime-2 and Prime-3. Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: (1) leading market positions in well-established industries; (2) high rates of return on funds employed; (3) conservative capitalization structures with moderate reliance on debt and ample asset protection; (4) broad margins in earnings coverage of fixed financial charges and high internal cash generation; and (5) well-established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Description of Fitch's ratings of municipal notes and tax-exempt demand bonds Municipal Bond Ratings The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue or class of debt. The ratings take into consideration special features of the issuer, its relationship to other obligations of the issuer, the current financial condition and operative performance of the issuer and of any guarantor, as well as the political and economic environment that might affect the issuer's financial strength and credit quality. AAA--Bonds rated AAA are considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. AA--Bonds rated AA are considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated B-3 AAA. Because bonds rated in the AAA and AA categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated F-1. A--Bonds rated A are considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstance than bonds with higher ratings. BBB--Bonds rated BBB are considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse consequences on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. Plus and minus signs are used by Fitch to indicate the relative position of credit within a rating category. Plus and minus signs, however, are not used in the AAA category. Short-Term Ratings Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes. Although the credit analysis is similar to Fitch's bond rating analysis, the short-term rating places greater emphasis than bond ratings on the existence of liquidity necessary to meet the issuer's obligations in a timely manner. F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1--Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated F-1+. F-2--Good Credit Quality. Issues carrying this rating have satisfactory degree of assurance for timely payments, but the margin of safety is not as great as the F-1+ and F-1 categories. F-3--Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, although near-term adverse changes could cause these securities to be rated below investment grade. B-4 APPENDIX C SPECIAL INVESTMENT CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS Some of the significant financial considerations relating to the investments of the New York Municipal Money Market Fund in New York municipal securities are summarized below. The following information constitutes only a brief summary, does not purport to be a complete description and is largely based on information drawn from official statements relating to securities offerings of New York municipal obligations available as of the date of this Statement of Additional Information. The accuracy and completeness of the information contained in such offering statements has not been independently verified. New York State New York State Financing Activities. There are a number of methods by which New York State (the "State") may incur debt. Under the State Constitution, the State may not, with limited exceptions for emergencies, undertake long-term general obligation borrowing (i.e., borrowing for more than one year) unless the borrowing is authorized in a specific amount for a single work or purpose by the New York State Legislature (the "Legislature") and approved by the voters. There is no limitation on the amount of long-term general obligation debt that may be so authorized and subsequently incurred by the State. With the exception of general obligation housing bonds (which must be paid in equal annual installments or installments that result in substantially level or declining debt service payments, within 50 years after issuance, commencing no more than three years after issuance), general obligation bonds must be paid in equal annual installments or installments that result in substantially level or declining debt service payments, within 40 years after issuance, beginning not more than one year after issuance of such bonds. The State may undertake short-term borrowings without voter approval (i) in anticipation of the receipt of taxes and revenues, by issuing tax and revenue anticipation notes ("TRANs"), and (ii) in anticipation of the receipt of proceeds from the sale of duly authorized but unissued bonds, by issuing bond anticipation notes ("BANs"). TRANs must mature within one year from their dates of issuance and may not be refunded or refinanced beyond such period. BANS may only be issued for the purposes and within the amounts for which bonds may be issued pursuant to voter authorizations. Such BANs must be paid from the proceeds of the sale of bonds in anticipation of which they were issued or from other sources within two years of the date of issuance or, in the case of BANs for housing purposes, within five years of the date of issuance. The State may also, pursuant to specific constitutional authorization, directly guarantee certain public authority obligations. The State Constitution provides for the State guarantee of the repayment of certain borrowings for designated projects of the New York State Thruway Authority, the Job Development Authority and the Port Authority of New York and New Jersey. The State has never been called upon to make any direct payments pursuant to such guarantees. The State-guaranteed bonds of the Port Authority of New York and New Jersey were fully retired on December 31, 1996. State-guaranteed bonds issued by the Thruway Authority were fully retired on July 1, 1995. In February 1997, the Job Development Authority ("JDA") issued approximately $85 million of State-guaranteed bonds to refinance certain of its outstanding bonds and notes in order to restructure and improve JDA's capital structure. Due to concerns regarding the economic viability of its programs, JDA's loan and loan guarantee activities had been suspended since the Governor took office in 1995. As a result of the structural imbalances in JDA's capital structure, and defaults in its loan portfolio and loan guarantee program incurred between 1991 and 1996, JDA would have experienced a debt service cash flow shortfall had it not completed its recent refinancing. JDA anticipates that it will transact additional refinancings in 1999, 2000 and 2003 to complete its long-term plan of finance and further alleviate cash flow imbalances which are likely to occur in future years. JDA recently resumed its lending activities under a revised set of lending programs and underwriting guidelines. C-1 The State employs additional long-term financing mechanisms, lease-purchase and contractual-obligation financing, which involve obligations of public authorities or municipalities that are State-supported but not general obligations of the State. Under these financing arrangements, certain public authorities and municipalities have issued obligations to finance the construction and rehabilitation of facilities or the acquisition and rehabilitation of equipment and expect to meet their debt service requirements through the receipt of rental or other contractual payments made by the State. Although these financing arrangements involve a contractual agreement by the State to make payments to a public authority, municipality or other entity, the State's obligation to make such payments is generally expressly made subject to appropriation by the Legislature and the actual availability of money to the State for making the payments. The State has also entered into a contractual-obligation financing arrangement with the New York Local Government Assistance Corporation ("LGAC") to restructure the way the State makes certain local aid payments. The State participates in the issuance of Certificates of Participation ("COPs") in a pool of leases entered into by the State's Office of General Services on behalf of several State departments and agencies interested in acquiring operational equipment, or in certain cases, real property. Legislation enacted in 1986 established restrictions upon and centralized State control, through the Comptroller and the Director of the Budget, over the issuance of COPs representing the State's contractual obligation, subject to annual appropriation by the Legislature and availability of money, to make installment or lease-purchase payments for the State's acquisition of such equipment or real property. The State also employs moral obligation financing. Moral obligation financing generally involves the issuance of debt by a public authority to finance a revenue-producing project or other activity. The debt is secured by project revenues and statutory provisions requiring the State, subject to appropriation by the Legislature, to make up any deficiencies which may occur in the issuer's debt service reserve fund. There has never been a default on any moral obligation debt of any public authority although there can be no assurance that such a default will not occur in the future. Payments of debt service on State general obligation and State-guaranteed bonds and notes are legally enforceable obligations of the State. The State has never defaulted on any of its general obligation indebtedness or its obligations under lease-purchase or contractual-obligation financing arrangements and has never been called upon to make any direct payments pursuant to its guarantees although there can be no assurance that such a default or call will not occur in the future. The proposed 1997-98 through 2002-2003 Capital Program and Financing Plan was released with the 1998-99 Executive Budget on January 20, 1998. As part of the Plan, changes were proposed to the State's 1997-98 borrowing plan, including: delay of the issuance of COPs to finance welfare information systems through 1998-99 to permit a thorough assessment of needs; and the elimination of issuances for the CEFAP to reflect the proposed conversion of that bond-financed program pay-as-you-go financing. In addition to the arrangements described above, State law provides for the creation of State municipal assistance corporations, which are public authorities established to aid financially troubled localities. The Municipal Assistance Corporation for The City of New York ("MAC") was created to provide financing assistance to New York City (the "City"). To enable MAC to pay debt service on its obligations, MAC receives, subject to annual appropriation by the Legislature, receipts from the 4% New York State Sales Tax for the benefit of New York City, the State-imposed stock transfer tax and, subject to certain prior liens, certain local assistance payments otherwise payable to the City. The legislation creating MAC also includes a moral obligation provision. Under its enabling legislation, MAC's authority to issue bonds and notes (other than refunding bonds and notes) expired on December 31, 1984. In 1995, the State created the Municipal Assistance Corporation for the City of Troy ("Troy MAC"). The bonds issued by Troy MAC, however, do not include moral obligation provisions. The 1999-2000 State Financial Plan. The State's 1999-2000 fiscal year commenced on April 1, 1999 and ends on March 31, 2000. On March 31, 1999, the State adopted the debt service portion of the State budget for the 1999-2000 fiscal year; four months later, on August 4, 1999, it enacted the remainder of the C-2 budget. The Governor approved the budget as passed by the Legislature. Prior to passing the budget in its entirety for the current fiscal year, the State enacted appropriations that permitted the State to continue its operations. Following enactment of the budget, the State prepared a Financial Plan for the 1999-2000 fiscal year, dated August 24, 1999 (the "1999-2000 Financial Plan"), that sets forth projected receipts and disbursements based on the actions taken by the Legislature. The State is required to issue quarterly modifications to the cash-basis State Financial Plan in July, October, and January. These modifications reflect analysis of actual receipts and disbursements on a cash basis for each reporting period, and contain revised estimates of receipts and disbursements for the then current fiscal year. As a result of the delay in adopting the budget for 1999-2000, the State incorporated the First Quarterly Update (the "August Financial Plan") into the Annual Information Statement dated August 24, 1999. The State issued its Second Quarterly Update to the cash-basis 1999-2000 State Financial Plan (the "Mid-Year Update") on October 29, 1999. The State Financial Plan is projected to be balanced on a cash basis. However, there can be no assurance that the State Financial Plan will continue to be in balance. On October 29, 1999, the State issued its Mid-Year Update to the 1999-2000 Financial Plan. In the Mid-Year Update, the State continues to project that the State Financial Plan for 1999-2000 will remain in balance. The State now projects total receipts and transfers from other funds of $39.32 billion in 1999-2000, an increase of $15 million over the amount projected in the August Financial Plan. The State has also lowered its disbursement projections by $10 million, with total disbursements of $37.35 billion now expected for the current fiscal year. The additional receipts and lower disbursements increase the State's projected cash-basis surplus by $25 million over the August Financial Plan. The State has earmarked the additional resources for the Contingency Reserve Fund. The State now projects a closing General Fund balance of $2.87 billion in 1999-2000. The balance is comprised of $1.82 billion reserved to finance already-enacted tax cuts, $473 million in the Tax Stabilization Reserve Fund, $250 million in the Debt Reduction Reserve Fund (DRRF), $132 million in the Contingency Reserve Fund (after the proposed deposit of $25 million) and $200 million in the Community Projects Fund. The State ended the first six months of the 1999-2000 fiscal year with a General Fund cash balance of $5.42 billion, roughly $295 million lower than projected in the cash flow accompanying the August Financial Plan. Total receipts, including transfers from other funds, were approximately $11 million less than expected, with the decrease comprised of lower tax revenues ($25 million) and transfers from other funds ($8 million) offset in part by $22 million in higher miscellaneous receipts. Total disbursements through the first six months of the fiscal year were $16.88 billion, or $284 million higher than projected in August. The Division of the Budget expects that most of these variances are timing-related and not likely to affect total disbursements for the fiscal year. Many complex political, social and economic forces influence the State's economy and finances, which may in turn affect the State's Financial Plan. These forces may affect the State unpredictably from fiscal year to fiscal year and are influenced by governments, institutions and organizations that are not subject to the State's control. The State Financial Plan is also necessarily based upon forecasts of national and State economic activity. Economic forecasts, however, have frequently failed to predict accurately the timing and magnitude of changes in the national and the State economies. Despite recent budgetary surpluses recorded by the State, State actions affecting the level of receipts and disbursements, the relative strength of the State and regional economy, actions of the federal government and other factors have created structural budget gaps for the State. These gaps resulted from a significant disparity between recurring revenues and the costs of maintaining or increasing the level of support for State programs. To address a potential imbalance in any given fiscal year, the State is required to take actions to increase receipts and/or reduce disbursements as it enacts the budget for that year, and under the State Constitution, the Governor is required to propose a balanced budget each year. There can be no assurance, however, that the Legislature will enact the Governor's proposals or that the State's actions will be sufficient to preserve budgetary balance in a given fiscal year or to align recurring receipts and disburse- C-3 ments in future fiscal years. For example, the fiscal effects of tax reductions adopted in the last several fiscal years (including 1998-99) are projected to grow more substantially beyond the 1999-2000 fiscal year, with the incremental annual cost of all currently enacted tax reductions estimated at over $4 billion by the time they are fully effective in State fiscal year 2002-03. These actions will place pressure on future budget balance in New York State. Projected Budget Gaps for 2000-01 and 2001-02. The revised Financial Plan projects a budget gap of $1.9 billion in 2000-01, $300 million higher than the Executive Budget estimate (after adjusting for the projected costs of collective bargaining). This estimate includes an assumption for the projected costs of new collective bargaining agreements, $500 million in assumed operating efficiencies, as well as the planned application of approximately $615 million of the $1.82 billion tax reduction reserve. DOB will formally update its projections of receipts and disbursements for future years as part of the Governor's 2000-01 Executive Budget submission. The revised expectations for these years will reflect the cumulative impact of tax reductions and spending commitments enacted over the last several years as well as new 2000-01 Executive Budget recommendations. Special Considerations. Many complex political, social and economic forces influence the State's economy and finances, which may in turn affect the State Financial Plan. These forces may affect the State unpredictably from fiscal year to fiscal year and are influenced by governments, institutions, and organizations that are not subject to the State's control. The State Financial Plan is also necessarily based upon forecasts of national and State economic activity. Economic forecasts have frequently failed to predict accurately the timing and magnitude of changes in the national and State economies. The Division of Budget believes that its projections of receipts and disbursements relating to the current State Financial Plan, and the assumptions on which they are based, are reasonable. Actual results, however, could differ materially and adversely from the projections set forth, and those projections may be changed materially and adversely from time to time. See the section entitled "State Financial Plan Considerations" below for a discussion of risks and uncertainties faced by the State. Effective January 1, 1997, the Health Care Reform Act (HCRA) moved the hospital industry into a competitive market system by allowing most non-governmental payers to negotiate reimbursement directly with hospitals. HCRA continued the New York Prospective Hospital Reimbursement Methodology (NYPHRM) rate setting system for Medicaid. HCRA legislation is scheduled to expire on December 31, 1999. It is anticipated that the State Legislature will convene a special session prior to that date to enact successor HCRA legislation. Since successor legislation has yet to be adopted, its impact on the Financial Plan, if any, is unknown at this time. Outyear Projections of Receipts and Disbursements. In recent years, the State has closed projected budget gaps of $5.0 billion (1995-96), $3.9 billion (1996-97), $2.3 billion (1997-98) and less than $1 billion (1998-99). The State, as a part of the 1998-99 Executive Budget projections submitted to the Legislature in February 1998, projected a 1999-2000 General Fund budget gap of approximately $1.7 billion and a 2000-01 gap of $3.7 billion. The State projects budget gaps of $1.1 billion in 2000-01 and $2.08 billion in 2001-02. The State and the United University Professionals (UUP) union have reached a tentative agreement on a new four-year labor contract. The State is continuing negotiations with other unions representing State employees, the largest of which is the Civil Service Employees Association (CSEA). CSEA previously failed to ratify a tentative agreement on a new four-year contract earlier in 1999. The 1999-2000 Financial Plan has reserved $100 million for possible collective bargaining agreements, and reserves are contained in the preliminary outyear projection for 2000-01 to cover the recurring costs of any new agreements. To the extent these reserves are inadequate to finance such agreements, the costs of new labor contracts could increase the size of future budget gaps. Sustained growth in the State's economy could contribute to closing projected budget gaps over the next several years, both in terms of higher-than-projected tax receipts and in lower-than-expected entitle- C-4 ment spending. The State assumes that the 2000-01 Financial Plan will achieve $500 million in savings from initiatives by State agencies to deliver services more efficiently, workforce management efforts, maximization of federal and non-General Fund spending offsets, and other actions necessary to help bring projected disbursements and receipts into balance. The projections do not assume any gap-closing benefit from the potential settlement of State claims against the tobacco industry. Uncertainties with regard to the economy, as well as the outcome of certain litigation now pending against the State, could produce adverse effects on the State's projections of receipts and disbursements. For example, changes to current levels of interest rates or deteriorating world economic conditions could have an adverse effect on the State economy and produce results in the current fiscal year that are worse than predicted. Similarly, adverse judgments in legal proceedings against the State could exceed amounts reserved in the 2000-2001 Financial Plan for payment of such judgments and produce additional unbudgeted costs to the State. In recent years, including this year, the State has failed to adopt a budget prior to the beginning of its fiscal year. A delay in the adoption of the State's budget beyond the statutory April 1 deadline could delay the projected receipt by the City of State aid, and there can be no assurance that State budgets in future fiscal years will be adopted by the April 1 statutory deadline. Year 2000 Compliance. New York State is currently addressing Year 2000 ("Y2K") data processing compliance issues. Since its inception, the computer industry has used a two-digit date convention to represent the year. In the year 2000, the date field will contain "00" and, as a result, many computer systems and equipment may not be able to process dates properly or may fail since they may not be able to distinguish between the years 1900 and 2000. The Year 2000 issue not only affects computer programs, but also the hardware, software and networks on which they operate. In addition, any system or equipment that is dependent on an embedded chip, such as telecommunication equipment and security systems, may also be adversely affected. In April 1999 the State Comptroller released an audit on the State's Year 2000 compliance. The audit, which reviewed the State's Y2K compliance activities through October 1998, found that the State had made progress in achieving Y2K compliance, but needed to improve its activities in several areas, including data interchanges and contingency planning. In 1996, the State created the Office for Technology ("OFT") to help address statewide technology issues, including the Year 2000 issue. The Office for Technology (OFT) will continue to monitor compliance progress for the State's mission-critical and high-priority systems. OFT submitted a final quarterly compliance progress report to the Governor's Office for the quarter ending September 30, 1999. Monthly exception reporting for the remainder of the year will replace the quarterly reports. The 1999-2000 enacted budget allocates $19 million for priority embedded systems and $20 million for unanticipated expenses related to bringing technology into Y2K compliance. OFT reports that as of September 1999, the State's mission-critical systems are 100% compliant; 93% of the overall compliance effort on the high-priority systems has been completed with 269 systems now Year 2000 compliant. The State also procured independent validation and verification services (IV&V) from a qualified vendor to perform an automated review of code for all mission-critical systems which was completed in October 1999. Overall, the vendor noted that New York State agencies had followed and implemented several best practices and therefore the vendor made very few process recommendations and only a few significant code check issues (.01% of the code) were remaining after agency reviews of the IV&V results. These results compare very favorably with results from IV&V of major systems from other states that the vendor has done. The State is also addressing a number of issues related to Y2K compliance, including: testing all data exchange interfaces with federal, state, local and private data partners for critical systems (as of September 1999, 98% of data exchanges are done); completing compliance work of priority equipment and systems that may depend on embedded chips (as of September 1999, 82% of these systems are compliant); and contacting critical vendors and supply partners to obtain and monitor Year 2000 compliance status information and C-5 assurances. The State is also preparing contingency plans. All agencies were required to complete contingency plans for priority systems and business processes by the first quarter of calendar year 1999. These plans have been completed and tested as of June 1999 and are being integrated into the State Emergency Response Plan under the direction of the State Emergency Management Office. As of September 1999, 46 agencies have filed their contingency plans with the State Emergency Management Office. In addition, State agencies that regulate industries, such as the Public Service Commission, the Banking Department and others are closely monitoring the few regulated companies that are not yet compliant. The Public Service Commission reports that as of September 1999, all State-regulated utilities, with the exception of a few small water and cable companies, are ready for the Year 2000, including the existence of comprehensive contingency plans. The State has also been working with local governments since December 1996 to raise awareness, promote action and provide assistance with Year 2000 compliance. This has included assisting local governments in addressing their local Y2K issues, guiding local governments in holding Citizen Forums to inform citizens of compliance and contingency activities in their community, and guiding citizens in their individual preparations for Year 2000. Presentations, teleconferences, written guidance materials, videotapes, a comprehensive web site and brochures have been made available and widely distributed. While the State is taking what it believes to be appropriate action to address Year 2000 compliance, there can be no guarantee that all of the State's systems and equipment will be Year 2000 compliant and that there will not be an adverse impact upon State operations or finances as a result. Since Year 2000 compliance by outside parties is beyond the State's control to remediate, the failure of outside parties to achieve Year 2000 compliance could have an adverse impact on State operations or finances as well. Government Funds Comprising the State Financial Plan. Four governmental fund types comprise the State Financial Plan: the General fund, the Special Revenue Funds, the Capital Projects funds and the Debt Service funds. General Fund. The General Fund is the principal operating fund of the State and is used to account for all financial transactions, except those required to be accounted for in another fund. It is the State's largest fund and receives almost all State taxes and other resources not dedicated to particular purposes. General Fund moneys are also transferred to other funds, primarily to support certain capital projects and debt service payments in other fund types. In the State's 1999-2000 fiscal year, the General Fund is expected by the State to account for approximately 47.1 percent of all governmental funds disbursements and 69.3 percent of total State Funds disbursements. Total General Fund receipts and transfers in 1999-2000 are now projected to be $39.31 billion, an increase of $2.58 billion from the $36.74 billion recorded in 1998-99. This total includes $35.94 billion in tax receipts, $1.36 billion in miscellaneous receipts, and $2.02 billion in transfers from other funds. The transfer of the $1.82 billion surplus recorded in 1998-99 to the 1999-2000 fiscal period has the effect of exaggerating the growth in State receipts from year to year by depressing reported 1998-99 figures and inflating 1999-2000 projections. General Fund disbursements, including transfers to support capital projects, debt service and other funds, are estimated at $37.35 billion in 1999-2000, an increase of $867 million. Following the pattern of the last two fiscal years, education programs receive the largest share of new funding contained in the 1999-2000 Financial Plan. School aid is expected to grow by $831 million or 8.58 percent over 1998-99 levels (on a State fiscal year basis). Outside of education, the largest growth in spending is for State Operations ($181 million, including $100 million reserved for possible collective bargaining costs); Debt Service ($183 million), and mental hygiene programs, including funding for a cost of living increase for care providers ($114 million). These increases were offset, in part, by spending reductions or actions in health and social welfare ($280 million), and in general State charges ($222 million). Grants to Local Governments is the largest category of General Fund disbursements and includes financial assistance to local governments and not-for-profit corporations, as well as entitlement benefits to C-6 individuals. The largest areas of spending in this category are for aid to elementary and secondary schools (41 percent) and for the State's share of Medicaid payments to providers (22 percent). Grants to Local Governments are projected at $25.62 billion in 1999-2000, an increase of $926 million over 1998-99. Under the 1999-2000 enacted budget, General Fund spending on school aid is projected at $10.52 billion on a State fiscal year basis, an increase of $831 million from the prior year. The budget provides additional funding for operating aid, building aid, and several other targeted aid programs. It also funds the balance of aid payable for the 1998-99 school year that is due primarily in the first quarter of the 1999-2000 fiscal year. For all other educational programs, disbursements are projected to grow by $78 million to $2.99 billion. Spending for Medicaid in 1999-2000 is projected to total $5.54 billion, essentially unchanged from 1998-99, due in part to the use of $145 million in other available funds that lowers disbursements in this area. Disbursements for all other health and social welfare programs are projected to total $2.70 billion, a decrease of $252 million. Lower welfare spending, driven by State and federal reforms and a robust economy, accounts for most of the decline. The remaining disbursements primarily support community-based mental hygiene programs, local transportation programs, and revenue sharing payments to local governments. Revenue sharing and other general purpose aid to local governments is projected at $825 million. State operations pays for the costs of operating the Executive, Legislative, and Judicial branches of government, including the prison system, mental hygiene institutions, and the State University system (SUNY). Personal Service costs account for approximately 73 percent of spending in this category. Spending in State operations in 1999-2000 will total $6.85 billion, an increase by $181 million over the prior year. The growth reflects $100 million in projected spending for new collective bargaining agreements that the State expects to be ratified in the current year. The year-to-year growth reflects $100 million reserved to fund new collective bargining agreements, including the recent contract ratified by the United University Professionals. Costs for the State's Year 2000 compliance programs and growth in the Legislative and Judiciary budgets also contribute to the increase. General State charges account for the costs of providing fringe benefits to State employees and retirees of the Executive, Legislature, and Judiciary. Disbursements in this category are estimated at $2.04 billion, a decrease of $222 million from the prior year. The change primarily reflects projected growth of $27 million in a variety of programs offset by the use of proceeds from the privatization of the Medical Malpractice Insurance Association, which is expected to offset certain General Fund fringe benefit costs over the next two fiscal years by approximately $250 million annually. Debt Service. This category accounts for debt service on short-term obligations of the State, i.e., the interest costs of the State's commercial paper program. The commercial paper program is expected to have an average of approximately $185 million outstanding during 1999-2000. The majority of the State's debt service is for long-term bonds, and is shown in the Financial Plan as a transfer to the General Debt Service Fund. Transfers to other funds from the General Fund are made primarily to finance certain portions of State capital projects spending and debt service on long-term bonds where these costs are not funded from other sources. Long-term debt service transfers are projected at $2.27 billion in 1999-2000, an increase of $183 million from 1998-99. The increase reflects debt service costs from prior-year bond sales (net of refunding savings), and certain sales planned to occur during the 1999-2000 fiscal year. Transfers for capital projects provide General Fund support for projects that are not financed with bond proceeds, dedicated taxes, other revenues, or federal grants. Transfers in this category are projected to total $168 million in 1999-2000.The decline of $78 million from the prior year is primarily due the delay of the receipt of payment of certain reimbursements in 1998-99. Receipts of $50 million transferred to DRRF in 1998-99 will be used in the Capital Projects Fund in 1999-2000 to provide pay-as-you-go funding for five capital programs that were previously funded with bond proceeds. The 1999-2000 enacted budget also reserves $250 million in new resources for DRRF. C-7 All other transfers (excluding DRRF), which reflect the remaining transfers from the General Fund to other funds, are estimated to total $385 million in 1999-2000, a decline of $84 million from 1998-99, primarily because of certain non-recurring transfers that occurred last year. The DOB estimates that the 1999-2000 State Financial Plan contains actions that provide non-recurring resources or savings totaling approximately $500 million, or 1.3 percent of General Fund resources, the largest of which is the first phase of the privatization of MMIA. To the greatest extent possible, one-time resources are expected to be utilized to finance one-time costs, including Year 2000 compliance costs and certain capital spending. Special Revenue Funds. Special Revenue Funds are used to account for the proceeds of specific revenue sources such as federal grants that are legally restricted, either by the Legislature or outside parties, to expenditures for specified purposes. Special Revenue Funds spending is projected at $30.94 billion, an increase of $1.29 billion or 4.35 percent over the prior year. Special Revenue Funds include Federal grants and State special revenue funds. Federal grants are projected to comprise 72 percent of all Special Revenue spending in 1999-2000, comparable to prior years. Disbursements from federal funds are estimated at $22.17 billion, an increase of $741 million or 3.46 percent. Medicaid is the largest program within federal funds, accounting for 56 percent of total spending in this category. In 1999-2000, Medicaid spending is projected at $14.32 billion, an increase of $711 million over 1998-99. The remaining growth in federal funds is primarily for the Child Health Plus program, which is estimated at $117 million in 1999-2000. This growth is offset by decreased spending in certain social services programs resulting from more recent spending reestimates. State special revenue spending is projected to be $8.77 billion, an increase of $550 million or 6.69 percent from last year. The spending growth is primarily due to $661 million for the next phase of the STAR program and $250 million in additional general State charges funded by proceeds from the MMIA transaction, offset by a decrease of $185 million in projected educational spending as a result of lower projected Lottery proceeds and a decline of $112 million in transportation disbursements. The remainder reflects the net impact of spending reestimates. Capital Projects Funds. Capital Projects Funds account for the financial resources used in the acquisition, construction or rehabilitation of major State capital facilities and for capital assistance grants to certain local governments or public authorities. This fund type consists of the Capital Projects Fund, which is supported by tax dollars transferred from the General Fund and various other capital funds established to distinguish specific capital construction purposes supported by other revenues. Capital Projects Funds spending in fiscal year 1999-2000 is projected at $4.18 billion, an increase of $114 million or 2.80 percent from last year. Transportation, environmental, education and mental hygiene programs are the major sources of year-to-year spending growth in this category. Debt Service Funds. Debt Service Funds are used to account for the payment of principal of, and interest on, long-term debt of the State and to meet commitments under lease-purchase and other contractual-obligation financing arrangements. Receipts in these Funds in excess of debt service requirements are transferred to the General Fund and Special Revenue Funds, pursuant to law. The Debt Service Fund type consists of the General Debt Service Fund, which is supported primarily by tax dollars transferred from the General Fund, and other funds established to accumulate moneys for the payment of debt service. Total disbursements from the Debt Service Fund type are estimated at $3.64 billion in 1999-2000, up $370 million or 11.31 percent from 1998-99. Transportation purposes, including debt service on bonds issued for State and local highway and bridge programs financed through the New York State Thruway Authority and supported by the Dedicated Highway and Bridge Trust Fund, account for $124 million of the year-to-year growth. Debt service for educational purposes, including State and City University programs financed through the Dormitory Authority, will increase by $80 million. The remaining growth is for a variety of programs in mental health and corrections, and for general obligation financings. C-8 General Fund: Prior Fiscal Years. New York State's financial operations have improved during recent fiscal years. During the period 1989-90 through 1991-92, the State incurred General Fund operating deficits that were closed with receipts from the issuance of TRANs. A national recession, followed by the lingering economic slowdown in the New York and regional economy, resulted in repeated shortfalls in receipts and three budget deficits during those years. During its last six fiscal years, however, the State has recorded balanced budgets on a cash basis, with positive fund balances as described below. There can be no assurance, however, that such trends will continue. Fiscal Year 1998-99. The State ended its 1998-99 fiscal year on March 31, 1999 in balance on a cash basis, with a General Fund cash surplus as reported by the DOB of $1.82 billion. The cash surplus was derived primarily from higher-than-projected tax collections as a result of continued economic growth, particularly in the financial markets and the securities industries. The State reported a General Fund closing cash balance of $892 million, an increase of $254 million from the prior fiscal year. The balance is held in three accounts within the General Fund: the Tax Stabilization Reserve Fund (TSRF), the Contingency Reserve Fund (CRF) and the Community Projects Fund (CPF). The TSRF closing balance was $473 million, following an additional deposit of $73 million in 1998-99. The CRF closing balance was $107 million, following a deposit of $39 million in 1998-99. The CPF, which finances legislative initiatives, closed the fiscal year with a balance of $312 million. The closing fund balance excludes $2.31 billion that the State deposited into the tax refund reserve account at the close of 1998-99 to pay for tax refunds in 1999-2000 of which $521 million was made available as a result of the Local Government Assistance Corporation (LGAC) financing program and was required to be on deposit as of March 31, 1999. The tax refund reserve account transaction has the effect of decreasing reported personal income tax receipts in 1998-99, while increasing reported receipts in 1999-2000. General Fund receipts and transfers from other funds (net of tax refund reserve account activity) for the 1998-99 fiscal year totaled $36.74 billion, an increase of 6.34 percent from 1997-98 levels. General Fund disbursements and transfers to other funds totaled $36.49 billion for the 1998-99 fiscal year, an increase of 6.23 percent from 1997-98 levels. Fiscal Year 1997-98. The State ended its 1997-98 fiscal year on March 31, 1998 in balance on a cash basis, with a General Fund cash surplus as reported by DOB of approximately $2.04 billion. The cash surplus was derived primarily from higher-than-anticipated receipts and lower spending on welfare, Medicaid and other entitlement programs. The General Fund had a closing balance of $638 million, an increase of $205 million from the prior fiscal year. The balance was held in three accounts within the General Fund: the TSRF, the CRF and the CPF. The TSRF closing balance was $400 million, following a required deposit of $15 million (repaying a transfer made in 1991-92) and an extraordinary deposit of $68 million made from the 1997-98 surplus. The CRF closing balance was $68 million, following a $27 million deposit from the surplus. The CPF, which finances legislative initiatives, closed the fiscal year with a balance of $170 million, an increase of $95 million. The General Fund closing balance did not include $2.39 billion in the tax refund reserve account, of which $521 million was made available as a result of the LGAC financing program and was required to be on deposit on March 31, 1998. General Fund receipts and transfers from other funds for the 1997-98 fiscal year (including net tax refund reserve account activity) totaled $34.55 billion, an annual increase of $1.51 billion, or 4.57 percent over 1996-97. General Fund disbursements and transfers to other funds were $34.35 billion, an annual increase of $1.45 billion or 4.41 percent. Fiscal year 1996-97. The State ended its 1996-97 fiscal year on March 31, 1997 in balance on a cash basis, with a General Fund cash surplus as reported by DOB of approximately $1.42 billion. The cash C-9 surplus was derived primarily from higher-than-expected revenues and lower-than-expected spending for social services programs. The General Fund closing fund balance was $433 million, an increase of $146 million from the 1995-96 fiscal year. Of that amount, $317 million was in the TSRF, after a required deposit of $15 million and an additional deposit of $65 million in 1996-97. In addition, $41 million was deposited in the CRF. The remaining $75 million reflected amounts then on deposit in the Community Projects Fund. The General Fund closing fund balance did not include $1.86 billion in the tax refund reserve account, of which $521 million was made available as a result of the LGAC financing program and was required to be on deposit as of March 31, 1997. General Fund receipts and transfers from other funds for the 1996-97 fiscal year totaled $33.04 billion, an increase of 0.7 percent from the previous fiscal year (including net tax refund reserve account activity). General Fund disbursements and transfers to other funds totaled $32.90 billion for the 1996-97 fiscal year, an increase of 0.7 percent from the 1995-96 fiscal year. Cash-Basis Results for the Non-General Funds Over the Last 3 Years. Activity in the three other governmental funds has remained relatively stable over the last three fiscal years, with federally-funded programs comprising approximately two-thirds of these funds. The most significant change in the structure of these funds has been the redirection of a portion of transportation-related revenues from the General Fund to two new dedicated funds in the Special Revenue and Capital Projects fund types. These revenues are used to support the capital programs of the Department of Transportation, the Metropolitan Transportation Authority (MTA) and other transit entities. In the Special Revenue Funds, disbursements increased from $26.02 billion to $29.65 billion over the last three years, primarily as a result of increased costs for the federal share of Medicaid and the STAR program. Other activity reflected dedication of taxes to a new fund for mass transportation, new lottery games, and new fees for criminal justice programs. Disbursements in the Capital Projects Funds increased over the three-year period from $3.54 billion to $4.06 billion, primarily for education, environment, public protection and transportation programs. The composition of this fund type's receipts has also changed as dedicated taxes, federal grants and reimbursements from public authority bonds increased, while general obligation bond proceeds declined. Activity in the Debt Service Funds reflected increased use of bonds during the three-year period for improvements to the State's capital facilities and the ongoing costs of the LGAC fiscal reform program. The increases were moderated by the refunding savings achieved by the State over the last several years using strict present value savings criteria. Disbursements in this fund type increased from $2.53 billion to $3.27 billion over the three-year period. GAAP-Basis Results. State law requires the State to update its projected financial results on a GAAP-basis on or before September first of each year. Projected GAAP-Basis Results for Fiscal Year 1999-2000. The State based its GAAP projections on the cash estimates in the Financial Plan. As of January, 1999, the General Fund GAAP Financial Plan for 1999-2000 projects total revenues of $37.47 billion, total expenditures of $37.59 billion and net other financing uses of $27 million. At the end of 1999-2000, the accumulated General Fund GAAP surplus is projected to be $1.55 billion. GAAP-Basis Results for Fiscal Year 1998-99. The State completed its 1998-99 fiscal year with a combined governmental funds operating surplus of $1.32 billion, which included operating surpluses in the General Fund ($1.078 billion), in Debt Service Funds ($209 million) and in Capital Projects Funds ($154 million) offset, in part, by an operating deficit in Special Revenue Funds ($117 million). General Fund. The State reported a General Fund operating surplus of $1.078 billion for the 1998-99 fiscal year, as compared to an operating surplus of $1.562 billion for the 1997-98 fiscal year. As a result, the State reported an accumulated fund balance of $1.645 billion in the General Fund. The 1998-99 C-10 fiscal year operating surplus resulted, in part, from an increase in taxes receivable of $516 million, a decrease in payables to local government of $262 million, a decrease in accrued liabilities of $129 million and a decrease in deferred revenues of $69 million. These gains were partially offset by a decrease in other assets of $117 million and an increase in tax refunds payable of $102 million. Revenues increased $1.969 billion (5.7 percent) over the prior fiscal year with increases in personal income, consumption and use and other taxes, and miscellaneous revenues. Business tax revenues fell from the prior fiscal year. Personal income taxes grew $1.733 billion, an increase of nearly 9.3 percent. The increase in personal income taxes was caused by strong employment and wage growth and the continued strong performance by the financial markets during 1998. Consumption and use taxes increased $269 million, or 3.8 percent, due to increased consumer confidence. Other taxes increased $73 million, or 6.9 percent. Miscellaneous revenues increased $145 million, a 5.6 percent increase, primarily because of an increase in reimbursements from regulated industries (e.g., banking and insurance) to fund the State's administrative costs. Business taxes decreased nearly $252 million, or 4.9 percent, because of prior year refunds and carry forwards which were applied against the current year (1998) liabilities. Expenditures increased $1.826 billion (5.5 percent) from the prior fiscal year, with the largest increases occurring in State aid for education and general purpose aid spending. Education expenditures grew $1.014 billion (9.1 percent) due mainly to an increase in spending for support for public schools, handicapped pupil education and municipal and community colleges. General purpose aid increased nearly $329 million (56.5 percent) due to statutory changes in the payment schedule. Personal service and fringe benefit costs increased due to increases in wages and continuing fringe benefits required by collective bargaining agreements. Net other financing sources decreased $626 million (159.3 percent) primarily because appropriated transfers from the Special Revenue Funds declined by over $230 million with increases of $265 million in appropriated transfers to Special Revenue, Debt Service and College and University Funds. In addition, transfers to public benefit corporations increased over $170 million primarily because of a change in reporting for Roswell Park Cancer Institute. Special Revenue, Debt Service and Capital Projects Fund Types. An operating deficit of $117 million was reported for the Special Revenue Funds for the 1998-99 fiscal year which decreased the accumulated fund balance to $464 million. Revenues increased $1.108 billion over the prior fiscal year (4.0 percent) as a result of increases in tax and federal grants revenues. Expenditures increased $1.308 billion (5.3 percent) as a result of increased costs for local assistance grants. Net other financing uses increased $34 million (1.0 percent). Debt Service Funds ended the 1998-99 fiscal year with an operating surplus of $209 million and, as a result, the accumulated fund balance increased to $2.07 billion. Revenues increased $160 million (6.3 percent) primarily because of increases in dedicated taxes. Debt service expenditures increased $162 million (6.0 percent). Net other financing sources increased $253 million (227.4 percent) due primarily to increases in transfers from the General Fund, patient revenue transfers and the establishment of the Debt Reduction Reserve Fund. An operating surplus of $154 million was reported in the Capital Projects Funds for the State's 1998-99 fiscal year and, as a result, the accumulated deficit fund balance decreased to $228 million. Revenues increased $242 million (10.6 percent) primarily because tax revenues increased $101 million and federal grant revenues increased $94 million for transportation projects. Expenditures increased $355 million (10.5 percent) primarily because of increases capital construction spending for transportation and correctional services projects. Net other financing sources increased by $35 million. GAAP-Basis Results for Fiscal Year 1997-98. The State completed its 1997-98 fiscal year with a combined Governmental Funds operating surplus of $1.80 billion, which included an operating surplus in the General Fund of $1.56 billion, in Capital Projects Funds of $232 million and in Special Revenue Funds of $49 million, offset in part by an operating deficit of $43 million in Debt Service Funds. C-11 General Fund. The State reported a General Fund operating surplus of $1.56 billion for the 1997-98 fiscal year, as compared to an operating surplus of $1.93 billion for the 1996-97 fiscal year. As a result, the State reported an accumulated surplus of $567 million in the General Fund for the first time since it began reporting its operations on a GAAP-basis. The 1997-98 fiscal year operating surplus reflects several major factors, including the cash-basis operating surplus resulting from the higher-than-anticipated personal income tax receipts, an increase in taxes receivable of $681 million, an increase in other assets of $195 million and a decrease in pension liabilities of $144 million. This was partially offset by an increase in payables to local governments of $270 million and tax refunds payable of $147 million. Revenues increased $617 million (1.8 percent) over the prior fiscal year, with increases in personal income, consumption and use and business taxes. Decreases were reported for other taxes, federal grants and miscellaneous revenues. Personal income taxes grew $746 million, an increase of nearly 4.2 percent. The increase in personal income taxes resulted from strong employment and wage growth and the strong performance by the financial markets during 1997. Consumption and use taxes increased $334 million or 5.0 percent as a result of increased consumer confidence. Business taxes grew $28 million, an increase of 0.5 percent. Other taxes fell primarily because revenue for estate and gift taxes decreased. Miscellaneous revenues decreased $380 million, or 12. 7 percent, due to a decline in receipts from the Medical Malpractice Insurance Association and medical provider assessments. Expenditures increased $137 million (0.4 percent) from the prior fiscal year, with the largest increases occurring in State aid for education and social services spending. education expenditures grew $391 million (3.6 percent) due mainly to an increase in spending for municipal and community colleges. Social services expenditures increased $233 million (2.6 percent) due mainly to program growth. Increases in other State aid spending were offset by a decline in general purpose aid of $235 million (27.8 percent) due to statutory changes in the payment schedule. Increases in personal and non-personal service costs were offset by a decrease in pension contribution of $660 million, a result of the refinancing of the State's pension amortization that occurred in 1997. Net other financing sources decreased $841 million (68.2 percent) due to the nonrecurring use of bond proceeds ($769 million) provided by DASNY to pay the outstanding pension amortization liability incurred in 1997. Special Revenue, Debt Service and Capital Projects Funds. An operating surplus of $49 million was reported for the Special Revenue Funds for the 1997-98 fiscal year, which increased the accumulated fund balance to $581 million. Revenues rose by $884 million over the prior fiscal year (3.3 percent) as a result of increases in tax and federal grant revenues. Expenditures increased by $795 million (3.3 percent) as a result of increased costs for local assistance grants. Net other financing uses decreased $105 million (3.3 percent). Debt Service Funds ended the 1997-98 fiscal year with an operating deficit of $43 million and, as a result, the accumulated fund balance declined to $1.86 billion. Revenues increased $246 million (10.6 percent) as a result of increases in dedicated taxes. Debt service expenditures increased $341 million (14.4 percent). Net other financing sources increased $89 million (401.3 percent) due primarily to savings achieved through advance refundings of outstanding bonds. An operating surplus of $232 million was reported in the Capital Projects Funds for the State's 1997-98 fiscal year and, as a result, the accumulated deficit in this fund type decreased to $381 million. Revenues increased $180 million (8.6 percent) primarily as a result of a $54 million increase in dedicated tax revenues and an increase of $101 million in federal grants for transportation and local waste water treatment projects. Net other financing sources increased by $100 million primarily as a result of a decrease in transfers to certain public benefit corporations engaged in housing programs. GAAP-Basis Results for Fiscal Year 1996-97. The State completed its 1996-97 fiscal year with a combined governmental funds operating surplus of $2.1 billion, which included an operating surplus in the C-12 General Fund of $1.9 billion, in the Capital Projects Funds of $98 million and in the Special Revenue Funds of $65 million, offset in part by an operating deficit of $37 million in the Debt Service Funds. General Fund. The State reported a General Fund operating surplus of $1.93 billion for the 1996-97 fiscal year, as compared to an operating surplus of $380 million for the prior fiscal year. The 1996-97 fiscal year GAAP operating surplus reflects several major factors, including the cash basis operating surplus, the benefit of bond proceeds which reduced the State's pension liability, an increase in taxes receivable of $493 million, and a reduction in tax refund liabilities of $196 million. This was offset by an increased payable to local governments of $244 million. Revenues increased $1.91 billion (nearly 6.0 percent) over the prior fiscal year with increases in all revenue categories. Personal income taxes grew $620 million, an increase of nearly 3.6 percent, despite the implementation of scheduled tax cuts. The increase in personal income taxes was caused by moderate employment and wage growth and the strong financial markets during 1996. Consumption and use taxes increased $179 million or 2.7 percent as a result of increased consumer confidence. Business taxes grew $268 million, an increase of 5.6 percent, primarily as a result of the strong financial markets during 1996. Other taxes increased primarily because revenues from estate and gift taxes increased. Miscellaneous revenues increased $743 million, a 33.1 percent increase, because of legislated increases in receipts from the Medical Local Practice Insurance Association and from medical provider assessments. Expenditures increased $830 million (2.6 percent) from the prior fiscal with the largest increase occurring in pension contributions and State aid for education spending. Pension contribution expenditures increased $514 million (198.2 percent), primarily because the State paid off its 1984-85 and 1985-86 pension amortization liability. Education expenditures grew $351 million (3.4 percent), due mainly to an increase in spending for support for public schools and physically handicapped children, offset by a reduction in spending for municipal and community colleges. Modest increases in other State aid spending was offset by a decline in social services expenditures of $157 million (1.7 percent). Social services spending continues to decline because of cost containment strategies and declining caseloads. Net other financing sources increased $475 million (62.6 percent), due mainly to bond proceeds provided by the Documentary Authority of the State of New York (DASNY) to pay the outstanding pension amortization, offset by elimination of prior year LGAC proceeds. Special Revenue, Debt Service and Capital Projects Funds. An operating surplus of $65 million was reported for the Special Revenue Funds for the 1996-97 fiscal year, increasing the accumulated fund balance to $532 million. Revenues increased $583 million over the prior fiscal year (2.2 percent) as a result of increases in tax and lottery revenues. Expenditures increased $384 million (1.6 percent) as a result of increased costs for departmental operations. Net other financing sources decreased $275 million (8.0 percent), primarily because of declines in amounts transferred to other funds. Debt Service Funds ended the 1996-97 fiscal year with an operating deficit of $37 million and, as a result, the accumulated fund balance declined to $1.90 billion. Revenues increased $102 million (4.6 percent) because of increases in both dedicated taxes and mental hygiene patient fees. Debt service expenditures increased $47 million (2.0 percent). Net other financing sources decreased $277 million 92.6 percent) due primarily to an increase in payments on advance refundings. An operating surplus of $98 million was reported in the Capital Projects Funds for the State's 1996-97 fiscal year, and, as a result, the accumulated fund deficit decreased to $614 million. Revenues increased $100 million (5.0 percent) primarily because a larger share of the real estate transfer tax was shifted to the Environmental Protection Fund and federal grant revenues increased for transportation and local waste water treatment projects. Expenditures decreased $359 million (10.0 percent) because of declines in capital grants for education, housing and regional development programs and capital construction spending. Net other financing sources decreased by $637 million as a result of a decrease in proceeds from financing arrangements. C-13 Due to changing economic conditions and information, public statements or reports regarding the State Financial Plan and its constituent funds may be released by the Governor, members of the Legislature, and their respective staffs, as well as others involved in the budget process from time to time. Those statements or reports may contain predictions, projections or other items of information relating to the State's financial condition, including potential operating results for the current fiscal year and projected baseline gaps for future fiscal years, that may vary materially and adversely from the information provided herein. State Financial Plan Considerations. Many complex political, social and economic forces influence the State's economy and finances, which may in turn affect the State's Financial Plan. These forces may affect the State unpredictably from fiscal year to fiscal year and are influenced by governments, institutions, and events that are not subject to the State's control. The Financial Plan is also necessarily based upon forecasts of national and State economic activity. Economic forecasts have frequently failed to predict accurately the timing and magnitude of changes in the national and State economies. The State Financial Plan is based upon forecasts of national and State economic activity developed through both internal analysis and review of State and national economic forecasts prepared by commercial forecasting services and other public and private forecasters. Economic forecasts have frequently failed to predict accurately the timing and magnitude of changes in the national and the State economies. Many uncertainties exist in forecasts of both the national and State economies, including consumer attitudes toward spending, the extent of corporate and governmental restructuring, federal fiscal and monetary policies, the level of interest rates, and the condition of the world economy, which could have an adverse effect on the State. There can be no assurance that the State economy will not experience results in the current fiscal year that are worse than predicted, with corresponding material and adverse effects on the State's projections of receipts and disbursements. Projections of total State receipts in the State Financial Plan are based on the State tax structure in effect during the fiscal year and on assumptions relating to basic economic factors and their historical relationships to State tax receipts. In preparing projections of State receipts, economic forecasts relating to personal income, wages, consumption, profits and employment have been particularly important. The projection of receipts from most tax or revenue sources is generally made by estimating the change in yield of such tax or revenue source caused by economic and other factors, rather than by estimating the total yield of such tax or revenue source from its estimated tax base. The forecasting methodology, however, ensures that State fiscal year estimates for taxes that are based on a computation of annual liability, such as the business and personal income taxes, are consistent with estimates of total liability under such taxes. Projections of total State disbursements are based on assumptions relating to economic and demographic factors, levels of disbursements for various services provided by local governments (where the cost is partially reimbursed by the State), and the results of various administrative and statutory mechanisms in controlling disbursements for State operations. Factors that may affect the level of disbursements in the fiscal year include uncertainties relating to the economy of the nation and the State, the policies of the federal government, and changes in the demand for and use of State services. An additional risk to the State Financial Plan arises from the potential impact of certain litigation and of federal disallowances now pending against the State, which could adversely affect the State's projections of receipts and disbursements. The State Financial Plan assumes no significant litigation or federal disallowance or other federal actions that could affect State finances, but has significant reserves in the event of such an action. Additional risks to the Financial Plan arise out of potential actions at the federal level. Potential changes to federal tax law currently under discussion as part of the federal government's efforts to enact a multi-year tax reduction package could alter the federal definitions of income on which certain State taxes rely. Certain proposals, if enacted, could have a significant impact on State revenues in the future. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 created a new Temporary Assistance to Needy Families program (TANF) partially funded with a fixed federal block grant to states. C-14 This law also imposes (with certain exceptions) a five-year durational limit on TANF recipients, requires that virtually all recipients be engaged in work or community service activities within two years of receiving benefits, and limits assistance provided to certain immigrants and other classes of individuals. States are required to meet work activity participation targets for their TANF caseload and conform with certain other federal standards or face potential sanctions in the form of a reduced federal block grant and increased State/ local funding requirements. Any future reduction could have an adverse impact on the State's Financial Plan. However, the State has been able to demonstrate compliance with TANF work requirements to date and does not now expect to be subject to associated federal fiscal penalties. The Division of the Budget believes that its projections of receipts and disbursements relating to the current State Financial Plan, and the assumptions on which they are based, are reasonable. Actual results, however, could differ materially and adversely from the projections set forth in this AIS. In the past, the State has taken management actions to address potential Financial Plan shortfalls, and DOB believes it could take similar actions should adverse variances occur in its projections for the current fiscal year. Despite recent budgetary surpluses recorded by the State, actions affecting the level of receipts and disbursements, the relative strength of the State and regional economy, and actions by the federal government could impact projected budget gaps for the State. These gaps would result from a disparity between recurring revenues and the costs of increasing the level of support for State programs. For example, the fiscal effects of tax reductions adopted in the last several fiscal years are projected to grow more substantially in the forecast period, continuing to restrain receipts levels and placing pressure on future spending levels. To address a potential imbalance in any given fiscal year, the State would be required to take actions to increase receipts and/or reduce disbursements as it enacts the budget for that year, and, under the State Constitution, the Governor is required to propose a balanced budget each year. There can be no assurance, however, that the Legislature will enact the Governor's proposals or that the State's actions will be sufficient to preserve budgetary balance in a given fiscal year or to align recurring receipts and disbursements in future fiscal years. To help guard against these risks, the State has projected reserves of $2.4 billion in 1999-2000. National and State Economic Outlooks. The information below summarizes the national and State economic situation and outlook upon which projections of receipts and certain disbursements were made for the 1999-2000 Financial Plan. However, many uncertainties exist in any forecast of the national and State economies, particularly in light of the recent volatility in the international economy and domestic financial markets. The timing and impact of changes in economic conditions are difficult to estimate with a high degree of accuracy. Unforeseeable events may occur. The actual rate of change in any, or all, of the concepts that are forecasted may differ substantially and adversely from the outlook described herein. U.S. Economy. Economic growth during both 1999 and 2000 is expected to be slower than it was during 1998. Growth in domestic consumption, which has been a major driving force behind the nation's strong economic performance recent years, is expected to slow in 2000 as consumer confidence retreats from historic highs and the stock market ceases to provide large amounts of extra discretionary income. The revised forecast projects real GDP growth of 3.8 percent in 1999, slightly below the 1998 growth rate. In 2000 the rate of growth in real GDP growth is expected to fall further, to 3.1 percent. The growth of nominal GDP is projected to increase from 4.9 percent in 1998 to 5.2 percent in 1999 and fall to 4.7 percent in 2000. The inflation rate as measured by the Consumer Price Index is expected to increase to 2.3 percent in 1999 and rise to 2.8 percent in 2000. The annual rate of job growth is expected to be 2.2 percent in 1999, lower than the strong growth rate experienced in 1998. In 2000, employment growth is forecast to slow further, to 2.0 percent. Growth in personal income and wages is expected to remain fairly strong in 1999 and again in 2000. There are uncertainties inherent in any economic forecast. Consumer or business spending could be weaker than expected, due, perhaps to further significant declines in corporate profits or equity values. Additionally, the international economic and financial disruptions currently being felt around the globe could worsen or take longer than anticipated to subside. The result could be a sharp, additional reduction in domestic economic growth. Indeed, several private sector forecasters have indicated a heightened risk of a national C-15 recession beginning in 1999. Under that scenario, the FRB would be likely to lower short-term interest rates faster and further than expected in an effort to reignite the nation's economic engines. Alternatively, but less likely, the pace of US economic growth could be faster if productivity or consumer spending becomes stronger than anticipated, or if the economies of many of the countries of Asia and Latin America recover more quickly than expected. If such growth, or a rapid rise in labor, health or energy costs, awakens long-dormant inflationary pressures, the FRB may reverse its current position and raise interest rates. New York Economy. Continued growth is projected in 1999 and 2000 for employment, wages, and personal income, although, for 2000, a slowdown in the growth rate of employment is expected. The growth of personal income is projected to decrease from 5.2 percent in 1998 to 4.8 percent in 1999, and then grow 4.9 percent in 2000. The growth in average wages is expected to outpace the inflation rate in both 1999 and 2000. Overall employment growth is expected to be 2.0 percent in 1999, almost the same as in 1998, but is expected to drop to 1.7 percent in 2000, reflecting the slowing growth of the national economy, continued spending restraint in government, constraints in labor supply, and continued restructuring in the manufacturing, health care, and banking sectors. The forecast of the State's economy shows continued expansion during the 1999 calendar year, with employment growth gradually slowing as the year progresses. The financial and business service sectors are expected to continue to do well, while employment in the manufacturing sector is expected to post a modest decline. On an average annual basis, the employment growth rate in the State is expected to be somewhat lower than in 1998 and the unemployment rate is expected to drop further to 5.1 percent. Personal income is expected to record moderate gains in 1999. Wage growth in 1999 is expected to be slower than in the previous year as the recent robust growth in bonus payments moderates. The forecast for continued growth, and any resultant impact on the State's 1999-2000 Financial Plan, contains some uncertainties. Stronger-than-expected gains in employment and wages or in stock market prices could lead to unanticipated strong growth in consumer spending. Inventory investment due to Y2K may be significantly stronger than expected towards the end of this year possibly followed by significant weakness early next year. Also, improvements in foreign economies may be weaker than expected and therefore, may have unanticipated effects on the domestic economy. The inflation rate may differ significantly from expectations due to the conflicting impacts of a tight labor market and improved productivity growth as well as to the future direction and magnitude of fluctuations of oil prices. In addition, the State economic forecast could over- or underestimate the level of future bonus payments, financial sector profits or inflation growth, resulting in unexpected economic impacts. Similarly, the State forecast could fail to correctly estimate the amount of employment change in the banking, financial and other business service sectors as well as the direction of employment change that is likely to accompany telecommunications and energy deregulation. New York is the third most populous state in the nation and has a relatively high level of personal wealth. The State's economy is diverse, with a comparatively large share of the nation's finance, insurance, transportation, communications and services employment and a very small share of the nation's farming and mining activity. The State's location and its excellent air transport facilities and natural harbors have made it an important link in international commerce. Travel and tourism constitute an important part of the economy. Like the rest of the nation, New York has a declining proportion of its work force engaged in manufacturing and an increasing proportion engaged in service industries. The following paragraphs summarize the state of major sectors of the New York economy: Services: The services sector, which includes entertainment, personal services, such as health care and auto repairs, and business-related services, such as information processing, law and accounting, is the State's leading economic sector. The services sector accounts for more than three of every ten nonagricultural jobs in New York and has a noticeably higher proportion of total jobs than does the rest of the nation. Manufacturing: Manufacturing employment continues to decline in importance in New York, as in most other states, and New York's economy is less reliant on this sector than is the nation. The C-16 principal manufacturing industries in recent years produced printing and publishing materials, instruments and related products, machinery, apparel and finished fabric products, electronic and other electric equipment, food and related products, chemicals and allied products, and fabricated metal products. Trade: Wholesale and retail trade is the second largest sector in terms of nonagricultural jobs in New York but is considerably smaller when measured by income share. Trade consists of wholesale businesses and retail businesses, such as department stores and eating and drinking establishments. Finance, Insurance and Real Estate: New York City is the nation's leading center of banking and finance and, as a result, this is a far more important sector in the State than in the nation as a whole. Although this sector accounts for under one-tenth of all nonagricultural jobs in the State, it contributes over one-sixth of all non-farm labor and proprietors' income. Agriculture: Farming is an important part of the economy of large regions of the State, although it constitutes a very minor part of total State output. Principal agricultural products of the State include milk and dairy products, greenhouse and nursery products, apples and other fruits, and fresh vegetables. New York ranks among the nation's leaders in the production of these commodities. Government: Federal, State and local government together are the third largest sector in terms of nonagricultural jobs, with the bulk of the employment accounted for by local governments. Public education is the source of nearly one-half of total state and local government employment. Relative to the nation, the State has a smaller share of manufacturing and construction and a larger share of service-related industries. The State's finance, insurance, and real estate share, as measured by income, is particularly large relative to the nation. The State is likely to be less affected than the nation as a whole during an economic recession that is concentrated in manufacturing and construction, but likely to be more affected during a recession that is concentrated in the service-producing sector. In the calendar years 1987 through 1996, the State's rate of economic growth was somewhat slower than that of the nation. In particular, during the 1990-91 recession and post-recession period, the economy of the State, and that of the rest of the Northeast, was more heavily damaged than that of the nation as a whole and has been slower to recover. The total employment growth rate in the State has been below the national average since 1987. The unemployment rate in the State dipped below the national rate in the second half of 1981 and remained lower until 1991; since then, it has been higher. According to data published by the US Bureau of Economic Analysis, personal income in the State has risen more slowly since 1988 than personal income for the nation as a whole, although preliminary data suggests that, in 1998, the State personal income rose more rapidly. Total State nonagricultural employment has declined as a share of national nonagricultural employment. State per capita personal income has historically been significantly higher than the national average, although the ratio has varied substantially. Because the City is a regional employment center for a multi-state region, State personal income measured on a residence basis understates the relative importance of the State to the national economy and the size of the base to which State taxation applies. Relevant News. On August 22, 1996, the President signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the "1996 Welfare Act"). This new law made significant changes to welfare and other benefit programs. Major changes included conversion of AFDC into the TANF block grant to states, new work requirements and durational limits on recipients of TANF and limits on assistance provided to immigrants. City expenditures as a result of welfare reform are estimated in the Financial Plan at $49 million in fiscal year 1998, $45 million in fiscal year 1999, $38 million in fiscal year 2000 and $44 million in fiscal year 2001. In addition, the City's naturalization initiative, CITIZENSHIP NYC, will assist immigrants made ineligible under Federal law to regain eligibility for benefits, by helping them through the application process for citizenship. The Financial Plan assumes that 75% of those immigrants who otherwise would have C-17 lost benefits will become citizens, resulting in projected savings to the City in public assistance expenditures of $6 million in fiscal year 1999, $24 million in fiscal year 2000 and $25 million in fiscal year 2001. Federal legislation enacted August 5, 1997, reinstated eligibility for even more immigrants currently on the rolls than projected. The outyear estimates made by OMB are preliminary and depend on a variety of factors, which are impossible to predict, including the implementation of workfare and child care programs modified by newly enacted State law, the impact of possible litigation challenging the law, and the impact of adverse economic developments on welfare and other benefit programs. In accordance with the Federal welfare reform law, the Governor submitted a State plan to the Federal government and such plan was deemed complete as of December 2, 1996. New York State's welfare reform, bringing the State into compliance with the 1996 Welfare Act and making changes to the Home Relief program, was signed into law on August 20, 1997. The Governor submitted an amended State plan to the Federal government, reflecting these changes, on September 20, 1997. Implementation of the changes at the State level will in part determine the possible costs or savings to the City. it is expected that OMB's preliminary estimates of potential costs will change, based on new policies to be developed by the State and City with respect to benefits no longer funded as Federal entitlements. On September 11, 1997, the State Comptroller released a report entitled "The 1997-98 Budget: Fiscal Review and Analysis" in which he identified several risks to the State Financial Plan and estimated that the State faces a potential imbalance in receipts and disbursements of approximately $1.5 billion for the State's 1998-99 fiscal year and approximately $3.4 billion for the State's 1999-2000 fiscal year. The 1998-99 fiscal year estimate by the State Comptroller is within the range discussed by the Division of the Budget in the section entitled "Outyear Projections of Receipts and Disbursements" in the Annual Information Statement of August 15, 1997. Any increase in the 1997-98 reserve for future needs would reduce this imbalance further and, based upon results to date, such an outcome is considered possible. In addition, the Comptroller identified risks in future years from an economic slowdown and from spending and revenue actions enacted as a part of the 1997-98 budget that will add pressure to future budget balance. The Governor is required to submit a balanced budget each year to the State Legislature. On August 11, 1997 President Clinton exercised his line item veto powers to cancel a provision in the Federal Balanced Budget Act of 1997 that would have deemed New York State's health care provider taxes to be approved by the federal government. New York and several other states have used hospital rate assessments and other provider tax mechanisms to finance various Medicaid and health insurance programs since the early 1980s. The State's process of taxation and redistribution of health care dollars was sanctioned by federal legislation in 1987 and 1991. However, the federal Health Care Financing Administration (HCFA) regulations governing the use of provider taxes require the State to seek waivers from HCFA that would grant explicit approval of the provider taxing system now in place. The State filed the majority of these waivers with HCFA in 1995 but has yet to receive final approval. The Balanced Budget Act of 1997 provision passed by Congress was intended to rectify the uncertainty created by continued inaction on the State's waiver requests. A federal disallowance of the State's provider tax system could jeopardize up to $2.6 billion in Medicaid reimbursement received through December 31, 1998. The President's veto message valued any potential disallowance at $200 million. The 1997-98 Financial Plan does not anticipate any provider tax disallowance. On October 9, 1997 the President offered a corrective amendment to the HCFA regulations governing such taxes. The Governor has stated that this proposal does not appear to address all of the State's concerns, and negotiations are ongoing between the State and HCFA. In addition, the City of New York and other affected parties in the health care industry have filed a lawsuit challenging the constitutionality of the President's line item veto. On July 31, 1997, the New York State Tax Appeals Tribunal delivered a decision involving the computation of itemized deductions and personal income taxes of certain high income taxpayers. By law, the State cannot appeal the Tribunal's decision. The decision will lower income tax liability attributable to such taxpayers for the 1997 and earlier open tax years, as well as on a prospective basis. C-18 Ratings Agencies. As of December 16, Moody's Investors Service, Inc. ("Moody's") confirmed its New York State general obligation bond rating of single-A2, and Fitch IBCA ("Fitch") had assigned it an A-plus. On November 9, 1999 Standard & Poor's ("S&P") raised its rating on the New York General Obligation Bonds from A to A-plus commenting that the outlook looked stable. On October 6, 1998, Moody's confirmed its New York State general obligation bond rating of single-A2. On April 20, 1998, New York's general obligation bond ratings were the lowest of any state, except Louisiana. Moody's had rated New York State at A2, S&P had given it an A and Fitch had assigned it an A-plus. On August 28, 1997, S&P revised its ratings on the State's general obligation bonds to A from A-, and, in addition, revised its ratings on the State's moral obligation, lease purchase, guaranteed and contractual obligation debt. S&P rated the State's general obligation bonds AA- from August 1987 to March 1990 and A+ from November 1982 to August 1987. In March 1990, S&P lowered its rating of all of the State's general obligation bonds from AA- to A. On January 13, 1992, S&P lowered its rating on the State's general obligation bonds from A to A-, and, in addition, reduced its ratings on the State's moral obligation, lease purchase, guaranteed and contractual obligation debt. On April 26, 1993 S&P revised the rating outlook assessment to stable. On February 14, 1994, S&P revised its outlook on the State's general obligation bonds to positive and, on August 5, 1996, confirmed its A- rating. On February 10, 1997, Moody's confirmed its A2 rating on the State's general obligation long-term indebtedness. On June 6, 1990, Moody's changed its ratings on all of the State's outstanding general obligation bonds from A1 to A, the rating having been A1 since May 27, 1986. On November 12, 1990, Moody's confirmed the A rating. On January 6, 1992, Moody's reduced its ratings on outstanding limited-liability State lease purchase and contractual obligations from A to Baa1. Authorities. The fiscal stability of the State is related in part to the fiscal stability of its public authorities, which generally have responsibility for financing, constructing and operating revenue-producing public benefit facilities. Public authorities are not subject to the constitutional restrictions on the incurrence of debt which apply to the State itself, and may issue bonds and notes within the amounts of, and as otherwise restricted by, their legislative authorization. The State's access to the public credit markets could be impaired, and the market price of its outstanding debt may be materially adversely affected, if any of its public authorities were to default on their respective obligations. As of September 31, 1998 there were 17 public authorities that had outstanding debt of $100 million or more each, and the aggregate outstanding debt, including refunding bonds, of all state public authorities was $94 billion. There are numerous public authorities, with various responsibilities, including those which finance, construct and/or operate revenue producing public facilities. Public authority operating expenses and debt service costs are generally paid by revenues generated by the projects financed or operated, such as tolls charged for the use of highways, bridges or tunnels, rentals charged for housing units and charges for occupancy at medical care facilities. In addition, State legislation authorizes several financing techniques for public authorities. Also, there are statutory arrangements providing for State local assistance payments otherwise payable to localities to be made under certain circumstances to public authorities. Although the State has no obligation to provide additional assistance to localities whose local assistance payments have been paid to public authorities under these arrangements, if local assistance payments are so diverted, the affected localities could seek additional State assistance. Some authorities also receive monies from State appropriations to pay for the operating costs of certain of their programs. As described below, the MTA receives the bulk of this money in order to carry out mass transit and commuter services. Beginning in 1998, the Long Island Power Authority (LIPA) assumed responsibility for the provision of electric utility services previously provided by Long Island Lighting Company for Nassau, Suffolk and a C-19 portion of Queen Counties, as part of an estimated $7 billion financing plan. As of the date of this AIS, LIPA has issued over $5 billion in bonds secured sorely by ratepayer charges. LIPA's debt is not considered either State-supported or State-related debt. The State's experience has been that if an Authority suffers serious financial difficulties, both the ability of the State and the Authorities to obtain financing in the public credit markets and the market price of the State's outstanding bonds and notes may be adversely affected. The New York State HFA, the New York State Urban Development Corporation and certain other Authorities have in the past required and continue to require substantial amounts of assistance from the State to meet debt service costs or to pay operating expenses. Further assistance, possibly in increasing amounts, may be required for these, or other, Authorities in the future. In addition, certain other statutory arrangements provide for State local assistance payments otherwise payable to localities to be made under certain circumstances to certain Authorities. The State has no obligation to provide additional assistance to localities whose local assistance payments have been paid to Authorities under these arrangements. However, in the event that such local assistance payments are so diverted, the affected localities could seek additional State funds. Metropolitan Transportation Authority. The MTA oversees the operation of the City's subway and bus lines by its affiliates, the New York City Transit Authority and the Manhattan and Bronx Surface Transit Operating Authority (collectively, the "TA"). The MTA operates certain commuter rail and bus lines in the New York Metropolitan area through MTA's subsidiaries, the Long Island Rail Road Company, the Metro-North Commuter Railroad Company and the Metropolitan Suburban Bus Authority. In addition, the Staten Island Rapid Transit Operating Authority, an MTA subsidiary, operates a rapid transit line on Staten Island. Through its affiliated agency, the Triborough Bridge and Tunnel Authority (the "TBTA"), the MTA operates certain intrastate toll bridges and tunnels. Because fare revenues are not sufficient to finance the mass transit portion of these operations, the MTA has depended, and will continue to depend for operating support upon a system of State, local government and TBTA support, and, to the extent available, Federal operating assistance, including loans, grants and operating subsidies. If current revenue projections are not realized and/or operating expenses exceed current projections, the TA or commuter railroads may be required to seek additional State assistance, raise fares or take other actions. Since 1980, the State has enacted several taxes--including a surcharge on the profits of banks, insurance corporations and general business corporations doing business in the 12-county Metropolitan Transportation Region served by the MTA and a special one-quarter of 1 percent regional sales and use tax-- that provide revenues for mass transit purposes, including assistance to the MTA. In addition, since 1987, State law has required that the proceeds of a one quarter of 1% mortgage recording tax paid on certain mortgages in the Metropolitan Transportation Region be deposited in a special MTA fund for operating or capital expenses. Further, in 1993 the State dedicated a portion of the State petroleum business tax to fund operating or capital assistance to the MTA. The 1999-2000 enacted budget provides State assistance to the MTA totaling approximately $1.4 billion, an increase of $55 million over the 1998-99 fiscal year. State legislation accompanying the 1996-97 adopted State budget authorized the MTA, TBTA and TA to issue an aggregate of $6.5 billion in bonds to finance a portion of a new $12.17 billion MTA capital plan for the 1995 through 1999 calendar years (the "1995-99 Capital Program"). In July 1997, the Capital Program Review Board approved the 1995-99 Capital Program and subsequently amended it in August 1997 and in March 1999. The MTA plan now totals $12.55 billion. This plan supersedes the overlapping portion of the MTA's 1992-96 Capital Program. This is the fourth capital plan since the Legislature authorized procedures for the adoption, approval and amendment of MTA capital programs and is designed to upgrade the performance of the MTA's transportation systems by investing in new rolling stock, maintaining replacement schedules for existing assets and bringing the MTA system into a state of good repair. The currently approved 1995-99 Capital Program assumes the issuance of an estimated $5.2 billion in bonds under this $6.5 billion aggregate bonding authority. The remainder of the plan is projected to be financed with assistance from the federal government, the State, the City of New York, and from various other revenues generated from actions taken by the MTA. C-20 The MTA is expected to submit a proposed capital plan for 2000 through 2004 by October 1, 1999 for consideration by the CPRB. There can be no assurance that the proposed capital plan will be approved by the CPRB without significant modifications, that the plan as adopted will be adequate to finance the MTA's capital needs over the plan period, or that funding sources identified in the approved plan will not be reduced or eliminated. There can be no assurance that all the necessary governmental actions for future capital programs will be taken, that funding sources currently identified will not be decreased or eliminated, or that the 1995-99 and 2000-04 Capital Programs or parts thereof, will not be delayed or reduced. Should funding levels fall below current projections, the MTA would have to revise its 1995-99 and 2000-04 Capital Programs accordingly. If the 1995-99 and 2000-04 Capital Programs are delayed or reduced, ridership and fare revenues may decline, which could, among other things, impair the MTA's ability to meet its operating expenses without additional assistance. Localities. Certain localities outside the City have experienced financial problems and have requested and received additional State assistance during the last several State fiscal years. The potential impact on the State of any future requests by localities for additional assistance is not included in the projections of the State's receipts and disbursements for the State's 1999-2000 fiscal year. The State has provided extraordinary financial assistance to select municipalities, primarily cities, since the 1996-97 fiscal year. Funding has essentially been continued or increased in each subsequent fiscal year. Such funding in 1999-2000 totals $113.9 million. In 1997-98, the State increased General Purpose State Aid for local governments by $27 million to $550 million, and has continued funding at this new level since that date. While the distribution of General Purpose State Aid for local governments was originally based on a statutory formula, in recent years both the total amount appropriated and the shares appropriated to specific localities have been determined by the Legislature. A State commission established to study the distribution and amounts of general purpose local government aid failed to agree on any recommendations for a new formula. Municipal Indebtedness. Counties, cities, towns, villages and school districts have engaged in substantial short-term and long-term borrowings. In 1997, the total indebtedness of all localities in the State, other than New York City, was approximately $21.0 billion. A small portion (approximately $80 million) of that indebtedness represented borrowing to finance budgetary deficits and was issued pursuant to enabling State legislation. For further information on the debt of New York localities, see tables 33 and 34 below. State law requires the Comptroller to review and make recommendations concerning the budgets of those local government units (other than New York City) authorized by State law to issue debt to finance deficits during the period that such deficit financing is outstanding. Twenty-two localities had outstanding indebtedness for deficit financing at the close of their fiscal year ending in 1997. Like the State, local governments must respond to changing political, economic and financial influences over which they have little or no control. Such changes may adversely affect the financial condition of certain local governments. For example, the federal government may reduce (or in some cases eliminate) federal funding of some local programs which, in turn, may require local governments to fund these expenditures from their own resources. It is also possible that the State, New York City, or any of their respective public authorities may suffer serious financial difficulties that could jeopardize local access to the public credit markets, which may adversely affect the marketability of notes end bonds issued by localities within the State. Localities may also face unanticipated problems resulting from certain pending litigation, judicial decisions and long-range economic trends. Other large-scale potential problems, such as declining urban populations, increasing expenditures, and the loss of skilled manufacturing jobs, may also adversely affect localities and necessitate State assistance. Litigation. Certain litigation pending against the State or its officers or employees could have a substantial or long-term adverse effect on State finances. Among the more significant of these cases are those C-21 that involve: (i) employee welfare benefit plans where plaintiffs are seeking a declaratory judgment nullifying on the ground of federal preemption provisions of Section 2807-c of the Public Health Law and implementing regulations which impose a bad debt and charity care allowance on all hospital bills and a 13 percent surcharge on inpatient bills paid by employee welfare benefit plans; (ii) several challenges to provisions of Chapter 81 of the Laws of 1995 which alter the nursing home Medicaid reimbursement methodology; (iii) the validity of agreements and treaties by which various Indian tribes transferred title to the State of certain land in central and upstate New York; (iv) challenges to the practice of using patients' Social Security benefits for the costs of care of patients of State Office of Mental Health facilities; (v) an action against State and City officials alleging that the present level of shelter allowance for public assistance recipients is inadequate under statutory standards to maintain proper housing; (vi) alleged responsibility of State officials to assist in remedying racial segregation in the City of Yonkers; (vii) alleged responsibility of the State Department of Environmental Conservation for a plaintiff's inability to complete construction of a cogeneration facility in a timely fashion and the damages suffered thereby; (viii) challenges to the promulgation of the State's proposed procedure to determine the eligibility for and nature of home care services for Medicaid recipients; (ix) a challenge to the constitutionality of petroleum business tax assessments authorized by Tax Law SS 301; (x) an action for reimbursement from the State for certain costs arising out of the provision of preschool services and programs for children with handicapping conditions, pursuant to Sections 4410 (10) and (11) of the Education Law; (xi) a challenge to the constitutionality of the Clean Water/Clean Air Bond Act of 1996 and its implementing regulations; (xii) two challenges to regulations promulgated by the Superintendent of Insurance that established excess medical malpractice premium rates for the 1986-87 through 1996-97 fiscal years; and (xiii) an action to compel the State to enforce sales and excise taxes imposed on tobacco products and motor fuel sold to non-Indian customers on Indian reservations. The General Purpose Financial Statements for the 1998-99 fiscal year report estimated probable awarded and anticipated unfavorable judgments of$895 million, of which $132 million is expected to be paid during the 1999-2000 fiscal year (for more information on the State's estimated liability, see footnote 14 in the General Purpose Financial Statements for the 1998-99 fiscal year). Adverse developments in the proceedings described below, other proceedings for which there are unanticipated, unfavorable and material judgments, or the initiation of new proceedings could affect the ability of the State to maintain a balanced 1999-2000 Financial Plan. The State believes that the 1999-2000 Financial Plan includes sufficient reserves to offset the costs associated with the payment of judgments that may be required during the 1999-2000 fiscal year. These reserves include (but are not limited to) amounts appropriated for court of claims payments and projected fund balances in the General Fund (for a discussion of the State's projected fund balances for the 1999-2000 fiscal year, see the section entitled "Current Fiscal Year"). In addition, any amounts ultimately required to be paid by the State may be subject to settlement or may be paid over a multi-year period. There can be no assurance, however, that adverse decisions in legal proceedings against the State would not exceed the amount of all potential 1999-2000 Financial Plan resources available for the payment of judgments, and could therefore affect the ability of the State to maintain a balanced 1999-2000 Financial Plan. New York City The fiscal health of the State may also be particularly affected by the fiscal health of the City, which continues to require significant financial assistance from the State. Although the City has maintained balanced budgets in each of its last seventeen fiscal years and is projected to achieve balanced operating results for the 1999-2000 fiscal year, there can be no assurance that the gap closing actions proposed in the Financial Plan can be successfully implemented or that the City will maintain a balanced budget in future years without additional state aid, revenue increases or expenditure reductions. Additional tax increases and reductions in essential City services could also adversely affect the City's economic base. The City depends on State aid both to enable the City to balance its budget and to meet its cash requirements. There can be no assurance that there will not be reductions in State aid to the City from amounts currently projected; that State C-22 budgets will be adopted by the April 1st Statutory deadline or interim appropriations enacted; or that any such reductions or delays will not have adverse effects on the City's cash flow or revenues. The State could also be affected by the ability of the City to market its securities successfully in the public credit markets. The City has achieved balanced operating results for each of its fiscal years since 1981 as reported in accordance with the then-applicable GAAP standards. Current law requires the City to prepare four-year annual financial plans, which are reviewed and revised on a quarterly basis and includes capital, revenue, and expense projections and outlines proposed gap-closing for the years with projected budget gaps. An annual financial report for its most recent completed fiscal year is prepared at the end of October of each year. The City's current Financial Plan projects a surplus in the 1999 and 2000 fiscal years, before discretionary transfers and budget gaps for each of the 2001, 2002 and 2003 fiscal years. In response to the City's fiscal crisis in 1975, the State took action to assist the City in returning to fiscal stability. Among these actions, the State established the Municipal Assistance Corporation for the City of New York ("MAC") to provide financing assistance to the City. The State also enacted the New York State Financial Emergency Act for The City of New York (the "Financial Emergency Act") which, among other things, established the New York State Financial Control Board (the "Control Board") to oversee the City's financial affairs. The State also established the Office of the State Deputy Comptroller for the City of New York ("OSDC") to assist the Control Board in exercising its powers and responsibilities and a "Control Period" from 1975 to 1986 during which the City was subject to certain statutorily-prescribed fiscal-monitoring arrangements. Although the Control Board terminated the Control Period in 1986 when certain statutory conditions were met, thus suspending certain Control Board powers, the Control Board, MAC and OSDC continue to exercise various fiscal-monitoring functions over the City, and upon the occurrence or "substantial likelihood and imminence" of the occurrence of certain events, including, but not limited to a City operating budget deficit of more than $100 million, the Control Board is required by law to reimpose a Control Period. Currently, the City and its "Covered Organizations" (i.e., those which receive or may receive money from the City directly, indirectly or contingently) operate under a four-year financial plan (the "City Financial Plan"), which the City prepares annually and updates periodically and which includes the City's capital revenue and expense projections and outlines proposed gap-closing programs for years with projected budget gaps. The City's projections set forth in the City Financial Plan are based on various assumptions and contingencies, some of which are uncertain and may not materialize. Unforeseen developments and changes in major assumptions could significantly affect the City's ability to balance its budget as required by State law and to meet its annual cash flow and financing requirements. To successfully implement its Financial Plan, the City and certain entities issuing debt for the benefit of the City must market their securities successfully. The City issues securities to finance, refinance and rehabilitate infrastructure and other capital needs, as well as for seasonal financing needs. In City fiscal year 1997-98, the State constitutional debt limit would have prevented the City from entering into new capital contracts. Therefore, in 1997, the State created the New York City Transitional Finance Authority (TFA) in order to finance a portion of the City's capital program. Despite this additional financing mechanism, the City currently projects that, if no further action is taken, it will reach its debt limit in City's current fiscal year 1999-2000. To continue its capital plan without interruption, the City is proposing an amendment to the State Constitution to change the methodology used to calculate the debt limit. Since an amendment to the Constitution to raise the debt limit could not take effect until City fiscal year 2001 -02 at the earliest, the City has decided to securitize a portion of its share of the proceeds from the settlement with the nation's tobacco companies. However, a number of potential developments may affect both the availability and level of funding that the City will receive from the tobacco settlement. City officials have indicated that, should their efforts to securitize a portion of City tobacco settlement proceeds fail or not be accomplished in a timely manner, the City will request that the State increase the borrowing authority of the TFA. Although the City has balanced its budget since 1981, estimates of the City's revenues and expenditures, which are based on numerous assumptions, are subject to various uncertainties. If, for example, expected federal or State aid is not forthcoming, if unforeseen developments in the economy significantly C-23 reduce revenues derived from economically sensitive taxes or necessitate increased expenditures for public assistance, if the City should negotiate wage increases for its employees greater than the amounts provided for in the City's financial plan or if other uncertainties materialize that reduce expected revenues or increase projected expenditures, then, to avoid operating deficits, the City may be required to implement additional actions, including increases in taxes and reductions in essential City services. The City might also seek additional assistance from the State. Unforeseen developments and changes in major assumptions could significantly affect the City's ability to balance its budget as required by State law and to meet its annual cash flow and financing requirements. The staffs of the Control Board, OSDC and the City Comptroller issue periodic reports on the City's Financial Plans. The reports analyze the City's forecasts of revenues and expenditures, cash flow, and debt service requirements, as well as evaluate compliance by the City and its Covered Organizations with its Financial Plan. According to recent staff reports, while economic growth in New York City has been slower than in other regions of the country, a surge in Wall Street profitability resulted in increased tax revenues and produced a substantial surplus for the City in City fiscal year 1997-98. Recent staff reports also indicate that the City projects a surplus for City fiscal year 1998-99. Although several sectors of the City's economy have expanded over the last several years, especially tourism and business and professional services, City tax revenues remain heavily dependent on the continued profitability of the securities industries and the performance of the national economy. In addition, the size of recent tax reductions has increased to over $2 billion in City fiscal year 1999-2000 through the expiration of a personal income tax surcharge, the repeal of the non-resident earnings tax and the elimination of the sales tax on clothing items costing less than $110. Staff reports have indicated that recent City budgets have been balanced in part through the use of non-recurring resources and that the City's Financial Plan relies in part on actions outside its direct control. These reports have also indicated that the City has not yet brought its long-term expenditure growth in line with recurring revenue growth and that the City is likely to continue to face substantial gaps between forecast revenues and expenditures in future years that must be closed with reduced expenditures and/or increased revenues. In addition to these monitoring agencies, the Independent Budget Office (IBO) has been established pursuant to the City Charter to provide analysis to elected officials and the public on relevant fiscal and budgetary issues affecting the City. For the 1999 fiscal year, the City had an operating surplus, before discretionary and other transfers, and achieved balanced operating results, after discretionary and other transfers, in accordance with GAAP. The 1999 fiscal year is the nineteenth year that the City has achieved an operating surplus, before discretionary and other transfers, and balanced operating results, after discretionary and other transfers. On June 14, 1999, the City released the Financial Plan for the 2000 through 2003 fiscal years, which relates to the City and certain entities which receive funds from the City. The Financial Plan reflects changes as a result of the City's expense and capital budgets for fiscal year 2000, which were adopted on June 7, 1999. The Financial Plan projects revenues and expenditures for the 2000 fiscal year balanced in accordance with GAAP and projects gaps of $1.8 billion, $1.9 billion and $1.8 billion for fiscal years 2001 through 2003, respectively. Changes since adoption of the City's Expense Budget for the 1999 fiscal year in June 1998, prior to the June 1998 Financial Plan, include: (i) an increase in projected tax revenues of $762 million, $558 million, $417 million and $1.4 billion in fiscal years 2000 through 2003, respectively; (ii) $300 million, $250 million, $300 million and $300 million of projected resources in fiscal years 2000 through 2003, respectively, from the receipt by the City of funds from the settlement of litigation with the leading cigarette companies; (iii) a reduction in the assumed collection of $350 million of projected rent payments for the City's airports to $210 million and a delay in the receipt of such payments from fiscal year 2000 to fiscal year 2001; (iv) anticipated proceeds from the proposed sale of the Coliseum in fiscal year 2001 totaling $345 million; and (v) net increases in spending of $817 million, $739 million, $713 million and $1.05 billion in fiscal years 2000 through 2003, including spending for Medicaid, education initiatives, anti-smoking programs, employee fringe benefit costs, and other agency programs. The Financial Plan includes a discretionary transfer in the 1999 fiscal year of C-24 $2.6 billion primarily to pay debt service due in fiscal year 2000, for budget stabilization purposes, a proposed discretionary transfer in fiscal year 2000 to pay debt service due in fiscal year 2001 totaling $429 million, and a proposed discretionary transfer in fiscal year 2001 to pay debt service due in fiscal year 2002 totaling $345 million. In addition, the Financial Plan sets forth gap-closing actions to eliminate a previously projected gap for the 2000 fiscal year and to reduce projected gaps for fiscal years 2001 through 2003. The gap-closing actions for the 2000 through 2003 fiscal years include: (i) additional agency actions totaling $502 million, $371 million, $293 million and $283 million for fiscal years 2000 through 2003, respectively; (ii) additional Federal aid of $75 million in each of fiscal years 2000 through 2003, which include the proposed restoration of $25 million of Federal revenue sharing and $50 million of increased Federal Medicaid aid; and (iii) additional State actions totaling approximately $125 million in each of fiscal years 2000 through 2003. The Financial Plan also reflects a tax reduction program, which includes the elimination of the City's non-residents earning tax, the extension of current tax reductions for owners of cooperative and condominium apartments and a proposed income tax credit for low income wage earners. The Financial Plan provides no additional wage increases for City employees after their contracts expire in fiscal years 2000 and 2001. In addition, the economic and financial condition of the City may be affected by various financial, social, economic and political factors which could have a material effect on the City. The City annually prepares a modification to its financial plan in October or November which amends the financial plan to accommodate any revisions to forecast revenues, expenditures and intergovernmental aid and to specify any additional gap-closing initiatives to the extent required to offset decreases in projected revenues or increases in projected expenditures. The Mayor is expected to publish the first quarter modification for the 2000 fiscal year in November. Assumptions. The Financial Plan assumes (i) approval by the Governor and the State Legislature of the extension of the 14% personal income tax surcharge, which is scheduled to expire on December 31, 1999 and the extension of which is projected to provide revenue of $168 million, $507 million, and $530 million in the 2000, 2001, and 2002 fiscal years, respectively, and of the extension of the 12.5% personal income tax surcharge, which is scheduled to expire on December 31, 1998 the extension of which is projected to provide revenue of $187 million, $531 million and $554 million, and $579 million in the 1999 through 2002 fiscal years, respectively; (ii) collection of the projected rent payments for the City's airports, totaling $365 million, $175 million, $170 million, and $70 million in the 1999 through 2002 fiscal years, respectively, which may depend on the successful completion of negotiations with the Port Authority or the enforcement of the City's rights under the existing leases through pending legal actions; and (iii) State approval of the repeal of the Wicks law relating to contracting requirements for City construction projects and the additional State funding assumed in the Financial Plan, and State and Federal approval of the State and Federal gap-closing actions proposed by the City in the Financial Plan. It is expected that the Financial Plan will engender public debate which will continue through the time the budget is scheduled to be adopted in June 1998, and that there will be alternative proposals to reduce taxes (including the 12.5% personal income tax surcharge) and increase in spending. Accordingly, the Financial Plan may be changed by the time the budget for the 1999 fiscal year is adopted. Moreover, the Financial Plan provides no additional wage increases for City employees after their contracts expire in fiscal years 2000 and 2001. In addition, the economic and financial condition of the City may be affected by various financial, social, economic and political factors which could have a material effect on the City. The 2000-2003 Financial Plan is based on numerous assumptions, including the condition of the City's and the region's economies and modest employment growth and the concomitant receipt of economically sensitive tax revenues in the amounts projected. The 2000-2003 Financial Plan is subject to various other uncertainties and contingencies relating to, among other factors, the extent, if any, to which wage increases for City employees exceed the annual wage costs assumed for the 2000 through 2003 fiscal years; C-25 continuation of projected interest earnings assumptions for pension fund assets and current assumptions with respect to wages for City employees affecting the City's required pension fund contributions; the willingness and ability of the State to provide the aid contemplated by the Financial Plan and to take various other actions to assist the City; the ability of HHC, the BOE and other such agencies to maintain balanced budgets; the willingness of the Federal government to provide the amount of Federal aid contemplated in the Financial Plan; the impact on City revenues and expenditures of Federal and State welfare reform and any future legislation affecting Medicare or other entitlement programs; adoption of the City's budgets by the City Council in substantially the forms submitted by the Mayor; the ability of the City to implement cost reduction initiatives, and the success with which the City controls expenditures; the impact of conditions in the real estate market on real estate tax revenues; the City's ability to market its securities successfully in the public credit markets; and unanticipated expenditures that may be incurred as a result of the need to maintain the City's infrastructure. City Employees. Substantially all of the City's full-time employees are members of labor unions. The Financial Emergency Act requires that all collective bargaining agreements entered into by the City and the Covered Organizations be consistent with the City's current financial plan, except for certain awards arrived at through impasse procedures. During a Control Period, and subject to the foregoing exception, the Control Board would be required to disapprove collective bargaining agreements that are inconsistent with the City's current financial plan. Under applicable law, the City may not make unilateral changes in wages, hours or working conditions under any of the following circumstances: (i) during the period of negotiations between the City and a union representing municipal employees concerning a collective bargaining agreement; (ii) if an impasse panel is appointed, then during the period commencing on the date on which such panel is appointed and ending sixty days thereafter or thirty days after it submits its report, whichever is sooner, subject to extension under certain circumstances to permit completion of panel proceedings; or (iii) during the pendency of an appeal to the Board of Collective Bargaining. Although State law prohibits strikes by municipal employees, strikes and work stoppages by employees of the City and the Covered Organizations have occurred. The 2000-2003 Financial Plan projects that the authorized number of City-funded employees whose salaries are paid directly from City funds, as opposed to Federal or State funds or water and sewer funds, will increase from an estimated level of 211,050 on June 30, 1999 to an estimated level of 212,401 by June 30, 2003, before implementation of the gap-closing programs included in the Financial Plan. Contracts with all of the City's municipal unions expired in the 1995 and 1996 fiscal years. The Financial Plan reflects the costs of the settlements and arbitration awards with the United Federation of Teachers ("UFT"), a coalition of unions headed by District Council 37 of the American Federation of State, County and Municipal Employees ("District Council 37") and other bargaining units, which together represent approximately 98% of the City's workforce, and assumes that the City will reach agreement with its remaining municipal unions under terms which are generally consistent with such settlements and arbitration awards. These contracts are approximately five years in length and have a total cumulative net increase of 13%. Assuming the City reaches similar settlements with its remaining municipal unions, the cost of all settlements for all City-funded employees would exceed $2 billion annually, during fiscal years 2000 through 2003. The Financial Plan provides no additional wage increases for City employees after their contracts expire in fiscal years 2000 and 2001. The terms of wage settlements could be determined through the impasse procedure in the New York City Collective Bargaining Law, which can impose a binding settlement. The City's pension expenditures in fiscal year 1999 were $1.43 billion. In each of fiscal years 2000 through 2003, these expenditures are expected to approximate $1.29 billion, $1.23 billion, $.95 billion and $.76 billion, respectively. Certain of the systems provide pension benefits of 50% to 55% of "final pay" after 20 to 25 years of service with additional benefits for subsequent years of service. For the 1998 fiscal year, the City's total annual pension costs, including the City's pension costs not associated with the five major actuarial systems, plus Federal Social Security tax payments by the City for the year, were approximately C-26 18.93% of total payroll costs. In addition, contributions are also made by certain component units of the City and other government units directly to the three cost sharing multiple employer actuarial systems. The State Constitution provides that pension rights of public employees are contractual and shall not be diminished or impaired. For the 1998 fiscal year, the City's total annual pension costs, including the City's pension costs not associated with the five major actuarial systems, plus Federal Social Security tax payments by the City for the year, were approximately 18.93% of total payroll costs. In addition, contributions are also made by certain component units of the City and government units directly to the three cost sharing multiple employer actuarial systems. The State Constitution provides that pension rights of public employees are contractual and shall not be diminished or impaired. Reports on the City Financial Plan. From time to time, the Control Board staff, OSDC, the City Comptroller, the IBO and others issue reports and make public statements regarding the City's financial condition, commenting on, among other matters, the City's financial plans, projected revenues and expenditures and actions by the City to eliminate projected operating deficits. Some of these reports and statements have warned that the City may have underestimated certain expenditures and overestimated certain revenues and have suggested that the City may not have adequately provided for future contingencies. Certain of these reports have analyzed the City's future economic and social conditions and have questioned whether the City has the capacity to generate sufficient revenues in the future to meet the costs of its expenditure increases and to provide necessary services. It is reasonable to expect that reports and statements will continue to be issued and to engender public comment. From time to time, the Control Board staff, OSDC, the City Comptroller, the IBO and others issue reports and make public statements regarding the City's financial condition, commenting on, among other matters, the City's financial plans, projected revenues and expenditures and actions by the City to eliminate projected operating deficits. Some of these reports and statements have warned that the City may have underestimated certain expenditures and overestimated certain revenues and have suggested that the City may not have adequately provided for future contingencies. Certain of these reports have analyzed the City's future economic and social conditions and have questioned whether the City has the capacity to generate sufficient revenues in the future to meet the costs of its expenditure increases and to provide necessary services. It is reasonable to expect that reports and statements will continue to be issued and to engender public comment. On July 14, 1999, the City Comptroller issued a report on the adopted budget for fiscal year 2000 and the Financial Plan. Taking into account the risks and additional resources identified in the report, the report projected a surplus for fiscal year 2000 of between $223 million and $891 million, including the $429 million surplus allocated to the Budget Stabilization Account. In addition, taking into account the risks and additional resources identified in the report and the budget gaps projected in the Financial Plan, the report projected budget gaps of between $1.8 billion and $3.5 billion, $1.7 billion and $3.6 billion, and $1.7 billion and $4.1 billion in fiscal years 2001 through 2003, respectively. With respect to fiscal years 2000 through 2003, the report identified baseline risks of between $338 million and $998 million, $654 million and $2.4 billion, $600 million and $2.4 billion and $719 million and $2.9 billion, respectively, depending upon whether (i) the State approves the extension of the 14% personal income tax surcharge; (ii) the City incurs additional labor costs as a result of the expiration of labor contracts starting in fiscal year 2001 which, if settled at the current forecast level of inflation, would result in additional costs totaling $345 million in fiscal year 2001, $713 million in fiscal year 2002 and $1.1 billion in fiscal year 2003; (iii) the State approves the continuation in fiscal years 2000 through 2003 of temporary State Medicaid cost containment; and (iv) the City receives $300 million, $250 million, $300 million and $300 million in fiscal years 2000 through 2003, respectively, from the tobacco settlement. Additional risks identified in the report for fiscal years 2000 through 2003 include assumed payments from the Port Authority relating to the City's claim for back rentals, which are the subject of arbitration; State and Federal gap-closing actions proposed in the Financial Plan; possible increased overtime expenditures; the sale of the New York City Coliseum in fiscal year 2001; the write down of outstanding education aid receivables of approximately $100 million in C-27 each of fiscal years 2002 and 2003; and a possible $149 million shortfall in tax revenues in fiscal year 2003. The report noted that these risks may be offset by additional resources of between $659 million and $873 million in fiscal years 2000 through 2003, due to the potential for higher than forecast tax revenues, lower than forecast payables for prior years, possible debt service savings, additional State education aid, the possible failure to spend funds for the construction of three sports facilities and lower pension costs resulting from excess earnings on pension assets in the 1999 fiscal year. In his report, the City Comptroller also noted that possible changes to the assumptions and methods used to compute actuarial liabilities, including changes in the mortality, disability, investment return and wage assumptions, could increase the City's pension expenditures by up to $600 million annually, and that the Financial Plan has provided reserves of $65 million, $250 million, $300 million and $260 million in fiscal years 2000 through 2003 to absorb some of the anticipated cost increases. The report further noted that the City Comptroller's forecast is contingent on the continued growth of the City economy and that the fear of renewed inflationary pressures has created uncertainty in the bond market which may dampen economic growth in the future. The report also indicated that a possible negotiated settlement of a class action, filed on behalf of approximately 65,000 persons challenging the Department of Corrections policy of strip searching detainees arrested for nonfelony offenses, may expose the City to substantial costs from the settlement of litigation. The report noted that, while settlement negotiations with representatives of the class are being conducted and, therefore, estimates of the potential cost of this litigation cannot be determined, the City has recently settled four cases for $25,000 each. On August 25, 1998, the City Comptroller issued a report reviewing the current condition of the City's major physical assets and the capital expenditures required to bring them to a state of good repair. The report estimated that the expenditure of approximately $91.83 billion would be required over the next decade to bring the City's infrastructure to a systematic state of good repair and address new capital needs already identified, and that the City's current Ten-Year Capital Strategy, together with funding received from other sources, is projected to provide approximately $52.08 billion. This represents the first time the Comptroller has issued such a report since May 1979. The capital need identified in the 1979 report was approximately two times greater than the actual capital expenditures for the period covered by that report. OMB notes that in the 1979 report, the Comptroller identified a capital need over seven times greater than the capital budget then proposed by the Mayor. The Comptroller's current report estimates a capital need of approximately twice the amount of the capital spending proposed by the Mayor. The recent report noted that the City's ability to meet all capital obligations is limited by law, as well as funding capacity, and that the issue for the City is how best to set priorities and manage limited resources. The report stated that its analysis is not limited to assets valued over $10 million. It is noted that the annual City capital asset condition survey as required by section 1110-a of the City Charter reviews items valued at $10 million or more. The report also includes major systems like traffic signal systems, street lighting, the East River bridges and assets leased to the Transit Authority and the Water Board. The report's findings relate only to current infrastructure and do not address future capacity or technology needs. While the report indicates that the demands of the City's infrastructure outstrip the City's ability to pay for them, the report identifies several potential alternative methods for capital financing. On July 15, 1999, the staff of the OSDC issued a report on the Financial Plan. With respect to fiscal year 2000, the report identified a possible gap of $13 million, reflecting revenues which could exceed projections in the Financial Plan by $290 million, a $200 million shortfall in anticipated Federal and State assistance, a possible $70 million increase in overtime costs and the write down of approximately $33 million of outstanding education aid receivables. With respect to fiscal years 2001 through 2003, the report identified net risks of $530 million, $447 million and $266 million which, when added to gaps projected in the Financial Plan, would result in gaps of $2.4 billion, $2.3 billion and $2.1 billion in fiscal years 2001 through 2003, respectively. The risks identified in the report included a $200 million shortfall in anticipated Federal and State assistance in each of fiscal years 2001 through 2003, the potential for increased overtime costs, the write down of outstanding State education aid receivables of approximately $100 million in each of fiscal C-28 years 2002 and 2003, $100 million of unspecified asset sales in fiscal year 2002 and delays in the receipt of Port Authority lease payments assumed in the Financial Plan. However, the report noted that tax revenues could be greater than forecast by the City by $155 million, $210 million and $255 million in fiscal years 2001 through 2003, respectively. The report also identified a number of other issues, including a possible delay in the receipt of the City's share of the proceeds under the settlement with the nation's tobacco companies; the extension of the 14% personal income tax surcharge; the possibility of pension costs being $250 million greater than assumed in the Financial Plan in each of fiscal years 2001 through 2003, as a result of changed actuarial assumptions; and the potential for wage increases which, at the projected inflation rate, would increase gaps by $285 million, $635 million and $1.0 billion in fiscal years 2001 through 2003, respectively. The report also noted the possibility that the Federal Reserve will raise interest rates and slow the economy, which could depress Wall Street profits below the levels projected by the City and have the potential to seriously impact the City's nonproperty tax revenue forecasts. On July 15, 1999, the staff of the Control Bond issued a report reviewing the Financial Plan. The report noted that the City is likely to end fiscal year 2000 in balance. However, the report identified risks of $562 million, $293 million, $640 million and $499 million for fiscal years 2000 through 2003, respectively, which, when combined with the City's projected gaps, results in estimated gaps of $562 million, $2.1 billion, $2.5 billion and $2.3 billion for fiscal years 2000 through 2003, respectively, before making provision for any increased labor costs which may occur when the current contracts with City employees expire in calendar year 2000. The report noted the possibility that non-property taxes in fiscal year 2000 could be $250 million greater than forecast in the Financial Plan. However, the report also identified risks for fiscal years 2000 through 2003, which include (i) the possibility that the City may decide to fund the $63 million annual cost of teachers' salary supplementation for fiscal years 2000 through 2003, which the State failed to fund in the 1999 fiscal year, and an additional risk of approximately $100 million in each of fiscal years 2002 and 2003 for BOB resulting from the write-down of funds owed to BOE by the State which have been outstanding for ten or more years; (ii) the receipt of assumed rental payments from the Port Authority relating to the City's claim for back rents, which are the subject of arbitration; (iii) a possible delay in the receipt of $300 million from the tobacco settlement in fiscal years 2000 and 2001; (iv) $200 million of Federal and State gap-closing actions assumed in the Financial Plan for each of fiscal years 2000 through 2003; and (v) $177 million in fiscal year 2000 from the lapse of State Medicaid cost containment, which has been extended subsequent to the report. In its report, the staff of the Control Board noted that total debt service is expected to increase from 9.2% of total revenues and 15.8% of tax revenues in the 1999 fiscal year to 11.6% of total revenues and 19% of tax revenues in fiscal year 2003, and that the City's capital plant will require additional resources at the same time that a rising debt service burden must be contained. With respect to HHC, the report noted that HHC revenues are expected to fall during the Financial Plan period, primarily due to falling Medicaid receipts, that HHC will face increasing financial pressure when the State implements mandatory Medicaid managed care beginning in fiscal year 2000 and that the eventual size of the projected gaps for HHC in fiscal years 2002 and 2003 may change substantially from current projections, as the revenue impact of proposed State and Federal reforms, growth in managed care and shifting utilization patterns remain largely uncertain. Finally, the report noted that, given the length of the current expansion, there is an increasing probability that a recession related to the end of the long bull market will occur by the end of the Financial Plan period, and it is likely that the next downturn, if and when it occurs, will have a disproportionately great impact on the City because of its dependence on income flows from financial services. Previous Reports. From time to time, the Control Board staff, OSDC, the City Comptroller, the IBO and others issue reports and make public statements regarding the City's financial condition, commenting on, among other matters, the City's financial plans, projected revenues and expenditures and actions by the City to eliminate projected operating deficits. Some of these reports and statements have warned that the City may have underestimated certain expenditures and overestimated certain revenues and have suggested that the City may not have adequately provided for future contingencies. Certain of these reports have analyzed the City's future economic and social conditions and have questioned whether the City has the capacity to generate sufficient revenues in the future to meet the costs of its expenditure increases and to C-29 provide necessary services. It is reasonable to expect that reports and statements will continue to be issued and to engender public comment. On May 24, 1999, the City Comptroller issued a report on the financial plan published on April 22, 1999 (the "April Financial Plan"). With respect to the 1999 fiscal year, the report identified a possible surplus of $94 million, after $2.1 billion of discretionary transfers and subsidy payments assumed in the April Financial Plan, due to the possibility of higher than forecasted tax revenues. Taking into account the risks and additional resources identified in the report, the report projected a surplus for fiscal year 2000 of between $31 million and $211 million, in addition to the $429 million surplus allocated to the Budget Stabilization Account and the $200 million General Reserve in the Executive Budget. In addition, taking into account the risks and additional resources identified in the report and the budget gaps projected in the April Financial Plan, the report projected budget gaps of between $1.8 billion and $3.0 billion, $1.8 billion and $3.1 billion, and $2.0 billion and $3.6 billion in fiscal years 2001 through 2003, respectively. With respect to fiscal years 2000 through 2003, the report identified baseline risks of between $698 million and $873 million, $1.0 billion and $2.2 billion, $978 million and $2.2 billion, and $1.1 billion and $2.7 billion, respectively, depending upon whether the State approves the extension of the 14% personal income tax surcharge and whether the City incurs additional labor costs as a result of the expiration of labor contracts starting in fiscal year 2001 which, if settled at the current forecast level of inflation, would result in additional costs totaling $345 million in fiscal year 2001, $713 million in fiscal year 2002 and $1.1 billion in fiscal year 2003. Additional risks identified in the report for fiscal years 2000 through 2003 include the revenues from the nonresident earnings tax, which the State Legislature has voted to repeal, at a potential cost to the City of between $360 million and $398 million annually starting in fiscal year 2000; assumed payments from the Port Authority relating to the City's claim for back rentals, which are the subject of arbitration; State and Federal gap-closing actions proposed in the April Financial Plan; possible increased overtime expenditures; the sale of the New York City Coliseum in fiscal year 2001; and the write-down of outstanding education aid receivables of approximately $100 million in each of fiscal years 2002 and 2003. The report also noted that these risks may be offset by additional resources of approximately $900 million in each of fiscal years 2000 through 2002 and approximately $800 million in fiscal year 2003, due to the potential for higher than forecast tax revenues, lower than forecast payables for prior years, possible debt service savings, additional tax revenues if the State failed to approve the proposed sales tax reductions assumed in the April Financial Plan, additional State education aid and the possible failure to spend funds for the construction of three sports facilities. The report further noted that expenditure growth continued to exceed revenue growth, and that deficits could increase if the economy deteriorates. In addition, the report noted that HHC faces a number of uncertainties that may have a negative impact on its long-term viability, including proposed State and Federal reductions to both Medicaid and Medicare and a significant decline in patient utilization. The decline in utilization has been primarily reflected in Medicaid revenue which accounts for approximately 50% of HHC's total revenues, and which has been adversely affected by a smaller welfare population, local welfare cost containment initiatives and greater competition for Medicaid funds among area hospitals. The report also indicated that a possible negotiated settlement of a class action, filed on behalf of approximately 63,000 persons challenging the Department of Corrections policy of strip searching detainees arrested for nonfelony offenses, may expose the City to substantial costs from the settlement of litigation. On May 20, 1999, the staff of the OSDC issued a report on the Executive Budget for fiscal year 2000. The report notes that tax revenues are likely to be higher than forecast by the City for fiscal years 1999 and 2000 by a total of $275 million, which may be needed to offset potential budget risks, such as a possible delay in the receipt of the proceeds from the tobacco settlement and shortfalls in Federal and State gap-closing aid assumed in the April Financial Plan. In addition, the report noted that the Governor is expected to approve legislation, despite objections from a number of State and City officials, which could repeal the nonresident income tax, which contributes approximately $360 million annually to the City, and that the City Council is contemplating restoring budget cuts proposed by the Mayor. With respect to the subsequent fiscal years in the April Financial Plan, the report noted that, while the budget gaps have been reduced to about $1.7 billion annually, they make no provision for wage increases after the expiration of current contracts which, at the C-30 projected rate of inflation, would increase costs by more than $1 billion by fiscal year 2003. In addition, the report noted that it is anticipated that an independent actuarial consulting firm reviewing the assumptions and methodologies to compute City pension contributions will issue its report in June 1999 and will recommend changes, such as a reduction in the pension fund investment earnings assumption. These changes, in addition to those that the City Actuary may recommend, could cost in excess of $500 million annually. In addition, the report noted that legislation is under consideration that would increase retirement benefits for certain City employees. The report noted that the City has already included between $195 million and $280 million annually in the April Financial Plan for fiscal years 2001 through 2003 to cover these potential costs, and that pension costs could be reduced by about $550 million in fiscal year 2002 by accelerating the recognition of investment gains over the last three years, rather than phasing them in over a five-year period. However, the report noted that the savings would not be sufficient to prevent budget gaps from widening beginning in fiscal year 2003. Finally, the report noted that the City remains vulnerable to an economic downturn which could result in a significant shortfall in projected nonproperty tax revenues and higher pension fund contributions and public assistance costs. On May 27, 1999, the staff of the Control Board issued a report on the April Financial Plan. The report noted that the City will end the 1999 fiscal year with a substantial surplus and that the budget proposed by the Mayor for fiscal year 2000 also appears to be balanced. However, the report noted that the lack of a State budget leaves uncertainties as to the amount of intergovernmental aid which will be available to the City in fiscal year 2000, and that the proposed elimination by the State of the City's nonresident earnings tax will require the City to make appropriate adjustments to its revenue and expenditure forecasts. The report further noted that large gaps still exist in subsequent fiscal years of the April Financial Plan, even before accounting for known risks such as the impact of future collective bargaining negotiations. Finally, the report noted that the City's business and personal income taxes are particularly susceptible to the vagaries of the financial markets and, if the economy falters, the City will likely experience a decline in revenues and an increase in social service costs which will increase the out-year gaps in the April Financial Plan. On May 14, 1999, the IBO released a report providing its analysis of the April Financial Plan. The report estimated a potential surplus of $356 million in fiscal year 2000 and potential gaps of $2.3 billion, $3.0 billion and $3.1 billion for fiscal years 2001 through 2003, respectively, which reflect, among other things, salary increases for City employees totaling $232 million, $607 million and $1.0 billion in fiscal years 2001 through 2003, respectively, which are not included in the April Financial Plan. Additional re-estimates by the IBO include tax revenue estimates which exceed those set forth in the April Financial Plan by $144 million, $289 million, $356 million, $406 million and $361 million in fiscal years 1999 through 2003, respectively. Uncertainties identified in the report include collection of projected rent payments for the City's airports totaling $330 million, $150 million and $120 million in fiscal years 2001 through 2003, respectively, possible additional overtime expenditures totaling $114 million in each of fiscal years 2000 through 2003 and Federal and State gap-closing actions assumed in the April Financial Plan relating to Medicaid assistance or cost containment, State tort reform legislation and State funding for low income uninsured disabled children. The report noted that, while the strength of the local economy is helping the City solve many of its near term budget problems, persistently large projected out-year gaps remain a major concern for the City, and even a modest slackening of the growth forecast for the next four years could increase projected budget gaps. Seasonal Financing. The City since 1981 has fully satisfied its seasonal financing needs in the public credit markets, repaying all short-term obligations within their fiscal year of issuance. The City anticipates that its seasonal financing needs for its 2000 fiscal year will be satisfied by the issuance of the Notes. The City issued $500 million of short-term obligations in the 1999 fiscal year to finance the City's projected cash flow needs for the 1999 fiscal year. The City issued $1.075 billion of short-term obligations in fiscal year 1998 to finance the City's projected cash flow needs for the 1998 fiscal year. The City issued $2.4 billion of short-term obligations in fiscal year 1997. Seasonal financing requirements for the 1996 fiscal year increased to $2.4 billion from $2.2 billion and $1.75 billion in the 1995 and 1994 fiscal years, respectively. The delay in the adoption of the State's budget in certain past fiscal years has required the City to issue short-term notes in amounts exceeding those expected early in such fiscal years. C-31 Litigation. The City is a defendant in a significant number of lawsuits. Such litigation includes, but is not limited to, actions commenced and claims asserted against the City arising out of alleged constitutional violations, alleged torts, alleged breaches of contracts and other violations of law and condemnation proceedings. While the ultimate outcome and fiscal impact, if any, on the proceedings and claims are not currently predictable, adverse determinations in certain of them might have a material adverse effect upon the City's ability to carry out the 1999 Modification and 2000-2003 Financial Plan City Financial Plan. The City is a party to numerous lawsuits and is the subject of numerous claims and investigations. The City has estimated that its potential future liability on account of outstanding claims against it as of June 30, 1999 amounted to approximately $3.5 billion. This estimate was made by categorizing the various claims and applying a statistical model, based primarily on actual settlements by type of claim during the preceding ten fiscal years, and by supplementing the estimated liability with information supplied by the City's Corporation Counsel. Ratings Agencies. On February 24, 1998 Moody raised its rating on New York City General Obligation Bonds from Baa1 to A3. Likewise S&P raised its rate to A-minus from triple-B-plus on July 16, 1998. Also Fitch increased its rating to A from A-minus on March 8, 1999. Fitch commented that the rating upgrade reflected sustained broad based economic growth, a surging real estate market that should continue to accrue benefits over the next few years, and strong financial operating results. On August 6, 1998, as well as July 2, June 8 and May 27, Fitch rated New York City's tax-exempt general obligation bonds as "A-". Fitch qualified that rating, stating that concerns still remained over significant projected outyear budget funding challenges coupled with sizable reliance on the securities industry. On July 2, 1998, Moody's revised its rating on the New York City General Obligation Bonds to Aaa from Baa1. On July 16, 1998, S&P increased New York City's bond rating to A-, up one notch from BBB+, but analysts at the agency also cautioned that New York still had room for improvement and that they were worried about the City's rising long-term debt and the Council's plan to cut taxes by $200 million this year and $500 million in future years. On July 7, 1998, S&P had assigned its triple-B-plus rating to New York City general obligation bonds, stating that the ratings had been placed on CreditWatch with positive implications. On February 3, 1998, S&P raised its credit outlook for New York City's outstanding general obligation bonds from stable to positive but maintained its BBB-plus rating. The City has held this rating since July 10, 1995, when S&P lowered its rating from A-to BBB+ and removed City bonds from CreditWatch. S&P stated that "structural budgetary balance remains elusive because of persistent softness in the City's economy, highlighted by weak job growth and a growing dependence on the historically volatile financial services sector." Other factors identified by S&P's in lowering its rating on City bonds included a trend of using one-time measures, including debt refinancings, to close projected budget gaps, dependence on unratified labor savings to help balance the City Financial Plan, optimistic projections of additional federal and State aid or mandate relief, a history of cash flow difficulties caused by State budget delays and continued high debt levels. In 1975, S&P suspended its A rating of City bonds. This suspension remained in effect until March 1981, at which time the City received an investment grade rating of BBB from S&P. On July 2, 1985, S&P revised its rating of City bonds upward to BBB+ and on November 19, 1987, to A-. On July 10, 1995, S&P revised its rating of City bonds downward to BBB+, as discussed above. On November 25, 1996, S&P issued a report which stated that, if the City reached its debt limit without the ability to issue bonds through other means, it would cause a deterioration in the City's infrastructure and significant cutbacks in the capital plan which would eventually impact the City's economy and revenues, and could have eventual negative credit implications. On February 24, 1998 Moody's raised its rating for City general obligation bonds from Baa1 to A3, based on improvement in its financial condition and economy. Previously, on July 17, 1997, Moody's had changed its outlook on City bonds to positive from stable. On March 1, 1996, Moody's stated that the rating for the City's Baa1 general obligation bonds remains under review for a possible downgrade pending the outcome of the adoption of the City's budget for the 1997 fiscal year and in light of the status of the debate on public assistance and Medicaid reform; the enactment of a State budget, upon which major assumptions C-32 regarding State aid are dependent, which may be extensively delayed; and the seasoning of the City's economy with regard to its strength and direction in the face of a potential national economic slowdown. Moody's ratings of City bonds were revised in November 1981 from B (in effect since 1977) to Ba1, in November 1983 to Baa, in December 1985 to Baa1, in May 1988 to A and again in February 1991 to Baa1. On February 3, 1998, Fitch Investors Service, Inc. ("Fitch") set its rating of City general obligation bonds at A-, which it has maintained since July 15, 1993. On February 28, 1996, Fitch placed the City's general obligation bonds on FitchAlert with negative implications. On November 5, 1996, Fitch removed the City's general obligation bonds from FitchAlert although Fitch stated that the outlook remains negative. Since then Fitch has revised the outlook to stable. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely. Any such downward revision or withdrawal could have an adverse effect on the market prices of the City's general obligation bonds. On October 9, 1995, Standard & Poor's issued a report which concluded that proposals to replace the graduated Federal income tax system with a "flat" tax could be detrimental to the creditworthiness of certain municipal bonds. The report noted that the elimination of Federal income tax deductions currently available, including residential mortgage interest, property taxes and state and local income taxes, could have a severe impact on funding methods under which municipalities operate. With respect to property taxes, the report noted that the total valuation of a municipality's tax base is affected by the affordability of real estate and that elimination of mortgage interest deduction would result in a significant reduction in affordability and, thus, in the demand for, and the valuation of, real estate. The report noted that rapid losses in property valuations would be felt by many municipalities, hurting their revenue raising abilities. In addition, the report noted that the loss of the current deduction for real property and state and local income taxes from Federal income tax liability would make rate increases more difficult and increase pressures to lower existing rates, and that the cost of borrowing for municipalities could increase if the tax-exempt status of municipal bond interest is worth less to investors. Finally, the report noted that tax anticipation notes issued in anticipation of property taxes could be hurt by the imposition of a flat tax, if uncertainty is introduced with regard to their repayment revenues, until property values fully reflect the loss of mortgage and property tax deductions. C-33 APPENDIX D SPECIAL INVESTMENT CONSIDERATIONS RELATING TO CALIFORNIA MUNICIPAL OBLIGATIONS Overview The financial condition of the State of California ("California"), its public authorities and local governments could affect the market values and marketability of, and therefore the net asset value per share and the interest income of, the Vista California Tax Free Money Market Fund or the Vista California Intermediate Tax Free Income Fund, or result in the default of existing obligations, including obligations which may be held by the Vista California Tax Free Money Market Fund or the Vista California Intermediate Tax Free Income Fund. The following section provides only a brief summary of the complex factors affecting the financial condition of California, and is based on information obtained from California, as publicly available prior to the date of this Statement of Additional Information. The information contained in such publicly available documents has not been independently verified. It should be noted that the creditworthiness of obligations issued by local issuers may be unrelated to the creditworthiness of California, and that there is no obligation on the part of California to make payment on such local obligations in the event of default in the absence of a specific guarantee or pledge provided by California. During the early 1990's, California experienced significant financial difficulties, which reduced its credit standing, but the State's finances have improved since 1994, with ratings increases since 1996. The ratings of certain related debt of other issuers for which California has an outstanding lease purchase, guarantee or other contractual obligation (such as for state-insured hospital bonds) are generally linked directly to California's rating. Should the financial condition of California deteriorate again, its credit ratings could be reduced, and the market value and marketability of all outstanding notes and bonds issued by California, its public authorities or local governments could be adversely affected. Economic Factors. California's economy is the largest among the 50 states and one of the largest in the world. The State's population of almost 33 million represents more than 12% of the total United States population and grew by 26% in the 1980s, more than double the national rate. Population growth slowed to less than 1% annually in 1994 and 1995, but rose to 1.8% in 1996. During the early 1990's, net population growth in the State was due to births and foreign immigration, but in recent years, the in-migration from the other states has increased. Total personal income in the State, at an estimated $865 billion in 1997, accounts for almost 13% of all personal income in the nation. Total employment is more than 14 million, the majority of which is in the service, trade and manufacturing sectors. From mid-1990 to late 1993, the State suffered a recession with the worst economic, fiscal and budget conditions since the 1930s. Construction, manufacturing (especially aerospace), and financial services, among others, were all severely affected, particularly in southern California. Employment levels stabilized by late 1993 and pre-recession job levels were reached in 1996. Unemployment, while remaining higher than the national average, has come down from its 10% recession peak to 5.6% in summer, 1998. Economic indicators show a recovery underway in California since the start of 1994 particularly in high technology manufacturing and services, including computer software, electronic manufacturing and motion picture/ television production, and other services, entertainment and tourism, and both residential and commercial construction. The Asian economic crisis beginning in mid-1997 has significantly reduced exports to that region, although this has been offset by increased exports to Latin America and other areas. Overall, the Asian crisis is expected to have a moderate dampening effect on the State's economy, but the economy is still expected to outpace the nation in 1999. Any delay or reversal of the recovery may create new shortfalls in State revenues. D-1 Constitutional Limitations on Taxes, Other Charges and Appropriations Limitation on Property Taxes. Certain California Municipal Obligations may be obligations of issuers which rely in whole or in part, directly or indirectly, on ad valorem property taxes as a source of revenue. The taxing powers of California local governments and districts are limited by Article XIIIA of the California Constitution, enacted by the voters in 1978 and commonly known as "Proposition 13." Briefly, Article XIIIA limits to 1% of full cash value of the rate of ad valorem property taxes on real property and generally restricts the reassessment of property to 2% per year, except under new construction or change of ownership (subject to a number of exemptions). Taxing entities may, however, raise ad valorem taxes above the 1% limit to pay debt service on voter-approved bonded indebtedness. Under Article XIIIA, the basic 1% ad valorem tax levy is applied against the assessed value of property as of the owner's date of acquisition (or as of March 1, 1975, if acquired earlier), subject to certain adjustments. This system has resulted in widely varying amounts of tax on similarly situated properties. Several lawsuits have been filed challenging the acquisition-based assessment system of Proposition 13, but it was upheld by the U.S. Supreme Court in 1992. Article XIIIA prohibits local governments from raising revenues through ad valorem taxes above the 1% limit; it also requires voters of any governmental unit to give two-thirds approval to levy any "special tax." Court decisions, however, allowed a nonvoter-appointed levy of "general taxes" which were not dedicated to a specific use. Limitations on Other Taxes, Fees and Charges. On November 5, 1996, the voters of the State approved Proposition 218, called the "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain a number of provisions affecting the ability of local agencies to levy and collect both existing and future taxes, assessments, fees and charges. Article XIIIC requires that all new or increased local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes require a two-thirds vote. Further, any general purpose tax which was imposed, extended or increased without voter approval after December 31, 1994 must be approved by a majority vote within two years. Article XIIID contains several new provisions making it generally more difficult for local agencies to levy and maintain "assessments" for municipal services and programs. Article XIIID also contains several new provisions affecting "fees" and "charges," defined for purposes of Article XIIID to mean "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by a [local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service." All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges which generate revenues exceeding the funds required to provide the property related service or are used for unrelated purposes. There are new notice, hearing and protest procedures for levying or increasing property related fees and charges, and, except for fees or charges for sewer, water and refuse collection services (for fees for electrical and gas service, which are not treated as "property related" for purposes of Article XIIID), no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area. In addition to the provisions described above, Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Consequently, local voters could, by future initiative, repeal, reduce or prohibit the future imposition or increase of any local tax, assessment, fee or charge. It is unclear how this right of local initiative may be used in cases where taxes or charges have been or will be specifically pledged to secure debt issues. The interpretation and application of Proposition 218 will ultimately be determined by the courts with respect to a number of matters, and it is not possible at this time to predict with certainly the outcome of such D-2 determinations. Proposition 218 is generally viewed as restricting the fiscal flexibility of local governments, and for this reason, some ratings of California cities and counties have been, and others may be, reduced. Appropriations Limits. The State and its local governments are subject to an annual "appropriations limit" imposed by Article XIIIB of the California Constitution, enacted by the voters in 1979 and significantly amended by Propositions 98 and 111 in 1988 and 1990, respectively. Article XIIIB prohibits the State or any covered local government from spending "appropriations subject to limitation" in excess of the appropriations limit imposed. "Appropriations subject to limitation" are authorizations to spend "proceeds of taxes," which consist of tax revenues and certain other funds, including proceeds from regulatory licenses, user charges or other fees, to the extent that such proceeds exceed the cost of providing the product or service, but "proceeds of taxes" exclude most State subventions to local governments. No limit is imposed on appropriations of funds which are not "proceeds of taxes," such as reasonable user charges or fees, and certain other non-tax funds, including bond proceeds. Among the expenditures not included in the Article XIIIB appropriations limit are (1) the debt service cost of bonds issued or authorized prior to January 1, 1979, or subsequently authorized by the voters, (2) appropriations arising from certain emergencies declared by the Governor, (3) appropriations for certain capital outlay projects, (4) appropriations by the State of post-1989 increases in gasoline taxes and vehicle weight fees, and (5) appropriations made in certain cases of emergency. The appropriations limit for each year is adjusted annually to reflect changes in cost of living and population, and any transfers of service responsibilities between government units. The definitions for such adjustments were liberalized in 1990 to follow more closely growth in the State's economy. "Excess" revenues are measured over a two-year cycle. Local governments must return any excess to taxpayers by rate reductions. The State must refund 50% of any excess, with the other 50% paid to schools and community colleges. With more liberal annual adjustment factors since 1988, and depressed revenues since 1990 because of the recession, few governments are currently operating near their spending limits, but this condition may change over time. Local governments may by voter approval exceed their spending limits for up to four years. During fiscal year 1986-87, State receipts from proceeds of taxes exceeded its appropriations limit by $1.1 billion, which was returned to taxpayers. Since that year, appropriations subject to limitation have been under the State limit. State appropriations were $6.3 billion under the limit for fiscal year 1998-99. Because of the complex nature of Articles XIIIA, XIIIB, XIIIC and XIIID of the California Constitution, the ambiguities and possible inconsistencies in their terms, and the impossibility of predicting future appropriations or changes in population and cost of living, and the probability of continuing legal challenges, it is not currently possible to determine fully the impact of these Articles on California Municipal Obligations or on the ability of the State or local governments to pay debt service on such California Municipal Obligations. It is not possible, at the present time, to predict the outcome of any pending litigation with respect to the ultimate scope, impact or constitutionality of these Articles or the impact of any such determinations upon State agencies or local governments, or upon their ability to pay debt service on their obligations. Further initiatives or legislative changes in laws or the California Constitution may also affect the ability of the State or local issuers to repay their obligations. Obligations of the State of California Under the California Constitution, debt service on outstanding general obligation bonds is the second charge to the General Fund after support of the public school system and public institutions of higher education. As of November 1, 1998, the State had outstanding approximately $18.7 billion of long-term general obligation bonds, plus $825 million of general obligation commercial paper which will be refunded by long-term bonds in the future, and $6.5 billion of lease-purchase debt supported by the State General Fund. The State also had about $7.2 billion of authorized and unissued long-term general obligation bonds and lease D-3 purchase debt. In FY 1997-98, debt service on general obligation bonds and lease purchase debt was approximately 4.4% of General Fund revenues. Recent Financial Results. The principal sources of General Fund revenues in 1996-1997 were the California personal income tax (47% of total revenues), the sales tax (34%), bank and corporation taxes (12%), and the gross premium tax on insurance (2%). The State maintains a Special Fund for Economic Uncertainties (the "SFEU"), derived from General Fund revenues, as a reserve to meet cash needs of the General Fund, but which is required to be replenished as soon as sufficient revenues are available. Year-end balances in the SFEU are included for financial reporting purposes in the General Fund balance. Because of the recession and an accumulated budget deficit, no reserve was budgeted in the SFEU from 1992-93 to 1995-96. General. Throughout the 1980's, State spending increased rapidly as the State population and economy also grew rapidly, including increased spending for many assistance programs to local governments, which were constrained by Proposition 13 and other laws. The largest State program is assistance to local public school districts. In 1988, an initiative (Proposition 98) was enacted which (subject to suspension by a two-thirds vote of the Legislature and the Governor) guarantees local school districts and community college districts a minimum share of State General Fund revenues (currently about 35%). Recent Budgets. As a result of the severe economic recession from 1990-94 and other factors, the State experienced substantial revenue shortfalls, and greater than anticipated social service costs, in the early 1990's. The State accumulated and sustained a budget deficit in the budget reserve, the SFEU, approaching $2.8 billion at its peak at June 30, 1993. The Legislature and Governor agreed on a number of different steps to respond to the adverse financial conditions and produce Budget Acts in the Years 1991-92 to 1994-95 (although not all of these actions were taken in each year): o significant cuts in health and welfare program expenditures; o transfers of program responsibilities and some funding sources from the State to local governments, coupled with some reduction in mandates on local government; o transfer of about $3.6 billion in annual local property tax revenues from cities, counties, redevelopment agencies and some other districts to local school districts, thereby reducing State funding for schools; o reduction in growth of support for higher education programs, coupled with increases in student fees; o revenue increases (particularly in the 1992-93 Fiscal Year budget), most of which were for a short duration; o increased reliance on aid from the federal government to offset the costs of incarcerating, educating and providing health and welfare services to undocumented aliens (although these efforts have produced much less federal aid than the State Administration had requested); and o various one-time adjustments and accounting changes (some of which have been challenged in court and reversed). A consequence of the accumulated budget deficits in the early 1990's, together with other factors such as disbursement of funds to local school districts "borrowed" from future fiscal years and hence not shown in the annual budget, was to significantly reduce the State's cash resources available to pay its ongoing obligations. The State's cash condition became so serious that from late spring 1992 until 1995, the State had to rely on issuance of short term notes which matured in a subsequent fiscal year to finance its ongoing deficit, and pay current obligations. For a two-month period in the summer of 1992, pending adoption of the annual Budget Act, the State was forced to issue registered warrants (IOUs) to some of its suppliers, employees and other creditors. The last of these deficit notes was repaid in April 1996. D-4 The State's financial condition improved during the 1995-96, 1996-97 and 1997-98 fiscal years, with a combination of better than expected revenues, a slowdown in growth of social welfare programs, and continued spending restraint based on the actions taken in earlier years. The State's cash position also improved, and no external deficit borrowing has occurred over the end of these three fiscal years. The economy grew during these fiscal years, and as a result, the General Fund took in greater tax revenue (around $2.2 billion in 1995-96, $1.6 billion in 1996-97 and $2.1 billion in 1997-98) than were initially planned when the budgets were enacted. These additional funds were largely directed to school spending as mandated by Proposition 98, and to make up shortfalls from reduced federal health and welfare aid in 1995-96 and 1996-97. The accumulated budget deficit from the recession years was finally eliminated. The Department of Finance estimates that the State's budget reserve (the SFEU) totaled about $400 million as of June 30, 1997 and $1.8 billion at June 30, 1998. FY 1997-98 Budget. In May 1997, the California Supreme Court ruled that the State had acted illegally in 1993 and 1994 by using a deferral of payments to the Public Employees Retirement Fund to help balance earlier budgets. In response to this court decision, the Governor ordered an immediate repayment to the Retirement Fund of about $1.235 billion, which was made in late July 1997, and substantially "used up" the then-expected additional General Fund revenues for the fiscal year. The 1997-98 Budget Act provided another year of rapidly increasing funding for K-14 public education. Support for higher education units in the State also increased by about 6 percent. Because of the pension payment, most other State programs were funded at levels consistent with prior years, and several initiatives had to be dropped. The final results for FY 1997-98 showed General Fund revenues and transfers of $54.7 billion and expenditures of $53.3 billion. Part of the 1997-98 Budget Act was completion of State welfare reform legislation to implement the new federal law passed in 1996. The new State program, called "CalWORKs," became effective January 1, 1998, and emphasizes programs to bring aid recipients into the workforce. As required by federal law, new time limits are placed on receipt of welfare aid. FY 1998-99 Budget. The FY 1998-99 Budget Act was signed on August 21, 1998. After giving effect to line-item vetoes made by the Governor, the Budget plan resulted in spending of about $57.3 billion for the General Fund and $14.7 billion for Special Funds. The Budget Act assumed General Fund revenues and transfers in FY 1998-99 of $57.0 billion. After enactment of the Budget Act, the Legislature passed a number of additional fiscal bills, which resulted in a net increase of expenditures of about $250 million, but the Administration also raised its estimate of revenues from the 1997-98 fiscal year. In total, the Administration projected the balance in the SFEU at June 30, 1999 would be about $1.2 billion. In November 1998, the Legislative Analyst's Office released a report saying that revenues were somewhat lower, and expenditures somewhat higher, than projected in the Budget Act, but the net variance would be within the $1.2 billion reserve amount. The Administration's projections for the balance of FY 1998-99 and for FY 1999-2000 will be released in early January. As has been the case in the last several years, spending on K-12 education increased significantly, by a total of $2.2 billion, with proected per-pupil spending of $5,695, more than one-third higher than the per-pupil spending during the last recession year of 1993-94. Funding to support higher education was also increased significantly (15% for the University of California and 14% for the California State University system). The Budget included some increases in health and welfare programs, including the first increase in the monthly welfare grant since levels were cut during the recession. One of the most important elements of the 1998-99 Budget Act was agreement on substantial tax cuts. The largest of these is a phased-in cut in the Vehicle License Fee (an annual tax on the value of cars registered in the State, the "VLF"). Starting in 1999, the VLF is reduced by 25%. Under current law, VLF funds are automatically transferred to cities and counties, so the new legislation provides for the General Fund to make up the reductions. If State General Fund revenues continue to grow above certain targeted levels in future years (a development which appears unlikely given more recent revenue projections), the cut could reach as D-5 much as 67.5% by the year 2003. The initial 25% VLF cut will be offset by about $500 million in General Fund money in FY 1998-99, and $1 billion for future years. Other tax cuts in FY 1998-99 include an increase in the dependent credit exemption for personal income tax filers, restoration of a renter's tax credit for taxpayers, and a variety of business tax relief measures. The total cost of these tax cuts is estimated at $1.4 billion for FY 1998-99. Although, as noted, the 1998-99 Budget Act projects a budget reserve in the SFEU of about $1.2 billion on June 30, 1999, the General Fund fund balance on that date also reflects $1.0 billion of "loans" which the General Fund made to local schools in the recession years, representing cash outlays above the mandatory minimum funding level. Settlement of litigation over these transactions in July 1996 calls for repayment of these loans over the period ending in 2001-02, about equally split between outlays from the General Fund and from schools' entitlements. The 1998-99 Budget Act contained a $300 million appropriation from the General Fund toward this settlement. Although the State's economy is producing record revenues to the State government, the State's budget continues to be under stress from mandated spending on education, a rising prison population, and social needs of a growing population with many immigrants. These factors which limit State spending growth also put pressure on local governments. There can be no assurances that, if economic conditions weaken, or other factors intercede, the State will not experience budget gaps in the future. Bond Rating The ratings on California's long-term general obligation bonds were reduced in the early 1990's from "AAA" levels which had existed prior to the recession. After 1996, Fitch and Standard & Poor's raised their ratings of California's general obligation bonds, which as of August 1998 were assigned ratings of "A+" from Standard & Poor's, "Aa3" from Moody's and "AA-" from Fitch. There can be no assurance that such ratings will be maintained in the future. It should be noted that the creditworthiness of obligations issued by local California issuers may be unrelated to creditworthiness of obligations issued by the State of California, and that there is no obligation on the part of the State to make payment on such local obligations in the event of default. Legal Proceedings The State is involved in certain legal proceedings (described in the State's recent financial statements) that, if decided against the State, may require the State to make significant future expenditures or may substantially impair revenues. Trial courts have recently entered tentative decisions or injunctions which would overturn several parts of the State's recent budget compromises. The matters covered by these lawsuits include reductions in welfare payments and the use of certain cigarette tax funds for health costs. All of these cases are subject to further proceedings and appeals, and if California eventually loses, the final remedies may not have to be implemented in one year. Obligations of Other Issuers Other Issuers of California Municipal Obligations. There are a number of State agencies, instrumentalities and political subdivisions of the State that issue Municipal Obligations, some of which may be conduit revenue obligations payable from payments from private borrowers. These entities are subject to various economic risks and uncertainties, and the credit quality of the securities issued by them may vary considerably from the credit quality of obligations backed by the full faith and credit of the State. State Assistance. Property tax revenues received by local governments declined more than 50% following passage of Proposition 13. Subsequently, the California Legislature enacted measures to provide for the redistribution of the State's General Fund surplus to local agencies, the reallocation of certain State revenues to local agencies and the assumption of certain governmental functions by the State to assist municipal issuers to raise revenues. Total local assistance from the State's General Fund was budgeted at D-6 approximately 75% of General Fund expenditures in recent years, including the effect of implementing reductions in certain aid programs. To reduce State General Fund support for school districts, the 1992-93 and 1993-94 Budget Acts caused local governments to transfer $3.9 billion of property tax revenues to school districts, representing loss of the post-Proposition 13 "bailout" aid. Local governments have in return received greater revenues and greater flexibility to operate health and welfare programs. However, except for agreement in 1997 on a new program for the State to substantially take over funding for local trial courts (saving cities and counties some $400 million annually), there has been no large-scale reversal of the property tax shift to help local government. To the extent the State should be constrained by its Article XIIIB appropriations limit, or its obligation to conform to Proposition 98, or other fiscal considerations, the absolute level, or the rate of growth, of State assistance to local governments may continue to be reduced. Any such reductions in State aid could compound the serious fiscal constraints already experienced by many local governments, particularly counties. Los Angeles County, the largest in the State, was forced to make significant cuts in services and personnel, particularly in the health care system, in order to balance its budget in FY 1995-96 and FY1996-97. Orange County, which emerged from Federal Bankruptcy Court protection in June 1996, has significantly reduced county services and personnel, and faces strict financial conditions following large investment fund losses in 1994 which resulted in bankruptcy. Counties and cities may face further budgetary pressures as a result of changes in welfare and public assistance programs, which were enacted in August 1997 in order to comply with the federal welfare reform law. Generally, counties play a large role in the new system, and are given substantial flexibility to develop and administer programs to bring aid recipients into the workforce. Counties are also given financial incentives if either at the county or statewide level the "Welfare-to-Work" programs exceed minimum targets; counties are also subject to financial penalties for failure to meet such targets. Counties remain responsible for providing "general assistance" for able-bodied indigents who are ineligible for other welfare programs. The long-term financial impact of the new CalWORKs system on local governments is still unknown. Assessment Bonds. California Municipal Obligations which are assessment bonds may be adversely affected by a general decline in real estate values or a slowdown in real estate sales activity. In many cases, such bonds are secured by land which is undeveloped at the time of issuance but anticipated to be developed within a few years after issuance. In the event of such reduction or slowdown, such development may not occur or may be delayed, thereby increasing the risk of a default on the bonds. Because the special assessments or taxes securing these bonds are not the personal liability of the owners of the property assessed, the lien on the property is the only security for the bonds. Moreover, in most cases the issuer of these bonds is not required to make payments on the bonds in the event of delinquency in the payment of assessments or taxes, except from amounts, if any, in a reserve fund established for the bonds. California Long Term Lease Obligations. Based on a series of court decisions, certain long-term lease obligations, though typically payable from the general fund of the State or a municipality, are not considered "indebtedness" requiring voter approval. Such leases, however, are subject to "abatement" in the event the facility being leased is unavailable for beneficial use and occupancy by the municipality during the term of the lease. Abatement is not a default, and there may be no remedies available to the holders of the certificates evidencing the lease obligation in the event abatement occurs. The most common cases of abatement are failure to complete construction of the facility before the end of the period during which lease payments have been capitalized and uninsured casualty losses to the facility (e.g., due to earthquake). In the event abatement occurs with respect to a lease obligation, lease payments may be interrupted (if all available insurance proceeds and reserves are exhausted) and the certificates may not be paid when due. Although litigation is brought from time to time which challenges the constitutionality of such lease arrangements, the California Supreme Court issued a ruling in August 1998 which reconfirmed the legality of these financing methods. D-7 Other Considerations The repayment of industrial development securities secured by real property may be affected by California laws limiting foreclosure rights of creditors. Securities backed by health care and hospital revenues may be affected by changes in State regulations governing cost reimbursements to health care providers under Medi-Cal (the State's Medicaid program), including risks related to the policy of awarding exclusive contracts to certain hospitals. Limitations on ad valorem property taxes may particularly affect "tax allocation" bonds issued by California redevelopment agencies. Such bonds are secured solely by the increase in assessed valuation of a redevelopment project area after the start of redevelopment activity. In the event that assessed values in the redevelopment project decline (e.g., because of a major natural disaster such as an earthquake), the tax increment revenue may be insufficient to make principal and interest payments on these bonds. Both Moody's and S&P suspended ratings on California tax allocation bonds after the enactment of Articles XIIIA and XIIIB, and only resumed such ratings on a selective basis. Proposition 87, approved by California voters in 1988, requires that all revenues produced by a tax rate increase go directly to the taxing entity which increased such tax rate to repay that entity's general obligation indebtedness. As a result, redevelopment agencies (which, typically, are the issuers of tax allocation securities) no longer receive an increase in tax increment when taxes on property in the project area are increased to repay voter-approved bonded indebtedness. The effect of these various constitutional and statutory changes upon the ability of California municipal securities issuers to pay interest and principal on their obligations remains unclear. Furthermore, other measures affecting the taxing or spending authority of California or its political subdivisions may be approved or enacted in the future. Legislation has been or may be introduced which would modify existing taxes or other revenue-raising measures or which either would further limit or, alternatively, would increase the abilities of state and local governments to impose new taxes or increase existing taxes. It is not possible, at present, to predict the extent to which any such legislation will be enacted. Nor is it possible, at present, to determine the impact of any such legislation on California Municipal Obligations in which the Funds may invest, future allocations of state revenues to local governments or the abilities of state or local governments to pay the interest on, or repay the principal of, such California Municipal Obligations. Substantially all of California is within an active geologic region subject to major seismic activity. Northern California in 1989 and Southern California in 1994 experienced major earthquakes causing billions of dollars in damages. The federal government provided more than $13 billion in aid for both earthquakes, and neither event is expected to have any long-term negative economic impact. Any California Municipal Obligation in the Funds' portfolios could be affected by an interruption of revenues because of damaged facilities, or, consequently, income tax deductions for casualty losses or property tax assessment reductions. Compensatory financial assistance could be constrained by the inability of (i) an issuer to have obtained earthquake insurance coverage rates; (ii) an insurer to perform on its contracts of insurance in the event of widespread losses; or (iii) the federal or State government to appropriate sufficient funds within their respective budget limitations. D-8 EX-99.(17)(E) 7 a2027167zex-99_17e.txt EXHIBIT 99(17)(E) STATEMENT OF ADDITIONAL INFORMATION April 28, 2000 CHASE BALANCED FUND CHASE CORE EQUITY FUND CHASE EQUITY GROWTH FUND CHASE EQUITY INCOME FUND CHASE INCOME FUND CHASE INTERMEDIATE TERM BOND FUND CHASE INTERNATIONAL EQUITY FUND CHASE MID CAP GROWTH FUND CHASE MONEY MARKET FUND CHASE NEW YORK TAX FREE INCOME FUND CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND CHASE SMALL CAPITALIZATION FUND CHASE TAX FREE INCOME FUND CHASE TAX FREE MONEY MARKET FUND CHASE U.S. GOVERNMENT SECURITIES FUND CHASE EQUITY GROWTH II FUND 1211 Avenue of the Americas, 41st Floor, New York, NY 10036 This Statement of Additional Information sets forth information which may be of interest to investors but which is not necessarily included in the Prospectuses offering shares of the Funds. This Statement of Additional Information should be read in conjunction with the Prospectuses offering Premier and Investor shares of Chase Money Market Fund and Chase Tax Free Money Market Fund (collectively the "Money Market Funds"), Chase Income Fund, Chase Intermediate Term Bond Fund, Chase New York Tax Free Income Fund, Chase Short-Intermediate Term U.S. Government Securities Fund, Chase Tax Free Income Fund and Chase U.S. Government Securities Fund (collectively the "Income Funds"), and Chase Balanced Fund, Chase Core Equity Fund, Chase Equity Income Fund, Chase Equity Growth Fund, Chase International Equity Fund, Chase Mid Cap Growth Fund, Chase Small Capitalization Fund and Chase Equity Growth II Fund (collectively the "Equity Funds"). The Chase Tax Free Money Market Fund, Chase Tax Free Income Fund and Chase New York Tax Free Income Fund are collectively known as the "Tax Free Funds." Any references to a "Prospectus" in this Statement of Additional Information is a reference to one or more of the foregoing Prospectuses, as the context requires. Copies of each Prospectus may be obtained by an investor without charge by contacting CFD Fund Distributors, Inc. ("CFD"), the Funds' distributor (the "Distributor"), at the above-listed address. The Chase Mid Cap Growth Fund, the Chase International Equity Fund and the Tax Free Funds are not currently available for investment. This Statement of Additional Information is NOT a prospectus and is authorized for distribution to prospective investors only if preceded or accompanied by an effective prospectus. For more information about your account, simply call or write the Chase Funds Service Center at: 1-800-5-CHASE-0 Chase Funds Service Center P.O. Box 419392 Kansas City, MO 64141
Table of Contents Page - ------------------------------------------------------------------------------------------------- The Funds ................................................................................ 3 Investment Policies and Restrictions ..................................................... 3 Performance Information .................................................................. 24 Determination of Net Asset Value ......................................................... 30 Purchases, Redemptions and Exchanges ..................................................... 32 Tax Matters .............................................................................. 32 Management of the Trusts and the Funds and Portfolios .................................... 38 Independent Accountants .................................................................. 50 Certain Regulatory Matters ............................................................... 50 General Information ...................................................................... 51 APPENDIX A--Description of Certain Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities ......................................................... A-1 APPENDIX B--Description of Ratings ....................................................... B-1
2 THE FUNDS Mutual Fund Investment Trust (the "Trust") is an open-end management investment company which was organized as a business trust under the laws of the Commonwealth of Massachusetts on September 23, 1997. The Trust presently consists of 16 separate series (the "Funds"). Certain of the Funds are diversified and other Funds are non-diversified, as such term is defined in the Investment Company Act of 1940, as amended (the "1940 Act"). The shares of the Funds are collectively referred to in this Statement of Additional Information as the "Shares." Effective January 1, 1998, the Money Market, Short-Intermediate Term U.S. Government Securities, U.S. Government Securities, Intermediate Term Bond, Income, Balanced, Equity Income, Core Equity, Equity Growth and Small Capitalization Funds of the AVESTA Trust, a collective investment trust, were converted and redomiciled into the corresponding portfolios of the Trust (the "Avesta Conversion"). The Chase Core Equity Fund and Chase Equity Growth Fund converted to a master/feeder fund structure on August 12, 1999. Under this structure, each of these Funds seeks to achieve its investment objective by investing all of its investable assets in an open-end management investment company which has the same investment objective as that Fund. Chase Core Equity and Chase Equity Growth invest in Core Equity Portfolio and Equity Growth Portfolio, respectively. Core Equity Portfolio and Equity Growth Portfolio are hereafter collectively referred to as the "Portfolios". Core Equity Portfolio and Equity Growth Portfolio are separate series of Mutual Fund Master Investment Trust (the "Master Trust", and with the Trust, the "Trusts"), an open-end management investment company that was organized as a business trust under the laws of the Commonwealth of Massachusetts. Certain qualified investors, in addition to a Fund, may invest in a Portfolio. For purposes of this Statement of Additional Information, any information or references to the Portfolios refer to the operations and activities after implementation of the master fund/feeder fund structure. The Chase Equity Growth II Fund commenced operations on July 1, 1999. This Fund may be purchased only by participating employee benefit plans that meet the minimum investment requirement. The Boards of Trustees of the Trusts provide broad supervision over the affairs of the Trusts including the Funds or the Portfolios, as the case may be. The Chase Manhattan Bank ("Chase") is the investment adviser for the Funds. Chase also serves as the Trusts' administrator (the "Administrator") and supervises the overall administration of the Trusts, including the Funds and Portfolios. A majority of the Trustees of the Trusts are not affiliated with the investment adviser or sub-advisers. INVESTMENT POLICIES AND RESTRICTIONS Investment Policies The Prospectuses set forth the various investment policies of each Fund. The following information supplements and should be read in conjunction with the related sections of the Prospectuses. As used in this Statement of Additional Information, with respect to those Funds and policies for which it applies, the term "Municipal Obligations" has the meaning given to it in the Prospectuses. For descriptions of the securities ratings of Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P") and Fitch Investors Service, Inc. ("Fitch"), see Appendix B. Unless otherwise indicated, a reference to a "Fund" or an "Equity Fund" (or their plurals) in this Statement of Additional Information shall also apply to the Portfolios. References to a "Money Market Fund", "Income Fund" or "Tax Free Fund" shall not apply to the Portfolios. U.S. Government Securities. U.S. Government Securities include (1) U.S. Treasury obligations, which generally differ only in their interest rates, maturities and times of issuance, including: U.S. Treasury bills (maturities of one year or less), U.S. Treasury notes (maturities of one to ten years) and U.S. Treasury bonds (generally maturities of greater than ten years); and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow any amount listed to a specific line of credit 3 from the U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase certain obligations of the U.S. Government agency or instrumentality or (d) the credit of the agency or instrumentality. Agencies and instrumentalities of the U.S. Government include but are not limited to: Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Student Loan Marketing Association, United States Postal Service, Chrysler Corporate Loan Guarantee Board, Small Business Administration, Tennessee Valley Authority and any other enterprise established or sponsored by the U.S. Government. Certain U.S. Government Securities, including U.S. Treasury bills, notes and bonds, Government National Mortgage Association certificates and Federal Housing Administration debentures, are supported by the full faith and credit of the United States. Other U.S. Government Securities are issued or guaranteed by federal agencies or government sponsored enterprises and are not supported by the full faith and credit of the United States. These securities include obligations that are supported by the right of the issuer to borrow from the U.S. Treasury, such as obligations of the Federal Home Loan Banks, and obligations that are supported by the creditworthiness of the particular instrumentality, such as obligations of the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation. For a description of certain obligations issued or guaranteed by U.S. Government agencies and instrumentalities, see Appendix A. In addition, certain U.S. Government agencies and instrumentalities issue specialized types of securities, such as guaranteed notes of the Small Business Administration, Federal Aviation Administration, Department of Defense, Bureau of Indian Affairs and Private Export Funding Corporation, which often provide higher yields than are available from the more common types of government-backed instruments. However, such specialized instruments may only be available from a few sources, in limited amounts, or only in very large denominations; they may also require specialized capability in portfolio servicing and in legal matters related to government guarantees. While they may frequently offer attractive yields, the limited-activity markets of many of these securities means that, if a Fund were required to liquidate any of them, it might not be able to do so advantageously; accordingly, each Fund investing in such securities normally to hold such securities to maturity or pursuant to repurchase agreements, and would treat such securities (including repurchase agreements maturing in more than seven days) as illiquid for purposes of its limitation on investment in illiquid securities. Bank Obligations. Investments in bank obligations are limited to those of U.S. banks (including their foreign branches) which have total assets at the time of purchase in excess of $1 billion and the deposits of which are insured by either the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, and foreign banks (including their U.S. branches) having total assets in excess of $10 billion (or the equivalent in other currencies), and such other U.S. and foreign commercial banks which are judged by the advisers to meet comparable credit standing criteria. Bank obligations include negotiable certificates of deposit, bankers' acceptances, fixed time deposits and deposit notes. A certificate of deposit is a short-term negotiable certificate issued by a commercial bank against funds deposited in the bank and is either interest-bearing or purchased on a discount basis. A bankers' acceptance is a short-term draft drawn on a commercial bank by a borrower, usually in connection with an international commercial transaction. The borrower is liable for payment as is the bank, which unconditionally guarantees to pay the draft at its face amount on the maturity date. Fixed time deposits are obligations of branches of United States banks or foreign banks which are payable at a stated maturity date and bear a fixed rate of interest. Although fixed time deposits do not have a market, there are no contractual restrictions on the right to transfer a beneficial interest in the deposit to a third party. Fixed time deposits subject to withdrawal penalties and with respect to which a Fund cannot realize the proceeds thereon within seven days are deemed "illiquid" for the purposes of its restriction on investments in illiquid securities. Deposit notes are notes issued by commercial banks which generally bear fixed rates of interest and typically have original maturities ranging from eighteen months to five years. 4 Banks are subject to extensive governmental regulations that may limit both the amounts and types of loans and other financial commitments that may be made and the interest rates and fees that may be charged. The profitability of this industry is largely dependent upon the availability and cost of capital funds for the purpose of financing lending operations under prevailing money market conditions. Also, general economic conditions play an important part in the operations of this industry and exposure to credit losses arising from possible financial difficulties of borrowers might affect a bank's ability to meet its obligations. Bank obligations may be general obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligations or by government regulation. Investors should also be aware that securities of foreign banks and foreign branches of United States banks may involve foreign investment risks in addition to those relating to domestic bank obligations. Depositary Receipts. A Fund will limit its investment in Depositary Receipts not sponsored by the issuer of the underlying security to no more than 5% of the value of its net assets (at the time of investment). A purchaser of an unsponsored Depositary Receipt may not have unlimited voting rights and may not receive as much information about the issuer of the underlying securities as with a sponsored Depositary Receipt. ECU Obligations. 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. The Trustees do not believe that such adjustments will adversely affect holders of ECU-denominated securities or the marketability of such securities. Supranational Obligations. Supranational organizations, include organizations such as The World Bank, which was chartered to finance development projects in developing member countries; the European Community, which is a twelve-nation organization engaged in cooperative economic activities; the European Coal and Steel Community, which is an economic union of various European nations steel and coal industries; and the Asian Development Bank, which is an international development bank established to lend funds, promote investment and provide technical assistance to member nations of the Asian and Pacific regions. Corporate Reorganizations. In general, securities that are the subject of a tender or exchange offer or proposal sell at a premium to their historic market price immediately prior to the announcement of the offer or proposal. The increased market price of these securities may also discount what the stated or appraised value of the security would be if the contemplated action were approved or consummated. These investments may be advantageous when the discount significantly overstates the risk of the contingencies involved; significantly undervalues the securities, assets or cash to be received by shareholders of the prospective portfolio company as a result of the contemplated transaction; or fails adequately to recognize the possibility that the offer or proposal may be replaced or superseded by an offer or proposal of greater value. The evaluation of these contingencies requires unusually broad knowledge and experience on the part of the advisers that must appraise not only the value of the issuer and its component businesses as well as the assets or securities to be received as a result of the contemplated transaction, but also the financial resources and business motivation of the offeror as well as the dynamics of the business climate when the offer or proposal is in progress. Investments in reorganization securities may tend to increase the turnover ratio of a Fund and increase its brokerage and other transaction expenses. Warrants and Rights. Warrants basically are options to purchase equity securities at a specified price for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants but normally have a shorter duration and are distributed directly by the issuer to shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer. Commercial Paper. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured promissory notes issued by corporations in order to finance their current operations. A variable amount 5 master demand note (which is a type of commercial paper) represents a direct borrowing arrangement involving periodically fluctuating rates of interest under a letter agreement between a commercial paper issuer and an institutional lender pursuant to which the lender may determine to invest varying amounts. The commercial paper and other short-term obligations of U.S. and foreign corporations which may be purchased by the Money Market Fund, other than those of bank holding companies, include obligations which are (i) rated Prime-1 by Moody's, A-1 by S&P, or F-1 by Fitch, or comparably rated by another NRO; or (ii) determined by the advisers to be of comparable quality to those rated obligations which may be purchased by the Money Market Fund at the date of purchase or which at the date of purchase have an outstanding debt issue rated in the highest rating category by Moody's, S&P, Fitch or another NRO. The commercial paper and other short-term obligations of U.S. banks holding companies which may be purchased by Money Market Fund include obligations issued or guaranteed by bank holding companies with total assets exceeding $1 billion. For purposes of the size standards with respect to banks and bank holding companies, "total deposits" and "total assets" are determined on an annual basis by reference to an institution's then most recent annual financial statements. Repurchase Agreements. A Fund will enter into repurchase agreements only with member banks of the Federal Reserve System and securities dealers believed creditworthy, and only if fully collateralized by securities in which such Fund is permitted to invest. Under the terms of a typical repurchase agreement, a Fund would acquire an underlying instrument for a relatively short period (usually not more than one week) subject to an obligation of the seller to repurchase the instrument and the Fund to resell the instrument at a fixed price and time, thereby determining the yield during the Fund's holding period. This procedure results in a fixed rate of return insulated from market fluctuations during such period. A repurchase agreement is subject to the risk that the seller may fail to repurchase the security. Repurchase agreements are considered under the 1940 Act to be loans collateralized by the underlying securities. All repurchase agreements entered into by a Fund will be fully collateralized at all times during the period of the agreement in that the value of the underlying security will be at least equal to 100% of the amount of the loan, including the accrued interest thereon, and the Fund or its custodian or sub-custodian will have possession of the collateral, which the Board of Trustees believes will give it a valid, perfected security interest in the collateral. Whether a repurchase agreement is the purchase and sale of a security or a collateralized loan has not been conclusively established. This might become an issue in the event of the bankruptcy of the other party to the transaction. In the event of default by the seller under a repurchase agreement construed to be a collateralized loan, the underlying securities would not be owned by the Fund, but would only constitute collateral for the seller's obligation to pay the repurchase price. Therefore, a Fund may suffer time delays and incur costs in connection with the disposition of the collateral. The Board of Trustees believes that the collateral underlying repurchase agreements may be more susceptible to claims of the seller's creditors than would be the case with securities owned by a Fund. Repurchase agreements maturing in more than seven days are treated as illiquid for purposes of the Funds' restrictions on purchases of illiquid securities. Repurchase agreements are also subject to the risks described below with respect to stand-by commitments. Forward Commitments. In order to invest a Fund's assets immediately, while awaiting delivery of securities purchased on a forward commitment basis, short-term obligations that offer same-day settlement and earnings will normally be purchased. Although, with respect to any Tax Free Fund, short-term investments will normally be in tax-exempt securities or Municipal Obligations, short-term taxable securities or obligations may be purchased if suitable short-term tax-exempt securities or Municipal Obligations are not available. When a commitment to purchase a security on a forward commitment basis is made, procedures are established consistent with the General Statement of Policy of the Securities and Exchange Commission concerning such purchases. Since that policy currently recommends that an amount of the respective Fund's assets equal to the amount of the purchase be held aside or segregated to be used to pay for the commitment, a separate account of such Fund consisting of cash or liquid securities equal to the amount of such Fund's commitments securities will be established at such Fund's custodian bank. For the purpose of determining the adequacy of the securities in the account, the deposited securities will be valued at market value. 6 If the market value of such securities declines, additional cash, cash equivalents or highly liquid securities will be placed in the account daily so that the value of the account will equal the amount of such commitments by the respective Fund. Although it is not intended that such purchases would be made for speculative purposes, purchases of securities on a forward commitment basis may involve more risk than other types of purchases. Securities purchased on a forward commitment basis and the securities held in the respective Fund's portfolio are subject to changes in value based upon the public's perception of the issuer and changes, real or anticipated, in the level of interest rates. Purchasing securities on a forward commitment basis can involve the risk that the yields available in the market when the delivery takes place may actually be higher or lower than those obtained in the transaction itself. On the settlement date of the forward commitment transaction, the respective Fund will meet its obligations from then available cash flow, sale of securities held in the separate account, sale of other securities or, although it would not normally expect to do so, from sale of the forward commitment securities themselves (which may have a value greater or lesser than such Fund's payment obligations). The sale of securities to meet such obligations may result in the realization of capital gains or losses which, for consideration by investors in the Tax Free Funds, are not exempt from federal, state or local taxation. To the extent a Fund engages in forward commitment transactions, it will do so for the purpose of acquiring securities consistent with its investment objective and policies and not for the purpose of investment leverage, and settlement of such transactions will be within 90 days from the trade date. Floating and Variable Rate Securities; Participation Certificates. Floating and variable rate demand instruments permit the holder to demand payment upon a specified number of days' notice of the unpaid principal balance plus accrued interest either from the issuer or by drawing on a bank letter of credit, a guarantee or insurance issued with respect to such instrument. Investments by the Income Funds in floating or variable rate securities normally will involve industrial development or revenue bonds that provide for a periodic adjustment in the interest rate paid on the obligation and may, but need not, permit the holder to demand payment as described above. While there is usually no established secondary market for issues of these types of securities, the dealer that sells an issue of such security frequently will also offer to repurchase the securities at any time at a repurchase price which varies and may be more or less than the amount the holder paid for them. The floating or variable rate demand instruments in which the Money Market Funds may invest are payable on demand on not more than seven calendar days' notice. The terms of these types of securities provide that interest rates are adjustable at intervals ranging from daily to up to six months and the adjustments are based upon the prime rate of a bank or other short-term rates, such as Treasury Bills or LIBOR (London Interbank Offered Rate), as provided in the respective instruments. The Funds will decide which floating or variable rate securities to purchase in accordance with procedures prescribed by Board of Trustees of the Trust in order to minimize credit risks. In the case of a Money Market Fund, the Board of Trustees may determine that an unrated floating or variable rate security meets the Fund's high quality criteria if it is backed by a letter of credit or guarantee or is insured by an insurer that meets such quality criteria, or on the basis of a credit evaluation of the underlying obligor. If the credit of the obligor is of "high quality", no credit support from a bank or other financial institution will be necessary. The Board of Trustees will re-evaluate each unrated floating or variable rate security on a quarterly basis to determine that it continues to meet a Money Market Fund's high quality criteria. If an instrument is ever deemed to fall below a Money Market Fund's high quality standards, either it will be sold in the market or the demand feature will be exercised. The securities in which certain Funds may be invested include participation certificates issued by a bank, insurance company or other financial institution in securities owned by such institutions or affiliated organizations ("Participation Certificates"). A Participation Certificate gives a Fund an undivided interest in 7 the security in the proportion that the Fund's participation interest bears to the total principal amount of the security and generally provides the demand feature described below. Each Participation Certificate is backed by an irrevocable letter of credit or guaranty of a bank (which may be the bank issuing the Participation Certificate, a bank issuing a confirming letter of credit to that of the issuing bank, or a bank serving as agent of the issuing bank with respect to the possible repurchase of the Participation Certificate) or insurance policy of an insurance company that the Board of Trustees of the Trust has determined meets the prescribed quality standards for a particular Fund. A Fund may have the right to sell the Participation Certificate back to the institution and draw on the letter of credit or insurance on demand after the prescribed notice period, for all or any part of the full principal amount of the Fund's participation interest in the security, plus accrued interest. The institutions issuing the Participation Certificates would retain a service and letter of credit fee and a fee for providing the demand feature, in an amount equal to the excess of the interest paid on the instruments over the negotiated yield at which the Participation Certificates were purchased by a Fund. The total fees would generally range from 5% to 15% of the applicable prime rate or other short-term rate index. With respect to insurance, a Fund will attempt to have the issuer of the participation certificate bear the cost of any such insurance, although the Funds retain the option to purchase insurance if deemed appropriate. Obligations that have a demand feature permitting a Fund to tender the obligation to a foreign bank may involve certain risks associated with foreign investment. A Fund's ability to receive payment in such circumstances under the demand feature from such foreign banks may involve certain risks such as future political and economic developments, the possible establishments of laws or restrictions that might adversely affect the payment of the bank's obligations under the demand feature and the difficulty of obtaining or enforcing a judgment against the bank. The advisers have been instructed by the Board of Trustees to monitor on an ongoing basis the pricing, quality and liquidity of the floating and variable rate securities held by the Funds, including Participation Certificates, on the basis of published financial information and reports of the rating agencies and other bank analytical services to which the Funds may subscribe. Although these instruments may be sold by a Fund, it is intended that they be held until maturity. Past periods of high inflation, together with the fiscal measures adopted to attempt to deal with it, have seen wide fluctuations in interest rates, particularly "prime rates" charged by banks. While the value of the underlying floating or variable rate securities may change with changes in interest rates generally, the floating or variable rate nature of the underlying floating or variable rate securities should minimize changes in value of the instruments. Accordingly, as interest rates decrease or increase, the potential for capital appreciation and the risk of potential capital depreciation is less than would be the case with a portfolio of fixed rate securities. A Fund's portfolio may contain floating or variable rate securities on which stated minimum or maximum rates, or maximum rates set by state law, limit the degree to which interest on such floating or variable rate securities may fluctuate; to the extent it does, increases or decreases in value may be somewhat greater than would be the case without such limits. Because the adjustment of interest rates on the floating or variable rate securities is made in relation to movements of the applicable banks' "prime rates" or other short-term rate adjustment indices, the floating or variable rate securities are not comparable to long-term fixed rate securities. Accordingly, interest rates on the floating or variable rate securities may be higher or lower than current market rates for fixed rate obligations of comparable quality with similar maturities. The maturity of variable rate securities is deemed to be the longer of (i) the notice period required before a Fund is entitled to receive payment of the principal amount of the security upon demand or (ii) the period remaining until the security's next interest rate adjustment. With respect to a Money Market Fund, the maturity of a variable rate demand instrument will be determined in the same manner for purposes of computing the Fund's dollar-weighted average portfolio maturity. With respect to Income Funds, if variable rate securities are not redeemed through the demand feature, they mature on a specified date which may range up to thirty years from the date of issuance. 8 Tender Option Floating or Variable Rate Certificates. The Money Market Funds may invest in tender option bonds. A tender option bond is a synthetic floating or variable rate security issued when long term bonds are purchased in the secondary market and are then deposited into a trust. Custodial receipts are then issued to investors, such as the Funds, evidencing ownership interests in the trust. The trust sets a floating or variable rate on a daily or weekly basis which is established through a remarketing agent. These types of derivatives, to be money market eligible under Rule 2a-7, must have a liquidity facility in place which provides additional comfort to the investors in case the remarketing fails. The sponsor of the trust keeps the difference between the rate on the long term bond and the rate on the short term floating or variable rate security. Reverse Repurchase Agreements. Reverse repurchase agreements involve the sale of securities held by a Fund with an agreement to repurchase the securities at an agreed upon price and date. The repurchase price is generally equal to the original sales price plus interest. Reverse repurchase agreements are usually for seven days or less and cannot be repaid prior to their expiration dates. Reverse repurchase agreements involve the risk that the market value of the portfolio securities transferred may decline below the price at which the Fund is obliged to purchase the securities. High Quality Municipal Obligations. Investments by the Tax Free Money Market Fund will be made in unrated Municipal Obligations only if they are determined to be of comparable quality to permissible rated investments on the basis of the advisers' credit evaluation of the obligor or of the bank issuing a participation certificate, letter of credit or guaranty, or insurance issued in support of the obligation. High Quality instruments may produce a lower yield than would be available from less highly rated instruments. The Board of Trustees has determined that Municipal Obligations which are backed by the credit of U.S. Government will be considered to have a rating equivalent to Moody's Aaa. If, subsequent to purchase by the Tax Free Money Market Fund, (a) an issue of rated Municipal Obligations ceases to be rated in the highest short-term rating category by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization) or the Board of Trustees determines that it is no longer of comparable quality or (b) the Tax Free Money Market Fund's advisers become aware that any portfolio security not so highly rated or any unrated security has been given a rating by any rating organization below the rating organization's second highest rating category, the Board of Trustees will reassess promptly whether such security presents minimal credit risk and will cause such Tax Free Money Market Fund to take such action as it determines is in its best interest and that of its shareholders; provided that the reassessment required by clause (b) is not required if the portfolio security is disposed of or matures within five business days of the advisers becoming aware of the new rating and the Fund's Board is subsequently notified of the adviser's actions. To the extent that a rating given by Moody's, S&P or Fitch for Municipal Obligations may change as a result of changes in such organizations or their rating systems, the Fund will attempt to use comparable ratings as standards for its investments in accordance with the investment policies contained in the Prospectus and this Statement of Additional Information. The ratings of Moody's, S&P and Fitch represent their opinions as to the quality of the Municipal Obligations which they undertake to rate. It should be emphasized, however, that ratings are relative and subjective and are not absolute standards of quality. Although these ratings may be an initial criterion for selection of portfolio investments, the advisers also will evaluate these securities and the creditworthiness of the issuers of such securities. Zero Coupon, Payment-in-Kind and Stripped Obligations. The principal and interest components of United States Treasury bonds with remaining maturities of longer than ten years are eligible to be traded independently under the Separate Trading of Registered Interest and Principal of Securities ("STRIPS") program. Under the STRIPS program, the principal and interest components are separately issued by the United States Treasury at the request of depository financial institutions, which then trade the 9 component parts separately. The interest component of STRIPS may be more volatile than that of United States Treasury bills with comparable maturities. Zero coupon obligations are sold at a substantial discount from their value at maturity and, when held to maturity, their entire return, which consists of the amortization of discount, comes from the difference between their purchase price and maturity value. Because interest on a zero coupon obligation is not distributed on a current basis, the obligation tends to be subject to greater price fluctuations in response to changes in interest rates than are ordinary interest-paying securities with similar maturities. The value of zero coupon obligations appreciates more than such ordinary interest-paying securities during periods of declining interest rates and depreciates more than such ordinary interest-paying securities during periods of rising interest rates. Under the stripped bond rules of the Internal Revenue Code of 1986, as amended (the "Code"), investments by a Fund in zero coupon obligations will result in the accrual of interest income on such investments in advance of the receipt of the cash corresponding to such income. Zero coupon securities may be created when a dealer deposits a U.S. Treasury or federal agency security with a custodian and then sells the coupon payments and principal payment that will be generated by this security separately. Proprietary receipts, such as Certificates of Accrual on Treasury Securities, Treasury Investment Growth Receipts and generic Treasury Receipts, are examples of stripped U.S. Treasury securities separated into their component parts through such custodial arrangements. Payment-in-kind ("PIK") bonds are debt obligations which provide that the issuer thereof may, at its option, pay interest on such bonds in cash or in the form of additional debt obligations. Such investments benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. Such investments experience greater volatility in market value due to changes in interest rates than debt obligations which provide for regular payments of interest. A Fund will accrue income on such investments for tax and accounting purposes, as required, which is distributable to shareholders and which, because no cash is received at the time of accrual, may require the liquidation of other portfolio securities to satisfy the Fund's distribution obligations. Illiquid Securities. For purposes of its limitation on investments in illiquid securities, each Fund may elect to treat as liquid, in accordance with procedures established by the Board of Trustees, certain investments in restricted securities for which there may be a secondary market of qualified institutional buyers as contemplated by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and commercial obligations issued in reliance on the so-called "private placement" exemption from registration afforded by Section 4(2) of the Securities Act ("Section 4(2) paper"). Rule 144A provides an exemption from the registration requirements of the Securities Act for the resale of certain restricted securities to qualified institutional buyers. Section 4(2) paper is restricted as to disposition under the federal securities laws, and generally is sold to institutional investors such as a Fund who agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale of Section 4(2) paper by the purchaser must be in an exempt transaction. One effect of Rule 144A and Section 4(2) is that certain restricted securities may now be liquid, though there is no assurance that a liquid market for Rule 144A securities or Section 4(2) paper will develop or be maintained. The Trustees have adopted policies and procedures for the purpose of determining whether securities that are eligible for resale under Rule 144A and Section 4(2) paper are liquid or illiquid for purposes of the limitation on investment in illiquid securities. Pursuant to those policies and procedures, the Trustees have delegated to the advisers the determination as to whether a particular instrument is liquid or illiquid, requiring that consideration be given to, among other things, the frequency of trades and quotes for the security, the number of dealers willing to sell the security and the number of potential purchasers, dealer undertakings to make a market in the security, the nature of the security and the time needed to dispose of the security. The Trustees will periodically review the Funds' purchases and sales of Rule 144A securities and Section 4(2) paper. 10 Stand-By Commitments. In a put transaction, a Fund acquires the right to sell a security at an agreed upon price within a specified period prior to its maturity date, and a stand-by commitment entitles a Fund to same-day settlement and to receive an exercise price equal to the amortized cost of the underlying security plus accrued interest, if any, at the time of exercise. The amount payable to the Tax Free Money Market Fund upon its exercise of a stand-by commitment with respect to a Municipal Obligation normally would be (i) the acquisition cost of the Municipal Obligation (excluding any accrued interest paid by the Fund on the acquisition), less any amortized market premium or plus any amortized market or original issue discount during the period the Fund owned the security, plus (ii) all interest accrued on the security since the last interest payment date during the period the security was owned by the Fund. Absent unusual circumstances relating to a change in market value, the Tax Free Money Market Fund would value the underlying Municipal Obligation at amortized cost. Accordingly, the amount payable by a bank or dealer during the time a stand-by commitment is exercisable would be substantially the same as the market value of the underlying Municipal Obligation. The Tax Free Money Market Fund values stand-by commitments at zero for purposes of computing their net asset value per share. Stand-by commitments are subject to certain risks, which include the inability of the issuer of the commitment to pay for the securities at the time the commitment is exercised, the fact that the commitment is not marketable by the Fund, and that the maturity of the underlying security will generally be different from that of the commitment. Nor more than 10% of the total assets of the Tax Free Money Market Fund will be invested in Municipal Obligations that are subject to stand-by commitments from the same bank or broker-dealer. Securities Loans. To the extent specified in the Prospectuses, each Fund is permitted to lend its securities to broker-dealers and other institutional investors in order to generate additional income. Such loans of portfolio securities may not exceed 30% of the value of a Fund's total assets. In connection with such loans, a Fund will receive collateral consisting of cash, cash equivalents, U.S. Government securities or irrevocable letters of credit issued by financial institutions. Such collateral will be maintained at all times in an amount equal to at least 102% of the current market value plus accrued interest of the securities loaned. A Fund can increase its income through the investment of such collateral. A Fund continues to be entitled to the interest payable or any dividend-equivalent payments received on a loaned security and, in addition, to receive interest on the amount of the loan. However, the receipt of any dividend-equivalent payments by a Fund on a loaned security from the borrower will not qualify for the dividends-received deduction. Such loans will be terminable at any time upon specified notice. A Fund might experience risk of loss if the institutions with which it has engaged in portfolio loan transactions breach their agreements with such Fund. The risks in lending portfolio securities, as with other extensions of secured credit, consist of possible delays in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower experience financial difficulty. Loans will be made only to firms deemed by the advisers to be of good standing and will not be made unless, in the judgment of the advisers, the consideration to be earned from such loans justifies the risk. Real Estate Investment Trusts. Certain Funds may invest in shares of real estate investment trusts ("REITs"), which are pooled investment vehicles which invest primarily in income-producing real estate or real estate related loans or interests. REITs are generally classified as equity REITs or mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. The value of equity trusts will depend upon the value of the underlying properties, and the value of mortgage trusts will be sensitive to the value of the underlying loans or interests. Additional Policies Regarding Derivative and Related Transactions Introduction. As explained more fully below, the non-Money Market Funds may employ derivative and related instruments as tools in the management of portfolio assets. Put briefly, a "derivative" instrument may be considered a security or other instrument which derives its value from the value or performance of 11 other instruments or assets, interest or currency exchange rates, or indexes. For instance, derivatives include futures, options, forward contracts, structured notes and various over-the-counter instruments. Like other investment tools or techniques, the impact of using derivatives strategies or similar instruments depends to a great extent on how they are used. Derivatives are generally used by portfolio managers in three ways: first, to reduce risk by hedging (offsetting) an investment position; second, to substitute for another security particularly where it is quicker, easier and less expensive to invest in derivatives; and lastly, to speculate or enhance portfolio performance. When used prudently, derivatives can offer several benefits, including easier and more effective hedging, lower transaction costs, quicker investment and more profitable use of portfolio assets. However, derivatives also have the potential to significantly magnify risks, thereby leading to potentially greater losses for a Fund. Each Fund may invest its assets in derivative and related instruments subject only to the Fund's investment objective and policies and the requirement that the Fund maintain segregated accounts consisting of cash or other liquid assets (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under such instruments with respect to positions where there is no underlying portfolio asset so as to avoid leveraging the Fund. The value of some derivative or similar instruments in which the Funds may invest may be particularly sensitive to changes in prevailing interest rates or other economic factors, and--like other investments of the Funds--ability of a Fund to successfully utilize these instruments may depend in part upon the ability of the advisers to forecast interest rates and other economic factors correctly. If the advisers inaccurately forecast such factors and have taken positions in derivative or similar instruments contrary to prevailing market trends, a Fund could be exposed to the risk of a loss. The Funds might not employ any or all of the strategies described herein, and no assurance can be given that any strategy used will succeed. Set forth below is an explanation of the various derivatives strategies and related instruments the Funds may employ along with risks or special attributes associated with them. This discussion is intended to supplement the Funds' current prospectuses as well as provide useful information to prospective investors. Risk Factors. As explained more fully below and in the discussions of particular strategies or instruments, there are a number of risks associated with the use of derivatives and related instruments. There can be no guarantee that there will be a correlation between price movements in a hedging vehicle and in the portfolio assets being hedged. An incorrect correlation could result in a loss on both the hedged assets in a Fund and the hedging vehicle so that the portfolio return might have been greater had hedging not been attempted. This risk is particularly acute in the case of "cross-hedges" between currencies. The advisers may inaccurately forecast interest rates, market values or other economic factors in utilizing a derivatives strategy. In such a case, a Fund may have been in a better position had it not entered into such strategy. Hedging strategies, while reducing risk of loss, can also reduce the opportunity for gain. In other words, hedging usually limits both potential losses as well as potential gains. Strategies not involving hedging may increase the risk to a Fund. Certain strategies, such as yield enhancement, can have speculative characteristics and may result in more risk to a Fund than hedging strategies using the same instruments. There can be no assurance that a liquid market will exist at a time when a Fund seeks to close out an option, futures contract or other derivative or related position. Many exchanges and boards of trade limit the amount of fluctuation permitted in option or futures contract prices during a single day; once the daily limit has been reached on particular contract, no trades may be made that day at a price beyond that limit. In addition, certain instruments are relatively new and without a significant trading history. As a result, there is no assurance that an active secondary market will develop or continue to exist. Finally, over-the-counter instruments typically do not have a liquid market. Lack of a liquid market for any reason may prevent a Fund from liquidating an unfavorable position. Activities of large traders in the futures and securities markets involving arbitrage, "program trading," and other investment strategies may cause price distortions in these markets. In certain instances, particularly 12 those involving over-the-counter transactions, forward contracts there is a greater potential that a counterparty or broker may default or be unable to perform on its commitments. In the event of such a default, a Fund may experience a loss. In transactions involving currencies, the value of the currency underlying an instrument may fluctuate due to many factors, including economic conditions, interest rates, governmental policies and market forces. Specific Uses and Strategies. Set forth below are explanations of various strategies involving derivatives and related instruments which may be used by a Fund. Options on Securities, Securities Indexes and Debt Instruments. A Fund may purchase, sell or exercise call and put options on (i) securities, (ii) securities indexes, and (iii) debt instruments. Although in most cases these options will be exchange-traded, the Funds may also purchase, sell or exercise over-the-counter options. Over-the-counter options differ from exchange-traded options in that they are two-party contracts with price and other terms negotiated between buyer and seller. As such, over-the-counter options generally have much less market liquidity and carry the risk of default or nonperformance by the other party. One purpose of purchasing put options is to protect holdings in an underlying or related security against a substantial decline in market value. One purpose of purchasing call options is to protect against substantial increases in prices of securities the Fund intends to purchase pending its ability to invest in such securities in an orderly manner. A Fund may also use combinations of options to minimize costs, gain exposure to markets or take advantage of price disparities or market movements. For example, a Fund may sell put or call options it has previously purchased or purchase put or call options it has previously sold. These transactions may result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. A Fund may write a call or put option in order to earn the related premium from such transactions. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of a similar option. The Funds will not write uncovered options. In addition to the general risk factors noted above, the purchase and writing of options involve certain special risks. During the option period, a Fund writing a covered call (i.e., where the underlying securities are held by the Fund) has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying securities above the exercise price, but has retained the risk of loss should the price of the underlying securities decline. The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying securities at the exercise price. The Funds will not write uncovered options. If a put or call option purchased by a Fund is not sold when it has remaining value, and if the market price of the underlying security, in the case of a put, remains equal to or greater than the exercise price or, in the case of a call, remains less than or equal to the exercise price, such Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more or less than the price of the related security. There can be no assurance that a liquid market will exist when a Fund seeks to close out an option position. Furthermore, if trading restrictions or suspensions are imposed on the options markets, a Fund may be unable to close out a position. Futures Contracts and Options on Futures Contracts. A Fund may purchase or sell (i) interest-rate futures contracts, (ii) futures contracts on specified instruments or indices, and (iii) options on these futures contracts ("futures options"). 13 The futures contracts and futures options may be based on various instruments or indices in which the Funds may invest such as foreign currencies, certificates of deposit, Eurodollar time deposits, securities indices, economic indices (such as the Consumer Price Indices compiled by the U.S. Department of Labor). Futures contracts and futures options may be used to hedge portfolio positions and transactions as well as to gain exposure to markets. For example, a Fund may sell a futures contract--or buy a futures option--to protect against a decline in value, or reduce the duration, of portfolio holdings. Likewise, these instruments may be used where a Fund intends to acquire an instrument or enter into a position. For example, a Fund may purchase a futures contract--or buy a futures option--to gain immediate exposure in a market or otherwise offset increases in the purchase price of securities or currencies to be acquired in the future. Futures options may also be written to earn the related premiums. When writing or purchasing options, the Funds may simultaneously enter into other transactions involving futures contracts or futures options in order to minimize costs, gain exposure to markets, or take advantage of price disparities or market movements. Such strategies may entail additional risks in certain instances. The Funds may engage in cross-hedging by purchasing or selling futures or options on a security or currency different from the security or currency position being hedged to take advantage of relationships between the two securities or currencies. Investments in futures contracts and options thereon involve risks similar to those associated with options transactions discussed above. The Funds will only enter into futures contracts or options on futures contracts which are traded on a U.S. or foreign exchange or board of trade, or similar entity, or quoted on an automated quotation system. Forward Contracts. A Fund may use foreign currency and interest-rate forward contracts for various purposes as described below. Foreign currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by the forces of supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or perceived changes in interest rates and other complex factors, as seen from an international perspective. A Fund that may invest in securities denominated in foreign currencies may, in addition to buying and selling foreign currency futures contracts and options on foreign currencies and foreign currency futures, enter into forward foreign currency exchange contracts to reduce the risks or otherwise take a position in anticipation of changes in foreign exchange rates. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be a fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. By entering into a forward foreign currency contract, a Fund "locks in" the exchange rate between the currency it will deliver and the currency it will receive for the duration of the contract. As a result, a Fund reduces its exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will exchange into. The effect on the value of a Fund is similar to selling securities denominated in one currency and purchasing securities denominated in another. Transactions that use two foreign currencies are sometimes referred to as "cross-hedges." A Fund may enter into these contracts for the purpose of hedging against foreign exchange risk arising from the Fund's investments or anticipated investments in securities denominated in foreign currencies. A Fund may also enter into these contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. A Fund may also use forward contracts to hedge against changes in interest rates, increase exposure to a market or otherwise take advantage of such changes. An interest-rate forward contract involves the obligation to purchase or sell a specific debt instrument at a fixed price at a future date. 14 Interest Rate and Currency Transactions. A Fund may employ currency and interest rate management techniques, including transactions in options (including yield curve options), futures, options on futures, forward foreign currency exchange contracts, currency options and futures and currency and interest rate swaps. The aggregate amount of a Fund's net currency exposure will not exceed the total net asset value of its portfolio. However, to the extent that a Fund is fully invested while also maintaining currency positions, it may be exposed to greater combined risk. The Funds will only enter into interest rate and currency swaps on a net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Interest rate and currency swaps do not involve the delivery of securities, the underlying currency, other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate and currency swaps is limited to the net amount of interest or currency payments that a Fund is contractually obligated to make. If the other party to an interest rate or currency swap defaults, a Fund's risk of loss consists of the net amount of interest or currency payments that the Fund is contractually entitled to receive. Since interest rate and currency swaps are individually negotiated, the Funds expect to achieve an acceptable degree of correlation between their portfolio investments and their interest rate or currency swap positions. A Fund may hold foreign currency received in connection with investments in foreign securities when it would be beneficial to convert such currency into U.S. dollars at a later date, based on anticipated changes in the relevant exchange rate. A Fund may purchase or sell without limitation as to a percentage of its assets forward foreign currency exchange contracts when the advisers anticipate that the foreign currency will appreciate or depreciate in value, but securities denominated in that currency do not present attractive investment opportunities and are not held by such Fund. In addition, a Fund may enter into forward foreign currency exchange contracts in order to protect against adverse changes in future foreign currency exchange rates. A Fund may engage in cross-hedging by using forward contracts in one currency to hedge against fluctuations in the value of securities denominated in a different currency if its advisers believe that there is a pattern of correlation between the two currencies. Forward contracts may reduce the potential gain from a positive change in the relationship between the U.S. Dollar and foreign currencies. Unanticipated changes in currency prices may result in poorer overall performance for a Fund than if it had not entered into such contracts. The use of foreign currency forward contracts will not eliminate fluctuations in the underlying U.S. dollar equivalent value of the prices of or rates of return on a Fund's foreign currency denominated portfolio securities and the use of such techniques will subject the Fund to certain risks. The matching of the increase in value of a forward contract and the decline in the U.S. dollar equivalent value of the foreign currency denominated asset that is the subject of the hedge generally will not be precise. In addition, a Fund may not always be able to enter into foreign currency forward contracts at attractive prices, and this will limit a Fund's ability to use such contract to hedge or cross-hedge its assets. Also, with regard to a Fund's use of cross-hedges, there can be no assurance that historical correlations between the movement of certain foreign currencies relative to the U.S. dollar will continue. Thus, at any time poor correlation may exist between movements in the exchange rates of the foreign currencies underlying a Fund's cross-hedges and the movements in the exchange rates of the foreign currencies in which the Fund's assets that are the subject of such cross-hedges are denominated. A Fund may enter into interest rate and currency swaps to the maximum allowed limits under applicable law. A Fund will typically use interest rate swaps to shorten the effective duration of its portfolio. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest, such as an exchange of fixed rate payments for floating rate payments. Currency swaps involve the exchange of their respective rights to make or receive payments in specified currencies. Mortgage-Related Securities. A Fund may purchase mortgage-backed securities--i.e., securities representing an ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, 15 commercial banks and savings and loan associations. Mortgage loans included in the pool--but not the security itself--may be insured by the Government National Mortgage Association or the Federal Housing Administration or guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Veterans Administration. Mortgage-backed securities provide investors with payments consisting of both interest and principal as the mortgages in the underlying mortgage pools are paid off. Although providing the potential for enhanced returns, mortgage-backed securities can also be volatile and result in unanticipated losses. The average life of a mortgage-backed security is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures will usually result in the return of the greater part of the principal invested far in advance of the maturity of the mortgages in the pool. The actual rate of return of a mortgage-backed security may be adversely affected by the prepayment of mortgages included in the mortgage pool underlying the security. A Fund may also invest in securities representing interests in collateralized mortgage obligations ("CMOs"), real estate mortgage investment conduits ("REMICs") and in pools of certain other asset-backed bonds and mortgage pass-through securities. Like a bond, interest and prepaid principal are paid, in most cases, monthly. CMOs may be collateralized by whole mortgage loans but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by the U.S. Government, or U.S. Government- related entities, and their income streams. CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, are allocated to different classes in accordance with the terms of the instruments, and changes in prepayment rates or assumptions may significantly affect the expected average life and value of a particular class. REMICs include governmental and/or private entities that issue a fixed pool of mortgages secured by an interest in real property. REMICs are similar to CMOs in that they issue multiple classes of securities. REMICs issued by private entities are not U.S. Government securities and are not directly guaranteed by any government agency. They are secured by the underlying collateral of the private issuer. The advisers expect that governmental, government-related or private entities may create mortgage loan pools and other mortgage-related securities offering mortgage pass-through and mortgage-collateralized investments in addition to those described above. The mortgages underlying these securities may include alternative mortgage instruments, that is, mortgage instruments whose principal or interest payments may vary or whose terms to maturity may differ from customary long-term fixed-rate mortgages. A Fund may also invest in debentures and other securities of real estate investment trusts. As new types of mortgage-related securities are developed and offered to investors, the Funds may consider making investments in such new types of mortgage-related securities. Dollar Rolls. Under a mortgage "dollar roll," a Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, a Fund forgoes principal and interest paid on the mortgage-backed securities. A Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase (often referred to as the "drop") as well as by the interest earned on the cash proceeds of the initial sale. A Fund may only enter into covered rolls. A "covered roll" is a specific type of dollar roll for which there is an offsetting cash position which matures on or before the forward settlement date of the dollar roll transaction. At the time a Fund enters into a mortgage "dollar roll," it will establish a segregated account with its custodian bank in which it will maintain cash or liquid securities equal in value to its obligations in respect of dollar rolls, and accordingly, such dollar rolls will not be considered senior securities. Mortgage dollar 16 rolls involve the risk that the market value of the securities the Fund is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a mortgage dollar roll files for bankruptcy or becomes insolvent, the Fund's use of proceeds of the dollar roll may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. Asset-Backed Securities. A Fund may invest in asset-backed securities, including conditional sales contracts, equipment lease certificates and equipment trust certificates. The advisers expect that other asset-backed securities (unrelated to mortgage loans) will be offered to investors in the future. Several types of asset-backed securities already exist, including, for example, "Certificates for Automobile ReceivablesSM" or "CARSSM" ("CARS"). CARS represent undivided fractional interests in a trust whose assets consist of a pool of motor vehicle retail installment sales contracts and security interests in the vehicles securing the contracts. Payments of principal and interest on CARS are passed-through monthly to certificate holders, and are guaranteed up to certain amounts and for a certain time period by a letter of credit issued by a financial institution unaffiliated with the trustee or originator of the CARS trust. An investor's return on CARS may be affected by early prepayment of principal on the underlying vehicle sales contracts. If the letter of credit is exhausted, the CARS trust may be prevented from realizing the full amount due on a sales contract because of state law requirements and restrictions relating to foreclosure sales of vehicles and the obtaining of deficiency judgments following such sales or because of depreciation, damage or loss of a vehicle, the application of federal and state bankruptcy and insolvency laws, the failure of servicers to take appropriate steps to perfect the CARS trust's rights in the underlying loans and the servicer's sale of such loans to bona fide purchasers, giving rise to interests in such loans superior to those of the CARS trust, or other factors. As a result, certificate holders may experience delays in payments or losses if the letter of credit is exhausted. A Fund also may invest in other types of asset-backed securities. In the selection of other asset-backed securities, the advisers will attempt to assess the liquidity of the security giving consideration to the nature of the security, the frequency of trading in the security, the number of dealers making a market in the security and the overall nature of the marketplace for the security. Structured Products. A Fund may invest in interests in entities organized and operated solely for the purpose of restructuring the investment characteristics of certain other investments. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, or specified instruments (such as commercial bank loans) and the issuance by that entity of one or more classes of securities ("structured products") backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued structured products to create securities with different investment characteristics such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to structured products is dependent on the extent of the cash flow on the underlying instruments. A Fund may invest in structured products which represent derived investment positions based on relationships among different markets or asset classes. A Fund may also invest in other types of structured products, including, among others, inverse floaters, spread trades and notes linked by a formula to the price of an underlying instrument. Inverse floaters have coupon rates that vary inversely at a multiple of a designated floating rate (which typically is determined by reference to an index rate, but may also be determined through a dutch auction or a remarketing agent or by reference to another security) (the "reference rate"). As an example, inverse floaters may constitute a class of CMOs with a coupon rate that moves inversely to a designated index, such as LIBOR (London Interbank Offered Rate) or the Cost of Funds Index. Any rise in the reference rate of an inverse floater (as a consequence of an increase in interest rates) causes a drop in the coupon rate while any drop in the reference rate of an inverse floater causes an increase in the coupon rate. A spread trade is an investment position relating to a difference in the prices or interest rates of two securities where the value of the investment position is determined by movements in the difference between the prices or interest rates, as the case may be, 17 of the respective securities. When a Fund invests in notes linked to the price of an underlying instrument, the price of the underlying security is determined by a multiple (based on a formula) of the price of such underlying security. A structured product may be considered to be leveraged to the extent its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest. Because they are linked to their underlying markets or securities, investments in structured products generally are subject to greater volatility than an investment directly in the underlying market or security. Total return on the structured product is derived by linking return to one or more characteristics of the underlying instrument. Because certain structured products of the type in which a Fund may invest may involve no credit enhancement, the credit risk of those structured products generally would be equivalent to that of the underlying instruments. A Fund may invest in a class of structured products that is either subordinated or unsubordinated to the right of payment of another class. Subordinated structured products typically have higher yields and present greater risks than unsubordinated structured products. Although a Fund's purchase of subordinated structured products would have similar economic effect to that of borrowing against the underlying securities, the purchase will not be deemed to be leverage for purposes of a Fund's fundamental investment limitation related to borrowing and leverage. Certain issuers of structured products may be deemed to be "investment companies" as defined in the 1940 Act. As a result, a Fund's investments in these structured products may be limited by the restrictions contained in the 1940 Act. Structured products are typically sold in private placement transactions, and there currently is no active trading market for structured products. As a result, certain structured products in which an Income Fund invests may be deemed illiquid and subject to its limitation on illiquid investments. Investments in structured products generally are subject to greater volatility than an investment directly in the underlying market or security. In addition, because structured products are typically sold in private placement transactions, there currently is no active trading market for structured products. Additional Restrictions on the Use of Futures and Option Contracts. None of the Funds is a "commodity pool" (i.e., a pooled investment vehicle which trades in commodity futures contracts and options thereon and the operator of which is registered with the CFTC and futures contracts and futures options will be purchased, sold or entered into only for bona fide hedging purposes, provided that a Fund may enter into such transactions for purposes other than bona fide hedging if, immediately thereafter, the sum of the amount of its initial margin and premiums on open contracts and options would not exceed 5% of the liquidation value of the Fund's portfolio, provided, further, that, in the case of an option that is in-the-money, the in-the-money amount may be excluded in calculating the 5% limitation. When a Fund purchases a futures contract, an amount of cash or cash equivalents or high quality debt securities will be deposited in a segregated account with such Fund's custodian or sub-custodian so that the amount so segregated, plus the initial deposit and variation margin held in the account of its broker, will at all times equal the value of the futures contract, thereby insuring that the use of such futures is unleveraged. In addition to the foregoing requirements, the Board of Trustees has adopted an additional restriction on the use of futures contracts and options thereon, requiring that the aggregate market value of the futures contracts held by a Fund not exceed 50% of the market value of its total assets. Neither this restriction nor any policy with respect to the above-referenced restrictions, would be changed by the Board of Trustees without considering the policies and concerns of the various federal and state regulatory agencies. Master-Feeder Structure Unlike other mutual funds which directly acquire and manage their own portfolio securities, each Fund is permitted to invest all of its investable assets in a separate registered investment company (a "Master Portfolio"). The Core Equity Fund and Equity Growth Fund utilize this structure. In that event, a shareholder's 18 interest in a Fund's underlying investment securities would be indirect. In addition to selling a beneficial interest to a Fund, a Master Portfolio could also sell beneficial interests to other mutual funds or institutional investors. Such investors would invest in such Master Portfolio on the same terms and conditions and would pay a proportionate share of such Master Portfolio's expenses. However, other investors in a Master Portfolio would not be required to sell their shares at the same public offering price as a Fund, and might bear different levels of ongoing expenses than a Fund. Shareholders of the Funds should be aware that these differences may result in differences in returns experienced in the different funds that invest in a Master Portfolio. Such differences in return are also present in other mutual fund structures. Smaller funds investing in a Master Portfolio could be materially affected by the actions of larger funds investing in the Master Portfolio. For example, if a large fund were to withdraw from a Master Portfolio, the remaining funds might experience higher pro rata operating expenses, thereby producing lower returns. Additionally, the Master Portfolio could become less diverse, resulting in increased portfolio risk. However, this possibility also exists for traditionally structured funds which have large or institutional investors. Funds with a greater pro rata ownership in a Master Portfolio could have effective voting control of such Master Portfolio. Under this master/feeder investment approach, whenever the Trust was requested to vote on matters pertaining to a Master Portfolio, the Trust would hold a meeting of shareholders of the relevant Fund and would cast all of its votes in the same proportion as did such Fund's shareholders. Shares of a Fund for which no voting instructions had been received would be voted in the same proportion as those shares for which voting instructions had been received. Certain changes in a Master Portfolio's objective, policies or restrictions might require the Trust to withdraw the relevant Fund's interest in such Master Portfolio. Any such withdrawal could result in a distribution in kind of portfolio securities (as opposed to a cash distribution from such Master Portfolio). A Fund could incur brokerage fees or other transaction costs in converting such securities to cash. In addition, a distribution in kind could result in a less diversified portfolio of investments or adversely affect the liquidity of the relevant Fund. A Fund will not adopt a master/feeder structure under which the disinterested Trustees of the Trust are Trustees of the Master Portfolio unless the Trustees of the Trust, including a majority of the disinterested Trustees, adopt procedures they believe to be reasonably appropriate to deal with any conflict of interest up to and including creating a separate Board of Trustees. If a Fund invests all of its investable assets in a Master Portfolio, investors in the Fund will be able to obtain information about whether investment in the Master Portfolio might be available through other funds by contacting the Chase Funds Service Center. In the event a Fund adopts a master/feeder structure and invests all of its investable assets in a Master Portfolio, shareholders of the Fund will be given at least 30 days' prior written notice. Investment Restrictions The Funds have adopted the following investment restrictions which may not be changed without approval by a "majority of the outstanding shares" of a Fund or Portfolio which, as used in this Statement of Additional Information, means the vote of the lesser of (i) 67% or more of the shares of a Fund or total beneficial interests of a Portfolio present at a meeting, if the holders of more than 50% of the outstanding shares of a Fund or total beneficial interests of a Portfolio are present or represented by proxy, or (ii) more than 50% of the outstanding shares of a Fund or total beneficial interests of a Portfolio. Whenever the Trust is requested to vote on a fundamental policy of a Portfolio, the Trust will hold a meeting of shareholders of the Fund that invests in such Portfolio and will cast its votes as instructed by the shareholders of such Fund. With respect to the Core Equity Fund and the Equity Growth Fund, it is a fundamental policy of each Fund that when the Fund holds no portfolio securities except interests in the Portfolio in which it invests, the 19 Fund's investment objective and policies shall be identical to the Portfolio's investment objective and policies, except for the following: a Fund (1) may invest more than 10% of its net assets in the securities of a registered investment company, (2) may hold more than 10% of the voting securities of a registered investment company, and (3) will concentrate its investments in the investment company. It is a fundamental investment policy of each such Fund that when the Fund holds only portfolio securities other than interests in the Portfolio, the Fund's investment objective and policies shall be identical to the investment objective and policies of the Portfolio at the time the assets of the Fund were withdrawn from the Portfolio. Each Fund may not: (1) borrow money, except that each Fund may borrow money for temporary or emergency purposes, or by engaging in reverse repurchase transactions, in an amount not exceeding 33 1/3% of the value of its total assets at the time when the loan is made and may pledge, mortgage or hypothecate no more than 1/3 of its net assets to secure such borrowings. Any borrowings representing more than 5% of a Fund's total assets must be repaid before the Fund may make additional investments; (2) make loans, except that each Fund may: (i) purchase and hold debt instruments (including without limitation, bonds, notes, debentures or other obligations and certificates of deposit, bankers' acceptances and fixed time deposits) in accordance with its investment objectives and policies; (ii) enter into repurchase agreements with respect to portfolio securities; and (iii) lend portfolio securities with a value not in excess of one-third of the value of its total assets; (3) purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, or repurchase agreements secured thereby) if, as a result, more than 25% of the Fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry. Notwithstanding the foregoing, (i) with respect to a Fund's permissible futures and options transactions in U.S. Government securities, positions in such options and futures shall not be subject to this restriction; (ii) the Money Market Funds may invest more than 25% of their total assets in obligations issued by banks, including U.S. banks; and (iii) the Tax Free Money Market Fund may invest more than 25% of its assets in municipal obligations secured by bank letters of credit or guarantees, including participation certificates. (4) purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments but this shall not prevent a Fund from (i) purchasing or selling options and futures contracts or from investing in securities or other instruments backed by physical commodities or (ii) engaging in forward purchases or sales of foreign currencies or securities; (5) purchase or sell real estate unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a Fund from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business). Investments by a Fund in securities backed by mortgages on real estate or in marketable securities of companies engaged in such activities are not hereby precluded; (6) issue any senior security (as defined in the 1940 Act), except that (a) a Fund may engage in transactions that may result in the issuance of senior securities to the extent permitted under applicable regulations and interpretations of the 1940 Act or an exemptive order; (b) a Fund may acquire other securities, the acquisition of which may result in the issuance of a senior security, to the extent permitted under applicable regulations or interpretations of the 1940 Act; and (c) subject to the restrictions set forth above, a Fund may borrow money as authorized by the 1940 Act. For purposes of this restriction, collateral arrangements with respect to permissible options and futures transactions, including deposits of initial and variation margin, are not considered to be the issuance of a senior security; or 20 (7) underwrite securities issued by other persons except insofar as a Fund may technically be deemed to be an underwriter under the Securities Act of 1933 in selling a portfolio security. In addition, as a matter of fundamental policy, notwithstanding any other investment policy or restriction, each Fund may seek to achieve its investment objective by investing all of its investable assets in another investment company having substantially the same investment objective and policies as the Fund. For purposes of investment restriction (2) above, loan participations are considered to be debt instruments. For purposes of investment restriction (5) above, real estate includes Real Estate Limited Partnerships. For purposes of investment restriction (3) above, industrial development bonds, where the payment of principal and interest is the ultimate responsibility of companies within the same industry, are grouped together as an "industry." Investment restriction (3) above, however, is not applicable to investments by a Fund in municipal obligations where the issuer is regarded as a state, city, municipality or other public authority since such entities are not members of an "industry." Supranational organizations are collectively considered to be members of a single "industry" for purposes of restriction (3) above. For purposes of investment restriction (3) above, the Money Market Funds may invest more than 25% of their respective total assets in obligations issued by banks, including foreign branches of U.S. banks where the investment risk of investing in the foreign branch is the same as that of investing in the U.S. parent, in that the U.S. parent would be unconditionally liable in the event the foreign branch failed to pay on its instruments for any reason. In addition, each Fund is subject to the following nonfundamental restrictions which may be changed without shareholder approval: (1) Each Fund other than the Tax Free Income Fund and New York Tax Free Income Fund may not, with respect to 75% of its assets, hold more than 10% of the outstanding voting securities of any issuer or invest more than 5% of its assets in the securities of any one issuer (other than obligations of the U.S. Government, its agencies and instrumentalities); each of the Tax Free Income Fund and New York Tax Free Income Fund may not, with respect to 50% of its assets, hold more than 10% of the outstanding voting securities of any issuer. (2) Each Fund may not make short sales of securities, other than short sales "against the box," or purchase securities on margin except for short-term credits necessary for clearance of portfolio transactions, provided that this restriction will not be applied to limit the use of options, futures contracts and related options, in the manner otherwise permitted by the investment restrictions, policies and investment program of a Fund. (3) Each Fund may not purchase or sell interests in oil, gas or mineral leases. (4) Each Fund other than the Money Market Funds may not invest more than 15% of its net assets in illiquid securities; each Money Market Fund may not invest more than 10% of its net assets in illiquid securities. (5) Each Fund may not write, purchase or sell any put or call option or any combination thereof, provided that this shall not prevent (i) the writing, purchasing or selling of puts, calls or combinations thereof with respect to portfolio securities or (ii) with respect to a Fund's permissible futures and options transactions, the writing, purchasing, ownership, holding or selling of futures and options positions or of puts, calls or combinations thereof with respect to futures. (6) Except as specified above, each Fund may invest up to 5% of its total assets in the securities of any one investment company, but may not own more than 3% of the securities of any one investment company or invest more than 10% of its total assets in the securities of other investment companies. 21 For purposes of the Funds' investment restrictions, the issuer of a tax-exempt security is deemed to be the entity (public or private) ultimately responsible for the payment of the principal of and interest on the security. If a percentage or rating restriction on investment or use of assets set forth herein or in a Prospectus is adhered to at the time a transaction is effected, later changes in percentage resulting from any cause other than actions by a Fund will not be considered a violation. If the value of a Fund's holdings of illiquid securities at any time exceeds the percentage limitation applicable at the time of acquisition due to subsequent fluctuations in value or other reasons, the Board of Trustees will consider what actions, if any, are appropriate to maintain adequate liquidity. Portfolio Transactions and Brokerage Allocation Specific decisions to purchase or sell securities for a Fund are made by a portfolio manager who is an employee of the adviser or sub-adviser to such Fund and who is appointed and supervised by senior officers of such adviser or sub-adviser. Changes in a Fund's investments are reviewed by the Board of Trustees of the Trust or Master Trust, as the case may be. The portfolio managers may serve other clients of the advisers in a similar capacity. The frequency of a Fund's portfolio transactions--the portfolio turnover rate--will vary from year to year depending upon market conditions. Because a high turnover rate may increase transaction costs and the possibility of taxable short-term gains, the advisers will weigh the added costs of short-term investment against anticipated gains. Each Fund will engage in portfolio trading if its advisers believe a transaction, net of costs (including custodian charges), will help it achieve its investment objective. Funds investing in both equity and debt securities apply this policy with respect to both the equity and debt portions of their portfolios. For the fiscal years ended December 31, 1997, 1998 and 1999, the annual rates of portfolio turnover for the following Funds (or their predecessors) were as follows:
Funds 1997* 1998 1999 - ----- ----- ---- ---- Balanced Fund 64% 58% 45% Core Equity Fund ** 24% 32% 11% Equity Growth Fund ** 35% 35% 15% Equity Income Fund 14% 3% 16% Income Fund 97% 54% 120% Intermediate Term Bond Fund 14% 135% 85% Short-Intermediate Term U.S. Government Securities Fund 63% 87% 91% Small Capitalization Fund 43% 45% 60% U.S. Government Securities Fund 87% 110% 19% Equity Growth II Fund *** N/A N/A 5%
- ---------- * The portfolio turnover rates for fiscal year 1997 relate to predecessors Funds of the AVESTA Trust. ** The portfolio turnover for fiscal year 1999 was calculated from January 1, 1999 to August 11, 1999. After August 11, 1999, Core Equity Fund and Equity Growth Fund invest all of their investable assets in Core Equity Portfolio and Equity Growth Portfolio, respectively. *** The portfolio turnover for fiscal year 1999 was calculated from July 1, 1999 (commencement of opera-tions) to December 31, 1999. As of August 12, 1999, Core Equity Fund and Equity Growth Fund invest all of their investable assets in Core Equity Portfolio and Equity Growth Portfolio, respectively. Core Equity Portfolio and Equity Growth 22 Portfolio are series of Mutual Fund Master Investment Trust. The portfolio turnover rates of Core Equity Portfolio and Equity Growth Portfolio for the period from August 12, 1999 (commencement of operations) to December 31, 1999 were 6% and 1%, respectively. For the fiscal year ended December 31, 2000, the annual rates of portfolio turnover for the International Equity Fund, Mid Cap Growth Fund, New York Tax Free Income Fund and Tax Free Income Fund are each expected not to exceed 200%. Under the advisory agreement and the sub-advisory agreements, the adviser and sub-advisers shall use their best efforts to seek to execute portfolio transactions at prices which, under the circumstances, result in total costs or proceeds being the most favorable to the Funds. In assessing the best overall terms available for any transaction, the adviser and sub-advisers consider all factors they deem relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, research services provided to the adviser and sub-advisers, and the reasonableness of the commissions, if any, both for the specific transaction and on a continuing basis. The adviser and sub-advisers are not required to obtain the lowest commission or the best net price for any Fund on any particular transaction, and are not required to execute any order in a fashion either preferential to any Fund relative to other accounts they manage or otherwise materially adverse to such other accounts. Debt securities are traded principally in the over-the-counter market through dealers acting on their own account and not as brokers. In the case of securities traded in the over-the-counter market (where no stated commissions are paid but the prices include a dealer's markup or markdown), the adviser or sub-adviser to a Fund normally seeks to deal directly with the primary market makers unless, in its opinion, best execution is available elsewhere. In the case of securities purchased from underwriters, the cost of such securities generally includes a fixed underwriting commission or concession. From time to time, soliciting dealer fees are available to the adviser or sub-adviser on the tender of a Fund's portfolio securities in so-called tender or exchange offers. Such soliciting dealer fees are in effect recaptured for a Fund by the adviser and sub-adviser. At present, no other recapture arrangements are in effect. Under the advisory and sub-advisory agreements and as permitted by Section 28(e) of the Securities Exchange Act of 1934, the adviser or sub-advisers may cause the Funds to pay a broker-dealer which provides brokerage and research services to the adviser or sub-advisers, the Funds and/or other accounts for which they exercise investment discretion an amount of commission for effecting a securities transaction for a Fund in excess of the amount other broker-dealers would have charged for the transaction if they determine in good faith that the greater commission is reasonable in relation to the value of the brokerage and research services provided by the executing broker-dealer viewed in terms of either a particular transaction or their overall responsibilities to accounts over which they exercise investment discretion. Not all of such services are useful or of value in advising the Funds. The adviser and sub-advisers report to the Board of Trustees regarding overall commissions paid by the Funds and their reasonableness in relation to the benefits to the Funds. The term "brokerage and research services" includes advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or of purchasers or sellers of securities, furnishing analyses and reports concerning issues, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts, and effecting securities transactions and performing functions incidental thereto such as clearance and settlement. The management fees that the Funds pay to the adviser will not be reduced as a consequence of the adviser's or sub-advisers' receipt of brokerage and research services. To the extent the Funds' portfolio transactions are used to obtain such services, the brokerage commissions paid by the Funds will exceed those that might otherwise be paid by an amount which cannot be presently determined. Such services generally would be useful and of value to the adviser or sub-advisers in serving one or more of their other clients and, conversely, such services obtained by the placement of brokerage business of other clients generally would be useful to the adviser or sub-advisers in carrying out their obligations to the Funds. While such ser- 23 vices are not expected to reduce the expenses of the adviser or sub-advisers, the advisers would, through use of the services, avoid the additional expenses which would be incurred if they should attempt to develop comparable information through their own staffs. In certain instances, there may be securities that are suitable for one or more of the Funds as well as one or more of the adviser's or sub-advisers' other clients. Investment decisions for the Funds and for other clients are made with a view to achieving their respective investment objectives. It may develop that the same investment decision is made for more than one client or that a particular security is bought or sold for only one client even though it might be held by, or bought or sold for, other clients. Likewise, a particular security may be bought for one or more clients when one or more clients are selling that same security. Some simultaneous transactions are inevitable when several clients receive investment advice from the same investment adviser, particularly when the same security is suitable for the investment objectives of more than one client. When two or more Funds or other clients are simultaneously engaged in the purchase or sale of the same security, the securities are allocated among clients in a manner believed to be equitable to each. It is recognized that in some cases this system could have a detrimental effect on the price or volume of the security as far as the Funds are concerned. However, it is believed that the ability of the Funds to participate in volume transactions will generally produce better executions for the Funds. For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds and Portfolios paid brokerage commissions as detailed below:
1997* 1998 1999 ------- -------- ------- Balanced Fund $15,780 $ 28,076 $32,417 Core Equity Fund 35,767 73,487 81,691** Equity Growth Fund 55,780 155,024 83,170** Equity Income Fund 27,089 34,168 75,480 Small Capitalization Fund 48,136 97,991 165,867 Equity Growth II Fund*** N/A N/A 25,477
- ---------- * For the fiscal year 1997, represents brokerage commissions paid by predecessor Funds from the AVESTA Trust. ** Represents brokerage commissions paid for the period January 1, 1999 through August 11, 1999. After August 11, 1999, Core Equity Fund and Equity Growth Fund invest all of their investable assets in Core Equity Portfolio and Equity Growth Portfolio, respectively. *** Represents brokerage commissions paid for the period July 1, 1999 (commencement of operations) through December 31, 1999. For the period from August 12, 1999 (commencement of operations) through December 31, 1999, Core Equity Portfolio and Equity Growth Portfolio paid aggregate broker commissions of $47,626 and $2,409, respectively. No portfolio transactions are executed with the advisers or with any affiliate of the advisers, acting either as principal or as broker. PERFORMANCE INFORMATION The discussion in this "Performance Information" section shall not apply to the Portfolios. From time to time, a Fund may use hypothetical investment examples and performance information in advertisements, shareholder reports or other communications to shareholders. Because such performance information is based on past investment results, it should not be considered as an indication or representation of the performance of any classes of a Fund in the future. From time to time, the performance and yield of classes of a Fund may be quoted and compared to those of other mutual funds with similar investment objectives, 24 unmanaged investment accounts, including savings accounts, or other similar products and to stock or other relevant indices or to rankings prepared by independent services or other financial or industry publications that monitor the performance of mutual funds. For example, the performance of a Fund or its classes may be compared to data prepared by Lipper Analytical Services, Inc. or Morningstar Mutual Funds on Disc, widely recognized independent services which monitor the performance of mutual funds. Performance and yield data as reported in national financial publications including, but not limited to, Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or in local or regional publications, may also be used in comparing the performance and yield of a Fund or its classes. A Fund's performance may be compared with indices such as the Lehman Brothers Government/Corporate Bond Index, the Lehman Brothers Government Bond Index, the Lehman Government Bond 1-3 Year Index and the Lehman Aggregate Bond Index; the S&P 500 Index, the S&P 400 Mid Cap Index, the S&P 600 Small Cap Index, the Dow Jones Industrial Average or any other commonly quoted index of common stock prices; and the Russell 2000 Index and the NASDAQ Composite Index. Additionally, a Fund may, with proper authorization, reprint articles written about such Fund and provide them to prospective shareholders. A Fund may provide period and average annual "total rates of return." The "total rate of return" refers to the change in the value of an investment in a Fund over a period (which period shall be stated in any advertisement or communication with a shareholder) based on any change in net asset value per share including the value of any shares purchased through the reinvestment of any dividends or capital gains distributions declared during such period. One-, five-, and ten-year periods will be shown, unless the class has been in existence for a shorter period. Unlike some bank deposits or other investments which pay a fixed yield for a stated period of time, the yields and the net asset values (in the case of the non-Money Market Funds) of the classes of shares of a Fund will vary based on market conditions, the current market value of the securities held by the Fund and changes in the Fund's expenses. The advisers, the Administrator, the Distributor and other service providers may voluntarily waive a portion of their fees on a month-to-month basis. In addition, the Distributor may assume a portion of a Fund's operating expenses on a month-to-month basis. These actions would have the effect of increasing the net income (and therefore the yield and total rate of return) of the classes of shares of the Fund during the period such waivers are in effect. These factors and possible differences in the methods used to calculate the yields and total rates of return should be considered when comparing the yields or total rates of return of the classes of shares of a Fund to yields and total rates of return published for other investment companies and other investment vehicles (including different classes of shares). Each Fund presents performance information for each class thereof since the commencement of operations of that Fund (or the related predecessor fund, as described below), rather than the date such class was introduced. Performance information for each class introduced after the commencement of operations of the related Fund (or predecessor fund) is therefore based on the performance history of a predecessor class. Historical expenses reflected in performance information are based upon the distribution and other expenses actually incurred during the periods presented and have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. In connection with the Avesta Conversion, each of the Balanced, Core Equity, Equity Growth, Equity Income, Income, Intermediate Term Bond, Money Market, Short-Intermediate Term U.S. Government Securities, Small Capitalization and U.S. Government Securities Funds of the Trust was established to receive the assets of the corresponding investment portfolio of the AVESTA Trust, a collective investment trust organized under Texas law. Performance results presented for each class of the Chase Funds include the performance of the corresponding investment portfolio of the AVESTA Trust for periods prior to the consummation of the Avesta Conversion. Accordingly, for periods prior to January 1, 1998, the performance results for each class of a Fund will be identical. Advertising or communications to shareholders may contain the views of the advisers as to current market, economic, trade and interest rate trends, as well as legislative, regulatory and monetary developments, and may include investment strategies and related matters believed to be of relevance to a Fund. 25 Advertisements for the Chase Funds may include references to the asset size of other financial products made available by Chase or its affiliates, such as the offshore assets of other funds. Total Rate of Return A Fund's or class's total rate of return for any period will be calculated by (a) dividing (i) the sum of the net asset value per share on the last day of the period and the net asset value per share on the last day of the period of shares purchasable with dividends and capital gains declared during such period with respect to a share held at the beginning of such period and with respect to shares purchased with such dividends and capital gains distributions, by (ii) the public offering price per share on the first day of such period, and (b) subtracting 1 from the result. The average annual rate of return quotation will be calculated by (x) adding 1 to the period total rate of return quotation as calculated above, (y) raising such sum to a power which is equal to 365 divided by the number of days in such period, and (z) subtracting 1 from the result. 26 Average Annual Total Returns(1) The average annual total rate of return figures for the following Funds, reflecting the initial investment and assuming the reinvestment of all distributions for the one, five and ten year periods ended December 31, 1999 and for the period from commencement of business operations of each such Fund to December 31, 1999 were as follows:
Date of Date of One Five Ten Since Fund Class Year Years Years Inception Inception Introduction ----------- ----------- ----------- ----------- ----------- ------------- Balanced Fund 3/29/88 Premier Shares 14.23% 19.51% 12.84% 3/29/88 Investor Shares (2) 13.94% 19.42% 12.80% 10/16/98 Core Equity Fund 4/1/93 Premier Shares 23.89% 27.18% N/A 20.11% 4/1/93 Investor Shares (2) 23.59% 27.09% N/A 20.05% 9/10/98 Equity Growth Fund 3/29/88 Premier Shares 31.85% 31.14% 18.45% 3/29/88 Investor Shares (2) 31.54% 31.04% 18.41% 8/13/98 Equity Income Fund 3/29/88 Premier Shares 13.06% 24.13% 14.70% 3/29/88 Investor Shares (2) 12.70% 24.03% 14.66% 8/24/98 Income Fund 3/29/88 Premier Shares (2.78%) 6.89% 6.47% 3/29/88 Investor Shares (2) (2.92%) 6.84% 6.45% 11/10/98 Intermediate Term Bond Fund 10/3/94 Premier Shares (1.11%) 6.32% N/A 6.00% 10/3/94 Investor Shares (2) (1.36%) 6.26% N/A 5.94% 11/10/98 Short-Intermediate Term U.S. Government Securities Fund 4/1/93 Premier Shares 0.72% 5.75% N/A 4.43% 4/1/93 Investor Shares (2) 0.48% 5.67% N/A 4.37% 11/10/98 Small Capitalization Fund 4/1/93 Premier Shares 13.23% 18.80% N/A 13.99% 4/1/93 Investor Shares (2) 12.89% 18.71% N/A 13.92% 8/12/98 U.S. Government Securities Fund 4/1/93 Premier Shares (2.55%) 8.28% N/A 6.07% 4/1/93 Investor Shares (2) (2.79%) 8.22% N/A 6.03% 11/10/98 Equity Growth II Fund N/A N/A N/A 14.76% 7/1/99 7/1/99
- ---------- (1) The ongoing fees and expenses borne by Investor Shares are greater than those borne by Premier Shares. As indicated above, the performance information for each class introduced after the commencement of operations of the related Fund (or predecessor fund) is based on the performance history of a predecessor class and historical expenses have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. Accordingly, the performance information presented in the table above and in each table that follows may be used in assessing each Fund's performance history but does not reflect how the distinct classes would have performed on a relative basis prior to the introduction of those classes, which would require an adjustment to the ongoing expenses. The performance quoted reflects fee waivers that subsidize and reduce the total operating expenses of certain Funds (or classes thereof). Returns on these Funds (or classes) would have been lower if there 27 were not such waivers. With respect to certain Funds, Chase and/or other service providers are obligated to waive certain fees and/or reimburse certain expenses for a stated period of time. In other instances, there is no obligation to waive fees or to reimburse expenses. The Prospectuses disclose the extent of any agreements to waive fees and/or reimburse expenses. Performance presented in the table above and in each table that follows for each class of these Funds includes the performance of their respective predecessor funds for periods prior to the consummation of the Avesta Conversion. Performance presented for each class of each of these Funds is based on the historical expenses and performance of a single class of shares of its predecessor fund and does not reflect the current distribution, service and/or other expenses that an investor would incur as a holder of such class of such Fund. Date of Fund inception shown for these Funds is the date of inception of their respective predecessor funds. These Funds commenced operations as part of the Trust on January 1, 1998. The predecessor funds (unlike the Chase Funds and other investment companies) were not required to comply with the diversification, distribution and other requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Had the predecessor funds been subject to such requirements, their investment performance might have been adversely affected. (2) Performance information presented in the table above and in each table that follows for this class of this Fund prior to the date the class was introduced does not reflect distribution fees and certain other expenses borne by this class which, if reflected, would reduce the performance quoted. Yield Quotations Any current "yield" quotation for a class of shares shall consist of an annualized hypothetical yield, carried at least to the nearest hundredth of one percent, based on a thirty calendar day period and shall be calculated by (a) raising to the sixth power the sum of 1 plus the quotient obtained by dividing the Fund's net investment income earned during the period by the product of the average daily number of shares outstanding during the period that were entitled to receive dividends and the maximum offering price per share on the last day of the period, (b) subtracting 1 from the result, and (c) multiplying the result by 2. Any current "yield" for a class of shares of a Money Market Fund which is used in such a manner as to be subject to the provisions of Rule 482(d) under the Securities Act of 1933, as amended, shall consist of an annualized historical yield, carried at least to the nearest hundredth of one percent, based on a specific seven calendar day period and shall be calculated by dividing the net change in the value of an account having a balance of one Share at the beginning of the period by the value of the account at the beginning of the period and multiplying the quotient by 365/7. For this purpose, the net change in account value would reflect the value of additional Shares purchased with dividends declared on the original Share and dividends declared on both the original Share and any such additional Shares, but would not reflect any realized gains or losses from the sale of securities or any unrealized appreciation or depreciation on portfolio securities. In addition, any effective yield quotation for a class of shares of a Money Market Fund so used shall be calculated by compounding the current yield quotation for such period by multiplying such quotation by 7/365, adding 1 to the product, raising the sum to a power equal to 365/7, and subtracting 1 from the result. A portion of the Tax Free Money Market Fund's income used in calculating such yields may be taxable. Any taxable equivalent yield quotation of a class of shares of a Tax Free Fund, whether or not it is a Money Market Fund, shall be calculated as follows. If the entire current yield quotation for such period is tax-exempt, the tax equivalent yield will be the current yield quotation (as determined in accordance with the appropriate calculation described above) divided by 1 minus a stated income tax rate or rates. If a portion of the current yield quotation is not tax-exempt, the tax equivalent yield will be the sum of (a) that portion of the yield which is tax-exempt divided by 1 minus a stated income tax rate or rates and (b) the portion of the yield which is not tax-exempt. 28 The SEC yields of the shares of the non-Money Market Funds for the thirty day period ended December 31, 1999 were as follows:
Premier Investor --------- --------- Balanced Fund 2.44% 2.20% Core Equity Fund -- -- Equity Growth Fund -- -- Equity Income Fund 0.71% 0.47% Income Fund 6.00% 5.63% Intermediate Term Bond Fund 6.07% 5.82% Short-Intermediate Term U.S. Government Securities Fund 5.68% 5.44% Small Capitalization Fund -- -- U.S. Government Securities Fund 5.56% 5.37%
The 30-day SEC yield for Equity Growth II Fund as of December 31, 1999 was 0.28%. The yields and effective yields of the shares of the Money Market Fund for the seven day period ended December 31, 1999 were as follows:
Effective Current Compound Annualized Yield Annualized Yield ------------------ ----------------- Money Market Fund Premier Shares 5.41% 5.55% Investor Shares 5.31% 5.45%
Non-Standardized Performance Results(1) The table below reflects the net change in value of an assumed initial investment of $10,000 in each class of Fund shares in the following Funds for the period from the commencement date of business for each such Fund through December 31, 1999, or in the case of the Balanced Fund, Equity Growth Fund, Equity Income Fund and the Income Fund for the ten-year period ending December 31, 1999. The values reflect an assumption that capital gain distributions and income dividends, if any, have been invested in additional shares of the same class. From time to time, the Funds may provide these performance results in addition to the total rate of return quotations required by the Securities and Exchange Commission. As discussed more fully in the Prospectus, neither these performance results, nor total rate of return quotations, should be considered as representative of the performance of the Funds in the future. These factors and the possible differences in the methods used to calculate performance results and total rates of return should be considered when comparing such performance results and total rate of return quotations of the Funds with those published for other investment companies and other investment vehicles. 29
Fund Inception Total Value Date ------------- ---------- Balanced Fund 3/29/88 Premier Shares $33,464 Investor Shares 33,348 Core Equity Fund 4/1/93 Premier Shares 34,476 Investor Shares 34,354 Equity Growth Fund 3/29/88 Premier Shares 54,379 Investor Shares 54,178 Equity Income Fund 3/29/88 Premier Shares 39,422 Investor Shares 39,274 Income Fund 3/29/88 Premier Shares 18,742 Investor Shares 18,682 Intermediate Term Bond Fund 10/3/94 Premier Shares 13,584 Investor Shares 13,532 Short-Intermediate Term U.S. Government Securities Fund 4/1/93 Premier Shares 13,408 Investor Shares 13,349 Small Capitalization Fund 4/1/93 Premier Shares 24,208 Investor Shares 24,114 U.S. Government Securities Fund 4/1/93 Premier Shares 14,900 Investor Shares 14,846 Equity Growth II Fund 11,476 7/1/99
- ---------- (1) See notes to the table captioned "Average Annual Total Return" above. The table above assumes an initial investment of $10,000 in a particular class of a Fund for the period from the Fund's commencement of operations or, in the case of the Balanced Fund, Equity Growth Fund, Equity Income Fund and the Income Fund, from December 31, 1989, although the particular class may have been introduced at a subsequent date. As indicated above, performance information for each class introduced after the commencement of operations of the related Fund (or predecessor fund) is based on the performance history of a predecessor class and historical expenses have not been restated, for periods during which the performance information for a particular class is based upon the performance history of a predecessor class, to reflect the ongoing expenses currently borne by the particular class. DETERMINATION OF NET ASSET VALUE As of the date of this Statement of Additional Information, the New York Stock Exchange is open for trading every weekday except for the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the International Equity Fund invests in securities primarily listed on foreign exchanges which may trade on Saturdays or other customary United States national business holidays on which the Fund does not price, the Fund's portfolio will trade and the net asset value of the Fund's shares may be significantly affected on days on which the investor has no access to the Fund. 30 Each Fund calculates its NAV once each day at the close of regular trading on the New York Stock Exchange. Equity securities in a Fund's portfolio are valued at the last sale price on the exchange on which they are primarily traded or on the NASDAQ National Market System, or at the last quoted bid price for securities in which there were no sales during the day or for other unlisted (over-the-counter) securities not reported on the NASDAQ National Market System. Bonds and other fixed income securities (other than short-term obligations, but including listed issues) in a Fund's portfolio are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques that take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Short-term obligations which mature in 60 days or less are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. Futures and option contracts that are traded on commodities or securities exchanges are normally valued at the settlement price on the exchange on which they are traded. Portfolio securities (other than short-term obligations) for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees. The Money Market Funds' portfolio securities are valued at their amortized cost. Amortized cost valuation involves valuing an instrument at its cost and thereafter accrediting discounts and amortizing premiums at a constant rate to maturity. Pursuant to the rules of the Securities and Exchange Commission, the Board of Trustees has established procedures to stabilize the net asset value of each Money Market Fund at $1.00 per share. These procedures include a review of the extent of any deviation of net asset value per share, based on available market rates, from the $1.00 amortized cost price per share. If fluctuating interest rates cause the market value of a Money Market Fund's portfolio to approach a deviation of more than 1/2 of 1% from the value determined on the basis of amortized cost, the Board of Trustees will considered what action, if any, should be initiated. Such action may include redemption of shares in kind (as described in greater detail below), selling portfolio securities prior to maturity, reducing or withholding dividends and utilizing a net asset value per share as determined by using available market quotations. The Money Market Funds have established procedures designed to ensure that their portfolio securities meet their high quality criteria. Bonds and other fixed income securities, (other than short-term obligations) in a Fund's portfolio are valued on the basis of valuations furnished by a pricing service, the use of which has been approved by the Board of Trustees. In making such valuations, the pricing service utilizes both dealer-supplied valuations and electronic data processing techniques that take into account appropriate factors such as institutional-size trading in similar groups of securities, yield, quality, compound rate, maturity, type of issue, trading characteristics and other market data, without exclusive reliance upon quoted prices or exchange or over-the-counter prices, since such valuations are believed to reflect more accurately the fair value of such securities. Short-term obligations which mature in 60 days or less are valued at amortized cost, which constitutes fair value as determined by the Board of Trustees. Futures and option contracts that are traded on commodities or securities exchanges are normally valued at the settlement price on the exchange on which they are traded. Portfolio securities (other than short-term obligations) for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Board of Trustees. Interest income on long-term obligations in a Fund's portfolio is determined on the basis of coupon interest accrued plus amortization of discount (the difference between acquisition price and stated redemption price at maturity) and premiums (the excess of purchase price over stated redemption price at maturity). Interest income on short-term obligations is determined on the basis of interest and discount accrued less amortization of premium. 31 PURCHASES, REDEMPTIONS AND EXCHANGES The discussion in this "Purchases, Redemptions and Exchanges" section shall not apply to the Portfolios. The Fund has established certain procedures and restrictions, subject to change from time to time, for purchase, redemption, and exchange orders, including procedures for accepting telephone instructions and effecting automatic investments and redemptions. The Funds' Transfer Agent may defer acting on a shareholder's instructions until it has received them in proper form. In addition, the privileges described in the Prospectuses are not available until a completed and signed account application has been received by the Transfer Agent. Telephone transaction privileges are made available to shareholders automatically upon opening an account unless the privilege is declined in Section 6 of the Account Application. Upon receipt of any instructions or inquiries by telephone from a shareholder or, if held in a joint account, from either party, or from any person claiming to be the shareholder, a Fund or its agent is authorized, without notifying the shareholder or joint account parties, to carry out the instructions or to respond to the inquiries, consistent with the service options chosen by the shareholder or joint shareholders in his or their latest account application or other written request for services, including purchasing, exchanging, or redeeming shares of such Fund and depositing and withdrawing monies from the bank account specified in the Bank Account Registration section of the shareholder's latest account application or as otherwise properly specified to such Fund in writing. Subject to compliance with applicable regulations, each Fund has reserved the right to pay the redemption price of its Shares, either totally or partially, by a distribution in kind of readily marketable portfolio securities (instead of cash). The securities so distributed would be valued at the same amount as that assigned to them in calculating the net asset value for the shares being sold. If a shareholder received a distribution in kind, the shareholder could incur brokerage or other charges in converting the securities to cash. The Trust has filed an election under Rule 18f-1 committing to pay in cash all redemptions by a shareholder of record up to amounts specified by the rule (approximately $250,000). Under the Exchange Privilege, shares may be exchanged for shares of another fund only if shares of the fund exchanged into are registered in the state where the exchange is to be made. Shares of a Fund may only be exchanged into another fund if the account registrations are identical. Any such exchange may create a gain or loss to be recognized for federal income tax purposes. Normally, shares of the fund to be acquired are purchased on the redemption rate, but such purchase may be delayed by either fund for up to five business days if a fund determines that it would be disadvantaged by an immediate transfer of the proceeds. A Fund may require signature guarantees for changes that shareholders request be made in Fund records with respect to their accounts, including but not limited to, changes in bank accounts, for any written requests for additional account services made after a shareholder has submitted an initial account application to the Fund, and in certain other circumstances described in the Prospectuses. A Fund may also refuse to accept or carry out any transaction that does not satisfy any restrictions then in effect. A signature guarantee may be obtained from a bank, trust company, broker-dealer or other member of a national securities exchange. Please note that a notary public cannot provide a signature guarantee. TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Prospectuses. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussions here and in the Prospectuses are not intended as substitutes for careful tax planning. Qualification as a Regulated Investment Company Each Fund intends to qualify and elect to be taxed as a regulated investment company (a "RIC") under Subchapter M of the Code. If a Fund qualifies as a RIC, such Fund will not be subject to federal income tax on the portion of its net investment income (i.e., its investment company taxable income, as that term is defined in the 32 Code, without regard to the deduction for dividends paid) and net capital gain (i.e., the excess of its net long-term capital gain over net short-term capital loss) that it distributes to shareholders, provided that it distributes (i) at least 90% of its net investment income for the taxable year, and (ii) in the case of each Tax Free Fund, at least 90% of its net tax-exempt interest income for the taxable year (the "Distribution Requirement"). In addition to satisfying the Distribution Requirement for each taxable year, a RIC must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies (to the extent such currency gains are directly related to the RIC's principal business of investing in stock or securities) and other income (including but not limited to gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies (the "Income Requirement"). In addition to satisfying the requirements described above, each Fund must satisfy an asset diversification test in order to qualify as a RIC. Under this test, at the close of each quarter of a Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other RICs, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other RICs), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses. Each non-Money Market Fund may engage in hedging or derivatives transactions involving foreign currencies, forward contracts, options and futures contracts (including options, futures and forward contracts on foreign currencies) and short sales. See "Additional Policies Regarding Derivative and Related Transactions." Such transactions will be subject to special provisions of the Code that, among other things, may affect the character of gains and losses realized by the Fund (that is, may affect whether gains or losses are ordinary or capital), accelerate recognition of income of the Fund and defer recognition of certain of the Fund's losses. These rules could therefore affect the character, amount and timing of distributions to shareholders. In addition, these provisions (1) will require a Fund to "mark-to-market" certain types of positions in its portfolio (that is, treat them as if they were closed out) and (2) may cause a Fund to recognize income without receiving cash with which to pay dividends or make distributions in amounts necessary to satisfy the Distribution Requirement and avoid the 4% excise tax (described below). Each Fund intends to monitor its transactions, will make the appropriate tax elections and will make the appropriate entries in its books and records when it acquires any option, futures contract, forward contract or hedged investment in order to mitigate the effect of these rules. If a Fund purchases shares in a "passive foreign investment company" (a "PFIC"), the Fund may be subject to U.S. federal income tax on a portion of any "excess distribution" or gain from the disposition of such shares even if such income is distributed as a taxable dividend by the Fund to its shareholders. Additional charges in the nature of interest may be imposed on the Fund in respect of deferred taxes arising from such distributions or gains. If a Fund were to invest in a PFIC and elected to treat the PFIC as a "qualified electing fund" under the Code (a "QEF"), in lieu of the foregoing requirements, the Fund would be required to include in income each year a portion of the ordinary earnings and net capital gain of the qualified electing fund, even if not distributed to the Fund. Alternatively, under recently enacted legislation, a Fund can elect to mark-to-market at the end of each taxable year its shares in a PFIC; in this case, the Fund would recognize as ordinary income any increase in the value of such shares, and as ordinary loss any decrease in such value to the extent it did not exceed prior increases included in income. Under either election, a Fund might be required to recognize in a year income in excess of its distributions from PFICs and its proceeds from dispositions of PFIC stock during that year, and such income would nevertheless be subject to the Distribution Requirement and would be taken into account for purposes of the 4% excise tax. 33 If for any taxable year a Fund does not qualify as a RIC, all of its taxable income (including its net capital gain) will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable to the shareholders as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions generally will be eligible for the dividends-received deduction in the case of corporate shareholders. Excise Tax on Regulated Investment Companies A 4% non-deductible excise tax is imposed on a RIC that fails to distribute in each calendar year an amount equal to 98% of ordinary taxable income for the calendar year and 98% of capital gain net income for the one-year period ended on October 31 of such calendar year (or, at the election of a RIC having a taxable year ending November 30 or December 31, for its taxable year (a "taxable year election")). The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a RIC is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. However, investors should note that a Fund may in certain circumstances be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability. Fund Distributions Each Fund anticipates distributing substantially all of its net investment income for each taxable year. Such distributions will be taxable to shareholders as ordinary income and treated as dividends for federal income tax purposes, but they will qualify for the 70% dividends-received deduction for corporations only to the extent discussed below. Dividends paid on Premier and Investor shares are calculated at the same time. In general, dividends on Investor shares are expected to be lower than those on Premier shares due to the higher distribution expenses borne by the Investor shares. Dividends may also differ between classes as a result of differences in other class specific expenses. A Fund may either retain or distribute to shareholders its net capital gain for each taxable year. Each Fund currently intends to distribute any such amounts. If net capital gain is distributed and designated as a "capital gain dividend," it will be taxable to shareholders as long-term capital gain, regardless of the length of time the shareholder has held his shares or whether such gain was recognized by the Fund prior to the date on which the shareholder acquired his shares. Under current legislation, the maximum rate of tax on long-term capital gains of individuals is 20% (10% for gains otherwise taxed at 15%) for long-term capital gains with respect to capital assets held for more than 12 months. Additionally, beginning after December 31, 2000, the maximum tax rate for capital assets with a holding period beginning after that date and held for more than five years will be 18%. Conversely, if a Fund elects to retain its net capital gain, the Fund will be taxed thereon (except to the extent of any available capital loss carryovers) at the 35% corporate tax rate. If a Fund elects to retain its net capital gain, it is expected that the Fund also will elect to have shareholders of record on the last day of its taxable year treated as if each received a distribution of his pro rata share of such gain, with the result that each shareholder will be required to report his pro rata share of such gain on his tax return as long-term capital gain, will receive a refundable tax credit for his pro rata share of tax paid by the Fund on the gain, and will increase the tax basis for his shares by an amount equal to the deemed distribution less the tax credit. Each Tax Free Fund intends to qualify to pay exempt-interest dividends by satisfying the requirement that at the close of each quarter of the Tax Free Fund's taxable year at least 50% of the its total assets con- 34 sist of tax-exempt municipal obligations. Distributions from a Tax Free Fund will constitute exempt-interest dividends to the extent of its tax-exempt interest income (net of expenses and amortized bond premium). Exempt-interest dividends distributed to shareholders of a Tax Free Fund are excluded from gross income for federal income tax purposes. However, shareholders required to file a federal income tax return will be required to report the receipt of exempt-interest dividends on their returns. Investors should be aware that gain from the sale or redemption of shares of a Tax Free Fund will be taxable to the shareholders as capital gain even though the increase in value of such shares is attributable to tax-exempt interest income. Moreover, while exempt-interest dividends are excluded from gross income for federal income tax purposes, they may be subject to alternative minimum tax ("AMT") in certain circumstances and may have other collateral tax consequences as discussed below. Distributions by a Tax Free Fund of any net investment income or of any net capital gain will be taxable to shareholders as discussed above. AMT is imposed in addition to, but only to the extent it exceeds, the regular income tax and is computed at a maximum marginal rate of 28% for noncorporate taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's alternative minimum taxable income ("AMTI") over an exemption amount. Exempt-interest dividends derived from certain "private activity" municipal obligations issued after August 7, 1986 will generally constitute an item of tax preference includable in AMTI for both corporate and noncorporate taxpayers. In addition, exempt-interest dividends derived from all municipal obligations, regardless of the date of issue, must be included in adjusted current earnings, which are used in computing an additional corporate preference item (i.e., 75% of the excess of a corporate taxpayer's adjusted current earnings over its AMTI (determined without regard to this item and the AMT net operating loss deduction)) includable in AMTI. Exempt-interest dividends must be taken into account in computing the portion, if any, of social security or railroad retirement benefits that must be included in an individual shareholder's gross income and subject to federal income tax. Further, a shareholder of a Tax Free Fund is denied a deduction for interest on indebtedness incurred or continued to purchase or carry shares of the Tax Free Fund. Moreover, a shareholder who is (or is related to) a "substantial user" of a facility financed by industrial development bonds held by a Tax Free Fund will likely be subject to tax on dividends paid by the Tax Free Fund which are derived from interest on such bonds. Receipt of exempt-interest dividends may result in other collateral federal income tax consequences to certain taxpayers, including financial institutions, property and casualty insurance companies and foreign corporations engaged in a trade or business in the United States. Prospective investors should consult their own tax advisers as to such consequences. Ordinary income dividends paid by a Fund with respect to a taxable year will qualify for the 70% dividends-received deduction generally available to corporations to the extent of the amount of qualifying dividends received by a Fund from domestic corporations for the taxable year. A dividend received by a Fund will not be treated as a qualifying dividend (1) if it has been received with respect to any share of stock that the Fund has held for less than 46 days (91 days in the case of certain preferred stock) during the 90 day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend (during the 180 day period beginning 90 days before such date in the case of certain preferred stock) under the Rules of Code Section 246(c)(3) and (4); (2) to the extent that a Fund is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property; or (3) to the extent the stock on which the dividend is paid is treated as debt-financed under the rules of Code Section 246A. Moreover, the dividends-received deduction for a corporate shareholder may be disallowed or reduced if the corporate shareholder fails to satisfy the foregoing requirements with respect to its shares of a Fund. For purposes of the Corporate AMT, the corporate dividends-received deduction is not itself an item of tax preference that must be added back to taxable income or is otherwise disallowed in determining a corporation's AMT. However, corporate shareholders will generally be required to take the full amount of any dividend received from a Fund into account (without a dividends-received deduction) in determining its adjusted current earnings. 35 Investment income that may be received by certain of the Funds from sources within foreign countries may be subject to foreign taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle any such Fund to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of any such Fund's assets to be invested in various countries is not known. If more than 50% of the value of the International Equity Fund's total assets at the close of its taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the amount of foreign taxes paid by such Fund. If the International Equity Fund so elects, each shareholder would be required to include in gross income, even though not actually received, his pro rata share of the foreign taxes paid by the Fund, but would be treated as having paid his pro rata share of such foreign taxes and would therefore be allowed to either deduct such amount in computing taxable income or use such amount (subject to various Code limitations) as a foreign tax credit against federal income tax (but not both). For purposes of the foreign tax credit limitation rules of the Code, each shareholder would treat as foreign source income his pro rata share of such foreign taxes plus the portion of dividends received from the International Equity Fund representing income derived from foreign sources. No deduction for foreign taxes could be claimed by an individual shareholder who does not itemize deductions. In certain circumstances, a shareholder that (i) has held shares of the International Equity Fund for less than a specified minimum period during which it is not protected from risk of loss or (ii) is obligated to make payments related to the dividends, will not be allowed a foreign tax credit for foreign taxes deemed imposed on dividends paid on such shares. Additionally, the International Equity Fund must also meet this holding period requirement with respect to its foreign stocks and securities in order for "creditable" taxes to flow-through. Each shareholder should consult his own tax adviser regarding the potential application of foreign tax credits. Distributions by a Fund that do not constitute ordinary income dividends, or capital gain dividends will be treated as a return of capital to the extent of (and in reduction of) the shareholder's tax basis in his shares; any excess will be treated as gain from the sale of his shares, as discussed below. Distributions by a Fund will be treated in the manner described above regardless of whether such distributions are paid in cash or reinvested in additional shares of the Fund (or of another fund). Shareholders receiving a distribution in the form of additional shares will be treated as receiving a distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. In addition, if the net asset value at the time a shareholder purchases shares of a Fund reflects undistributed net investment income or recognized capital gain net income, or unrealized appreciation in the value of the assets of the Fund, distributions of such amounts will be taxable to the shareholder in the manner described above, although such distributions economically constitute a return of capital to the shareholder. Ordinarily, shareholders are required to take distributions by a Fund into account in the year in which the distributions are made. However, dividends declared in October, November or December of any year and payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders (and made by the Fund) on December 31 of such calendar year if such dividends are actually paid in January of the following year. Shareholders will be advised annually as to the U.S. federal income tax consequences of distributions made (or deemed made) during the year. A Fund will be required in certain cases to withhold and remit to the U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and the proceeds of redemption of shares, paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the IRS for failure to report the receipt of interest or dividend income properly, or (3) who has failed to certify to the Fund that it is not subject to backup withholding or that it is a corporation or other "exempt recipient." Sale or Redemption of Shares Each Money Market Fund seeks to maintain a net asset value of $1.00 per share; however, there can be no assurance that a Money Market Fund will be able to do this. In such a case and in any case involving 36 the non-Money Market Funds, a shareholder will recognize gain or loss on the sale or redemption of shares of a Fund in an amount equal to the difference between the proceeds of the sale or redemption and the shareholder's adjusted tax basis in the shares. All or a portion of any loss so recognized may be disallowed if the shareholder purchases other shares of the Fund within 30 days before or after the sale or redemption. In general, any gain or loss arising from (or treated as arising from) the sale or redemption of shares of a Fund will be considered capital gain or loss and will be long-term capital gain or loss if the shares were held for longer than one year. However, any capital loss arising from the sale or redemption of shares held for six months or less will be disallowed to the extent of the amount of exempt-interest dividends received on such shares and (to the extent not disallowed) will be treated as a long-term capital loss to the extent of the amount of capital gain dividends received on such shares. Foreign Shareholders Taxation of a shareholder who, as to the United States, is a nonresident alien individual, foreign trust or estate, foreign corporation, or foreign partnership ("foreign shareholder"), depends on whether the income from a Fund is "effectively connected" with a U.S. trade or business carried on by such shareholder. If the income from a Fund is not effectively connected with a U.S. trade or business carried on by a foreign shareholder, dividends paid to a foreign shareholder will be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Furthermore, such a foreign shareholder may be subject to U.S. withholding tax at the rate of 30% (or lower treaty rate) on the gross income resulting from the International Equity Fund's election to treat any foreign taxes paid by it as paid by the shareholders, but may not be allowed a deduction against this gross income or a credit against this U.S. withholding tax for the foreign shareholder's pro rata share of such foreign taxes which it is treated as having paid. Such a foreign shareholder would generally be exempt from U.S. federal income tax on gains realized on the sale of shares of the Fund and capital gain dividends and exempt-interest dividends and amounts retained by the Fund that are designated as undistributed capital gains. If the income from a Fund is effectively connected with a U.S. trade or business carried on by a foreign shareholder, then ordinary income dividends, capital gain dividends, and any gains realized upon the sale of shares of the Fund will be subject to U.S. federal income tax on a net basis at the rates applicable to U.S. citizens or domestic corporations. In the case of foreign noncorporate shareholders, a Fund may be required to withhold U.S. federal income tax at a rate of 31% on distributions that are otherwise exempt from withholding tax (or taxable at a reduced treaty rate) unless such shareholders furnish the Fund with proper notification of its foreign status. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund, including the applicability of foreign taxes. State and Local Tax Matters Depending on the residence of the shareholder for tax purposes, distributions may also be subject to state and local taxes or withholding taxes. Most states provide that a RIC may pass through (without restriction) to its shareholders state and local income tax exemptions available to direct owners of certain types of U.S. government securities (such as U.S. Treasury obligations). Thus, for residents of these states, distributions derived from a Fund's investment in certain types of U.S. government securities should be free from state and local income taxes to the extent that the interest income from such investments would have been exempt from state and local income taxes if such securities had been held directly by the respective shareholders themselves. Certain states, however, do not allow a RIC to pass through to its shareholders the state 37 and local income tax exemptions available to direct owners of certain types of U.S. government securities unless the RIC holds at least a required amount of U.S. government securities. Accordingly, for residents of these states, distributions derived from a Fund's investment in certain types of U.S. government securities may not be entitled to the exemptions from state and local income taxes that would be available if the shareholders had purchased U.S. government securities directly. Shareholders' dividends attributable to a Fund's income from repurchase agreements generally are subject to state and local income taxes, although states and regulations vary in their treatment of such income. The exemption from state and local income taxes does not preclude states from asserting other taxes on the ownership of U.S. government securities. To the extent that a Fund invests to a substantial degree in U.S. government securities which are subject to favorable state and local tax treatment, shareholders of such Fund will be notified as to the extent to which distributions from the Fund are attributable to interest on such securities. Rules of state and local taxation of ordinary income dividends and capital gain dividends from RICs may differ from the rules for U.S. federal income taxation in other respects. Shareholders are urged to consult their tax advisers as to the consequences of these and other state and local tax rules affecting investment in a Fund. Effect of Future Legislation The foregoing general discussion of U.S. federal income tax consequences is based on the Code and the Treasury Regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. MANAGEMENT OF THE TRUSTS AND THE FUNDS AND PORTFOLIOS Trustees and Officers The Trustees and officers of the Trusts and their principal occupations for at least the past five years are set forth below. Their titles may have varied during that period. *Sarah E. Jones--Chairman and Trustee. President and Chief Operating Officer of Chase Mutual Funds Corp.; formerly Managing Director for the Global Asset Management and Private Banking Division of The Chase Manhattan Bank. Age: 47. Address: Chase Mutual Funds Corp., 1211 Avenue of the Americas, 41st Floor, New York, New York 10036. William J. Armstrong--Trustee. Vice President and Treasurer, Ingersoll-Rand Company. Age: 58. Address: 49 Aspen Way, Upper Saddle River, NJ 07458. John R.H. Blum--Trustee. Attorney in private practice; formerly, partner in the law firm of Richards, O'Neil & Allegaert; Commissioner of Agriculture--State of Connecticut, 1992-1995. Age: 70. Address: 322 Main Street, Lakeville, CT 06039. Stuart W. Cragin, Jr.--Trustee. Retired; formerly President, Fairfield Testing Laboratory, Inc. He has previously served in a variety of marketing, manufacturing and general management positions with Union Camp Corp., Trinity Paper & Plastics Corp., and Conover Industries. Age: 66. Address: 108 Valley Road, Cos Cob, CT 06807. Roland R. Eppley, Jr.--Trustee. Retired; formerly President and Chief Executive Officer, Eastern States Bankcard Association Inc., (1971-1988); Director, Janel Hydraulics, Inc.; Director of The Hanover Funds, Inc. Age: 67. Address: 105 Coventry Place, Palm Beach Gardens, FL 33418. Joseph J. Harkins--Trustee. Retired; Commercial Sector Executive and Executive Vice President of The Chase Manhattan Bank, N.A. from 1985 through 1989. He has been employed by Chase in numerous 38 capacities and offices since 1954. Director of Blessings Corporation, Jefferson Insurance Company of New York, Monticello Insurance Company and National. Age: 68. Address: 257 Plantation Circle South, Ponte Vedra Beach, FL 32082. W.D. MacCallan--Trustee. Director of The Adams Express Co. and Petroleum & Resources Corp.; formerly Chairman of the Board and Chief Executive Officer of The Adams Express Co. and Petroleum & Resources Corp.; Director of The Hanover Funds, Inc. and The Hanover Investment Funds, Inc. Age: 72. Address: 624 East 45th Street, Savannah, GA 31405. George E. McDavid--Trustee. President, Houston Chronicle Publishing Company. Member of Avesta Supervisory Committee from inception to 1997. Age: 69. Address: PO Box 2558, Houston, TX 77252. W. Perry Neff--Trustee. Independent Financial Consultant; Director of North America Life Assurance Co., Petroleum & Resources Corp. and The Adams Express Co.; Director and Chairman of The Hanover Funds, Inc.; Director, Chairman and President of The Hanover Investment Funds, Inc. Age: 72. Address: RR 1 Box 102, Weston, VT 05181. Fergus Reid, III--Trustee. Chairman and Chief Executive Officer, Lumelite Corporation, since September 1985; Trustee, Morgan Stanley Funds. Age: 67. Address: 202 June Road, Stamford, CT 06903. *Leonard M. Spalding, Jr.--Trustee. Chief Executive Officer of Chase Mutual Funds Corp.; formerly President and Chief Executive Officer of Vista Capital Management; Chief Investment Executive of The Chase Manhattan Bank. Age: 64. Address: Chase Mutual Funds Corp., 1211 Avenue of the Americas, 41st Floor, New York, NY 10036. Richard E. Ten Haken--Trustee. Chairman of the Audit Committee. Formerly District Superintendent of Schools, Monroe No. 2 and Orleans Counties, New York; Chairman of the Board and President, New York State Teachers' Retirement System. Age: 65. Address: 4 Barnfield Road, Pittsford, NY 14534. Irving L. Thode--Trustee. Retired; formerly Vice President of Quotron Systems. He has previously served in a number of executive positions with Control Data Corp., including President of its Latin American Operations, and General Manager of its Data Services business. Age: 69. Address: 80 Perkins Road, Greenwich, CT 06830. *H. Richard Vartabedian--Trustee. Investment Management Consultant, formerly, Senior Investment Officer, Division Executive of the Investment Management Division of The Chase Manhattan Bank, N.A., 1980 through 1991. Age: 64. Address: P.O. Box 296, Beach Road, Hendrick's Head, Southport, ME 04576. Martin R. Dean--Treasurer and Assistant Secretary. Associate Director, Accounting Services, BISYS Fund Services; formerly Senior Manager, KPMG Peat Marwick (1987-1994). Age: 37. Address: 3435 Stelzer Road, Columbus, OH 43219. Lisa Hurley--Secretary. Senior Vice President and General Counsel, BISYS Fund Services; formerly Counsel to Moore Capital Management and General Counsel to Global Asset Management and Northstar Investments Management. Age: 44. Address: 90 Park Avenue, New York, NY 10016. Vicky M. Hayes--Assistant Secretary. Vice President and Global Marketing Manager, Vista Fund Distributors, Inc.; formerly Assistant Vice President, Alliance Capital Management and held various positions with J. & W. Seligman & Co. Age: 37. Address: 1211 Avenue of the Americas, 41st Floor, New York, NY 10036. 39 Alaina Metz--Assistant Secretary. Chief Administrative Officer, BISYS Fund Services; formerly Supervisor, Blue Sky Department, Alliance Capital Management L.P. Age: 31. Address: 3435 Stelzer Road, Columbus, OH 43219. * Asterisks indicate those Trustees that are "Interested Persons" (as defined in the 1940 Act). With the exception of Ms. Jones, Mr. McDavid and Mr. Reid, each of whom served as Trustees of the Trust for the Trust's entire fiscal year, each of the other Trustees became Trustees of the Trust in March 2000. The Board of Trustees of the Trust presently has an Audit Committee. The members of the Audit Committee are Messrs. Ten Haken (Chairman), Armstrong, Eppley, MacCallan and Thode. The function of the Audit Committee is to recommend independent auditors and monitor accounting and financial matters. The Trustees and officers of the Trusts appearing in the table above also serve in the same capacities with respect to Mutual Fund Group, Mutual Fund Trust, Mutual Fund Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio (these entities, together with the Trusts, are referred to below as the "Chase Mutual Funds"). Remuneration of Trustees and Certain Executive Officers: Each Trustee is reimbursed for expenses incurred in attending each meeting of the Board of Trustees or any committee thereof. Each Trustee who is not an affiliate of the advisers is compensated for his or her services according to a fee schedule which recognizes the fact that each Trustee also serves as a Trustee of other investment companies advised by the advisers. Each Trustee receives a fee, allocated among all investment companies for which the Trustee serves, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued during the fiscal year ended December 31, 1999 for each Trustee of the Trusts:
Pension or Retirement Total Compensation Benefits Accrued by the from "Fund Complex" Fund Complex (1) (2) Sarah E. Jones, Trustee -- -- William J. Armstrong, Trustee $ 35,695 $ 80,000 John R.H. Blum, Trustee 70,084 87,500 Stuart W. Cragin, Jr., Trustee 42,785 82,500 Ronald R. Eppley, Jr., Trustee 52,102 80,000 Joseph J. Harkins, Trustee 60,009 80,000 George E. McDavid, Trustee -- 8,000 W.D. MacCallan, Trustee 73,291 80,000 W. Perry Neff, Trustee 70,365 80,000 Fergus Reid, III, Trustee 108,490 168,000 Leonard M. Spalding, Jr., Trustee 25,509 80,000 Richard E. Ten Haken, Trustee 55,162 83,750 Irving L. Thode, Trustee 50,414 80,000 H. Richard Vartabedian, Trustee 69,858 120,000
(1) Data reflects total benefits accrued by the Trusts for the fiscal year ended December 31, 1999, by Mutual Fund Group, Mutual Fund Select Group, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio for the fiscal year ended October 31, 1999, and by Mutual Fund Trust, Mutual Fund Select Trust and Mutual Fund Variable Annuity Trust for the fiscal year ended October 31, 1999. (2) Data reflects total compensation earned during the period ended December 31, 1999 for service as a Trustee to the Trust, Mutual Fund Group, Mutual Fund Trust, Mutual Fund Variable Annuity Trust, Mutual 40 Fund Select Group, Mutual Fund Select Trust, Capital Growth Portfolio, Growth and Income Portfolio and International Equity Portfolio. Of the amounts listed in the second column above, the Trust paid $8,000 in Trustee fees to each of Mr. McDavid and Mr. Reid. Of the amount listed above, the Trusts paid $8,000 to each of Mr. McDavid and Mr. Reid. In addition, the Trusts paid $7,500, $7,000 and $7,500 to Frank A. Liddell, Jr., Kenneth L. Otto and H. Michael Tyson, respectively. Messrs. Liddell, Otto and Tyson resigned as Trustees in March 2000. As of March 31, 2000, the Trustees and officers as a group owned less than 1% of each Fund's outstanding shares, all of which were acquired for investment purposes. Chase Vista Funds Retirement Plan for Eligible Trustees The Trustees also instituted a Retirement Plan for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an employee of any of the Funds, the advisers, administrator or distributor or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, the normal retirement date is the date on which the eligible Trustee has attained age 65 and has completed at least five years of continuous service with one or more of the investment companies advised by the adviser (collectively, the "Covered Funds"). Each Eligible Trustee is entitled to receive from the Covered Funds an annual benefit commencing on the first day of the calendar quarter coincident with or following his date of retirement equal to the sum of (i) 8% of the highest annual compensation received from the Covered Funds multiplied by the number of such Trustee's years of service (not in excess of 10 years) completed with respect to any of the Covered Funds and (ii) 4% of the highest annual compensation received from the Covered Funds for each year of service in excess of 10 years, provided that no Trustee's annual benefit will exceed the highest annual compensation received by that Trustee from the Covered Funds. Such benefit is payable to each eligible Trustee in monthly installments for the life of the Trustee. Set forth below in the table are the estimated annual benefits payable to an eligible Trustee upon retirement assuming various compensation and years of service classifications. As of October 31, 1999, the estimated credited years of service for Messrs. Reid, Vartabedian, Armstrong, Blum, Cragin, Eppley, Harkins, MacCallan, Neff, Spalding, Ten Haken and Thode and for Ms. Jones are 15, 7, 12, 15, 6, 10, 9, 9, 15, 1, 14, 6 and 0, respectively. Highest Annual Compensation Paid by All Chase Vista Funds
$80,000 $100,000 $120,000 $140,000 $160,000 Years of Service Estimated Annual Benefits Upon Retirement 16 $80,000 $100,000 $120,000 $140,000 $160,000 14 76,800 96,000 115,200 134,400 153,600 12 70,400 88,000 105,600 123,200 140,800 10 64,000 80,000 96,000 112,000 128,000 8 51,200 64,000 76,800 89,600 102,400 6 38,400 48,000 57,600 67,200 76,800 4 25,600 32,000 38,400 44,800 51,200
Effective August 21, 1995, the Trustees instituted a Deferred Compensation Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which each Trustee (who is not an employee of any of the Funds, the advisers, administrator or distributor or any of their affiliates) may enter into agreements with the Funds whereby payment of the Trustee's fees are deferred until the payment date elected by the Trustee (or the Trustee's termination of service). The deferred amounts are invested in shares of Chase Vista Funds selected by the Trustee. The deferred amounts are paid out in a lump sum or over a period of several years 41 as elected by the Trustee at the time of deferral. If a deferring Trustee dies prior to the distribution of amounts held in the deferral account, the balance of the deferral account will be distributed to the Trustee's designated beneficiary in a single lump sum payment as soon as practicable after such deferring Trustee's death. Messrs. Eppley, Ten Haken, Thode and Vartabedian have each executed a deferred compensation agreement for the 1999 calendar year and as of October 31, 1999 they had contributed $52,400, $27,700, $58,950 and $98,250, respectively. The Declaration of Trust each of the Trust and the Master Trust provides that the Trust or Master Trust, as the case may be, will indemnify its Trustees and officers against liabilities and expenses incurred in connection with litigation in which they may be involved because of their offices with the Trust or Master Trust, as the case may be, unless, as to liability to the Trust or its shareholders, it is finally adjudicated that they engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in their offices or with respect to any matter unless it is finally adjudicated that they did not act in good faith in the reasonable belief that their actions were in the best interest of the Trust or Master Trust, as the case may be. In the case of settlement, such indemnification will not be provided unless it has been determined by a court or other body approving the settlement or other disposition, or by a reasonable determination based upon a review of readily available facts, by vote of a majority of disinterested Trustees or in a written opinion of independent counsel, that such officers or Trustees have not engaged in willful misfeasance, bad faith, gross negligence or reckless disregard of their duties. Adviser and Sub-Adviser Chase acts as investment adviser to the Funds and Portfolios pursuant to separate Investment Advisory Agreements (collectively, the "Advisory Agreement"). Subject to such policies as the Board of Trustees may determine, Chase is responsible for investment decisions for the Funds. Pursuant to the terms of the Advisory Agreement, Chase provides the Funds with such investment advice and supervision as it deems necessary for the proper supervision of the Funds' investments. The advisers (including the sub-advisers) continuously provide investment programs and determine from time to time what securities shall be purchased, sold or exchanged and what portion of the Funds' assets shall be held uninvested. The advisers to the Fund furnish, at their own expense, all services, facilities and personnel necessary in connection with managing the investments and effecting portfolio transactions for the Funds. The Advisory Agreement for the Funds will continue in effect from year to year only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of a Fund's outstanding voting securities and by a majority of the Trustees who are not parties to the Advisory Agreement or interested persons of any such party, at a meeting called for the purpose of voting on such Advisory Agreement. Under the Advisory Agreement and the sub-advisers' agreements with the adviser, the adviser and sub-advisers may utilize the specialized portfolio skills of all their various affiliates, thereby providing the Funds with greater opportunities and flexibility in accessing investment expertise. Pursuant to the terms of the advisory agreements, the advisers are permitted to render services to others. Each advisory agreement is terminable without penalty by the Trust or Master Trust, as the case may be, on behalf of the Funds on not more than 60 days', nor less than 30 days', written notice when authorized either by a majority vote of a Fund's shareholders or by a vote of a majority of the Board of Trustees of the Trust or Master Trust, as the case may be, or by the adviser or sub-adviser on not more than 60 days', nor less than 30 days', written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act). The advisory agreements provide that the adviser or sub-adviser under such agreement shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in the execution of portfolio transactions for the respective Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties thereunder. 42 In the event the operating expenses of the Funds, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to the Funds imposed by the securities laws or regulations thereunder of any state in which the shares of the Funds are qualified for sale, as such limitations may be raised or lowered from time to time, the adviser shall reduce its advisory fee (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by the adviser shall be deducted from the monthly advisory fee otherwise payable with respect to the Funds during such fiscal year; and if such amounts should exceed the monthly fee, the adviser shall pay to a Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. Under the Advisory Agreement, Chase may delegate a portion of its responsibilities to a sub-adviser. In addition, the Advisory Agreement provides that Chase may render services through its own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser of the Fund and are under the common control of Chase, as long as all such persons are functioning as part of an organized group of persons, managed by authorized officers of Chase. Chase, on behalf of the Money Market Fund, Short-Intermediate Term U.S. Government Securities Fund, U.S. Government Securities Fund, Intermediate Term Bond Fund, Income Fund, Balanced Fund, Equity Income Fund, Core Equity Portfolio, Equity Growth Portfolio and Small Capitalization Fund, has entered into several investment sub-advisory agreements with Texas Commerce Bank National Association, which subsequently changed its name to Chase Bank of Texas, National Association (herein "Chase Texas"). Chase may enter into one or more additional sub-advisory agreements with respect to the Tax Free Money Market Fund, Tax Free Income Fund, New York Tax Free Income Fund, Mid Cap Growth Fund and International Equity Fund. With respect to the day-to-day management of the Funds, under the sub-advisory agreements, the sub-advisers make decisions concerning, and place all orders for, purchases and sales of securities and help maintain the records relating to such purchase and sales. The sub-advisers may, in their discretion, provide such services through their own employees or the employees of one or more affiliated companies that are qualified to act as an investment adviser to the Company under applicable laws and are under the common control of Chase; provided that (i) all persons, when providing services under the sub-advisory agreement, are functioning as part of an organized group of persons, and (ii) such organized group of persons is managed at all times by authorized officers of the sub-adviser. This arrangement will not result in the payment of additional fees by the Funds. Chase, a wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank holding company, is a commercial bank offering a wide range of banking and investment services to customers throughout the United States and around the world. Also included among Chase's accounts are commingled trust funds and a broad spectrum of individual trust and investment management portfolios. These accounts have varying investment objectives. Chase Texas, a wholly-owned subsidiary of The Chase Manhattan Corporation, is a commercial bank offering a wide range of banking and investment services to customers throughout the United States and around the world. Also included among Chase Texas's accounts are commingled trust funds and a broad spectrum of individual trust and investment management portfolios. These accounts have varying investment objectives. In consideration of the services provided by the adviser pursuant to the Advisory Agreement, the adviser is entitled to receive from the appropriate Fund(s) an investment advisory fee computed daily and paid monthly based on a rate equal to a percentage of such Fund's average daily net assets specified in the Prospectuses. However, the adviser may voluntarily agree to waive a portion of the fees payable to it on a month-to-month basis. For its services under its sub-advisory agreement, Chase Texas will be entitled to receive, with respect to each such Fund, such compensation, payable by the adviser out of its advisory fee, as described in the Prospectuses. For the fiscal years ended December 31, 1998 and 1999, Chase was paid the following investment advisory fees with respect to the following Funds, and voluntarily waived the amounts following such fees: 43
Year-Ended 12/31/98 Year-Ended 12/31/99 ----------------------------- -------------------------- Payable Waived Payable Waived ------------- ------------- ------------ ----------- Balanced Fund $350,137 $132,884 $ 635,226 $158,258 Core Equity Fund (a) 503,400 124,638 613,653 95,747 Equity Growth Fund (a) 912,673 110,212 1,000,139 54,183 Equity Income Fund 737,842 102,058 1,128,251 131,830 Income Fund 277,249 94,268 328,083 118,339 Intermediate Term Bond Fund 126,776 123,836 184,091 158,995 Money Market Fund 499,599 172,800 693,232 186,920 Short-Intermediate Term U.S. Government Securities Fund 142,451 102,568 159,408 119,040 Small Capitalization Fund 388,277 137,579 556,937 161,025 U.S. Government Securities Fund 15,300 15,300 32,650 32,650 Equity Growth II Fund (b) N/A N/A 35,396 32,928
- ---------- (a) Advisory fees and waivers for 1999 are from the period January 1, 1999 through August 11, 1999. On August 12, 1999 Core Equity and Equity Growth Funds adopted the Master/Feeder Fund Structure and would not have an investment advisor because the Trust seeks to achieve the investment objective of the Fund by investing all of the investable assets of each respective Fund in each respective Portfolio. For the period from August 12, 1999 (commencement of operations) to December 31, 1999, Chase was paid or accrued investment advisory fees of $524,385 and $863,350 by Core Equity Portfolio and Equity Growth Portfolio, respectively. Of these amounts, Chase voluntarily waived $69,918 and $34,534, respectively. (b) Advisory fees and waivers for 1999 are from the period July 1, 1999 (commencement of operations) through December 31, 1999. Prior to January 1, 1998, the Funds were series of the AVESTA Trust. Chase Texas acted as Trustee for the Avesta Funds pursuant to three separate, but substantially similar, management agreements (the "Avesta Management Agreements"). As with certain of the Funds, Chase Texas provided investment advisory services to the Avesta Funds. However, Chase Texas was also obligated to perform certain administrative and account servicing functions under the Avesta Management Agreements, including preparation and distribution of communications to shareholders, accounting and recordkeeping. As Trustee, Chase Texas also paid certain expenses, including (i) all costs and expenses arising in connection with the organization of the AVESTA Trust, including the initial registration statement and qualification of the AVESTA Trust and its units under federal and state law; (ii) all marketing and advertising expenses of the AVESTA Trust and (iii) expenses of all employees, office space and facilities necessary to carry out its duties under the Avesta Management Agreements. Accordingly, the compensation received by the Trustee under the Avesta Management Agreements are not necessarily indicative of the fees to be earned by Chase under the Advisory Agreement. For its services under the Avesta Management Agreements, the Trustee was entitled to receive compensation as follows: 44
Average Daily Net Assets ---------------------------------------------------------- In Excess of $250 Million Up to but less than In Excess of Fund $250 Million $500 Million $500 Million - ---- -------------- ---------------- --------------- Balanced 1.00% 0.90% 0.80% Core Equity 1.00% 0.90% 0.80% Equity Growth 1.00% 0.90% 0.80% Equity Income 1.00% 0.90% 0.80% Income 1.00% 0.90% 0.80% Intermediate Term Bond 0.75% 0.65% 0.55% Money Market 0.65% 0.65% 0.65% Short-Intermediate Term U.S. Government Securities 0.75% 0.65% 0.55% Small Capitalization 1.15% 1.05% 0.95% U.S. Government Securities 0.85% 0.75% 0.65%
The Funds in operation paid management fees to the Trustee, net of voluntary waivers (1), for the years ended, respectively, as follows:
Year Ended December 31, ------------------------ Fund 1997 - ---- --------- Balanced Fund $ 256,363 Core Equity Fund 377,800 Equity Growth Fund 700,938 Equity Income Fund 709,821 Income Fund 512,611 Intermediate Term Bond Fund 112,462 Money Market Fund 806,004 Short-Intermediate Term U.S. Government Securities Fund 194,675 Small Capitalization Fund 352,263 U.S. Government Securities Fund 23,662
- ------------ (1) For the fiscal year ended December 31, 1997, the Trustee waived management fees for the Money Market, Income, U.S. Government Securities and Small Capitalization Funds of $185,719, $128,407, $2,783 and $45,611, respectively. The Trustee had agreed to reimburse each Fund for the amount by which the expenses of that Fund (including the management fee, but excluding interest, taxes, brokerage commissions and extraordinary expenses) during any year exceed the management fee payable by the Fund, provided that the average daily value of the Fund's net assets during such year provided that the assets of the Fund did not exceed $250 million. As such, the total reimbursements paid to the Funds below by the Trustee for the year ended December 31, 1997, were: 45
Total Reimbursements --------------- Balanced Fund $ 72,408 Core Equity Fund 75,253 Equity Growth Fund 76,840 Equity Income Fund 78,924 Income Fund 70,483 Intermediate Term Bond Fund 75,545 Money Market Fund 107,304 Short-Intermediate Term U.S. Government Securities Fund 67,908 Small Capitalization Fund 75,786 U.S. Government Securities Fund 63,928
Administrator Pursuant to separate Administration Agreements (collectively, the "Administration Agreement"), Chase is the administrator of the Funds and Portfolios. Chase provides certain administrative services to the Funds, including, among other responsibilities, coordinating the negotiation of contracts and fees with, and the monitoring of performance and billing of, the Funds' independent contractors and agents; preparation for signature by an officer of the Trust or Master Trust, as the case may be, of all documents required to be filed for compliance by the Trust or Master Trust, as the case may be, with applicable laws and regulations excluding those of the securities laws of various states; arranging for the computation of performance data, including net asset value and yield; responding to shareholder inquiries; and arranging for the maintenance of books and records of the Funds and providing, at its own expense, office facilities, equipment and personnel necessary to carry out its duties. Chase in its capacity as administrator does not have any responsibility or authority for the management of the Funds, the determination of investment policy, or for any matter pertaining to the distribution of Fund shares. Under the Administration Agreement Chase is permitted to render administrative services to others. The Administration Agreement will continue in effect from year to year with respect to each Fund only if such continuance is specifically approved at least annually by the Board of Trustees of the Trust or Master Trust, as the case may be, or by vote of a majority of such Fund's outstanding voting securities and, in either case, by a majority of the Trustees who are not parties to the Administration Agreement or "interested persons" (as defined in the 1940 Act) of any such party. The Administration Agreement is terminable without penalty by the Trust or Master Trust, as the case may be, on behalf of each Fund or Portfolio, as the case may be, on 60 days' written notice when authorized either by a majority vote of such Fund's shareholders or by vote of a majority of the Board of Trustees, including a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust or Master Trust, as the case may be, or by Chase on 60 days' written notice, and will automatically terminate in the event of their "assignment" (as defined in the 1940 Act). The Administration Agreement also provides that neither Chase or its personnel shall be liable for any error of judgment or mistake of law or for any act or omission in the administration of the Funds, except for willful misfeasance, bad faith or gross negligence in the performance of its or their duties or by reason of reckless disregard of its or their obligations and duties under the Administration Agreement. In addition, the Administration Agreement provides that, in the event the operating expenses of any Fund, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to that Fund imposed by the securities laws or regulations thereunder of any state in which the shares of such Fund are qualified for sale, as such limitations may be raised or lowered from time to time, Chase shall reduce its administration fee (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by Chase shall be deducted from the monthly administration fee otherwise payable to Chase during such fiscal 46 year, and if such amounts should exceed the monthly fee, Chase shall pay to such Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. In consideration of the services provided by Chase pursuant to the Administration Agreement, Chase receives from each Fund (except Core Equity Fund and Equity Growth Fund) a fee computed daily and paid monthly at an annual rate equal to 0.10% of each of the Fund's average daily net assets, on an annualized basis for the Fund's then-current fiscal year. Effective August 12, 1999, Chase receives from Core Equity Fund and Equity Growth Fund a fee computed at an annual rate equal to 0.05% of average daily net assets. Prior to August 12, 1999, the fee was 0.10% of average daily net assets. Under a separate administration agreement, Chase receives from Core Equity Portfolio and Equity Growth Portfolio a fee computed at an annual rate equal to 0.05% of average daily net assets. Chase may voluntarily waive a portion of the fees payable to it with respect to each Fund on a month-to-month basis. For the fiscal years ended December 31, 1998 and 1999, Chase was paid or accrued the following administration fees, and voluntarily waived the amounts following such fees:
Year-Ended 12/31/98 Year-Ended 12/31/99 ----------------------------- --------------------- Payable Waived Payable Waived ------- ------ ------- ------ Balanced Fund $ 46,685 $ -- $ 84,697 $ -- Core Equity Fund 67,120 -- 114,476 -- Equity Growth Fund 121,688 -- 187,150 -- Equity Income Fund 98,379 -- 150,434 -- Income Fund 55,450 -- 65,617 -- Intermediate Term Bond Fund 25,355 5,261 36,818 -- Money Market Fund 166,533 -- 231,077 -- Short-Intermediate Term U.S. Government Securities Fund 28,490 -- 31,882 -- Small Capitalization Fund 51,769 -- 74,258 -- U.S. Government Securities Fund 3,062 3,062 6,530 6,530 Equity Growth II Fund (a) N/A N/A 8,849 7,615
- ---------- (a) Administration fees and waivers for 1999 are from the period July 1, 1999 (commencement of operations) through December 31, 1999. For the period from August 12, 1999 (commencement of operations) through December 31, 1999, Chase was paid administration fees of $34,960 and $57,557 by Core Equity Portfolio and Equity Growth Portfolio, respectively. Distribution Plan The discussion in this "Distribution Plan" sub-section shall not apply to the Portfolios. The Trust has adopted a plan of distribution pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan") on behalf of the Investor Class shares of its Funds as described in the Prospectus, which provides such class of the Funds shall pay for distribution services a distribution fee (the "Distribution Fee"), including payments to the Distributor, at annual rates not to exceed the amounts set forth in the Prospectus for Investor Class shares. The Distributor may use all or any portion of such Distribution Fee to pay for Fund expenses of printing prospectuses and reports used for sales purposes, expenses of the preparation and printing of sales literature and other such distribution-related expenses. Investor Class shares pay a Distribution Fee of up to 0.25% of average daily net assets. Some payments under the Distribution Plans may be used to compensate broker-dealers with trail or maintenance 47 commissions in an amount not to exceed 0.25% annualized of the average net asset values of Investor Class shares maintained in a Fund by such broker-dealers' customers. Since the distribution fees are not directly tied to expenses, the amount of distribution fees paid by a Fund during any year may be more or less than actual expenses incurred pursuant to the Distribution Plans. For this reason, this type of distribution fee arrangement is characterized by the staff of the Securities and Exchange Commission as being of the "compensation variety" (in contrast to "reimbursement" arrangements by which a distributor's payments are directly linked to its expenses). With respect to Investor Class shares, because of the 0.25% annual limitation on the compensation paid to the Distributor during a fiscal year, compensation relating to a large portion of the commissions attributable to sales of Investor Class shares in any one year will be accrued and paid by a Fund to the Distributor in fiscal years subsequent thereto. In determining whether to purchase Investor Class shares, investors should consider that compensation payments could continue until the Distributor has been fully reimbursed for the commissions paid on sales of Investor Class shares. However, the shares are not liable for any distribution expenses incurred in excess of the Distribution Fee paid. The Investor Class shares are entitled to exclusive voting rights with respect to matters concerning its Distribution Plan. The Distribution Plan provides that it will continue in effect indefinitely if such continuance is specifically approved at least annually by a vote of both a majority of the Trustees and a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Distribution Plan or in any agreement related to such Plan ("Qualified Trustees"). The Distribution Plan requires that the Trust shall provide to the Board of Trustees, and the Board of Trustees shall review, at least quarterly, a written report of the amounts expended (and the purposes therefor) under the Distribution Plan. The Distribution Plan further provides that the selection and nomination of Qualified Trustees shall be committed to the discretion of the disinterested Trustees (as defined in the 1940 Act) then in office. The Distribution Plan may be terminated at any time by a vote of a majority of the Qualified Trustees or, with respect to a particular Fund, by vote of a majority of the outstanding voting Investor Class shares of such Fund (as defined in the 1940 Act). The Distribution Plan may not be amended to increase materially the amount of permitted expenses thereunder without the approval of shareholders and may not be materially amended in any case without a vote of the majority of both the Trustees and the Qualified Trustees. Each of the Funds will preserve copies of any plan, agreement or report made pursuant to the Distribution Plan for a period of not less than six years from the date of the Distribution Plan, and for the first two years such copies will be preserved in an easily accessible place. For the fiscal years ended December 31, 1998 and 1999, the Distributor was paid or accrued the following distribution fees, and voluntarily waived the amounts following such fees:
Year-Ended 12/31/98 Year-Ended 12/31/99 -------------------- --------------------- Payable Waived Payable Waived --------- -------- --------- --------- Balanced Fund--Investor Class $ 7 $ 7 $2,933 $2,933 Core Equity Fund--Investor Class 9 9 5,263 5,263 Equity Growth Fund--Investor Class 511 511 17,690 17,690 Equity Income Fund--Investor Class 49 49 3,706 3,706 Income Fund--Investor Class -- -- 436 436 Intermediate Term Bond Fund--Investor Class -- -- 518 518 Money Market Fund--Investor Class -- -- 72 72 Short-Intermediate Term U.S. Government Securities Fund--Investor Class -- -- 73 73
48
Year-Ended Year-Ended 12/31/98 12/31/99 ----------- ---------------- Small Capitalization Fund--Investor Class 26 26 1,342 1,342 U.S. Government Securities Fund-- Investor Class -- -- 97 97
Distribution and Sub-Administration Agreement The discussion in this "Distribution and Sub-Administration Agreement" sub-section shall not apply to the Portfolios. The Trust has entered into a Distribution and Sub-Administration Agreement dated January 1, 1998 (the "Distribution Agreement") with the Distributor, pursuant to which the Distributor acts as the Funds' exclusive underwriter, provides certain administration services and promotes and arranges for the sale of each class of Shares. The Distributor is a wholly-owned subsidiary of BISYS Fund Services, Inc. The Distribution Agreement provides that the Distributor will bear the expenses of printing, distributing and filing prospectuses and statements of additional information and reports used for sales purposes, and of preparing and printing sales literature and advertisements not paid for by the Distribution Plan. The Trust pays for all of the expenses for qualification of the shares of each Fund for sale in connection with the public offering of such shares, and all legal expenses in connection therewith. In addition, pursuant to the Distribution Agreement, the Distributor provides certain sub-administration services to the Trust, including providing officers, clerical staff and office space. The Distribution Agreement is currently in effect and will continue in effect with respect to each Fund only if such continuance is specifically approved at least annually by the Board of Trustees or by vote of a majority of such Fund's outstanding voting securities and, in either case, by a majority of the Trustees who are not parties to the Distribution Agreement or "interested persons" (as defined in the 1940 Act) of any such party. The Distribution Agreement is terminable without penalty by the Trust on behalf of each Fund on 60 days' written notice when authorized either by a majority vote of such Fund's shareholders or by vote of a majority of the Board of Trustees of the Trust, including a majority of the Trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust, or by the Distributor on 60 days' written notice, and will automatically terminate in the event of its "assignment" (as defined in the 1940 Act). The Distribution Agreement also provides that neither the Distributor nor its personnel shall be liable for any act or omission in the course of, or connected with, rendering services under the Distribution Agreement, except for willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations or duties. In the event the operating expenses of any Fund, including all investment advisory, administration and sub-administration fees, but excluding brokerage commissions and fees, taxes, interest and extraordinary expenses such as litigation, for any fiscal year exceed the most restrictive expense limitation applicable to that Fund imposed by the securities laws or regulations thereunder of any state in which the shares of such Fund are qualified for sale, as such limitations may be raised or lowered from time to time, the Distributor shall reduce its sub-administration fee with respect to such Fund (which fee is described below) to the extent of its share of such excess expenses. The amount of any such reduction to be borne by the Distributor shall be deducted from the monthly sub-administration fee otherwise payable with respect to such Fund during such fiscal year; and if such amounts should exceed the monthly fee, the Distributor shall pay to such Fund its share of such excess expenses no later than the last day of the first month of the next succeeding fiscal year. In consideration of the sub-administration services provided by the Distributor pursuant to the Distribution Agreement, the Distributor receives an annual fee, payable monthly, of 0.05% of the net assets of each Fund. However, the Distributor has voluntarily agreed to waive a portion of the fees payable to it under the Distribution Agreement with respect to each Fund on a month-to-month basis. For fiscal years ended December 31, 1998 and 1999, the Distributor was paid or accrued the following sub-administration fees, and voluntarily waived the amounts following such fees: 49
Year-Ended 12/31/98 Year-Ended 12/31/99 ------------------------------ ---------------------- Payable Waived Payable Waived -------------- ------------- ---------- --------- Balanced Fund $ 23,343 -- $42,348 -- Core Equity Fund 33,560 -- 73,566 -- Equity Growth Fund 60,845 -- 120,874 -- Equity Income Fund 49,189 -- 75,217 -- Income Fund 27,725 -- 32,808 -- Intermediate Term Bond Fund 12,678 -- 18,409 -- Money Market Fund 83,266 -- 115,539 -- Short-Intermediate Term U.S. Government Securities Fund 14,245 -- 15,941 -- Small Capitalization Fund 25,885 -- 37,129 -- U.S. Government Securities Fund 1,529 1,529 3,265 3,265 Equity Growth II Fund (a) N/A N/A 4,424 3,808
- ---------- (a) Sub-administration fees and waivers for 1999 are from the period July 1, 1999 (commencement of operations) through December 31, 1999. Transfer Agent and Custodian The Trust has also entered into a Transfer Agency Agreement with DST Systems, Inc. ("DST") pursuant to which DST acts as transfer agent for the Trust. DST's address is 210 West 10th Street, Kansas City, MO 64105. Pursuant to a Custodian Agreement, Chase acts as the custodian of the assets of each Fund (except Core Equity Fund and Equity Growth Fund) and receives such compensation as is from time to time agreed upon by the Trust and Chase. As custodian, Chase provides oversight and record keeping for the assets held in the portfolios of each Fund. Chase also provides fund accounting services for the income, expenses and shares outstanding for such Funds. Chase is located at 3 Metrotech Center, Brooklyn, NY 11245. Investors Bank & Trust Company ("IBT") acts as the custodian of the assets of Core Equity Fund, Equity Growth Fund and the Portfolios. IBT is located at 200 Clarendon Street, Boston, MA 02117. INDEPENDENT ACCOUNTANTS The financial statements incorporated herein by reference from the Annual Report to Shareholders for the fiscal year ended December 31, 1999 and the related financial highlights which appear in the Prospectuses, have been incorporated herein and included in the Prospectuses in reliance on the report of PricewaterhouseCoopers LLP, independent accountants of the Funds, given on the authority of said firm as experts in accounting and auditing. PricewaterhouseCoopers LLP provides the Funds with audit services, tax return preparation and assistance and consultation with respect to the preparation of filings with the Securities and Exchange Commission. CERTAIN REGULATORY MATTERS Chase and its affiliates may have deposit, loan and other commercial banking relationships with the issuers of securities purchased on behalf of any of the Funds, including outstanding loans to such issuers which may be repaid in whole or in part with the proceeds of securities so purchased. Chase and its affiliates deal, trade and invest for their own accounts in U.S. Government obligations, municipal obligations and commercial paper and are among the leading dealers of various types of U.S. Government obligations and municipal obligations. Chase and its affiliates may sell U.S. Government obligations and municipal obligations to, and purchase them from, other investment companies sponsored by the Funds' distributor or affiliates of the distributor. Chase will not invest any Fund assets in any U.S. Government obligations, municipal obligations or commercial paper purchased from itself or any affiliate, although under certain circumstances such securities may be purchased from 50 other members of an underwriting syndicate in which Chase or an affiliate is a non-principal member. This restriction may limit the amount or type of U.S. Government obligations, municipal obligations or commercial paper available to be purchased by any Fund. Chase has informed the Funds that in making its investment decision, it does not obtain or use material inside information in the possession of any other division or department of Chase, including the division that performs services for the Trust as custodian, or in the possession of any affiliate of Chase. Shareholders of the Funds should be aware that, subject to applicable legal or regulatory restrictions, Chase and its affiliates may exchange among themselves certain information about the shareholder and his account. Transactions with affiliated broker-dealers will only be executed on an agency basis in accordance with applicable federal regulations. GENERAL INFORMATION Description of Shares, Voting Rights and Liabilities Mutual Fund Investment Trust is an open-end, non-diversified management investment company organized as Massachusetts business trust under the laws of the Commonwealth of Massachusetts in 1997. The Trust currently consists of 16 series of shares of beneficial interest, par value $.001 per share. With respect to all of its Funds, the Trust may offer more than one class of shares. The Trust has reserved the right to create and issue additional series or classes. Each share of a series or class represents an equal proportionate interest in that series or class with each other share of that series or class. The shares of each series or class participate equally in the earnings, dividends and assets of the particular series or class. Expenses of the Trust which are not attributable to a specific series or class are allocated amount all the series in a manner believed by management of the Trust to be fair and equitable. Shares have no preemptive or conversion rights. Shares when issued are fully paid and non-assessable, except as set forth below. Shareholders are entitled to one vote for each share held. Shares of each series or class generally vote together, except when required under federal securities laws to vote separately on matters that only affect a particular class, such as the approval of distribution plans for a particular class. The classes of shares have several different attributes relating to expenses, as described herein and in the Prospectuses. In addition to such differences, expenses borne by each class of a Fund may differ slightly because of the allocation of other class-specific expenses. For example, a higher transfer agency fee may be imposed on Retail Class shares than on Premier class shares. The relative impact of ongoing annual expenses will depend on the length of time a share is held. Selected dealers and financial consultants may receive different levels of compensation for selling one particular class of shares rather than another. The Trust is not required to hold annual meetings of shareholders but will hold special meetings of shareholders of a series or class when, in the judgment of the Trustees, it is necessary or desirable to submit matters for a shareholder vote. Shareholders have, under certain circumstances, the right to communicate with other shareholders in connection with requesting a meeting of shareholders for the purpose of removing one or more Trustees. Shareholders also have, in certain circumstances, the right to remove one or more Trustees without a meeting. No material amendment may be made to the Trust's Declaration of Trust without the affirmative vote of the holders of a majority of the outstanding shares of each portfolio affected by the amendment. Shares have no preemptive or conversion rights. Shares, when issued, are fully paid and non- assessable, except as set forth below. Any series or class may be terminated (i) upon the merger or consolidation with, or the sale or disposition of all or substantially all of its assets to, another entity, if approved by the vote of the holders of two-thirds of its outstanding shares, except that if the Board of Trustees recommends such merger, consolidation or sale or disposition of assets, the approval by vote of the holders of a majority of the series' or class' outstanding shares will be sufficient, or (ii) by the vote of the holders of a majority of its outstanding shares, or (iii) by the Board of Trustees by written notice to the series' or class' shareholders. Unless each series and class is so terminated, the Trust will continue indefinitely. 51 Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the Trust's Declaration of Trust contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides for indemnification and reimbursement of expenses out of the Trust property for any shareholder held personally liable for the obligations of the Trust. The Trust's Declaration of Trust also provides that the Trust shall maintain appropriate insurance (for example, fidelity bonding and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees and agents covering possible tort and other liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations. The Trust's Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually but only upon the property of the Trust and that the Trustees will not be liable for any action or failure to act, errors of judgment or mistakes of fact or law, but nothing in the Declaration of Trust protects a Trustee against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. The Board of Trustees has adopted a code of ethics addressing personal securities transactions by investment personnel and access persons and other related matters. The code has been designated to address potential conflicts of interest that can arise in connection with personal trading activities of such persons. Persons subject to the code are generally permitted to engage in personal securities transactions, subject to certain prohibitions, pre-clearance requirements and blackout periods. Principal Holders As of April 3, 2000, the following persons owned of record 5% or more of the outstanding shares of the following classes of the following Funds:
Name of Funds % of Total Shares - ------------- ------------------- Balanced Fund Investor Shares Amalgamated Bank of NY TTEE .................... 43.22% FBO Liuna Supplemental Emp Ret Plan PO Box 370, Cooper Station New York, NY 10276-0370 NFSC FEBO # CR5-509981 ......................... 15.57% The Chase Manhattan Bank Cust IRA of Manuel C Pena-Morros Trad'l IRA R/O 1627 Brickell Ave #2005 Miami, FL 33129-1250 IFTC Cust IRA R/O .............................. 5.91% Dwight Evans 1005 Stacey Renee Ct Arlington, TX 76002-4218
52
Name of Funds % of Total Shares - ------------- ------------------- Balanced Fund Premier Shares Texas Commerce Bank ............................ 74.73% Attn Asset Trading 1111 Pannin Suite 10 Houston, TX 77002-6925 Hamill & Co FBO Chase Bank of Texas NA ......... 18.07% Attn Mutual Fund Unit 16HCBO9 PO Box 2558 Houston, TX 77252-2558 Trulin & Co .................................... 6.57% c/o Chase Manhattan Bank Attn Michele Bullard/Mutual Funds PO Box 1412 Rochester, NY 14603-1412 Core Equity Fund Investor Shares Hamill & Co FBO Chase Bank of Texas NA ......... 11.86% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Core Equity Fund Premier Texas Commerce Bank ............................ 52.16% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 Hamill & Co FBO Chase Bank of Texas NA ......... 43.76% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Equity Growth Fund Investor Shares Charles Schwab & Co Inc. ....................... 33.46% Reinvest Account Attn Mutual Funds Dept 101 Montgomery Street San Francisco, CA 94104-4122
53
Name of Funds % of Total Shares - ------------- ------------------- Equity Growth Fund Premier Hamill & Co FBO Chase Bank of Texas NA ......... 43.21% Attn Mutual Fund Unit 16HCBO9 PO Box 2558 Houston, TX 77252-2558 Texas Commerce Bank ............................ 43.12% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 First Union National Bank Cust ................. 7.42% FBO Rollins Truck Leasing Corp Pension Plan # 1546002483 Attn Mutual Fund Dept 1525 W Wt Harris Blvd Charlotte, NC 28262-8522 Equity Income Fund Investor Shares Hamill & Co FBO Chase Bank of Texas NA ......... 20.35% Attn Mutual Fund Unit 16HCBO9 PO Box 2558 Houston, TX 77252-2558 Trulin & Co .................................... 6.35% c/o Chase Manhattan Bank Attn Michele Bullard/Mutual Funds PO Box 1412 Rochester, NY 14603-1412 NFSC FEBO # ATL-278793 ......................... 5.27% M June Waggoner J Virgil Waggoner 11 Shadder Way Houston, TX 77019-1415 Equity Income Fund Premier Hamill & Co FBO Chase Bank of Texas NA ......... 47.05% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Texas Commerce Bank ............................ 46.82% Attn Asset Trading 1111 Fannin Suite 10
54
Name of Funds % of Total Shares - ------------- ------------------- Houston, TX 77002-6925 Income Fund Investor Shares Obie & Co ...................................... 66.96% c/o Chase Bank of Texas NA Attn Mutual Funds Unit 16HCB 09 PO Box 200547 Houston, TX 77216-0547 IFTC Cust IRA R/O .............................. 10.23% Felipe C Perez 3415 Hickory Hill Dr Arlington, TX 76014-3322 Federico Carrillo .............................. 7.94% Francia Fernandez JTWROS 3 World Financial Ctr Fl 16 New York, NY 10285-0001 Income Fund Premier Hamill & Co FBO Chase Bank of Texas NA ......... 65.91% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston TX, 77252-2558 Texas Commerce Bank ............................ 28.13% Attn Asset Trading 1111 Fannin Suite 10 Houston TX, 77002-6925 Obie & Co ...................................... 5.95% c/o Chase Bank of Texas NA Attn Mutual Funds Unit 16HCB 09 PO Box 200547 Houston, TX 77216-0547 Intermediate Term Bond Fund Investor Shares NFSC FEBO #H76-008435 .......................... 47.52% Rollover IRA Durr L Minor Chase Bank of Texas Cust 2834 Shadowdale Houston, TX 77043-1715 IFTC Cust IRA R/O .............................. 14.34% Felipe C Perez 3415 Hickory Hill Dr
55
Name of Funds % of Total Shares - ------------- ------------------- Arlington, TX 76014-3322 Hamill & Co FBO Chase Bank of Texas NA ......... 10.22% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Margaret D Penrose ............................. 6.75% 2315 Little Rd Apt 217 Arlington, TX 76016-6345 Federico Carrillo .............................. 5.58% Francia Fernandez JTWROS 3 World Financial Ctr Fl 16 New York, NY 10285-0001 Intermediate Term Bond Fund Premier Hamill & Co FBO Chase Bank of Texas NA ......... 61.95% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Texas Commerce Bank ............................ 15.95% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 First Union National Bank Cust ................. 14.58% U/A for Matlack Systems Inc PPL A/C 1546002456 1525 West Wt Harris Blvd Charlotte, NC 28262-8522 Obie & Co ...................................... 5.03% c/o Chase Bank of Texas NA Attn Mutual Funds Unit 16HCB 09 PO Box 200547 Houston, TX 77216-0547 Money Market Fund Investor Shares Margaret C Bowden .............................. 21.10% PO Box 348 Irvington, NY 10533-0348
56
Name of Funds % of Total Shares - ------------- ------------------- Raymond Jean Lesperance TOD .............................. 16.84% Rebecca B Lesperance & Jennifer B Lesperance Subject to DST Rules 795 Stuyvesant Ave Apt 2 Irvington, NY 10533-0348 Suresh C Nayar ........................................... 11.46% Diane M Nayar JTWROS 4249 La Adelita Dr El Paso, TX 79922-2340 Investors Fiduciary Tr Co Cust ........................... 9.33% Roth Converted IRA 1/1/1998 FBO Jeffery A Petroske 14 Manor Pkwy Rochester, NY 14620-2605 Money Market Fund Premier Texas Commerce Bank ...................................... 71.07% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 Obie & Co ................................................ 28.77% c/o Texas Commerce Bank Attn CTF/Chase Unit 18HCB 98 PO Box 2558 Houston, TX 77252-2558 Short Int Term US Gov SEC Fund Investor Shares Hamill & Co FBO Chase Bank of Texas NA ................... 41.61% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Talbot Perkins Childrens Services Endowment Fund ......... 23.91% 116 W 32nd St Fl 13 New York, NY 10001-3289 Luke Joseph Smith & Elaine Joan Smith GDNS ............... 7.79% Carolyn Anne Smith 17 Layton Dr Canterbury, NH 03224-2017
57
Name of Funds % of Total Shares - ------------- ------------------- NFSC FEBO #ATL-189626 .......................... 7.71% Frank B Dunlap III GDN Matthew A Koester 3001 East Ave Apt 242 Bld J Grand Prairie, TX 75050 NFSC FEBO #ATL-189618 .......................... 7.62% Frank B Dunlap III GDN Laura Elaine Koester 3001 East Ave Apt 242 Bld J Grand Prairie, TX 75050 Boris Amusin ................................... 6.92% Valentina Amusina JT WROS 40 Ocean Pkwy Apt 2D Brooklyn, NY 11218-1538 Short Intr Term US Gov SEC FD Premier Hamill & Co FBO Chase Bank of Texas NA ......... 64.80% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Texas Commerce Bank ............................ 32.39% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 Small Capitalization Fund Investor Shares Hamill & Co FBO Chase Bank of Texas NA ......... 66.53% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Western Mining Corp USA ........................ 10.81% 401k Profit Sharing Plan 8008 E Arapahoe Rd Ste 110 Englewood, CO 80112-1356 Small Capitalization Fund Premier Shares Hamill & Co FBO Chase Bank of Texas NA ......... 62.41% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558
58
Name of Funds % of Total Shares - ------------- ------------------- Texas Commerce Bank ............................ 24.92% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925 US Government Securities Fund Investor Shares Edgar Jones .................................... 34.48% Melva D Jones JTWROS 1404 S Rodgers Dr Graham, TX 76450-4440 Margaret D Penrose ............................. 17.55% 2315 Little Rd Apt 217 Arlington, TX 76016-6345 Richard Monte .................................. 14.91% 5 Cornelia St Apt 4C New York, NY 10014-5617 Investors Fiduciary TR CO Cust ................. 8.95% IRA R/O Bobby J Coffin 1405 Marlee Ln Arlington, TX 76014-1435 Donna M Ephlin ................................. 8.91% Gary W Ephlin JTWROS 10827 Loma Del Sol Dr El Paso, TX 79934-3782 John G Gleason ................................. 7.41% Lorraine A Gleason JT WROS 12 Burnett Brook Dr Mendham, NJ 07945-2100 US Government Securities Fund Premier Shares Hamill & Co FBO Chase Bank of Texas NA ......... 53.27% Attn Mutual Fund Unit 16HCB09 PO Box 2558 Houston, TX 77252-2558 Texas Commerce Bank ............................ 45.37% Attn Asset Trading 1111 Fannin Suite 10 Houston, TX 77002-6925
59
Name of Funds % of Total Shares - ------------- ------------------- Equity Growth Fund II Chase Manhattan Bank N/A ....................... 100.00% Global Sec Services Omnibus CMB Thrift Plan Attn Jeff Rosenberg 3 Chase Metro Tech Center Flr 7 Brooklyn, NY 11245-0001
60 Financial Statements The Annual Report to Shareholders for the fiscal year ended December 31, 1999 of each Fund, including the report of independent accounts, financial highlights and financial statements for the fiscal year ended December 31, 1999 contained therein, are incorporated herein by reference. Specimen Computations of Offering Prices Per Share Balanced Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 38.50 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 38.46 Core Equity Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 32.24 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 32.19 Equity Growth Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 68.09 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 67.85 Equity Income Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 49.80 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 49.83 Income Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 18.71
61 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 18.72 Intermediate Term Bond Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.06 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.06 Money Market Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 1.00 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 1.00 Short-Intermediate Term U.S. Government Securities Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.05 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.04 Small Capitalization Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 22.60 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 22.51 U.S. Government Securities Fund (specimen computations) Premier Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.84 Investor Shares: Net Asset Value and Redemption Price per Share of Beneficial Interest at December 31, 1999 ................................................ $ 12.84
62 [This page intentionally left blank] 63 APPENDIX A DESCRIPTION OF CERTAIN OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES Federal Farm Credit System Notes and Bonds--are bonds issued by a cooperatively owned nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government. These bonds are not guaranteed by the U.S. Government. Maritime Administration Bonds--are bonds issued and provided by the Department of Transportation of the U.S. Government are guaranteed by the U.S. Government. FNMA Bonds--are bonds guaranteed by the Federal National Mortgage Association. These bonds are not guaranteed by the U.S. Government. FHA Debentures--are debentures issued by the Federal Housing Administration of the U.S. Government and are guaranteed by the U.S. Government. FHA Insured Notes--are bonds issued by the Farmers Home Administration of the U.S. Government and are guaranteed by the U.S. Government. GNMA Certificates--are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration and therefore guaranteed by the U.S. Government. As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates. The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures may result in the return of the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose no risk to principal investment because of the GNMA guarantee. As the prepayment rate of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. The yield which will be earned on GNMA Certificates may vary from their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by the prepayment of mortgages included in the mortgage pool underlying the Certificates. Principal which is so prepaid will be reinvested although possibly at a lower rate. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium could result in a loss to a Fund. Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate. If agency securities are purchased at a premium above principal, the premium is not guaranteed by the issuing agency and a decline in the market value to par may result in a loss of the premium, which may be particularly likely in the event of a prepayment. When and if available, U.S. Government obligations may be purchased at a discount from face value. FHLMC Certificates and FNMA Certificates--are mortgage-backed bonds issued by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, respectively, and are guaranteed by the U.S. Government. A-1 GSA Participation Certificates--are participation certificates issued by the General Services Administration of the U.S. Government and are guaranteed by the U.S. Government. New Communities Debentures--are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which is guaranteed by the U.S. Government. Public Housing Bonds--are bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government. Penn Central Transportation Certificates--are certificates issued by Penn Central Transportation and guaranteed by the U.S. Government. SBA Debentures--are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government. Washington Metropolitan Area Transit Authority Bonds--are bonds issued by the Washington Metropolitan Area Transit Authority. Some of the bonds issued prior to 1993 are guaranteed by the U.S. Government. FHLMC Bonds--are bonds issued and guaranteed by the Federal Home Loan Mortgage Corporation. These bonds are not guaranteed by the U.S. Government. Federal Home Loan Bank Notes and Bonds--are notes and bonds issued by the Federal Home Loan Bank System and are not guaranteed by the U.S. Government. Student Loan Marketing Association ('Sallie Mae') Notes and Bonds--are notes and bonds issued by the Student Loan Marketing Association and are not guaranteed by the U.S. Government. D.C. Armory Board Bonds--are bonds issued by the District of Columbia Armory Board and are guaranteed by the U.S. Government. Export-Import Bank Certificates--are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the U.S. and are guaranteed by the U.S. Government. In the case of securities not backed by the 'full faith and credit' of the U.S. Government, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the U.S. Government itself in the event the agency or instrumentality does not meet its commitments. Investments may also be made in obligations of U.S. Government agencies or instrumentalities other than those listed above. A-2 APPENDIX B DESCRIPTION OF RATINGS A description of the rating policies of Moody's, S&P and Fitch with respect to bonds and commercial paper appears below. Moody's Investors Services' Corporate Bond Ratings Aaa--Bonds which are rated "Aaa" are judged to be of the best quality and carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin, and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa--Bonds which are rated "Aa" are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. A--Bonds which are rated "A" possess many favorable investment qualities and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa--Bonds which are rated "Baa" are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba--Bonds which are rated "Ba" are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B--Bonds which are rated "B" generally lack characteristics of a desirable investment. Assurance of interest and principal payments or of maintenance and other terms of the contract over any long period of time may be small. Caa--Bonds which are rated "Caa" are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca--Bonds which are rated "Ca" represent obligations which are speculative in high degree. Such issues are often in default or have other marked shortcomings. C--Bonds which are rated "C" are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Moody's applies numerical modifiers "1", "2", and "3" to certain of its rating classifications. The modifier "1" indicates that the security ranks in the higher end of its generic rating category; the modifier "2" B-1 indicates a mid-range ranking; and the modifier "3" indicates that the issue ranks in the lower end of its generic rating category. Standard & Poor's Ratings Group Corporate Bond Ratings AAA--This is the highest rating assigned by Standard & Poor's to a debt obligation and indicates an extremely strong capacity to repay principal and pay interest. AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to pay principal and interest is very strong, and differs from "AAA" issues only in small degree. A--Bonds rated "A" have a strong capacity to repay principal and pay interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB--Bonds rated "BBB" are regarded as having an adequate capacity to repay principal and pay interest. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to repay principal and pay interest for bonds in this category than for higher rated categories. BB-B-CCC-CC-C--Bonds rated "BB", "B", "CCC", "CC" and "C" are regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. BB indicates the lowest degree of speculation and C the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. CI--Bonds rated "CI" are income bonds on which no interest is being paid. D--Bonds rated "D" are in default. The "D" category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired unless S&P believes that such payments will be made during such grace period. The "D" rating is also used upon the filing of a bankruptcy petition if debt service payments are jeopardized. The ratings set forth above may be modified by the addition of a plus or minus to show relative standing within the major rating categories. Moody's Investors Service's Commercial Paper Ratings Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a superior ability for repayment of senior short-term debt obligations. "Prime-1" repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries, high rates of return on funds employed, conservative capitalization structures with moderate reliance on debt and ample asset protection, broad margins in earnings coverage of fixed financial charges and high internal cash generation, and well-established access to a range of financial markets and assured sources of alternate liquidity. Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternative liquidity is maintained. Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt B-2 protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained. Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating categories. Standard & Poor's Rating Group Commercial Paper Ratings A S&P commercial paper rating is current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. Ratings are graded in several categories, ranging from "A-1" for the highest quality obligations to "D" for the lowest. The four categories are as follows: A-1--This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus (+) sign designation. A-2--Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated "A-1". A-3--Issues carrying this designation have adequate capacity for timely payment. They are, however, somewhat more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. B--Issues rated "B" are regarded as having only speculative capacity for timely payment. C--This rating is assigned to short-term debt obligations with a doubtful capacity for payment. D--Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. Fitch Bond Ratings AAA--Bonds rated AAA by Fitch are considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. AA--Bonds rated AA by Fitch are considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issues is generally rated F-1+ by Fitch. A--Bonds rated A by Fitch are considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings. BBB--Bonds rated BBB by Fitch are considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse consequences on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. Plus and minus signs are used by Fitch to indicate the relative position of a credit within a rating category. Plus and minus signs, however, are not used in the AAA category. B-3 Fitch Short-Term Ratings Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposits, medium-term notes, and municipal and investment notes. The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner. Fitch's short-term ratings are as follows: F-1+--Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1--Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated F-1+. F-2--Issues assigned this rating have a satisfactory degree of assurance for timely payment but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. F-3--Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, although near-term adverse changes could cause these securities to be rated below investment grade. LOC--The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank. Like higher rated bonds, bonds rated in the Baa or BBB categories are considered to have adequate capacity to pay principal and interest. However, such bonds may have speculative characteristics, and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade bonds. After purchase by a Fund, a security may cease to be rated or its rating may be reduced below the minimum required for purchase by such Fund. Neither event will require a sale of such security by a Fund. However, a Fund's investment manager will consider such event in its determination of whether such Fund should continue to hold the security. To the extent the ratings given by Moody's, S&P or Fitch may change as a result of changes in such organizations or their rating systems, a Fund will attempt to use comparable ratings as standards for investments in accordance with the investment policies contained in this Statement of Additional Information. B-4 [This page intentionally left blank] B-5 (C)The Chase Manhattan Corporation, 2000. CF10 400 April 2000 CF102-400 PART C - OTHER INFORMATION Item 23. Exhibits 1 Declaration of Trust dated as of September 19, 1997.* 2 By-Laws.* 3 None. 4(a) Form of Investment Advisory Agreement between Trust and The Chase Manhattan Bank.* 4(b) Form of Sub-Advisory Agreement between The Chase Manhattan Bank and Texas Commerce Bank National Association.* 4(c) Form of Administration Agreement.* 4(d) Form of Investment Advisory Agreement.* 5 Form of Distribution and Sub-Administration Agreement.* 6 None. 7 Form of Custodian Agreement.* 8 Form of Transfer Agency Agreement.* II-1 9 Opinion and consent of counsel as to the legality of the securities being registered.* 10 Consent of Independent Auditors.+ 11 Financial Statements and the Reports thereon for the Funds filed herein for the fiscal year ended December 31, 1999 are incorporated by reference into this Part B as part of the 1999 Annual Reports to Shareholders for such Funds as filed with the Securities and Exchange Commission by the Registrant on Form N-30D on February 18 and 28, 2000, accession numbers 0000950146-00-000154 and 0000950146-00-000200. 12 None. 13 Distribution Plan.* 14 Financial Data Schedules.+ 18 None. * Previously filed with Registration Statement and Post-effective Amendments and are herein incorporated by reference. + Filed herewith. II-2 Item 24. Persons Controlled by or Under Common Control with the Fund. Inapplicable. Item 25. Indemnification Sections 10.2 and 10.4 of the Amended and Restated Declaration of Trust, filed as Exhibit 1, are incorporated herein by reference. Section 10.2 contains provisions limiting the liabilities of members of the Supervisory Committee and Section 10.4 contains provisions for indemnification of the Trustee, members of the Supervisory Committee and officers of the Trust. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the Trust and the Trustee pursuant to the foregoing provisions or otherwise, the Trust has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Trust of expenses incurred or paid by a director, officer, or controlling person of the Trust and the Trustee in connection with the successful defense of any action, suit or proceeding) is asserted against the Trust by such director, officer or controlling person or the Trustee in connection with the Units being registered, the Trust will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 26. Business and Other Connections of Investment Adviser (a) The Chase Manhattan Bank ("Chase") is the investment adviser of the Trust. Chase is a commercial bank providing a wide range of banking and investment services. II-3 To the knowledge of the Registrant, none of the Directors or executive officers of Chase, except those described below, are or have been, at any time during the past two years, engaged in any other business, profession, vocation or employment of a substantial nature, except that certain Directors and executive officers of Chase also hold or have held various positions with bank and non-bank affiliates of Chase, including its parent, The Chase Manhattan Corporation. Each Director listed below is also a Director of The Chase Manhattan Corporation.
Name Position with Chase Principal Occupation ---- ------------------- -------------------- Hans W. Becherer Director Chairman and CEO, Deere & Co. Frank A. Bennack, Jr. Director Chairman and CEO, The Hearst Corp. Susan V. Berresford Director President, The Ford Foundation Donald L. Boudreau Vice Chairman None Of the Board M. Anthony Burns Director Chairman of the Board, President and Chief Executive Officer of Ryder System, Inc. H. Laurance Fuller Director Chairman, President, Chief Executive Officer and Director of Amoco Corporation and Director of Abbott Laboratories Melvin R. Goodes Director Chairman and CEO, Warner-Lambert Co. William H. Gray III Director President and CEO, The College Fund/UNCF George V. Grune Director Chairman and CEO, The Reader's Digest Assoc., Inc. William Harrison Vice Chairman None Of the Board Harold S. Hook Director Retired Chairman, American General Corp. Helene Kaplan Director Of Counsel, Skaden, Arps, Slate, Meager & Flom LLP Thomas G. Labreque President and Chief Chairman, Chief Executive Operating Officer Officer and a Director of The and Director Chase Manhattan Corporation and a Director of AMAX, Inc. Donald H. Layton Vice Chairman None Of the Board James B. Lee Vice Chairman None Of the Board Denis O'Leary Executive None Vice President Marc J. Shapiro Vice Chairman None Of the Board Joseph G. Sponholz Vice Chairman None Of the Board Henry B. Schacht Director Chairman and Chief Executive Officer of Cummins Engine Company, Inc. and a Director of each of American Telephone and Telegraph Company and CBS Inc. II-4 Walter V. Shipley Chairman of the None Board and Chief Executive Officer Andrew C. Sigler Director Chairman of the Board and Chief Executive Officer, Champion International Corporation John R. Stafford Director Chairman, President and Chief Executive Officer, American Home Products Corporation Marina V. N. Whitman Director Professor of Business Administration and Public Policy, University of Michigan
(b) Chase Bank of Texas, N.A. ("CBT") is investment sub-adviser with respect to certain of the Funds. Its business has been solely that of a national bank. The directors and executive officers (i.e., members of management committee) of the investment adviser have held during the past two fiscal years the following positions of a substantial nature: II-5
Position(s) Position(s) and Offices and Offices Other Substantial with with Business, Profession, Name CBT Registrant Vocation or Employment ----- -------------- ----------- ---------------------- John L. Adams Chairman, None None President and CEO Elaine B. Agather CEO, CBT -- None None Fort Worth, Vice Chairman, CBT -- Metroplex Alan R. Buckwalter, III Director, None None Vice Chairman II-6 Position(s) Position(s) and Offices and Offices Other Substantial with with Business, Profession, Name CBT Registrant Vocation or Employment ----- -------------- ------------- ---------------------- Robert C. Hunter Director, None None Vice Chairman S. Todd Maclin Director, None None Vice Chairman Beverly H. McCaskill Director, None None Executive Vice President Scott J. McLean Executive None None Vice President Cathy S. Nunnally Executive None None Vice President Jeffrey B. Reitman Director, None None General Counsel Harriet S. Wasserstrum Director, None None Vice Chairman
Item 27. Principal Underwriters Inapplicable. Item 28. Location of Accounts and Records Accounts and other documents are maintained at the offices of the Registrant. II-7 Item 29. Management Services. Inapplicable. Item 30. Undertakings (a) Registrant hereby undertakes to call a meeting of shareholders for the purpose of voting upon the question of removal of one or more of Registrant's directors when requested in writing to do so by the holders of at least 10% of Registrant's outstanding shares of common stock and, in connection with such meeting, to assist in communications with other shareholders in this regard, as provided under Section 16(c) of the 1940 Act. (b) Registrant hereby 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 change. II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has certified that it meets all requirements for effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to its Registration Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York and the State of New York on the 28th day of April, 2000. MUTUAL FUND INVESTMENT TRUST By /s/ Sarah Jones -------------------------- Sarah Jones Chair Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. * Trustee April 28, 2000 - ------------------------------- Fergus Reid, III /s/ H. Richard Vartabedian Trustee April 28, 2000 - ------------------------------- H. Richard Vartabedian * Trustee April 28, 2000 - ------------------------------- William J. Armstrong * Trustee April 28, 2000 - ------------------------------- John R.H. Blum * Trustee April 28, 2000 - ------------------------------- Stuart W. Cragin, Jr. * - ------------------------------- Trustee April 28, 2000 Roland R. Eppley, Jr. * Trustee April 28, 2000 - ------------------------------- Joseph J. Harkins * Chair and April 28, 2000 - ------------------------------- Trustee Sarah E. Jones * - ------------------------------- Trustee April 28, 2000 W.D. MacCallan * - ------------------------------- Trustee April 28, 2000 W. Perry Neff * Trustee April 28, 2000 - ------------------------------- Leonard M. Spalding, Jr. * Trustee April 28, 2000 - ------------------------------- Irv Thode * Trustee April 28, 2000 - ------------------------------- Richard E. Ten Haken /s/ Martin R. Dean Treasurer and April 28, 2000 - ------------------------------- Principal Financial Martin R. Dean Officer /s/ H. Richard Vartabedian Attorney in April 28, 2000 - ------------------------------- Fact H. Richard Vartabedian
CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated February 10, 2000, relating to the financial statements and financial highlights which appear in the December 31, 1999 Annual Report to Shareholders of Chase Money Market Fund, Chase Short-Intermediate Term U.S. Government Securities Fund, Chase Income Fund, Chase Balanced Fund, Chase Equity Income Fund, Chase Small Capitalization Fund, Chase Core Equity Fund, Chase Equity Growth Fund and Chase Equity Growth II Fund (separate portfolios of Mutual Fund Investment Trust) and Core Equity Portfolio and Equity Growth Portfolio (separate portfolios of Mutual Fund Master Investment Trust), which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Highlights" and "Independent Accountants" in such Registration Statement. PricewaterhouseCoopers LLP New York, New York April 28, 2000 EX-99.(17)(F) 8 a2027167zex-99_17f.txt EXHIBIT 99(17)(F) - ----------------------------------------------------------------------------- AUGUST 31, 2000 - ----------------------------------------------------------------------------- Chase Vista Money Market Funds ANNUAL REPORT 100% U.S. TREASURY SECURITIES MONEY MARKET FUND U.S. GOVERNMENT MONEY MARKET FUND TREASURY PLUS MONEY MARKET FUND FEDERAL MONEY MARKET FUND CASH MANAGEMENT FUND PRIME MONEY MARKET FUND TAX FREE MONEY MARKET FUND NEW YORK TAX FREE MONEY MARKET FUND CALIFORNIA TAX FREE MONEY MARKET FUND [Chase Logo] THE RIGHT RELATIONSHIP IS EVERYTHING.[RegTM] ANMM-2-1000 - ---------------------------------------------------------------------------- Contents - ----------------------------------------------------------------------------
Chairman's Letter 1 Chase Vista 100% U.S. Treasury Securities Money Market Fund 2 Fund Facts Chase Vista U.S. Government Money Market Fund 3 Fund Facts Chase Vista Treasury Plus Money Market Fund 4 Fund Facts Chase Vista Federal Money Market Fund 5 Fund Facts Chase Vista Cash Management Fund 6 Fund Facts Chase Vista Prime Money Market Fund 7 Fund Facts Chase Vista Tax Free Money Market Fund 8 Fund Facts Chase Vista New York Tax Free Money Market Fund 9 Fund Facts Chase Vista California Tax Free Money Market Fund 10 Fund Facts Portfolios of Investments 11 Financial Statements 60 Notes to Financial Statements 71
Highlights o In light of very strong economic growth in the U.S., the Federal Reserve Board continued its policy of raising short-term interest rates. At the end of the reporting period, the Federal Funds rate stood at 6.5%. o By June 2000, the first signs of moderation began to appear in the economy, and subsequent data seemed to confirm the slowdown. o Along with official Fed moves, yields on money market securities moved higher for most of the reporting year before stabilizing. --------------------------------------------------------- NOT FDIC INSURED | May lose value / No bank guarantee --------------------------------------------------------- Chase Vista Funds are distributed by Vista Fund Distributors, Inc. - -------------------------------------------------------------------------------- CHASE VISTA MONEY MARKET FUNDS - -------------------------------------------------------------------------------- Chairman's Letter October 2, 2000 Dear Shareholder: We are pleased to present this annual report on each of the Chase Vista Money Market Funds. Inside, you will find current seven-day yields and a current list of holdings for each fund as of August 31, 2000, the final day of the reporting year. After Extended Burst of Growth, U.S. Economy Appears to Slow For the great majority of the reporting year, the United States economy continued to expand at a rapid pace, with GDP growth soaring well in excess of the 3.5% that many analysts consider to be the Federal Reserve Board's maximum non-inflationary trend rate. In response, the Fed continued its policy of short-term interest rate increases, creating a generally negative backdrop for the fixed-income markets. The exception was the long-term U.S. Treasury market, which benefited from the February announcement and subsequent implementation of a plan by the United States Treasury department to use proceeds of the budget surplus to "buy back" longer-term Treasuries. This had the effect of creating an inverted Treasury yield curve, where investors were paid more for holding shorter-term Treasury securities than longer-term issues. In June, with shifting economic data showing a slowing economy, investors decided that the six Fed rate increases over the previous year had begun to take effect. As evidence of a slowdown continued to mount, the bullish view was that the Fed would achieve another "soft landing" in which growth will moderate but not disappear. As of this writing, the Fed has kept the short-term rate unchanged for four months. However, with several potentially troubling issues on the horizon--including the price of crude oil rising to all-time highs--investors are eagerly awaiting the upcoming third quarter GDP figures to understand the full extent of the economy's slowdown. In this environment, your portfolio managers did an excellent job, maintaining competitive yields while maintaining the $1 net asset value per share. All of us at Chase thank you for your continued investment and look forward to helping you reach your financial goals for many years to come. Sincerely yours, /s/ Fergus Reid Fergus Reid Chairman 1 - -------------------------------------------------------------------------------- CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------- Primary investments | Direct obligations of the U.S. Treasury | including Treasury bills, bonds and notes - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share classes offered | Vista, Premier and Institutional Shares - -------------------------------------------------------------------------------- Net assets | $4.5 Billion - -------------------------------------------------------------------------------- Average maturity | 73 days - -------------------------------------------------------------------------------- S&P Rating | Not Rated - -------------------------------------------------------------------------------- Moody's Rating | Not Rated - -------------------------------------------------------------------------------- NAIC Rating | Not Rated - --------------------------------------------------------------------------------
Maturity Schedule - ------------------------------ 1-14 days | 0.00% - ------------------------------ 15-30 days | 35.47% - ------------------------------ 31-60 days | 0.00% - ------------------------------ 61-90 days | 29.41% - ------------------------------ 91-180 days | 29.06% - ------------------------------ 181-270 days | 3.09% - ------------------------------ 271+ days | 2.97% - ------------------------------
7-Day SEC Yield(1) - ------------------------------ Vista Shares | 5.62% - ------------------------------ Premier Shares | 5.73% - ------------------------------ Institutional Shares | 5.96% - ------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Premier Shares and Institutional Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 5.50%, 5.69% and 5.86% for Vista Shares, Premier Shares and Institutional Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 2 - -------------------------------------------------------------------------------- CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------- Primary investments | Direct obligations of the U.S. Treasury and its | Agencies including Treasury bills, bonds, notes | and repurchase agreements - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share classes offered | Vista, Premier and Institutional Shares - -------------------------------------------------------------------------------- Net assets | $7.2 Billion - -------------------------------------------------------------------------------- Average maturity | 50 days - -------------------------------------------------------------------------------- S&P Rating* | AAA - -------------------------------------------------------------------------------- Moody's Rating* | Aaa - -------------------------------------------------------------------------------- NAIC Rating* | Class 1 - --------------------------------------------------------------------------------
* This rating is historical and is based upon the Fund's credit quality, market price exposure and management. It signifies that the Fund's safety is excellent and that it has superior capacity to maintain a $1 Net Asset Value per share. The National Association of Insurance Commissioners' (NAIC's) Class 1 status indicates that the Fund meets certain pricing and quality guidelines. Maturity Schedule - ----------------------------- 1-14 days | 64.32% - ----------------------------- 15-30 days | 2.75% - ----------------------------- 31-60 days | 7.06% - ----------------------------- 61-90 days | 5.11% - ----------------------------- 91-180 days | 10.95% - ----------------------------- 181-270 days | 5.66% - ----------------------------- 271+ days | 4.15% - -----------------------------
7-Day SEC Yield(1) - ------------------------------- Vista Shares | 6.06% - ------------------------------- Premier Shares | 6.20% - ------------------------------- Institutional Shares | 6.39% - -------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Premier Shares and Institutional Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 5.97%, 6.07% and 6.33% for Vista Shares, Premier Shares and Institutional Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 3 - -------------------------------------------------------------------------------- CHASE VISTA TREASURY PLUS MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------- Primary investments | Direct obligations of the U.S. Treasury | including Treasury bills, bonds and notes | as well as repurchase agreements which | are fully collateralized by obligations | issued or guaranteed by the U.S. Treasury - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share classes offered | Vista, Premier and Institutional Shares - -------------------------------------------------------------------------------- Net assets | $2.5 Billion - -------------------------------------------------------------------------------- Average maturity | 4 days - -------------------------------------------------------------------------------- S&P Rating* | AAA - -------------------------------------------------------------------------------- Moody's Rating* | Aaa - -------------------------------------------------------------------------------- NAIC Rating* | Exempt - --------------------------------------------------------------------------------
* This rating is historical and is based upon the Fund's credit quality, market price exposure and management. It signifies that the Fund's safety is excellent and that it has superior capacity to maintain a $1 Net Asset Value per share. The National Association of Insurance Commissioners' (NAIC's) "exempt" status indicates that the Fund meets certain pricing and quality guidelines. Maturity Schedule - ----------------------------- 1-14 days | 77.10% - ----------------------------- 15-30 days | 22.90% - ----------------------------- 31-60 days | 0.00% - ----------------------------- 61-90 days | 0.00% - ----------------------------- 91-180 days | 0.00% - ----------------------------- 181-270 days | 0.00% - ----------------------------- 271+ days | 0.00% - -----------------------------
7-Day SEC Yield(1) - ------------------------------------ Vista Shares | 5.97% - ------------------------------------ Premier Shares | 6.11% - ------------------------------------ Institutional Shares | 6.31% - ------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Premier Shares and Institutional Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 5.85%, 6.05% and 6.20% for Vista Shares, Premier Shares and Institutional Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 4 - -------------------------------------------------------------------------------- CHASE VISTA FEDERAL MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------------- Primary investments | Direct obligations of the U.S. Treasury including | Treasury bills, bonds and notes as well as | obligations issued or guaranteed by the U.S. | Treasury and its Agencies - -------------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------------- Share classes offered | Vista, Premier, Institutional and Reserve Shares - -------------------------------------------------------------------------------------- Net assets | $1.1 Billion - -------------------------------------------------------------------------------------- Average maturity | 59 days - -------------------------------------------------------------------------------------- S&P Rating | Not Rated - -------------------------------------------------------------------------------------- Moody's Rating | Not Rated - -------------------------------------------------------------------------------------- NAIC Rating | Not Rated - --------------------------------------------------------------------------------------
Maturity Schedule - ----------------------------- 1-14 days | 35.45% - ----------------------------- 15-30 days | 26.66% - ----------------------------- 31-60 days | 7.70% - ----------------------------- 61-90 days | 1.30% - ----------------------------- 91-180 days | 12.61% - ----------------------------- 181-270 days | 16.28% - ----------------------------- 271+ days | 0.00% - -----------------------------
7-Day SEC Yield(1) - ------------------------------------ Vista Shares | 5.80% - ------------------------------------ Premier Shares | 6.02% - ------------------------------------ Institutional Shares | 6.24% - ------------------------------------ Reserve Shares | 5.71% - ------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Institutional Shares and Reserve Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 5.78%, 6.17% and 5.06% for Vista Shares, Institutional Shares and Reserve Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 5 - -------------------------------------------------------------------------------- CHASE VISTA CASH MANAGEMENT FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------- Primary investments | High quality, short-term, U.S. dollar- | denominated money market instruments - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share classes offered | Vista, Premier and Institutional Shares - -------------------------------------------------------------------------------- Net assets | $11.1 Billion - -------------------------------------------------------------------------------- Average maturity | 49 days - -------------------------------------------------------------------------------- S&P Rating | Not Rated - -------------------------------------------------------------------------------- Moody's Rating | Not Rated - -------------------------------------------------------------------------------- NAIC Rating | Not Rated - --------------------------------------------------------------------------------
Maturity Schedule - ----------------------------- 1-14 days | 30.52% - ----------------------------- 15-30 days | 31.88% - ----------------------------- 31-60 days | 11.03% - ----------------------------- 61-90 days | 11.23% - ----------------------------- 91-180 days | 9.41% - ----------------------------- 181-270 days | 4.80% - ----------------------------- 271+ days | 1.13% - -----------------------------
7-Day SEC Yield(1) - ------------------------------------ Vista Shares | 6.14% - ------------------------------------ Premier Shares | 6.28% - ------------------------------------ Institutional Shares | 6.47% - ------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Premier Shares and Institutional Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 6.12%, 6.22% and 6.39% for Vista Shares, Premier Shares and Institutional Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 6 - -------------------------------------------------------------------------------- CHASE VISTA PRIME MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------------------- Objective | High current income consistent with | capital preservation - -------------------------------------------------------------------------------------------- Primary investments | High quality, short-term, U.S. dollar- | denominated money market instruments - -------------------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------------------- Share classes offered | Vista, Premier, Institutional, Reserve, B and C Shares - -------------------------------------------------------------------------------------------- Net assets | $12.8 Billion - -------------------------------------------------------------------------------------------- Average maturity | 50 days - -------------------------------------------------------------------------------------------- S&P Rating* | AAA - -------------------------------------------------------------------------------------------- Moody's Rating* | Aaa - -------------------------------------------------------------------------------------------- NAIC Rating* | Class 1 - --------------------------------------------------------------------------------------------
* This rating is historical and is based upon the Fund's credit quality, market price exposure and management. It signifies that the Fund's safety is excellent and that it has superior capacity to maintain a $1 Net Asset Value per share. The National Association of Insurance Commissioners' (NAIC's) Class 1 status indicates that the Fund meets certain pricing and quality guidelines. Maturity Schedule - ----------------------------- 1-14 days | 34.98% - ----------------------------- 15-30 days | 37.76% - ----------------------------- 31-60 days | 4.94% - ----------------------------- 61-90 days | 4.34% - ----------------------------- 91-180 days | 11.42% - ----------------------------- 181-270 days | 4.86% - ----------------------------- 271+ days | 1.70% - -----------------------------
7-Day SEC Yield(1) - ------------------------------------ B Shares | 5.46% - ------------------------------------ C Shares | 5.46% - ------------------------------------ Vista Shares | 6.11% - ------------------------------------ Premier Shares | 6.24% - ------------------------------------ Institutional Shares | 6.43% - ------------------------------------ Reserve Shares | 5.90% - ------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for B Shares, C Shares, Vista Shares, Premier Shares, Institutional Shares and Reserve Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 5.45%, 5.45%, 6.10%, 6.21%, 6.36% and 5.24% for B Shares, C Shares, Vista Shares, Premier Shares, Institutional Shares and Reserve Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce the fund's performance. 7 - -------------------------------------------------------------------------------- CHASE VISTA TAX FREE MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - ------------------------------------------------------------------------------------- Objective | High current tax free income consistent | with capital preservation* - ------------------------------------------------------------------------------------- Primary investments | Short-term municipal obligations - ------------------------------------------------------------------------------------- Suggested investment time frame | Short-term - ------------------------------------------------------------------------------------- Share classes offered | Vista, Premier, Institutional and Reserve Shares - ------------------------------------------------------------------------------------- Net assets | $1.7 Billion - ------------------------------------------------------------------------------------- Average maturity | 55 days - ------------------------------------------------------------------------------------- S&P Rating** | AAA - ------------------------------------------------------------------------------------- Moody's Rating | Not rated - ------------------------------------------------------------------------------------- NAIC Rating | Not rated - -------------------------------------------------------------------------------------
** This rating is historical and is based upon the Fund's credit quality, market price exposure and management. It signifies that the Fund's safety is excellent and that it has superior capacity to maintain a $1 Net Asset Value per share. Maturity Schedule - ----------------------------- 1-7 days | 67.63% - ----------------------------- 8-30 days | 4.37% - ----------------------------- 31-90 days | 8.18% - ----------------------------- 91-180 days | 8.76% - ----------------------------- 181-270 days | 4.23% - ----------------------------- 271+ days | 6.83% - -----------------------------
Yields
Taxable 7-Day Equivalent SEC Yield(1) Yield(2) - ----------------------------------------------------- Vista Shares | 3.73% | 6.18% - ----------------------------------------------------- Premier Shares | 3.80% | 6.29% - ----------------------------------------------------- Institutional Shares | 4.06% | 6.72% - ----------------------------------------------------- Reserve Shares | 3.52% | 5.83% - -----------------------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares, Premier Shares, Institutional Shares and Reserve Shares reflect the voluntary waiver of certain expenses. Without waivers, the yields would have been 3.61%, 3.80%, 3.96% and 2.87% for Vista Shares, Premier Shares, Institutional Shares and Reserve Shares, respectively. This voluntary waiver may be modified or terminated at any time, which would reduce performance. (2) Taxable equivalent yields are calculated based on the SEC yield divided by 1 minus the effective tax rate. The effective federal tax rate used for this illustration is 39.6%. * A portion of the Fund's income may be subject to the Alternative Minimum Tax (AMT), and some investors may be subject to certain state and local taxes. 8 - -------------------------------------------------------------------------------- CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current tax free income consistent | with capital preservation* - -------------------------------------------------------------------------------- Primary investments | New York short-term municipal obligations - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share classes offered | Vista and Reserve Shares - -------------------------------------------------------------------------------- Net assets | $1.8 Billion - -------------------------------------------------------------------------------- Average maturity | 54 days - -------------------------------------------------------------------------------- S&P Rating | Not rated - -------------------------------------------------------------------------------- Moody's Rating | Not rated - -------------------------------------------------------------------------------- NAIC Rating | Not rated - --------------------------------------------------------------------------------
Maturity Schedule - ----------------------------- 1-7 days | 72.53% - ----------------------------- 8-30 days | 0.23% - ----------------------------- 31-90 days | 8.78% - ----------------------------- 91-180 days | 3.93% - ----------------------------- 181-270 days | 4.33% - ----------------------------- 271+ days | 10.20% - -----------------------------
Yields
Taxable 7-Day Equivalent SEC Yield(1) Yield(2) - ------------------------------------------------- Vista Shares | 3.59% | 6.65% - ------------------------------------------------- Reserve Shares | 3.39% | 6.28% - -------------------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yields for Vista Shares and Reserve Shares reflect the voluntary waiver of certain expenses. Without waivers, the yield would have been 3.48% for Vista Shares and 2.69% for Reserve Shares. This voluntary waiver may be modified or terminated at any time, which would reduce performance. (2) Taxable Equivalent Yields are calculated based on the SEC yield divided by 1 minus the effective tax rate. The effective combined federal, state and local tax rate used for this illustration is 46.05%. * A portion of the Fund's income may be subject to the Alternative Minimum Tax (AMT), and some investors may be subject to certain state and local taxes. 9 - -------------------------------------------------------------------------------- CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND As of August 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- Fund Facts - -------------------------------------------------------------------------------- Objective | High current tax free income consistent with capital preservation* - -------------------------------------------------------------------------------- Primary investments | California short-term municipal obligations - -------------------------------------------------------------------------------- Suggested investment time frame | Short-term - -------------------------------------------------------------------------------- Share Classes Offered | Vista Shares - -------------------------------------------------------------------------------- Net assets | $77.5 Million - -------------------------------------------------------------------------------- Average maturity | 46 days - -------------------------------------------------------------------------------- S&P Rating | Not rated - -------------------------------------------------------------------------------- Moody's Rating | Not rated - -------------------------------------------------------------------------------- NAIC Rating | Not rated - --------------------------------------------------------------------------------
Maturity Schedule - ----------------------------- 1-7 days | 73.85% - ----------------------------- 8-30 days | 7.67% - ----------------------------- 31-90 days | 1.80% - ----------------------------- 91-180 days | 8.64% - ----------------------------- 181-270 days | 0.00% - ----------------------------- 271+ days | 8.04% - -----------------------------
Yields
Taxable 7-Day Equivalent SEC Yield(1) Yield(2) - ------------------------------------------------ Vista Shares 3.25% 5.93% - ------------------------------------------------
Past performance is not a guarantee of future results. Yields will fluctuate. An investment in a money market fund is not insured by the FDIC or any other government agency. Although money market funds strive to preserve the value of the investment at $1.00 per share, it is possible to lose money by investing in a money market fund. (1) The yield for Vista Shares reflects the voluntary waiver of certain expenses. Without waivers, the yield would have been 3.00%. This voluntary waiver may be modified or terminated at any time, which would reduce performance. (2) Taxable Equivalent Yields are calculated based on the SEC yield divided by 1 minus the effective tax rate. The effective combined federal, state and local tax rate used for this illustration is 45.22%. * A portion of the Fund's income may be subject to the Alternative Minimum Tax (AMT), and some investors may be subject to certain state and local taxes. 10 - -------------------------------------------------------------------------------- CHASE VISTA 100% U.S. TREASURY SECURITIES MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Money Market Instruments -- 99.5% - -------------------------------------------------------------------------------- U.S. Treasury Securities -- 99.5% ------------------------------------ U.S. Treasury Bills, $ 82,730 6.19%, 11/16/00 $ 81,666 75,000 6.21%, 11/24/00 73,931 33,511 6.32%, 09/21/00 33,393 6,374 6.38%, 09/21/00 6,352 1,500,000 6.44%, 09/15/00 1,496,252 U.S. Treasury Notes, 745,000 4.00%, 10/31/00 742,336 230,000 4.50%, 01/31/01 228,264 627,000 4.63%, 11/30/00 624,528 100,000 5.00%, 02/28/01 99,336 135,000 5.25%, 05/31/01 133,855 225,000 5.38%, 02/15/01 223,979 231,500 5.63%, 11/30/00 231,099 40,000 5.63%, 05/15/01 39,786 426,000 5.75%, 11/15/00 425,599 60,502 6.13%, 09/30/00 60,500 - -------------------------------------------------------------------------------- Total Investments -- 99.5% $4,500,876 (Cost $4,500,876)* - --------------------------------------------------------------------------------
See notes to financial statements. 11 - -------------------------------------------------------------------------------- CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Money Market Instruments -- 100.9% - -------------------------------------------------------------------------------- U.S. Government Agency Securities -- 100.2% -------------------------------------------- Federal Farm Credit Bank -- 1.3% $ 90,000 Federal Farm Credit Bank, FRN, 6.54%, 03/01/01 $ 90,000 Federal Home Loan Bank -- 25.6% Federal Home Loan Bank, 111,600 6.04%, 10/25/00 111,600 100,000 6.55%, 02/15/01 100,000 100,000 6.70%, 03/01/01 100,000 75,000 6.75%, 03/01/01 75,000 38,000 7.00%, 05/18/01 38,000 50,000 7.16%, 07/17/01 49,992 50,000 7.17%, 07/13/01 50,000 100,000 DN, 6.44%, 03/09/01 96,824 450,000 DN, 6.51%, 09/01/00 450,000 200,000 FRN, 6.48%, 07/18/01 199,877 250,000 FRN, 6.55%, 10/10/00 249,977 100,000 FRN, 6.67%, 04/12/01 100,000 65,000 FRN, 6.70%, 03/06/01 64,983 150,000 FRN, 6.72%, 05/10/01 149,948 ---------- 1,836,201 Federal Home Loan Mortgage Corp. -- 13.8% Federal Home Loan Mortgage Corp., 175,000 DN, 6.50%, 11/16/00 172,636 90,900 DN, 6.60%, 01/04/01 88,874 200,000 DN, 6.62%, 02/14/01 194,102 135,189 DN, 6.70%, 12/07/00 132,825 100,000 MTN, 6.75%, 04/27/01 100,000 100,000 MTN, 6.90%, 08/24/01 100,000 100,000 MTN, +, 6.90%, 09/11/01 100,000 100,000 MTN, 7.10%, 07/17/01 100,000 ---------- 988,437 Federal National Mortgage Association -- 42.4% Federal National Mortgage Association, 150,000 DN, 6.34%, 10/12/00 148,949 200,000 DN, 6.50%, 11/16/00 197,298 170,096 DN, 6.60%, 01/04/01 166,304 200,000 DN, @, 6.63%, 09/28/00 199,022 111,922 DN, 6.70%, 12/07/00 109,965 250,000 FRN, 6.49%, 06/07/01 249,842 315,000 FRN, 6.53%, 05/24/01 315,000 250,000 FRN, 6.59%, 03/01/01 249,901 310,000 FRN, 6.72%, 05/10/01 309,974 250,000 MTN, FRN, 6.42%, 12/08/00 249,934 150,000 MTN, FRN, 6.59%, 11/06/00 149,976 200,000 MTN, FRN, 6.63%, 09/05/00 199,999 500,000 MTN, FRN, 6.64%, 09/18/00 499,996 ---------- 3,046,160 Student Loan Marketing Association -- 17.1% Student Loan Marketing Association, 150,000 FRN, 6.47%, 09/21/00 150,000 135,000 FRN, 6.57%, 10/19/00 135,000 100,000 FRN, 6.67%, 02/15/01 100,000
See notes to financial statements. 12 CHASE VISTA U.S. GOVERNMENT MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ---------------------------------------------------------------------------------- Money Market Instruments -- Continued - ---------------------------------------------------------------------------------- Student Loan Marketing Association -- Continued $ 200,000 FRN, 6.84%, 07/24/01 $ 199,911 200,000 MTN, FRN, 6.76%, 03/05/01 199,950 175,000 MTN, FRN, 6.77%, 08/09/01 174,921 100,000 MTN, FRN, 6.79%, 08/09/01 99,955 165,000 MTN, FRN, 6.84%, 08/23/01 165,030 ---------- 1,224,767 ------------------------------------------------------------------ Total U.S. Government Agency Securities 7,185,565 (Cost $7,185,565) ------------------------------------------------------------------ Repurchase Agreement -- 0.7% ---------------------------- 49,454 Salomon Smith Barney, Tri Party, 6.66%, due 09/01/00 (Dated 08/31/00, Proceeds $49,463, Secured by FHLMC, $52,107, DN, due 03/01/01; Market Value $50,444) 49,454 (Cost $49,454) - ---------------------------------------------------------------------------------- Total Investments -- 100.9% $7,235,019 (Cost $7,235,019)* - ----------------------------------------------------------------------------------
See notes to financial statements. 13 - -------------------------------------------------------------------------------- CHASE VISTA TREASURY PLUS MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------------ Money Market Instruments -- 100.2% - ------------------------------------------------------------------------------------------ U.S. Treasury Securities -- 22.9% --------------------------------- U.S. Treasury Bills, $ 75,000 6.36%, 09/21/00 $ 74,736 500,000 6.44%, 09/15/00 498,751 -------------------------------------------------------------------------- Total U.S. Treasury Securities 573,487 (Cost $573,487) -------------------------------------------------------------------------- Repurchase Agreements -- 77.3% ------------------------------ 120,000 Bear Stearns, Tri Party, 6.60%, due 09/01/00 (Dated 08/31/00, Proceeds $120,022, Secured by USTR, $127,707, 5.00% through 7.25%, due 11/15/00 through 10/15/06; Market Value $128,475) 120,000 620,000 Deutsche Bank, Tri Party, 6.61%, due 09/01/00 (Dated 08/31/00, Proceeds $620,114, Secured by USTR, $593,827, 4.88% through 8.75%, due 02/15/01 through 11/15/26; Market Value $632,400) 620,000 111,548 Goldman Sachs & Co., Tri Party, 6.58%, due 09/01/00 (Dated 08/31/00, Proceeds $111,568, Secured by USTR, $93,269, 7.88%, due 02/15/21; Market Value $113,780) 111,548 620,000 Greenwich Capital Markets, Inc., Tri Party, 6.60%, due 09/01/00 (Dated 08/31/00, Proceeds $620,114, Secured by USTR, $578,264, 3.63% through 13.25%, due 09/30/00 through 02/15/29; Market Value $631,308) 620,000 100,000 Lehman Brothers, Inc., Tri Party, 6.58%, due 09/01/00 (Dated 08/31/00, Proceeds $100,018, Secured by USTR, $102,149, 5.50% through 6.38%, due 08/31/01 through 08/15/10; Market Value $102,005) 100,000 120,000 Merrill Lynch & Co., Inc., Tri Party, 6.62%, due 09/01/00 (Dated 08/31/00 Proceeds $120,022, Secured by USTR, $98,960, 3.63% through 14.00%, due 11/15/10 through 11/15/28; Market Value $122,404) 120,000 120,000 Morgan Stanley Dean Witter & Co., Tri Party, 6.50%, due 09/01/00 (Dated 08/31/00, Proceeds $120,022, Secured by USTR, $120,312, 6.13% through 7.88%, due 08/15/01 through 08/15/07; Market Value $123,630) 120,000 120,000 Salomon Smith Barney, Tri Party, 6.62%, due 09/01/00 (Dated 08/31/00, Proceeds $120,022, Secured by USTR, $107,055, 5.50% through 12.50%, due 10/05/00 through 08/15/28; Market Value $123,727) 120,000 -------------------------------------------------------------------------- Total Repurchase Agreements 1,931,548 (Cost $1,931,548) - ------------------------------------------------------------------------------------------ Total Investments -- 100.2% $2,505,035 (Cost $2,505,035)* - ------------------------------------------------------------------------------------------
See notes to financial statements. 14 - -------------------------------------------------------------------------------- CHASE VISTA FEDERAL MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Money Market Instruments -- 99.7% - -------------------------------------------------------------------------------- U.S. Government Agency Securities -- 99.7% ------------------------------------------ Federal Farm Credit Bank -- 9.6% Federal Farm Credit Bank, $ 8,439 DN, 5.89%, 10/26/00 $ 8,367 1,561 DN, 5.91%, 10/26/00 1,548 100,000 FRN, 6.44%, 05/01/01 99,967 ---------- 109,882 Federal Home Loan Bank -- 85.7% Federal Home Loan Bank, 25,000 6.75%, 03/01/01 25,000 15,500 6.76%, 03/13/01 15,500 20,000 DN, 5.89%, 10/27/00 19,827 8,000 DN, 5.91%, 10/06/00 7,957 15,000 DN, 5.93%, 11/24/00 14,804 20,000 DN, 6.03%, 12/08/00 19,690 25,000 DN, 6.13%, 12/22/00 24,550 15,000 DN, 6.32%, 01/08/01 14,680 37,319 DN, 6.44%, 09/15/00 37,225 100,000 DN, 6.50%, 09/27/00 99,533 25,000 DN, 6.50%, 02/01/01 24,352 3,821 DN, 6.51%, 09/01/00 3,821 75,000 DN, 6.51%, 09/27/00 74,649 25,000 DN, 6.51%, 03/15/01 24,172 16,844 DN, 6.54%, 01/16/01 16,436 45,000 DN, 6.55%, 01/16/01 43,911 25,000 DN, 6.55%, 04/09/01 24,060 92,429 DN, 6.56%, 09/15/00 92,198 25,000 DN, 6.57%, 04/20/01 24,010 75,000 DN, 6.61%, 02/28/01 72,600 75,000 FRN, MTN, 6.46%, 03/20/01 74,976 50,000 FRN, 6.48%, 07/18/01 49,969 50,000 FRN, 6.55%, 10/10/00 49,995 75,000 FRN, 6.61%, 09/22/00 74,999 50,000 FRN, 6.72%, 05/10/01 49,983 ---------- 978,897 Student Loan Marketing Association -- 4.4% 50,000 Student Loan Marketing Association, FRN, 6.57%, 10/19/00 50,000 - -------------------------------------------------------------------------------- Total Investments -- 99.7% $1,138,779 (Cost $1,138,779)* - --------------------------------------------------------------------------------
See notes to financial statements. 15 - -------------------------------------------------------------------------------- CHASE VISTA CASH MANAGEMENT FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - --------------------------------------------------------------------------------------- Money Market Instruments -- 99.5% - --------------------------------------------------------------------------------------- U.S. Government Agency Securities -- 2.3% ----------------------------------------- Federal Home Loan Bank, $ 35,000 DN, 5.93%, 11/24/00 $ 34,543 93,900 DN, 5.93%, 12/01/00 92,571 25,000 DN, 6.50%, 02/01/01 24,352 50,000 DN, 6.51%, 03/15/01 48,344 17,798 DN, 6.55%, 04/09/01 17,129 35,000 DN, 6.57%, 04/20/01 33,614 --------------------------------------------------------------------- Total U.S. Government Agency Securities 250,553 (Cost $250,553) --------------------------------------------------------------------- State and Municipal Obligations -- 1.3% --------------------------------------- California -- 1.0% 60,610 California Housing Finance Agency, Home Mortgage, Ser. M, Rev. FRDO, 6.58%, 09/04/00 60,610 20,000 California Pollution Control Financing Authority, Environmental Improvement, Shell Oil Co., Project B, Rev. FRDO, 6.57%, 09/06/00 20,000 22,000 Sacramento County, California, Rev. FRDO, 6.55%, 09/04/00 22,000 ------- 102,610 Missouri -- 0.1% 16,200 SSM Healthcare, Missouri Health Facilities, Ser. E, Rev. FRDO, 6.62%, 09/05/00 16,200 Texas -- 0.2% 27,500 Texas State, Veterans Housing Assistance, Ser. A-2, GO, FRDO, 6.60%, 09/04/00 27,500 --------------------------------------------------------------------- Total State and Municipal Obligations 146,310 (Cost $146,310) --------------------------------------------------------------------- Corporate Notes & Bonds -- 59.8% -------------------------------- Asset Backed Securities -- 13.3% Asset Backed Capital Finance, Inc., 100,000 MTN, FRN, #, 6.63%, 05/25/01 99,993 50,000 MTN, FRN, #, 6.63%, 06/18/01 50,000 70,000 MTN, FRN, #, 6.64%, 06/19/01 70,000 110,000 Asset Securitization Cooperative Corp. (ASCC), FRN, 6.57%, 01/12/01 109,981 134,427 Associates Manufactured Housing Corp., Ser. 1999-1, Class A, Putable, FRN, #, 6.85%, 10/15/00 134,443 125,000 Beta Finance Corp., Inc., (Channel Islands), MTN, FRN, #, 6.60%, 05/08/01 125,000 CC USA, Inc., (Centauri Corp.), 50,000 MTN, #, 7.07%, 07/25/01 50,000 75,000 MTN, #, 7.48%, 06/07/01 75,000 75,000 Compass Securitization LLC, FRN, 6.59%, 10/16/00 74,999 130,000 Lexington Parker Capital, FRN, 6.63%, 01/25/01 129,994 Liberty Lighthouse U.S. Capital Co., 120,000 MTN, FRN, #, 6.68%, 03/05/01 120,000 65,000 MTN, FRN, #, 6.83%, 11/06/00 65,000 100,000 Strategic Money Market (SMM), Trust 2000-B, FRN, #, 6.81%, 12/13/00 100,000
See notes to financial statements. 16 CHASE VISTA CASH MANAGEMENT FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - --------------------------------------------------------------------------------------- Money Market Instruments -- Continued - --------------------------------------------------------------------------------------- Asset Backed Securities -- Continued $ 100,000 Special Purpose Accounts Receivable Cooperative Corp., FRN, 6.62%, 01/05/01 $ 100,000 75,000 Structured Products Asset Return Certificates, Ser. 1998-1, FRN, #, 6.73%, 11/27/00 75,000 100,000 Variable Funding Capital Corp., FRN, 6.60%, 02/05/01 99,992 ---------- 1,479,402 Automotive -- 8.0% American Honda Finance Corp., 100,000 MTN, FRN, #, 6.61%, 02/06/01 99,990 60,000 MTN, FRN, #, 6.77%, 06/19/01 60,000 200,000 Daimler Chrysler North America Holding Corp., MTN, FRN, 6.56%, 02/22/01 199,928 Ford Motor Credit Co., 75,000 MTN, FRN, 6.77%, 10/02/00 74,994 27,000 MTN, FRN, 7.10%, 09/25/00 27,005 General Motors Acceptance Corp., 250,000 MTN, FRN, 6.72%, 12/14/00 249,938 30,000 MTN, FRN, 6.83%, 04/30/01 30,025 140,000 Toyota Motor Credit Corp., MTN, FRN, 6.81%, 10/12/00 140,000 ---------- 881,880 Banking -- 12.8% 100,000 Abbey National Treasury Services PLC, (United Kingdom), (Yankee), MTN, FRN, 6.52%, 06/15/01 99,939 American Express Centurion Bank, 100,000 FRN, 6.58%, 02/28/01 100,000 50,000 MTN, FRN, 6.58%, 04/12/01 49,997 100,000 MTN, FRN, 6.59%, 05/08/01 100,000 55,000 Bank One Corp., FRN, 6.71%, 11/17/00 54,995 Commerzbank AG (Germany), (Yankee), 165,000 FRN, 6.54%, 03/19/01 164,956 200,000 FRN, 6.57%, 04/26/01 199,960 100,000 Credit Suisse First Boston Inc. (Switzerland), MTN, FRN, 6.59%, 05/09/01 99,993 75,000 Credit Suisse First Boston International, (Switzerland), FRN, #, 6.78%, 10/02/00 75,003 240,000 Dresdner Bank AG, (Germany), FRN, 6.55%, 03/28/01 239,946 Fleet National Bank, 100,000 FRN, 6.71%, 10/26/00 99,994 85,000 MTN, FRN, 6.77%, 05/24/01 85,060 50,000 National City Bank, MTN, FRN, 6.76%, 07/05/01 49,981 ---------- 1,419,824 Consumer Products -- 0.7% 75,000 Unilever Capital Corp., FRN, 6.65%, 09/07/01 75,000 Financial Services -- 15.2% 100,000 Associates Corp. of North America, SUB, FRN, 6.77%, 06/15/04 100,000 Bear Stearns Companies, Inc., 200,000 Ser. B, MTN, FRN, 6.68%, 02/23/01 199,999 85,000 FRN, 6.96%, 08/01/01 85,142
See notes to financial statements. 17 CHASE VISTA CASH MANAGEMENT FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - -------------------------------------------------------------------------------- Money Market Instruments -- Continued - -------------------------------------------------------------------------------- Financial Services -- Continued CIT Group, Inc., $ 80,000 MTN, FRN, 6.80%, 09/15/00 $ 79,998 30,000 MTN, FRN, 7.02%, 11/13/00 30,017 100,000 Citigroup Inc., MTN, FRN, 6.59%, 06/06/01 100,000 Goldman Sachs Group, Inc., 148,000 FRN, #, 6.86%, 05/15/01 148,000 30,000 MTN, FRN, 6.85%, 09/07/00 30,000 J.P. Morgan & Co., Inc., 63,000 FRN, 6.61%, 03/16/01 63,000 40,000 FRN, 6.74%, 06/18/01 40,041 60,000 FRN, 6.77%, 06/25/01 60,057 Merrill Lynch & Co., Inc., 200,000 MTN, FRN, 6.58%, 03/06/01 199,989 20,000 MTN, FRN, 6.82%, 09/25/00 20,000 Morgan Stanley Dean Witter & Co., 110,000 FRN, 6.64%, 08/15/01 110,000 150,000 MTN, FRN, 6.60%, 03/16/01 150,000 50,000 MTN, FRN, 6.86%, 01/22/01 50,030 25,000 MTN, FRN, 6.91%, 03/15/01 25,000 130,000 Wells Fargo & Co., FRN, 6.59%, 09/14/01 130,000 75,000 Westpac Banking Corp., (Australia), (Yankee), FRN, 6.73%, 05/08/01 75,019 ---------- 1,696,292 Insurance -- 0.7% Prudential Funding Corp., 30,000 FRN, 6.70%, 12/21/00 29,994 50,000 MTN, FRN, 6.81%, 04/17/01 50,020 ---------- 80,014 Machinery & Engineering Equipment -- 0.7% 75,000 Caterpillar Financial Services Corp., MTN, FRN, 6.80%, 07/09/01 75,000 Real Estate -- 0.8% 84,000 Main Place Real Estate Investment Corp., FRN, 6.89%, 10/25/00 84,008 Telecommunications -- 5.4% 30,000 AT&T Capital Corp., MTN, FRN, 7.45%, 12/01/00 30,047 AT&T Corp., 100,000 FRN, #, 6.56%, 03/08/01 99,990 265,000 FRN, #, 6.65%, 07/19/01 265,001 200,000 SBC Communications, Inc., FRN, #, 6.63%, 05/15/01 199,972 ---------- 595,010 Utilities -- 2.2% 55,292 Baltimore Gas & Electric Co., FRN, 6.84%, 09/01/06 55,294 190,000 National Rural Utilities Co., Ser. C., MTN, FRN, 6.81%, 09/08/00 190,000 ---------- 245,294 ---------------------------------------------------------------- Total Corporate Notes & Bonds 6,631,724 (Cost $6,631,724) ------------------------------------------------------------------
See notes to financial statements. 18 CHASE VISTA CASH MANAGEMENT FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - ----------------------------------------------------------------------------------- Money Market Instruments -- Continued - ----------------------------------------------------------------------------------- Commercial Paper -- 18.3% ------------------------- Asset Backed Securities -- 10.5% $ 50,000 Amstel Funding Corp., 6.56%, 09/18/00 $ 49,846 60,000 Atlantis One Funding, 6.75%, 02/14/01 58,193 50,000 Bills Securitization LTD, 6.93%, 11/03/00 49,414 Concord Minutemen Capital Co., LLC, Series A, 41,324 6.57%, 09/14/00 41,226 92,000 6.58%, 09/07/00 91,900 Crown Point Capital Co., LLC, 73,000 6.64%, 09/14/00 72,827 27,000 6.64%, 11/16/00 26,627 Falcon Asset Securitization Corp., 75,000 6.59%, 09/14/00 74,823 48,000 6.59%, 09/20/00 47,835 42,000 Greenwich Funding Corp., 6.56%, 09/15/00 41,894 75,000 Greyhawk Funding LLC, 6.77%, 02/02/01 72,899 50,000 Intrepid Funding Master Trust, Ser. 1999-A, 6.28%, 09/05/00 49,966 27,000 Lexington Parker Capital Corp., LLC, 6.73%, 09/12/00 26,945 65,000 Montauk Funding Corp., 6.57%, 09/26/00 64,706 Moriarty LLC, 75,000 6.75%, 02/27/01 72,565 85,000 6.85%, 02/02/01 82,593 25,544 Parthenon Receivables Funding LLC, 6.87%, 01/25/01 24,856 41,149 Pooled Accounts Receivable Capital Corp., 6.56%, 09/18/00 41,022 100,000 Sheffield Receivables Corp., #, 6.56%, 09/15/00 99,746 75,000 Tulip Funding Corp., 6.62%, 09/20/00 74,741 ---------- 1,164,624 Banking -- 2.8% 100,000 Bank of America, NA, 6.30%, 09/12/00 99,814 90,000 Credit Suisse First Boston Inc., 6.32%, 09/13/00 89,816 125,000 United Mexican States, 7.02%, 11/03/00 123,508 ---------- 313,138 Financial Services -- 3.5% 102,000 Aspen Funding Corp., 6.35%, 09/18/00 101,703 100,000 Citibank Capital Markets Assets, LLC, 6.86%, 02/06/01 97,095 75,000 Girsa Funding Corp., 6.55%, 10/23/00 74,313 100,000 Goldman Sachs Group, Inc., 6.75%, 02/14/01 96,994 20,000 Interperu Funding Ltd., 6.88%, 11/08/00 19,749 ---------- 389,854 Telecommunications -- 0.7% British Telecommunications PLC, 25,000 6.28%, 09/07/00 24,975 50,000 6.85%, 11/06/00 49,393 ---------- 74,368 Utilities -- 0.8% 87,000 Comision Federal De Electricidad, (Mexico), 6.58%, 09/18/00 86,732 ------------------------------------------------------------------- Total Commercial Paper 2,028,716 (Cost $2,028,716) -------------------------------------------------------------------
See notes to financial statements. 19 CHASE VISTA CASH MANAGEMENT FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - --------------------------------------------------------------------------------------- Money Market Instruments -- Continued - --------------------------------------------------------------------------------------- Funding Agreements/GICS -- 6.4% ------------------------------- $ 50,000 AIG Funding Inc., Floating Rate, 6.81%, 10/02/00 $ 50,000 125,000 First Allmerica Financial Life Insurance Co., Floating Rate, 6.82%, 04/06/01 125,000 150,000 G E Financial Assurance, Floating Rate, 6.91%, 03/01/01 150,000 Jackson National Life Insurance Co., Floating Rate, 100,000 6.86%, 01/18/01 100,000 80,000 6.91%, 09/01/01 80,000 100,000 MetLife Funding Inc., Floating Rate, #, 6.91%, 06/01/01 100,000 50,000 Travelers Insurance Co., Floating Rate, 6.80%, 04/24/01 50,000 50,000 United of Omaha Life Insurance Company, Floating Rate, 6.71%, 05/17/01 50,000 ----------------------------------------------------------------------- Total Funding Agreements/GICS 705,000 (Cost $705,000) ----------------------------------------------------------------------- Certificates of Deposit -- 10.1% -------------------------------- 150,000 Banco Santander Central Hispano SA, (Spain), (Yankee), 6.73%, 02/28/01 149,998 Bank Austria AG (Austria), (Yankee), 50,000 6.55%, 02/01/01 49,990 50,000 6.71%, 02/05/01 49,990 190,000 Bayerische Hypo- und Vereinsbank AG, Floating Rate, (Germany), (Yankee), 6.54%, 02/28/01 189,955 130,000 Bayerische Landesbank Girozentrale, Floating Rate, (Germany), (Yankee), 6.54%, 12/15/00 129,972 90,000 Commerzbank AG (Germany), (Yankee), 6.52%, 01/08/01 89,991 75,000 Deutsche Bank AG, (Germany), (Yankee), 6.73%, 03/16/01 74,977 55,000 Landesbank Hessen-Thuringen Girozentrale, (Germany), (Yankee), 6.89%, 04/30/01 54,995 50,000 Norddeutsche Landesbank Girozentrale, (Germany), (Yankee), 6.55%, 01/16/01 49,991 75,000 Rabobank Nederland NV (Netherlands), (Yankee), 6.50%, 01/29/01 74,985 50,000 Svenska Handelsbanken, Inc., (Sweden), (Yankee), 6.75%, 02/14/01 49,989 150,000 Westdeutsche Landesbank Girozentrale, (Germany), (Yankee), 6.75%, 08/28/01 150,000 ----------------------------------------------------------------------- Total Certificates of Deposit 1,114,833 (Cost $1,114,833) ----------------------------------------------------------------------- Time Deposit -- 1.3% -------------------- 145,902 Wachovia Bank, 6.56%, 09/01/00 145,902 (Cost $145,902) - --------------------------------------------------------------------------------------- Total Investments -- 99.5% $11,023,038 (Cost $11,023,038)* - ---------------------------------------------------------------------------------------
See notes to financial statements. 20 - -------------------------------------------------------------------------------- CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------------ Money Market Instruments -- 102.2% - ------------------------------------------------------------------------------------------ U.S. Government Agency Securities -- 1.8% ----------------------------------------- Federal Home Loan Bank, $ 35,000 DN, 5.85%, 11/17/00 $ 34,586 50,000 DN, 5.93%, 11/24/00 49,347 55,000 DN, 6.03%, 12/08/00 54,148 15,000 DN, 6.13%, 12/22/00 14,730 25,000 DN, 6.32%, 01/08/01 24,467 25,000 DN, 6.50%, 02/01/01 24,352 25,000 DN, 6.51%, 03/15/01 24,172 ------------------------------------------------------------------------ Total U.S. Government Agency Securities 225,802 (Cost $225,802) ------------------------------------------------------------------------ State and Municipal Obligation -- 0.0% -------------------------------------- 4,346 Sault Sainte Marie, Michigan, Tribe Building Authority, Taxable, Rev., FRDO, 7.51%, 12/01/00 4,346 (Cost $4,346) ------------------------------------------------------------------------ Corporate Notes & Bonds -- 39.4% -------------------------------- Asset Backed Securities -- 19.0% 47,000 ACE Overseas Corp., FRN, 6.74%, 03/16/01 46,991 Beta Finance Corp., Inc., (Channel Islands), 75,000 FRN, #, 6.61%, 08/14/01 74,996 65,000 MTN, #, 6.87%, 02/26/01 65,000 30,000 MTN, #, 6.90%, 03/30/01 29,999 85,000 MTN, #, 6.94%, 05/02/01 85,000 50,000 MTN, FRN, #, 6.11%, 03/30/01 49,997 50,000 MTN, FRN, #, 6.60%, 04/30/01 50,000 CC USA, Inc. (Centauri Corp.), 60,000 MTN, #, 6.10%, 09/07/00 60,000 35,000 MTN, #, 7.12%, 05/07/01 35,000 50,000 MTN, #, 7.07%, 07/25/01 50,000 50,000 MTN, FRN, #, 6.60%, 04/20/01 50,000 50,000 MTN, FRN, #, +, 6.84%, 09/10/01 50,000 100,000 Compass Securitization LLC, FRN, 6.59%, 10/16/00 99,998 Dorada Finance Inc., 70,000 MTN, #, 7.06%, 07/17/01 70,000 75,000 MTN, FRN, #, 6.87%, 09/05/00 75,000 75,000 MTN, FRN, #, +, 6.84%, 09/10/01 75,000 26,481 First Security Auto Owner Trust 2000-1, Class A-1, 6.77%, 07/16/01 26,481 K2 (USA) LLC, 55,000 MTN, FRN, #, 6.62%, 07/16/01 55,000 100,000 MTN, FRN, #, 6.62%, 08/15/01 100,000 50,000 MTN, FRN, #, 6.80%, 10/16/00 50,000 75,000 Links Finance LLC, MTN, FRN, #, 6.60%, 05/11/01 74,992 Restructured Asset Securities with Enhanced Returns (RACERS), 37,000 1999 Ser. MM-35, FRN, #, 6.72%, 12/15/00 37,000 90,000 2000 Ser. MM-7, FRN, #, 6.64%, 05/30/01 89,963 100,000 2000 Ser. MM-10, FRN, #, 6.64%, 06/22/01 100,000 Sigma Finance Corp., (Channel Islands), 100,000 MTN, FRN, #, 6.60%, 05/02/01 100,000 75,000 MTN, FRN, #, 6.61%, 03/05/01 75,000
See notes to financial statements. 21 - -------------------------------------------------------------------------------- CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments (Continued) - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - ---------------------------------------------------------------------------------------- Money Market Instruments -- Continued - ---------------------------------------------------------------------------------------- Asset Backed Securities -- Continued $ 100,000 MTN, FRN, #, 6.62%, 05/15/01 $ 100,000 50,000 MTN, FRN, #, 6.67%, 09/25/01 50,012 50,000 MTN, FRN, #, 6.80%, 10/16/00 50,000 70,000 MTN, FRN, #, 6.90%, 09/15/00 70,000 Strategic Money Market (SMM), 75,000 Trust 2000-B, FRN, #, 6.81%, 12/13/00 75,000 60,000 Trust 2000-E, FRN, #, 6.64%, 03/14/01 60,000 136,957 Trust 2000-G, FRN, #, 6.89%, 06/04/01 136,958 100,000 Special Purpose Accounts Receivable Cooperative Corp., FRN, 6.62%, 02/26/01 100,000 100,000 Variable Funding Capital Corp., FRN, 6.60%, 02/05/01 99,992 ---------- 2,417,379 Automotive -- 1.3% Toyota Motor Credit Corp., 150,000 MTN, FRN, @, 6.68%, 04/23/01 149,964 20,000 MTN, FRN, 6.87%, 10/25/00 20,003 ---------- 169,967 Banking -- 6.3% 250,000 Abbey National Treasury Services PLC, (United Kingdom), (Yankee), MTN, FRN, 6.52%, 06/15/01 249,846 100,000 American Express Centurion Bank, MTN, FRN, 6.59%, 05/08/01 100,000 70,000 Bank of America, N.A., MTN, FRN, 6.78%, 07/11/01 70,006 100,000 Bank One N.A., FRN, 6.65%, 09/10/01 100,025 Commerzbank AG (Germany), (Yankee), 75,000 FRN, 6.54%, 03/19/01 74,980 160,000 FRN, 6.58%, 06/29/01 159,921 50,000 Landesbank Hessen-Thuringen Girozentrale, (Germany), (Yankee), FRN, 6.77%, 10/02/00 49,994 ---------- 804,772 Consumer Products -- 0.6% 75,000 Unilever Capital Corp., FRN, 6.65%, 09/07/01 75,000 Financial Services -- 9.8% 75,000 Associates Corp. of North America, FRN, 6.77%, 06/26/01 75,000 Citigroup, Inc., 175,000 MTN, FRN, 6.58%, 04/04/01 175,000 150,000 MTN, FRN, 6.59%, 06/06/01 150,000 90,000 Goldman Sachs Group LP, Ser. A, MTN, FRN, #, 6.81%, 09/12/01 90,000 150,000 Merrill Lynch & Co., Inc., MTN, FRN, 6.58%, 03/06/01 149,992 Morgan Stanley Dean Witter & Co., 150,000 FRN, 6.64%, 08/15/05 150,000 55,000 MTN, FRN, 6.69%, 05/15/01 55,002 35,000 MTN, FRN, 6.90%, 03/13/01 35,000 50,000 MTN, FRN, 6.91%, 03/15/01 50,000 Wells Fargo Bank, N.A., 150,000 FRN, 6.59%, 09/14/01 150,000 175,000 MTN, FRN, 6.76%, 07/24/01 174,939 ---------- 1,254,933
See notes to financial statements. 22 CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - --------------------------------------------------------------------------------- Money Market Instruments -- Continued - --------------------------------------------------------------------------------- Telecommunications -- 2.4% $ 150,000 AT&T Corp., FRN, #, 6.56%, 03/08/01 $ 149,985 150,000 SBC Communications, Inc., FRN, #, 6.63%, 05/15/01 149,979 ---------- 299,964 ---------------------------------------------------------------- Total Corporate Notes & Bonds 5,022,015 (Cost $5,022,015) ---------------------------------------------------------------- Commercial Paper -- 39.8% ------------------------- Asset Backed Securities -- 24.4% Alpine Securitization Corp., 54,000 6.55%, 09/19/00 53,824 135,000 6.56%, 09/18/00 134,583 34,396 6.62%, 09/18/00 34,290 100,000 Atlantis One Funding Corp., 6.75%, 02/14/01 96,989 Barton Capital Corp., 77,110 6.55%, 09/22/00 76,817 40,434 6.58%, 09/06/00 40,397 50,000 Bills Securitization Ltd., 6.93%, 11/03/00 49,414 85,000 Bavaria Universal Funding Co., Floating Rate, 6.60%, 02/13/01 84,994 70,000 Blue Ridge Asset Funding Corp., 6.57%, 09/06/00 69,937 115,000 Brahms Funding Corp., 6.62%, 10/18/00 113,688 Charta Corp., 45,000 6.59%, 09/08/00 44,943 50,000 6.62%, 09/07/00 49,945 Falcon Asset Securitization Corp., 75,000 6.56%, 09/27/00 74,647 75,000 6.59%, 09/14/00 74,823 Four Winds Funding Corp., 54,000 #, 6.55%, 09/08/00 53,932 102,600 6.55%, 09/18/00 102,284 100,000 Galaxy Funding Inc., 6.89%, 02/02/01 97,155 Grand Funding Corp., 65,000 6.55%, 09/06/00 64,941 41,200 6.57%, 09/18/00 41,073 150,000 Greenwich Funding Corp., 6.56%, 09/15/00 149,619 75,000 Greyhawk Funding LLC, 6.77%, 02/02/01 72,899 International Securitization Corp., 48,000 6.56%, 09/15/00 47,878 78,465 6.56%, 09/29/00 78,066 75,000 Intrepid Funding Master Trust, Ser. 1999-A, 6.28%, 09/05/00 74,949 K2 (USA) LLC, 24,000 6.87%, 02/26/01 23,217 50,000 6.94%, 04/17/01 47,910 Liberty Street Funding Corp., 37,945 6.74%, 09/06/00 37,910 60,000 6.75%, 09/07/00 59,934 99,740 Market Street Funding Corp., #, 6.76%, 09/07/00 99,630 72,790 Old Line Funding Corp., #, 6.60%, 09/20/00 72,539 42,000 Parthenon Receivables Funding LLC, 6.57%, 09/18/00 41,870 61,955 Pooled Accounts Receivable Capital Corp., 6.15%, 09/12/00 61,832
See notes to financial statements. 23 CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------- Money Market Instruments -- Continued - ------------------------------------------------------------------------------------- Asset Backed Securities -- Continued $ 65,539 Receivables Capital Corp., #, 6.58%, 09/11/00 $ 65,420 Sheffield Receivables Corp., 100,000 6.56%, 09/01/00 100,000 100,000 6.56%, 09/15/00 99,746 49,400 6.57%, 09/20/00 49,230 65,000 Sigma Finance Corp., (Channel Islands), #, 6.74%, 02/28/01 62,881 Silver Tower U.S. Funding, LLC, 95,000 6.74%, 02/23/01 91,989 50,000 6.75%, 02/12/01 48,515 75,000 Surrey Funding Corp., 6.56%, 09/14/00 74,823 65,411 Thames Asset Global Securitization (TAGS), #, 6.76%, 09/29/00 65,073 82,398 Tulip Funding Corp., 6.62%, 09/20/00 82,114 68,000 Victory Receivables, 6.55%, 09/19/00 67,778 50,000 WCP Funding, Inc., 6.58%, 09/07/00 49,946 ---------- 3,084,444 Automotive -- 2.4% Daimler Chrysler North America Holding Corp., 100,000 6.57%, 09/25/00 99,565 156,950 6.58%, 09/27/00 156,210 50,000 6.63%, 11/22/00 49,257 ---------- 305,032 Banking -- 3.5% 54,800 Banco de Galicia y Buenos Aires SA de CV, (Argentina), 6.63%, 09/22/00 54,591 20,000 Banco Rio De La Plata SA, (Argentina), 6.78%, 03/08/01 19,317 100,000 Banco Santander, (Puerto Rico), 6.63%, 09/12/00 99,800 150,000 Bank of America, N.A., 6.30%, 09/12/00 149,719 Banque ET Caisse DEpargne De L'Etat (France), 51,000 6.68%, 12/27/00 49,923 75,000 6.76%, 02/16/01 72,715 ---------- 446,065 Financial Services -- 6.4% 102,000 Aspen Funding Corp., 6.35%, 09/18/00 101,704 70,000 Associates Corp. of North America, ECN, 6.63%, 09/25/00 69,694 70,000 Citibank Capital Markets Assets, LLC, 6.86%, 02/07/01 67,953 Dakota Certificate Program (Citibank Credit Card Master Trust I), 91,894 6.62%, 09/26/00 91,477 60,000 6.63%, 09/14/00 59,858 Fairway Finance Corp., 70,259 6.56%, 09/25/00 69,954 40,941 6.77%, 02/23/01 39,639 112,917 HomeSide Lending Inc., 6.65%, 09/27/00 112,383 30,000 Interperu Funding Ltd., 6.54%, 09/27/00 29,863 100,000 New Castle Certificate Program (Discover Card Master Trust I, Ser. 2000-A), ECN, 6.70%, 09/18/00 99,687 110,000 Quincy Capital Corp., 6.56%, 09/25/00 109,522 ---------- 851,734
See notes to financial statements. 24 CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - --------------------------------------------------------------------------------- Money Market Instruments -- Continued - --------------------------------------------------------------------------------- Food/Beverage Products -- 1.0% Coca-Cola Co., $ 50,000 ECN, 6.61%, 09/18/00 $ 49,846 75,000 ECN, 6.64%, 11/14/00 73,993 ---------- 123,839 Telecommunications -- 1.5% British Telecommunications PLC, 50,000 6.65%, 11/06/00 49,393 144,500 6.74%, 02/15/01 140,130 ---------- 189,523 Utilities -- 0.6% Comision Federal De Electricidad, (Mexico), 50,000 6.58%, 09/18/00 49,846 31,000 6.60%, 09/18/00 30,904 ---------- 80,750 ----------------------------------------------------------------- Total Commercial Paper 5,081,387 (Cost $5,081,387) ----------------------------------------------------------------- Certificates of Deposit -- 12.9% -------------------------------- 110,000 Banco Popolare di Milano (Italy), (Yankee), 6.64%, 11/15/00 110,005 Bank Austria AG (Austria), (Yankee), 50,000 6.55%, 02/01/01 49,990 59,000 6.71%, 02/05/01 58,988 Bayerische Landesbank Girozentrale, Floating Rate, (Germany), (Yankee), 135,000 6.54%, 12/15/00 134,971 190,000 6.54%, 03/01/01 189,954 Credit Communal De Belgique S.A., (Belgium), 25,000 5.96%, 10/02/00 24,997 100,000 Floating Rate, 6.54%, 03/01/01 99,976 75,000 Deutsche Bank AG, (Germany), (Yankee), 6.73%, 03/16/01 74,977 Landesbank Baden-Wuerttemberg, (Germany), (Yankee), 75,000 6.72%, 02/28/01 74,997 100,000 6.73%, 02/15/01 100,000 55,000 Landesbank Hessen-Thuringen Girozentrale, (Germany), 6.89%, 04/30/01 54,995 Norddeutsche Landesbank Girozentrale, (Germany), (Yankee), 50,000 6.55%, 01/16/01 49,991 125,000 6.72%, 02/28/01 124,992 75,000 Rabobank Nederland NV (Netherlands), (Yankee), 6.50%, 01/29/01 74,985 68,000 Svenska Handelsbanken, Inc., (Sweden), (Yankee), 6.75%, 02/14/01 67,985 100,000 UBS Finance Inc., (Switzerland), (Yankee), 6.50%, 01/08/01 99,983 260,000 Westdeutsche Landesbank Girozentrale, (Germany), (Yankee), Floating Rate, 6.54%, 02/28/01 259,937 ----------------------------------------------------------------- Total Certificates of Deposit 1,651,723 (Cost $1,651,723) -----------------------------------------------------------------
See notes to financial statements. 25 CHASE VISTA PRIME MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------------ Time Deposits -- 4.7% --------------------- $ 295,000 Firstar Bank, 6.59%, 09/01/00 $ 295,000 308,864 Key Bank N.A., 6.56%, 09/01/00 308,864 ------------------------------------------------------------------------- Total Time Deposits 603,864 (Cost $603,864) ------------------------------------------------------------------------- Repurchase Agreements -- 3.6% ----------------------------- 255,000 Credit Suisse First Boston, Tri Party, 6.66%, due 09/01/00 (Dated 08/31/00, Proceeds $255,047, Secured by U.S. Government Agency Obligations, $260,471, 5.20% through 8.47%, due 09/01/00 through 02/24/10; Market Value $260,783) 255,000 200,000 Salomon Smith Barney, Tri Party, 6.66%, due 09/01/00 (Dated 08/31/00, Proceeds $200,037, Secured by U.S. Government Agency Obligations, $205,665, DN, due 09/22/00 through 03/01/01; Market Value $204,000) 200,000 ------------------------------------------------------------------------- Total Repurchase Agreements 455,000 (Cost $455,000) - ------------------------------------------------------------------------------------------ Total Investments -- 102.2% $13,044,137 (Cost $13,044,137)* - ------------------------------------------------------------------------------------------
See notes to financial statements. 26 - -------------------------------------------------------------------------------- CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Money Market Instruments -- 100.2% - ------------------------------------------------------------------------------------- U.S. Government Agency Securities -- 0.5% ----------------------------------------- Federal Home Loan Bank -- 0.0% $ 601 Federal Home Loan Bank, DN, 6.53%, 09/07/00 $ 601 Federal Home Loan Mortgage Corp. -- 0.5% 6,853 Federal Home Loan Mortgage Corp., DN, 6.53%, 09/07/00 6,853 --------------------------------------------------------------------- Total U.S. Government Agency Securities 7,454 (Cost $7,454) --------------------------------------------------------------------- Municipal Securities -- 99.7% ----------------------------- Alabama -- 2.3% 3,820 Alabama State, Public School & College Authority, Ser. 124, PUTTERS, FRDO, 4.32%, 09/07/00 3,820 5,000 Birmingham, Alabama, GO, FRDO, 4.25%, 09/07/00 5,000 3,450 Birmingham, Alabama, Ser. A, Warrants, FRDO, 4.25%, 09/07/00 3,450 5,000 DCH Health Care Authority, Alabama, Health Care Facilities, Rev., FRDO, 4.25%, 09/07/00 5,000 3,000 Infirmary Health Systems, Special Care Facilities Financing Authority, Mobile, Alabama, Infirmary Health Systems Inc., Ser. A, Rev., FRDO, 4.25%, 09/07/00 3,000 1,195 Marshall County, Alabama, Special Obligation, Warrants, FRDO, 4.30%, 09/07/00 1,195 1,000 Phenix County, Alabama, Industrial Development Board, Environmental Improvement, Mead Coated Board Project, Ser. A, Rev., FRDO, 4.45%, 09/01/00 1,000 8,700 Stevenson, Alabama, Industrial Development Board, Environmental Improvement, The Mead Corp. Project, Rev., FRDO, 4.35%, 09/01/00 8,700 4,900 Stevenson, Alabama, Industrial Development Board, Environmental Improvement, The Mead Corp. Project, Ser. C, Rev., FRDO, 4.35%, 09/01/00 4,900 1,900 University of Alabama, Hospital, Ser. B, Rev., FRDO, 4.25%, 09/06/00 1,900 ------- 37,965 Alaska -- 0.9% 7,875 Alaska State, Housing Finance Corp., Floating Rate Trusts Receipts, Ser. N-13, Regulation D, Rev., FRDO, 4.50%, 09/06/00 7,875 6,845 Alaska State, Housing Finance Corp., FLOATS, Ser. PT-202, Rev., FRDO, 5.92%, 09/01/00 6,848 ------- 14,723 Arizona -- 0.3% 5,000 University of Arizona, Main Campus & Research, Ser. A, Rev., COP, FRDO, 4.20%, 09/06/00 5,000 Arkansas -- 0.8% 3,600 Arkansas Hospital Equipment Finance Authority, AHA Pooled Financing Program, Rev., FRDO, 4.35%, 09/06/00 3,600 3,750 Arkansas State, Development Finance Authority, IDR, Stratton Seed Co. Project, Rev., FRDO, 4.45%, 09/07/00 3,750
See notes to financial statements. 27 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ----------------------------------------------------------------------------------- Money Market Instruments -- Continued - ----------------------------------------------------------------------------------- Arkansas -- Continued $ 5,500 Columbia County, Arkansas, Solid Waste Disposal, Albemarle Corp. Project, Rev., FRDO, 4.45%, 09/07/00 $ 5,500 ------- 12,850 California -- 0.1% 500 Alameda County, California, Multi-Family Housing, Quail, Ser. A, Rev., FRDO, 3.50%, 09/06/00 500 900 San Diego, California, IDR, Kaiser Aerospace & Electric, Ser. A, Rev., FRDO, 3.85%, 09/07/00 900 ------- 1,400 Colorado -- 2.0% 15,400 Colorado Springs, Colorado, Utilities, Municipal Securities Trust Receipts, Ser. SGA-88, Rev., FRDO, 4.35%, 09/01/00 15,400 2,500 Colorado Student Obligation Bond Authority, Student Loan, Senior Lien, Ser. A-3, Rev., FRDO, 4.35%, 09/06/00 2,500 15,580 Denver, Colorado, City & County Airport, Floating Rate Certificates, Ser. 153, Rev., FRDO, 4.33%, 09/07/00 15,580 ------- 33,480 Connecticut -- 0.9% 15,100 Meriden, Connecticut, GO, BAN, 4.75%, 08/08/01 15,139 Delaware -- 0.6% 9,400 Delaware State, Economic Development Authority, IDR, Star Enterprise Project, Ser. B, Rev., FRDO, 4.35%, 09/06/00 9,400 District of Columbia -- 3.8% 19,400 District of Columbia, Rev., FRDO, 4.30%, 11/16/00 19,400 4,755 District of Columbia, Water & Sewer Authority, Public Utility, Rev., FRDO, 4.33%, 09/07/00 4,755 6,155 Eagle Tax Exempt Trust, Weekly Option Mode, Water & Sewer Rev., District of Columbia, Ser. 98-5202, FRDO, #, 4.33%, 09/07/00 6,155 10,000 Metropolitan Washington Airport, Rev., 4.30%, 12/06/00 10,000 10,000 Metropolitan Washington Airport, Rev., 4.33%, 11/06/00 10,000 6,900 Metropolitan Washington Airport, Rev., 4.40%, 02/14/01 6,900 6,000 Metropolitan Washington Airport, Rev., 4.50%, 09/06/00 6,000 ------- 63,210 Florida -- 5.4% 400 Alachua County, Florida, Health Facilities Authority, Shands Teaching Hospital, Ser. B, Rev., FRDO, 4.25%, 09/06/00 400 1,600 Broward County, Florida, Ser. C, GO, 5.60%, 01/01/01 1,606 1,150 Collier County, Florida, Health Facilities Authority, The Moorings Inc. Project, Rev., FRDO, 4.30%, 09/06/00 1,150 2,720 Dade County, Florida, Housing Finance Authority, Multi-Family Housing, Kendall Ct. Apartments, Rev., FRDO, 4.30%, 09/07/00 2,720 2,020 Dade County, Florida, Housing Finance Authority, Multi-Family Housing, Star Creek Apartments, Rev., FRDO, 4.30%, 09/07/00 2,020
See notes to financial statements. 28 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Florida -- Continued $ 2,155 Dade County, Florida, Housing Finance Authority, Single Family Mortgage, FLOATS, Ser. PT-344, Rev., FRDO, #, 4.38%, 09/07/00 $2,158 5,000 Florida Finance Commission, 4.30%, 01/24/01 5,000 7,185 Florida Housing Finance Corp., Multi-Family Housing, Beneva Project, Ser. C, Rev., FRDO, 4.20%, 09/07/00 7,185 5,000 Florida Housing Finance Corp., Multi-Family Housing, Kings Project, Ser. D, Rev., FRDO, 4.25%, 09/07/00 5,000 3,960 Florida State, Board of Education, Capital Outlay, FLOATS, Ser. PA-696, GO, FRDO, 4.38%, 09/07/00 3,960 5,330 Gulf Breeze, Florida, Local Government Loan Program, Ser. B, Rev., FRDO, 4.25%, 09/07/00 5,330 12,450 Gulf Breeze, Florida, Local Government Loan Program, Ser. C, Rev., FRDO, 4.25%, 09/07/00 12,450 100 Jacksonville, Florida, Capital Project, Ser. 1, Rev., FRDO, 4.25%, 09/06/00 100 8,000 Jacksonville, Florida, Educational Facilities, Jacksonville University Project, Rev., FRDO, 4.25%, 09/07/00 8,000 1,000 Jacksonville, Florida, Health Facilities Authority, River Garden Project, Rev., FRDO, 4.25%, 09/07/00 1,000 6,000 Orange County, Florida, Health Facilities Authority, Florida Hospital Association of Health, Ser. A, Rev., FRDO, 4.35%, 09/06/00 6,000 4,700 Orange County, Florida, Health Facilities Authority, Presbyterian Retirement Project, Rev., FRDO, 4.30%, 09/07/00 4,700 2,000 Orlando, Florida, Utilities Commission, Water & Sewer System, Rev., 4.25%, 10/02/00 2,000 14,100 Tampa, Florida, Sports Authority, Municipal Securities Trust Receipts, Ser. SGA-61, Rev., FRDO, 4.35%, 09/01/00 14,103 4,500 The University of North Florida Foundation Inc., Parking System, Rev., FRDO, 4.30%, 09/07/00 4,500 ------ 89,382 Georgia -- 3.1% 6,600 Atlanta, Georgia, Urban Residential Finance Authority, Multi-Family Housing, The Park at Lakewood, Rev., FRDO, 4.40%, 09/07/00 6,600 10,580 Atlanta, Georgia, Water & Wastewater, Municipal Securities Trust Receipts, Ser. SGA-86, Rev., FRDO, 4.30%, 09/06/00 10,580 1,000 Bibb County, Georgia, Class A Certificates, Ser. C, FRDO, 4.40%, 09/07/00 1,000 6,900 Crisp County, Georgia, Solid Waste Management Authority, Rev., FRDO, 4.38%, 09/07/00 6,900 15,100 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 97C- 1002, FRDO, #, 4.33%, 09/07/00 15,100 1,000 Fulton County, Georgia, Development Authority, Arthritis Foundation Inc. Project, Rev., FRDO, 4.30%, 09/06/00 1,000 3,000 Georgia Local Government, FLOATS, Ser. PT-1060, COP, FRDO, 4.33%, 09/07/00 3,000 3,849 Georgia Municipal Association Pooled Bond, COP, FRDO, 4.25%, 09/07/00 3,849
See notes to financial statements. 29 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Georgia -- Continued $ 1,860 Georgia State, Residential Finance Authority, Home Ownership Mortgage, Ser. A, Rev., FRDO, 4.15%, 12/01/00 $ 1,900 2,000 Municipal Electric Authority of Georgia, Rev., 4.40%, 09/07/00 2,000 ------- 51,929 Hawaii -- 0.1% 1,670 Hawaii State, Housing Finance & Development Corp., Single Family Mortgage, FLOATS, Ser. PA-73A, Rev., FRDO, 4.40%, 09/07/00 1,675 Illinois -- 6.9% 18,400 Chicago, Illinois, Airport, Special Facilities, O'Hare, Rev., FRDO, 4.35%, 09/06/00 18,400 3,000 Chicago, Illinois, Wastewater Transmission, Rev., -, 6.75%, 11/15/00 3,075 20,800 Chicago, Illinois, Water, Municipal Securities Trust Receipts, Ser. SGA-93, Rev., FRDO, 4.35%, 09/01/00 20,800 6,660 Elmhurst, Illinois, Joint Commission Accredation, Rev., FRDO, 4.25%, 09/07/00 6,660 3,205 Illinois Development Finance Authority, IDR, CFC International Inc. Project, Rev., FRDO, 4.30%, 09/07/00 3,205 2,000 Illinois Development Finance Authority, IDR, Valspar Corp. Project, Special Tax, FRDO, 4.40%, 09/07/00 2,000 4,100 Illinois Development Finance Authority, Local Government Financing Program, Ser. A, Rev., FRDO, 4.35%, 09/06/00 4,100 1,820 Illinois Development Finance Authority, Toughy LTD Partnership Project, Rev., FRDO, 4.30%, 09/06/00 1,820 18,540 Illinois Health Facilities Authority, Rev., 4.20%, 10/18/00 18,540 3,000 Illinois Health Facilities Authority, Rev., 4.30%, 10/05/00 3,000 3,600 Illinois Housing Development Authority, Multi-Family Housing, Camelot, Rev., FRDO, 4.45%, 09/06/00 3,600 16,685 Illinois Housing Development Authority, Multi-Family Housing, Lakeshore Plaza, Ser. A, Rev., FRDO, 4.20%, 09/06/00 16,685 2,660 Libertyville, Illinois, Industrial Revenue, Libertyville Manor Project, Rev., FRDO, 4.25%, 09/07/00 2,660 10,000 University of Illinois, Health Services Facilities System, Ser. B, Rev., FRDO, 4.20%, 09/06/00 10,000 ------- 114,545 Indiana -- 2.1% 5,000 DeKalb County, Indiana, Economic Development, New Process Steel Project, Rev., FRDO, 4.45%, 09/07/00 5,000 5,990 Indiana Bond Bank, FLOATS, Ser. PA-688, Rev., FRDO, 4.33%, 09/07/00 5,990 3,000 Indiana State, Development Finance Authority, Environmental Improvement, USX Corp. Project, Rev., FRDO, 3.00%, 03/01/01 3,000 9,000 Indiana State, Development Finance Authority, PCR, Southern Indiana Gas & Electric, Ser. A, Rev., FRDO, 3.00%, 03/01/01 9,000 6,665 Indiana State, Office Building Commission Capital Complex, FLOATS, Ser. PT-381, Rev., FRDO, 4.33%, 09/07/00 6,665
See notes to financial statements. 30 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Indiana -- Continued $ 1,270 Lafayette, Indiana, Economic Development, Health Quest Realty Project, Rev., FRDO, 4.30%, 09/07/00 $ 1,270 600 Muncie, Indiana, Economic Development, Health Quest Realty Project, Rev., FRDO, 4.30%, 09/07/00 600 3,305 Municipal Securities Trust Certificates, Ser. 1997-19A, Class A, Rev., FRDO, #, -, 4.30%, 09/06/00 3,305 ------- 34,830 Iowa -- 0.9% 15,000 Iowa School Corporations, Iowa School Cash Anticipation Program, Ser. A, Warrant Certificates, Rev., 5.50%, 06/22/01 15,117 Kansas -- 1.0% 2,000 Eagle Tax-Exempt Trust, Weekly Option Mode, Ser. 2000-1601, FRDO, #, 4.33%, 09/07/00 2,000 8,720 Kansas State, Development Finance Authority, FLOATS, Ser. PA-715, Rev., FRDO, 4.33%, 09/07/00 8,720 2,150 Spring Hill, Kansas, Industrial Revenue, Abrasive Engineering Project, Rev., FRDO, 4.43%, 09/07/00 2,150 1,650 Wichita, Kansas, Airport Facilities, Cessna Citation Center Project, Ser. III, Rev., FRDO, 4.40%, 09/06/00 1,650 1,800 Wichita, Kansas, Hospital, Facilities Improvement, Riverside, Ser. IV, Rev., FRDO, 4.30%, 09/07/00 1,800 ------- 16,320 Kentucky -- 2.2% 3,000 Jeffersontown, Kentucky, Lease Program, Kentucky League of Cities Funding Trust, Rev., FRDO, 4.25%, 09/06/00 3,000 26,575 Kentucky Area Development Districts, Financing Trust Lease Program, Ewing, Kentucky, Rev., FRDO, 4.35%, 09/07/00 26,574 2,000 Kentucky Asset Liability Commission, General Fund, Ser. A, Rev., TRAN, 5.25%, 06/27/01 2,011 2,530 Kentucky Housing Corp., Ser. D, Rev., 4.40%, 01/01/01 2,530 1,000 Kentucky State, Property & Buildings Commission, Project No. 55, Rev., 4.30%, 09/01/00 1,000 1,085 Kentucky State, Property & Buildings Commission, Project No. 66, Ser. A, Rev., 5.00%, 05/01/02 1,089 ------- 36,204 Louisiana -- 1.3% 2,950 Caddo Parish, Louisiana, Industrial Development Board Inc., Frymaster Corp. Project, Rev., FRDO, 4.25%, 09/05/00 2,950 2,685 Iberia Parish, Louisiana, Industrial Development Board Inc., Cuming Insulation Corp. Project, Rev., FRDO, 4.37%, 09/07/00 2,685 2,000 Louisiana Housing Finance Agency, Ser. A-52, Rev., FRDO, 4.50%, 09/06/00 2,000 5,575 Louisiana Public Facilities Authority, Tiger Athletic Foundation Project, Rev., FRDO, 4.28%, 09/07/00 5,575 1,535 New Orleans, Louisiana, Aviation Board, Ser. A, Rev., FRDO, 4.30%, 09/06/00 1,535
See notes to financial statements. 31 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Louisiana -- Continued $ 3,000 Plaquemines, Louisiana, Port Harbor & Terminal District, Rev., 4.30%, 12/08/00 $ 3,000 4,000 Plaquemines, Louisiana, Port Harbor & Terminal District, Port Facilities, International Marine Terminal Project, Ser. B, Rev., FRDO, 4.20%, 03/15/01 4,005 ------- 21,750 Maine -- 0.3% 1,000 Maine Educational Loan Marketing Corp., Student Loan, Ser. A-4, Rev., 5.60%, 11/01/00 1,002 3,310 Maine State, Turnpike Authority, FLOATS, Ser. PA-699, Rev., FRDO, 4.33%, 09/07/00 3,311 ------- 4,313 Maryland -- 1.6% 3,000 Anne Arundel County, Maryland, GO, 4.25%, 12/14/00 3,000 8,605 Howard County, Maryland, Multi-Family Housing, Sherwood Crossing LTD, Rev., FRDO, 4.85%, 12/01/00 8,605 5,000 Maryland State, Stadium Authority, Sports Facilities Lease, Rev., FRDO, 4.30%, 09/06/00 5,000 10,000 Municipal Securities Trust Certificates, Ser. 1999-76, Class A, Rev., FRDO, #, 4.55%, 12/01/00 10,000 ------- 26,605 Massachusetts -- 0.5% 5,300 Massachusetts State, Health & Educational Facilities Authority, Municipal Securities Trust Receipts, Ser. SGA-97, Rev., FRDO, 4.35%, 09/01/00 5,300 3,000 Massachusetts State, Ser. A, GO, BAN, +, 5.00%, 09/06/01 3,020 ------- 8,320 Michigan -- 2.8% 1,100 Cornell Township, Michigan, Economic Development Corp., Environmental Improvement, Dates-Mead- Escanaba Paper Co., Rev., FRDO, 4.25%, 09/01/00 1,100 6,100 Holt, Michigan, Public Schools, Ser. B, GO, FRDO, +, 4.30%, 03/01/01 6,100 1,500 Michigan Municipal Bond Authority, Ser. C-2, Rev., 5.00%, 08/23/01 1,510 22,000 Michigan State, Building Authority, Rev., 4.20%, 09/21/00 22,000 1,200 Michigan State, Hospital Finance Authority, Mt. Clemens Hospital, Rev., FRDO, 4.20%, 09/06/00 1,200 6,000 Michigan State, Housing Development Authority, Ser. 1999-B2, Rev., 4.45%, 09/06/00 6,000 7,495 Michigan State, Strategic Fund LTD, FLOATS, Ser. PT-237, Rev., FRDO, 4.33%, 09/07/00 7,495 1,175 Michigan State, Strategic Fund LTD, Wayne Disposal, Oakland Project, Rev., FRDO, 4.35%, 09/06/00 1,175 ------- 46,580 Minnesota -- 0.3% 3,300 Minnesota State, GO, FRDO, 4.33%, 09/07/00 3,300 1,255 Minnesota State, Housing Finance Agency, Single Family Mortgage, Ser. E, Rev., FRDO, 4.35%, 05/01/01 1,255 ------- 4,555
See notes to financial statements. 32 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Mississippi -- 0.5% $ 3,030 Mississippi Business Finance Corp., IDR, Choctaw Maid Farms, Inc. Project, Rev., FRDO, 4.35%, 09/06/00 $ 3,030 4,840 Mississippi Home Corp., Single Family Housing, Class A Certificates, Ser. I, Rev., FRDO, 4.40%, 09/07/00 4,840 ------- 7,870 Missouri -- 2.0% 7,335 Independence, Missouri, IDA, Multi-Family Housing, FLOATS, Ser. PT-314, Rev., FRDO, 4.40%, 09/07/00 7,335 3,400 Kansas City, Missouri, IDR, Livers Bronze Co. Project, Rev., FRDO, 4.45%, 09/07/00 3,400 880 Macon, Missouri, IDA, Health Care Realty Macon, Rev., FRDO, 4.40%, 09/01/00 880 1,600 Missouri Higher Education Loan Authority, Student Loan, Ser. B, Rev., FRDO, 4.40%, 09/06/00 1,600 700 Missouri State, Health & Educational Facilities Authority, Medical Research Facilities, Stowers Institute, Rev., FRDO, 4.20%, 09/07/00 700 3,500 Missouri State, Health & Educational Facilities Authority, School District, Advance Funding Program, Saint Charles R-6 School, Ser. J, GO, 4.25%, 09/19/00 3,501 1,900 Missouri State, Health & Educational Facilities Authority, School District, Advance Funding Program, Webster Groves School, Ser. K, GO, 4.25%, 09/19/00 1,900 8,915 Missouri State, Housing Development Commission, FLOATS, Ser. PT-223, Rev., FRDO, 4.50%, 09/01/00 8,915 4,000 Missouri State, Housing Development Commission, Ser. A-64, Rev., FRDO, 4.50%, 09/06/00 4,003 865 Osage Beach, Missouri, IDA, Health Care Realty Osage, Rev., FRDO, 4.40%, 09/01/00 865 ------- 33,099 Montana -- 0.2% 3,785 Montana State, Board of Housing, FLOATS, Ser. PT-356, Rev., FRDO, 4.38%, 09/07/00 3,785 Multiple States -- 0.5% 7,795 Koch Fixed Rate Trust, Variable States, FLOATS, Ser. PL-6A, Rev., FRDO, 4.39%, 09/01/00 7,795 Nebraska -- 0.1% 1,800 Sidney, Nebraska, IDR, Pennington Seed Inc. Project, Rev., FRDO, 4.35%, 09/06/00 1,800 Nevada -- 2.9% 1,600 Clark County, Nevada, Airport, Ser. B-2, Rev., FRDO, 4.25%, 09/06/00 1,600 1,745 Clark County, Nevada, School District, Building & Renovation, Ser. B, GO, 7.50%, 06/15/01 1,786 19,800 Eagle Tax Exempt Trust, Weekly Option Mode, Clark County, Ser. 98-2801, FRDO, #, 4.33%, 09/07/00 19,800 6,250 Nevada Housing Division, Multi-Unit Housing, Joshua Villas, Ser. E, Rev., FRDO, 4.40%, 09/07/00 6,250 4,435 Nevada Housing Division, Multi-Unit Housing, Judith Villas, Ser. C, Rev., FRDO, 4.40%, 09/07/00 4,435
See notes to financial statements. 33 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Nevada -- Continued $ 6,750 Nevada Housing Division, Multi-Unit Housing, Ser. A, Rev., FRDO, 4.40%, 09/07/00 $ 6,750 3,195 Nevada Housing Division, Multi-Unit Housing, Ser. M, Rev., FRDO, 4.40%, 09/07/00 3,195 4,400 Nevada State, Municipal Securities Trust Receipts, Ser. SGB-31, GO, FRDO, 4.33%, 09/07/00 4,400 ------- 48,216 New Hampshire -- 0.3% 1,540 New Hampshire State, Business Finance Authority, Industrial Facilities, Nickerson Assembly Co., Rev., FRDO, 4.50%, 09/06/00 1,540 3,870 New Hampshire State, Housing Finance Authority, Single Family Housing, FLOATS, Ser. PT-115, Rev., FRDO, 4.40%, 09/07/00 3,870 ------- 5,410 New Jersey -- 0.2% 2,700 New Jersey Economic Development Authority, Danic Urban Renewal, Rev., FRDO, 3.70%, 09/07/00 2,700 New Mexico -- 0.5% 3,000 New Mexico State, Hospital Equipment Loan Council, Pooled Loan Program, Ser. A, Rev., FRDO, 4.35%, 09/06/00 3,000 5,000 New Mexico State, Rev., TRAN, 5.00%, 06/29/01 5,028 ------- 8,028 New York -- 4.9% 1,235 Eagle Tax-Exempt Trust, Weekly Option Mode, Ser. 96C-4901, Class A, FRDO, #, 3.30%, 09/07/00 1,235 1,305 Fort Plain, New York, Central School District, GO, 4.75%, 06/15/01 1,308 15,560 IBM Tax Exempt Grantor Trust, IBM Project, FLOATS, Weekly Receipt, FRDO, 4.48%, 09/07/00 15,560 3,000 Jamestown, New York, City School District, GO, 4.90%, 06/15/01 3,009 1,520 Monroe County, New York, Airport Authority, FLOATS, Ser. PA-585, Rev., FRDO, 4.29%, 09/07/00 1,520 6,000 Municipal Securities Trust Certificates, Ser. 2000-92, Class A, GO, FRDO, #, 4.35%, 09/01/00 6,000 7,700 Municipal Securities Trust Certificates, Ser. 2000-93, Class A, Rev., FRDO, #, 4.35%, 09/01/00 7,701 16,300 Nassau County, New York, Ser. B, Tax Exempt Anticipation Note, GO, RAN, 6.00%, 03/20/01 16,432 8,900 New York City, New York, Trust Cultural Resources, American Museum of National History, Ser. B, Rev., FRDO, 4.58%, 07/01/01 8,900 3,000 New York State, Environmental Quality, Ser. G, GO, FRDO, 3.90%, 09/06/00 3,000 1,540 New York State, Job Development Authority, Ser. B-1 through B-21, Rev., FRDO, 4.40%, 09/01/00 1,540 1,020 Rome, New York, City School District, GO, 5.38%, 06/15/01 1,027 10,000 Suffolk County, New York, Floating Rate Trust Receipts, Ser. A-38, Regulation D, GO, FRDO, 4.50%, 09/06/00 10,000
See notes to financial statements. 34 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ New York -- Continued $ 4,200 Triborough Bridge & Tunnel Authority, New York, FLOATS, Ser. SG-41, Rev., FRDO, 4.24%, 09/07/00 $ 4,200 ------- 81,432 North Carolina -- 0.6% 2,000 Gaston County, North Carolina, Industrial Facilities & PCFA, Industrial Development, Quality Metal Project, Rev., FRDO, 4.40%, 09/07/00 2,000 900 Guilford County, North Carolina, Industrial Facilities & PCFA, Neal Manufacturing, Rev., FRDO, 4.40%, 09/07/00 900 5,000 Mecklenburg County, North Carolina, Public Improvement, Ser. C, GO, FRDO, 4.30%, 09/06/00 5,000 2,400 North Carolina, Medical Care Commission, Health Care Facilities, The Givens Estates Inc. Project, Rev., FRDO, 4.35%, 09/01/00 2,400 ------- 10,300 North Dakota -- 1.0% 16,000 North Dakota State, Housing Finance Agency, Housing Finance Program, Home Mortgage, Ser. D, Rev., @, 4.45%, 08/27/01 16,000 Ohio -- 1.0% 5,000 Columbus, Ohio, Ser. 1, GO, FRDO, 4.10%, 09/07/00 5,000 1,000 Ohio Housing Finance Agency, Residential Mortgage, Ser. A-2, Rev., 4.25%, 09/01/00 1,000 4,900 Ohio Housing Finance Agency, Residential Mortgage, Ser. C, Rev., +, 4.35%, 09/01/01 4,900 3,595 Ohio Housing Finance Agency, Single Family Mortgage, FLOATS, Ser. PT-71, Rev., FRDO, 4.40%, 09/07/00 3,667 1,000 Ohio State, Public Facilities Commission, Higher Education Capital Facilities, Ser. II-B, Rev., 4.50%, 11/01/00 1,000 1,330 Ohio State, Water Development Authority, Pollution Control Facilities, Water Control Loan Fund, State Match, Rev., 5.50%, 06/01/01 1,340 ------- 16,907 Oklahoma -- 0.6% 3,000 Oklahoma Development Finance Authority, Oklahoma Hospital Association, Ser. A, Rev., FRDO, 4.35%, 09/06/00 3,000 7,000 Oklahoma State, Water Resource Board, State Loan Program, Rev., FRDO, 4.05%, 03/01/01 7,000 ------- 10,000 Oregon -- 0.6% 5,240 Oregon State, Housing & Community Services Department, Single Family Mortgage Program, Ser. C, Rev., 4.25%, 03/29/01 5,240 1,900 Oregon State, Ser. 73-E, GO, FRDO, 4.15%, 09/06/00 1,900 3,470 Port Portland, Oregon, Airport, Ser. 7-A, Rev., -, 6.75%, 07/01/01 3,563 ------- 10,703
See notes to financial statements. 35 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Money Market Instruments -- Continued - ------------------------------------------------------------------------------------- Pennsylvania -- 1.5% $ 3,900 Butler County, Pennsylvania, Hospital Authority, North Hills Passavant Hospital, Ser. A, Rev., -, 7.00%, 06/01/01 $ 4,040 100 Delaware Valley, Pennsylvania, Regional Finance Authority, Local Government, Rev., FRDO, 4.30%, 09/06/00 100 500 Geisinger Authority, Pennsylvania, Health System, Penn State Geisinger Health, Ser. B, Rev., FRDO, 4.30%, 09/01/00 500 2,000 Harrisburg, Pennsylvania, Water Authority, Municipal Securities Trust Receipts, Ser. SGA-80, Rev., FRDO, 4.30%, 09/06/00 2,000 5,000 Pennsylvania State, Higher Education Assistance Agency, Student Loan, Ser. A, Rev., FRDO, 4.35%, 09/06/00 5,000 4,230 Philadelphia, Pennsylvania, IDA, Airport, FLOATS, Ser. PT-417, Rev., FRDO, 4.55%, 06/14/01 4,230 4,425 Philadelphia, Pennsylvania, Redevelopment Authority, Multi-Family Housing, Courts Project, Ser. A, Rev., FRDO, 4.30%, 09/07/00 4,425 5,000 Philadelphia, Pennsylvania, Ser. A, Rev., TRAN, @, 5.00%, 06/29/01 5,025 ------- 25,320 Rhode Island -- 0.3% 4,995 Rhode Island Refunding Bond Authority, State Public Projects, FLOATS, Ser. PT-419, Rev., 4.50%, 06/14/01 4,995 South Carolina -- 1.8% 4,000 Kershaw County, South Carolina, IDR, New South Inc. Project, Rev., FRDO, 4.30%, 09/07/00 4,000 2,000 South Carolina State, Public Service Authority, Municipal Trust Receipts, Ser. SG-32, Rev., FRDO, 4.33%, 09/07/00 2,003 4,500 South Carolina State, Public Service Authority, Ser. A, Rev., 4.50%, 01/01/01 4,504 18,800 South Carolina Transportation Infrastructure Bank, Floating Rate Trust Receipts, Ser. L-10, Regulation D, Rev., FRDO, 4.45%, 09/06/00 18,802 ------- 29,309 South Dakota -- 0.9% 14,595 South Dakota Housing Development Authority, FLOATS, Ser. PT-73, Rev., FRDO, 4.33%, 09/07/00 14,595 Tennessee -- 8.5% 16,125 Clarksville, Tennessee, Public Building Authority, Pooled Financing, Tennessee Municipal Bond Fund, Rev., FRDO, 4.25%, 09/07/00 16,125 5,995 Metropolitan Government Nashville & Davidson Counties, Tennessee, FLOATS, Ser. PT-394, Rev., FRDO, 4.45%, 09/07/00 5,995 2,500 Metropolitan Government of Nashville & Davidson Counties, Tennessee, Health & Education Facilities Board, Vanderbilt University, Ser. 85-A, Rev., FRDO, 4.15%, 01/15/01 2,500
See notes to financial statements. 36 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Money Market Instruments -- Continued - ------------------------------------------------------------------------------------- Tennessee -- Continued $ 7,500 Metropolitan Government of Nashville & Davidson Counties, Tennessee, Industrial Development Board, Country Music Hall of Fame, Rev., FRDO, 4.20%, 09/07/00 $ 7,500 1,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. II-A-1, Rev., FRDO, 4.30%, 09/07/00 1,500 2,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. II-A-2, Rev., FRDO, 4.30%, 09/07/00 2,500 4,000 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. II-D-2, Rev., FRDO, 4.30%, 09/07/00 4,000 9,400 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. II-D-2, Rev., FRDO, 4.30%, 09/07/00 9,400 1,160 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. II-D-3, Rev., FRDO, 4.30%, 09/07/00 1,160 6,800 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. III-C-5, Rev., FRDO, 4.30%, 09/07/00 6,800 1,600 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. III-D-3, Rev., FRDO, 4.30%, 09/07/00 1,600 5,000 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. III-E-2, Rev., FRDO, 4.30%, 09/07/00 5,000 2,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. III-E-3, Rev., FRDO, 4.30%, 09/07/00 2,500 5,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. III-G-2, Rev., FRDO, 4.30%, 09/07/00 5,500 7,600 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-1, Rev., FRDO, 4.35%, 09/01/00 7,600 5,000 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-3, Rev., FRDO, 4.35%, 09/01/00 5,000 7,000 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-A-3, Rev., FRDO, 4.35%, 09/01/00 7,000 4,700 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-B-12, Rev., FRDO, 4.35%, 09/01/00 4,700 5,200 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-B-5, Rev., FRDO, 4.35%, 09/01/00 5,200 4,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-B-9, Rev., FRDO, 4.35%, 09/01/00 4,500
See notes to financial statements. 37 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------------- Money Market Instruments -- Continued - -------------------------------------------------------------------------------------- Tennessee -- Continued $ 5,000 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement, Ser. IV-D-1, Rev., FRDO, 4.35%, 09/01/00 $ 5,000 6,200 Shelby County, Tennessee, Health, Educational & Housing Facilities Board, Baptist Health, Rev., FRDO, 4.45%, 01/18/01 6,200 5,465 Shelby County, Tennessee, Health, Educational & Housing Facilities Board, Educational Facilities, Rhodes College, Rev., FRDO, 4.25%, 09/07/00 5,465 300 Shelby County, Tennessee, Ser. A, GO, FRDO, 4.20%, 09/06/00 300 700 South Pittsburgh, Tennessee, Industrial Development Board, Lodge Manufacturing Co. Project, Rev., FRDO, 4.35%, 09/06/00 700 3,635 Tennessee Housing Development Agency, FLOATS, Ser. PA-726R, Rev., FRDO, 4.38%, 09/07/00 3,635 13,530 Tennessee, Housing Development Agency, FLOATS, Ser. PT-279, Rev., FRDO, 4.30%, 01/01/01 13,530 -------- 140,910 Texas -- 18.4% 1,500 Addison, Texas, GO, 6.25%, 09/01/00 1,500 2,000 Austin, Texas, Independent School District, GO, 5.20%, 08/01/01 2,014 1,135 Austin, Texas, Public Improvement, GO, 7.00%, 09/01/00 1,135 1,000 Brazos River Authority, Texas, PCR, TXU Electric Co., Ser. C, Rev., FRDO, 4.40%, 09/06/00 1,000 800 Brazos River Authority, Texas, PCR, Utilities Electric Co., Ser. B, Rev., FRDO, 4.40%, 09/01/00 800 9,200 Carroll, Texas, Independent School District, GO, FRDO, 4.20%, 09/07/00 9,200 6,200 City of El Paso, Texas, GO, 4.15%, 09/05/00 6,200 2,000 City of El Paso, Texas, GO, 4.40%, 09/07/00 2,000 8,200 Dallas County, Texas, Ser. C, GO, FRDO, 4.65%, 06/15/01 8,200 1,800 Dallas, Texas, Area Rapid Transit, North Central Light Rail, Rev., FRDO, 4.20%, 09/06/00 1,800 5,000 Dallas-Fort Worth, Texas, International Airport Facilities Improvement Corp., Flight Safety Project, Rev., FRDO, 4.40%, 09/07/00 5,000 1,855 Dallas-Fort Worth, Texas, Regional Airport, Municipal Securities Trust Receipts, Ser. SGA-49, Rev., FRDO, 4.35%, 09/01/00 1,855 5,000 Dallas-Fort Worth, Texas, Regional Airport, Ser. A-CR-103, Rev., FRDO, 4.35%, 02/01/01 5,000 5,000 Dallas-Fort Worth, Texas, Regional Airport, Ser. A-CR-104, Rev., FRDO, 4.35%, 02/01/01 5,000 4,500 Dallas-Fort Worth, Texas, Regional Airport, Ser. A-CR-107, Rev., FRDO, 4.35%, 02/01/01 4,500 16,100 Denton, Texas, Independent School District, GO, FRDO, 4.33%, 02/01/01 16,100 1,270 Denton, Texas, Utility Systems, Ser. A, Rev., 4.88%, 12/01/00 1,272 3,910 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 99-4302, #, FRDO, 4.33%, 09/07/00 3,910
See notes to financial statements. 38 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------ Texas -- Continued $ 8,400 Greater East Texas, Higher Education, Ser. B, Rev., FRDO, 3.85%, 09/07/00 $ 8,400 10,000 Greater Texas, Student Loan Corp., Student Loan, Ser. A, Rev., 4.22%, 02/01/01 10,000 3,000 Guadalupe Blanco River Authority, Texas, Industrial Development Corp., IDR, The BOC Group Inc. Project, Rev., FRDO, 4.30%, 09/07/00 3,000 5,000 Harlandale, Texas, Independent School District, Municipal Securities Trust Receipts, Ser. SGA-100, GO, FRDO, 4.40%, 09/06/00 5,000 1,520 Harris County, Texas, GO, @, 4.25%, 10/04/00 1,520 5,100 Harris County, Texas, GO, 4.25%, 10/05/00 5,100 7,900 Hays, Texas, Memorial Health Facilities Development Corp., Central Texas Medical Center Project, Ser. A, Rev., 4.30%, 09/07/00 7,900 10,000 Houston, Texas, Airport System, Rev., 4.30%, 10/11/00 10,000 1,400 Houston, Texas, Ser. A, GO, 4.35%, 01/11/01 1,400 3,000 Houston, Texas, Ser. B, GO, 4.30%, 11/28/00 3,000 5,000 Houston, Texas, Ser. C, GO, 4.30%, 11/28/00 5,000 10,000 Houston, Texas, Water & Sewer System, Rev., 4.30%, 11/09/00 10,000 2,930 Humble, Texas, Independent School District, GO, 6.50%, 02/15/01 2,960 3,900 Katy, Texas, Independent School District, Ser, A, GO, FRDO, 4.20%, 09/07/00 3,900 4,200 Longview, Texas, Industrial Corp., Collins Industries Inc. Project, Rev., FRDO, 4.45%, 09/07/00 4,200 5,000 Mesquite, Texas, Independent School District, GO, FRDO, 4.45%, 02/01/01 5,002 1,355 Midland, Texas, Independent School District, GO, FRDO, 4.20%, 09/07/00 1,355 30,000 North Central Texas, Health Facilities Development Corp., Rev., 4.35%, 12/12/00 29,999 4,700 Richardson, Texas, Independent School District, Ser. A, GO, FRDO, 4.20%, 09/07/00 4,700 7,190 San Angelo, Texas, Independent School District, GO, FRDO, 4.25%, 09/07/00 7,190 19,920 San Antonio, Texas, Electric & Gas, Municipal Securities Trust Receipts, Ser. SGA-48, Rev., FRDO, 4.30%, 09/06/00 19,920 5,000 San Antonio, Texas, Water Revenue, Municipal Securities Trust Receipts, Ser. SGA-42, Rev., FRDO, 4.30%, 09/06/00 5,000 3,830 Tarrant County, Texas, Housing Finance Corp, Multi-Family Housing, Remington Project, Rev., FRDO, 4.20%, 09/06/00 3,830 5,565 Texas State, Department of Housing & Community Affairs, Residential Mortgage, FLOATS, Ser. PA-743R, Rev., FRDO, 4.40%, 09/07/00 5,565 10,000 Texas State, Floating Rate Trust Receipts, Ser. A-18, Regulation D, Rev., FRDO, 4.45%, 09/01/00 10,000 12,000 Texas State, Floating Rate Trust Receipts, Ser. N-19, Regulation D, Rev., FRDO, 4.45%, 09/06/00 12,000
See notes to financial statements. 39 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------------- Money Market Instruments -- Continued - -------------------------------------------------------------------------------------- Texas -- Continued $ 4,945 Texas State, FLOATS, Ser. PT-1991, Rev., FRDO, 4.38%, 09/07/00 $ 4,945 5,000 Texas State, Rev., TRAN, 5.25%, 08/31/01 5,047 10,000 Texas State, Ser. 93-A, GO, 4.30%, 10/04/00 10,000 3,000 Texas State, Turnpike Authority, Dallas North Thruway, Floating Rate Receipts, Ser. SG-70, Rev., FRDO, 4.33%, 09/07/00 3,000 4,400 Texas State, Veteran's Housing Assistance, Ser. A-1, GO, FRDO, 4.50%, 09/06/00 4,400 13,290 University of Texas, Municipal Securities Trust Receipts, Ser. SGA-78, Rev., FRDO, 4.30%, 09/06/00 13,290 1,800 West Side Calhoun County, Texas, Naval District, Sewer & Solid Waste Disposal, BP Chemicals Inc. Project, Rev., FRDO, 4.45%, 09/01/00 1,800 -------- 304,909 Utah -- 0.4% 2,100 Utah State Board of Regents, Student Loan, Ser. C, Rev., FRDO, 4.30%, 09/06/00 2,100 5,000 Utah State, Housing Finance Agency, Single Family Mortgage, Ser. E-1, Rev., FRDO, 3.85%, 09/06/00 5,000 -------- 7,100 Virginia -- 1.9% 2,000 Harrisonburg, Virginia, Redevelopment & Housing Authority, Multi-Family Housing, Misty Ridge Project, Ser. A, Rev., FRDO, 4.30%, 09/07/00 2,000 4,870 King George County, Virginia, IDA, Exempt Facilities, Birchwood Power Partners, Ser. B, Rev., FRDO, 4.45%, 09/01/00 4,870 1,100 Lynchburg, Virginia, IDA, Hospital Facilities, First Mortgage, VHA Mid Atlantic/Cap, Ser. E, Rev., FRDO, 4.25%, 09/06/00 1,100 12,893 Norfolk, Virginia, Airport Authority, Rev., 4.35%, 01/16/01 12,893 800 Petersburg, Virginia, Hospital Authority, Hospital Facilities, Southside Regional, Rev., FRDO, 4.35%, 09/01/00 800 7,150 Roanoke, Virginia, IDA, Hospital, Carilion Health Systems, Ser. B, Rev., FRDO, 4.35%, 09/01/00 7,150 2,385 Spotsylvania County, Virginia, IDA, Residential Care Facilities, Chancellor's Village Project, Rev., FRDO, 4.25%, 09/07/00 2,385 -------- 31,198 Washington -- 5.5% 12,150 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. A, FRDO, #, 4.33%, 09/07/00 12,150 15,830 King County, Washington, FLOATS, Ser. PT-385, Rev., FRDO, 4.45%, 09/07/00 15,830 950 King County, Washington, Housing Authority, Auburn Court Apartments Project, Rev., FRDO, 4.40%, 09/07/00 950 2,000 Port Townsend, Washington, Industrial Development, Port Townsend Paper Corp., Ser. A, Rev., FRDO, 4.40%, 09/07/00 2,000
See notes to financial statements. 40 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------------- Money Market Instruments -- Continued - -------------------------------------------------------------------------------------- Washington -- Continued $ 1,050 Redmond, Washington, Public Corp., Industrial Revenue, Integrated Circuits Project, Rev., FRDO, 4.35%, 09/07/00 $ 1,050 1,275 Seattle, Washington, Housing Authority, Low Income Housing Assistance, Bayview Manor Project, Ser. B, Rev., FRDO, 4.15%, 09/07/00 1,275 8,955 Seattle, Washington, Municipal Light & Power, Municipal Securities Trust Receipts, Ser. SGA-96, Rev., FRDO, 4.35%, 09/01/00 8,956 11,450 Seattle, Washington, Municipal Light & Power, Rev., 4.20%, 10/19/00 11,450 15,715 Seattle, Washington, Water Systems, Municipal Securities Trust Receipts, Ser. SGA-90, Rev., FRDO, 4.30%, 09/06/00 15,715 7,020 Washington State, GO, 4.25%, 10/04/00 7,020 2,000 Washington State, Health Care Facilities Authority, Sisters of Providence, Rev., -, 8.25%, 10/01/00 2,046 1,000 Washington State, Housing Finance Commission, Non-Profit Housing, Golden Sands Project, Rev., FRDO, 4.25%, 09/01/00 1,000 3,000 Washington State, Housing Finance Commission, Single Family Program, Ser. 1-A-S, Rev., 4.20%, 02/01/01 3,000 2,500 Washington State, Housing Finance Commission, Single Family Program, Ser. 2-A-S, Rev., 4.40%, 04/01/01 2,500 4,000 Washington State, Public Power Supply System, Nuclear Project No. 1, Ser. A, Rev., -, 6.88%, 07/01/01 4,148 2,000 Washington State, Public Power Supply System, Nuclear Project No. 2, Ser. C, Rev., -, 7.50%, 01/01/01 2,060 ------- 91,150 West Virginia -- 0.3% 5,765 West Virginia State, Building Commission, FLOATS, Ser. PA-520, Rev., FRDO, 4.38%, 09/07/00 5,765 Wisconsin -- 3.5% 9,800 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 94-4904, FRDO, #, 4.35%, 09/07/00 9,800 1,550 Milwaukee County, Wisconsin, Airport, Ser. A, GO, 4.50%, 10/01/00 1,550 14,455 Municipal Securities Trust Certificates, Ser. 1999-70, Class A, Rev., FRDO, 4.30%, 09/06/00 14,455 3,250 Wisconsin Housing & Economic Development Authority, Home Ownership, Floating Rate Trust Receipts, Ser. 18, Rev., FRDO, 4.55%, 09/06/00 3,250 5,800 Wisconsin Public Power Inc. System, Power Supply System, Municipal Securities Trust Receipts, Ser. SGA-2, Rev., FRDO, 4.30%, 09/06/00 5,807 5,000 Wisconsin State, Clean Water, Ser. 1, Rev., -, 6.75%, 06/01/01 5,172 7,200 Wisconsin State, Health & Education Facilities Authority, Rev., 4.25%, 10/16/00 7,200 10,000 Wisconsin State, Transportation, Rev., 4.20%, 10/05/00 10,000 ------- 57,234
See notes to financial statements. 41 CHASE VISTA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------------ Wyoming -- 0.6% $ 1,300 Lincoln County, Wyoming, PCR, Exxon Project, Ser. D, Rev., FRDO, 4.25%, 09/01/00 $ 1,300 7,860 Wyoming Community Development Authority, Housing, FLOATS, Ser. PT-195, Rev., FRDO, 4.38%, 09/07/00 7,860 ---------- 9,160 ---------- Total Municipal Securities 1,650,982 (Cost $1,650,982) - ------------------------------------------------------------------------------------------ Total Investments -- 100.2% $1,658,436 (Cost $1,658,436)* - ------------------------------------------------------------------------------------------
See notes to financial statements. 42 - -------------------------------------------------------------------------------- CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - 100.4% - ------------------------------------------------------------------------------------- New York -- 100.4% $ 21,402 ABN AMRO Munitops, Certificates Trust, New York, Ser. 1999-3, FRDO, #, 4.20%, 09/06/00 $21,402 12,000 ABN AMRO Munitops, Certificates Trust, New York, Ser. 1999-13, FRDO, #, 4.20%, 09/06/00 12,000 5,500 Albany, New York, City School District, GO, RAN, 5.00%, 10/25/00 5,502 5,000 Albany, New York, City School District, GO, TAN, 4.50%, 10/12/00 5,002 11,530 Albany, New York, GO, BAN, 5.00%, 08/03/01 11,564 590 Albany, New York, IDA, IDR, Newkirk Productions Inc. Project, Ser. A, Rev., FRDO, 4.15%, 09/07/00 590 8,000 Attica, New York, Central School District, GO, BAN, @, 5.00%, 04/18/01 8,024 8,915 Attica, New York, Central School District, GO, BAN, 5.00%, 06/15/01 8,937 1,600 Babylon, New York, IDA, IDR, Edwin Berger/Lambro Industries, Rev., FRDO, 4.15%, 09/06/00 1,600 9,400 Babylon, New York, IDA, Resource Recovery, OFS Equity Babylon Project, Rev., FRDO, 4.35%, 09/01/00 9,400 1,500 Beacon, New York, City School District, GO, RAN, 6.00%, 09/29/00 1,501 1,690 Beacon, New York, GO, BAN, 4.75%, 02/15/01 1,693 3,000 Beekmantown, New York, Central School District, GO, BAN, 5.00%, 06/29/01 3,011 7,500 Board of Cooperative Educational Services, New York, Sole Supervisory District, GO, RAN, 5.00%, 06/22/01 7,519 6,000 Board of Cooperative Educational Services, New York, Sole Supervisory District, GO, RAN, 5.00%, 06/27/01 6,019 9,620 Board of Cooperative Educational Services, New York, Sole Supervisory District, GO, RAN, 5.00%, 06/29/01 9,639 4,000 Board of Cooperative Educational Services, New York, Sole Supervisory District, GO, RAN, 5.25%, 06/22/01 4,014 795 Brockport, New York, Central School District, GO, 5.40%, 06/15/01 800 2,906 Brookhaven, New York, IDA, IDR, Waverly Association LLC, Rev., FRDO, 4.30%, 09/07/00 2,906 850 Broome County, New York, IDA, IDR, Binghamton Realty Project, Rev., FRDO, 4.10%, 09/06/00 850 7,000 Buffalo, New York, Ser. A, GO, BAN, 5.50%, 11/15/00 7,012 3,075 Camden, New York, Central School District, GO, RAN, 5.00%, 06/29/01 3,086 3,544 Carthage, New York, Central School District, GO, RAN, 5.00%, 06/22/01 3,552 2,670 Chautauqua County, New York, GO, BAN, 4.50%, 03/06/01 2,672 9,400 Chautauqua Lake, New York, Central School District, GO, BAN, 4.50%, 03/15/01 9,410 1,750 Chenango Forks, New York, Central School District, GO, BAN, 4.25%, 09/08/00 1,750 1,525 Chittenango, New York, Central School District, GO, RAN, 5.00%, 06/29/01 1,530 850 Corning, New York, GO, 4.70%, 09/01/00 850
See notes to financial statements. 43 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 5,000 Cortland, New York, City School District, GO, RAN, 5.00%, 06/29/01 $ 5,018 2,100 Dutchess County, New York, IDA, Civic Facility, Marist College, Ser. A, Rev., FRDO, 4.10%, 09/07/00 2,100 2,580 Dutchess County, New York, IDA, IDR, Laerdal Medical Corp. Project, Rev., FRDO, 4.30%, 09/06/00 2,580 1,130 Dutchess County, New York, Resource Recovery Agency, Solid Waste Systems, Ser. A, Rev., 4.45%, 01/01/01 1,131 10,000 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 94-3203, Class A, FRDO, #, 4.30%, 09/07/00 10,000 8,805 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 94-3205, Class A, FRDO, #, 4.30%, 09/07/00 8,805 9,910 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 94-3208, Class A, FRDO, #, 4.30%, 09/07/00 9,910 20,880 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 95-3202, Class A, FRDO, #, 4.30%, 09/07/00 20,880 18,900 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 95-3203, Class A, FRDO, #, 4.30%, 09/07/00 18,900 12,155 Eagle Tax Exempt Trust, Long Option Mode, Ser. 96-3207, Class A, FRDO, #, 4.15%, 09/07/00 12,155 11,000 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 96C-3203, Class A, FRDO, #, 4.30%, 09/07/00 11,000 14,850 Eagle Tax Exempt Trust, Weekly Option Mode, Ser. 96C-3208, Class A, FRDO, #, 4.30%, 09/07/00 14,850 8,200 Eastern Suffolk, New York, Board of Cooperative Educational Services District, GO, RAN, 5.00%, 06/28/01 8,223 650 Elba, New York, Central School District, GO, 5.50%, 06/15/01 653 2,700 Erie County, New York, Water Authority, Ser. A, Rev., FRDO, 4.10%, 09/06/00 2,700 400 Erie County, New York, Water Authority, Ser. B, Rev., FRDO, 4.10%, 09/06/00 400 4,000 Fredonia, New York, Central School District, GO, BAN, 4.75%, 02/08/01 4,008 595 Glens Falls, New York, IDA, IDR, Broad Street Center Project, Rev., FRDO, 4.25%, 09/06/00 595 1,955 Glenville, New York, GO, BAN, 5.00%, 07/13/01 1,961 4,210 Great Neck North, New York, Water Authority, Water System, Ser. A, Rev., FRDO, 4.25%, 09/06/00 4,210 300 Guilderland, New York, IDA, IDR, Northeastern Industrial Park, Ser. A, Rev., FRDO, 4.10%, 09/06/00 300 2,000 Hempstead, New York, IDA, IDR, Trigen-Nassau Energy, Rev., FRDO, 4.05%, 09/06/00 2,000 2,000 Hempstead, New York, Union Free School District, GO, TAN, 5.25%, 06/28/01 2,011 3,550 Hilton, New York, Central School District, GO, RAN, 5.00%, 04/26/01 3,559 1,890 Ilion, New York, Central School District, GO, BAN, 5.00%, 03/29/01 1,895 3,256 Ilion, New York, Central School District, GO, RAN, 5.00%, 06/29/01 3,268 2,000 Islip, New York, IDA, Brentwood Distribution Co. Facility, Rev., FRDO, 4.20%, 09/07/00 2,000
See notes to financial statements. 44 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------------- Municipal Securities - Continued - -------------------------------------------------------------------------------------- New York -- Continued $ 5,060 Lisbon, New York, Central School District, GO, BAN, 4.75%, 04/27/01 $ 5,068 8,780 Long Island Power Authority, New York, Electric Systems, Floating Rate Receipts, Ser. SG-125, Rev., FRDO, 4.29%, 09/07/00 8,780 5,000 Long Island Power Authority, New York, Electric Systems, FLOATS, Ser. PA-420, Rev., FRDO, 4.29%, 09/07/00 5,000 12,000 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 2, Rev., FRDO, 4.15%, 09/06/00 12,000 20,400 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 3, Rev., FRDO, 4.00%, 09/07/00 20,400 10,200 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 3, Rev., FRDO, 4.15%, 10/04/00 10,200 2,600 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 3, Rev., FRDO, 4.20%, 09/07/00 2,600 15,800 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 3, Rev., FRDO, 4.25%, 10/04/00 15,800 9,900 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 4, Rev., FRDO, 4.25%, 09/07/00 9,900 12,360 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 5, Rev., FRDO, 4.30%, 09/01/00 12,360 39,640 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 6, Rev., FRDO, 4.20%, 09/01/00 39,640 14,100 Long Island Power Authority, New York, Electric Systems, Sub. Ser. 7, Sub. Ser. 7-A, Rev., FRDO, 3.90%, 09/06/00 14,100 8,110 Longwood Central School District, Suffolk County, New York, GO, TAN, 5.00%, 06/29/01 8,132 2,900 Marlboro, New York, Central School District, GO, TAN, 4.50%, 11/17/00 2,901 3,985 Metropolitan Transportation Authority, New York, Commuter Facilities, Municipal Securities Trust Receipts, Ser. SGA-82, Rev., FRDO, 4.20%, 09/06/00 3,985 6,815 Metropolitan Transportation Authority, New York, Dedicated Tax Fund, FLOATS, Ser. PA-683, Rev., FRDO, 4.24%, 09/07/00 6,815 16,500 Metropolitan Transportation Authority, New York, Transportation Facilities, Rev., 4.15%, 11/01/00 16,500 14,500 Metropolitan Transportation Authority, New York, Transportation Facilities, Rev., 4.20%, 10/05/00 14,500 31,000 Metropolitan Transportation Authority, New York, Transportation Facilities, Special Obligation, Ser. CP-1, BAN, 4.00%, 09/05/00 31,000 4,400 Mexico, New York, Central School District, GO, RAN, 5.00%, 06/21/01 4,410 4,695 Middletown, New York, GO, BAN, 4.00%, 09/01/00 4,695 2,228 Milford, New York, Central School District, GO, BAN, 4.25%, 09/28/00 2,229 1,500 Monroe County, New York, IDA, Public Improvements, Canal Ponds Park, Ser. D, Rev., FRDO, 4.25%, 09/06/00 1,500 6,695 Municipal Securities Trust Certificates, Ser. 2000-89, Class A, Rev., FRDO, #, 4.35%, 09/01/00 6,695
See notes to financial statements. 45 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 18,620 New York City, New York, FLOATS, Ser. PA-442, GO, FRDO, 4.29%, 09/07/00 $18,620 9,245 New York City, New York, FLOATS, Ser. PT-405, GO, FRDO, 4.29%, 09/07/00 9,245 34,000 New York City, New York, FLOATS, Ser. PT-1038, GO, FRDO, 4.29%, 09/07/00 34,000 13,170 New York City, New York, Housing Development Corp., Multi-Family Housing, Columbus Apartments, Ser. A, Rev., FRDO, 4.10%, 09/06/00 13,170 8,500 New York City, New York, Housing Development Corp., Multi-Family Housing, James Tower Development, Ser. A, Rev., FRDO, 4.15%, 09/06/00 8,500 2,900 New York City, New York, Housing Development Corp., Multi-Family Housing, Spring Creek III Project, Ser. A, Rev., FRDO, 4.10%, 09/06/00 2,900 1,300 New York City, New York, Housing Development Corp., Multi-Family Housing, Sullivan Street Project, Ser. A, Rev., FRDO, 4.10%, 09/06/00 1,300 3,400 New York City, New York, Housing Development Corp., Multi-Family Rental Housing, 100 Jane Street Development, Ser. A, Rev., FRDO, 4.10%, 09/06/00 3,400 8,050 New York City, New York, Housing Development Corp., Multi-Family Rental Housing, Monterey, Ser. A, Rev., FRDO, 4.15%, 09/06/00 8,050 3,000 New York City, New York, Housing Development Corp., Multi-Family Rental Housing, One Columbus Place Development, Ser. A, Rev., FRDO, 4.10%, 09/06/00 3,000 2,000 New York City, New York, Housing Development Corp., Multi-Family Rental Housing, Tribeca Tower, Ser. A, Rev., FRDO, 4.10%, 09/06/00 2,000 3,000 New York City, New York, IDA, Civic Facility, Calhoun School Inc. Project, Rev., FRDO, 4.25%, 09/07/00 3,000 3,400 New York City, New York, IDA, IDR, DXB Videotape Inc. Project, Rev., FRDO, 4.15%, 09/06/00 3,400 500 New York City, New York, IDA, IDR, Rev., FRDO, 4.15%, 09/06/00 500 1,500 New York City, New York, IDA, IDR, Ser. K, Rev., FRDO, 4.15%, 09/06/00 1,500 1,300 New York City, New York, Municipal Securities Trust Receipts, Ser. SG-109, GO, FRDO, 4.29%, 09/07/00 1,300 3,605 New York City, New York, Municipal Securities Trust Receipts, Ser. SGA-63, GO, FRDO, 4.35%, 09/01/00 3,605 800 New York City, New York, Municipal Securities Trust Receipts, Ser. SGB-33, GO, FRDO, 4.30%, 09/07/00 800 12,865 New York City, New York, Municipal Securities Trust Receipts, Ser. SGB-36, GO, FRDO, 4.20%, 09/07/00 12,865 1,500 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, FLOATS, Ser. PA-454, Rev., FRDO, 4.24%, 09/07/00 1,500 3,000 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, FLOATS, Ser. PT-1032, Rev., FRDO, 4.60%, 09/07/00 3,000
See notes to financial statements. 46 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 9,685 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Municipal Securities Trust Receipts, Ser. SGA-12, Rev., FRDO, 4.20%, 09/06/00 $ 9,685 7,255 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Municipal Securities Trust Receipts, Ser. SGA-13, Rev., FRDO, 4.20%, 09/06/00 7,255 2,390 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Municipal Securities Trust Receipts, Ser. SGB-25, Rev., FRDO, 4.30%, 09/07/00 2,390 28,200 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Municipal Securities Trust Receipts, Ser. SGB-26, Rev., FRDO, 4.33%, 09/07/00 28,200 3,700 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Municipal Securities Trust Receipts, Ser. SGB-27, Rev., FRDO, 4.30%, 09/07/00 3,700 20,000 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Rev., 4.20%, 10/12/00 20,000 20,000 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Rev., 4.25%, 09/08/00 20,000 2,270 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Ser. A, Rev., -, 7.00%, 06/15/01 2,335 10,000 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Ser. A, Rev., FRDO, 4.35%, 09/01/00 10,000 5,000 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Ser. C, Rev., FRDO, 4.15%, 09/01/00 5,000 23,600 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Ser. C, Rev., FRDO, 4.20%, 09/01/00 23,600 18,200 New York City, New York, Municipal Water Finance Authority, Water & Sewer Systems, Ser. G, Rev., FRDO, 4.30%, 09/01/00 18,200 9,200 New York City, New York, Ser. B, GO, FRDO, 4.35%, 09/01/00 9,200 1,100 New York City, New York, Ser. B-1, Sub. Ser. B-8, GO, FRDO, 4.05%, 09/06/00 1,100 4,800 New York City, New York, Ser. B-2, Sub. Ser. B-3, GO, FRDO, 4.15%, 09/01/00 4,800 1,600 New York City, New York, Ser. B-2, Sub. Ser. B-5, GO, FRDO, 4.15%, 09/01/00 1,600 1,000 New York City, New York, Ser. F-3, GO, FRDO, 4.10%, 09/06/00 1,000 10,450 New York City, New York, Ser. F-5, GO, FRDO, 4.05%, 09/06/00 10,450
47 See notes to financial statements. CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 2,700 New York City, New York, Ser. J, Sub. Ser. J-2, GO, FRDO, 4.10%, 09/06/00 $ 2,700 2,300 New York City, New York, Sub. Ser. A-5, GO, FRDO, 4.15%, 09/01/00 2,300 3,000 New York City, New York, Sub. Ser. A-7, GO, FRDO, 4.30%, 09/01/00 3,000 4,100 New York City, New York, Sub. Ser. E-2, GO, FRDO, 4.30%, 09/01/00 4,100 3,000 New York City, New York, Sub. Ser. E-4, GO, FRDO, 4.30%, 09/01/00 3,000 12,350 New York City, New York, Sub. Ser. E-5, GO, FRDO, 4.30%, 09/01/00 12,350 5,000 New York City, New York, Transit Authority, Metropolitan Transportation Authority, Triborough, Floating Rate Trust Receipts, Ser. PMD-10, COP, FRDO, 4.19%, 09/07/00 5,000 29,900 New York City, New York, Transitional Finance Authority, Floating Rate Trust Receipts, Ser. A-16, Regulation D, Rev., FRDO, 4.45%, 09/01/00 29,900 35,100 New York City, New York, Transitional Finance Authority, Future Tax Secured, Ser. A-2, Rev., FRDO, 4.05%, 09/06/00 35,100 3,450 New York City, New York, Transitional Finance Authority, Municipal Securities Trust Receipts, Ser. SGA-74, Rev., FRDO, 4.35%, 09/01/00 3,450 4,995 New York City, New York, Transitional Finance Authority, PUTTERS, Ser. 129, FRDO, 4.23%, 09/07/00 4,995 5,000 New York City, New York, Transitional Finance Authority, Ser. 3, Rev., BAN, 4.75%, 11/01/00 5,005 3,700 New York City, New York, Trust Cultural Resources, American Museum of Natural History, Ser. B, Rev., FRDO, 4.10%, 09/06/00 3,700 2,672 New York City, New York, Trust Cultural Resources, Carnegie Hall, Rev., FRDO, 4.00%, 09/06/00 2,672 15,000 New York State, Dorm Authority, Floating Rate Trust Receipts, Class F, Ser. 2, Rev., FRDO, @, 4.31%, 09/07/00 15,000 9,645 New York State, Dorm Authority, FLOATS, Ser. PA-409, Rev., FRDO, 4.24%, 09/07/00 9,645 4,870 New York State, Dorm Authority, FLOATS, Ser. PA-419, Rev., FRDO, 4.24%, 09/07/00 4,870 8,425 New York State, Dorm Authority, FLOATS, Ser. PA-428, Rev., FRDO, 4.24%, 09/07/00 8,425 3,545 New York State, Dorm Authority, FLOATS, Ser. PA-449, Rev., FRDO, 4.24%, 09/07/00 3,545 4,670 New York State, Dorm Authority, FLOATS, Ser. PA-541, Rev., FRDO, 4.24%, 09/07/00 4,670 3,000 New York State, Dorm Authority, FLOATS, Ser. PA-640, Rev., FRDO, 4.24%, 09/07/00 3,000 990 New York State, Dorm Authority, FLOATS, Ser. PT-130, Rev., FRDO, 4.24%, 09/07/00 990 2,900 New York State, Dorm Authority, FLOATS, Ser. PT-1067, Rev., FRDO, 4.24%, 09/07/00 2,900 4,770 New York State, Dorm Authority, New York Public Library, Ser. A, Rev., FRDO, 4.05%, 09/06/00 4,770
See notes to financial statements. 48 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 2,500 New York State, Dorm Authority, Oxford University Press Inc., Rev., FRDO, 4.20%, 09/01/00 $ 2,500 6,100 New York State, Energy Research & Development Authority, Facilities, FLOATS, Ser. PA-411, Rev., FRDO, 4.24%, 09/07/00 6,100 5,000 New York State, Energy Research & Development Authority, PCR, Annual Tender, New York State Electric & Gas, Rev., FRDO, 4.20%, 03/15/01 5,000 2,755 New York State, Energy Research & Development Authority, PCR, New York State Electric & Gas, Ser. C, Rev., FRDO, 4.20%, 09/01/00 2,755 2,260 New York State, Energy Research & Development Authority, PCR, Niagara Mohawk Power Corp. Project, Ser. A, Rev., FRDO, 4.20%, 09/01/00 2,260 2,100 New York State, Energy Research & Development Authority, PCR, Niagara Mohawk Power Corp. Project, Ser. A, Rev., FRDO, 4.35%, 09/01/00 2,100 3,700 New York State, Energy Research & Development Authority, PCR, Niagara Mohawk Power Corp., Ser. B, Rev., FRDO, 4.15%, 09/01/00 3,700 10,200 New York State, Energy Research & Development Authority, PCR, Niagara Mohawk Power Corp., Ser. C, Rev., FRDO, 4.15%, 09/01/00 10,200 3,000 New York State, Energy Research & Development Authority, PCR, Rochester Gas & Electric Corp., Ser. B, Rev., FRDO, 4.20%, 09/06/00 3,000 1,200 New York State, Environmental Facilities Corp., OFS Equity Huntington Project, Rev., FRDO, 4.25%, 09/01/00 1,200 3,675 New York State, Environmental Facilities Corp., PCR, State Water Revolving Fund, Ser. E, Rev., 6.88%, 06/15/01 3,814 4,300 New York State, Environmental Quality, Ser. G, GO, FRDO, 3.90%, 09/06/00 4,300 17,850 New York State, Housing Finance Agency, 101 West End Ave. Housing, Ser. A, Rev., FRDO, 4.30%, 09/06/00 17,850 25,000 New York State, Housing Finance Agency, 150 East 44th Street Housing, Ser. A, Rev., FRDO, 4.30%, 09/06/00 25,000 5,700 New York State, Housing Finance Agency, 345 East 94th Street Housing, Ser. A, Rev., FRDO, 4.20%, 09/06/00 5,700 29,500 New York State, Housing Finance Agency, 750 Sixth Ave. Housing, Ser. A, Rev., FRDO, 4.05%, 09/06/00 29,500 5,400 New York State, Housing Finance Agency, East 39th Street Housing, Ser. A, Rev., FRDO, 4.05%, 09/06/00 5,400 2,495 New York State, Housing Finance Agency, FLOATS, Ser. PA-143, Rev., FRDO, 4.31%, 09/07/00 2,495 1,000 New York State, Housing Finance Agency, Liberty View, Ser. A, Rev., FRDO, 4.15%, 09/06/00 1,000 3,300 New York State, Housing Finance Agency, Multi-Family Housing, Ser. A, Rev., FRDO, 4.30%, 09/06/00 3,300 5,100 New York State, Housing Finance Agency, Residential, Ser. A, Rev., FRDO, 4.30%, 09/06/00 5,100 23,000 New York State, Housing Finance Agency, Ser. A, Rev., FRDO, 4.10%, 09/06/00 23,000
See notes to financial statements. 49 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 5,300 New York State, Housing Finance Agency, Service Contract Obligation, Ser. A, Rev., FRDO, 3.95%, 09/06/00 $ 5,300 10,000 New York State, Housing Finance Agency, Theatre Row Tower, Ser. A, Rev., FRDO, 4.10%, 09/06/00 10,000 20,900 New York State, Housing Finance Agency, Tribeca, Ser. A, Rev., FRDO, 4.05%, 09/06/00 20,900 21,400 New York State, Housing Finance Agency, Union Square South Housing, Rev., FRDO, 4.10%, 09/06/00 21,400 6,240 New York State, Job Development Authority, State Guaranteed, Ser. A-1 through A-21, Rev., FRDO, 4.40%, 09/01/00 6,240 5,295 New York State, Job Development Authority, State Guaranteed, Ser. A-1 through A-42, Rev., FRDO, 4.40%, 09/01/00 5,295 910 New York State, Job Development Authority, State Guaranteed, Ser. B-1 through B-9, Rev., FRDO, 4.40%, 09/01/00 910 4,670 New York State, Job Development Authority, State Guaranteed, Ser. B-1 through B-21, Rev., FRDO, 4.40%, 09/01/00 4,670 3,155 New York State, Job Development Authority, State Guaranteed, Special Purpose, Ser. A-1 through A-13, Rev., FRDO, 4.40%, 09/01/00 3,155 2,400 New York State, Job Development Authority, State Guaranteed, Special Purpose, Ser. A-1 through A-25, Rev., FRDO, 4.40%, 09/01/00 2,400 495 New York State, Job Development Authority, State Guaranteed, Special Purpose, Ser. B-1 through B-2, Rev., FRDO, 4.40%, 09/01/00 495 240 New York State, Job Development Authority, State Guaranteed, Special Purpose, Ser. B-1 Through B-9, Rev., FRDO, 4.40%, 09/01/00 240 5,800 New York State, Local Government Assistance Corp., Floating Rate Receipts, Ser. SG-99, Rev., FRDO, 4.24%, 09/07/00 5,800 20,000 New York State, Local Government Assistance Corp., FLOATS, Ser. PT-1040, Rev., FRDO, 4.60%, 09/07/00 20,000 14,400 New York State, Local Government Assistance Corp., Municipal Securities Trust Receipts, Ser. SGA-59, Rev., FRDO, 4.35%, 09/01/00 14,400 12,085 New York State, Local Government Assistance Corp., Ser. A, Rev., -, 7.25%, 04/01/01 12,529 24,880 New York State, Local Government Assistance Corp., Ser. A, Rev., FRDO, 4.00%, 09/06/00 24,880 1,030 New York State, Local Government Assistance Corp., Ser. B, Rev., -, 7.13%, 04/01/01 1,067 4,240 New York State, Local Government Assistance Corp., Ser. B, Rev., -, 7.25%, 04/01/01 4,396 7,900 New York State, Local Government Assistance Corp., Ser. B, Rev., -, 7.50%, 04/01/01 8,201 3,400 New York State, Local Government Assistance Corp., Ser. B, Rev., FRDO, 4.05%, 09/06/00 3,400
See notes to financial statements. 50 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 500 New York State, Local Government Assistance Corp., Ser. F, Rev., FRDO, 4.05%, 09/06/00 $ 500 1,500 New York State, Local Government Assistance Corp., Ser. G, Rev., FRDO, 4.10%, 09/06/00 1,500 8,200 New York State, Medical Care Facilities, Finance Agency, FLOATS, Ser. PA-113, Rev., FRDO, 4.24%, 09/07/00 8,200 7,845 New York State, Medical Care Facilities, Finance Agency, FLOATS, Ser. PT-17, Rev., FRDO, 4.24%, 09/07/00 7,845 8,805 New York State, Medical Care Facilities, Finance Agency, FLOATS, Ser. PT-100, Rev., FRDO, 4.24%, 09/07/00 8,805 5,425 New York State, Medical Care Facilities, Finance Agency, FLOATS, Ser. PT-109, Rev., FRDO, 4.24%, 09/07/00 5,425 8,355 New York State, Medical Care Facilities, Finance Agency, FLOATS, Ser. PT-145A, Rev., FRDO, 4.24%, 09/07/00 8,355 3,625 New York State, Medical Care Facilities, Finance Agency, North Shore University Hospital, Rev., -, 7.20%, 11/01/00 3,716 2,500 New York State, Mortgage Agency, FLOATS, Ser. PA-628, Rev., FRDO, 4.29%, 09/07/00 2,500 11,415 New York State, Mortgage Agency, FLOATS, Ser. PA-657, Rev., FRDO, 4.24%, 09/07/00 11,415 4,140 New York State, Mortgage Agency, FLOATS, Ser. PT-217, Rev., FRDO, 4.29%, 09/07/00 4,140 5,145 New York State, Mortgage Agency, FLOATS, Ser. PT-260, Rev., FRDO, 4.60%, 09/06/00 5,145 8,190 New York State, Mortgage Agency, FLOATS, Ser. PT-322, Rev., FRDO, 4.30%, 09/07/00 8,190 6,650 New York State, Mortgage Agency, FLOATS, Ser. PT-1190, Rev., FRDO, 4.24%, 09/07/00 6,650 200 New York State, Mortgage Agency, Homeowner Mortgage, Ser. 87, Rev., 3.80%, 10/01/00 200 165 New York State, Mortgage Agency, Homeowner Mortgage, Ser. 91, Rev., 4.00%, 10/01/00 165 810 New York State, Mortgage Agency, Homeowner Mortgage, Ser. 91, Rev., 4.15%, 04/01/01 810 200 New York State, Mortgage Agency, Homeowner Mortgage, Ser. 93, Rev., 4.00%, 10/01/00 200 210 New York State, Mortgage Agency, Homeowner Mortgage, Ser. 93, Rev., 4.15%, 04/01/01 210 11,000 New York State, Power Authority, Rev., 4.00%, 09/05/00 11,000 11,800 New York State, Power Authority, Rev., 4.20%, 10/02/00 11,800 7,300 New York State, Power Authority, Rev., 4.30%, 10/02/00 7,300 2,900 New York State, Power Authority, Ser. Y, Rev., -, 6.75%, 01/01/01 2,982 17,500 New York State, Ser. A, GO, FRDO, 4.05%, 02/01/01 17,500 34,605 New York State, Thruway Authority, Floating Rate Receipts, Ser. SG-119, FRDO, 4.40%, 09/01/00 34,605 11,415 New York State, Thruway Authority, FLOATS, Ser. PA-532, Rev., FRDO, 4.24%, 09/07/00 11,415 10,000 New York State, Thruway Authority, GO, BAN, 4.20%, 10/11/00 10,000
See notes to financial statements. 51 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 1,015 New York State, Thruway Authority, Municipal Securities Trust Receipts, Ser. SGA-66, Rev., FRDO, 4.20%, 09/06/00 $ 1,015 4,600 New York State, Thruway Authority, Service Contract, Local Highway & Bridge, Rev., -, 6.00%, 01/01/01 4,627 14,265 New York State, Thruway Authority, Service Contract, Local Highway & Bridge, Rev., -, 7.25%, 01/01/01 14,683 3,000 New York State, Urban Development Corp., Correctional Capital Facilities, Ser. 2, Rev., -, 7.50%, 01/01/01 3,090 3,900 New York State, Urban Development Corp., FLOATS, Ser. PA-429, Rev., FRDO, 4.24%, 09/07/00 3,900 1,000 Niagara County, New York, IDA, Solid Waste Disposal, American Refunding, Fuel Co., Ser. A, Rev., FRDO, 4.30%, 09/06/00 1,000 1,000 Niagara County, New York, IDA, Solid Waste Disposal, American Refunding, Fuel Co., Ser. B, Rev., FRDO, 4.40%, 09/06/00 1,000 4,995 Niagara Falls, New York, Bridge Commission, FLOATS, Ser. PA-530, Rev., FRDO, 4.24%, 09/07/00 4,995 9,500 Niagara Falls, New York, Bridge Commission, Ser. A, Rev., FRDO, 4.10%, 09/06/00 9,500 7,000 North Babylon, New York, Union Free School District, GO, TAN, 5.00%, 06/28/01 7,016 7,017 North Hempstead, New York, GO, BAN, 5.00%, 07/26/01 7,049 1,500 North Salem, New York, Central School District, GO, TAN, 4.75%, 02/28/01 1,503 4,000 Northern Adironadack Central School District, Ellenburg, New York, GO, BAN, 5.00%, 07/06/01 4,011 5,000 Ogdensburg, New York, Enlarged City School District, GO, RAN, 5.00%, 06/29/01 5,012 4,500 Oneonta, New York, City School District, GO, RAN, 5.00%, 06/15/01 4,508 1,780 Panama, New York, Central School District, GO, BAN, 5.00%, 08/15/01 1,786 7,800 Pawling, New York, Central School District, GO, BAN, 4.50%, 11/10/00 7,804 3,180 Port Authority of New York & New Jersey, Consolidated Bonds 117th Series, 1st Installment, Rev., 4.00%, 11/15/00 3,180 2,950 Port Authority of New York & New Jersey, Equipment Notes, Ser. 3, Rev., FRDO, 4.45%, 09/06/00 2,950 3,405 Port Authority of New York & New Jersey, FLOATS, Ser. PA-518, Rev., FRDO, 4.08%, 09/07/00 3,405 1,305 Port Jervis, New York, IDA, The Future Home Tech Inc., Rev., FRDO, 4.40%, 09/06/00 1,305 2,455 Pulaski, New York, Central School District, GO, RAN, 5.00%, 06/29/01 2,464 5,025 Riverhead, New York, Central School District, GO, TAN, 5.00%, 06/22/01 5,035 5,000 Rochester, New York, GO, BAN, 4.75%, 03/07/01 5,014 800 Rockland County, New York, IDA, IDR, X Products Corp. Project, Rev., FRDO, 4.20%, 09/07/00 800 2,290 Rockland County, New York, IDA, Shock Technical Inc. Project, Rev., FRDO, 4.30%, 09/06/00 2,290
See notes to financial statements. 52 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- New York -- Continued $ 10,000 Rome, New York, City School District, GO, RAN, 5.00%, 06/29/01 $10,018 8,158 Rondout Valley Central School District, Accord, New York, GO, BAN, +, 4.75%, 03/15/01 8,171 4,635 Roosevelt, New York, Union Free School District, GO, TAN, 5.25%, 06/28/01 4,640 12,215 Schenectady, New York, City School District, GO, RAN, 5.50%, 06/29/01 12,239 4,500 South Colonie, New York, Central School District, GO, RAN, 5.00%, 06/29/01 4,516 2,500 South Country Central School District, Brookhaven, New York, GO, TAN, 5.00%, 06/26/01 2,508 3,954 South Jefferson, New York, Central School District, GO, RAN, 5.00%, 06/20/01 3,963 1,000 St. Lawrence County, New York, IDA, PCR, Reynolds Metals, Rev., FRDO, 4.15%, 09/01/00 1,000 8,900 Suffolk County, New York, Floating Rate Trust Receipts, Ser. A-38, Regulation D, GO, FRDO, 4.50%, 09/06/00 8,900 2,400 Suffolk County, New York, Water Authority, BAN, FRDO, 4.20%, 09/06/00 2,400 6,400 Tompkins-Seneca-Tioga, New York, Board of Cooperative Educational Services, Sole Supervisory District, GO, RAN, 5.00%, 06/29/01 6,415 14,600 Triborough Bridge & Tunnel Authority, New York, Floating Rate Trust Receipts, Ser. N-15, Regulation D, Rev., FRDO, 4.40%, 09/06/00 14,600 1,475 Triborough Bridge & Tunnel Authority, New York, FLOATS, Ser. PA-200, Rev., FRDO, 4.24%, 09/07/00 1,475 4,995 Triborough Bridge & Tunnel Authority, New York, FLOATS, Ser. PA-665, Rev., FRDO, 4.29%, 09/07/00 4,995 2,000 Triborough Bridge & Tunnel Authority, New York, General Purpose, Ser. B, Rev., 4.75%, 01/01/01 2,003 4,050 Tully, New York, Central School District, GO, RAN, 5.00%, 06/29/01 4,064 3,300 Tupper Lake, New York, Central School District, GO, BAN, 5.00%, 02/23/01 3,309 11,019 Ulster County, New York, GO, BAN, 4.50%, 11/21/00 11,026 5,790 Union Endicott, New York, Central School District, GO, BAN, 4.50%, 01/18/01 5,797 5,000 Utica, New York, City School District, GO, RAN, 5.00%, 06/26/01 5,012 6,000 VRDC/IVRC Trust, Tax Exempt, Ser. 93-C, Rev., FRDO, #, 4.20%, 09/06/00 6,000 4,150 Westchester County, New York, IDA, Civic Facility, Northern Westchester Hospital, Rev., FRDO, 4.10%, 09/06/00 4,150 5,000 William Floyd, Union Free School District, Mastics- Moriches-Shirley, GO, BAN, 5.00%, 02/22/01 5,009 1,900 Yonkers, New York, IDA, Civic Facility, Consumers Union Facility, Rev., FRDO, 4.00%, 09/06/00 1,900
See notes to financial statements. 53 CHASE VISTA NEW YORK TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ---------------------------------------------------------------------------------------- Municipal Securities - Continued - ---------------------------------------------------------------------------------------- New York -- Continued $ 8,000 Yonkers, New York, IDA, Civic Facility, Sarah Lawrence College Project, Rev., FRDO, 4.25%, 09/06/00 $ 8,000 - ---------------------------------------------------------------------------------------- Total Investments -- 100.4% $1,837,991 (Cost $1,837,991)* - ----------------------------------------------------------------------------------------
See notes to financial statements. 54 - -------------------------------------------------------------------------------- CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - 99.4% - ------------------------------------------------------------------------------------- California -- 90.3% $ 1,000 ABAG Finance Authority for Nonprofit Corporations, California, Multi-Family Housing, Miramar Apartments, Ser. A, Rev., FRDO, 3.60%, 09/07/00 $1,000 1,000 California Community College Financing Authority, Ser. B, Rev., TRAN, 5.00%, 08/03/01 1,007 200 California Educational Facilities Authority, Stanford University, Ser. M, Rev., 5.25%, 12/01/00 201 500 California Educational Facilities Authority, University of San Francisco, Rev., FRDO, 3.40%, 09/06/00 500 835 California Educational Facilities Authority, University of Southern California, Ser. A, Rev., 5.60%, 10/01/00 836 1,700 California Housing Finance Agency, FLOATS, Ser. PA-539R, Rev., FRDO, 3.88%, 09/07/00 1,700 900 California Housing Finance Agency, Multi-Family Housing, Ser. B, Rev., FRDO, 3.35%, 09/01/00 900 1,610 California Infrastructure & Economic Development, IDR, Pleasant Mattress Inc. Project, Ser. A, Rev., FRDO, 3.85%, 09/06/00 1,610 400 California PCFA, PCR, Shell Oil Co. Project, Ser. A, Rev., FRDO, 3.55%, 09/01/00 400 300 California PCFA, Solid Waste Disposal, Shell Oil Co. Martinez Project, Ser. A, Rev., FRDO, 3.45%, 09/01/00 300 2,000 California State, Economic Development Financing Authority, IDR, Provena Foods Inc. Project, Rev., FRDO, 3.90%, 09/06/00 2,000 1,700 California State, Economic Development Financing Authority, IDR, Standard Abrasives Manufacturing Project, Rev., FRDO, 3.85%, 09/06/00 1,700 400 California State, Economic Development Financing Authority, IDR, Volk Enterprises Inc. Project, Rev., FRDO, 3.55%, 09/07/00 400 495 California State, FLOATS, Ser. PA-464, GO, FRDO, 3.88%, 09/07/00 495 800 California State, FLOATS, Ser. PT-1070, GO, FRDO, 3.88%, 09/07/00 800 900 California State, FLOATS, Ser. PT-1072, GO, FRDO, 3.88%, 09/07/00 900 100 California State, GO, 6.60%, 10/01/00 100 2,000 California State, Municipal Securities Trust Receipts, Ser. SGA-40, GO, FRDO, 3.72%, 09/06/00 2,000 2,800 California State, Municipal Securities Trust Receipts, Ser. SGA-55, GO, FRDO, #, 3.72%, 09/06/00 2,800 1,000 California Statewide Communities Development Authority, Ser. A, Rev., TRAN, 5.25%, 06/29/01 1,008 4,000 Central Valley Schools Financing Authority, California, Ser. A-45, FRDO, 4.00%, 09/06/00 4,001 1,325 County of Riverside, Teete, California, Rev., 3.90%, 09/13/00 1,325 750 East Bay, California, Regional Park District, Ser. B, GO, -, 6.30%, 09/01/00 765 250 Eastern Municipal Water District, California, COP, -, 7.00%, 11/01/00 251
See notes to financial statements. 55 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- California -- Continued $ 1,400 Irvine Ranch, California, Water District, Consolidated Bonds, Rev., FRDO, 3.60%, 09/01/00 $1,400 700 Irvine Ranch, California, Water District, Consolidated Bonds, Rev., FRDO, 3.60%, 09/01/00 700 400 Irvine, California, Improvement Bond Act of 1915, Assessment District No. 94-15, Special Assessment, Rev., FRDO, 3.60%, 09/01/00 400 100 Los Angeles County, California, Metropolitan Transportation Authority, Proposition C, Second Ser., Ser. A, Rev., FRDO, 3.50%, 09/07/00 100 1,000 Los Angeles County, California, Schools Pooled Financing Program, Pooled Transportation, Ser. A, COP, GO, 5.00%, 07/02/01 1,006 1,000 Los Angeles, California, Harbor Department, Floating Rate Trust Receipts, Ser. 7, Class F, Rev., FRDO, 3.88%, 09/07/00 1,000 700 M-S-R Public Power Agency, California, San Juan Project, Sub-Lien, Ser. E, Rev., FRDO, 3.50%, 09/07/00 700 2,000 Metropolitan Water District, Southern California, Rev., 4.05%, 12/14/00 2,000 500 Metropolitan Water District, Southern California, Waterworks, Rev., 5.10%, 07/01/01 503 500 Metropolitan Water District, Southern California, Waterworks, Ser. B, Rev., FRDO, 3.60%, 09/07/00 500 250 Milpitas, California, Unified School District, GO, 7.50%, 09/01/00 250 200 Modesto, California, Irrigation District Financing Authority, Ser. A, Rev., 4.70%, 10/01/00 200 1,000 Monrovia, California, Unified School District, Municipal Securities Trust Receipts, Ser. SGA-70, Rev., FRDO, 3.70%, 09/06/00 1,000 1,000 Moreno Valley, California, Unified School District, TRAN, 4.75%, 08/15/01 1,007 105 Mount Diablo, California, Hospital District, Ser. A, Rev., -, 6.13%, 12/01/00 108 650 Mount Diablo, California, Unified School District, GO, TRAN,, 4.50%, 01/19/01 652 3,000 Municipal Securities Trust Certificates, Ser. 1998-47, Class A, Rev., FRDO, #, 3.80%, 09/06/00 3,000 3,290 Municipal Securities Trust Certificates, Ser. 2000-95, Class A, Rev., FRDO, #, 3.90%, 09/01/00 3,290 600 Oakland, California, GO, TRAN, 4.25%, 09/29/00 600 1,000 Oakland-Alameda County, California, Coliseum Authority, Coliseum Project, Ser. C-1, Rev., FRDO, 3.65%, 09/06/00 1,000 100 Ontario, California, Redevelopment Agency, IDR, Safariland Project, Rev., FRDO, 4.10%, 09/06/00 100 250 Orange County, California, Local Transportation Authority, Sales Tax, First Ser., Measure M, Rev., 5.50%, 02/15/01 251 2,275 Orange County, California, Sanitation Districts No. 1-3, 5-7, 11, 13 & 14, COP, FRDO, 3.60%, 09/01/00 2,275
See notes to financial statements. 56 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- California -- Continued $ 2,440 Oxnard, California, Industrial Development Financing Authority, IDR, Accurate Engineering Project, Rev., FRDO, 3.85%, 09/06/00 $2,440 1,500 Pasadena, California, Rose Bowl Improvements Project, COP, FRDO, 3.65%, 09/06/00 1,500 450 Petaluma, California, City School District, GO, TRAN, 5.00%, 07/05/01 453 400 Pleasanton, California, Multi-Family Mortgage, Valley Plaza, Ser. A, Rev., FRDO, 3.50%, 09/06/00 400 700 Riverside County, California, IDA, Design Time Inc. Project, Ser. A-I, Rev., FRDO, 3.85%, 09/06/00 700 200 Riverside County, California, Public Financing Authority, Special Tax, Menifee Village Project, Senior Lien, Ser. A, Rev., 4.00%, 09/01/00 200 800 Sacramento County, California, Multi-Family Housing, Ser. C, Rev., FRDO, 3.45%, 09/07/00 800 550 San Bernardino County, California, Housing Authority, Multi-Family Housing, Victoria Terrace Project, Ser. A, Rev., FRDO, 3.60%, 09/07/00 550 90 San Bernardino County, California, IDA, Aqua-Service, Rev., FRDO, 4.35%, 09/06/00 90 90 San Bernardino County, California, IDA, Master Halco Inc., Ser. II, Rev., FRDO, 4.10%, 09/05/00 90 2,000 San Diego County, California, GO, 3.95%, 10/05/00 2,000 700 San Diego County, California, Multi-Family Housing, Country Hills, Ser. A, Rev., FRDO, 3.50%, 09/06/00 700 1,340 San Diego, California, Area Local Government, Ser. C, COP, TRAN, 4.50%, 09/29/00 1,341 300 San Diego, California, IDR, Kaiser Aerospace & Electric, Ser. A, Rev., FRDO, 3.85%, 09/07/00 300 250 San Diego, California, Unified School District, Ser. A, GO, TRAN, 4.25%, 09/29/00 250 300 San Francisco, California, City & County, Affordable Housing, Ser. D, GO, 7.38%, 06/15/01 307 300 San Francisco, California, City & County, Redevelopment Agency, Multi-Family Housing, 3rd & Mission, Ser. C, Rev., FRDO, 3.55%, 09/06/00 300 1,000 San Juan, California, Unified School District, Ser. A-41, Rev., FRDO, 4.00%, 09/06/00 1,000 500 Santa Ana, California, Unified School District, COP, FRDO, 3.50%, 09/06/00 500 250 Santa Barbara County, California, Ser. A, GO, TRAN, 4.25%, 09/29/00 250 625 Santa Clara County-El Camino, California, Hospital District, Hospital Facilities Authority, ACES, Lease, Valley Medical Center Project, Ser. B, Rev., FRDO, 3.35%, 09/05/00 625 490 Santa Cruz County, California, Redevelopment Agency, Live Oak/Soquel Project, Tax Allocation, 4.25%, 09/01/01 491 260 Simi Valley, California, Public Financing Authority, Rev., 4.00%, 09/01/00 260 500 Solano County, California, Ser. B, GO, TRAN, 4.50%, 12/15/00 501
See notes to financial statements. 57 CHASE VISTA CALIFORNIA TAX FREE MONEY MARKET FUND Portfolio of Investments (Continued) As of August 31, 2000 (Amounts in thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Municipal Securities - Continued - ------------------------------------------------------------------------------------- California -- Continued $ 460 Sonoma Valley, California, Unified School District, GO, 10.00%, 08/01/01 $ 484 600 Three Valleys Municipal Water District, California, Miramar Water Treatment, COP, FRDO, 3.70%, 09/06/00 600 122 Tustin, California, Improvement Bond Act of 1915, Reassessment District No. 95-2-A, Special Assessment, FRDO, 3.60%, 09/01/00 122 300 Union Sanitation District, California, Financing Authority, Sewer, Rev., 5.10%, 10/01/00 300 425 Upland, California, Community Redevelopment Agency, Multi-Family Housing, Northwoods Project, Ser. 168-A, Rev., FRDO, 3.75%, 09/07/00 425 1,500 Vacaville, California, Multi-Family Mortgage, Quail Run, Ser. A, Rev., 3.50%, 09/06/00 1,500 850 West Contra Costa, California, Unified School District, Rev., TRAN, 4.50%, 12/06/00 851 600 Western Riverside County, California, Regional Wastewater Authority, Regional Wastewater Treatment, Rev., FRDO, 3.60%, 09/01/00 600 ------- 69,971 Puerto Rico -- 9.0% 1,000 Municipal Securities Trust Certificates, Ser. 2000-91, Class A, Rev., FRDO, #, 3.90%, 09/01/00 1,000 600 Puerto Rico Commonwealth, FLOATS, Ser. PA-472, GO, FRDO, 3.88%, 09/07/00 600 1,000 Puerto Rico Commonwealth, FLOATS, Ser. PA-625, GO, FRDO, 3.88%, 09/07/00 1,000 1,000 Puerto Rico Commonwealth, FLOATS, Ser. PT-1025, GO, FRDO, 4.05%, 09/07/00 1,000 1,344 Puerto Rico Government Development Bank, 4.00%, 01/09/01 1,344 2,000 Puerto Rico Government Development Bank, 4.00%, 01/31/01 2,000 ------- 6,944 Virgin Islands -- 0.1% 100 Virgin Islands Public Finance Authority, Ser. A, Rev., -, 7.30%, 10/01/00 101 ---------------------------------------------------------- ------- Total Investments -- 99.4% $77,016 (Cost $77,016)* ----------------------------------------------------------
See notes to financial statements. 58 CHASE VISTA FUNDS Portfolio of Investments (Continued) As of August 31, 2000 INDEX: * -- The cost of securities is substantially the same for federal income tax purposes. # -- Security may only be sold to qualified institutional buyers. - - -- Security is prerefunded or escrowed to maturity. The maturity date shown is the date of the prerefunded call. + -- When issued or delayed delivery security. @ -- All or portion of this security is segregated for when issued or delayed delivery securities. ACES -- Auction Rate Securities. BAN -- Bond Anticipation Notes. COP -- Certificates of Participation. DN -- Discount Note. The rate shown is the effective yield at the date of purchase. Eagles -- Earnings of accrual generated on local exempt securities. ECN -- Extendible Commercial Note. The maturity date shown is the call date. The interest rate shown is the effective yield at the date of purchase. FHLMC -- Federal Home Loan Mortgage Corporation. FLOATS -- Floating Auction Tax Exempts. FRDO -- Floating Rate Demand Obligation. The maturity date shown is the next interest reset date. The interest rate shown is the rate in effect at August 31, 2000. FRN -- Floating Rate Note. The maturity date shown is the actual maturity date. The rate shown is the rate in effect at August 31, 2000. GIC -- Guaranteed Insurance Contract. GO -- General Obligation. IDA -- Industrial Development Authority. IDR -- Industrial Development Revenue. MTN -- Medium Term Note. PCFA -- Pollution Control Financing Authority. PCR -- Pollution Control Revenue. PUTTERS -- Putable Tax Exempt Receipts. RAN -- Revenue Anticipation Notes. Rev. -- Revenue Bond. Ser. -- Series. SUB -- Step-Up Bond. The maturity date shown is the call date. The interest rate shown is the rate in effect at August 31, 2000. TAN -- Tax Anticipation Notes. TRAN -- Tax & Revenue Anticipation Notes. USTR -- United States Treasury Notes, Bonds and Bills. See notes to financial statements. 59 - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES August 31, 2000 - -------------------------------------------------------------------------------- (Amounts in Thousands, Except Per Share Amounts)
100% U.S. Treasury U.S. Securities Government Treasury Plus Money Market Money Market Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- ASSETS: Investment securities, at value (Note 1) .............................. $4,500,876 $7,235,019 $2,505,035 Cash .................................. -- 33 1 Other assets .......................... 31 48 17 Receivables: Investment securities sold ........... 1,492,428 -- 497,101 Interest ............................. 33,490 63,860 354 Fund shares sold ..................... -- 113 -- - ------------------------------------------------------------------------------------------- Total Assets ....................... 6,026,825 7,299,073 3,002,508 - ------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased 1,496,252 100,000 498,751 Fund shares redeemed ................. 615 5,945 76 Dividends ............................ 4,481 18,117 3,357 Accrued liabilities: (Note 2) Investment advisory fees ............. 392 620 215 Administration fees .................. 235 434 129 Shareholder servicing fees ........... 1,112 1,225 373 Distribution fees .................... 69 367 111 Custody fees ......................... 63 99 36 Other ................................ 995 1,692 535 - ------------------------------------------------------------------------------------------- Total Liabilities .................. 1,504,214 128,499 503,583 - ------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ....................... 4,522,720 7,170,601 2,498,979 Accumulated undistributed (distributions in excess of) net investment income ..................... (119) (7) (60) Accumulated net realized gain (loss) on investment transactions ..... 10 (20) 6 - ------------------------------------------------------------------------------------------- Net Assets ......................... $4,522,611 $7,170,574 $2,498,925 - ------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Vista Shares .......................... 3,535,228 3,398,198 1,367,009 Premier Shares ........................ 115,844 1,134,019 228,106 Institutional Shares .................. 871,705 2,638,437 903,945 Net asset value, offering and redemption price per share (all classes) .......................... $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------- Cost of investments .................... $4,500,876 $7,235,019 $2,505,035 - -------------------------------------------------------------------------------------------
See notes to financial statements. 60 STATEMENT OF ASSETS AND LIABILITIES August 31, 2000 (Amounts in Thousands, Except Per Share Amounts)
Federal Cash Prime Money Market Management Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- ASSETS: Investment securities, at value (Note 1) ............................ $1,138,779 $11,023,038 $13,044,137 Cash ................................ -- 1,310 285 Other assets ........................ 7 71 71 Receivables: Interest ........................... 6,078 65,028 59,962 Fund shares sold ................... 67 2,480 -- - ------------------------------------------------------------------------------------------- Total Assets ..................... 1,144,931 11,091,927 13,104,455 - ------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased -- -- 325,236 Fund shares redeemed ............... 9 4,191 160 Dividends .......................... 1,738 6,948 16,573 Accrued liabilities: (Note 2) Investment advisory fees ........... 96 926 1,032 Administration fees ................ 96 834 929 Shareholder servicing fees ......... 225 2,260 1,020 Distribution fees .................. 48 -- 7 Custody fees ....................... 24 34 98 Other .............................. 541 2,157 2,098 - ------------------------------------------------------------------------------------------- Total Liabilities ................ 2,777 17,350 347,153 - ------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ..................... 1,142,234 11,075,522 12,757,495 Accumulated undistributed (distributions in excess of) net investment income ................... (48) (85) (131) Accumulated net realized loss on investment transactions .......... (32) (860) (62) - ------------------------------------------------------------------------------------------- Net Assets ....................... $1,142,154 $11,074,577 $12,757,302 - ------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Vista Shares ........................ 576,606 7,345,958 1,478,706 Premier Shares ...................... 278,840 425,636 1,841,212 Institutional Shares ................ 286,779 3,303,869 9,426,519 Reserve Shares ...................... 1 -- 1 B Shares* ........................... -- -- 10,941 C Shares* ........................... -- -- 44 Net asset value, offering and redemption price per share (all classes) ........................ $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------- Cost of investments .................. $1,138,779 $11,023,038 $13,044,137 - -------------------------------------------------------------------------------------------
*Redemption price may be reduced by contingent deferred sales charge. See notes to financial statements. 61 STATEMENT OF ASSETS AND LIABILITIES August 31, 2000 (Amounts in Thousands, Except Per Share Amounts)
New York California Tax Free Tax Free Tax Free Money Market Money Market Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- ASSETS: Investment securities, at value (Note 1) ............................ $1,658,436 $1,837,991 $77,016 Cash ................................ 2,417 7 16 Other assets ........................ 12 12 1 Receivables: Interest ........................... 11,886 14,074 711 Fund shares sold ................... 8 287 1 - ------------------------------------------------------------------------------------------- Total Assets ..................... 1,672,759 1,852,371 77,745 - ------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased 14,020 18,230 -- Fund shares redeemed ............... -- 60 -- Dividends .......................... 2,656 1,584 137 Accrued liabilities: (Note 2) Investment advisory fees ........... 143 155 6 Administration fees ................ 143 78 6 Shareholder servicing fees ......... 204 544 10 Distribution fees .................. 75 62 3 Custody fees ....................... 38 23 17 Other .............................. 816 423 47 - ------------------------------------------------------------------------------------------- Total Liabilities ................ 18,095 21,159 226 - ------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ..................... 1,655,095 1,831,154 77,536 Accumulated undistributed (distributions in excess of) net investment income ............... 23 60 (3) Accumulated net realized loss on investment transactions .......... (454) (2) (14) - ------------------------------------------------------------------------------------------- Net Assets ....................... $1,654,664 $1,831,212 $77,519 - ------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) .......................... Vista Shares ........................ 894,544 1,831,255 77,535 Premier Shares ...................... 119,999 -- -- Institutional Shares ................ 640,573 -- -- Reserve Shares ...................... 1 1 -- Net asset value, offering and redemption price per share (all classes) ........................ $ 1.00 $ 1.00 $ 1.00 - ------------------------------------------------------------------------------------------- Cost of investments .................. $1,658,436 $1,837,991 $77,016 - -------------------------------------------------------------------------------------------
See notes to financial statements. 62 - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the year ended August 31, 2000 - -------------------------------------------------------------------------------- (Amounts in Thousands)
100% U.S. Treasury U.S. Securities Government Treasury Plus Money Market Money Market Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- INTEREST INCOME: (Note 1C) ............... $237,313 $433,744 $155,272 - ------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ................ 4,308 7,316 2,714 Administration fees ..................... 4,308 7,316 2,714 Shareholder servicing fees .............. 12,816 17,899 6,982 Distribution fees ....................... 3,359 4,681 1,505 Custodian fees .......................... 317 501 237 Printing and postage .................... 44 44 28 Professional fees ....................... 138 204 98 Registration expenses ................... 947 530 813 Transfer agent fees ..................... 677 736 222 Trustees' fees .......................... 215 366 136 Other ................................... 54 84 84 - ------------------------------------------------------------------------------------------- Total expenses ........................ 27,183 39,677 15,533 - ------------------------------------------------------------------------------------------- Less amounts waived (Note 2E) ........... 4,777 6,694 2,854 Less earnings credits (Note 2F) ......... 35 81 122 - ------------------------------------------------------------------------------------------- Net expenses .......................... 22,371 32,902 12,557 - ------------------------------------------------------------------------------------------- Net investment income ................. 214,942 400,842 142,715 - ------------------------------------------------------------------------------------------- REALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions ................. 183 25 7 - ------------------------------------------------------------------------------------------- Net increase in net assets from operations .............................. $215,125 $400,867 $142,722 - -------------------------------------------------------------------------------------------
See notes to financial statements. 63 - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the year ended August 31, 2000 - -------------------------------------------------------------------------------- (Amounts in Thousands)
Federal Cash Prime Money Market Management Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- INTEREST INCOME: (Note 1C) ............... $66,574 $578,841 $649,782 - ------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ................ 1,136 9,412 10,633 Administration fees ..................... 1,136 9,412 10,633 Shareholder servicing fees .............. 2,980 26,121 15,284 Distribution fees ....................... 570 -- 166 Custodian fees .......................... 123 424 618 Printing and postage .................... 12 84 134 Professional fees ....................... 64 288 304 Registration expenses ................... 90 1,492 1,507 Transfer agent fees ..................... 481 1,937 481 Trustees' fees .......................... 57 471 534 Other ................................... 7 265 262 - ------------------------------------------------------------------------------------------- Total expenses ........................ 6,656 49,906 40,556 - ------------------------------------------------------------------------------------------- Less amounts waived (Note 2E) ........... 486 3,201 6,582 Less earnings credits (Note 2F) ......... 46 155 129 - ------------------------------------------------------------------------------------------- Net expenses .......................... 6,124 46,550 33,845 - ------------------------------------------------------------------------------------------- Net investment income ................. 60,450 532,291 615,937 - ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions ................. (24) (247) (60) Change in net unrealized appreciation/depreciation of investments .......................... -- 1,650 3,884 - ------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments ................... (24) 1,403 3,824 - ------------------------------------------------------------------------------------------- Net increase in net assets from operations .............................. $60,426 $533,694 $619,761 - -------------------------------------------------------------------------------------------
See notes to financial statements. 64 STATEMENT OF OPERATIONS For the year ended August 31, 2000 (Amounts in Thousands)
New York California Tax Free Tax Free Tax Free Money Market Money Market Money Market Fund Fund Fund - ------------------------------------------------------------------------------------------- INTEREST INCOME: (Note 1C) ............... $61,421 $63,637 $2,260 - ------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ................ 1,565 1,664 63 Administration fees ..................... 1,565 1,664 63 Shareholder servicing fees .............. 3,876 5,824 221 Distribution fees ....................... 843 1,664 63 Custodian fees .......................... 215 202 82 Printing and postage .................... 65 38 1 Professional fees ....................... 77 71 29 Registration expenses ................... 852 20 2 Transfer agent fees ..................... 213 378 34 Trustees' fees .......................... 78 83 3 Other ................................... 106 66 7 - ------------------------------------------------------------------------------------------- Total expenses ........................ 9,455 11,674 568 - ------------------------------------------------------------------------------------------- Less amounts waived (Note 2E) ........... 2,046 1,782 212 Less earnings credits (Note 2F) ......... 171 74 8 - ------------------------------------------------------------------------------------------- Net expenses .......................... 7,238 9,818 348 - ------------------------------------------------------------------------------------------- Net investment income ................. 54,183 53,819 1,912 - ------------------------------------------------------------------------------------------- REALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions .............. (60) 60 -- - ------------------------------------------------------------------------------------------- Net increase in net assets from operations .............................. $54,123 $53,879 $1,912 - -------------------------------------------------------------------------------------------
See notes to financial statements. 65 - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the year ended August 31, - -------------------------------------------------------------------------------- (Amounts in Thousands)
100% U.S. Treasury Securities U.S. Government Money Market Money Market Fund Fund 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........... $ 214,942 $ 187,621 $ 400,842 $ 335,206 Net realized gain on investments .................. 183 2,072 25 27 - ------------------------------------------------------------------------------------------------------- Increase in net assets from operations ................ 215,125 189,693 400,867 335,233 - ------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ........... (214,925) (187,727) (400,848) (335,181) Net realized gain on investment transactions ......... (200) (2,956) -- -- - ------------------------------------------------------------------------------------------------------- Total distributions to shareholders ................... (215,125) (190,683) (400,848) (335,181) - ------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS: # Proceeds from shares issued Vista Shares ................... 12,269,163 13,705,921 21,070,138 16,404,385 Premier Shares ................. 398,033 152,506 7,472,951 7,944,261 Institutional Shares ........... 5,690,875 5,004,382 24,558,779 23,799,456 - ------------------------------------------------------------------------------------------------------- 18,358,071 18,862,809 53,101,868 48,148,102 - ------------------------------------------------------------------------------------------------------- Proceeds from reinvestment of dividends Vista Shares ................... 127,472 112,062 99,652 74,078 Premier Shares ................. 3,353 1,084 30,191 25,108 Institutional Shares ........... 32,950 27,526 78,208 79,090 - ------------------------------------------------------------------------------------------------------- 163,775 140,672 208,051 178,276 - ------------------------------------------------------------------------------------------------------- Cost of shares redeemed Vista Shares ................... (12,174,395) (13,555,840) (21,310,059) (15,973,405) Premier Shares ................. (309,408) (151,462) (7,291,128) (8,130,974) Institutional Shares ........... (5,746,903) (5,932,433) (24,911,228) (23,763,028) - ------------------------------------------------------------------------------------------------------- (18,230,706) (19,639,735) (53,512,415) (47,867,407) - ------------------------------------------------------------------------------------------------------- Net increase (decrease) from capital share transactions ................... 291,140 (636,254) (202,496) 458,971 - ------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets ........................ 291,140 (637,244) (202,477) 459,023 NET ASSETS: Beginning of period ............. 4,231,471 4,868,715 7,373,051 6,914,028 - ------------------------------------------------------------------------------------------------------- End of period ................... $ 4,522,611 $ 4,231,471 $ 7,170,574 $ 7,373,051 - -------------------------------------------------------------------------------------------------------
# At $1.00 per share. See notes to financial statements. 66 STATEMENT OF CHANGES IN NET ASSETS For the year ended August 31, (Amounts in Thousands)
Treasury Plus Federal Money Market Money Market Fund Fund 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........... $ 142,715 $ 125,763 $ 60,450 $ 46,821 Net realized gain (loss) on investments .................. 7 789 (24) 95 - ------------------------------------------------------------------------------------------------------- Increase in net assets from operations ................ 142,722 126,552 60,426 46,916 - ------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ........... (142,713) (125,782) (60,450) (46,814) Net realized gain on investment transactions ......... (62) (798) -- (112) - ------------------------------------------------------------------------------------------------------- Total distributions to shareholders ................... (142,775) (126,580) (60,450) (46,926) - ------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS: # Proceeds from shares issued Vista Shares ................... 10,985,282 13,476,115 1,370,953 1,297,509 Premier Shares ................. 2,838,587 2,362,876 373,817 372,508 Institutional Shares ........... 9,562,850 12,537,826 2,941,384 3,327,807 Reserve Shares* ................ -- -- 1 -- - ------------------------------------------------------------------------------------------------------- 23,386,719 28,376,817 4,686,155 4,997,824 - ------------------------------------------------------------------------------------------------------- Proceeds from reinvestment of dividends Vista Shares ................... 54,114 41,118 22,852 18,183 Premier Shares ................. 5,041 3,990 13,241 11,931 Institutional Shares ........... 36,706 35,134 4,454 5,462 Reserve Shares* ................ -- -- -- -- - ------------------------------------------------------------------------------------------------------- 95,861 80,242 40,547 35,576 - ------------------------------------------------------------------------------------------------------- Cost of shares redeemed Vista Shares ................... (11,406,802) (13,099,202) (1,367,229) (1,124,759) Premier Shares ................. (3,091,819) (2,046,068) (406,427) (399,355) Institutional Shares ........... (9,674,902) (12,469,834) (2,907,355) (3,282,935) Reserve Shares* ................ -- -- -- -- - ------------------------------------------------------------------------------------------------------- (24,173,523) (27,615,104) (4,681,011) (4,807,049) - ------------------------------------------------------------------------------------------------------- Net increase (decrease) from capital share transactions ................... (690,943) 841,955 45,691 226,351 - ------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets .................... (690,996) 841,927 45,667 226,341 NET ASSETS: Beginning of period ............. 3,189,921 2,347,994 1,096,487 870,146 - ------------------------------------------------------------------------------------------------------- End of period ................... $ 2,498,925 $ 3,189,921 $1,142,154 $1,096,487 - -------------------------------------------------------------------------------------------------------
# At $1.00 per share. * Reserve Shares commencement of offering, 7/31/00. See notes to financial statements. 67 STATEMENT OF CHANGES IN NET ASSETS For the year ended August 31, (Amounts in Thousands)
Prime Cash Management Money Market Fund Fund 2000 1999 2000 1999 - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income .................................. $ 532,291 $ 317,595 $ 615,937 $ 382,831 Net realized gain (loss) on investments ......................................... (247) (329) (60) 327 Change in net unrealized appreciation/depreciation of investments ......................................... 1,650 (1,650) 3,884 (3,884) - -------------------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations ....................................... 533,694 315,616 619,761 379,274 - -------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income .................................. (532,279) (317,818) (615,944) (382,895) Net realized gain on investment transactions ................................ -- (117) (121) (271) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders .......................................... (532,279) (317,935) (616,065) (383,166) - -------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS: # Proceeds from shares issued Vista Shares* ......................................... 29,721,636 26,474,726 7,131,346 1,051,476 Premier Shares ........................................ 4,224,828 4,894,950 13,034,051 11,380,971 Institutional Shares .................................. 15,577,944 10,132,124 82,896,178 61,694,665 Reserve Shares** ...................................... -- -- 1 -- B Shares .............................................. -- -- 135,290 143,459 C Shares .............................................. -- -- 7,817 4,653 - -------------------------------------------------------------------------------------------------------------------------------- 49,524,408 41,501,800 103,204,683 74,275,224 - -------------------------------------------------------------------------------------------------------------------------------- Proceeds from reinvestment of dividends Vista Shares* ......................................... 301,792 187,928 39,797 4,244 Premier Shares ........................................ 19,160 16,857 37,777 24,988 Institutional Shares .................................. 138,122 63,365 352,349 229,886 Reserve Shares** ...................................... -- -- -- -- B Shares .............................................. -- -- 806 771 C Shares .............................................. -- -- 8 5 - -------------------------------------------------------------------------------------------------------------------------------- 459,074 268,150 430,737 259,894 - -------------------------------------------------------------------------------------------------------------------------------- Cost of shares redeemed Vista Shares* ......................................... (28,358,265) (24,623,550) (6,207,576) (540,581) Premier Shares ........................................ (4,280,942) (4,864,551) (12,325,229) (10,901,491) Institutional Shares .................................. (13,959,695) (9,707,967) (81,986,141) (58,482,409) Reserve Shares** ...................................... -- -- -- -- B Shares .............................................. -- -- (161,484) (136,601) C Shares .............................................. -- -- (7,925) (4,584) - -------------------------------------------------------------------------------------------------------------------------------- (46,598,902) (39,196,068) (100,688,355) (70,065,666) - -------------------------------------------------------------------------------------------------------------------------------- Net increase from capital share transactions .......................................... 3,384,580 2,573,882 2,947,065 4,469,452 - -------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets ........................................... 3,385,995 2,571,563 2,950,761 4,465,560 NET ASSETS: Beginning of period .................................... 7,688,582 5,117,019 9,806,541 5,340,981 - -------------------------------------------------------------------------------------------------------------------------------- End of period .......................................... $11,074,577 $ 7,688,582 $ 12,757,302 $ 9,806,541 - --------------------------------------------------------------------------------------------------------------------------------
# At $1.00 per share. * PRM Vista Shares commencement of offering, 10/1/98. ** Reserve Shares commencement of offering, 7/31/00. See notes to financial statements. 68 STATEMENT OF CHANGES IN NET ASSETS For the year ended August 31, (Amounts in Thousands)
Tax Free New York Tax Free Money Market Money Market Fund Fund 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ......... $ 54,183 $ 36,759 $ 53,819 $ 37,793 Net realized gain (loss) on investments ................ (60) 59 60 61 - ------------------------------------------------------------------------------------------------- Increase in net assets from operations .............. 54,123 36,818 53,879 37,854 - ------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ......... (54,097) (36,827) (53,800) (37,841) - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS: # Proceeds from shares issued Vista Shares ................. 2,078,075 2,100,524 3,464,112 3,260,482 Premier Shares ............... 343,481 385,299 -- -- Institutional Shares ......... 3,019,983 2,526,660 -- -- Reserve Shares* .............. 1 -- 1 -- - ------------------------------------------------------------------------------------------------- 5,441,540 5,012,483 3,464,113 3,260,482 - ------------------------------------------------------------------------------------------------- Proceeds from reinvestment of dividends Vista Shares ................. 12,007 8,397 37,398 25,347 Premier Shares ............... 2,982 2,257 -- -- Institutional Shares ......... 9,475 5,196 -- -- Reserve Shares* .............. -- -- -- -- - ------------------------------------------------------------------------------------------------- 24,464 15,850 37,398 25,347 - ------------------------------------------------------------------------------------------------- Cost of shares redeemed Vista Shares ................. (1,949,740) (2,088,092) (3,174,889) (3,153,158) Premier Shares ............... (356,488) (390,878) -- -- Institutional Shares ......... (2,865,404) (2,465,756) -- -- Reserve Shares* .............. -- -- -- -- - ------------------------------------------------------------------------------------------------- (5,171,632) (4,944,726) (3,174,889) (3,153,158) - ------------------------------------------------------------------------------------------------- Net increase from capital share transactions ................. 294,372 83,607 326,622 132,671 - ------------------------------------------------------------------------------------------------- Total increase in net assets ............... 294,398 83,598 326,701 132,684 - ------------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period ........... 1,360,266 1,276,668 1,504,511 1,371,827 - ------------------------------------------------------------------------------------------------- End of period ................. $1,654,664 $1,360,266 $1,831,212 $1,504,511 - -------------------------------------------------------------------------------------------------
# At $1.00 per share. * Reserve Shares commencement of offering, 7/31/00. See notes to financial statements. 69 STATEMENT OF CHANGES IN NET ASSETS For the year ended August 31, (Amounts in Thousands)
California Tax Free Money Market Fund 2000 1999 - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ...................................... $ 1,912 $ 1,181 Net realized gain on investments ........................... -- 4 - ------------------------------------------------------------------------------------------------- Increase in net assets from operations .................... 1,912 1,185 - ------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ...................................... (1,912) (1,200) - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS: # Proceeds from shares issued (Vista Shares) ................. 243,038 329,610 Proceeds from reinvestment of dividends (Vista Shares) ..... 732 474 Cost of shares redeemed (Vista Shares) ..................... (233,891) (312,828) - ------------------------------------------------------------------------------------------------- Net increase from capital share transactions .............. 9,879 17,256 - ------------------------------------------------------------------------------------------------- Total increase in net assets ............................. 9,879 17,241 NET ASSETS: Beginning of period ........................................ 67,640 50,399 - ------------------------------------------------------------------------------------------------- End of period .............................................. $ 77,519 $ 67,640 - -------------------------------------------------------------------------------------------------
# At $1.00 per share. See notes to financial statements. 70 - -------------------------------------------------------------------------------- CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies Mutual Fund Trust (the "Trust") was organized as a Massachusetts business trust, and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, management investment company. 100% U.S. Treasury Securities Money Market Fund ("USTS"), U.S. Government Money Market Fund ("USG"), Treasury Plus Money Market Fund ("TP"), Federal Money Market Fund ("FED"), Cash Management Fund ("CM"), Prime Money Market Fund ("PRM"), Tax Free Money Market Fund ("TF"), New York Tax Free Money Market Fund ("NYTF") and California Tax Free Money Market Fund ("CTF") (collectively, the "Funds") are nine separate portfolios of the Trust. The Funds offer various classes of shares as follows:
Fund Classes Offered - -------------------------------------------------------------------------------- USTS Vista, Premier, Institutional USG Vista, Premier, Institutional TP Vista, Premier, Institutional FED Vista, Premier, Institutional, Reserve CM Vista, Premier, Institutional PRM Vista, Premier, Institutional, Reserve, B Shares, C Shares TF Vista, Premier, Institutional, Reserve NYTF Vista, Reserve CTF Vista
All classes of shares have equal rights as to earnings, assets and voting privileges except that each class may bear different transfer agent, distribution and shareholder servicing expenses, and each class has exclusive voting rights with respect to its distribution plan and shareholder servicing agreement. The following is a summary of significant accounting policies followed by the Funds: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. Valuation of investments -- Money market instruments are valued at amortized cost which approximates market value. The Trust's use of amortized cost is subject to the Trust's compliance with certain conditions as specified under Rule 2a-7 of the 1940 Act. B. Repurchase and reverse repurchase agreements -- It is each Fund's policy that repurchase agreements are fully collateralized by U.S. Treasury and Government Agency securities. All collateral is held by the Fund's custodian bank, subcustodian or a bank in which the custodian bank has entered into a subcustodian agreement or is segregated in the Federal Reserve Book Entry System. If the seller of a repurchase agreement defaults and the value of the collateral declines, or if the seller enters into an insolvency proceeding, realization of the collateral may be delayed or limited. At all times that a reverse repurchase agreement is outstanding, the Fund segregates assets with a value at least equal to its obligation under the 71 CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS (continued) agreement. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use of proceeds from the agreement may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. The Fund's use of the proceeds of the reverse repurchase agreement may also effectively be restricted pending such decisions. During the year ended August 31, 2000, CM entered into one reverse repurchase agreement amounting to $90,000,000 at 6.48%. Interest expense totaled $47,142, which is included in Other expenses on the statement of operations. The agreement, which matured June 19, 2000, was collateralized by Federal Home Loan Bank notes with a par value of $87,300,000, due December 1, 2000. C. Security transactions and investment income -- Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Interest income consists of coupon interest accrued and amortization of premium and discount earned. D. Federal income taxes -- Each Fund is treated as a separate taxable entity for Federal income tax purposes. The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its distributable net income, including net realized gain on investments. In addition, the Fund intends to make distributions as required to avoid excise taxes. Accordingly, no provision for Federal income or excise tax is necessary. E. Distributions to shareholders -- Dividends and distributions paid to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations, which may differ from generally accepted accounting principles. To the extent these "book/tax" differences are permanent in nature (i.e., that they result from other than timing of recognition--"temporary differences"), such amounts are reclassified within the capital accounts based on their Federal income tax-basis treatment. Dividends and distributions which exceed net investment income or net realized capital gains for financial reporting purposes but not for tax purposes are reported as distributions in excess of net investment income or net realized capital gains. F. Income and Expenses -- Expenses directly attributable to a Fund are charged to that Fund; other expenses are allocated proportionately among each of the Funds within the Trust in relation to the net assets of each Fund or on another reasonable basis. Expenses directly attributable to a particular class are charged directly to such class. In calculating net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses (e.g. transfer agent fees), are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. 72 CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS (continued) 2. Fees and Other Transactions with Affiliates A. Investment advisory fee -- Pursuant to separate Investment Advisory Agreements, The Chase Manhattan Bank ("Chase" or "Adviser") acts as the investment adviser to the Funds. Chase is a direct wholly-owned subsidiary of The Chase Manhattan Corporation. As investment adviser, Chase supervises the investments of each Fund and for such services is paid a fee. The fee is accrued daily and paid monthly at an annual rate equal to 0.10% of the average daily net assets for each respective Fund. The Adviser voluntarily waived fees as outlined in Note 2.E. below. Chase Asset Management, Inc. ("CAM"), a registered investment adviser, is the sub-investment adviser to each Fund, other than CM and TF, pursuant to a Sub-Investment Advisory Agreement between CAM and Chase. CAM is a wholly-owned subsidiary of Chase and is entitled to receive a fee, payable by Chase from its advisory fee, at an annual rate equal to 0.03% of each Fund's average daily net assets. Prior to August 1, 2000, Chase Bank of Texas, National Association ("CBT") was the sub-investment adviser to CM and TF pursuant to a Sub-Investment Advisory Agreement between Chase and CBT. CBT, a wholly-owned subsidiary of Chase, was entitled to receive a fee, payable by Chase from its advisory fee, at an annual rate equal to 0.03% of the Fund's average daily net assets. B. Shareholder and Fund servicing fees -- The Trust adopted Administrative Service Plans which, among other things, provide that the Trust on behalf of the Funds may obtain the services of one or more Shareholder Servicing Agents. For its services, each Shareholder Servicing Agent receives a fee. The fee is computed daily and paid monthly at an annual rate of 0.35% of the average daily net assets of the Vista and Reserve Classes, 0.25% of the average daily net assets of the Premier, B Share and C Share Classes, and 0.10% of the average daily net assets of the Institutional Class of each Fund. Chase and certain of its affiliates are the only Shareholder Servicing Agents. The Shareholder Servicing Agents have voluntarily waived fees as outlined in Note 2.E. below. C. Distribution and sub-administrations fees -- Pursuant to a Distribution and Sub-Administration Agreement, Vista Fund Distributors, Inc. ("VFD" or the "Distributor"), a wholly-owned subsidiary of The BISYS Group, Inc. ("BISYS"), acts as the Trust's exclusive underwriter and promotes and arranges for the sale of each Fund's shares. In addition, the Distributor provides certain sub-administration services to the Trust, including providing officers, clerical staff and office space for an annual fee computed daily and paid monthly of 0.05% of the average daily net assets of each Fund. The Trustees have adopted plans of distribution under the 1940 Act for the Premier Shares of USG (the "Premier Plan"), for the Vista Shares of each Fund (the "Vista Plan") except for CM and PRM, for the Reserve Shares of FED, PRM, TF and NYTF (the "Reserve Plan"), and for the B Shares and C Shares of PRM (the "B Plan" and "C Plan", respectively). 73 CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS (continued) There are no distribution plans for the Institutional Shares. The Premier, Vista, Reserve, B and C Share Plans pay the Distributor a distribution fee. The fee is computed daily and paid monthly at an annual rate of: 0.10% of the average daily net assets of the Vista Class of each Fund (except CM and PRM), 0.10% of the average daily net assets of the USG Premier Class, 0.30% of the average daily net assets of the Reserve Class of FED, PRM, TF and NYTF, and 0.75% of the average daily net assets of the B Shares and C Shares of PRM. The Distributor voluntarily waived fees as outlined in Note 2.E. below. D. Administration fee -- Pursuant to the Administration Agreement, Chase (the "Administrator") provides certain administration services and facilities to each Fund at a fee computed daily and paid monthly at the annual rate equal to 0.05% of the respective Fund's average daily net assets. The Administrator voluntarily waived fees as outlined in Note 2.E. below. E. Waiver of fees -- For the year ended August 31, 2000, the Funds' vendors voluntarily waived fees for each of the Funds as follows (amounts in thousands):
Investment Shareholder Advisory Administration Servicing Distribution - -------------------------------------------------------------------------------- USTS......... $-- $1,723 $1,629 $1,425 USG .......... -- 186 6,059 449 TP ........... -- 1,086 1,768 -- FED .......... -- -- 486 -- CM ........... -- 90 3,111 -- PRM .......... -- 103 6,479 -- TF ........... -- 369 1,677 -- NYTF.......... -- 746 -- 1,036 CTF .......... 44 -- 136 32
F. Other --Certain officers of the Trust are officers of VFD or of its parent corporation, BISYS. Chase provides portfolio accounting and custody services for the Funds. Compensation for such services is presented in the Statement of Operations as custodian fees. Custodian fees are subject to reduction by credits earned by each Fund, based on cash balances held by Chase as custodian. Such earnings credits are presented separately in the Statement of Operations. The Funds could have invested the cash balances utilized in connection with the earnings credit arrangements in income producing assets if they had not entered into such arrangements. During the year ended August 31, 2000, the fund accountant reimbursed PRM approximately $957,000 for uncollectible interest accruals. 74 CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS (continued) 3. Federal Income Tax Matters At August 31, 2000, the following Funds have capital loss carryovers which will be available to offset capital gains. To the extent that any net capital loss carryovers are used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders.
Fund Amount Expiration Date - ------------------------------------------------------ USG ........... $ 13,546 Aug. 31, 2006 5,917 Aug. 31, 2007 -------- 19,463 FED ........... 6,078 Aug. 31, 2008 CM ............ 664,023 Aug. 31, 2008 TF ............ 336,447 Aug. 31, 2002 29,205 Aug. 31, 2003 812 Aug. 31, 2004 28,042 Aug. 31, 2006 -------- 394,506 NYTF .......... 1,760 Aug. 31, 2006 CTF ........... 3,956 Aug. 31, 2001 8,932 Aug. 31, 2004 652 Aug. 31, 2005 903 Aug. 31, 2006 -------- 14,443
During the year ended August 31, 2000, USG, NYTF and CTF utilized capital loss carryforwards of $1,404, $59,708 and $26, respectively. 4. Concentration of Credit Risk As of August 31, 2000, CM and PRM invested 76.6% and 87.0%, respectively, of their net assets in securities issued by institutions in the financial services industry including banks, broker dealers and insurance companies. General economic conditions, as well as exposure to credit losses arising from possible financial difficulties of borrowers, play an important role in the operation of the financial services industry. TF, NYTF and CTF invest substantially all of their assets in a diversified portfolio of debt obligations issued by states, territories and possessions of the United States and by the District of Columbia, and by their political subdivisions and duly constituted authorities, with NYTF primarily investing in issuers in the State of New York, and CTF primarily investing in issuers in the State of California. As of August 31, 2000, TF invested 18.4% of its net assets in issuers in the State of Texas. The issuers' abilities to meet their obligations may be affected by economic or political developments in a specific state or region. 75 CHASE VISTA FUNDS NOTES TO FINANCIAL STATEMENTS (continued) 5. Trustee Compensation The Funds have adopted an unfunded noncontributory defined benefit pension plan covering all independent trustees of the Funds who will have served as an independent trustee for at least five years at the time of retirement. Benefits under this plan are based on compensation and years of service. Pension expenses for the year ended August 31, 2000, included in Trustees Fees in the Statement of Operations, and accrued pension liability included in Other Accrued Liabilities in the Statement of Assets and Liabilities were as follows (in thousands):
Pension Accrued Fund Expenses Pension Liability - ---------------------------------------------------------- USTS ......... $ 72 $321 USG .......... 128 608 TP ........... 47 231 FED .......... 20 91 CM ........... 145 507 PRM .......... 188 466 TF ........... 25 119 NYTF ......... 26 123 CTF .......... 1 5
6. Subsequent Events Effective September 5, 2000, CAM changed its name to Chase Fleming Asset Management (USA) Inc. At a special meeting held October 5, 2000, shareholders of CM approved a Reorganization Plan whereby all of the assets and liabilities of CM will be transferred to PRM in exchange for shares in PRM. Under the Reorganization Plan, each shareholder of CM will receive shares in PRM with a value equal to their holdings in CM. Holders of Vista Class Shares in CM will receive Vista Class Shares in PRM, holders of Premier Class Shares in CM will receive Premier Class Shares in PRM and holders of Institutional Class Shares in CM will receive Institutional Class Shares in PRM. The effective date of the reorganization is expected to be October 20, 2000. 76 - -------------------------------------------------------------------------------- CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
100% U.S. Treasury Securities Money Market Fund ------------------------------------------------------------------------------------ Vista Shares ------------------------------------------------------------------------------------ Year Ended Year Ended August 31, 12/1/95++ November 30, ------------------------------------------- Through ------------- 2000 1999 1998 1997 8/31/96 1995 -------- ------ ------ ------ --------- ------------- Per Share Operating Performance Net Asset Value, Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income ........................ 0.05 0.04 0.05 0.05 0.04 0.05 Less Dividends from Net Investment Income ........................... 0.05 0.04 0.05 0.05 0.04 0.05 -------- ------ ------ ------ ------ ------ Net Asset Value, End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ====== ====== ====== ====== ====== Total Return .................................. 5.02% 4.31% 4.92% 4.87% 3.50% 5.15% Ratios/Supplemental Data: Net Assets, End of Period (millions) ......... $3,535 $3,312 $3,051 $2,376 $1,672 $1,338 Ratios to Average Net Assets#: Expenses ..................................... 0.59% 0.59% 0.59% 0.59% 0.60% 0.58% Net Investment Income ........................ 4.92% 4.15% 4.78% 4.74% 4.58% 4.99% Expenses Without Waivers, Reimbursements and Earnings Credits ......................... 0.71% 0.71% 0.71% 0.71% 0.68% 0.61% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ...................................... 4.80% 4.03% 4.66% 4.62% 4.50% 4.96% - ------------------------------------------------------------------------------------------------------------------------------------ 100% U.S. Treasury Securities Money Market Fund ------------------------------------------------------------------------------------ Premier Shares ------------------------------------------------------------------------------------ Year Ended August 31, 12/1/95++ ------------------------------------------- Through 2000 1999 1998 1997 8/31/96 -------- ------ ------ ------ --------- Per Share Operating Performance Net Asset Value, Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- --------- Income from Investment Operations: Net Investment Income ........................ 0.05 0.04 0.05 0.05 0.01 Less Dividends from Net Investment Income ........................... 0.05 0.04 0.05 0.05 0.01 -------- ------- ------- ------- --------- Net Asset Value, End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ========= Total Return .................................. 5.12% 4.40% 5.00% 4.91% 1.11% Ratios/Supplemental Data: Net Assets, End of Period (millions) ......... $ 116 $ 24 $ 22 $ 6 $ 1 Ratios to Average Net Assets#: Expenses ..................................... 0.49% 0.50% 0.51% 0.55% 0.42% Net Investment Income ........................ 5.02% 4.22% 4.99% 4.80% 3.45% Expenses Without Waivers, Reimbursements and Earnings Credits ......................... 0.53% 0.56% 0.78% 0.80% 0.42% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ...................................... 4.98% 4.16% 4.72% 4.55% 3.45% - ------------------------------------------------------------------------------------------------------------------------------------
++ In 1996, the Fund changed its fiscal year-end from November 30 to August 31. * Commencement of offering of class of shares. # Short periods have been annualized. 77 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
100% U.S. Treasury Securities Money Market Fund -------------------------------------------------------- Institutional Shares -------------------------------------------------------- Year Ended August 31, 6/3/96* ------------------------------------------ Through 2000 1999 1998 1997 8/31/96 ------ ------ ------ ------ ------- Per Share Operating Performance Net Asset Value, Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------ ------- -------- Income from Investment Operations: Net Investment Income ........................ 0.05 0.05 0.05 0.05 0.01 Less Dividends from Net Investment Income ........................... 0.05 0.05 0.05 0.05 0.01 ------- ------- ------ ------- -------- Net Asset Value, End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ====== ======= ======== Total Return .................................. 5.38% 4.67% 5.30% 5.20% 1.23% Ratios/Supplemental Data: Net Assets, End of Period (millions) ......... $ 872 $ 895 $1,796 $ 81 $ 1 Ratios to Average Net Assets#: Expenses ..................................... 0.25% 0.24% 0.21% 0.27% 0.21% Net Investment Income ........................ 5.26% 4.51% 5.13% 5.06% 3.65% Expenses Without Waivers, Reimbursements and Earnings Credits ......................... 0.34% 0.32% 0.25% 0.27% 0.21% Net Investment Income Without Waivers, Reimbursements and Earnings Credits .......... 5.17% 4.43% 5.09% 5.06% 3.65% - --------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. See notes to financial statements. 78 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
U.S. Government Money Market Fund -------------------------------------------------------------- Vista Shares -------------------------------------------------------------- Year Ended August 31, -------------------------------------------------------------- 2000 1999 1998 1997 1996 ------ ------ ------ ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income .............................. 0.05 0.04 0.05 0.05 0.05 Less Dividends from Net Investment Income ......... 0.05 0.04 0.05 0.05 0.05 ------ ------ ------ ------ ------ Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return ........................................ 5.48% 4.55% 5.14% 5.04% 4.97% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $3,398 $3,538 $3,033 $2,139 $2,057 Ratios to Average Net Assets: Expenses ........................................... 0.59% 0.59% 0.59% 0.59% 0.65% Net Investment Income .............................. 5.35% 4.46% 5.01% 4.93% 4.83% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.69% 0.69% 0.70% 0.72% 0.73% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 5.25% 4.36% 4.90% 4.80% 4.75% - -------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 79 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
U.S. Government Money Market Fund ------------------------------------------------------ Premier Shares ------------------------------------------------------ Year Ended August 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income .......................... 0.05 0.05 0.05 0.05 0.05 Less Dividends from Net Investment Income ..... 0.05 0.05 0.05 0.05 0.05 ------ ------ ------ ------ ------ Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return .................................... 5.62% 4.70% 5.25% 5.08% 5.15% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $1,134 $ 922 $1,084 $ 837 $ 802 Ratios to Average Net Assets: Expenses ....................................... 0.45% 0.45% 0.48% 0.55% 0.55% Net Investment Income .......................... 5.50% 4.60% 5.12% 4.97% 5.04% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.58% 0.58% 0.60% 0.60% 0.59% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.37% 4.47% 5.00% 4.92% 5.00% - --------------------------------------------------------------------------------------------------------- U.S. Government Money Market Fund ------------------------------------------------------ Institutional Shares ------------------------------------------------------ Year Ended August 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income .......................... 0.06 0.05 0.05 0.05 0.05 Less Dividends from Net Investment Income ..... 0.06 0.05 0.05 0.05 0.05 ------ ------ ------ ------ ------ Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return .................................... 5.83% 4.92% 5.51% 5.40% 5.45% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $2,639 $2,913 $2,797 $2,955 $1,182 Ratios to Average Net Assets: Expenses ....................................... 0.26% 0.25% 0.24% 0.24% 0.27% Net Investment Income .......................... 5.66% 4.80% 5.36% 5.29% 5.30% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.33% 0.31% 0.24% 0.24% 0.27% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.59% 4.74% 5.36% 5.29% 5.30% - ---------------------------------------------------------------------------------------------------------
See notes to financial statements. 80 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Treasury Plus Money Market Fund ------------------------------------------------------ Vista Shares ------------------------------------------------------ Year Ended August 31, 5/6/96* ------------------------------------------- Through 2000 1999 1998 1997 8/31/96 ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net Asset Value, Beginning of Period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income ...................... 0.05 0.04 0.05 0.05 0.02 Less Dividends from Net Investment Income ......................... 0.05 0.04 0.05 0.05 0.02 ------ ------ ------ ------ ------ Net Asset Value, End of Period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return ................................ 5.29% 4.39% 5.05% 4.89% 1.50% Ratios/Supplemental Data: Net Assets, End of Period (millions) ....... $1,367 $1,734 $1,316 $1,606 $1,382 Ratios to Average Net Assets:# Expenses ................................... 0.59% 0.59% 0.59% 0.59% 0.59% Net Investment Income ...................... 5.14% 4.27% 4.92% 4.79% 4.63% Expenses Without Waivers, Reimbursements and Earnings Credits ....................... 0.71% 0.69% 0.70% 0.70% 0.73% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ........ 5.02% 4.17% 4.81% 4.68% 4.49% - ---------------------------------------------------------------------------------------------------- Treasury Plus Money Market Fund ------------------------------------------------------ Premier Shares ------------------------------------------------------ Year Ended August 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net Asset Value, Beginning of Period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income ...................... 0.05 0.04 0.05 0.05 0.05 Less Dividends from Net Investment Income ......................... 0.05 0.04 0.05 0.05 0.05 ------ ------ ------ ------ ------ Net Asset Value, End of Period .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return ................................ 5.44% 4.54% 5.18% 4.98% 5.07% Ratios/Supplemental Data: Net Assets, End of Period (millions) ....... $ 228 $ 476 $ 155 $ 131 $ 106 Ratios to Average Net Assets:# Expenses ................................... 0.45% 0.45% 0.46% 0.51% 0.52% Net Investment Income ...................... 5.28% 4.42% 5.06% 4.88% 4.85% Expenses Without Waivers, Reimbursements and Earnings Credits ....................... 0.51% 0.50% 0.50% 0.53% 0.63% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ........ 5.22% 4.37% 5.02% 4.86% 4.74% - ----------------------------------------------------------------------------------------------------
# Short periods have been annualized. * Commencement of offering of class of shares. See notes to financial statements. 81 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Treasury Plus Money Market Fund -------------------------------------------------------------- Institutional Shares -------------------------------------------------------------- Year Ended August 31, -------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income .............................. 0.06 0.05 0.05 0.05 0.05 Less Dividends from Net Investment Income ......... 0.06 0.05 0.05 0.05 0.05 ------ ------ ------ ------ ------ Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== Total Return ........................................ 5.65% 4.75% 5.44% 5.24% 5.29% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 904 $ 980 $ 876 $ 292 $ 189 Ratios to Average Net Assets: Expenses ........................................... 0.25% 0.24% 0.21% 0.26% 0.30% Net Investment Income .............................. 5.48% 4.61% 5.29% 5.16% 5.11% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.36% 0.31% 0.25% 0.26% 0.38% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 5.37% 4.54% 5.25% 5.16% 5.03% - -----------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 82 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Federal Money Market Fund ------------------------------------------------------ Vista Shares ------------------------------------------------------ Year Ended August 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .......................... 0.05 0.04 0.05 0.05 0.05 Less Dividends from Net Investment Income ..... 0.05 0.04 0.05 0.05 0.05 ------- ------- ------- ------- ------- Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= Total Return .................................... 5.29% 4.46% 4.94% 4.91% 4.83% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $ 576 $ 550 $ 359 $ 301 $ 353 Ratios to Average Net Assets: Expenses ....................................... 0.70% 0.70% 0.70% 0.70% 0.70% Net Investment Income .......................... 5.17% 4.35% 4.88% 4.79% 4.79% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.75% 0.78% 0.84% 0.82% 0.93% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.12% 4.27% 4.74% 4.67% 4.56% - ---------------------------------------------------------------------------------------------------------- Federal Money Market Fund ------------------------------------------------------ Premier Shares ------------------------------------------------------ Year Ended August 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .......................... 0.05 0.05 0.05 0.05 0.05 Less Dividends from Net Investment Income ..... 0.05 0.05 0.05 0.05 0.05 ------- ------- ------- ------- ------- Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= Total Return .................................... 5.50% 4.67% 5.22% 5.12% 5.14% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $ 279 $ 298 $ 313 $ 400 $ 249 Ratios to Average Net Assets: Expenses ....................................... 0.50% 0.50% 0.50% 0.50% 0.50% Net Investment Income .......................... 5.35% 4.56% 5.07% 5.01% 4.99% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.50% 0.50% 0.51% 0.52% 0.52% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.35% 4.56% 5.06% 4.99% 4.97% - ------------------------------------------------------------------------------------------------------------
See notes to financial statements. 83 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Federal Money Market Fund ---------------------------------------------------------------------- Institutional Shares Reserve Shares ------------------------------------------------------ --------------- Year Ended August 31, 7/31/00* ------------------------------------------------------ Through 2000 1999 1998 1997 1996 8/31/00 ------- ------- ------- ------- ------- -------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- --------- Income from Investment Operations: Net Investment Income .............................. 0.06 0.05 0.05 0.05 0.05 0.01 Less Dividends from Net Investment Income ......... 0.06 0.05 0.05 0.05 0.05 0.01 -------- ------- ------- ------- ------- -------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= ======== Total Return ........................................ 5.75% 4.92% 5.46% 5.35% 5.35% 0.49% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 287 $ 248 $ 198 $ 131 $ 141 $ + Ratios to Average Net Assets:# Expenses ........................................... 0.26% 0.26% 0.27% 0.27% 0.30% 0.79% Net Investment Income .............................. 5.61% 4.79% 5.32% 5.23% 5.20% 5.08% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.34% 0.34% 0.27% 0.27% 0.30% 1.44% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 5.53% 4.71% 5.32% 5.23% 5.20% 4.43% - ---------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 84 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Cash Management Fund -------------------------------------------------------------------------- Vista Shares -------------------------------------------------------------------------- Year Ended August 31, 12/1/95++ Year Ended ----------------------------------------- Through November 30, 2000 1999 1998 1997 8/31/96 1995 -------- ------ ------ ------ --------- ------ Per Share Operating Performance Net Asset Value, Beginning of Period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------ ------ ------ ------- ------ Income from Investment Operations: Net Investment Income ........................ 0.06 0.05 0.05 0.05 0.04 0.05 Less Dividends from Net Investment Income ........................... 0.06 0.05 0.05 0.05 0.04 0.05 -------- ------ ------ ------ ------- ------ Net Asset Value, End of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ====== ====== ====== ======= ====== Total Return .................................. 5.66% 4.74% 5.23% 5.09% 3.69% 5.49% Ratios/Supplemental Data: Net Assets, End of Period (millions) ......... $7,345 $5,679 $3,642 $2,576 $1,621 $1,634 Ratios to Average Net Assets:# Expenses ..................................... 0.59% 0.59% 0.59% 0.59% 0.60% 0.58% Net Investment Income ........................ 5.58% 4.61% 5.09% 4.99% 4.91% 5.35% Expenses Without Waivers, Reimbursements and Earnings Credits ......................... 0.61% 0.62% 0.61% 0.62% 0.63% 0.62% Net Investment Income Without Waivers, Reimbursements and Earnings Credits .......... 5.56% 4.58% 5.07% 4.96% 4.88% 5.31% - ---------------------------------------------------------------------------------------------------------------------------
++ In 1996, the Fund changed its fiscal year-end from November 30 to August 31. # Short periods have been annualized. See notes to financial statements. 85 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Cash Management Fund ------------------------------------------------------- Premier Shares ------------------------------------------------------- Year Ended August 31, ------------------------------------------- 5/6/96* Through 2000 1999 1998 1997 8/31/96 -------- ------- ------- ------- --------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- --------- Income from Investment Operations: Net Investment Income .......................... 0.06 0.05 0.05 0.05 0.02 Less Dividends from Net Investment Income ..... 0.06 0.05 0.05 0.05 0.02 -------- ------- ------- ------- --------- Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ========= Total Return .................................... 5.81% 4.89% 5.35% 5.18% 1.61% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $ 426 $ 463 $ 415 $ 375 $ 433 Ratios to Average Net Assets:# Expenses ....................................... 0.45% 0.45% 0.47% 0.50% 0.50% Net Investment Income .......................... 5.72% 4.77% 5.22% 5.07% 4.93% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.50% 0.50% 0.52% 0.51% 0.52% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.67% 4.72% 5.17% 5.06% 4.91% Cash Management Fund ------------------------------------------------------- Institutional Shares ------------------------------------------------------- Year Ended August 31, ------------------------------------------- 5/6/96* Through 2000 1999 1998 1997 8/31/96 -------- ------- ------- ------- --------- Per Share Operating Performance Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------ ------ ------- ------- Income from Investment Operations: Net Investment Income .......................... 0.06 0.05 0.06 0.05 0.02 Less Dividends from Net Investment Income ..... 0.06 0.05 0.06 0.05 0.02 -------- ------ ------ ------- ------- Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ====== ====== ======= ======= Total Return .................................... 6.01% 5.09% 5.59% 5.45% 1.69% Ratios/Supplemental Data: Net Assets, End of Period (millions) ........... $3,304 $1,547 $1,060 $ 924 $ 657 Ratios to Average Net Assets:# Expenses ....................................... 0.26% 0.26% 0.24% 0.24% 0.25% Net Investment Income .......................... 5.91% 4.95% 5.45% 5.34% 5.22% Expenses Without Waivers, Reimbursements and Earnings Credits ........................... 0.33% 0.32% 0.24% 0.24% 0.25% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ............ 5.84% 4.89% 5.45% 5.34% 5.22% - ---------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. See notes to financial statements. 86 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Prime Money Market Fund -------------------------------------------------------------- Premier Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .............................. 0.06 0.05 0.05 0.05 0.05 Less Dividends from Net Investment Income ......... 0.06 0.05 0.05 0.05 0.05 -------- ------- ------- ------- ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= Total Return ........................................ 5.81% 4.90% 5.44% 5.34% 5.32% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $1,841 $1,094 $ 590 $ 499 $ 419 Ratios to Average Net Assets: Expenses ........................................... 0.45% 0.45% 0.45% 0.45% 0.45% Net Investment Income .............................. 5.67% 4.77% 5.29% 5.17% 5.18% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.49% 0.49% 0.51% 0.53% 0.51% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 5.63% 4.73% 5.23% 5.09% 5.12% - ------------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 87 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Prime Money Market Fund -------------------------------------------------------------- Institutional Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------ ------ ------ ------ Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------ ------ ------ ------- Income from Investment Operations: Net Investment Income .............................. 0.06 0.05 0.06 0.05 0.05 Less Dividends from Net Investment Income ......... 0.06 0.05 0.06 0.05 0.05 -------- ------ ------ ------ ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ====== ====== ====== ======= Total Return ........................................ 6.01% 5.10% 5.65% 5.49% 5.51% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $9,430 $8,161 $4,722 $1,348 $ 725 Ratios to Average Net Assets: Expenses ........................................... 0.26% 0.26% 0.24% 0.25% 0.26% Net Investment Income .............................. 5.86% 4.96% 5.50% 5.37% 5.33% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.33% 0.33% 0.24% 0.25% 0.26% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 5.79% 4.89% 5.50% 5.37% 5.33% - --------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 88 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Prime Money Market Fund -------------------------------------------------------------- B Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .............................. 0.05 0.04 0.05 0.04 0.04 Less Dividends from Net Investment Income ......... 0.05 0.04 0.05 0.04 0.04 -------- ------- ------- ------- ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= Total Return ........................................ 4.97% 4.07% 4.60% 4.33% 4.25% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 11 $ 36 $ 29 $ 10 $ 16 Ratios to Average Net Assets: Expenses ........................................... 1.25% 1.25% 1.25% 1.35% 1.47% Net Investment Income .............................. 4.87% 4.00% 4.49% 4.27% 4.17% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 1.27% 1.47% 1.50% 1.53% 1.71% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 4.85% 3.78% 4.24% 4.09% 3.93% - --------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 89 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Prime Money Market Fund ------------------------------------------------------------------------------ C Shares Vista Shares Reserve Shares ------------------------------------ ------------------------ --------------- Year Year 5/14/98* Year 10/1/98* 7/31/00* Ended Ended Through Ended Through Through 8/31/00 8/31/99 8/31/98 8/31/00 8/31/99 8/31/00 ------- ------- --------- --------- --------- ----------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- --------- -------- --------- --------- Income from Investment Operations: Net Investment Income .............................. 0.05 0.04 0.01 0.06 0.04 0.01 Less Dividends from Net Investment Income ......... 0.05 0.04 0.01 0.06 0.04 0.01 ------- ------- --------- -------- --------- --------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ========= ======== ========= ========= Total Return ........................................ 4.95% 3.85% 1.29% 5.65% 4.26% 0.50% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ + $ 1 $ 1 $ 1,475 $ 515 $ + Ratios to Average Net Assets:# Expenses ........................................... 1.26% 1.45% 1.50% 0.59% 0.59% 0.79% Net Investment Income .............................. 4.86% 3.75% 4.21% 5.53% 4.61% 5.33% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 1.26% 1.45% 1.50% 0.61% 0.72% 1.45% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 4.86% 3.75% 4.21% 5.51% 4.48% 4.67% - ------------------------------------------------------------------------------------------------------------------------------------
# Short periods have been annualized. * Commencement of offering of classes of shares. + Amount rounds to less than one million. See notes to financial statements. 90 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Tax Free Money Market Fund ---------------------------------------------------------------------- Vista Shares Reserve Shares ------------------------------------------------------ --------------- Year Ended August 31, 7/31/00* ------------------------------------------------------ Through 2000 1999 1998 1997 1996 8/31/00 -------- ------- ------ ------- ------- -------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- --------- Income from Investment Operations: Net Investment Income .............................. 0.03 0.03 0.03 0.03 0.03 -- Less Dividends from Net Investment Income ......... 0.03 0.03 0.03 0.03 0.03 -- -------- ------- ------- ------- ------- --------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= ========= Total Return ........................................ 3.37% 2.73% 3.10% 3.12% 2.92% 0.30% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 895 $ 754 $ 733 $ 566 $ 574 $ + Ratios to Average Net Assets:# Expenses ........................................... 0.59% 0.59% 0.59% 0.59% 0.69% 0.79% Net Investment Income .............................. 3.33% 2.68% 3.05% 3.08% 2.89% 3.13% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.75% 0.73% 0.72% 0.73% 0.80% 1.44% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 3.17% 2.54% 2.92% 2.94% 2.78% 2.48% - ----------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 91 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Tax Free Money Market Fund -------------------------------------------------------------- Premier Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .............................. 0.03 0.03 0.03 0.03 0.03 Less Dividends from Net Investment Income ......... 0.03 0.03 0.03 0.03 0.03 -------- ------- ------- ------- ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= Total Return ........................................ 3.41% 2.78% 3.17% 3.19% 3.12% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 120 $ 130 $ 133 $ 105 $ 145 Ratio to Average Net Assets: Expenses ........................................... 0.55% 0.54% 0.53% 0.53% 0.58% Net Investment Income .............................. 3.40% 2.74% 3.10% 3.13% 3.08% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.59% 0.56% 0.53% 0.53% 0.73% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 3.26% 2.72% 3.10% 3.13% 2.93% - -------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 92 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
Tax Free Money Market Fund -------------------------------------------------------------- Institutional Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .............................. 0.04 0.03 0.03 0.04 0.03 Less Dividends from Net Investment Income ......... 0.04 0.03 0.03 0.04 0.03 -------- ------- ------- ------- ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= Total Return ........................................ 3.71% 3.07% 3.45% 3.45% 3.40% Ratios/Supplemental Data: Net Assets, End of Period (millions) ............... $ 640 $ 476 $ 410 $ 286 $ 149 Ratio to Average Net Assets: Expenses ........................................... 0.26% 0.26% 0.26% 0.26% 0.31% Net Investment Income .............................. 3.67% 3.01% 3.37% 3.41% 3.33% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.39% 0.35% 0.26% 0.26% 0.31% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 3.54% 2.92% 3.37% 3.41% 3.33% - --------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 93 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
New York Tax Free Money Market Fund ---------------------------------------------------------------------- Vista Shares Reserve Shares ------------------------------------------------------ --------------- Year Ended August 31, 7/31/00* ------------------------------------------------------ Through 2000 1999 1998 1997 1996 8/31/00 ---------- -------- -------- -------- -------- --------------- Per Share Operating Performance Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ ------ Income from Investment Operations: Net Investment Income .............................. 0.03 0.03 0.03 0.03 0.03 -- Less Dividends from Net Investment Income ......... 0.03 0.03 0.03 0.03 0.03 -- ------ ------ ------ ------ ------ ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== ======= Total Return ........................................ 3.27% 2.66% 3.03% 3.02% 2.85% 0.28% Ratios/Supplemental Data: Net Assets, End of Period (millions) ................ $1,831 $1,505 $1,372 $ 957 $ 890 $ + Ratio to Average Net Assets:# Expenses ........................................... 0.59% 0.59% 0.59% 0.59% 0.74% 0.79% Net Investment Income .............................. 3.24% 2.61% 2.97% 2.97% 2.79% 3.04% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.70% 0.71% 0.72% 0.73% 0.83% 1.49% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 3.13% 2.49% 2.84% 2.83% 2.70% 2.34% - -----------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 94 CHASE VISTA FUNDS FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS
California Tax Free Money Market Fund -------------------------------------------------------------- Vista Shares -------------------------------------------------------------- Year Ended August 31, ----------------------------------------------------------------- 2000 1999 1998 1997 1996 -------- ------- ------- ------- ------- Per Share Operating Performance Net Asset Value, Beginning of Period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- ------- ------- ------- ------- Income from Investment Operations: Net Investment Income .............................. 0.03 0.03 0.03 0.03 0.03 Less Dividends from Net Investment Income ......... 0.03 0.03 0.03 0.03 0.03 -------- ------- ------- ------- ------- Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======= ======= ======= ======= Total Return ........................................ 3.00% 2.66% 2.97% 3.02% 3.06% Ratios/Supplemental Data: Net Assets, End of Period (millions) ................ $ 78 $ 68 $ 50 $ 46 $ 43 Ratio of Average Net Assets: Expenses ........................................... 0.55% 0.55% 0.55% 0.56% 0.56% Net Investment Income .............................. 3.03% 2.55% 2.89% 2.99% 3.03% Expenses Without Waivers, Reimbursements and Earnings Credits ............................... 0.90% 0.94% 0.93% 0.86% 1.02% Net Investment Income Without Waivers, Reimbursements and Earnings Credits ................ 2.68% 2.16% 2.51% 2.69% 2.57% - -------------------------------------------------------------------------------------------------------------------------
See notes to financial statements. 95 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Trustees and Shareholders of Mutual Fund Trust In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Chase Vista 100% U.S. Treasury Securities Money Market Fund, Chase Vista Treasury Plus Money Market Fund, Chase Vista Federal Money Market Fund, Chase Vista U.S. Government Money Market Fund, Chase Vista Cash Management Fund, Chase Vista Prime Money Market Fund, Chase Vista Tax Free Money Market Fund, Chase Vista New York Tax Free Money Market Fund and Chase Vista California Tax Free Money Market Fund (separate portfolios of Mutual Fund Trust, hereafter referred to as the "Trust") at August 31, 2000, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented (for the four years in the period ended August 31, 2000 and for the period December 1, 1995 through August 31, 1996 for Chase Vista 100% U.S. Treasury Securities Money Market Fund and Chase Vista Cash Management Fund), in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2000 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of Chase Vista 100% U.S. Treasury Securities Money Market Fund and Chase Vista Cash Management Fund for the year ended November 30, 1995 were audited by other independent accountants whose report dated January 19, 1996 expressed an unqualified opinion on these financial highlights. PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 October 11, 2000 96 - -------------------------------------------------------------------------------- TAX LETTER (UNAUDITED) - -------------------------------------------------------------------------------- Chase Vista 100% U.S. Treasury Securities Money Market Fund (USTS) Chase Vista U.S. Government Money Market Fund (USG) Chase Vista Treasury Plus Money Market Fund (TP) Chase Vista Federal Money Market Fund (FED) Chase Vista Cash Management Fund (CM) Chase Vista Prime Money Market Fund (PRM) Chase Vista Tax Free Money Market Fund (TF) Chase Vista New York Tax Free Money Market Fund (NYTF) Chase Vista California Tax Free Money Market Fund (CTF) - -------------------------------------------------------------------------------- Certain tax information regarding the Chase Vista Mutual Funds is required to be provided to shareholders based upon the Funds' income and distributions for the taxable year ended August 31, 2000. The information and distributions reported in this letter may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2000. The information necessary to complete your income tax returns for the calendar year ending December 31, 2000 will be received under separate cover. The following schedule presents the source and percentage of income from government obligations for the fiscal year ended August 31, 2000.
USTS USG TP FED CM PRM ------------ ---------- ----------- ---------- ---------- ---------- U.S. Treasury Obligations 100.00% 0.12% 22.80% 1.46% -- -- Federal Farm Credit Bank -- 3.20% -- 21.14% 0.13% -- Federal Home Loan Bank -- 36.74% -- 70.22% 2.24% 1.92% Student Loan Marketing Association -- 8.36% -- 7.17% 0.65% -- Tennessee Valley Authority -- -- -- 0.01% -- -- Federal National Mortgage Association -- 39.10% -- -- -- 0.01%
Also, for the fiscal year ended August 31, 2000: o The dividends paid from net investment income are 99.45%, 99.59% and 99.74% exempt from Federal income tax for TF, NYTF and CTF, respectively. o For shareholders who are subject to the Alternative Minimum Tax, the income from private activity bonds issued after August 7, 1986, which may be considered a tax preference item, was 13.76%, 14.13% and 13.60% for TF, NYTF, and CTF, respectively. 97 CHASE VISTA MONEY MARKET FUNDS ANNUAL REPORT - -------------------------------------------------------------------------------- Investment Adviser, Administrator, Shareholder and Fund Servicing Agent and Custodian The Chase Manhattan Bank Distributor Vista Fund Distributors, Inc. Transfer Agent DST Systems, Inc. Legal Counsel Simpson Thacher & Bartlett Independent Accountants PricewaterhouseCoopers LLP Chase Vista Funds are distributed by Vista Fund Distributors, Inc., which is unaffiliated with The Chase Manhattan Bank. Chase and its respective affiliates receive compensation from Chase Vista Funds for providing investment advisory and other services. This report is submitted for the general information of the shareholders of the funds. It is not authorized for distribution to prospective investors in the funds unless preceded or accompanied by a prospectus. To obtain a prospectus for any of the Chase Vista Funds, call 1-800-34-VISTA. The prospectus contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. (c) The Chase Manhattan Corporation, 2000. All Rights Reserved. October 2000 [Logo] CHASE VISTA FUNDS[RegTM] Chase Vista Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 EX-99.(17)(G) 9 a2027167zex-99_17g.txt EXHIBIT 99(17)(G) DECEMBER 31, 1999 Chase Funds ANNUAL REPORT MONEY MARKET FUND SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND INTERMEDIATE TERM BOND FUND U.S. GOVERNMENT SECURITIES FUND INCOME FUND BALANCED FUND EQUITY INCOME FUND SMALL CAPITALIZATION FUND CORE EQUITY FUND EQUITY GROWTH FUND (C-465-01618) ANCF-2-12-99
- ---------------------------------------------------------- Contents - ---------------------------------------------------------- Chairman's Letter 1 - ---------------------------------------------------------- Chase Money Market Fund 2 Fund Commentary - ---------------------------------------------------------- Chase Short-Intermediate Term U.S. Government Securities Fund 5 Fund Commentary - ---------------------------------------------------------- Chase Intermediate Term Bond Fund 8 Fund Commentary - ---------------------------------------------------------- Chase U.S. Government Securities Fund 11 Fund Commentary - ---------------------------------------------------------- Chase Income Fund 14 Fund Commentary - ---------------------------------------------------------- Chase Balanced Fund 17 Fund Commentary - ---------------------------------------------------------- Chase Equity Income Fund 20 Fund Commentary - ---------------------------------------------------------- Chase Small Capitalization Fund 23 Fund Commentary - ---------------------------------------------------------- Chase Core Equity Fund 26 Fund Commentary - ---------------------------------------------------------- Chase Equity Growth Fund 29 Fund Commentary - ---------------------------------------------------------- Portfolios of Investments 32 - ---------------------------------------------------------- Fund Financial Statements 52 - ---------------------------------------------------------- Portfolio Financial Statements 83 - ----------------------------------------------------------
Highlights - - Bond markets struggled as the United States economy continued to grow sharply during the reporting year. Gross Domestic Product growth in the United States in 1999 was 4.2%. - - Stocks ended the year on a strong note with technology issues, IPOs and large cap growth stocks leading the upward advance. - - Inflation, while still well under control, inched up during the reporting year and the Federal Reserve began raising interest rates in June. NOT FDIC INSURED May lose value / No bank guarantee - -------------------------------------------------------------------------------- CHASE FUNDS - -------------------------------------------------------------------------------- Chairman's Letter January 20, 2000 Dear Fellow Shareholders: We are pleased to present this annual report for Chase Funds for the year ended December 31, 1999. In providing you with this information, we seek to assist you in fully understanding how your fund performed and the strategies your fund managers pursued within the context of the overall economic and market environment. Continued Strong US Economic Growth Tests "New Paradigm" Throughout the 1990s, the wonderful combination of strong economic growth, falling unemployment and low inflation has led to a growing belief in a "new paradigm." Under this theory, productivity and technological gains will allow the economy to grow at faster levels without sparking an inflationary spiral that causes the Federal Reserve to raise interest rates in an effort to cool the economy. Prior to the arrival of the "new paradigm," it was thought that GDP growth much above a 2.5% annual rate would inevitably become inflationary. However, the sizzling US economy began testing the upper limits of the "new paradigm" equation during the reporting year as Gross Domestic Product in 1999 grew by 4.2%. Although inflation remained relatively subdued, it did move higher over the reporting year and this, when combined with the very high growth in the US and the resumption of growth overseas, led to rising interest rates and a generally rough road to hoe for the bond market. Fed Shifts Policy in Early 1999 Early in 1999, it became apparent that a global economic recovery was underway. The global recovery, combined with 6% annual growth in the US in the 4th quarter of 1998 and record-low unemployment, led to bond market fears that the Fed would shift to a policy of raising short-term interest rates. This generally negative sentiment continued for the rest of the year as the Fed did indeed begin tightening, first on June 30, 1999 and then again on August 24 and November 16. In the view of many market participants, the Fed would have acted again in December were it not for Y2K concerns. Moving into 2000, the question among market participants is not whether the Fed will continue to raise rates, but rather by how much and for how long. Your portfolio management team rose to the occasion of 1999's challenging environment. While it's impossible to predict what markets will do, you can surely expect that all of us at Chase Funds will continue to do our best to deliver solid investments and help you reach your financial goals. We appreciate your continued trust and support. Sincerely yours, /s/ Sarah E. Jones Sarah E. Jones Chairman 1 - -------------------------------------------------------------------------------- CHASE MONEY MARKET FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Money Market Fund had a total return of 4.89% (Premier Shares) for the year ended December 31, 1999. How the Fund Was Managed The Fund began the with an average maturity slightly below that of the index and, as interest rates climbed in the first half of the year, the management team increased average maturity to a roughly neutral position to take advantage of higher-yielding paper. Given the Fund's strong focus on quality, this longer maturity was achieved by purchasing high-grade corporate notes. In the third quarter, the management team took advantage of the wide spread between fixed and floating rate notes by allocating an additional 20% of assets to floating rate notes, bringing total exposure to these securities to 40%. Although the Fund ended September with an average maturity longer than its index, the high exposure to floating rate notes gave the portfolio an excellent risk/reward profile. During the fourth quarter, the management team's decision to shorten average maturity in light of the continued rise in interest rates contributed positively to performance. Where the Fund May Be Headed Despite the U.S. economy's robust showing in recent months and a near-term outlook that calls for potentially more of the same, the management team believes that the economy will begin to slow as the year progresses. Given this backdrop, the team intends to increase the Fund's average maturity in the coming months to enhance income. As always, the focus will be on maintaining a high-quality, diversified investment approach that seeks capital preservation and attractive yields to shareholders. 2 CHASE MONEY MARKET FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [TABULAR REPRESENTATION OF PIE CHART] Corporate Notes & Bonds (49.4%) Commercial Paper (31.2%) Certificates of Deposit (11.6%) U.S. Government Agency Securities (3.2%) Cash Equivalent and Short-Term Paper (2.9%) State and Municipal Obligations (1.7%)
3 CHASE MONEY MARKET FUND As of December 31, 1999 (Unaudited) Maturity Schedule 1-14 days 27.03% 15-30 days 5.81% 31-60 days 32.94% 61-90 days 18.17% 91-180 days 10.77% 181-270 days 2.05% 270+ days 3.23%
7-Day SEC Yield Premier Shares 5.41% Investor Shares 5.31%
Performance information represents past performance and is not intended to indicate or predict future results. Yields will vary and you may experience gains or losses when you sell your shares. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. Chase Money Market Fund is the successor to the AVESTA Trust Money Market Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Money Market Fund, a new investment portfolio of MFIT. The Chase Money Market Fund unlike the AVESTA Money Market Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. Premier Shares commenced on 3/29/88, carry a $1 million minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/9/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Yield information is net of expenses and fees, and reflects reimbursement and waiver of certain expenses and fees. An investment in the Fund isn't a bank deposit and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The Fund is AAAm rated by Standard and Poor's. This rating is historical and is based upon the fund's credit quality, market exposure and management. It signifies that the fund's safety is excellent and that it has a superior capacity to maintain a $1.00 net asset value per share. 4 - -------------------------------------------------------------------------------- CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Short-Intermediate Term U.S. Government Securities Fund had a total return of .72% (Premier Shares) for the year ended December 31, 1999. This compares to .64% for the Lipper Short-Intermediate US Government Funds Index and .49% for the Lehman Intermediate Government Index. How the Fund Was Managed With interest rates rising throughout the year, 1999 was a difficult environment for all types of US fixed income securities. Compounding the difficulties was high issuance of non-Treasury "spread" sector securities as government agency and corporate issuers sought to fund their debt before higher rates made it unattractive. In the first half of the year, the management team's strategy was to stay relatively close to its index and capture yield where possible without taking on excessive risk. After beginning the year with a neutral maturity structure, the management team cut duration in February before becoming duration neutral in May and remaining so until the end of June. The Fund maintained a slightly overweight position in mortgage-backed securities in the first quarter, which proved beneficial as "spread" sectors outperformed Treasuries. In the second quarter, however, the Fund began to favor Treasuries over mortgages, which was helpful to performance in June as the prices of mortgage-backed securities slipped. In the third quarter, the Fund's exposure to federal agency securities was increased significantly to take advantage of further widening in yield spreads due to new issuance. The Fund underwent a change of management in the fourth quarter. When the new management team took over, the Fund had a longer-than-benchmark duration and was underweight in mortgage backed securities versus its Lipper peer group. In an effort to improve diversification, increase dividend yield to shareholders and make the portfolio reflective of its interest rate views, the management team took several steps. First, it allowed the Fund's duration (and hence its sensitivity to changes in interest rates) to shorten dramatically, making an especially significant strategic reduction in December. Next, the Fund's exposure to short-term mortgages and government agencies was increased while exposure to two-year Treasury bills was cut. Each of these moves proved beneficial in the last two months of the year as interest rates rose sharply at the short end of the yield curve and non-Treasury "spread" sectors outperformed. Where the Fund May Be Headed Moving forward, the management team believes that above-trend economic growth, tight labor markets and increasing inflation will drive long-term rates higher and cause the Federal Reserve to hike short-term rates. As such, it is expected that the Fund will maintain a slightly short of benchmark duration and emphasize government agency and premium (not pass-through) mortgage-backed securities, which tend to outperform in a rising rate environment. 5 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [TABULAR REPRESENTATION OF PIE CHART] U.S. Government Agency Securities (47.7%) U.S. Treasury Securities (36.4%) Mortgage-Backed Pass Through Securities (15.9%)
6 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (4/1/93) Premier Shares 0.72% 4.74% 5.75% 4.43% Investor Shares 0.48% 4.61% 5.67% 4.37%
Life of Fund Performance* [TABULAR REPRESENTATION OF LINE CHART]
Chase Short-Intermediate Lipper Term Short-Intermediate Lehman Lehman U.S. Government U.S. Gov't. Intermediate 1-3 Year Securities Funds Gov't. Gov't. Fund Index Index Index 4/93 10000 10000 10000 10000 12/93 10240 10350 10428 10317 12/94 10129 10190 10246 10368 12/95 11348 11439 11724 11493 12/96 11659 11855 12199 12078 12/97 12388 12674 13121 12881 12/98 13299 13552 14232 13858 12/99 13408 13663 14304 14269
*Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Short-Intermediate Term U.S. Government Securities Fund, the Lehman 1-3 Year Government Index, the Lehman Intermediate Government Index and Lipper Short-Intermediate Term U.S. Government Funds Index from April 1, 1993 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and carry a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Short-Intermediate Term U.S. Government Securities Fund is the successor to the AVESTA Trust Short-Intermediate Term U.S. Government Securities Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Short-Intermediate Term U.S. Government Securities Fund, a new investment portfolio of MFIT. Chase Short-Intermediate Term U.S. Government Securities Fund, unlike the AVESTA Trust Short-Intermediate Term U.S. Government Securities Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lehman 1-3 Year Government Index is composed of bonds covered by the Government Bond Index with maturities of 1-3 years. The index is unmanaged and reflect the reinvestment of dividends. An individual cannot invest directly in an index. The Lipper Short-Intermediate Term U.S. Government Fund Index represents performance of the 30 largest short-intermediate term debt funds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Intermediate Government Index consists of U.S. agency and Treasury securities with maturities of one to 10 years. An individual cannot invest directly in an index. 7 - -------------------------------------------------------------------------------- CHASE INTERMEDIATE TERM BOND FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Intermediate Term Bond Fund had a total return of -1.11% (Premier Shares) for the year ended December 31, 1999. This compares to -1.31% for the Lipper Intermediate Grade Debt Funds Index and -.82% for the Lehman Aggregate Index. How the Fund Was Managed With interest rates rising throughout the year, 1999 was a difficult environment for all types of US fixed income securities. Compounding the difficulties was high issuance of non-Treasury "spread" sector securities as government agency and corporate issuers sought to fund their debt before higher rates made it unattractive. Concerned that fixed income markets had entered a corrective phase of consolidation, the management team became defensive and cut duration in February. However, after allowing duration to rise in March, the management team continued to extend until duration became relatively neutral in May. The Fund added corporate and mortgage-backed securities in the first quarter of the year and added Federal agency paper in the second quarter when large issuance led to high yields on these issues relative to Treasuries. In the third quarter, the Fund was able to buy Federal agency paper at what turned out to be the most beneficial point of the year and adding to its holdings of corporate securities, which held up relatively well during a poor quarter for corporates due to the management team's focus on maturities of less than three years. The Fund underwent a change of management in the fourth quarter. When the new management team took over, the Fund had a longer-than-benchmark duration and was underweight in mortgage-backed securities. In an effort to improve diversification, increase dividend yield to shareholders and make the portfolio reflective of its interest rate views, the management team took several steps. First, it allowed the Fund's duration (and hence its sensitivity to changes in interest rates) to shorten dramatically, making an especially significant strategic reduction in December. Next, the Fund's exposure to mortgages was increased to become neutral relative to its peer group while its corporate holdings were raised to an overweight position, with the latter move being made with the first quarter of 2000 in mind. Each of these moves proved beneficial in the last two months of 1999 as interest rates rose and non-Treasury "spread" sectors outperformed. Where the Fund May Be Headed Moving forward, the management team believes that above-trend economic growth, tight labor markets and increasing inflation will drive long-term rates higher and cause the Federal Reserve to hike short-term rates. As such, it is expected that the Fund will maintain a slightly short of benchmark duration and an overweight position in the non-Treasury "spread" sectors, which tend to outperform in a rising rate environment. 8 CHASE INTERMEDIATE TERM BOND FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [TABULAR REPRESENTATION OF PIE CHART] Corporate Notes & Bonds (38.7%) Mortgage-Backed Pass Through Securities (29.9%) U.S. Government Agency Securities (25.7%) U.S. Treasury Securities (5.7%)
9 CHASE INTERMEDIATE TERM BOND FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (10/3/94) Premier Shares -1.11% 4.51% 6.32% 6.00% Investor Shares -1.36% 4.41% 6.26% 5.94%
Life of Fund Performance* [TABULAR REPRESENTATION OF LINE CHART]
Lipper Chase Intermediate Lehman Intermediate Grade Lehman Intermediate Term Bond Debt Funds Aggregate Gov't./Corp Fund Index Index Index 10/94 10000 10000 10000 10000 12/94 9990 10010 10038 9989 12/95 11668 11724 11892 11518 12/96 11889 12126 12322 11985 12/97 12750 13191 13514 12928 12/98 13722 14230 14686 14016 12/99 13584 14091 14563 14070
*Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Intermediate Term Bond Fund, the Lehman Intermediate Gov't./Corp. Index, the Lehman Aggregate Index and the Lipper Intermediate Grade Debt Funds Index from October 31, 1994 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares and do not include Investor Share expenses. Chase Intermediate Term Bond Fund is the successor to the AVESTA Trust Intermediate Term Bond Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Intermediate Term Bond Fund, a new investment portfolio of MFIT. Chase Intermediate Term Bond Fund, unlike the AVESTA Trust Intermediate Term Bond Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Intermediate Grade Debt Funds Index represents performance of the largest 30 intermediate investment grade debt funds. Each of these funds invests the majority of its assets in investment grade debt issues (rated in top four grades) with dollar-weighted average maturities of five to 10 years. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Aggregate Index is composed of the Lehman Government/Corporate Bond Index and the Mortgage-Backed Securities Index and includes Treasury issues, agency issues, corporate bond issues and mortgage-backed securities. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. The Lehman Intermediate Gov't/Corp. Index includes the government and corporate bond indices, with maturities of one to 10 years, including U.S. governmental treasury and agency securities, corporate and Yankee bonds. An individual cannot invest directly in an index. 10 - -------------------------------------------------------------------------------- CHASE U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase U.S. Government Securities Fund had a total return of -2.55% (Premier Shares) for the year ended December 31, 1999. This compares to -3.01% for the Lipper General U.S. Government Funds Index and -2.23% for the Lehman Government Index. How the Fund Was Managed With interest rates rising throughout the year, 1999 was a difficult environment for all types of US fixed income securities. Compounding the difficulties was high issuance of non-Treasury "spread" sector securities as government agency and corporate issuers sought to fund their debt before higher rates made it unattractive. In the first half of the year, concerned that fixed income markets had entered a corrective phase of consolidation, the management team's strategy was to stay relatively close to its index and capture yield where possible without taking on excessive risk. Consistent with this strategy, the Fund added mortgage-backed securities in the first quarter of the year and added Federal agency paper in the second quarter when large issuance led to high yields on these issues relative to Treasuries. In the third quarter, the Fund continued to modestly add to its holdings of federal agency and mortgage-backed securities to take advantage of further widening in yield spreads due to new issuance by government agencies. The Fund underwent a change of management in the fourth quarter. When the new team took over, the Fund had a longer-than-benchmark duration and was underweight in mortgage-backed securities versus its Lipper peer group. In an effort to improve diversification, increase dividend yield to shareholders and make the portfolio reflective of its interest rate views, the management team took several steps. First, it allowed the Fund's duration (and hence its sensitivity to changes in interest rates) to shorten dramatically, making an especially significant strategic reduction in December. Next, the Fund's exposure to mortgages was increased while exposure to Treasury securities was cut. Each of these moves proved beneficial in the final two months of the year as interest rates rose and non-Treasury "spread" sectors outperformed. Where the Fund May Be Headed Moving forward, the management team believes that above-trend economic growth, tight labor markets and increasing inflation will drive long-term rates higher and cause the Federal Reserve to hike short-term rates. As such, it is expected that the Fund will maintain a slightly short of benchmark duration and an overweight position in mortgage-backed securities, which tend to outperform in a rising rate environment. 11 CHASE U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Mortgage-Backed Pass Through Securities (41.4%) U.S. Treasury Securities (33.9%) U.S. Government Agency Securities (24.7%) [END PLOT POINTS] 12 CHASE U.S. GOVERNMENT SECURITIES FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (4/1/93) Premier Shares -2.55% 5.27% 8.28% 6.07% Investor Shares -2.79% 5.18% 8.22% 6.03%
Life of Fund Performance* [LINE CHART PLOT POINTS]
Chase U.S. Government Lipper General U.S. Lehman Securities Fund Gov't. Funds Index Gov't. Index 4/93 10000 10000 10000 12/93 10910 10462 10587 12/94 9999 9966 10229 12/95 13010 11654 12106 12/96 12760 11905 12440 12/97 13981 12991 13632 12/98 15279 14010 14975 12/99 14900 13637 14849
[END PLOT POINTS] *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in the Premier Shares of Chase U.S. Government Securities Fund, the Lehman Government Index, and Lipper General U.S. Government Funds Index from April 1, 1993 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase U.S. Government Securities Fund is the successor to the AVESTA Trust U.S. Government Securities Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase U.S. Government Securities Fund, a new investment portfolio of MFIT. Chase U.S. Government Securities Fund, unlike the AVESTA U.S. Government Securities Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. Lehman Government Index is composed of the Lehman Treasury Bond Index and the Lehman Agency Bond Index and includes Treasury bonds and debt issued by the U.S. Government and its agencies. The index is unmanaged and includes the reinvestment of dividends. An individual cannot invest directly in an index. The Lipper General U.S. Government Funds Index represents performance of the 30 largest U.S. government securities funds. Lipper is an independent mutual fund performance monitor whose results do not reflect a sales charge. An individual cannot invest directly in an index. 13 - -------------------------------------------------------------------------------- CHASE INCOME FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Income Fund had a total return of -2.78% (Premier Shares) for the year ended December 31, 1999. This compares to -2.58% for the Lipper Corporate Debt A Rated Fund Index and -2.15% for the Lehman Government/Corporate Index. How the Fund Was Managed With interest rates rising throughout the year, 1999 was a difficult environment for all types of US fixed income securities. Compounding the difficulties was high issuance of non-Treasury "spread" sector securities as government agency and corporate issuers sought to fund their debt before higher rates made it unattractive. In the first half of the year, concerned that fixed income markets had entered a corrective phase of consolidation, the management team's strategy was to stay relatively close to its index and capture yield where possible without taking on excessive risk. Consistent with this strategy, the Fund added corporate and mortgage-backed securities in the first quarter of the year and added Federal agency paper in the second quarter when large issuance led to high yields on these issues relative to Treasuries. In the third quarter, the Fund continued to modestly add to its holdings of non-Treasury "spread" sectors to take advantage of further widening in yield spreads due to new issuance by government agencies and corporations. The Fund underwent a change of management in the fourth quarter. When the new team took over, the Fund had a longer-than-benchmark duration, was underweight in mortgage-backed securities and held no asset-backed or commercial mortgage-backed securities. In an effort to improve diversification, increase dividend yield to shareholders and make the portfolio reflective of its interest rate views, the management team took several steps. First, it allowed the Fund's duration (and hence its sensitivity to changes in interest rates) to shorten dramatically, making an especially significant strategic reduction in December. Next, the Fund's exposure to mortgages was increased and asset-backed securities were added. Each of these moves proved beneficial in the final two months of the year as interest rates rose and non-Treasury "spread" sectors outperformed. Where the Fund May Be Headed Moving forward, the management team believes that above-trend economic growth, tight labor markets and increasing inflation will drive long-term rates higher and cause the Federal Reserve to hike short-term rates. As such, it is expected that the Fund will maintain a slightly short of benchmark duration and an overweight position in the non-Treasury "spread" sectors, which tend to outperform in a rising rate environment. 14 CHASE INCOME FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] U.S. Government Agency Securities (44.7%) Mortgage-Backed Securities (22.5%) Corporate Notes & Bonds (21.3%) U.S. Treasury Securities (8.9%) Asset Backed Securities (1.8%) Foreign Government Securities (0.8%) [END PLOT POINTS] 15 CHASE INCOME FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years Premier Shares -2.78% 4.99% 6.89% 6.47% Investor Shares -2.92% 4.91% 6.84% 6.45%
10 Year Performance* [LINE CHART PLOT POINTS]
Chase Income Lipper Corporate Debt A Lehman Gov't./Corp. Index Rated Fund Index Index 12/89 10000 10000 10000 12/90 10654 10665 10829 12/91 12119 12528 12576 12/92 12746 13471 13528 12/93 14044 15074 15024 12/94 13416 14332 14497 12/95 15874 17171 17286 12/96 16178 17649 17788 12/97 17590 19345 19523 12/98 19257 20760 21371 12/9 18742 20337 20912
[END PLOT POINTS] *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Income Fund, the Lehman Government/Corporate Index and the Lipper Corporate Debt A Rated Funds Index from December 31, 1989 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Income Fund is the successor to the AVESTA Trust Income Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Income Fund, a new investment portfolio of MFIT. Chase Income Fund, unlike the AVESTA Income Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Corporate Debt A Rated Funds Index represents performance of the largest 30 A rated corporate debt funds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Govt/Corp. Index includes the Government and Corporate Bond Indices, including U.S. Government Treasury and agency securities, corporate and yankee bonds. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. 16 - -------------------------------------------------------------------------------- CHASE BALANCED FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Balanced Fund, which seeks to provide a balance of current income and growth of capital, provided a total return of 14.23% (Premier Shares) compared to the Lipper Balanced Funds Index return of 8.98% and the Lehman Gov't./Corp. Index return of -2.15% for the one year period ended December 31, 1999. How the Fund Was Managed The Fund's equity portfolio performed well during a year ideally-suited to its style of buying high quality, large-cap growth stocks with superior earnings prospects. The fixed income portfolio lost value, however, as U.S. Treasury yields rose in the face of continuing robust economic growth and fears of higher inflation. Most of the equity portfolio's gain was recorded in the fourth quarter. Technology stocks rallied as the market focused on areas judged likely to profit from the Internet economy. Expectations of strong growth in demand for semiconductors, cell phones and communications equipment boosted many names. Holdings like Microsoft, Cisco Systems and Nortel Networks all performed well. But gains were not restricted to technology. The Fund benefited from an investment in Omnicom, the advertising and marketing multinational, where growth in Internet dot.com advertising should boost profits. Stock prices of a number of 'old media' companies--like AT&T, Liberty Media and Time Warner--also rose in anticipation of convergence with 'new media.' Strong stock picking even enabled the equity portfolio to perform well in the difficult third quarter, when inflation worries trapped much of the market in a trading range. Technology stocks and a small number of well-managed blue chips continued to make new highs. The Fund benefited from holdings in companies like Microsoft, Intel, Dell Computer, GE, and Procter & Gamble. The fixed income portfolio was not so fortunate. Although the portfolio invested in the short maturity securities least vulnerable to rising inflation, it was unable to avoid falling bond prices. Inflation fears intensified in the third and fourth quarters. The Federal Open Markets Committee raised rates three times in the year, and the yield on the benchmark 30-year U.S. Treasury rose from 5.1% to 6.5% in the course of the year. Where the Fund May Be Headed \Looking ahead, equity market rallies may no longer focus to such an extent on technology stocks, but may include a broader selection of names. The outlook for fixed income is negative due to stronger-than-trend economic growth and the likelihood of further rate rises. The Fund will benefit, however, from its balanced approach, and its large-cap growth style. 17 CHASE BALANCED FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Transportation (0.3%) Technology (21.2%) Corporate Notes & Bonds (19.8%) U.S. Treasury Securities (15.9%) Health Care (8.6%) Consumer Cyclicals (8.2%) Cash Equuivalent & Short-Term Paper (6.5%) Capital Goods (5.2%) Utilities (5.1%) U.S. Government Agency Securities (4.3%) Financial (3.5%) Consumer Staples (1.4%) [END PLOT POINTS] Top Ten Equity Holdings of the Portfolio 1. Microsoft Corp. (3.3%) Develops, manufactures, licenses and supports computer software products. 2. General Electric Co. (2.7%) A diversified manufacturing, technology and services company. Operations include appliance manufacturing, capital services, information services, and electrical distribution. 3. EMC Corp. (2.3%) Provides enterprise storage systems, software, networks and services. 4. Intel Corp. (2.2%) Manufactures micro and personal computers. The Company also supplies mainframe computers and other information processing equipment, software and networking products and peripheral equipment. 5. Wal-Mart Stores, Inc. (2.1%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware, and other products. 6. Applied Materials, Inc. (2.0%) Develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. 7. Amgen, Inc. (1.9%) Discovers, develops, manufactures, and markets human therapeutics based on cellular and molecular biology. Focuses its research on secreted protein and small molecule therapeutics. 8. America Online, Inc. (1.8%) Provides interactive communications and services through its America Online and Compuserve worldwide Internet online services. 9. Novellus Systems, Inc. (1.8%) Manufactures, markets and services advanced automated wafer fabrication systems for the deposition of thin films. 10. Cisco Systems, Inc. (1.8%) Supplies data networking products to the corporate enterprise and public wide area service provider markets. Top 10 equity holdings comprised 21.9% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 18 CHASE BALANCED FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Year Premier Shares 14.23% 20.92% 19.51% 12.84% Investor Shares 13.94% 20.78% 19.42% 12.80%
10 Year Performance* [LINE CHART PLOT POINTS]
Chase Balanced Lipper Balanced Lehman Govt./ S&P 500 Fund Funds Index Corp. Index Index 12/89 10000 10000 10000 10000 12/90 10136 10066 10828 9690 12/91 12584 12665 12575 12642 12/92 13256 13610 13528 13605 12/93 14048 15237 15020 14976 12/94 13730 14925 14493 15174 12/95 17001 18639 17282 20876 12/96 18929 21072 17784 25669 12/97 23407 25349 19519 34233 12/98 29291 29173 21368 44016 12/99 33464 31792 20909 53278
[END PLOT POINTS] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Balanced Fund, the Lehman Government/Corporate Index, the Standard & Poor's 500 Index and the Lipper Balanced Funds Index from December 31, 1989 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares were introduced on 10/16/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 10/16/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Balanced Fund is the successor to the AVESTA Trust-Balanced Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Balanced Fund, a new investment portfolio of MFIT. Chase Balanced Fund, unlike the AVESTA Trust-Balanced Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Balanced Funds Index represents performance of the largest 30 balanced funds. Each of these funds invests in a portfolio of stocks and bonds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock markets. It includes 500 widely held common stocks. Total return figures represent the reinvestment of dividends. An individual cannot invest directly in an index. The Lehman Government/Corporate Index includes the Government and Corporate Bond Indices, including the U.S. Government Treasury and agency securities, corporate and yankee bonds. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. 19 - -------------------------------------------------------------------------------- CHASE EQUITY INCOME FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Equity Income Fund, which seeks to provide capital appreciation and current income, generated a total return of 13.06% (Premier Shares) compared to the Lipper Equity Income Funds Index return of 4.19% and the Lipper Large Cap Value Index return of 10.78% for the one year period ended December 31, 1999. How the Fund Was Managed High-quality growth stocks drove the Fund's performance during the year. As befits a defensive portfolio that seeks to earn a current income in excess of the S&P 500 Index, the Fund was not invested in some of the technology companies that have yet to pay dividends, and so did not gain the full benefit from the year-end rally fueled by euphoria concerning the Internet economy. Arguably, though, its gains should prove reasonably resilient to any future correction. During the all-important fourth quarter, the Fund rose 7.9%. While this was less than the broad market, as defined by the S&P 500 Index, the stocks that fueled the rise were high quality names. The top five contributors to performance were: GE; Motorola; Microsoft, which bounced back following its anti-trust trial; Wal-Mart; and Citigroup. All are proven growth stocks, with experienced managements that have met earnings expectations quarter after quarter. Financials as a whole performed well for the Fund in the fourth quarter following the repeal of the Glass-Steagall Act, which was introduced to prevent investment banks and commercial banks from merging. In addition to Citigroup, American International Group made a significant contribution. The Fund illustrated its defensive credentials in the third quarter, when interest rate and inflation fears caused much of the equity market to become trapped in a trading range. The Fund outperformed the broad market indices for the quarter. Over the course of the year, the Fund's performance ranked well within its equity-income peer group. However, its income-generating objective will always limit participation in rallies such as that which we experienced at the end of this past year. Where the Fund May Be Headed The Fund will continue to be run in a conservative fashion intended to cushion the impact of market volatility. It will invest in well-managed companies with diversified businesses that offer some protection from economic uncertainty. The intention is to create a portfolio of stocks with a roughly 85% exposure to the S&P 500 Index. In other words, the Fund should capture at least 85% of any rise, but no more than 85% of any fall. 20 CHASE EQUITY INCOME FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Transporation (0.9%) Technology (19.7%) Financial (16.2%) Health Care (10.7%) Utilities (10.1%) Consumer Cyclicals (9.9%) Energy (9.2%) Cash Equivalent & Short-Term Paper (8.6%) Capital Goods (6.5%) Consumer Staples (5.1%) Basic Materials (3.1%) [END PLOT POINTS] Top Ten Equity Holdings of the Portfolio 1. General Electric Co. (4.2%) A diversified manufacturing, technology and services company. Operations include appliance manufacturing, capital services, information services, and electrical distribution. 2. Microsoft Corp. (3.7%) Develops, manufactures, licenses and supports computer software products. 3. International Business Machines Corp. (3.3%) Manufactures micro and personal computers. The Company also supplies mainframe computers and other information processing equipment, software and networking products and peripheral equipment. 4. American International Group (3.1%) Provides a variety of insurance and financial services in the U.S. and internationally. The Company writes property, casualty, marine, life, and financial services insurance. 5. Citigroup, Inc. (2.9%) A diversified financial services holding company that provides investment services, including asset management, consumer finance ser- vices, property and casualty insurance services, and life insurance services. 6. Lucent Technologies, Inc. (2.9%) Designs, develops, manufactures, and distributes communications systems, software, and products worldwide. 7. Wal-Mart Stores, Inc. (2.6%) The "Wal-Mart" Company's discount stores and Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware, and other products. 8. Intel Corp. (2.5%) Manufactures micro and personal computers. The Company also supplies mainframe computers and other information processing equipment, software and networking products and peripheral equipment. 9. Texas Instruments, Inc. (2.5%) Provides semiconductor products, as well as designs and supplies digital processing and analog technologies. 10. Procter & Gamble Co. (2.4%) Manufactures and markets consumer products for laundry and cleaning, paper, beauty care, food, beverages, and health care. Top 10 equity holdings comprised 30.1% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 21 CHASE EQUITY INCOME FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years Premier Shares 13.06% 23.20% 24.13% 14.70% Investor Shares 12.70% 23.04% 24.03% 14.66%
10 Year Performance* [LINE CHART PLOT POINTS]
Chase Equity Lipper Equity Inome Lipper Large Cap S&P 500 Income Fund Funds Index Value Index Index 12/89 10000 10000 10000 10000 12/90 9558 9489 9595 9690 12/91 11665 12020 12533 12642 12/92 12324 13191 13618 13605 12/93 13841 15149 15424 14976 12/94 13378 15011 15452 15174 12/95 17886 19488 20589 20876 12/96 21084 22991 24926 25669 12/97 27631 29234 32024 34233 12/98 34869 32677 37865 44016 12/99 39422 34045 41947 53278
[END PLOT POINTS] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance of $10,000 invested in Premier Shares of Chase Equity Income, the Standard & Poor's 500 Index and the Lipper Equity Income Funds Index from December 31, 1989 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/24/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/24/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Equity Income Fund is the successor to the AVESTA Trust Equity Income Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Equity Income Fund, a new investment portfolio of MFIT. Chase Equity Income Fund, unlike the AVESTA Equity Income Fund is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Equity Income Funds Index represents performance of the largest 30 Equity Income Funds. Each of these funds combines a growth of earnings orientation and an income requirement for level and/or rising dividends. The Lipper Large Cap Value Index consists of funds that invest in large-cap value stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in an index. 22 - -------------------------------------------------------------------------------- CHASE SMALL CAPITALIZATION FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Small Capitalization Fund, which seeks to provide capital appreciation, provided a total return of 13.23% (Premier Shares) compared to the Lipper Small Company Funds Index return of 41.54% and Lipper Small Cap Core Fund Index return of 20.17% for the one year period ended December 31, 1999. How the Fund Was Managed Superior stock selection helped the Fund perform well in the final quarter of the year. It benefited from holding a number of the small caps judged likely to grow earnings as a result of expansion in the Internet economy and advances in healthcare. Further, there were a number of names in the portfolio that were taken over toward year-end. Almost all of the year's gain came in the fourth quarter, when technology companies rallied in expectation of a surge in demand for semiconductor devices, cell phones and communications equipment. Vishay Intertechnology and CTS--the contract manufacturing electronics company--were strong performers, as were Molecular Devices, an instrumentation company enabling drug discovery, and King Pharmaceuticals. Oak Industries, a provider of components for the communications industry, rose following its November acquisition by technology company Corning. The deal strengthens Corning's position as a global leader in optical communications. The biggest contributors to performance for the year as a whole also tended to come from the technology sector. Comverse Technology, the telecommunication equipment specialist, was a leading holding, as was Cree Research, and Actel, two semiconductor companies. Micros Systems, the software development company, also performed well, as did Optical Coating Laboratory and PRI Automation. In the early months of the year, small-cap performance was lackluster as investors focused on large cap stocks. During the second quarter, however, performance rebounded somewhat as the equity market's leadership stocks broadened out to include not just the large technology stocks. An array of sectors from basic materials to capital goods to consumer cyclicals performed well in the period. The third quarter was another dull period for small caps as inflation worries dogged the market. Where the Fund May Be Headed We are cautiously optimistic regarding the prospects for small-cap stocks. Earnings forecasts for small caps are roughly double those of large caps, and small-cap valuations are still reasonable. However, there is a caveat in that small-cap stock prices would be particularly vulnerable to sustained rises in interest rates. 23 CHASE SMALL CAPITALIZATION FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Technology (28.8%) Consumer Cyclicals (20.9%) Health Care (12.5%) Capital Goods (12.3%) Financial (7.8%) Cash Equivalent & Short-Term Paper (5.4%) Energy (3.9%) Utilities (3.4%) Basic Materials (2.0%) Real Estate (1.3%) Transportation (1.1%) Consumer Staples (0.6%) [END PLOT POINTS] Top Ten Equity Holdings of the Portfolio 1. Optical Coating Laboratory, Inc. (3.3%) Manufactures optical thin film coated components used to manage light. The Company's products are used in computer monitors, flat panel displays and telecommunications systems. 2. PRI Automation, Inc. (3.2%) Supplies factory automation systems for semiconductor manufacturers and original equipment suppliers. 3. CTS Corp. (3.0%) Designs, manufactures and sells electronic components and custom electronic assemblies. The Company sells its products to original equipment manufacturers primarily in the communications equipment markets. 4. Comverse Technology, Inc. (2.7%) Designs, manufactures, markets, and supports computer and telecommunications systems and software for multimedia communications and information processing applications. 5. Molecular Devices Corp. (2.4%) Designs, develops, manufactures, and markets bioanalytical measurement systems, including software and consumables. 6. OAK Industries, Inc. (2.4%) Manufactures engineered components that it designs and sells to manufacturers and service providers in communication and other selected industries. 7. Vishay Intertechnology, Inc. (2.1%) Manufactures a broad line of discrete passive electronic components and discrete active electronic components, particularly resistors and transistors. 8. Micros Systems, Inc. (2.1%) Designs, manufactures, markets, and services enterprise information solutions for the global hospitality industry. The Company's solutions consist of application specific software and hardware systems. 9. BJ's Wholesale Club, Inc. (2.0%) A merchandise wholesale club chain. The Company sells brand name food and general merchandise at discount prices. 10. Spartech Corp. (2.0%) Produces engineered thermoplastic materials, polymeric compounds, and molded and profile products for a wide spectrum of manufacturing customers. Top 10 equity holdings comprised 25.2% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 24 CHASE SMALL CAPITALIZATION FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years 4/1/93 Premier Shares 13.23% 11.32% 18.80% 13.99% Investor Shares 12.89% 11.17% 18.71% 13.92%
Life of Fund Performance* [LINE CHART PLOT POINTS]
Chase Small Lipper Small Company Lipper Small Cap Capitalization Fund Funds Index Core Fund Index S&P 500 Index 4/93 10000 10000 10000 10000 12/93 10890 11565 10948 11469 12/94 10230 11509 10966 10921 12/95 13410 15148 14338 14194 12/96 17550 17324 17020 17220 12/97 21781 19926 20804 21626 12/98 21381 19755 20047 21342 12/99 24208 27962 24092 23991
[END PLOT POINTS] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance of $10,000 invested in Premier Shares of Chase Small Capitalization Fund, the Standard & Poor's 600 Index and the Lipper Small Company Funds Index from April 1, 1993 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the Index and the Average do not include a sales charge and have been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/12/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/12/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. The Chase Small Capitalization Fund is the successor to the AVESTA Trust Small Capitalization Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Small Capitalization Fund, a new investment portfolio of MFIT. The Chase Small Capitalization Fund, unlike the AVESTA Small Capitalization Fund is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Small Company Funds Index represents the performance of the 30 largest small company funds. The Lipper Small Cap Core Index consists of funds that invest in small-capitalization stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. The Standard and Poor's 600 Index is a broad-based index consisting of 600 small capitalization companies. The index is unmanaged and reflects the reinvestment of dividend. An individual cannot invest directly in an index. Small Capitalization funds typically carry more risk than stock funds investing in well-established blue chip companies since smaller companies generally have a higher risk of failure. Historically smaller companies' stock has experienced a greater degree of market volatility than the average stock. 25 - -------------------------------------------------------------------------------- CHASE CORE EQUITY FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Core Equity Fund, which seeks to maximize total investment return with an emphasis on long-term capital appreciation and current income, provided a total return of 23.89% (Premier Shares) compared to the Lipper Growth & Income Funds Index return of 11.86% and Lipper Large Cap Core Index return of 19.35% for the one year period ended December 31, 1999. How the Fund Was Managed Skillful stock selection and good performance by precisely the type of stock bought by the Fund (i.e., high quality, large-cap growth stocks with superior earnings prospects) led to superior returns compared to the market. Most of the gain was recorded in the fourth quarter, when the Fund rode the technology-stock rally to return a total of 15.58%. Technology stocks rallied as the market focused on areas judged likely to profit from the Internet economy. Expectations of strong growth in demand for semiconductors, cell phones and communications equipment boosted many names. Holdings like Microsoft, Cisco Systems and Nortel Networks all performed well. But gains were not restricted to technology. The Fund benefited from an investment in Omnicom, the advertising and marketing multinational, where growth in internet dot.com advertising should boost profits. Stock prices of a number of `old media' companies--like AT&T Liberty Media and Time Warner--also rose in anticipation of convergence with `new media'. The Fund's investment style was even suited to the difficult third quarter, when inflation and valuation worries haunted the market. Much of the equity market was trapped in a trading range, and those companies that missed earnings forecasts were severely punished. Yet technology stocks and a small number of well-managed blue chips continued to make new highs. The Fund benefited from holdings in companies like Microsoft, Intel and Dell Computer. It also had positions in well-managed multinationals like GE and Procter & Gamble. However, a number of portfolio stocks did perform badly at that time as a result of disappointing trading. Discount broker Charles Schwab fell sharply after warning that profit margins might deteriorate sharply later in the year. Where the Fund May Be Headed Looking ahead, market rises may no longer focus to such an extent on technology stocks, but may include a broader selection of stocks. If interest rates continue to move higher, technology-stock valuations will be impacted. As always, the Fund may benefit both from its balanced approach and its strategy of holding large companies with superior earnings growth and leadership positions in their markets. 26 CHASE CORE EQUITY FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Technology (26.9%) Consumer Cyclicals (17.0%) Financial (13.5%) Health Care (10.3%) Utilities (7.5%) Capital Goods (7.3%) Energy (7.1%) Cash Equivalent & Short-Term Paper (4.9%) Consumer Staples (2.7%) Basic Materials (1.9%) Transportation (0.9%) [END PLOT POINTS] Top Ten Equity Holdings of the Portfolio 1. Microsoft Corp. (6.6%) Develops, manufactures, licenses and supports computer software products. 2. General Electric Co. (4.5%) A diversified manufacturing, technology and services company. Operations include appliance manufacturing, capital services, information services, and electrical distribution. 3. Wal-Mart Stores, Inc. (3.6%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware, and other products. 4. Exxon Mobil Corp. (3.1%) Operates petroleum and petrochemicals businesses on a worldwide basis. Operations include exploration and production of oil and gas. 5. American International Group, Inc. (2.8%) Provides a variety of insurance and financial services in the U.S. and internationally. The Company writes property, casualty, marine, life, and financial services insurance. 6. Cisco Systems, Inc. (2.8%) Supplies data networking products to the corpo- rate enterprise and public wide area service provider markets. 7. Intel Corp. (2.3%) Manufactures micro and personal computers. The Company also supplies mainframe computers and other information processing equipment, software and networking products and peripheral equipment. 8. Home Depot, Inc. (2.2%) Sells building materials and home improvement products. The Company's stores sell plumbing, heating and electrical supplies, lumber, floor and wall coverings. 9. Lucent Technologies, Inc. (2.2%) Designs, develops, manufactures, and distributes communications systems, software, and products worldwide. 10. Citigroup, Inc. (2.1 %) A diversified financial services holding company that provides investment services, including asset management, consumer finance services, property and casualty insurance services, and life insurance services. Top 10 equity holdings comprised 32.2% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 27 CHASE CORE EQUITY FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years 4/1/93 Premier Shares 23.89% 29.32% 27.18% 20.11% Investor Shares 23.59% 29.17% 27.09% 20.05%
Life of Fund Performance* [LINE CHART PLOT POINTS]
Chase Core Lipper Growth & Lipper Large Cap Equity Fund Income Funds Index Core Index S&P 500 Index 4/93 10000 10000 10000 10000 12/93 10800 10821 10688 10547 12/94 10358 10777 10573 10687 12/95 13006 14132 13930 14702 12/96 15936 17054 16694 18078 12/97 21246 21638 21573 24109 12/98 27823 24576 27384 31000 12/99 34476 27491 32682 37523
[END PLOT POINTS] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Core Equity Fund, the Standard & Poor's 500 Index and Lipper Growth and Income Funds Index from April 1, 1993 to December 31, 1999. The performance of the Fund assumed the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares were introduced on 9/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 9/10/98 are based on the predecessor Premier Shares class and do not include Investor Share expenses. Chase Core Equity Fund is the successor to the AVESTA Trust Core Equity Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Core Equity Fund, a new investment portfolio of MFIT. Chase Core Equity Fund, unlike the AVESTA Core Equity Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Growth and Income Funds Index represents performance of the largest 30 growth and income funds. Each of these funds combines a growth of earnings orientation and an income requirement for level and/or rising dividends. The Lipper Large Cap Core Index consists of funds that invest in both growth and value stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in the index. 28 - -------------------------------------------------------------------------------- CHASE EQUITY GROWTH FUND As of December 31, 1999 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Equity Growth Fund, which seeks to provide capital appreciation, generated a total return of 31.85% (Premier Shares) compared to the Lipper Growth Funds Index return of 27.96% and Lipper Large Cap Growth Index return of 34.82% for the one year period ended December 31, 1999. How the Fund Was Managed Skillful stock selection benefited the Fund in a year that was perfectly suited to its style of investing in large-cap growth companies. Technology stocks made the greatest contributions to performance, but biotechnology stocks were also beginning to perform towards the year-end in anticipation of advances in medical science. Most of the gain came in the fourth quarter, when technology companies rallied in expectation of a surge in demand for semiconductor devices, cell phones and communications equipment as a result of the burgeoning Internet economy. Stocks that rallied strongly then were also among the Fund's leading contributors to performance for the year as a whole. EMC Corp., Microsoft and Applied Material were all leading performers. Cisco Systems was also a major contributor. But the fourth quarter rally was not confined to technology. Financials performed strongly following the repeal of the Glass-Steagall Act that had prevented commercial and investment banks from merging. Another holding that performed well during the year was the biotechnology stock Amgen. Fellow biotechnology company Biogen was also strong, if a little volatile. Otherwise performance was fairly selective. Although retailing, for example, was poor as a sector, Wal-Mart and Home Depot made significant contributions to Fund performance. The Fund's investment style was even suited to the difficult third quarter, when inflation and valuation worries haunted the market. Much of the equity market was trapped in a trading range, and those companies that missed earnings forecasts were severely punished. Yet technology stocks and a small number of well-managed blue chips continued to make new highs. Although technology and other growth stocks came under pressure for a few weeks in May, they showed great resilience. Where the Fund May Be Headed Financial markets are in a climate of rising interest rates and historically high equity valuations. At the same time, investors were highly selective in 1999. While valuations in areas like technology rose significantly, many areas of the market--such as consumer staples--actually experienced declining prices. In this environment, there are some valuation discrepancies and, therefore, some opportunities. The Fund will seek to take advantage of these opportunities within the context of its focus on high-quality growth companies. 29 CHASE EQUITY GROWTH FUND As of December 31, 1999 (Unaudited) Percentage of Total Portfolio Investments [PIE CHART PLOT POINTS] Technology (37.7%) Health Care (15.2%) Consumer Cyclicals (14.6%) Capital Goods (9.2%) Utilities (9.1%) Financial (6.2%) Core Equivalent & Short-Term Paper (5.0%) Consumer Staples (2.4%) Transporation (0.6%) [END PLOT POINTS] Top Ten Equity Holdings of the Portfolio 1. Microsoft Corp. (5.9%) Develops, manufactures, licenses and supports computer software products. 2. General Electric Co. (4.8%) A diversified manufacturing, technology and services company. Operations include appliance manufacturing, capital services, information services, and electrical distribution. 3. EMC Corp. (4.1%) Provides enterprise storage systems, software, networks and services. 4. Intel Corp. (3.9%) Manufactures micro and personal computers. The Company also supplies mainframe computers and other information processing equipment, software and networking products and peripheral equipment. 5. Wal-Mart Stores, Inc. (3.8%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware, and other products. 6. Applied Materials, Inc. (3.6%) Develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. 7. Amgen, Inc. (3.4%) Discovers, develops, manufactures, and markets human therapeutics based on cellular and molecular biology. Focuses its research on secreted protein and small molecule therapeutics. 8. America Online, Inc. (3.1%) Provides interactive communications and services through its America Online and Compuserve worldwide Internet online services. 9. Novellus Systems, Inc. (3.1%) Manufactures, markets and services advanced automated wafer fabrication systems for the deposition of thin films. 10. Cisco Systems, Inc. (3.1%) Supplies data networking products to the corporate enterprise and public wide area service provider markets. Top 10 equity holdings comprised 38.8% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 30 CHASE EQUITY GROWTH FUND As of December 31, 1999 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years Premier Shares 31.85% 36.75% 31.14% 18.45% Investor Shares 31.54% 36.58% 31.04% 18.41%
10 Year Performance* [LINE CHART PLOT POINTS]
Chase Equity Lipper Growth Lipper Large Cap S&P Barra Growth Fund Funds Index Growth Index Growth Index 12/89 10000 10000 10000 10000 12/90 9855 9459 9818 10020 12/91 12974 12895 13484 13865 12/92 13811 13879 14413 14567 12/93 14154 15541 15949 14812 12/94 14023 15297 15818 15275 12/95 17643 20292 21342 21100 12/96 21261 23850 25729 26160 12/97 29168 30536 32828 35677 12/98 41238 38380 44802 50715 12/99 54379 49112 60401 64907
[END PLOT POINTS] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Equity Growth Fund, the Standard and Poor's Barra Growth Index and Lipper Growth Funds Index from December 31, 1989 to December 31, 1999. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $1 million minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/13/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/13/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Equity Growth Fund is the successor to the AVESTA Trust Equity Growth Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Equity Growth Fund, a new investment portfolio of MFIT. Chase Equity Growth Fund, unlike the AVESTA Equity Growth Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Growth Funds Index represents performance of the largest 30 growth funds. Each of these funds invests in companies whose long-term earnings are expected to grow significantly faster than the earnings of the stocks represented in the major unmanaged stock indices. The Lipper Large Cap Growth Fund Index consists of funds that invest in large-cap growth stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's Barra Growth Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in an index. 31 - -------------------------------------------------------------------------------- CHASE MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Money Market Instruments -- 99.3% - ------------------------------------------------------------------------------------- U.S. Government Agency Security -- 3.2% --------------------------------------- $ 10,000 Federal Home Loan Bank, DN, 6.13%, 12/22/00 $9,428 (Cost $9,428) State And Municipal Obligation -- 1.7% -------------------------------------- 5,000 Texas State, Taxable, Veterans Housing Assistance, Ser. A-2, FRDN, 6.50%, 01/05/00 5,000 (Cost $5,000) Corporate Notes & Bonds -- 49.0% -------------------------------- Asset Backed Securities -- 2.0% Beta Finance Corp., LTD., (Channel Islands), MTN, #, 2,000 5.20%, 03/01/00 2,000 3,000 5.27%, 05/15/00 3,000 1,000 CC USA Inc., (Centauri Corp.), MTN, #, 5.68%, 06/15/00 1,000 ------ 6,000 Automotive -- 12.2% 3,000 Chrysler Financial Co., LLC, MTN, 5.85%, 05/15/00 3,008 10,000 Ford Motor Credit Co., MTN, FRN, 5.74%, 08/18/00 9,996 10,000 General Motors Acceptance Corp., MTN, FRN, 6.46%, 11/09/00 10,024 2,000 PACCAR Financial Corp., MTN, 6.23%, 03/15/00 2,004 Toyota Motor Credit Corp., MTN, 3,000 5.76%, 07/06/00 3,000 4,000 FRN, 5.80%, 08/18/00 4,000 4,000 FRN, 5.81%, 10/12/00 4,000 ------ 36,032 Banking -- 8.1% American Express Centurion Bank, FRN, 1,000 5.85%, 05/16/00 1,000 4,000 5.85%, 09/29/00 4,000 12,000 Bank of New York Co., Inc., MTN, FRN, 6.09%, 06/05/00 11,997 U.S. Central Credit Union, MTN, 2,000 5.08%, 04/19/00 2,000 5,000 5.14%, 04/24/00 5,000 ------ 23,997 Computers/Computer Hardware -- 0.7% 2,000 IBM Credit Corp., MTN, 5.90%, 08/07/00 2,000 Financial Services -- 14.9% 5,000 Bollingbrent LTD Partnership, FRN, 6.59%, 01/06/00 5,000 10,000 CIT Group, Inc., MTN, FRN, 5.80%, 09/15/00 9,995 1,000 Commercial Credit Group Inc., 6.13%, 03/01/00 1,002 Goldman Sachs Group LP, FRN, #, 6,000 6.26%, 01/12/01 6,000 3,000 6.31%, 01/26/00 3,000 International Lease Finance Corp., 1,500 6.20%, 05/01/00 1,503 5,000 MTN, 6.69%, 04/03/00 5,017 Merrill Lynch & Co., Inc., MTN, 1,000 5.56%, 06/30/00 1,000 5,000 FRN, 6.07%, 08/14/00 4,998 2,000 FRN, 6.46%, 08/03/00 2,003 5,000 Morgan Stanley Dean Witter & Co., MTN, FRN, 6.67%, 11/13/00 5,025 ------ 44,543
See notes to financial statements. 32 CHASE MONEY MARKET FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - --------------------------------------------------------------------------------------- Money Market Instruments -- Continued - --------------------------------------------------------------------------------------- Machinery & Engineering Equipment -- 6.7% Caterpillar Financial Services Corp., MTN, $ 2,250 5.80%, 03/15/00 $ 2,252 7,500 FRN, 6.21%, 06/08/00 7,503 10,000 John Deere Capital Corp., MTN, FRN, 6.43%, 11/09/00 10,021 ------- 19,776 Office Equipment -- 0.7% 2,000 Xerox Credit Corp., MTN, 5.83%, 05/08/00 1,999 Retailing -- 1.0% Wal-Mart Stores Inc., 2,000 5.65%, 02/01/00 2,001 1,000 5.85%, 06/01/00 1,001 ------- 3,002 Telecommunications -- 2.0% 6,000 AT&T Corp., FRN, #, 6.14%, 07/13/00 5,997 Utilities -- 0.7% 2,000 National Rural Utilities Co., MTN, FRN, 5.81%, 09/08/00 2,000 - --------------------------------------------------------------------------------------- Total Corporate Notes & Bonds 145,346 (Cost $145,346) ----------------------------------------------------------------------- Discount Commercial Paper -- 31.0% ---------------------------------- Asset Backed Securities -- 5.7% 2,836 Alpine Securitization, 6.37%, 02/22/00 2,810 10,000 Blue Ridge Asset Funding Corp., 6.20%, 02/15/00 9,924 4,218 Quincy Capital Corp., 6.07%, 02/04/00 4,194 ------- 16,928 Banking -- 2.3% 7,000 Citibank Capital Markets Assets, LLC, 6.10%, 02/25/00 6,936 Chemicals -- 4.0% 12,000 E.I. Dupont de Nemours Co., 5.87%, 03/10/00 11,868 Diversified -- 4.0% General Electric Capital Corp., 7,000 5.95%, 02/28/00 6,934 5,000 6.04%, 03/17/00 4,938 ------- 11,872 Entertainment/Leisure -- 1.0% 3,000 Walt Disney Co., #, 5.34%, 02/02/00 2,986 Financial Services -- 7.9% 5,000 Associates Corp. of North America, 5.86%, 02/08/00 4,970 9,000 Cargill Global Funding PLC, #, 5.58%, 01/13/00 8,985 3,482 Kitty Hawk Funding Corp., #, 6.03%, 02/09/00 3,460 6,000 Nationwide Building Society, (United Kingdom), 5.49%, 01/14/00 5,988 ------- 23,403 Food/Beverage Products -- 1.7% 5,000 Archer Daniels Midland Co., 5.89%, 04/03/00 4,926 Insurance -- 3.4% 10,000 Allstate Corp., #, 5.89%, 02/15/00 9,928 Metals/Mining -- 1.0% 3,000 Rio Tinto America Inc., 5.88%, 01/21/00 2,990 - --------------------------------------------------------------------------------------- Total Discount Commercial Paper 91,837 (Cost $91,837) - ---------------------------------------------------------------------------------------
See notes to financial statements. 33 CHASE MONEY MARKET FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - ---------------------------------------------------------------------------------- Money Market Instruments -- Continued - ---------------------------------------------------------------------------------- Certificates Of Deposit -- 11.5% -------------------------------- $ 10,000 Banco Popolare di Milano, (Italy), 6.02%, 02/22/00 $ 10,000 5,000 Bayerische Landesbank, (Germany), FRN, 6.39%, 12/15/00 4,996 3,000 Commerzbank AG, (Germany), 5.12%, 04/25/00 2,999 5,000 First Union National Bank, FRN, 6.27%, 09/25/00 5,000 10,000 Landesbank Baden-Wuerttemberg, (Principal in Euro), (Germany), 6.04%, 03/06/00 10,001 1,000 Royal Bank of Canada, (Canada), 5.12%, 03/20/00 1,000 ------------------------------------------------------------------ Total Certificates Of Deposit 33,996 (Cost $33,996) ------------------------------------------------------------------ Repurchase Agreement -- 2.9% ---------------------------- 8,469 Lehman Bros. Inc. Tri Party, 3.75%, due 01/03/00 8,469 (Dated 12/31/99, Proceeds $8,472, Secured by FNMA, $8,323, 6.50% through 9.00%, due 05/18/25 through 12/18/25; Market Value $8,639) (Cost $8,469) - ---------------------------------------------------------------------------------- Total Investments -- 99.3% $294,076 (Cost $294,076) - ----------------------------------------------------------------------------------
See notes to financial statements. 34 - -------------------------------------------------------------------------------- CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 97.0% - -------------------------------------------------------------------------------- U.S. Treasury Securities -- 36.0% --------------------------------- U.S. Treasury Notes & Bonds, $ 1,500 4.75%, 11/15/08 $ 1,323 4,800 5.50%, 12/31/00 4,772 1,200 5.50%, 03/31/03 1,170 1,000 5.63%, 02/15/06 957 1,000 5.75%, 11/30/02 985 900 5.88%, 11/30/01 894 250 5.88%, 09/30/02 247 1,100 6.88%, 05/15/06 1,119 ---------------------------------------------------------------- Total U.S. Treasury Securities 11,467 (Cost $11,729) ---------------------------------------------------------------- U.S. Government Agency Securities -- 45.3% ------------------------------------------ Federal Farm Credit Bank, 1,500 5.25%, 05/01/02 1,455 1,500 5.88%, 07/02/01 1,488 1,330 MTN, 6.90%, 05/01/02 1,336 Federal Home Loan Bank, 1,500 5.13%, 04/17/01 1,476 1,300 6.79%, 04/17/01 1,303 1,500 Federal Home Loan Mortgage Corp., 6.25%, 10/15/02 1,486 Federal National Mortgage Association, 1,500 5.25%, 01/15/03 1,443 1,000 6.00%, 05/15/08 936 1,500 6.25%, 11/15/02 1,486 1,000 6.50%, 08/15/04 988 1,000 7.10%, 10/18/04 991 ---------------------------------------------------------------- Total U.S. Government Agency Securities 14,388 (Cost $14,505) ---------------------------------------------------------------- Mortgage-Backed Pass Through Securities -- 15.7% ------------------------------------------------ Collateralized Mortgage Obligation -- 4.6% 1,483 Federal Home Loan Mortgage Corp., Ser. 2196, Class MA, 7.00%, 11/15/06 1,470 Residential Mortgage-Backed Pass Through Securities -- 11.1% Federal National Mortgage Association, 1,070 Pool 190806, 6.00%, 05/01/01 1,057 2,552 Pool 251901, 6.50%, 08/01/13 2,476 ------- 3,533 - -------------------------------------------------------------------------------- Total Mortgage-Backed Pass Through Securities 5,003 (Cost $5,121) - -------------------------------------------------------------------------------- Total Long-Term Investments 30,858 (Cost $31,355) - -------------------------------------------------------------------------------- Short-Term Investment -- 2.1% - -------------------------------------------------------------------------------- U.S. Government Agency Security -- 2.1% --------------------------------------- 677 Federal Home Loan Bank, DN, 1.40%, 01/03/00 677 (Cost $677) - -------------------------------------------------------------------------------- Total Investments -- 99.1% $31,535 (Cost $32,032) - --------------------------------------------------------------------------------
See notes to financial statements. 35 - -------------------------------------------------------------------------------- CHASE INTERMEDIATE TERM BOND FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------- Long-Term Investments -- 84.1% - ------------------------------------------------------------------------------------- U.S. Treasury Security -- 5.6% ------------------------------ $ 2,380 U.S. Treasury Bond, 6.25%, 08/15/23 $2,244 (Cost $2,389) U.S. Government Agency Securities -- 10.7% ------------------------------------------ Federal Home Loan Bank, 1,400 5.40%, 03/01/04 1,326 500 7.00%, 04/02/07 497 Federal Home Loan Mortgage Corp., 1,300 5.75%, 03/15/09 1,187 1,300 6.25%, 07/15/04 1,271 ------------------------------------------------------------------- Total U.S. Government Agency Securities 4,281 (Cost $4,373) ------------------------------------------------------------------- Corporate Notes & Bonds -- 38.3% -------------------------------- Automotive -- 3.1% 500 Ford Motor Credit Co., 7.38%, 10/28/09 494 750 TRW, Inc., #, 6.45%, 06/15/01 742 ------ 1,236 Banking -- 1.6% 750 U.S. Bank, NA, 5.70%, 12/15/08 657 Computers/Computer Hardware -- 1.8% 750 Electronic Data Systems Corp., 7.13%, 10/15/09 730 Consumer Products -- 2.0% 800 Procter & Gamble Co., 6.60%, 12/15/04 790 Diversified -- 2.0% 800 Tyco International Group, SA, (Luxembourg), 6.13%, 06/15/01 786 Electronics/Electrical Equipment -- 1.7% 700 General Electric Capital Corp., MTN, 5.91%, 05/07/01 693 Financial Services -- 9.8% 900 American Express Co., 8.50%, 08/15/01 924 600 Associates Corp. of North America, 6.63%, 05/15/01 598 600 International Lease Finance Corp., 5.95%, 06/01/01 592 800 Lehman Brothers Holdings Inc., 6.63%, 04/01/04 774 1,000 Merrill Lynch & Co., Inc., MTN, 6.10%, 12/10/01 985 ------ 3,873 Oil & Gas -- 5.8% 800 Amerada Hess Corp., 7.88%, 10/01/29 781 800 Conoco, Inc., 5.90%, 04/15/04 764 800 Occidental Petroleum Corp., 7.38%, 11/15/08 779 ------ 2,324 Retailing -- 2.5% 1,000 Wal-Mart Stores, Inc., 6.15%, 08/10/01 991 Telecommunications -- 3.0% 750 Metronet Communications Corp., (Canada), SUB, 0.00%, 06/15/03 592 700 U.S. West Capital Funding, Inc., 6.50%, 11/15/18 605 ------ 1,197
See notes to financial statements. 36 CHASE INTERMEDIATE TERM BOND FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount (USD) Issuer Value - -------------------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------------------- Utilities -- 5.0% $ 800 Empresa Nacional de Electricidad SA, Ser. B, (Chile), 8.50%, 04/01/09 $ 793 500 Hydro-Quebec, Ser.B, (Canada), MTN, 6.86%, 04/01/05 490 700 Israel Electronic Corp., (Israel), MTN, #, 8.25%, 10/15/09 698 ------- 1,981 ------- -------------------------------------------------------------------------- Total Corporate Notes & Bonds 15,258 (Cost $15,498) -------------------------------------------------------------------------- Mortgage-Backed Pass Through Securities -- 29.5% ------------------------------------------------ Residential Mortgage-Backed Pass Through Securities -- 29.5% Federal Home Loan Mortgage Corp., 1,232 Gold Pool C17245, 7.00%, 11/01/28 1,192 2,320 Gold Pool E77074, 6.00%, 05/01/14 2,202 Federal National Mortgage Association, 59 Pool 124734, 6.50%, 03/01/00 59 287 Pool 250772, 7.00%, 12/01/03 287 362 Pool 398212, 6.50%, 02/01/13 351 1,609 Pool 398265, 6.00%, 03/01/28 1,472 942 Pool 442508, 6.00%, 09/01/13 895 Government National Mortgage Association, 439 Pool 436259, 6.50%, 03/15/28 412 762 Pool 448704, 7.50%, 10/15/27 754 434 Pool 462508, 6.50%, 02/15/28 407 282 Pool 476305, 6.50%, 05/15/28 265 281 Pool 478172, 6.50%, 06/15/28 264 1,497 Pool 491662, 7.00%, 10/15/29 1,446 749 Pool 498870, 7.00%, 10/15/29 723 1,097 Pool 504549, 7.00%, 09/15/29 1,059 -------------------------------------------------------------------------- Total Mortgage-Backed Pass Through Securities 11,788 (Cost $12,273) - -------------------------------------------------------------------------------------------- Total Long-Term Investments 33,571 (Cost $34,533) - -------------------------------------------------------------------------------------------- Short-Term Investment -- 14.6% - -------------------------------------------------------------------------------------------- U.S. Government Agency Security -- 14.6% ---------------------------------------- 5,822 Federal Home Loan Bank, DN, 1.40%, 01/03/00 5,822 (Cost $5,822) - -------------------------------------------------------------------------------------------- Total Investments -- 98.7% $39,393 (Cost $40,355) - --------------------------------------------------------------------------------------------
See notes to financial statements. 37 - -------------------------------------------------------------------------------- CHASE U.S. GOVERNMENT SECURITIES FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 93.0% - -------------------------------------------------------------------------------- U.S. Treasury Securities -- 33.6% --------------------------------- U.S. Treasury Notes & Bonds, $ 535 6.25%, 10/31/01 $ 535 350 6.50%, 08/31/01 351 675 7.13%, 02/15/23 703 850 8.75%, 05/15/17 1,015 ---------------------------------------------------------------- Total U.S. Treasury Securities 2,604 (Cost $2,646) ---------------------------------------------------------------- U.S. Government Agency Securities -- 18.3% ------------------------------------------ Federal National Mortgage Association, 250 6.25%, 11/15/02 248 500 6.38%, 06/15/09 477 700 6.50%, 08/15/04 691 ---------------------------------------------------------------- Total U.S. Government Agency Securities 1,416 (Cost $1,448) ---------------------------------------------------------------- Mortgage-Backed Pass Through Securities -- 41.1% ------------------------------------------------ Residential Mortgage-Backed Pass Through Securities -- 41.1% 400 Federal Home Loan Mortgage Corp., Gold Pool E00766, 7.00%, 12/01/14 396 Federal National Mortgage Association, 300 Pool 252921, 7.50%, 11/01/14 302 650 Pool 511599, 8.00%, 12/01/29 656 467 Pool 523930, 8.00%, 11/01/29 470 650 Pool 525908, 7.00%, 12/01/29 629 Government National Mortgage Association, 400 Pool 434628, 8.00%, 12/15/29 404 325 Pool 510845, 7.50%, 12/15/29 321 ---------------------------------------------------------------- Total Mortgage-Backed Pass Through Securities 3,178 (Cost $3,200) - -------------------------------------------------------------------------------- Total Long-Term Investments 7,198 (Cost $7,294) - -------------------------------------------------------------------------------- Short-Term Investment -- 6.3% - -------------------------------------------------------------------------------- U.S. Government Agency Security -- 6.3% --------------------------------------- 484 Federal Home Loan Bank, DN, 1.40%, 01/03/00 484 (Cost $484) - -------------------------------------------------------------------------------- Total Investments -- 99.3% $7,682 (Cost $7,778) - --------------------------------------------------------------------------------
See notes to financial statements. 38 - -------------------------------------------------------------------------------- CHASE INCOME FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ----------------------------------------------------------------------------------- Long-Term Investments -- 86.4% - ----------------------------------------------------------------------------------- U.S. Treasury Securities -- 11.5% --------------------------------- U.S. Treasury Notes & Bonds, $ 2,000 6.25%, 08/15/23 $1,886 5,000 8.13%, 08/15/19 - 5,697 ----------------------------------------------------------------- Total U.S. Treasury Securities 7,583 (Cost $7,894) ----------------------------------------------------------------- U.S. Government Agency Securities -- 15.3% ------------------------------------------ Federal Home Loan Bank, 4,000 4.88%, 01/22/02 - 3,870 1,650 6.38%, 08/15/06 - 1,595 Federal National Mortgage Association, 1,500 6.38%, 06/15/09 1,432 1,750 6.50%, 08/15/04 1,728 1,500 Tennessee Valley Authority, 6.00%, 09/24/02 1,474 ----------------------------------------------------------------- Total U.S. Government Agency Securities 10,099 (Cost $10,388) ----------------------------------------------------------------- Foreign Government Security -- 1.1% ----------------------------------- 750 Quebec Province, (Canada), 6.50%, 01/17/06 - 720 (Cost $735) Corporate Notes & Bonds -- 27.3% -------------------------------- Automotive -- 3.7% 1,000 Ford Motor Credit Co., 6.25%, 12/08/05 - 945 TRW, Inc., #, 750 6.45%, 06/15/01 743 800 7.75%, 06/01/29 750 ------ 2,438 Banking -- 5.0% 1,400 BankAmerica Corp., 6.20%, 02/15/06 - 1,320 Korea Development Bank, (South Korea), 700 6.50%, 11/15/02 - 680 700 7.13%, 09/17/01 - 695 700 U.S. Bank, NA, 5.70%, 12/15/08 - 613 ------ 3,308 Business Services -- 1.1% 750 Comdisco, Inc., 7.25%, 09/01/02 - 742 Diversified -- 2.1% Tyco International Group, SA, (Luxembourg), 750 5.88%, 11/01/04 694 700 6.13%, 06/15/01 - 688 ------ 1,382 Financial Services -- 2.2% 750 Lehman Brothers Holdings Inc., 6.63%, 02/05/06 - 709 750 TXU Eastern Funding Co., (United Kingdom), #, 6.15%, 05/15/02 731 ------ 1,440 Food/Beverage Products -- 4.1% 2,000 Anheuser-Busch Companies, Inc., 6.75%, 08/01/03 - 1,988 750 Coca-Cola Enterprises, 7.13%, 09/30/09 - 733 ------ 2,721
See notes to financial statements. 39 CHASE INCOME FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ------------------------------------------------------------------------------------------- Insurance -- 1.1% $ 700 Conseco, Inc., 8.50%, 10/15/02 - $ 708 Oil & Gas -- 2.2% 1,500 Amerada Hess Corp., 7.88%, 10/01/29 - 1,463 Packaging -- 0.7% 500 Tenneco Packaging, Inc., 8.00%, 04/15/07 491 Retailing -- 1.0% 750 Kroger Co., 6.38%, 03/01/08 680 Telecommunications -- 2.5% 450 Metronet Communications Corp., (Canada), SUB, 0.00%, 06/15/03 355 800 Sprint Capital Corp., 6.13%, 11/15/08 - 725 600 U.S. West Capital Funding, Inc., 6.25%, 07/15/05 568 ------- 1,648 Utilities -- 1.6% 600 Empresa Nacional de Electricidad SA, Ser. B, (Chile), 8.50%, 04/01/09 - 595 500 Israel Electronic Corp., (Israel), #, MTN 7.75%, 12/15/27 432 ------- 1,027 ------------------------------------------------------------------------ Total Corporate Notes & Bonds 18,048 (Cost $18,212) ------------------------------------------------------------------------ Mortgage-Backed Pass Through Securities -- 28.9% ------------------------------------------------ Residential Mortgage-Backed Pass Through Securities -- 28.9% Federal National Mortgage Association, 2,500 Pool 10940, 6.00%, 01/15/49 2,287 1,400 Pool 13975, 7.00%, 01/25/15 1,384 2,700 Pool 16475, 6.50%, 01/15/49 2,619 5,700 Pool 28668, 6.50%, 01/15/49 5,370 3,400 Pool 30037, 7.50%, 01/15/49 3,362 4,200 Pool 32767, 7.00%, 01/15/49 4,061 ------------------------------------------------------------------------- Total Mortgage-Backed Pass Through Securities 19,083 (Cost $19,249) ------------------------------------------------------------------------- Asset Backed Securities -- 2.3% ------------------------------- 800 MBNA Master Credit Card Trust, Ser. 1999-M, Class B, 6.80%, 04/16/07 786 750 Residential Asset Securities Corp., Ser. 1999-KS4, Class AI3, 6.94%, 04/25/25 741 ------------------------------------------------------------------------- Total Asset Backed Securities 1,527 (Cost $1,547) - ------------------------------------------------------------------------------------------- Total Long-Term Investments 57,060 (Cost $58,025) - ------------------------------------------------------------------------------------------- Short-Term Investment -- 42.1% - ------------------------------------------------------------------------------------------- U.S. Government Agency Security -- 42.1% ---------------------------------------- 27,791 Federal Home Loan Bank, DN, 1.40%, 01/03/00 - 27,789 (Cost $27,789) - ------------------------------------------------------------------------------------------- Total Investments -- 128.5% $84,849 (Cost $85,814) - -------------------------------------------------------------------------------------------
See notes to financial statements. 40 - -------------------------------------------------------------------------------- CHASE BALANCED FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 93.4% - -------------------------------------------------------------------------------- Common Stock -- 53.6% --------------------- Airlines -- 0.3% 20 Southwest Airlines, Inc $ 331 Biotechnology--2.8% 33 Amgen, Inc. * 1,972 9 Biogen, Inc. * 746 5 Genzyme Corp. (General Division) * 203 ----- 2,921 Broadcasting/Cable -- 0.3% 3 Clear Channel Communications, Inc. * 272 Computer Networks -- 1.8% 17 Cisco Systems, Inc. * 1,840 Computer Software -- 3.8% 4 Citrix Systems, Inc. * 535 30 Microsoft Corp. * 3,470 ----- 4,005 Computers/Computer Hardware -- 4.7% 21 Dell Computer Corp. * 1,049 22 EMC Corp. * 2,391 14 International Business Machines Corp. 1,490 ----- 4,930 Consumer Products -- 1.5% 10 Gillette Co. 398 11 Procter & Gamble Co. 1,159 ----- 1,557 Diversified -- 3.2% 18 General Electric Co. 2,843 12 Tyco International LTD (Bermuda) 467 ----- 3,310 Electronics/Electrical Equipment -- 1.1% 12 Solectron Corp. * 1,103 Financial Services -- 3.0% 4 American Express Co. 582 25 Charles Schwab Corp. 962 8 Merrill Lynch & Co., Inc. 676 6 Morgan Stanley Dean Witter & Co. 896 ----- 3,116 Food/Beverage Products -- 1.4% 3 Anheuser-Busch Companies, Inc. 188 14 Coca-Cola, Co. 794 12 PepsiCo, Inc. 436 ----- 1,418 Health Care/Health Care Services -- 0.4% 4 Guidant Corp. * 203 5 Medtronic, Inc. 186 ----- 389 Insurance -- 0.5% 5 American International Group, Inc. 558 Internet Services/Software -- 1.8% 25 America Online, Inc. * 1,886 Machinery & Engineering Equipment -- 2.0% 17 Applied Materials, Inc. * 2,132
See notes to financial statements. 41 CHASE BALANCED FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Multi-Media -- 0.9% 13 Time Warner, Inc. $ 945 Pharmaceuticals -- 5.3% 9 Abbot Laboratories 315 10 American Home Products Corp. 404 12 Bristol-Myers Squibb Co. 757 8 Eli Lilly & Co. 545 8 Johnson & Johnson 733 15 Merck & Co., Inc. 1,020 23 Pfizer, Inc. 740 12 Schering-Plough Corp. 513 7 Warner-Lambert Co. 586 ------ 5,613 Restaurants/Food Services -- 0.2% 5 McDonald's Corp. 210 Retailing -- 5.4% 12 Bed Bath & Beyond, Inc. * 414 7 Best Buy Co., Inc. * 374 24 Gap, Inc. 1,104 13 Home Depot, Inc. 913 33 Kroger Co. * 631 32 Wal-Mart Stores, Inc. 2,230 ------ 5,666 Semi-Conductors -- 5.4% 28 Intel Corp. 2,297 10 KLA-Tencor Corp. * 1,158 15 Novellus Systems, Inc. * 1,844 4 Texas Instruments, Inc. 388 ------ 5,687 Telecommunications -- 5.1% 27 AT&T Corp. 1,363 7 Bell Atlantic Corp. 439 9 BellSouth Corp. 407 5 GTE Corp. 333 12 MCI WorldCom, Inc. * 647 6 Nextel Communications, Inc., Class A * 578 18 SBC Communications, Inc. 901 6 Sprint Corp. (FON Group) 385 6 Vodafone AirTouch PLC, ADR (United Kingdom) 309 ------ 5,362 Telecommunications Equipment -- 2.7% 21 Lucent Technologies, Inc. 1,603 9 Motorola, Inc. 1,277 ------ 2,880 - -------------------------------------------------------------------------------- Total Common Stock 56,131 (Cost $31,009) - --------------------------------------------------------------------------------
See notes to financial statements. 42 CHASE BALANCED FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ------------------------------------------------------------------------------------- U.S. Treasury Securities -- 15.8% --------------------------------- U.S. Treasury Notes & Bonds, 2,500 5.25%, 05/15/04 $2,395 4,200 5.63%, 02/15/06 4,018 1,000 5.88%, 11/15/05 971 7,035 6.25%, 08/15/23 6,633 2,000 6.38%, 03/31/01 2,004 625 6.50%, 11/15/26 609 --------------------------------------------------------------------- Total U.S. Treasury Securities 16,630 (Cost $17,800) --------------------------------------------------------------------- U.S. Government Agency Securities -- 4.2% ----------------------------------------- 1,000 Federal Home Loan Bank, 4.88%, 01/22/02 968 3,650 Federal National Mortgage Association, 6.38%, 06/15/09 3,485 --------------------------------------------------------------------- Total U.S. Government Agency Securities 4,453 (Cost $4,594) --------------------------------------------------------------------- Corporate Notes & Bonds -- 19.8% -------------------------------- Automotive -- 2.8% 1,425 DaimlerChrysler North America Holdings Corp., MTN, 6.63%, 09/21/01 1,418 225 Ford Motor Credit Co., 6.25%, 12/08/05 213 1,500 General Motors Acceptance Corp., 5.85%, 01/14/09 1,325 ------ 2,956 Banking -- 2.2% 1,950 Bank One Corp., 6.40%, 08/01/02 1,917 400 BankAmerica Corp., 6.20%, 02/15/06 377 ------ 2,294 Biotechnology -- 0.9% 1,100 Monsanto Co., #, 5.88%, 12/01/08 984 Computers/Computer Hardware -- 1.4% 1,425 IBM Credit Corp., MTN, 6.35%, 08/30/01 1,413 Consumer Products -- 0.3% 325 Procter & Gamble Co., 6.45%, 01/15/26 287 Financial Services -- 4.4% 20 American General Finance Corp., MTN, 6.04%, 07/02/01 20 500 Associates Corp. of North America, MTN, 7.52%, 03/29/00 502 1,625 Household Finance Corp., 5.88%, 09/25/04 1,533 1,265 International Lease Finance Corp., MTN, 8.35%, 02/04/02 1,296 1,330 Merrill Lynch & Co., Inc., MTN, 5.71%, 01/15/02 1,299 ------ 4,650 Food/Beverage Products -- 0.5% 500 Anheuser-Busch Companies, Inc., 6.75%, 08/01/03 497 Machinery & Engineering Equipment -- 1.3% 1,425 Caterpillar Financial Services Corp., MTN, 5.89%, 06/17/02 1,391 Oil & Gas -- 2.0% 2,200 BP Amoco PLC, (United Kingdom), 6.50%, 08/01/07 2,106 Pharmaceuticals -- 0.5% 600 Abbott Laboratories, 5.60%, 10/01/03 570
See notes to financial statements. 43 CHASE BALANCED FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Restaurants/Food Services -- 0.4% 450 McDonald's Corp., 7.05%, 11/15/25 $ 408 Retailing -- 3.1% 1,500 Safeway, Inc., 7.25%, 09/15/04 1,486 1,775 Wal-Mart Stores, Inc., 6.55%, 08/10/04 1,745 -------- 3,231 -------------------------------------------------------------------- Total Corporate Notes & Bonds 20,787 (Cost $21,346) - -------------------------------------------------------------------------------- Total Long-Term Investments 98,001 (Cost $74,749) - -------------------------------------------------------------------------------- Short-Term Investments -- 6.4% - --------------------------------------------------------------------------------- Repurchase Agreement -- 6.4% ---------------------------- 6,763 Greenwich Capital Markets, Inc., in a joint trading account at 3.50%, due 01/03/00 (Dated 12/31/99, Proceeds $6,765, Secured by FHLMC, $7,071, 5.75%, due 09/15/22; Market Value $6,903) 6,763 (Cost $6,763) - -------------------------------------------------------------------------------- Total Investments -- 99.8% $104,764 (Cost $81,512) - --------------------------------------------------------------------------------
See notes to financial statements. 44 - -------------------------------------------------------------------------------- CHASE EQUITY INCOME FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 92.3% - -------------------------------------------------------------------------------- Common Stock -- 92.3% --------------------- Automotive -- 1.8% 32 Ford Motor Co. $1,689 21 General Motors Corp. 1,526 ------ 3,215 Banking -- 4.6% 80 Bank of New York Co., Inc. 3,184 14 J.P. Morgan & Co. 1,798 44 SunTrust Banks, Inc. 3,028 ------ 8,010 Biotechnology -- 1.0% 51 Monsanto Co. 1,806 Chemicals -- 2.5% 15 Dow Chemical Co. 2,044 34 E.I. DuPont de Nemours Co. 2,227 ------ 4,271 Computer Networks -- 1.6% 26 Cisco Systems, Inc. * 2,828 Computer Software -- 3.7% 56 Microsoft Corp. * 6,480 Computers/Computer Hardware -- 4.6% 20 Hewlett-Packard Co. 2,267 53 International Business Machines Corp. 5,735 ------ 8,002 Consumer Products -- 3.5% 31 Gillette Co. 1,269 26 Philip Morris Companies, Inc. 603 39 Procter & Gamble Co. 4,272 ------ 6,144 Diversified -- 4.2% 47 General Electric Co. 7,344 Financial Services -- 8.7% 23 American Express Co. 3,874 93 Citigroup, Inc. 5,179 23 Merrill Lynch & Co., Inc. 1,954 28 Morgan Stanley Dean Witter & Co. 3,997 ------ 15,004 Food/Beverage Products -- 5.2% 29 Anheuser-Busch Companies, Inc. 2,027 34 Coca-Cola, Co. 1,986 32 PepsiCo, Inc. 1,124 98 Sysco Corp. 3,866 ------ 9,003 Insurance -- 3.1% 50 American International Group, Inc. 5,383 Machinery & Engineering Equipment -- 1.6% 63 Dover Corp. 2,859 Manufacturing -- 0.7% 22 Honeywell International Inc. 1,281 Multi-Media -- 0.5% 31 The Walt Disney Co. 916
See notes to financial statements. 45 CHASE EQUITY INCOME FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Oil & Gas -- 9.4% 49 BP Amoco PLC, ADR (United Kingdom) $ 2,928 28 Chevron Corp. 2,416 56 Enron Corp. 2,476 41 Exxon Mobil Corp. 3,307 46 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 2,754 8 Schlumberger LTD 467 32 Texaco, Inc. 1,711 2 Transocean Sedco Forex Inc. 54 ------- 16,113 Paper/Forest Products -- 0.7% 23 International Paper Co. 1,281 Pharmaceuticals -- 9.9% 45 Abbot Laboratories 1,645 41 American Home Products Corp. 1,629 52 Bristol-Myers Squibb Co. 3,306 44 Eli Lilly & Co. 2,933 20 Johnson & Johnson 1,853 34 Merck & Co., Inc. 2,253 104 Pfizer, Inc. 3,379 ------- 16,998 Retailing -- 4.1% 38 Home Depot, Inc. 2,571 67 Wal-Mart Stores, Inc. 4,597 ------- 7,168 Semi-Conductors -- 5.0% 53 Intel Corp. 4,395 45 Texas Instruments, Inc. 4,340 ------- 8,735 Shipping/Transportation -- 0.9% 42 Norfolk Southern Corp. 851 17 Union Pacific Corp. 733 ------- 1,584 Telecommunications -- 8.1% 47 AT&T Corp. 2,367 30 Bell Atlantic Corp. 1,847 43 BellSouth Corp. 1,994 25 GTE Corp. 1,757 40 MCI WorldCom, Inc. * 2,117 81 SBC Communications, Inc. 3,956 ------- 14,038 Telecommunications Equipment -- 4.8% 68 Lucent Technologies, Inc. 5,075 23 Motorola, Inc. 3,343 ------- 8,418 Utilities -- 2.1% 55 DQE, Inc. 1,894 35 Duke Energy Corp. 1,744 ------- 3,638 - -------------------------------------------------------------------------------- Total Long-Term Investments 160,519 (Cost $98,045) - --------------------------------------------------------------------------------
See notes to financial statements. 46 CHASE EQUITY INCOME FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - ---------------------------------------------------------------------------------- Short-Term Investments -- 8.7% - ---------------------------------------------------------------------------------- Repurchase Agreement -- 8.7% ---------------------------- $ 15,040 Greenwich Capital Markets, Inc., in a joint trading account at 3.50%, due 01/03/00, (Dated 12/31/99, Proceeds $15,044, Secured by FHLMC, $16,156, 5.75% through 6.00%, due 09/15/22 through 02/15/27; Mar- ket Value $15,344) $ 15,040 (Cost $15,040) - ---------------------------------------------------------------------------------- Total Investments -- 101.0% $175,559 (Cost $113,085) - ----------------------------------------------------------------------------------
See notes to financial statements. 47 - -------------------------------------------------------------------------------- CHASE SMALL CAPITALIZATION FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 94.6% - -------------------------------------------------------------------------------- Common Stock -- 94.6% --------------------- Advertising -- 0.6% 5 Catalina Marketing Corp. * $ 567 Aerospace -- 0.9% 47 AAR Corp. 847 Automotive -- 2.5% 40 Lithia Motors, Inc., Class A * 706 50 O'Reilly Automotive, Inc. * 1,065 35 Tower Automotive, Inc. * 540 ----- 2,311 Banking -- 5.0% 18 Amcore Financial, Inc. 432 14 Chittenden Corp. 415 23 City National Corp. 764 20 Commerce Bancorp., Inc. 793 33 Cullen/Frost Bankers, Inc. 856 10 First Washington Bancorp, Inc. 151 15 Investors Financial Services Corp. 672 5 ISB Financial Corp. 72 11 ITLA Capital Corp. * 137 20 Trustmark Corp. 428 ----- 4,720 Broadcasting/Cable -- 1.9% 24 Westwood One, Inc. * 1,807 Business Services -- 6.0% 30 ACNielsen Corp. * 726 39 Iron Mountain, Inc. * 1,533 67 NFO Worldwide, Inc. * 1,506 70 Profit Recovery Group International * 1,860 ----- 5,625 Chemicals -- 2.0% 59 Spartech Corp. 1,911 Computer Networks -- 5.9% 28 Black Box Corp. * 1,846 26 Micros Systems, Inc. * 1,946 46 National Computer Systems Inc. 1,723 ----- 5,515 Computer Software -- 2.3% 75 Activision, Inc. * 1,141 31 Dendrite International Inc. * 1,050 ----- 2,191 Construction -- 0.7% 15 Dycom Industries Inc. * 643 Construction Materials -- 1.8% 79 Dal-Tile International Inc. * 796 28 Elcor Corp. 846 ----- 1,642
See notes to financial statements. 48 CHASE SMALL CAPITALIZATION FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Electronics/Electrical Equipment--12.5% 43 Artesyn Technologies, Inc. * $ 896 37 CTS Corp. 2,810 24 Hadco Corp. * 1,244 21 OAK Industries, Inc. * 2,229 26 PerkinElmer, Inc. 1,076 14 Technitrol, Inc. 641 44 Varian, Inc. * 981 62 Vishay Intertechnology, Inc. * 1,947 ------ 11,824 Engineering Services -- 0.5% 14 Jacobs Engineering Group, Inc. * 466 Entertainment/Leisure -- 2.5% 61 Cinar Corp., Class B (Canada) * 1,505 39 Station Casinos, Inc. * 868 ------ 2,373 Financial Services -- 0.3% 2 SEI Investments Co. 244 Food/Beverage Products -- 0.6% 23 Performance Food Group Co. * 551 Health Care/Health Care Services -- 8.3% 30 Cooper Companies, Inc. 895 24 Datascope Corp. 948 34 Hooper Holmes, Inc. 868 45 MedQuist, Inc. * 1,151 44 Molecular Devices Corp. * 2,300 49 Osteotech, Inc. * 659 40 Ventana Medical Systems * 983 ------ 7,804 Insurance -- 2.5% 16 Annuity and Life Re, LTD (Bermuda) 423 9 Arthur J. Gallagher & Co. 550 15 Brown & Brown, Inc. 590 26 Delphi Financial Group, Inc., Class A * 785 ------ 2,348 Machinery & Engineering Equipment -- 6.0% 19 Cognex Corp. * 749 38 Gerber Scientific, Inc. 823 44 PRI Automation, Inc. * 2,970 19 Zebra Technologies Corp., Class A * 1,088 ------ 5,630 Manufacturing -- 3.3% 10 Optical Coating Laboratory, Inc. 3,064 Oil & Gas -- 3.9% 24 Atwood Oceanics * 939 48 Louis Dreyfus Natural Gas * 862 60 Pride International, Inc. * 879 16 St. Mary Land & Exploration 407 46 Vintage Petroleum, Inc. * 551 ------ 3,638
See notes to financial statements. 49 CHASE SMALL CAPITALIZATION FUND Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Pharmaceuticals -- 4.2% 50 Advance Paradigm, Inc. * $ 1,082 10 Idec Pharmaceuticals Corp. * 983 33 King Pharmaceuticals, Inc. * 1,850 ------- 3,915 Real Estate Investment Trust -- 1.3% 39 Alexandria Real Estate Equities 1,234 Restaurants/Food Services -- 1.4% 63 Jack in the Box, Inc. * 1,304 Retailing -- 6.0% 26 Ames Department Stores, Inc. * 761 53 BJ's Wholesale Club Inc. * 1,921 40 Chico's FAS, Inc. * 1,513 22 Pacific Sunwear of California * 708 34 Wild Oats Markets, Inc. * 752 ------- 5,655 Semi-Conductors -- 3.9% 76 Actel Corp. * 1,831 16 Cree Research, Inc. * 1,332 7 Dallas Semiconductor Corp. 477 ------- 3,640 Shipping/Transportation -- 1.1% 16 C.H. Robinson Worldwide, Inc. 634 17 MS Carriers, Inc. * 411 ------- 1,045 Telecommunications -- 1.1% 36 Price Communications Corp. * 990 Telecommunications Equipment -- 3.3% 16 Antec Corp. * 582 17 Comverse Technology, Inc. * 2,497 ------- 3,079 Utilities -- 2.3% 19 AGL Resources, Inc. 315 22 American States Water Co. 780 3 E'town Corp. 181 17 Laclede Gas Co. 360 17 Northwest Natural Gas Co. 365 5 United Water Resources, Inc. 173 ------- 2,174 - -------------------------------------------------------------------------------- Total Long-Term Investments 88,757 (Cost $64,820) - -------------------------------------------------------------------------------- Short-Term Investments -- 5.4% - --------------------------------------------------------------------------------
Principal Amount Repurchase Agreement -- 5.4% ---------------------------- $5,020 Greenwich Capital Markets, Inc., in a joint trading account at 3.50%, due 01/03/00, (Dated 12/31/99, Proceeds $5,021, Secured by FNMA, $4,974, FRN, due 07/18/27; Market Value $5,121) 5,020 (Cost $5,020) - -------------------------------------------------------------------------------- Total Investments -- 100.0% $93,777 (Cost $69,840) - --------------------------------------------------------------------------------
See notes to financial statements. 50 Portfolio of Investments (Continued) INDEX: * -- Non-income producing security. - - -- All or portion of this security is segregated for delayed delivery securities. # -- Security may only be sold to qualified institutional buyers. ADR -- American Depositary Receipt. Discount Commercial Paper -- The rate shown is the effective yield at the date of purchase. DN -- Discount Note. The rate shown is the effective yield at the date of purchase. FHLMC -- Federal Home Loan Mortgage Corporation. FNMA -- Federal National Mortgage Association. FRDN -- Floating Rate Demand Note. The maturity date shown is the next interest rate reset date; the rate shown is the rate in effect at December 31, 1999. FRN -- Floating Rate Note. The maturity date shown is actual maturity date; the rate shown is the rate in effect at December 31, 1999. MTN -- Medium Term Note. SUB -- Step-Up Bond. The maturity date shown is the call date; the rate shown is the rate in effect at December 31, 1999. 51 - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES As of December 31, 1999 - -------------------------------------------------------------------------------- (Amounts in Thousands, Except Per Share Amounts)
Short- Intermediate Term U.S. U.S. Money Government Intermediate Government Market Securities Term Bond Securities Fund Fund Fund Fund ASSETS: Investment securities, at value (Note 1) .................... $294,076 $31,535 $39,393 $7,682 Cash .............................. -- 1 2 -- Receivables: Fund shares sold ................. 1,095 2 196 1 Interest/Dividends ............... 1,861 332 414 84 Expense reimbursement from Distributor ................. -- -- -- 15 - ------------------------------------------------------------------------------------------- Total Assets ................... 297,032 31,870 40,005 7,782 - ------------------------------------------------------------------------------------------- LIABILITIES: Payables: To Custodian ..................... 3 -- -- 3 Fund shares redeemed ............. 180 -- -- -- Dividends payable ................ 361 3 10 1 Accrued liabilities: (Note 2) Investment advisory fees ......... 59 3 5 -- Administration fees .............. 37 4 5 -- Custody and accounting fees ............................. 14 16 22 8 Other ............................ 98 16 68 31 - ------------------------------------------------------------------------------------------- Total Liabilities .............. 752 42 110 43 - ------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ................... 296,279 32,507 41,724 8,168 Accumulated undistributed net investment income ............ 3 2 3 -- Accumulated net realized loss on investments ............... (2) (184) (870) (333) Net unrealized depreciation of investments .................... -- (497) (962) (96) - ------------------------------------------------------------------------------------------- Net Assets ..................... $296,280 $31,828 $39,895 $7,739 - ------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares .................... 296,120 2,636 3,270 599 Investor Shares ................... 159 6 38 4 Net Asset Value, maximum offering and redemption price per share Premier Shares $ 1.00 $ 12.05 $ 12.06 $12.84 Investor Shares ................... $ 1.00 $ 12.04 $ 12.06 $12.84 Cost of Investments ................ $294,076 $32,032 $40,355 $7,778 - -------------------------------------------------------------------------------------------
See notes to financial statements. 52 STATEMENT OF ASSETS AND LIABILITIES As of December 31, 1999 (Amounts in Thousands, Except Per Share Amounts)
Equity Small Income Balanced Income Capitalization Fund Fund Fund Fund ASSETS: Investment securities, at value (Note 1) ........................ $84,849 $104,764 $175,559 $93,777 Cash .................................. 4 2 1 1 Receivables: Investment securities sold ........... -- -- -- 482 Fund shares sold ..................... 7 186 38 75 Interest/Dividends ................... 733 809 142 33 - ------------------------------------------------------------------------------------------- Total Assets ....................... 85,593 105,761 175,740 94,368 - ------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased ............................ 19,249 -- 75 263 Fund shares redeemed ................. 200 632 1,632 195 Dividends payable .................... 18 -- -- -- Accrued liabilities: (Note 2) Investment advisory fees ............. 17 53 99 45 Administration fees .................. 8 13 22 11 Custody and accounting fees .......... 8 17 22 13 Other ................................ 40 100 87 96 - ------------------------------------------------------------------------------------------- Total Liabilities .................. 19,540 815 1,937 623 - ------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ....................... 69,625 81,987 111,835 78,465 Accumulated undistributed net investment income ................. 22 149 -- -- Accumulated net realized loss on investments ........................ (2,629) (442) (506) (8,657) Net unrealized appreciation (depreciation) of investments ......... (965) 23,252 62,474 23,937 - ------------------------------------------------------------------------------------------- Net Assets ......................... $66,053 $104,946 $173,803 $93,745 - ------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares ........................ 3,503 2,681 3,415 4,109 Investor Shares ....................... 27 45 75 40 Net Asset Value, maximum offering and redemption price per share Premier Shares ........................ $ 18.71 $ 38.50 $ 49.80 $ 22.60 Investor Shares ....................... $ 18.72 $ 38.46 $ 49.83 $ 22.51 Cost of Investments .................... $85,814 $ 81,512 $113,085 $69,840 - -------------------------------------------------------------------------------------------
See notes to financial statements. 53 STATEMENT OF ASSETS AND LIABILITIES As of December 31, 1999 (Amounts in Thousands, Except Per Share Amounts)
Equity Core Equity Growth Fund Fund ASSETS: Investment in Portfolio, at value (Note 1) ........................... $186,884 $334,025 Receivable for fund shares sold .......... 162 985 - -------------------------------------------------------------------------------- Total Assets .......................... 187,046 335,010 - -------------------------------------------------------------------------------- LIABILITIES: Payable for fund shares redeemed ......... 42 159 Accrued liabilities: (Note 2) Administration fees ..................... 15 27 Other ................................... 100 81 - -------------------------------------------------------------------------------- Total Liabilities ..................... 157 267 - -------------------------------------------------------------------------------- Paid in capital .......................... 126,272 194,432 Accumulated net realized gain (loss) on investments ........................... 2,227 (877) Net unrealized appreciation of investments ........................... 58,390 141,188 - -------------------------------------------------------------------------------- Net Assets ............................ $186,889 $334,743 - -------------------------------------------------------------------------------- Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares ........................... 5,607 4,696 Investor Shares .......................... 191 221 Net Asset Value, maximum offering and redemption price per share Premier Shares ........................... $ 32.24 $ 68.09 Investor Shares .......................... $ 32.19 $ 67.85 - --------------------------------------------------------------------------------
See notes to financial statements. 54 - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the year ended December 31, 1999 - -------------------------------------------------------------------------------- (Amounts in Thousands)
Short- Intermediate Term U.S. U.S. Money Government Intermediate Government Market Securities Term Bond Securities Fund Fund Fund Fund - --------------------------------------------------------------------------------------------------- INTEREST INCOME ..................... $12,274 $1,777 $2,240 $ 368 - ---------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ........... 693 159 184 33 Administration fees ................ 347 48 55 10 Distribution fees .................. -- -- 1 -- Custody and accounting fees ............................... 53 53 60 38 Printing and postage ............... 70 17 20 6 Professional fees .................. 42 24 35 13 Registration expenses .............. 64 20 38 23 Transfer agent fees ................ 57 48 51 44 Trustees' fees ..................... 8 1 1 -- Other .............................. 26 4 9 9 - ---------------------------------------------------------------------------------------------- Total expenses .................. 1,360 374 454 176 - ---------------------------------------------------------------------------------------------- Less amounts waived (Note 2D) .......................... 187 119 160 43 Less expense reimbursements ..................... 18 16 17 84 - ---------------------------------------------------------------------------------------------- Net expenses ..................... 1,155 239 277 49 - ---------------------------------------------------------------------------------------------- Net investment income .......................... 11,119 1,538 1,963 319 - ---------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions ............ (1) (174) (865) (333) Change in net unrealized appreciation/depreciation of investments ..................... -- (1,131) (1,474) (128) - ---------------------------------------------------------------------------------------------- Net realized and unrealized loss on investments ..................... (1) (1,305) (2,339) (461) - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ......... $11,118 $ 233 $ (376) $(142) - ----------------------------------------------------------------------------------------------
See notes to financial statements. 55 STATEMENT OF OPERATIONS For the year ended December 31, 1999 (Amounts in Thousands)
Equity Small Income Balanced Income Capitalization Fund Fund Fund Fund - --------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest .............................. $ 3,960 $ 2,467 $ 399 $ 225 Dividend .............................. -- 239 2,116 424 Foreign taxes withheld ................ -- -- (19) -- - ------------------------------------------------------------------------------------------ Total investment income ............ 3,960 2,706 2,496 649 - ------------------------------------------------------------------------------------------ EXPENSES: (Note 2) Investment advisory fees .............. 328 635 1,128 557 Administration fees ................... 98 127 226 111 Distribution fees ..................... -- 3 4 1 Custody and accounting fees ........... 62 72 78 64 Printing and postage .................. 26 30 61 35 Professional fees ..................... 28 36 38 36 Registration expenses ................. 20 52 45 48 Transfer agent fees ................... 43 58 66 60 Trustees' fees ........................ 2 3 5 3 Other ................................. 13 14 19 15 - ------------------------------------------------------------------------------------------ Total expenses ..................... 620 1,030 1,670 930 - ------------------------------------------------------------------------------------------ Less amounts waived (Note 2D) ......... 119 161 136 162 Less expense reimbursements ........... 9 19 26 24 - ------------------------------------------------------------------------------------------ Net expenses ......................... 492 850 1,508 744 - ------------------------------------------------------------------------------------------ Net investment income (loss) ............................. 3,468 1,856 988 (95) - ------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions ............... (2,604) (61) 6,287 (6,607) Change in net unrealized appreciation/depreciation of investments ........................ (2,648) 10,256 10,874 17,986 - ------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments ................. (5,252) 10,195 17,161 11,379 - ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ................ $(1,784) $12,051 $18,149 $11,284 - ------------------------------------------------------------------------------------------
See notes to financial statements. 56 STATEMENT OF OPERATIONS For the year ended December 31, 1999 (Amounts in Thousands)
Equity Core Equity Growth Fund* Fund* - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest ................................. $ 186 $ 259 Dividend ................................. 820 771 Investment income from Portfolio ......... 667 815 Foreign taxes withheld ................... (5) (1) Expenses from Portfolio .................. (502) (895) - -------------------------------------------------------------------------------- Total investment income ............... 1,166 949 - -------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ................. 614 1,000 Administration fees ...................... 188 308 Distribution fees ........................ 5 18 Custody and accounting fees .............. 68 73 Printing and postage ..................... 50 57 Professional fees ........................ 30 27 Registration expenses .................... 61 48 Transfer agent fees ...................... 71 123 Trustees' fees ........................... 4 7 Other .................................... 14 10 - -------------------------------------------------------------------------------- Total expenses ........................ 1,105 1,671 - -------------------------------------------------------------------------------- Less amounts waived (Note 2D) ............ 101 72 Less expense reimbursements .............. 30 58 - -------------------------------------------------------------------------------- Net expenses ............................ 974 1,541 - -------------------------------------------------------------------------------- Net investment income (loss) .......... 192 (592) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions .................. 5,082 4,029 Change in net unrealized appreciation of investments .............. 26,635 69,875 - -------------------------------------------------------------------------------- Net realized and unrealized gain on investments ........................... 31,717 73,904 - -------------------------------------------------------------------------------- Net increase in net assets from operations ............................... $31,909 $73,312 - --------------------------------------------------------------------------------
* See Note 1. See notes to financial statements. 57 - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
Money Market Fund ---------------------------- Year Ended December 31, 1999 1998 - -------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ................................ $ 11,119 $ 8,450 Net realized gain (loss) on investment transactions ......................................... (1) (1) Change in net unrealized appreciation/ depreciation of investments .......................... -- -- - -------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations ......................................... 11,118 8,449 - -------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ................................ (11,116) (8,450) In excess of net investment income ................... -- -- Net realized gain on investment transactions ......... -- -- In excess of net realized gain on investment transactions ......................................... -- -- - -------------------------------------------------------------------------------------- Total distributions to shareholders ................ (11,116) (8,450) - -------------------------------------------------------------------------------------- Increase from capital share transactions# 100,785 60,915 - -------------------------------------------------------------------------------------- Total increase in net assets ....................... 100,787 60,914 NET ASSETS: Beginning of period .................................. 195,493 134,579 - -------------------------------------------------------------------------------------- End of period ........................................ $296,280 $195,493 - -------------------------------------------------------------------------------------- Short-Intermediate Term U.S. Government Intermediate Securities Fund Term Bond Fund ----------------------- ----------------------- Year Ended Year Ended December 31, December 31, 1999 1998 1999 1998 - --------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ................................ $ 1,538 $ 1,444 $ 1,963 $ 1,335 Net realized gain (loss) on investment transactions ......................................... (174) 215 (865) 409 Change in net unrealized appreciation/ depreciation of investments .......................... (1,131) 344 (1,474) 138 - --------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations ......................................... 233 2,003 (376) 1,882 - --------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ................................ (1,538) (1,444) (1,963) (1,335) In excess of net investment income ................... -- (11) -- -- Net realized gain on investment transactions ......... (115) (96) (30) (381) In excess of net realized gain on investment transactions ......................................... -- -- -- -- - --------------------------------------------------------------------------------------------------------- Total distributions to shareholders ................ (1,653) (1,551) (1,993) (1,716) - --------------------------------------------------------------------------------------------------------- Increase from capital share transactions# 2,684 6,164 9,384 14,119 - --------------------------------------------------------------------------------------------------------- Total increase in net assets ....................... 1,264 6,616 7,015 14,285 NET ASSETS: Beginning of period .................................. 30,564 23,948 32,880 18,595 - --------------------------------------------------------------------------------------------------------- End of period ........................................ $31,828 $30,564 $39,895 $32,880 - ---------------------------------------------------------------------------------------------------------
# See detailed Capital Share Transactions. See notes to financial statements. 58 STATEMENT OF CHANGES IN NET ASSETS For the periods indicated STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
U.S. Government Securities Fund Income Fund --------------------- ----------------------- Year Ended Year Ended December 31, December 31. 1999 1998 1999 1998 - -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................... $ 319 $ 155 $ 3,468 $ 2,929 Net realized gain (loss) on investment transactions .................................... (333) 168 (2,604) 1,952 Change in net unrealized appreciation/ depreciation of investments ..................... (128) (59) (2,648) 132 - ------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations .................................... (142) 264 (1,784) 5,013 - ------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ........................... (319) (155) (3,468) (2,929) In excess of net investment income .............. -- -- -- (18) Net realized gain on investment transactions .... -- (168) (584) (1,353) In excess of net realized gain on investment transactions .................................... -- (2) -- -- - ------------------------------------------------------------------------------------------------- Total distributions to shareholders ........... (319) (325) (4,052) (4,300) - ------------------------------------------------------------------------------------------------- Increase from capital share transactions# 4,566 767 11,811 8,036 - ------------------------------------------------------------------------------------------------- Total increase in net assets .................. 4,105 706 5,975 8,749 NET ASSETS: Beginning of period ............................. 3,634 2,928 60,078 51,329 - ------------------------------------------------------------------------------------------------- End of period ................................... $7,739 $3,634 $66,053 $60,078 - ------------------------------------------------------------------------------------------------- Equity Balanced Fund Income Fund ------------------------- -------------------------------- Year Ended Year Ended December 31, December 31, 1999 1998 1999 1998 - --------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................... $ 1,856 $ 1,085 $ 988 $ 811 Net realized gain (loss) on investment transactions .................................... (61) 2,397 6,287 382 Change in net unrealized appreciation/ depreciation of investments ..................... 10,256 7,274 10,874 22,275 - --------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations .................................... 12,051 10,756 18,149 23,468 - --------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ........................... (1,710) (1,085) (978) (811) In excess of net investment income .............. -- (2) -- (18) Net realized gain on investment transactions .... (521) (2,053) (6,799) (382) In excess of net realized gain on investment transactions .................................... -- -- -- (5) - --------------------------------------------------------------------------------------------------------------- Total distributions to shareholders ........... (2,231) (3,140) (7,777) (1,216) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions# 36,093 15,058 35,513 30,423 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets .................. 45,913 22,674 45,885 52,675 NET ASSETS: Beginning of period ............................. 59,033 36,359 127,918 75,243 - --------------------------------------------------------------------------------------------------------------- End of period ................................... $104,946 $59,033 $173,803 $127,918 - ---------------------------------------------------------------------------------------------------------------
# See detailed Capital Share Transactions. See notes to financial statements. 59 STATEMENT OF CHANGES IN NET ASSETS For the periods indicated STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
Small Core Capitalization Fund Equity Fund ----------------------- ------------------------- Year Ended Year Ended December 31, December 31, 1999 1998 1999 1998 - ----------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ......................... $ (95) $ (17) $ 192 $ 263 Net realized gain (loss) on investment transactions ......................................... (6,607) 2,044 5,082 3,962 Change in net unrealized appreciation/ depreciation of investments .......................... 17,986 (3,092) 26,635 14,995 - ----------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations ........................................... 11,284 (1,065) 31,909 19,220 - ----------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ................................ -- -- (192) (263) In excess of net investment income ................... -- -- -- (3) Net realized gain on investment transactions ......... -- (2,044) (3,154) (3,659) In excess of net realized gain on investment transactions .............................. -- (2,080) -- -- - ----------------------------------------------------------------------------------------------------------- Total distributions to shareholders ................ -- (4,124) (3,346) (3,925) - ----------------------------------------------------------------------------------------------------------- Increase from capital share transactions# 17,669 29,953 69,766 21,868 - ----------------------------------------------------------------------------------------------------------- Total increase in net assets ....................... 28,953 24,764 98,329 37,163 NET ASSETS: Beginning of period .................................. 64,792 40,028 88,560 51,397 - ----------------------------------------------------------------------------------------------------------- End of period ........................................ $93,745 $64,792 $186,889 $88,560 - ----------------------------------------------------------------------------------------------------------- Equity Growth Fund ------------------------- Year Ended December 31, 1999 1998 - ----------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ......................... $ (592) $ 65 Net realized gain (loss) on investment transactions ......................................... 4,029 6,296 Change in net unrealized appreciation/ depreciation of investments .......................... 69,875 40,718 - ----------------------------------------------------------------------------------- Increase (decrease) in net assets from operations ........................................... 73,312 47,079 - ----------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income ................................ -- (65) In excess of net investment income ................... -- (15) Net realized gain on investment transactions ......... (4,405) (5,914) In excess of net realized gain on investment transactions .............................. -- -- - ----------------------------------------------------------------------------------- Total distributions to shareholders ................ (4,405) (5,994) - ----------------------------------------------------------------------------------- Increase from capital share transactions# 85,511 62,510 - ----------------------------------------------------------------------------------- Total increase in net assets ....................... 154,418 103,595 NET ASSETS: Beginning of period .................................. 180,325 76,730 - ----------------------------------------------------------------------------------- End of period ........................................ $334,743 $180,325 - -----------------------------------------------------------------------------------
# See detailed Capital Share Transactions. See notes to financial statements. 60 - -------------------------------------------------------------------------------- CHASE FUNDS Capital Share Transactions - -------------------------------------------------------------------------------- MONEY MARKET FUND For the periods indicated (Amounts in Thousands)
- ------------------------------------------------------------------------------------------------------ Premier Shares Investor Shares - ------------------------------------------------------------------------------------------------------ Year Ended December 31, 1999 Amount Shares Amount Shares - ------------------------------------------------------------------------------------------------------ Shares sold $ 329,869 329,869 $215 215 Shares issued in reinvestment of distributions 8,626 8,626 4 4 Shares redeemed (237,852) (237,852) (77) (77) - ------------------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 100,643 100,643 $142 142 ====================================================================================================== Year Ended December 31, 1998* - ------------------------------------------------------------------------------------------------------ Shares sold $ 241,189 241,189 $ 17 17 Shares issued in reinvestment of distributions 6,713 6,713 -- -- Shares redeemed (187,004) (187,004) -- -- - ------------------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 60,898 60,898 $ 17 17 ======================================================================================================
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - -------------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - -------------------------------------------------------------------------------------------------------- Shares sold $10,757 872 $ 77 6 Shares issued in reinvestment of distributions 1,622 132 1 -- Shares redeemed (9,760) (794) (13) (1) - ------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 2,619 210 $ 65 5 ======================================================================================================= Year Ended December 31, 1998** Shares sold $11,638 931 $ 10 1 Shares issued in reinvestment of distributions 1,293 103 -- -- Shares redeemed (6,777) (540) -- -- - ------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 6,154 494 $ 10 1 =======================================================================================================
*For Investor shares, from commencement of offering on November 9, 1998. **For Investor shares, from commencement of offering on November 10, 1998. See notes to financial statements. 61 - -------------------------------------------------------------------------------- CHASE FUNDS Capital Share Transactions - -------------------------------------------------------------------------------- INTERMEDIATE TERM BOND FUND For the periods indicated (Amounts in Thousands)
- --------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - --------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------- Shares sold $16,653 1,339 $482 39 Shares issued in reinvestment of distributions 1,892 153 12 1 Shares redeemed (9,622) (776) (33) (3) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 8,923 716 $461 37 =================================================================================================== Year Ended December 31, 1998* Shares sold $20,306 1,576 $ 10 1 Shares issued in reinvestment of distributions 1,431 111 -- -- Shares redeemed (7,628) (591) -- -- - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $14,109 1,096 $ 10 1 ===================================================================================================
U.S. GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------------------ Premier Shares Investor Shares - ------------------------------------------------------------------------------------------ Year Ended December 31, 1999 Amount Shares Amount Shares - ------------------------------------------------------------------------------------------ Shares sold $ 6,505 489 $ 56 4 Shares issued in reinvestment of distributions 316 24 2 -- Shares redeemed (2,303) (176) (10) (1) - ------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 4,518 337 $ 48 3 ========================================================================================== Year Ended December 31, 1998* Shares sold $ 1,942 135 $ 10 1 Shares issued in reinvestment of distributions 286 21 1 -- Shares redeemed (1,472) (103) -- -- - ------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 756 53 $ 11 1 ==========================================================================================
*For Investor shares, from commencement of offering on November 10, 1998. See notes to financial statements. 62 - -------------------------------------------------------------------------------- CHASE FUNDS Capital Share Transactions - -------------------------------------------------------------------------------- INCOME FUND For the periods indicated (Amounts in Thousands)
Premier Shares Investor Shares - ------------------------------------------------------------------------------------------------ Year Ended December 31, 1999 Amount Shares Amount Shares - ------------------------------------------------------------------------------------------------ Shares sold $ 25,281 1,289 $586 30 Shares issued in reinvestment of distributions 3,825 198 10 1 Shares redeemed (17,803) (918) (88) (5) - ------------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 11,303 569 $508 26 ================================================================================================ Year Ended December 31, 1998* Shares sold $ 20,818 1,014 $ 10 1 Shares issued in reinvestment of distributions 3,601 175 1 -- Shares redeemed (16,394) (798) -- -- - ------------------------------------------------------------------------------------------------ Net increase in Fund shares outstanding $ 8,025 391 $ 11 1 ================================================================================================
BALANCED FUND
- --------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - --------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------- Shares sold $ 54,740 1,536 $ 4,478 124 Shares issued in reinvestment of distributions 2,202 61 28 1 Shares redeemed (22,470) (625) (2,885) (81) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 34,472 972 $ 1,621 44 =================================================================================================== Year Ended December 31, 1998** Shares sold $ 29,750 934 $ 17 1 Shares issued in reinvestment of distributions 3,139 94 1 -- Shares redeemed (17,849) (562) -- -- - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 15,040 466 $ 18 1 ===================================================================================================
*For Investor shares, from commencement of offering on November 10, 1998. **For Investor shares, from commencement of offering on October 16, 1998. See notes to financial statements. 63 - -------------------------------------------------------------------------------- CHASE FUNDS Capital Share Transactions - -------------------------------------------------------------------------------- EQUITY INCOME FUND For the periods indicated (Amounts in Thousands)
- --------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - --------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------- Shares sold $ 55,841 1,131 $4,015 81 Shares issued in reinvestment of distributions 7,374 151 145 3 Shares redeemed (31,339) (637) (523) (11) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 31,876 645 $3,637 73 =================================================================================================== Year Ended December 31, 1998* Shares sold $ 49,582 1,208 $ 68 2 Shares issued in reinvestment of distributions 1,190 28 -- -- Shares redeemed (20,417) (501) -- -- - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 30,355 735 $ 68 2 ===================================================================================================
SMALL CAPITALIZATION FUND
Premier Shares Investor Shares Year Ended December 31, 1999 Amount Shares Amount Shares Shares sold $34,842 1,764 776 41 hSares issued in reinvestment of distributions -- -- -- -- Shares redeemed (17,865) (898) (84) (4) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $16,977 866 $692 37 =================================================================================================== Year Ended December 31, 1998** Shares sold $38,507 1,806 $ 45 3 Shares issued in reinvestment of distributions 3,988 210 3 -- Shares redeemed (12,590) (611) -- -- - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $29,905 1,405 $ 48 3 ===================================================================================================
*For Investor shares, from commencement of offering on August 24, 1998. **For Investor shares, from commencement of offering on August 12, 1998. See notes to financial statements. 64 - -------------------------------------------------------------------------------- CHASE FUNDS Capital Share Transactions - -------------------------------------------------------------------------------- CORE EQUITY FUND For the periods indicated (Amounts in Thousands)
- ---------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - --------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------- Shares sold $ 99,241 3,481 $6,109 205 Shares issued in reinvestment of distributions 3,169 102 68 2 Shares redeemed (38,291) (1,315) (530) (17) - ------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 64,119 2,268 $5,647 190 =================================================================================================== Year Ended December 31, 1998* Shares sold $ 33,357 1,410 $ 21 1 Shares issued in reinvestment of distributions 3,840 149 1 -- Shares redeemed (15,351) (639) -- -- - ------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 21,846 920 $ 22 1 ===================================================================================================
EQUITY GROWTH FUND
- --------------------------------------------------------------------------------------------------- Premier Shares Investor Shares - --------------------------------------------------------------------------------------------------- Year Ended December 31, 1999 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------- Shares sold $121,695 2,098 $11,697 201 Shares issued in reinvestment of distributions 4,136 63 188 3 Shares redeemed (51,649) (883) (556) (9) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 74,182 1,278 $11,329 195 =================================================================================================== Year Ended December 31, 1998** Shares sold $ 80,644 1,862 $ 1,269 28 Shares issued in reinvestment of distributions 5,872 116 44 1 Shares redeemed (25,217) (561) (102) (3) - --------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 61,299 1,417 $ 1,211 26 ===================================================================================================
*For Investor shares, from commencement of offering on September 10, 1998. **For Investor shares, from commencement of offering on August 13, 1998. See notes to financial statements. 65 - -------------------------------------------------------------------------------- CHASE FUNDS NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies Mutual Fund Investment Trust (the "Trust") was organized on September 23, 1997 as a Massachusetts Business Trust, and is registered under the Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end management investment company. Chase Money Market Fund ("MMF"), Chase Short-Intermediate Term U.S. Government Securities Fund ("STGSF"), Chase Intermediate Term Bond Fund ("ITBF"), Chase U.S. Government Securities Fund ("GSF"), Chase Income Fund ("IF"), Chase Balanced Fund ("BF"), Chase Equity Income Fund ("EIF"), Chase Small Capitalization Fund ("SCF"), Chase Core Equity Fund ("CEF") and Chase Equity Growth Fund ("EGF"), collectively the "Funds", are separate series of the Trust. Each Fund offers Premier and Investor classes of shares. All classes of shares have equal voting rights as to earnings, assets and voting privileges, except that each class may bear different transfer agent, distribution, and shareholder servicing expenses, and each class has exclusive voting rights with respect to its distribution plan and shareholder servicing agreement. Premier Shares may be purchased only by Financial Intermediaries who are able to meet the minimum investment requirement. The Funds were established on January 1, 1998 for the conversion of the AVESTA Trust to the newly created Chase Funds of the Mutual Fund Investment Trust. AVESTA Trust contributed securities and other assets (net of liabilities) in a tax-free exchange for shares of the corresponding portfolio of the newly created Funds. The Chase Manhattan Bank agreed to bear all costs related to conversion. On August 12, 1999, CEF and EGF adopted Master Feeder Fund Structures by contributing substantially all of their assets and liabilities to Core Equity Portfolio ("CEP") and Equity Growth Portfolio ("EGP"), respectively (collectively, the "Portfolios") in a tax-free exchange for beneficial ownership of those Portfolios. Investment income and expenses from the Portfolios are for the period August 12, 1999 to December 31, 1999. Realized gains on investments transactions include $4,897,914 and $4,029,324, respectively from CEP and EGP. The following is a summary of significant accounting policies followed by the Funds: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. CEF and EGF CEF and EGF utilize the Master Feeder Fund Structure and seek to achieve their investment objectives by investing all of their investable assets in CEP and EGP, respectively, which like the Funds, are open-end management investment companies having the same investment objectives as the Funds. As of December 31, 1999, CEF and EGF owned 87.60% and 91.72% of the net assets of their respective Portfolios. The financial statements of the Portfolios, including the Portfolios of Investments, are included elsewhere in this report and should be read in conjunction with the financial statements of the Funds. 66 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (continued) 1. Valuation of investments -- CEF and EGF record their investments in their respective Portfolios at value. Securities of the Portfolios are recorded at value as more fully discussed in the notes to those financial statements. 2. Investment income and expenses -- CEF and EGF record daily their pro-rata share of their respective Portfolio's income, expenses, and realized and unrealized gains and losses. In addition, the Funds accrued their own expenses daily as incurred. Realized gains/losses and changes in unrealized appreciation/depreciation represent the Fund's share of such elements allocated from the Portfolio. B. MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF 1. Valuation of investments -- Equity securities are valued at the last sale price on the exchange on which they are primarily traded, including the NASDAQ National Market. Securities for which sale prices are not available and other over-the-counter securities are valued at the last quoted bid price. Except for MMF, bonds and other fixed income securities (other than short-term obligations), including listed issues, are valued on the basis of valuations supplied by pricing services or by matrix pricing systems of a major dealer in bonds. Short-term debt securities with 61 days or more to maturity at time of purchase are valued, through the 61st day prior to maturity, at market value based on quotations obtained from market makers or other appropriate sources; thereafter, the value on the 61st day is amortized on a straight-line basis over the remaining number of days to maturity. Short-term investments with 60 days or less to maturity at time of purchase are valued at amortized cost, which approximates market. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees. Money Market instruments held by MMF are valued at amortized cost, which approximates market value. The Trust's use of amortized cost is subject to the Trust's compliance with certain conditions specified under Rule 2a-7 of the 1940 Act. 2. Repurchase agreements -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Funds of the Trust may transfer uninvested cash balances into one or more joint trading accounts for the purpose of investing in repurchase agreements. It is the Funds' policy that repurchase agreements are fully collateralized by U.S. Treasury and Government Agency securities. All collateral is held in one or more joint trading accounts by the Trust's custodian bank, subcustodian, or a bank with which the custodian bank has entered into a subcustodian agreement, or is segregated in the Federal Reserve Book Entry System. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited. 3. Security transactions and investment income -- Investment transactions are accounted for on the trade date (the date the order to buy or 67 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (continued) sell is executed). Securities gains and losses are calculated on the identified cost basis. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Securities purchased or sold on a when-issued, to be announced (TBA) or delayed-delivery basis may be settled a month or more after the trade date; interest income is not accrued until settlement date. Each Fund segregates assets with a current value at least equal to the amount of its when-issued and TBA purchase commitments. C. General Policies 1. Expenses -- Expenses directly attributable to a Fund are charged to that Fund; other expenses are allocated proportionately among the Funds within the Trust in relation to the net assets of each Fund or on another reasonable basis. Expenses directly attributable to a particular class are charged directly to such class. In calculating the net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses (including transfer agent fees) are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. 2. Federal income taxes -- Each Fund is treated as a separate taxable entity for Federal income tax purposes. Each Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its distributable net investment income and net realized gain on investments. In addition, each Fund intends to make distributions as required to avoid excise taxes. Accordingly, no provision for Federal income or excise tax is necessary. 3. Distributions to shareholders -- Dividends and distributions paid to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations, which may differ from generally accepted accounting principles. To the extent these "book/tax" differences are permanent in nature (i.e., that they result from other than timing of recognition-- "temporary differences"), such amounts are reclassified within the capital accounts based on their Federal tax-basis treatment. 68 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (continued) The following amounts were reclassified within the capital accounts (in thousands):
Accumulated undistributed/ Accumulated (overdistributed) net realized Paid-in net investment gain (loss) capital income on investments - ------------------------------------------------------------------- SCF ......... $(102) $ 94 $8 EGF ......... (599) 592 7
The reclassification for SCF and EGF primarily relate to the character for tax purposes of current year net operating losses. Dividends and distributions which exceed net investment income or net realized capital gains for financial reporting purposes but not for tax purposes are reported as distributions in excess of net investment income or net realized capital gains. 2. Fees and Other Transactions with Affiliates A. Investment advisory fee -- Pursuant to separate Investment Advisory Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor"), acts as the Investment Advisor to MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF. Chase is a direct wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase supervises the investments of the Funds and for such services is paid a fee. The fee is computed daily and paid monthly at an annual rate equal to 0.30% for MMF, 0.50% for STGSF, ITBF, GSF and IF, and 0.75% for BF, EIF and SCF of average daily net assets. The Advisor voluntarily waived a portion of its fees as outlined in Note 2.D. Chase Bank of Texas N.A. ("Chase Texas"), a wholly-owned subsidiary of The Chase Manhattan Corporation, is the Sub-Investment Advisor to MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF. Pursuant to the Sub-Investment Advisory Agreement between Chase Texas and Chase, Chase Texas is entitled to receive a fee payable by Chase from its advisory fee, at an annual rate equal to 0.15% for MMF, 0.25% for STGSF, ITBF, GSF and IF, and 0.375% for BF, EIF and SCF of average daily net assets. B. Distribution and sub-administration fees -- Pursuant to a Distribution and Sub-Administration Agreement, Chase Fund Distributors, Inc. ("CFD" or the "Distributor"), a wholly-owned subsidiary of The BISYS Group, Inc., acts as the Funds' distributor and sub-administrator. The Trust has adopted a Rule 12b-1 distribution plan for Investor Class shares, which provides for the payment of distribution fees at an annual rate of up to 0.10% of the average daily net assets attributable to Investor Class shares of the Money Market Fund and at an annual rate of up to 0.25% of the average daily net assets attributable to Investor Class Shares of each other Fund. For the sub-administrative services it performs, CFD is entitled to receive a fee from each Fund at an annual rate equal to 0.05% of the Fund's average daily net assets. 69 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (continued) The Distributor voluntarily waived some or all of its fees as outlined in Note 2.D. C. Administration fee -- Pursuant to an Administration Agreement, Chase (the "Administrator") provides certain administration services to the Trust. For these services and facilities, the Administrator receives from the Funds (except for CEF and EGF) a fee computed at the annual rate equal to 0.10% of the respective Fund's average daily net assets. Effective August 12, 1999, the Administrator receives from CEF and EGF a fee computed at an annual rate equal to 0.05% of average daily net assets. Prior to August 12, 1999, the fee was 0.10% of average daily net assets. The Administrator voluntarily waived some or all of its fees as outlined in Note 2.D. D. Waiver of fees -- For the year ended December 31, 1999, the Advisor, Distributor and Administrator voluntarily waived fees for each of the Funds as follows (in thousands):
Investment Fund Advisory Administration Distribution Total - -------------------------------------------------------------------------- MMF ........... $187 $-- $-- $187 STGSF ......... 119 -- -- 119 ITBF .......... 159 -- 1 160 GSF ........... 33 10 -- 43 IF ............ 119 -- -- 119 BF ............ 158 -- 3 161 EIF ........... 132 -- 4 136 SCF ........... 161 -- 1 162 CEF ........... 96 -- 5 101 EGF ........... 54 -- 18 72
E. Other -- Certain officers of the Trust are officers of Chase Fund Distributors, Inc. or of its parent corporation, The BISYS Group, Inc. Chase provides portfolio accounting and custody services for the Funds, except for CEF and EGF. Compensation for such services is presented in the Statement of Operations as custodian fees. Chase provided portfolio accounting and custody services for CEF and EGF through June 30, 1999. Compensation paid to Chase by CEF and EGF for portfolio accounting and custody services was approximately $41,818 and $39,559, respectively. The Distributor voluntarily reimbursed expenses of the Funds in the amounts as shown on the Statement of Operations. 3. Investment Transactions For the year ended December 31, 1999, purchases and sales of investments (excluding short-term investments) were as follows (in thousands): 70 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (continued)
Purchases Sales Purchases Sales (excluding U.S. (excluding U.S. of U.S. of U.S. Government) Government) Government Government - -------------------------------------------------------------------------------- STGSF ......... $ -- $ -- $31,059 $25,367 ITBF .......... 21,214 14,691 15,928 14,270 GSF ........... -- -- 1,108 6,703 IF ............ 26,244 28,096 55,504 46,609 BF ............ 35,246 6,676 33,412 29,720 EIF ........... 41,731 22,442 -- -- SCF ........... 57,315 42,749 -- -- CEF ........... 65,637 14,089 -- -- EGF ........... 73,977 30,823 -- --
Purchases and sales for CEF and EGF reflect the period January 1, 1999 to August 11, 1999. After August 11, 1999, all of CEF's and EGF's investable assets were invested in CEP and EGP, respectively. 4. Federal Income Tax Matters For Federal income tax purposes, the cost and unrealized appreciation (depreciation) in value of the investment securities at December 31, 1999, are as follows (in thousands):
Net unrealized Aggregate Gross unrealized Gross unrealized appreciation/ cost appreciation depreciation (depreciation) - ------------------------------------------------------------------------------------ STGSF ......... $ 32,032 $ 2 $ (499) $ (497) ITBF .......... 40,401 -- (1,008) (1,008) GSF ........... 7,778 -- (96) (96) IF ............ 86,041 -- (1,192) (1,192) BF ............ 83,135 24,284 (2,655) 21,629 EIF ........... 113,089 65,700 (3,230) 62,470 SCF ........... 69,840 27,055 (3,118) 23,937
At December 31, 1999, the following funds had a capital loss carryover which will be available to offset capital gains arising through December 31, 2007 (in thousands):
Capital Loss Carryover - ----------------------------------------------------------------------- STGSF.............................................. $ 110 ITBF .............................................. 301 GSF ............................................... 35 IF ................................................ 813 SCF ............................................... 8,242
To the extent that any net capital loss carryovers are used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders. 71 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Money Market Fund -------------------------------- Premier Shares -------------------------------- For the Years Ended December 31, -------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $1.00 $1.00 $1.00 ------- ------ ------ Income from investment operations: Net investment income ................................................... 0.05 0.05 0.05 Net gains or losses in investments (both realized and unrealized) ....... -- -- -- ------- ------ ------ Total from investment operations ....................................... 0.05 0.05 0.05 ------- ------ ------ Less distributions: Dividends from net investment income .................................... 0.05 0.05 0.05 Distributions from capital gains ........................................ -- -- -- ------- ------ ------ Total distributions .................................................... 0.05 0.05 0.05 ------- ------ ------ Net asset value, end of period ........................................... $1.00 $1.00 $1.00 ======= ====== ====== Total return ............................................................. 4.89% 5.20% 5.18% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 296 $ 195 $ 135 Ratios to average net assets:# Expenses ................................................................ 0.50% 0.50% 0.50% Net investment income ................................................... 4.81% 5.07% 5.09% Expenses without waivers and assumption of expenses ..................... 0.58% 0.60% 0.74% Net investment income without waivers and assumption of expenses 4.73% 4.97% 4.85% - ---------------------------------------------------------------------------------------------------------- Chase Money Market Fund ---------------------------------------------- Premier Shares Investor Shares ---------------------------------------------- For the Years Ended December 31, Year 11/10/98** -------------------- Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ..................................... $1.00 $1.00 $ 1.00 $1.00 ----- ----- ------ ----- Income from investment operations: Net investment income ................................................... 0.05 0.05 0.05 0.01 Net gains or losses in investments (both realized and unrealized) ....... -- -- -- -- ----- ----- ------ ----- Total from investment operations ....................................... 0.05 0.05 0.05 0.01 ----- ----- ------ ----- Less distributions: Dividends from net investment income .................................... 0.05 0.05 0.05 0.01 Distributions from capital gains ........................................ -- -- -- -- ----- ----- ------ ----- Total distributions .................................................... 0.05 0.05 0.05 0.01 ----- ----- ------ ----- Net asset value, end of period ........................................... $1.00 $1.00 $1.00 $1.00 ===== ===== ====== ===== Total return ............................................................. 5.06% 5.57% 4.78% 0.69% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 119 $ 71 $ + $ + Ratios to average net assets:# Expenses ................................................................ 0.50% 0.50% 0.60% 0.60% Net investment income ................................................... 4.93% 5.43% 4.71% 4.72% Expenses without waivers and assumption of expenses ..................... 0.72% 0.72% 25.25% 0.80% Net investment income without waivers and assumption of expenses 4.71% 5.21% (19.94%) 4.52% - ----------------------------------------------------------------------------------------------------------------------------
** Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 72 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS - ----------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Short-Intermediate Term U.S. Government Securities Fund ---------------------------------- Premier Shares ---------------------------------- For the Years Ended December 31, ---------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ................................... $12.60 $12.39 $11.66 -------- ------ - ---- Income from investment operations: Net investment income ................................................. 0.60 0.63 0.67 Net gains or losses in investments (both realized and unrealized) ..... (0.51) 0.25 0.06 -------- ------ ------ Total from investment operations ..................................... 0.09 0.88 0.73 -------- ------ ------ Less distributions: Dividends from net investment income .................................. 0.60 0.63 -- Distributions from capital gains ...................................... 0.04 0.04 -- -------- ------ ------ Total distributions .................................................. 0.64 0.67 -- -------- ----- ------ Net asset value, end of period ......................................... $12.05 $12.60 $12.39 ======== ====== ====== Total return ........................................................... 0.72% 7.35% 6.30% Ratios/supplemental data: Net assets, end of period (millions) .................................. $ 31 $ 31 $ 24 Ratios to average net assets:# Expenses .............................................................. 0.75% 0.75% 0.75% Net investment income ................................................. 4.82% 5.06% 5.40% Expenses without waivers and assumption of expenses ................... 1.12% 1.12% 1.01% Net investment income without waivers and assumption of expenses 4.45% 4.69% 5.14% Portfolio turnover rate ................................................ 91% 87% 63% - ----------------------------------------------------------------------------------------------------------- Chase Short-Intermediate Term U.S. Government Securities Fund ------------------------------------------ Premier Shares Investor Shares --------------- --------------------- For the Years Ended December 31, Year 11/10/98** ------------------ Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ................................... $11.35 $10.14 $ 12.59 $12.64 ------ ------ -------- ------- Income from investment operations: Net investment income ................................................. 0.60 0.58 0.57 0.08 Net gains or losses in investments (both realized and unrealized) ..... (0.29) 0.63 (0.51) -- ------ ------ -------- ------- Total from investment operations ..................................... 0.31 1.21 0.06 0.08 ------ ------ -------- ------- Less distributions: Dividends from net investment income .................................. -- -- 0.57 0.09 Distributions from capital gains ...................................... -- -- 0.04 0.04 ------ ------ -------- ------- Total distributions .................................................. -- -- 0.61 0.13 ------ ------ -------- ------- Net asset value, end of period ......................................... $11.66 $11.35 $ 12.04 $12.59 ====== ====== ======== ======= Total return ........................................................... 2.68% 12.01% 0.48% 0.60% Ratios/supplemental data: Net assets, end of period (millions) .................................. $ 29 $ 29 $ + $ + Ratios to average net assets:# Expenses .............................................................. 0.75% 0.75% 0.99% 1.03% Net investment income ................................................. 5.26% 5.38% 4.58% 4.47% Expenses without waivers and assumption of expenses ................... 0.88% 0.91% 57.39% 1.58% Net investment income without waivers and assumption of expenses 5.13% 5.22% (51.82%) 3.92% Portfolio turnover rate ................................................ 177% 187% 91% 87% - --------------------------------------------------------------------------------------------------------------------
** Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 73 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Intermediate Term Bond Fund ----------------------------------- Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $12.87 $12.75 $11.89 ------ ------- ------ Income from investment operations: Net investment income ................................................... 0.66 0.68 0.56 Net gains or losses in investments (both realized and unrealized) ....... (0.80) 0.27 0.30 ------ ------ ------ Total from investment operations ....................................... (0.14) 0.95 0.86 ------ ------ ------ Less distributions: Dividends from net investment income .................................... 0.66 0.68 -- Distributions from capital gains ........................................ 0.01 0.15 -- ------ ------ ------ Total distributions .................................................... 0.67 0.83 -- ------ ------ ------ Net asset value, end of period ........................................... $12.06 $12.87 $12.75 ====== ====== ====== Total return ............................................................. (1.11%) 7.63% 7.26% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 39 $ 33 $ 19 Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 0.75% Net investment income ................................................... 5.33% 5.25% 5.61% Expenses without waivers and assumption of expenses ..................... 1.18% 1.27% 1.25% Net investment income without waivers and assumption of expenses 4.90% 4.73% 5.11% Portfolio turnover rate .................................................. 85% 135% 14% - -------------------------------------------------------------------------------------------------------------- Chase Intermediate Term Bond Fund ---------------------------------------------- Premier Shares Investor Shares ----------------- ------------------------ For the Years Ended December 31, Year 11/10/98** ------------------ Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ..................................... $11.67 $ 9.99 $12.87 $12.91 ------ ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.61 0.64 0.63 0.09 Net gains or losses in investments (both realized and unrealized) ....... (0.39) 1.04 (0.80) 0.11 ------ ------ ------ ------ Total from investment operations ....................................... 0.22 1.68 (0.17) 0.20 ------ ------ ------ ------ Less distributions: Dividends from net investment income .................................... -- -- 0.63 0.09 Distributions from capital gains ........................................ -- -- 0.01 0.15 ------ ------ ------ ------ Total distributions .................................................... -- -- 0.64 0.24 ------ ------ ------ ------ Net asset value, end of period ........................................... $11.89 $11.67 $12.06 $12.87 ====== ====== ====== ====== Total return ............................................................. 1.86% 16.79% (1.36%) 1.52% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 7 $ 5 $ + $ + Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 0.99% 1.03% Net investment income ................................................... 5.32% 5.89% 5.09% 4.64% Expenses without waivers and assumption of expenses ..................... 1.42% 1.43% 9.79% 1.72% Net investment income without waivers and assumption of expenses 4.65% 5.21% (3.71%) 3.95% Portfolio turnover rate .................................................. 134% 198% 85% 135% - ---------------------------------------------------------------------------------------------------------------------------
** Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 74 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase U.S. Government Securities Fund ------------------------------------- Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $13.83 $13.98 $12.76 ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.64 0.72 0.75 Net gains or losses in investments (both realized and unrealized) ....... (0.99) 0.54 0.47 -------- ------ ------ Total from investment operations ....................................... (0.35) 1.26 1.22 -------- ------ ------ Less distributions: Dividends from net investment income .................................... 0.64 0.72 -- Distributions from capital gains ........................................ -- 0.68 -- In excess of realized capital gains ..................................... -- 0.01 -- -------- ------ ------ Total distributions .................................................... 0.64 1.41 -- -------- ------ ------ Net asset value, end of period ........................................... $12.84 $13.83 $13.98 ====== ====== ====== Total return ............................................................. (2.55%) 9.28% 9.55% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 8 $ 4 $ 3 Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 0.75% Net investment income ................................................... 4.87% 5.07% 5.73% Expenses without waivers and assumption of expenses ..................... 2.44% 3.85%* 3.15% Net investment income without waivers and assumption of expenses 3.18% 1.97%* 3.33% Portfolio turnover rate .................................................. 19% 110% 87% - --------------------------------------------------------------------------------------------------------------- Chase U.S. Government Securities Fund ----------------------------------------------- Premier Shares Investor Shares ---------------- ------------------------- For the Years Ended December 31, Year 11/10/98** ------------------- Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ..................................... $13.01 $10.00 $ 13.83 $14.42 ------ ------ ------- ------ Income from investment operations: Net investment income ................................................... 0.74 0.73 0.61 0.09 Net gains or losses in investments (both realized and unrealized) ....... (0.99) 2.28 (0.99) 0.10 ------ ------ ------- ------ Total from investment operations ....................................... (0.25) 3.01 (0.38) 0.19 ------ ------ ------- ------ Less distributions: Dividends from net investment income .................................... -- -- 0.61 0.09 Distributions from capital gains ........................................ -- -- -- 0.68 In excess of realized capital gains ..................................... -- -- -- 0.01 ------ ------ ------- ------ Total distributions .................................................... -- -- 0.61 0.78 ------ ------ ------- ------ Net asset value, end of period ........................................... $12.76 $13.01 12.84 $13.83 ====== ====== ======= ====== Total return ............................................................. (1.89%) 30.11% (2.79%) 1.37% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 3 $ 3 $ + $ + Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 1.00% 1.03% Net investment income ................................................... 6.01% 6.38% 4.62% 4.45% Expenses without waivers and assumption of expenses ..................... 2.09% 2.22% 45.80% 1.92% Net investment income without waivers and assumption of expenses 4.67% 4.91% (40.18%) 3.56% Portfolio turnover rate .................................................. 48% 17% 19% 110% - ----------------------------------------------------------------------------------------------------------------------------
* Restated. ** Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 75 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Income Fund ----------------------------------- Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $20.47 $20.18 $18.56 ------ ------ ------ Income from investment operations: Net investment income ................................................... 1.03 1.09 1.14 Net gains or losses in investments (both realized and unrealized) ....... (1.59) 0.77 0.48 ------ ------ ------ Total from investment operations ....................................... (0.56) 1.86 1.62 ------ ------ ------ Less distributions: Dividends from net investment income .................................... 1.03 1.09 -- Distributions from capital gains ........................................ 0.17 0.48 -- ------ ------ ------ Total distributions .................................................... 1.20 1.57 -- ------ ------ ------ Net asset value, end of period ........................................... $18.71 $20.47 $20.18 ====== ====== ====== Total return ............................................................. (2.78%) 9.47% 8.73% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 65 $ 60 $ 51 Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 0.75% Net investment income ................................................... 5.28% 5.28% 5.82% Expenses without waivers and assumption of expenses ..................... 0.93% 0.94% 1.14% Net investment income without waivers and assumption of expenses 5.10% 5.09% 5.43% Portfolio turnover rate .................................................. 120% 54% 97% - -------------------------------------------------------------------------------------------------------------- Chase Income Fund ---------------------------------------------- Premier Shares Investor Shares ------------------- ------------------------ For the Years Ended December 31, Year 11/10/98** -------------------- Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ..................................... $18.21 $15.39 $20.46 $20.77 ------ ------ ------- ------ Income from investment operations: Net investment income ................................................... 1.00 0.97 0.98 0.14 Net gains or losses in investments (both realized and unrealized) ....... (0.65) 1.85 (1.57) 0.18 ------ ------ ------- ------ Total from investment operations ....................................... 0.35 2.82 (0.59) 0.32 ------ ------ ------- ------ Less distributions: Dividends from net investment income .................................... -- -- 0.98 0.15 Distributions from capital gains ........................................ -- -- 0.17 0.48 ------ ------ ------- ------ Total distributions .................................................... -- -- 1.15 0.63 ------ ------ ------- ------ Net asset value, end of period ........................................... $18.56 $18.21 $18.72 $20.46 ====== ====== ====== ====== Total return ............................................................. 1.91% 18.38% (2.92%) 1.54% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 54 $ 57 $ 1 $ 1 Ratios to average net assets:# Expenses ................................................................ 0.75% 0.75% 0.99% 1.03% Net investment income ................................................... 5.58% 5.77% 5.04% 4.72% Expenses without waivers and assumption of expenses ..................... 1.07% 1.08% 6.22% 1.44% Net investment income without waivers and assumption of expenses 5.26% 5.44% (0.19%) 4.31% Portfolio turnover rate .................................................. 72% 93% 120% 54% - --------------------------------------------------------------------------------------------------------------------------
** Commencement of offering of class of shares. # Short periods have been annualized. See notes to financial statements. 76 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Balanced Fund ------------------------------------ Premier Shares ------------------------------------ For the Years Ended December 31, ------------------------------------ 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $34.54 $29.26 $23.66 ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.78@ 0.73 0.74 Net gains or losses in investments (both realized and unrealized) ....... 4.07 6.53 4.86 ------ ------ ------ Total from investment operations ....................................... 4.85 7.26 5.60 ------ ------ ------ Less distributions: Dividends from net investment income .................................... 0.70 0.73 -- Distributions from capital gains ........................................ 0.19 1.25 -- ------ ------ ------ Total distributions .................................................... 0.89 1.98 -- ------ ------ ------ Net asset value, end of period ........................................... $38.50 $34.54 $29.26 ====== ====== ====== Total return ............................................................. 14.23% 25.15% 23.67% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 103 $ 59 $ 36 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.00% Net investment income ................................................... 2.19% 2.32% 2.73% Expenses without waivers and assumption of expenses ..................... 1.19% 1.28% 1.28% Net investment income without waivers and assumption of expenses 2.00% 2.04% 2.45% Portfolio turnover rate .................................................. 45% 58% 64% - --------------------------------------------------------------------------------------------------------------- Chase Balanced Fund ---------------------------------------------- Premier Shares Investor Shares ------------------- ------------------------ For the Years Ended December 31, Year 10/16/98** ------------------ Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- ---------- Per share operating performance: Net asset value, beginning of period ..................................... $21.25 $17.16 $34.51 $ 31.87 ------ ------ ------ -------- Income from investment operations: Net investment income ................................................... 0.63 0.57 0.70@ 0.10 Net gains or losses in investments (both realized and unrealized) ....... 1.78 3.52 4.05 3.95 ------ ------ ------ -------- Total from investment operations ....................................... 2.41 4.09 4.75 4.05 ------ ------ ------ -------- Less distributions: Dividends from net investment income .................................... -- -- 0.61 0.16 Distributions from capital gains ........................................ -- -- 0.19 1.25 ------ ------ ------ -------- Total distributions .................................................... -- -- 0.80 1.41 ------ ------ ------ -------- Net asset value, end of period ........................................... $23.66 $21.25 $38.46 $ 34.51 ====== ====== ====== ======== Total return ............................................................. 11.31% 23.83% 13.94% 12.78% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 23 $ 21 $ 2 $ 1 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.25% 1.25% Net investment income ................................................... 2.82% 2.94% 1.94% 1.84% Expenses without waivers and assumption of expenses ..................... 1.17% 1.17% 3.34% 107.16% Net investment income without waivers and assumption of expenses 2.65% 2.77% (0.15%) (104.07%) Portfolio turnover rate .................................................. 70% 98% 45% 58% - ----------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 77 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Equity Income Fund ----------------------------------- Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $46.14 $36.97 $28.21 ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.32@ 0.33 0.40 Net gains or losses in investments (both realized and unrealized) ....... 5.65 9.32 8.36 ------ ------ ------ Total from investment operations ....................................... 5.97 9.65 8.76 ------ ------ ------ Less distributions: Dividends from net investment income .................................... 0.31 0.34 -- Distributions from capital gains ........................................ 2.00 0.14 -- ------ ------ ------ Total distributions .................................................... 2.31 0.48 -- ------ ------ ------ Net asset value, end of period ........................................... $49.80 $46.14 $36.97 ====== ====== ====== Total return ............................................................. 13.06% 26.20% 31.50% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 170 $ 128 $ 75 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.00% Net investment income ................................................... 0.66% 0.82% 1.67% Expenses without waivers and assumption of expenses ..................... 1.09% 1.10% 1.11% Net investment income without waivers and assumption of expenses 0.57% 0.72% 1.56% Portfolio turnover rate .................................................. 16% 3% 14% - -------------------------------------------------------------------------------------------------------------- Chase Equity Income Fund --------------------------------------------- Premier Shares Investor Shares --------------------- ---------------------- For the Years Ended December 31, Year 8/24/98** ------------------ Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- -------- Per share operating performance: Net asset value, beginning of period ..................................... $23.93 $17.90 $ 46.23 $ 40.49 ------ ------ ------- ------- Income from investment operations: Net investment income ................................................... 0.43 0.44 0.20@ 0.06 Net gains or losses in investments (both realized and unrealized) ....... 3.85 5.59 5.63 5.89 ------ ------ ------- ------- Total from investment operations ....................................... 4.28 6.03 5.83 5.95 ------ ------ ------- ------- Less distributions: Dividends from net investment income .................................... -- -- 0.23 0.07 Distributions from capital gains ........................................ -- -- 2.00 0.14 ------ ------ ------- ------- Total distributions .................................................... -- -- 2.23 0.21 ------ ------ ------- ------- Net asset value, end of period ........................................... $28.21 $23.93 $ 49.83 $ 46.23 ====== ====== ======= ======= Total return ............................................................. 17.87% 33.72% 12.70% 14.70% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 63 $ 55 $ 4 $ 1 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.24% 1.18% Net investment income ................................................... 1.67% 2.10% 0.42% 0.57% Expenses without waivers and assumption of expenses ..................... 1.07% 1.09% 3.33% 37.61% Net investment income without waivers and assumption of expenses 1.60% 2.01% (1.67%) (35.86%) Portfolio turnover rate .................................................. 24% 11% 16% 3% - --------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 78 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Chase Small Capitalization Fund ----------------------------------- Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $19.96 $21.78 $17.55 ------ ------ ------ Income from investment operations: Net investment income ................................................... (0.02)@ (0.01) 0.02 Net gains or losses in investments (both realized and unrealized) ....... 2.66 (0.46) 4.21 ------ ------ ------ Total from investment operations ....................................... 2.64 ( 0.47) 4.23 ------ ------ ------ Less distributions: Dividends from capital gains ............................................ -- 0.71 -- In excess of net realized gain on investment ............................ -- 0.64 -- ------ ------ ------ Total distributions .................................................... -- 1.35 -- ------ ------ ------ Net asset value, end of period ........................................... $22.60 $19.96 $21.78 ====== ====== ====== Total return ............................................................. 13.23% (1.83%) 24.08% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 93 $ 65 $ 40 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.00% Net investment income ................................................... (0.13%) (0.03%) 0.13% Expenses without waivers and assumption of expenses ..................... 1.21% 1.26% 1.40% Net investment income without waivers and assumption of expenses (0.34%) (0.29%) (0.27%) Portfolio turnover rate .................................................. 60% 45% 43% - ---------------------------------------------------------------------------------------------------------------
Chase Small Capitalization Fund ------------------------------------------- Premier Shares Investor Shares --------------------- --------------------- For the Years Ended December 31, Year 8/12/98* --------------------- Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- -------- Per share operating performance: Net asset value, beginning of period ..................................... $13.41 $10.23 $19.94 $19.86 ------ ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.01 0.05 (0.08)@ (0.01) Net gains or losses in investments (both realized and unrealized) ....... 4.13 3.13 2.65 1.44 ------ ------ ------ ------ Total from investment operations ....................................... 4.14 3.18 2.57 1.43 ------ ------ ------ ------ Less distributions: Dividends from capital gains ............................................ -- -- -- 0.71 In excess of net realized gain on investment ............................ -- -- -- 0.64 ------ ------ ------ ------ Total distributions .................................................... -- -- -- 1.35 ------ ------ ------ ------ Net asset value, end of period ........................................... $17.55 $13.41 $22.51 $19.94 ====== ====== ====== ====== Total return ............................................................. 30.88% 31.14% 12.89% 7.56% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 21 $ 13 $ 1 $ 1 Ratios to average net assets:# Expenses ................................................................ 1.22% 1.35% 1.24% 1.24% Net investment income ................................................... 0.04% 0.46% (0.37%) (0.18%) Expenses without waivers and assumption of expenses ..................... 1.37% 1.50% 6.02% 74.81% Net investment income without waivers and assumption of expenses (0.11%) 0.31% (5.15%) (73.75%) Portfolio turnover rate .................................................. 68% 89% 60% 45% - ------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 79 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
Chase Core Equity Fund ------------------------------------ Premier Shares ------------------------------------ For the Years Ended December 31, ------------------------------------ 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $26.52 $21.25 $15.94 ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.04@ 0.09 0.14 Net gains or losses in investments (both realized and unrealized) ....... 6.27 6.44 5.17 ------ ------ ------ Total from investment operations ....................................... 6.31 6.53 5.31 ------ ------ ------ Less distributions: Dividends from net investment income .................................... 0.04 0.09 -- Distributions from capital gains ........................................ 0.55 0.17 -- ------ ------ ------ Total distributions .................................................... 0.59 1.26 -- ------ ------ ------ Net asset value, end of period ........................................... $32.24 $26.52 $21.25 ====== ====== ====== Total return ............................................................. 23.89% 30.95% 33.33% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 181 $ 89 $ 51 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.00% Net investment income ................................................... 0.13% 0.39% 0.74% Expenses without waivers and assumption of expenses ..................... 1.11% 1.18% 1.20% Net investment income without waivers and assumption of expenses 0.02% 0.21% 0.54% Portfolio turnover rate .................................................. 11%- 32% 24% - --------------------------------------------------------------------------------------------------------------- Chase Core Equity Fund ----------------------------------------------- Premier Shares Investor Shares -------------------- ----------------------- For the Years Ended December 31, Year 9/10/98* --------------------- Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- -------- Per share operating performance: Net asset value, beginning of period ..................................... $13.01 $10.36 $26.52 $ 21.49 ------ ------ ------ -------- Income from investment operations: Net investment income ................................................... 0.16 0.17 (0.05)@ -- Net gains or losses in investments (both realized and unrealized) ....... 2.77 2.48 6.28 6.22 ------ ------ ------ -------- Total from investment operations ....................................... 2.93 2.65 6.23 6.22 ------ ------ ------ -------- Less distributions: Dividends from net investment income .................................... -- -- 0.01 0.02 Distributions from capital gains ........................................ -- -- 0.55 1.17 ------ ------ ------ -------- Total distributions .................................................... -- -- 0.56 1.19 ------ ------ ------ -------- Net asset value, end of period ........................................... $15.94 $13.01 $32.19 $ 26.52 ====== ====== ====== ======== Total return ............................................................. 22.54% 25.53% 23.59% 29.08% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 29 $ 24 $ 6 $ 1 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.24% 1.23% Net investment income ................................................... 1.10% 1.44% (0.13%) (0.03%) Expenses without waivers and assumption of expenses ..................... 1.14% 1.17% 3.02% 140.46% Net investment income without waivers and assumption of expenses 0.96% 1.27% (1.89%) (139.26%) Portfolio turnover rate .................................................. 29% 133% 11%- 32% - ----------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in CEP (see Note 1). @ Calculated based upon average shares outstanding. See notes to financial statements. 80 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
HERE Chase Equity Growth Fund ------------------------------------ Premier Shares ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- Per share operating performance: Net asset value, beginning of period ..................................... $52.36 $38.36 $27.95 ------ ------ ------ Income from investment operations: Net investment income ................................................... (0.14)@ 0.03 0.07 Net gains or losses in investments (both realized and unrealized) ....... 16.78 15.78 10.34 --------- -------- -------- Total from investment operations ....................................... 16.64 15.81 10.41 --------- -------- -------- Less distributions: Dividends from net investment income .................................... -- 0.03 -- Distributions from capital gains ........................................ 0.91 1.78 -- --------- -------- -------- Total distributions .................................................... 0.91 1.81 -- --------- -------- -------- Net asset value, end of period ........................................... $68.09 $52.36 $38.36 ========= ======== ======== Total return ............................................................. 31.85% 41.38% 37.20% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 320 $ 179 $ 74 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.00% Net investment income ................................................... (0.24%) 0.05% 0.20% Expenses without waivers and assumption of expenses ..................... 1.03% 1.09% 1.11% Net investment income without waivers and assumption of expenses (0.27%) (0.04%) 0.09% Portfolio turnover rate .................................................. 15%- 35% 35% - -------------------------------------------------------------------------------------------------------------- Chase Equity Growth Fund ----------------------------------------------- Premium Shares Investor Shares ---------------------- ----------------------- Year 8/13/98* Ended Through 1996 1995 12/31/99 12/31/98 ---- ---- -------- -------- Per share operating performance: Net asset value, beginning of period ..................................... $23.20 $18.44 $52.30 $45.57 ------ ------ ------ ------ Income from investment operations: Net investment income ................................................... 0.10 0.17 (0.29)@ (0.02) Net gains or losses in investments (both realized and unrealized) ....... 4.65 4.59 16.75 8.53 ------ ------ ------ ------ Total from investment operations ....................................... 4.75 4.76 16.46 8.51 ------ ------ ------ ------ Less distributions: Dividends from net investment income .................................... -- -- -- -- Distributions from capital gains ........................................ -- -- 0.91 1.78 ------ ------ ------ ------ Total distributions .................................................... -- -- 0.91 1.78 ------ ------ ------ ------ Net asset value, end of period ........................................... $27.95 $23.20 $67.85 $52.30 ====== ====== ====== ====== Total return ............................................................. 20.52% 25.78% 31.54% 18.80% Ratios/supplemental data: Net assets, end of period (millions) .................................... $ 57 $ 46 $ 15 $ 1 Ratios to average net assets:# Expenses ................................................................ 1.00% 1.00% 1.24% 1.25% Net investment income ................................................... 0.41% 0.78% (0.48%) (0.19%) Expenses without waivers and assumption of expenses ..................... 1.08% 1.10% 2.34% 5.88% Net investment income without waivers and assumption of expenses 0.33% 0.68% (1.58%) 4.82% Portfolio turnover rate .................................................. 62% 99% 15%- 35% - --------------------------------------------------------------------------------------------------------------------------
* Commencement of offering of class of shares. # Short periods have been annualized. - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in EGP (see Note 1). @ Calculated based upon average shares outstanding. See notes to financial statements. 81 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Trustees and Shareholders of Mutual Fund Investment Trust In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments as presented, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Chase Money Market Fund, Chase Short-Intermediate Term U.S. Government Securities Fund, Chase Intermediate Term Bond Fund, Chase U.S. Government Securities Fund, Chase Income Fund, Chase Balanced Fund, Chase Equity Income Fund, Chase Small Capitalization Fund, Chase Core Equity Fund, and Chase Equity Growth Fund (separate portfolios of Mutual Fund Investment Trust, hereafter referred to as the "Trust") at December 31, 1999, the results of each of their operations for the year then ended, and the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 February 10, 2000 82 - -------------------------------------------------------------------------------- CORE EQUITY PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 95.2% - -------------------------------------------------------------------------------- Common Stock -- 95.2% --------------------- Advertising -- 0.6% 13 Omnicom Group $ 1,305 Airlines -- 0.9% 120 Southwest Airlines, Inc. 1,936 Automotive -- 1.1% 28 Ford Motor Co. 1,482 11 General Motors Corp. 790 ------ 2,272 Banking -- 2.4% 28 Bank of America Corp. 1,395 47 Bank of New York Co., Inc. 1,865 46 Wells Fargo Co. 1,861 ------ 5,121 Biotechnology -- 1.0% 34 Amgen, Inc. * 2,054 Broadcasting/Cable -- 1.6% 43 AT&T Corp. -- Liberty Media Group, Class A * 2,435 12 Clear Channel Communications, Inc. * 1,071 ------ 3,506 Chemicals -- 0.8% 26 E.I. DuPont de Nemours Co. 1,726 Computer Networks -- 2.8% 55 Cisco Systems, Inc. * 5,924 Computer Software -- 6.6% 121 Microsoft Corp. * 14,077 Computers/Computer Hardware -- 6.2% 57 Dell Computer Corp. * 2,913 37 EMC Corp. * 4,053 18 Hewlett-Packard Co. 2,034 39 International Business Machines Corp. 4,172 ------ 13,172 Consumer Products -- 1.1% 21 Procter & Gamble Co. 2,336 Diversified -- 5.7% 62 General Electric Co. 9,548 65 Tyco International LTD (Bermuda) 2,513 ------ 12,061 Electronics/Electrical Equipment -- 1.5% 33 Solectron Corp. * 3,146 Financial Services -- 7.1% 26 American Express Co. 4,289 54 Charles Schwab Corp. 2,090 81 Citigroup, Inc. 4,475 37 Fannie Mae 2,310 15 Morgan Stanley Dean Witter & Co. 2,113 ------ 15,277
See notes to financial statements. 83 CORE EQUITY PORTFOLIO Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Food/Beverage Products -- 2.7% 26 Anheuser-Busch Companies, Inc. $ 1,837 42 Coca-Cola, Co. 2,421 43 PepsiCo, Inc. 1,519 ------- 5,777 Health Care/Health Care Services -- 2.3% 45 Colgate-Palmolive Co. 2,953 24 Guidant Corp. * 1,118 23 Medtronic, Inc. 831 ------- 4,902 Insurance -- 4.0% 33 American General Corp. 2,530 55 American International Group, Inc. 5,995 ------- 8,525 Internet Services/Software -- 1.3% 37 America Online, Inc. * 2,818 Machinery & Engineering Equipment -- 0.9% 15 Applied Materials, Inc. * 1,846 Manufacturing -- 0.8% 31 Honeywell International Inc. 1,761 Metals/Mining -- 1.1% 28 Alcoa, Inc. 2,359 Multi-Media -- 1.2% 34 Time Warner, Inc. 2,476 Oil & Gas -- 7.0% 17 Chevron Corp. 1,494 67 Enron Corp. 2,960 84 Exxon Mobil Corp. 6,760 25 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 1,529 18 Texaco, Inc. 983 44 Williams Companies, Inc. 1,352 ------- 15,078 Pharmaceuticals -- 7.0% 29 Abbot Laboratories 1,059 26 American Home Products Corp. 1,017 34 Bristol-Myers Squibb Co. 2,194 20 Eli Lilly & Co. 1,313 21 Johnson & Johnson 1,981 39 Merck & Co., Inc. 2,597 67 Pfizer, Inc. 2,178 37 Schering-Plough Corp. 1,556 14 Warner-Lambert Co. 1,131 ------- 15,026 Restaurants/Food Services -- 0.7% 35 McDonald's Corp. 1,410
See notes to financial statements. 84 CORE EQUITY PORTFOLIO Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Retailing -- 10.8% 29 Bed Bath & Beyond, Inc. * $ 1,016 39 Best Buy Co., Inc. * 1,951 29 Dayton-Hudson Corp. 2,144 47 Gap, Inc. 2,155 69 Home Depot, Inc. 4,750 58 Kroger Co. * 1,100 111 Wal-Mart Stores, Inc. 7,702 80 Walgreen Co. 2,344 -------- 23,162 Semi-Conductors -- 3.8% 26 Altera Corp. * 1,303 59 Intel Corp. 4,846 20 Texas Instruments, Inc. 1,928 -------- 8,077 Telecommunications -- 6.8% 51 AT&T Corp. 2,601 43 BellSouth Corp. 2,020 27 GTE Corp. 1,879 49 MCI WorldCom, Inc. * 2,597 60 SBC Communications, Inc. 2,934 36 Sprint Corp. (FON Group) 2,413 -------- 14,444 Telecommunications Equipment -- 4.7% 62 Lucent Technologies, Inc. 4,651 21 Motorola, Inc. 3,085 23 Nortel Networks Corp. (Canada) 2,318 -------- 10,054 Utilities -- 0.7% 20 AES Corp. * 1,488 - -------------------------------------------------------------------------------- Total Long-Term Investments 203,116 (Cost $142,453) - -------------------------------------------------------------------------------- Short-Term Investments -- 4.9% - --------------------------------------------------------------------------------
Principal Amount Repurchase Agreement -- 4.9% ---------------------------- $ 10,464 Greenwich Capital Markets, Inc., in a joint trading account at 3.50%, due 01/03/00, (Dated 12/31/99, Proceeds $10,467, Secured by FHLMC, $10,938, 5.75%, due 09/15/22; Market Value $10,678) 10,464 (Cost $10,464) - -------------------------------------------------------------------------------- Total Investments -- 100.1% $213,580 (Cost $152,917) - --------------------------------------------------------------------------------
See notes to financial statements. 85 - -------------------------------------------------------------------------------- EQUITY GROWTH PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 95.0% - -------------------------------------------------------------------------------- Common Stock -- 95.0% --------------------- Airlines -- 0.6% 126 Southwest Airlines, Inc. $ 2,045 Biotechnology -- 5.0% 203 Amgen, Inc. * 12,189 54 Biogen, Inc. * 4,593 28 Genzyme Corp. -- General Division * 1,250 ------- 18,032 Broadcasting/Cable -- 0.5% 19 Clear Channel Communications, Inc. * 1,682 Computer Networks -- 3.1% 106 Cisco Systems, Inc. * 11,347 Computer Software -- 6.8% 27 Citrix Systems, Inc. * 3,312 184 Microsoft Corp. * 21,435 ------- 24,747 Computers/Computer Hardware -- 8.4% 127 Dell Computer Corp. * 6,473 135 EMC Corp. * 14,730 85 International Business Machines Corp. 9,215 ------ 30,418 Consumer Products -- 2.6% 60 Gillette Co. 2,460 66 Procter & Gamble Co. 7,179 ------- 9,639 Diversified -- 5.6% 113 General Electric Co. 17,560 74 Tyco International LTD (Bermuda) 2,885 ------- 20,445 Electronics/Electrical Equipment -- 1.9% 72 Solectron Corp. * 6,809 Financial Services -- 5.3% 22 American Express Co. 3,583 155 Charles Schwab Corp. 5,939 50 Merrill Lynch & Co., Inc. 4,179 39 Morgan Stanley Dean Witter & Co. 5,528 ------- 19,229 Food/Beverage Products -- 2.4% 16 Anheuser-Busch Companies, Inc. 1,155 84 Coca-Cola, Co. 4,894 76 PepsiCo, Inc. 2,689 ------- 8,738 Health Care/Health Care Services -- 0.7% 27 Guidant Corp. * 1,256 32 Medtronic, Inc. 1,148 ------- 2,404 Insurance -- 0.9% 32 American International Group, Inc. 3,444 Internet Services/Software -- 3.1% 151 America Online, Inc. * 11,402
See notes to financial statements. 86 EQUITY GROWTH PORTFOLIO Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Machinery & Engineering Equipment -- 3.6% 104 Applied Materials, Inc. * $ 13,176 Multi-Media -- 1.6% 80 Time Warner, Inc. 5,829 Pharmaceuticals -- 9.5% 53 Abbot Laboratories 1,941 63 American Home Products Corp. 2,489 73 Bristol-Myers Squibb Co. 4,671 51 Eli Lilly & Co. 3,375 48 Johnson & Johnson 4,514 94 Merck & Co., Inc. 6,286 141 Pfizer, Inc. 4,570 75 Schering-Plough Corp. 3,164 44 Warner-Lambert Co. 3,624 -------- 34,634 Restaurants/Food Services -- 0.4% 32 McDonald's Corp. 1,293 Retailing -- 9.5% 73 Bed Bath & Beyond, Inc. * 2,548 46 Best Buy Co., Inc. * 2,316 148 Gap, Inc. 6,817 82 Home Depot, Inc. 5,641 206 Kroger Co. * 3,896 199 Wal-Mart Stores, Inc. 13,763 -------- 34,981 Semi-Conductors -- 9.5% 172 Intel Corp. 14,177 64 KLA-Tencor Corp. * 7,136 93 Novellus Systems, Inc. * 11,362 25 Texas Instruments, Inc. 2,393 -------- 35,068 Telecommunications -- 9.1% 166 AT&T Corp. 8,401 44 Bell Atlantic Corp. 2,698 54 BellSouth Corp. 2,507 29 GTE Corp. 2,060 75 MCI WorldCom, Inc. * 3,992 35 Nextel Communications, Inc., Class A * 3,571 113 SBC Communications, Inc. 5,494 35 Sprint Corp. (FON Group) 2,371 38 Vodafone AirTouch PLC, ADR (United Kingdom) 1,902 -------- 32,996 Telecommunications Equipment -- 4.9% 132 Lucent Technologies, Inc. 9,889 53 Motorola, Inc. 7,871 -------- 17,760 - -------------------------------------------------------------------------------- Total Long-Term Investments 346,118 (Cost $200,787) - --------------------------------------------------------------------------------
See notes to financial statements. 87 EQUITY GROWTH PORTFOLIO Portfolio of Investments (Continued) As of December 31, 1999 (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Short-Term Investments -- 5.0% - -------------------------------------------------------------------------------- Repurchase Agreement -- 5.0% ---------------------------- $ 18,146 Greenwich Capital Markets, Inc., in a joint trading account at 3.50%, due 01/03/00, (Dated 12/31/99, Proceeds $18,151, Secured by FHLMC, $18,959, 5.75%, due 09/15/22; Market Value $18,509) $ 18,146 (Cost $18,146) - -------------------------------------------------------------------------------- Total Investments -- 100.0% $364,264 (Cost $218,933) - --------------------------------------------------------------------------------
INDEX: * -- Non-income producing security. ADR -- American Depositary Receipt. FHLMC -- Federal Home Loan Mortgage Corporation. See notes to financial statements. 88 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Assets and Liabilities As of December 31, 1999 - -------------------------------------------------------------------------------- (Amounts in Thousands)
Equity Core Equity Growth Portfolio Portfolio - -------------------------------------------------------------------------------- ASSETS: Investment securities, at value (Note 1) ......... $213,580 $364,264 Cash ............................................. -- 1 Receivable for interest and dividends ............ 83 160 - -------------------------------------------------------------------------------- Total Assets .................................. 213,663 364,425 - -------------------------------------------------------------------------------- LIABILITIES: Payable to Custodian ............................. 181 -- Accrued liabilities: (Note 2) Investment advisory fees ........................ 113 212 Administration fees ............................. 9 15 Other ........................................... 31 17 - -------------------------------------------------------------------------------- Total Liabilities ............................. 334 244 - -------------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS .............................. $213,329 $364,181 - -------------------------------------------------------------------------------- Cost of investments .............................. $152,917 $218,933 - --------------------------------------------------------------------------------
See notes to financial statements. 89 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Operations For the period from August 12, 1999 to December 31, 1999 - -------------------------------------------------------------------------------- (Amounts in Thousands)
Equity Core Equity Growth Portfolio Portfolio - ------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend ..................................................... $ 522 $ 570 Interest ..................................................... 192 290 Foreign taxes withheld ....................................... (2) (1) - ------------------------------------------------------------------------------------------- Total investment income ................................... 712 859 - ------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ..................................... 524 863 Administration fees .......................................... 35 58 Custody and accounting fees .................................. 18 28 Professional fees ............................................ 22 22 Trustees' fees and expenses .................................. 4 2 Other ........................................................ 6 6 - ------------------------------------------------------------------------------------------- Total expenses ............................................ 609 979 - ------------------------------------------------------------------------------------------- Less amounts waived (Note 2A) ................................ 70 35 - ------------------------------------------------------------------------------------------- Net expenses ............................................... 539 944 - ------------------------------------------------------------------------------------------- Net investment income (loss) .............................. 173 (85) - ------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions .......... 2,121 (283) Change in net unrealized appreciation of investments ......... 23,715 67,192 - ------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments .............. 25,836 66,909 - ------------------------------------------------------------------------------------------- Net increase in net assets from operations ................... $26,009 $66,824 - -------------------------------------------------------------------------------------------
See notes to financial statements. 90 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Changes in Net Assets For the periods indicated - -------------------------------------------------------------------------------- (Amounts in Thousands)
Equity Core Equity Growth Portfolio Portfolio - ---------------------------------------------------------------------------------------------------- 08/12/99* 08/12/99* Through Through 12/31/99 12/31/99 - ---------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ................................. $ 173 $ (85) Net realized gain (loss) on investments ...................... 2,121 (283) Change in net unrealized appreciation of investments ......... 23,715 67,192 - ---------------------------------------------------------------------------------------------------- Increase in net assets from operations ..................... 26,009 66,824 - ---------------------------------------------------------------------------------------------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS (Note 1): Contributions ................................................ 207,886 332,120 Withdrawals .................................................. (20,566) (34,763) - ---------------------------------------------------------------------------------------------------- Net increase from transactions in investors' beneficial interests ........................................ 187,320 297,357 - ---------------------------------------------------------------------------------------------------- Total increase in net assets ............................... 213,329 364,181 NET ASSETS: Beginning of period .......................................... -- -- - ---------------------------------------------------------------------------------------------------- End of period ................................................ $213,329 $ 364,181 - ----------------------------------------------------------------------------------------------------
* Commencement of operations. See notes to financial statements. 91 - -------------------------------------------------------------------------------- PORTFOLIOS Notes to Financial Statements - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies Mutual Fund Master Investment Trust (the "Trust") was organized as a Massachusetts Business Trust, and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Core Equity Portfolio ("CEP") and Equity Growth Portfolio ("EGP"), collectively the "Portfolios," are separate series of the Trust. The declaration of trust permits the Trustees to issue beneficial interests in the Portfolios. On August 12, 1999, the Chase Core Equity Fund and Chase Equity Growth Fund (separate portfolios of Mutual Fund Investment Trust) contributed 100% of their investable net assets ($156,409,317 and $240,616,354, respectively) to the newly created CEP and EGP, in a tax-free exchange. The following is a summary of significant accounting policies followed by the Portfolios: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. Valuation of investments -- Equity securities, purchased options and futures are valued at the last sale price on the exchange on which they are primarily traded, including the NASDAQ National Market. Securities for which sale prices are not available and other over-the-counter securities are valued at the last quoted bid price. Bonds and other fixed income securities (other than short-term obligations), including listed issues, are valued on the basis of valuations supplied by pricing services or by matrix pricing systems of a major dealer in bonds. Short-term debt securities with 61 days or more to maturity at time of purchase are valued, through the 61st day prior to maturity, at market value based on quotations obtained from market makers or other appropriate sources; thereafter, the value on the 61st day is amortized on a straight-line basis over the remaining number of days to maturity. Short-term investments with 60 days or less to maturity at time of purchase are valued at amortized cost, which approximates market. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees. B. Repurchase agreements -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolios may transfer uninvested cash balances into one or more joint trading accounts for the purpose of investing in repurchase agreements. It is the Portfolios' policy that repurchase agreements are fully collateralized by U.S. Treasury and Government Agency securities. All collateral is held in one or more joint trading accounts by the Portfolios' custodian bank, subcustodian, or a bank with which the custodian bank has entered into a subcustodian agreement, or is segregated in the Federal Reserve Book Entry System. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the collateral by the Trusts may be delayed or limited. 92 PORTFOLIOS Notes to Financial Statements C. Security transactions and investment income -- Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. D. Federal income taxes -- The Portfolios intend to continue to qualify as partnerships and therefore net investment income and net realized gains are taxed to the partners. Accordingly, no tax provisions are recorded by the Portfolios. The investors in the Portfolios must take into account their proportionate share of the Portfolios' income, gains, losses, deductions, credits and tax preference items in computing their federal income tax liability, without regard to whether they have received any cash distributions from the Portfolio. The Portfolios do not intend to distribute to investors their net investment income or their net realized gains, if any. It is intended that the Portfolios will be managed in such a way that investors in the Portfolio will be able to satisfy the requirements of subchapter M of the Internal Revenue Code to be taxed as regulated investment companies. E. Expenses -- Expenses directly attributable to a Portfolio are charged to that Portfolio; other expenses are allocated on another reasonable basis. 2. Fees and Other Transactions with Affiliates A. Investment advisory fee -- Pursuant to separate Investment Advisory Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor") acts as the Investment Advisor to the Portfolios. Chase is a direct wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase supervises the investments of the Portfolios and for such services is paid a fee. The fee is computed daily and paid monthly at an annual rate equal to 0.75% of the Portfolios' average daily net assets. Chase Bank of Texas N.A. ("Chase Texas"), a registered investment advisor, is the sub-investment advisor to each of the Portfolios pursuant to a Sub-Investment Advisory Agreement between Chase Texas and Chase. Chase Texas is a wholly-owned subsidiary of Chase and is entitled to receive a fee, payable by Chase from its advisory fee, at an annual rate equal to 0.375% of each Portfolio's average daily net assets. For the period from August 12, 1999 to December 31, 1999, the Advisor voluntarily waived advisory fees of $69,918 and $34,534 for CEP and EGP, respectively. B. Administration fee -- Pursuant to an Administration Agreement, Chase (the "Administrator") provides certain administration services to the Portfolios. For these services and facilities, the Administrator receives from each Portfolio a fee computed at the annual rate equal to 0.05% of the respective Portfolio's average daily net assets. 93 PORTFOLIOS Notes to Financial Statements 3. Investment Transactions For the period from August 12, 1999 to December 31, 1999, purchases and sales of investments (excluding short-term investments) were as follows (in thousands):
CEP EGP - -------------------------------------------------------------------------- Purchases (excluding U.S. Government)........... $43,236 $52,438 Sales (excluding U.S. Government) .............. 11,187 1,116
The portfolio turnover rates of CEP and EGP for the period from August 12, 1999 to December 31, 1999, were 6% and 1% respectively. 4. Federal Income Tax Matters For Federal income tax purposes, the cost and unrealized appreciation (depreciation) in value of the investment securities at December 31, 1999, are as follows (in thousands):
CEP EGP - -------------------------------------------------------------------------- Aggregate cost ......................... $152,948 $219,810 -------- -------- Gross unrealized appreciation........... $ 62,562 $145,253 Gross unrealized depreciation........... (1,930) (799) -------- -------- Net unrealized appreciation ............ $ 60,632 $144,454 ======== ========
94 - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Trustees and Beneficial Unit Holders of Mutual Fund Master Investment Trust In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of Core Equity Portfolio and Equity Growth Portfolio (separate portfolios of Mutual Fund Master Investment Trust, hereafter referred to as the "Trust") at December 31, 1999, and the results of each of their operations and the changes in each of their net assets for the period August 12, 1999 (commencement of operations) through December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Trust's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 February 10, 2000 95 [This page intentionally left blank] [This page intentionally left blank] - -------------------------------------------------------------------------------- CHASE FUNDS ANNUAL REPORT - -------------------------------------------------------------------------------- Investment Adviser, Administrator, Shareholder and Fund Servicing Agent and Custodian Chase Funds Service Center 210 West 10th Street Kansas City, MO 64105 Legal Counsel Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Independent Accountants PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 Chase Funds are distributed by Chase Fund Distributors, Inc., which is unaffiliated with The Chase Manhattan Bank. Chase and its respective affiliates receive compensation from Chase Funds for providing investment advisory and other services. This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by a prospectus. To obtain a prospectus for any of the Chase Funds, call 1-800-5-CHASE-0. The prospectus contains more complete information, including charges and ongoing expenses. Please read it carefully before you invest or send money. (C) 2000 The Chase Manhattan Corporation. All Rights Reserved. February 2000 [CHASE LOGO] CHASE FUNDS(SM) Chase Funds Fulfillment Center 393 Manley Street West Bridgewater, MA 02379-1039 EX-99.(17)(H) 10 a2027167zex-99_17h.txt EXHIBIT 99(17)(H) - -------------------------------------------------------------------------------- JUNE 30, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- Chase Funds SEMI-ANNUAL REPORT MONEY MARKET FUND SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND INTERMEDIATE TERM BOND FUND U.S. GOVERNMENT SECURITIES FUND INCOME FUND BALANCED FUND EQUITY INCOME FUND SMALL CAPITALIZATION CORE EQUITY FUND EQUITY GROWTH FUND [CHASE Logo] ANCF-3-600 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Contents - ----------------------------------------------------------------------------- Chairman's Letter 1 - ----------------------------------------------------------------------------- Chase Money Market Fund 2 Fund Commentary - ----------------------------------------------------------------------------- Chase Short-Intermediate Term U.S. Government Securities Fund 4 Fund Commentary - ----------------------------------------------------------------------------- Chase Intermediate Term Bond Fund 6 Fund Commentary - ----------------------------------------------------------------------------- Chase U.S. Government Securities Fund 8 Fund Commentary - ----------------------------------------------------------------------------- Chase Income Fund 10 Fund Commentary - ----------------------------------------------------------------------------- Chase Balanced Fund 12 Fund Commentary - ----------------------------------------------------------------------------- Chase Equity Income Fund 15 Fund Commentary - ----------------------------------------------------------------------------- Chase Small Capitalization Fund 18 Fund Commentary - ----------------------------------------------------------------------------- Chase Core Equity Fund 21 Fund Commentary - ----------------------------------------------------------------------------- Chase Equity Growth Fund 24 Fund Commentary - ----------------------------------------------------------------------------- Portfolios of Investments 27 - ----------------------------------------------------------------------------- Fund Financial Statements 49 - ----------------------------------------------------------------------------- Portfolio Financial Statements 79 Highlights - - Domestic equity and fixed-income markets endured a rocky period during the first half of the year. - - The streak of new economy stock outperformance came to a halt, and the divergence between those stocks and old economy stocks began to diminish. - - Amid a growing federal budget surplus backdrop, the U.S. Treasury's buyback program prompted higher long-term Treasury prices, leading to an inverted yield curve. --------------------------------------------------- NOT FDIC INSURED May lose value / No bank guarantee --------------------------------------------------- - -------------------------------------------------------------------------------- CHASE FUNDS - -------------------------------------------------------------------------------- Chairman's Letter August 1, 2000 Dear Shareholder: We are pleased to present this semi-annual report for the Chase Funds for the six months ended June 30, 2000. To help you analyze your investment, this report gives you specific information on your Fund's holdings, performance, management strategies and outlook. Old Economy/New Economy: An End of the Extremes The first half of 2000 was rocky for domestic equity and fixed-income markets. At first, new economy outperformance continued, whereby technology-related stocks appreciated at the expense of all others. This was evident in the Nasdaq, which was up 15.42% in the first two months of the year, compared with a loss of 7% for the S&P 500. This trend carried into March, with the Nasdaq cresting to its 2000 high of 5,048 on March 10. Although there was no single catalyst that caused the new economy's stumble, Nasdaq investors were on a bumpy ride for the remainder of the period as the index fell to a low of 3,164 on May 23, before rising to 4,064 on June 21, and ending at 3,966. The S&P 500 was flat (-0.4%), proving less volatile than the Nasdaq. It became clear that the Federal Reserve Board's tight money policies were taking effect. When the Fed raised rates in May, the market was in the doldrums. Economic reports suggested, however, that rates were impacting the economy, and the potential for slower growth and an end to tightenings allowed for a June rally. The best performing S&P 500 sectors were healthcare, energy, technology and utilities. By capitalization, mid-caps outperformed. Treasury Buyback Program Has Big Impact on Bonds While the economic state is a driver among bonds, one cannot overlook the factor of the Treasury's buyback program for longer-dated Treasuries given the growing federal budget surplus. With normal supply-and-demand considerations taking hold, investors bid up the prices of long-term Treasuries, resulting in an inverted yield curve, with higher yields for shorter-term issues. The program caused "spread" sectors to underperform, which is unusual when the Fed is in a tightening cycle. Undoubtedly, the big issue is whether the economy can achieve a soft landing, allowing the Fed to take its foot off the brakes. Regardless, our equity fund managers continue to pick what they believe are the best stocks across sectors, those with potential to increase earnings in a variety of economic scenarios. Our bond fund managers are focused on adding value through individual security selection as well as sector allocations. On behalf of the management team, and everyone at Chase Funds, we thank you for your business. Sincerely yours, [Graphic; Signature of Sarah E. Jones] Sarah E. Jones Chairman 1 - -------------------------------------------------------------------------------- CHASE MONEY MARKET FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Money Market Fund had a total return of 2.89% (Premier Shares), for the six months ended June 30, 2000. As of the last day of the period, the Fund had an annualized dividend yield of 6.15% (Premier Shares). How the Fund Was Managed The management team's decision to extend the Fund's average-weighted duration during the first quarter, as interest rates rose, contributed positively to performance in January, February and March. In the second quarter, the management team continued to use the rising rate environment as an opportunity to purchase higher-yielding, longer-duration paper that should help shield the Fund from subsequent drops in rates. Where the Fund May Be Headed In the management team's view, there will likely be one more Fed rate hike over the remainder of this year, most likely at the Federal Open Market Committee's meeting on August 22. While noting that the US economy has indicated hints of a slowdown, the team's view is that it may be the third quarter before the pace of any cooling can be confirmed. In the meantime, the expected strategy is one of diversification among high quality securities and taking advantage of any further interest rate hikes by extending duration to capture yield for shareholders. 2 CHASE MONEY MARKET FUND As of June 30, 2000 (Unaudited) Maturity Schedule 1-14 days 64.50% 15-30 days 7.08% 31-60 days 7.02% 61-90 days 7.65% 91-180 days 2.99% 181-270 days 7.69% 270+ days 3.07%
7-Day Avg. Yield Premier Shares 6.18% Investor Shares 6.08%
Performance information represents past performance and is not intended to indicate or predict future results. Yields will vary and you may experience gains or losses when you sell your shares. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. Chase Money Market Fund is the successor to the AVESTA Trust Money Market Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Money Market Fund, a new investment portfolio of MFIT. The Chase Money Market Fund unlike the AVESTA Money Market Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. Premier Shares commenced on 3/29/88, carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Yield information is net of expenses and fees, and reflects reimbursement and waiver of certain expenses and fees. An investment in the Fund isn't a bank deposit and it isn't insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 3 - -------------------------------------------------------------------------------- CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Short-Intermediate Term U.S. Government Securities Fund (Premier Shares) had a total return of 2.78% in the six months ended June 30, 2000, compared to a total return of 3.00% for the Lehman 1-3 Year Government Index. How the Fund Was Managed The Fund began 2000 with a shorter-than-benchmark duration, and this proved detrimental to performance in the first quarter. While the Fund's exposure to non-Treasury sectors was also a negative factor, this was offset by the fact that the Fund was concentrated in the short end of the yield curve. As the first quarter progressed, the management team took advantage of widening yield spreads between Treasuries and other sectors to increase the Fund's yield by adding to government agency securities. The Fund entered the second quarter with a relatively neutral duration strategy and this generally helped the Fund maintain its performance in the crosswinds created by the strong economy's upward pressure on rates and the Treasury's buyback program's downward pressure. The Fund also benefited from its yield curve strategy as it had a barbell in place when the yield curve inverted and began adjusting back to neutral given the expectation that the curve would correct back to a more normal slope. The management team maintained the Fund's exposure to mortgage and agency securities due to historically-high yield spreads, and within mortgages began concentrating on GNMA issues for several reasons: the explicit government guarantee; higher yields that don't fully reflect the guarantee; a high degree of convexity, and; a lower likelihood of being adversely affected by mortgage prepayments. Where the Fund May Be Headed Moving forward, the management team intends to continue to focus on GNMA issues for the reasons cited above and to adjust the portfolio in a prudent manner as the status of the economy becomes clear. 4 CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (4/1/93) ------------------------------------------------------------------------------ Premier Shares 3.69% 4.89% 4.76% 4.51% ------------------------------------------------------------------------------ Investor Shares 3.44% 4.76% 4.68% 4.45% ------------------------------------------------------------------------------
Life of Fund Performance* [Line chart data]
Chase Lipper Lehman Lehman Short-Intermediate Short-Intermediate Intermediate 1-3 Year Term U.S. Government U.S. Government Government Government Securities Fund Funds Index Index Index 4/93 10000 10000 10000 10000 6/93 10090 10166 10197 10111 6/94 10080 10135 10177 10265 6/95 10908 10969 11169 11052 6/96 11308 11437 11721 11657 6/97 11928 12179 12535 12423 6/98 12744 13046 13585 13266 6/99 13278 13522 14186 13935 6/00 13769 14057 14823 14612
[End Line data *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Short-Intermediate Term U.S. Government Securities Fund, the Lehman 1-3 Year Government Index, the Lehman Intermediate Government Index and Lipper Short-Intermediate Term U.S. Government Funds Index from April 1, 1993 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and carry a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Short-Intermediate Term U.S. Government Securities Fund is the successor to the AVESTA Trust Short-Intermediate Term U.S. Government Securities Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Short-Intermediate Term U.S. Government Securities Fund, a new investment portfolio of MFIT. Chase Short-Intermediate Term U.S. Government Securities Fund, unlike the AVESTA Trust Short-Intermediate Term U.S. Government Securities Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lehman 1-3 Year Government Index is composed of bonds covered by the Government Bond Index with maturities of 1-3 years. The index is unmanaged and reflect the reinvestment of dividends. An individual cannot invest directly in an index. The Lipper Short-Intermediate Term U.S. Government Funds Index represents performance of the 30 largest short-intermediate term debt funds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Intermediate Government Index consists of U.S. agency and Treasury securities with maturities of one to 10 years. An individual cannot invest directly in an index. 5 - -------------------------------------------------------------------------------- CHASE INTERMEDIATE TERM BOND FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Intermediate Term Bond Fund (Premier Shares) had a total return of 3.26% in the six months ended June 30, 2000, compared to a total return of 3.99% for the Lehman Aggregate Index. How the Fund Was Managed The Fund began 2000 positioned for continued strength in the US economy, and as such was short-to-neutral its benchmark duration. When the US Treasury announced and began its program of buying back longer-dated Treasuries, causing the yield curve to invert and longer Treasuries to outperform dramatically, the management team attempted to extend duration to take advantage of the rally. Of substantial benefit during the first quarter's rally was the Fund's yield curve strategy as the portfolio had significant exposure to 20-year securities, the strongest part of the curve. On a sector level, the Fund benefited in the first quarter from its exposure to mortgages, and the management team took advantage of widening yield spreads between Treasuries and other sectors to increase the Fund's yield substantially, especially by adding to corporate and agency positions. The Fund's overweight position in "spread" sectors was detrimental to relative performance in April and May as longer-dated Treasuries continued to outperform with the support of the Treasury buyback program, but this was somewhat offset by positions in strong-performing longer paper during the June rally. The Fund's longer duration had the opposite effect of the "spread" sector overweight, causing underperformance in May, as rates on securities of ten years and longer rose, and then helping in the June rally. Where the Fund May Be Headed As the reporting period ended, the management team had begun increasing mortgage exposure given its belief that the market could be in a trading range and, therefore, it should be advantageous to hold higher-yielding securities without the extra credit and supply risks of corporate bonds. Additionally, the management team intends to continue to adjust the portfolio in a prudent manner as the status of the economy becomes clear. 6 CHASE INTERMEDIATE TERM BOND FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (10/3/94) ---------------------------------------------------------------------------- Premier Shares 3.69% 4.93% 4.83% 6.05% ---------------------------------------------------------------------------- Investor Shares 3.44% 4.78% 4.74% 5.98% ----------------------------------------------------------------------------
Life of Fund Performance* [Line chart data]
Chase Lipper Lehman Intermediate Intermediate Lehman Intermediate Term Bond Grade Debt Aggregate Gov't/Credit Fund Funds Index Index Index 10/94 10000 10000 10000 10000 6/95 11069 11042 11187 10947 6/96 11439 11565 11747 11494 6/97 12129 12484 12705 12324 6/98 13200 13692 14044 13376 6/99 13513 14032 14483 13935 6/00 14013 14558 15142 14521
[End Line data] *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Intermediate Term Bond Fund, the Lehman Intermediate Gov't/ Credit Index (formerly the Lehman Intermediate Gov't./Corp. Index), the Lehman Aggregate Index and the Lipper Intermediate Grade Debt Funds Index from October 31, 1994 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares and do not include Investor Share expenses. Chase Intermediate Term Bond Fund is the successor to the AVESTA Trust Intermediate Term Bond Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Intermediate Term Bond Fund, a new investment portfolio of MFIT. Chase Intermediate Term Bond Fund, unlike the AVESTA Trust Intermediate Term Bond Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Intermediate Grade Debt Funds Index represents performance of the largest 30 intermediate investment grade debt funds. Each of these funds invests the majority of its assets in investment grade debt issues (rated in top four grades) with dollar-weighted average maturities of five to 10 years. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Aggregate Index is composed of the Lehman Government/ Corporate Bond Index and the Mortgage-Backed Securities Index and includes Treasury issues, agency issues, corporate bond issues and mortgage-backed securities. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. The Lehman Intermediate Gov't/Credit Index includes the government and corporate bond indices, with maturities of one to 10 years, including U.S. governmental treasury and agency securities, corporate and yankee bonds. An individual cannot invest directly in an index. 7 - -------------------------------------------------------------------------------- CHASE U.S. GOVERNMENT SECURITIES FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase U.S. Government Securities Fund (Premier Shares) had a total return of 4.37% in the six month period ended June 30, 2000, compared to a total return of 4.97% for the Lehman Government Index. How the Fund Was Managed Beginning the year with a longer-than-benchmark duration, the Fund benefited as yields fell in response to the U.S. Treasury's program to buy back longer-dated securities. Although the Fund was underexposed to the Treasury sector in general during the quarter, Treasury (and mortgage) exposure was concentrated in the long end of the yield curve, which outperformed dramatically. As the first quarter progressed, the management team took advantage of widening yield spreads between Treasuries and other sectors to increase the Fund's yield profile by adding to non-GNMA government agency positions. The Fund entered the second quarter with a relatively neutral duration and yield curve strategy, and this generally helped the Fund maintain its performance in the crosswinds created by the strong economy's upward pressure on rates and the Treasury's buyback program's downward pressure. The management team maintained the Fund's exposure to mortgage and agency securities due to historically-high yield spreads, and within mortgages began concentrating on GNMA issues for several reasons: the explicit government guarantee; higher yields that don't fully reflect the guarantee; a high degree of convexity, and; a lower likelihood of being adversely affected by mortgage prepayments. Where the Fund May Be Headed Moving forward, the management team intends to continue its focus on GNMA issues for the reasons cited above and to adjust the portfolio in a prudent manner as the status of the economy becomes clear. 8 CHASE U.S. GOVERNMENT SECURITIES FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years (4/1/93) ---------------------------------------------------------------------------- Premier Share s 4.26% 6.23% 5.74% 6.27% ---------------------------------------------------------------------------- Investor Shares 4.00% 6.09% 5.66% 6.21% ----------------------------------------------------------------------------
Life of Fund Performance* [Line chart data]
Chase Lipper U.S. Government General Lehman Securities U.S. Government Government Fund Funds Index Index 4/93 10000 10000 10000 6/93 10530 10252 10289 6/94 9999 9937 10151 6/95 11749 10989 11375 6/96 12100 11383 11887 9/97 12960 12227 12766 6/98 14575 13446 14203 6/99 14904 13662 14635 6/00 15535 14180 15364
[End Line data] *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in the Premier Shares of Chase U.S. Government Securities Fund, the Lehman Government Index, and Lipper General U.S. Government Funds Index from April 1, 1993 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase U.S. Government Securities Fund is the successor to the AVESTA Trust U.S. Government Securities Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase U.S. Government Securities Fund, a new investment portfolio of MFIT. Chase U.S. Government Securities Fund, unlike the AVESTA U.S. Government Securities Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. Lehman Government Index is composed of the Lehman Treasury Bond Index and the Lehman Agency Bond Index and includes Treasury bonds and debt issued by the U.S. Government and its agencies. The index is unmanaged and includes the reinvestment of dividends. An individual cannot invest directly in an index. The Lipper General U.S. Government Funds Index represents performance of the 30 largest U.S. government securities funds. Lipper is an independent mutual fund performance monitor whose results do not reflect a sales charge. An individual cannot invest directly in an index. 9 - -------------------------------------------------------------------------------- CHASE INCOME FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund Performed Chase Income Fund (Premier Shares) had a total return of 2.78% in the six months ended June 30, 2000, compared to a total return of 4.18% for the Lehman Government/Credit Index. How the Fund Was Managed The Fund began 2000 positioned for continued strength in the US economy, and as such was short-to-neutral its benchmark duration. When the US Treasury announced and began its program of buying back longer-dated Treasuries, causing the yield curve to invert and longer Treasuries to outperform dramatically, the management team attempted to extend duration to take advantage of the rally. Of substantial benefit during the first quarter's rally was the Fund's yield curve strategy, as the portfolio had significant exposure to longer-term issues. As the quarter progressed, the management team took advantage of widening yield spreads between Treasuries and other sectors to increase the Fund's yield substantially, especially by adding to corporate and agency positions. The Fund entered the second quarter positioned for continued strength in the economy and an actively-tightening Fed posture. Specifically, the Fund was overweight in non-Treasury "spread" sectors, which tend to outperform in a rising-interest rate environment. This proved beneficial in April and early May but, when economic data softened in late May and early June, the bond market shifted gears radically and began to rally. While this rally did not support the Fund's strategy, the management team felt that such a sharp reversal on limited data was a case of overreaction. Instead of restructuring the entire portfolio, therefore, the team preferred to make more limited adjustments. Where the Fund May Be Headed Moving forward, the management team intends to continue to adjust the portfolio in a prudent manner as the status of the economy becomes clear. On a sector level, the team is concerned about excessive corporate supply, particularly among telecommunications issuers. 10 CHASE INCOME FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns 1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------------------------- Premier Share s 2.66% 5.14% 5.42% 6.60% ---------------------------------------------------------------------------- Investor Shares 2.46% 5.04% 5.36% 6.57% ----------------------------------------------------------------------------
10 Year Performance* [Line chart data]
Lipper Chase Corporate Debt Lehman Income A Rated Funds Government/Credit Fund Index Index 6/90 10000 10000 10000 6/91 10713 10977 11022 6/92 12069 12619 12585 6/93 13483 14328 14240 6/94 13097 14000 14032 6/95 14547 15775 15823 6/96 15310 16468 16560 6/97 16297 17821 17843 6/98 18075 19733 19857 6/99 18452 19971 20392 6/00 18947 20614 21264
[End Line data] *Source: Lipper Analytical Services Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Income Fund, the Lehman Gov't/Credit Index (formerly the Lehman Gov't/Corp. Index) and the Lipper Corporate Debt A Rated Funds Index from June 30, 1990 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares commenced on 11/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 11/10/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Income Fund is the successor to the AVESTA Trust Income Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Income Fund, a new investment portfolio of MFIT. Chase Income Fund, unlike the AVESTA Income Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Corporate Debt A Rated Funds Index represents performance of the largest 30 A rated corporate debt funds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Lehman Govt/Credit Index includes the Government and Corporate Bond Indices, including U.S. Government Treasury and agency securities, corporate and yankee bonds. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. 11 - -------------------------------------------------------------------------------- CHASE BALANCED FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund performed Chase Balanced Fund, which seeks to provide a balance of current income and growth of capital, provided a total return of 2.68% (Premier shares) for the six months ended June 30, 2000, versus a (0.43)% return from the S&P 500 Index. How the Fund was managed Equity markets experienced a difficult first half as the stocks of companies in the technology, telecommunications and Internet-related sectors continued their meteoric rise in the first three months, only to come crashing to earth during April and May. Fixed income served to smooth this volatility, however, and provided a boost to the Fund's performance. In spite of its volatility, technology stocks made a greater contribution to performance than any other equity sector. Our focus on leadership companies with strong earnings growth prospects helped performance. It was, however, a measure of the turmoil in technology that the Fund's individual best and worst performers were both technology stocks. Semiconductor company Intel was the leading performer, while Microsoft plunged in the face of a potential break-up. Defensive sectors benefited from the uncertainty. Stocks in the utilities, healthcare and energy sectors all rose. Utilities were helped further by fears of rising interest rates, while pharmaceutical companies returned to favor after a lengthy period of concern regarding their poor drug pipelines. Among utilities, Enron showed particular strength, while healthcare companies Pfizer and Warner-Lambert made worthwhile contributions. Rising oil and gas prices boosted energy stocks. There were, however, disappointments outside technology. Most notably, consumer cyclicals fell sharply, with consumer staples also garnering disappointments. Among others, Wal-Mart Stores, Home Depot and Procter & Gamble fell sharply. Communications services stocks were also disappointing, with companies such as AT&T and Sprint making stock price losses. Fixed income had a broadly positive period, as prices firmed following early-June employment data, which suggested that Fed rate hikes had succeeded in subduing economic growth. In addition, 30-year Treasury yields fell sharply, creating an inverted yield curve. Where the Fund may be headed Both equities and bonds await further monthly data to confirm that growth is slowing. This should reduce market uncertainty. In the long term, we continue to seek stocks with superior earnings growth prospects. While there has been considerable recent volatility in technology stocks, we believe that much of the economy's growth potential remains locked within this industry. 12 CHASE BALANCED FUND As of June 30, 2000 (Unaudited) Percentage of Total Portfolio Investments [Pie chart data] Technology (22.6%) Financial (13.8%) Consumer Cyclicals (12.9%) Mortgage Backed Pass Through Securities (12.5%) Health Care (8.0%) Utilities (6.3%) U.S. Treasurey Securities (6.0%) Energy (5.3%) Capital Goods (4.9%) Consumer Staples (2.6%) U.S. Government Agency Securities (2.2%) Cash Equivalent & Short-Term Paper (1.8%) Transportation (0.6%) Basic Materials (0.5%)
[End Pie chart data] Top Ten Equity Holdings of the Portfolio 1. General Electric Co. (2.8%) A diversified manufacturing, technology and services company. Operations include appliance manufacturing, capital services, information services and electrical distribution. 2. Intel Corp. (2.2%) Designs, manufactures and sells computer components and related products. Major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, system management software, conferencing products and digital imaging products. 3. Microsoft Corp. (2.0%) Develops, manufactures, licenses and supports computer software products. 4. Cisco Systems, Inc. (2.0%) Supplies data networking products to the corporate enterprise and public wide area service provider markets. Products include routers, LAN switches, frame relay/ATM and remote access concentrators. 5. Exxon Mobil Corp. (1.9%) Operates petroleum and petrochemicals businesses on a worldwide basis. Operations include exploration and production of oil and gas. 6. American International Group, Inc. (1.8%) Writes property and casualty insurance and life insurance and provides a variety of insurance and insurance-related services through its subsidiaries in the U.S. and overseas. 7. Wal-Mart Stores, Inc. (1.8%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware and other products. 8. Pfizer, Inc. (1.8%) A research-based, global pharmaceutical company that discovers, develops, manufactures and markets medicines for humans and animals. Its products include prescription pharmaceuticals, non-prescription self- medications and animal health products. 9. American Express Co. (1.5%) Through its subsidiaries, the Company provides travel-related, financial advisory and international banking services around the world. Its products include the American Express Card, the Optima Card and American Express Travelers Cheques. 10. Citigroup, Inc. (1.4%) A diversified financial services holding company that provides investment services, including asset management, consumer finance services, property and casualty insurance services, and life insurance services. Top 10 equity holdings comprised 19.2% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 13 CHASE BALANCED FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------------------------- Premier Share s 11.89% 16.84% 17.04% 12.91% ---------------------------------------------------------------------------- Investor Shares 11.59% 16.65% 16.93% 12.85% ----------------------------------------------------------------------------
10 Year Performance* [Line chart data]
Chase Lipper Lehman S&P Balanced Balanced Gov't./Credit 500 Fund Funds Index Index Index 6/90 10000 10000 10000 10000 6/91 10799 10906 11020 10736 6/92 11999 12448 12580 12174 6/93 13433 14235 14235 13831 6/94 13112 14349 14028 14026 6/95 15330 16575 15820 17676 6/96 17305 19032 16555 22264 6/97 21105 22957 17836 29983 6/98 25987 27186 19849 39024 6/99 30081 30324 20386 47902 6/00 33662 31674 21258 51369
[End Line data] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Balanced Fund, the Lehman Gov't/Credit Index (formerly the Lehman Intermediate Gov't/Credit Index), the Standard & Poor's 500 Index and the Lipper Balanced Funds Index from June 30, 1990 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares were introduced on 10/16/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 10/16/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Balanced Fund is the successor to the AVESTA Trust-Balanced Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Balanced Fund, a new investment portfolio of MFIT. Chase Balanced Fund, unlike the AVESTA Trust-Balanced Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Balanced Funds Index represents performance of the largest 30 balanced funds. Each of these funds invests in a portfolio of stocks and bonds. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock markets. It includes 500 widely held common stocks. Total return figures represent the reinvestment of dividends. An individual cannot invest directly in an index. The Lehman Gov't/Credit Index includes the Government and Corporate Bond Indices, including the U.S. Government Treasury and agency securities, corporate and yankee bonds. The index is unmanaged and reflects the reinvestment of dividends. An individual cannot invest directly in an index. 14 - -------------------------------------------------------------------------------- CHASE EQUITY INCOME FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund performed Chase Equity Income Fund, which seeks to invest in securities that provide both capital appreciation and current income, generated a total return of 1.44% (Premier shares), compared to a (0.43)% return from the S&P 500 Index, for the six months ended June 30, 2000. How the Fund was managed The Fund's defensive qualities served it well in a difficult period. While the broad S&P 500 Index had an exceptionally volatile six months, and recorded a marginal loss, the Fund achieved a small gain. The Fund has a relatively light weighting in high-beta stocks in sectors like technology, and therefore avoided the worst market instability. It tended to fall less than the S&P 500 Index in the months when the market declined, while rising almost as much when the market recovered. Many of the biggest gains came from the stocks of healthcare companies. These stocks had failed to participate in the technology-fueled late 1999 market rally and their prices had reached extremely depressed levels. Much of the price weakness had been caused by anticipation of legislation that would reduce the prices Medicare patients pay for drugs. But the price falls appeared overdone, and as technology stock prices started to fall, many investors sought refuge in healthcare stocks, including Pfizer and Eli Lilly. Technology companies, ironically, also made a contribution to performance. In spite of the sharp correction that hit the sector in March, April and May, the stock prices of some companies with leading technologies were still ahead at the end of the six months. Intel, which commands premium pricing for its Pentium semiconductor chips, made the greatest individual contribution to performance. Texas Instruments was also strong. But there was a considerable divergence of performance in the sector. Microsoft stock plummeted as the software giant's break-up appeared increasingly probable. The stock was the single biggest destroyer of the Fund's value. Other technology disappointments were Lucent Technologies and Motorola. Elsewhere, there were few broad themes and performance was achieved almost on a stock-by-stock basis. In financials, groups that were active in the financial markets achieved stock price gains, while traditional retail and commercial banks fell back. As a result, Merrill Lynch rose in price, while SunTrust Banks fell back. Procter & Gamble was a notable faller after failing to meet first quarter earnings expectations. Where the Fund may be headed A firm market trend should emerge as it becomes clear whether Fed rate hikes have succeeded in subduing economic growth and preventing higher inflation. 15 CHASE EQUITY INCOME FUND As of June 30, 2000 (Unaudited) Percentage of Total Portfolio Investments [Pie chart data] Technology (25.6%) Financial (15.1%) Health Care (13.4%) Utilities (10.8%) Cash Equivalent & Short-Term Paper (8.2%) Consumer Cyclicals (7.8%) Capital Goods (5.9%) Energy (5.9%) Consumer Staples (5.3%) Basic Materials (2.0%)
[End Pie chart data] Top Ten Equity Holdings of the Portfolio 1. Intel Corp. (4.4%) Designs, manufactures and sells computer components and related products. Major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, system management software, conferencing products and digital imaging products. 2. General Electric Co. (4.1%) Develops, manufactures and markets products for the generation, distribution and utilization of electricity. Through General Electric Capital Services, Inc., offers a variety of financial services including mutual fund management, financing, asset management and insurance. General Electric also owns the National Broadcasting Company. 3. International Business Machines Corp. (3.7%) Provides technologies, systems, products, services, software and financing. It offers products through its global sales and distribution organization, as well as through a variety of third party distributors and resellers. 4. Texas Instruments, Inc. (3.2%) Provides semiconductor products, as well as designs and supplies digital signal processing and analog technologies. 5. American International Group, Inc. (3.2%) Writes property and casualty insurance and life insurance and provides a variety of insurance and insurance- related services through its subsidiaries in the U.S. and overseas. 6. Oracle Corp. (3.1%) Supplies software for enterprise information management. It offers databases and relational servers, application development and decision support tools and enterprise business applications 7. Citigroup, Inc. (3.1%) Diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers around the world. Its services include investment banking, retail brokerage, corporate banking and cash management products and services. 8. Microsoft Corp. (2.8%) Develops, manufactures, licenses and supports computer software products. 9. Pfizer, Inc. (2.7%) A research-based, global pharmaceutical company that discovers, develops, manufactures and markets medicines for humans and animals. Its products include prescription pharmaceuticals, non-prescription self- medications and animal health products. 10. Morgan Stanley Dean Witter & Co. (2.6%) Provides financial and investment products and services worldwide. It offers securities investment, asset management and credit and transaction services. Its products include mutual funds and Discover credit cards. Top 10 equity holdings comprised 32.9% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 16 CHASE EQUITY INCOME FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------------------------- Premier Shares 3.82% 16.41% 20.72% 14.97% ---------------------------------------------------------------------------- Investor Shares 3.57% 16.22% 20.60% 14.91% ----------------------------------------------------------------------------
10 Year Performance* [Line chart data]
Lipper Chase Equity Large Cap Value S&P 500 Income Fund Funds Index Index 6/90 10000 10000 10000 6/91 10572 10674 10736 6/92 11591 12183 12174 6/93 13455 14206 13831 6/94 13349 14637 14026 6/95 15740 17846 17676 6/96 19420 21962 22264 6/97 25583 28361 29983 6/98 32193 35390 39024 6/99 38866 41274 47902 6/00 40352 40326 51369
*Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance of $10,000 invested in Premier Shares of Chase Equity Income, the Standard & Poor's 500 Index and the Lipper Large Cap Value Funds Index from June 30, 1990 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/24/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/24/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Equity Income Fund is the successor to the AVESTA Trust Equity Income Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Equity Income Fund, a new investment portfolio of MFIT. Chase Equity Income Fund, unlike the AVESTA Equity Income Fund is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Large Cap Value Funds Index consists of funds that invest in large-cap value stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in an index. 17 - -------------------------------------------------------------------------------- CHASE SMALL CAPITALIZATION FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund performed Chase Small Capitalization Fund, which seeks capital appreciation through investment in small capitalization stocks, provided a total return of 11.86% (Premier shares) for the six months ended June 30, 2000, outperforming the S&P 600 Index, which had a return of 6.93%. How the Fund was managed During the first six months of 2000, small capitalization stocks ended a long period of underperformance. Fueled by outstanding earnings growth, they have consistently outperformed. While the large-cap S&P 500 Index was virtually flat for the period with a fall of -0.43%, the small-cap S&P 600 Index rose 6.93%. In the first quarter, small-caps reported significantly higher earnings growth than large caps. This was the first time in six quarters that they had done so. Technology stocks made the greatest contribution to Fund performance in spite of considerable volatility. The technology-laden Nasdaq Index experienced its most volatile six-month period in 15 years. Management's decision to sell some of the more highly valued names during April helped the Fund avoid much of the technology stock correction that gathered pace over the next few weeks. Among the Fund's leading technology stocks were Actel, Varian and Molecular Devices. In the capital goods sector, a number of technology-oriented stocks performed exceptionally well. Among them were Vishay Intertechnology, an electronic components manufacturer, and Hadco Corp. Hadco, a manufacturer of advanced electronic interconnect products, was acquired during the period by Sanmina Corp, an electronics contract manufacturer which is also a fund holding. The run-up in the prices of oil and gas drove stock price gains among many energy companies. As these energy price rises appeared increasingly sustainable, so the stock prices of companies involved in activities like exploration and production rose. The Fund held stocks such as Pride International, Atwood Oceanics and Louis Dreyfus Natural Gas Co. Healthcare stocks had a strong six months as the mapping of the human genome sparked anticipation of a new era in drug discovery. There were significant rises in the prices of generic drug, specialty pharmaceutical and biotechnology companies. Leading healthcare names included Province Healthcare, Inhale Therapeutic Systems and King Pharmaceuticals. Where the Fund may be headed Analysts' forecasts suggest that small-capitalization stocks should continue to generate higher earnings growth than large stocks for the rest of this year. This should lead to continued outperformance of the large-cap universe. Such an outlook depends, however, on the success of recent Fed rate hikes in subduing economic growth. 18 CHASE SMALL CAPITALIZATION FUND As of June 30, 2000 (Unaudited) Percentage of Total Portfolio Investments [Pie chart data] Technology (32.6%) Consumer Cyclicals (20.9%) Healthe Care (17.4%) Financial (8.1%) Energy (5.2%) Capital Goods (5.0%) Utilities (3.5%) Cash Equivalent & Short-Term Paper (3.0%) Basic Materials (1.3%) Real Estate (1.2%) Transportation (1.2%) Consumer Staples (0.6%)
[End Pie chart data] Top Ten Equity Holdings of the Portfolio 1. Samina Corp. (3.2%) Designs, manufactures and markets a wide range of analog and mixed-signal semiconductors, including integrated circuits, discrete circuits and assembly products. Its devices are used in computer, communications, industrial, military-aerospace and automotive applications. 2. Molecular Devices Corp. (2.7%) Designs, develops, manufacturers and markets bio-analytical measurement systems, including software and consumables. Its products are designed to accelerate and improve the cost effectiveness of the drug discovery and development process. Molecular's systems have applications in many aspects of life science, including therapeutic development. 3. Actel Corp. (2.3%) Designs, develops, manufactures and markets various non- volatile memory and logic integrated circuits using proprietary technology. Its devices are used in products for telecommunications, computers, networking, image processing, industrial and military applications and avionics. 4. Varian, Inc. (2.0%) Develops, manufacturers, sells and services a variety of scientific instruments and vacuum technologies. It supplies analytical and research instruments and related equipment for studying the chemical composition of a range of substances, as well as develops nuclear magnetic resonance spectrometers and vacuum products. 5. Black Box Corp. (1.9%) A worldwide direct marketer and technical service provider of computer communications and networking equipment and services. Catalogs offer businesses throughout the world access to numerous computer com- munications and networking products. It sells products primarily to businesses under the BLACK BOX private label. 6. Cree, Inc. (1.7%) Develops and manufactures semiconductor materials and electronic devices made from silicon carbide (SiC). It uses proprietary technology to make enabling compound semiconductors such as blue and green light emitting diodes, SiC crystals used in the production of unique gemstones and SiC wafers that are sold for device production and research. 7. Province Healthcare Co. (1.7%) Provides health care services in non-urban markets in the United States. It owns or leases acute care hospitals in several states. Province also provides management services to primarily non-urban hospitals in the United States and Puerto Rico. 8. PerkinElmer, Inc. (1.7%) Provides products and systems to the medical, pharmaceutical, telecommunications, semiconductor and photographic markets located worldwide. Its products include seals and bellows, hardware and software, opto-electronics and bioanalytic and diagnostic instrument systems. 9. BJ's Wholesale Club, Inc. (1.7%) Is a merchandise wholesale club chain. It sells brand name food and general merchandise at discounted prices through clubs in the eastern United States. 10. Vishay Intertechnology, Inc. (1.6%) Manufactures a broad line of discrete passive electronic components and discrete active electronic components, particularly resistors, capacitors, inductors, diodes and transistors. Top 10 equity holdings comprised 20.5% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 19 CHASE SMALL CAPITALIZATION FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years 4/1/93 ---------------------------------------------------------------------------- Premier Shares 21.01% 11.49% 18.79% 14.73% ---------------------------------------------------------------------------- Investor Shares 20.58% 11.29% 18.66% 14.64% ----------------------------------------------------------------------------
Life of Fund Performance* [Line chart data]
Chase Lipper Small Small Cap S&P Capitalization Core Funds 600 Fund Index Index 4/93 10000 10000 10000 6/93 10000 10112 10217 6/94 9550 10437 10408 6/95 11450 12588 12525 6/96 15900 16345 15782 6/97 19540 18813 19208 6/98 22382 21998 22941 6/99 22377 21151 22411 6/00 27079 26147 25645
[End Line data] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance of $10,000 invested in Premier Shares of Chase Small Capitalization Fund, the Standard & Poor's 600 Index and the Lipper Small Cap Core Funds Index from April 1, 1993 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the Index and the Average do not include a sales charge and have been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/12/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/12/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. The Chase Small Capitalization Fund is the successor to the AVESTA Trust Small Capitalization Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Small Capitalization Fund, a new investment portfolio of MFIT. The Chase Small Capitalization Fund, unlike the AVESTA Small Capitalization Fund is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Small Cap Core Funds Index consists of funds that invest in small- capitalization stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. The Standard and Poor's 600 Index is a broad-based index consisting of 600 small capitalization companies. The index is unmanaged and reflects the reinvestment of dividend. An individual cannot invest directly in an index. Small Capitalization funds typically carry more risk than stock funds investing in well-established blue chip companies since smaller companies generally have a higher risk of failure. Historically smaller companies' stock has experienced a greater degree of market volatility than the average stock. 20 - -------------------------------------------------------------------------------- CHASE CORE EQUITY FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund performed Chase Core Equity Fund, which seeks to maximize total investment return with an emphasis on long-term capital appreciation and current income, provided a total return of 0.93% (Premier shares), compared to (0.43)% from the S&P 500 Index, for the six months ended June 30, 2000. How the Fund was managed Equity markets experienced a difficult first half as stocks of companies in the technology, telecommunications and Internet-related sectors continued their meteoric rise in the first three months, only to come crashing down during April and May. The technology-laden Nasdaq Index fell 2.54% in the period, but this small loss masked considerable volatility. In spite of this, the technology sector made the greatest contribution to Fund performance. Our focus on leadership companies with strong earnings growth prospects helped performance. But it was a measure of technology turmoil that both the Fund's best and worst performers were technology stocks. Intel, the semiconductor company, was the leading performer, while Microsoft plunged in the face of possible break-up. Defensive sectors benefited from the uncertainty. Stocks in the utilities, healthcare and energy sectors all rose. Utilities were helped further by fears of rising interest rates, while pharmaceutical companies returned to favor after a lengthy period of concern regarding their poor drug pipelines. Among utilities, Enron showed particular strength, while healthcare companies Pfizer and Warner-Lambert made worthwhile contributions. Rising oil and gas prices boosted energy stocks. Investors bought energy company stocks as it appeared increasingly likely that price rises were sustainable and would boost profits. BJ Services, the exploration and production company, made a significant contribution to performance, as did integrated energy giant Royal Dutch Petroleum. There were, however, disappointments outside technology. Most notably, consumer cyclicals fell sharply, with consumer staples also having lackluster results. Companies such as Wal-Mart Stores, Home Depot and Procter & Gamble fell sharply. Communications services stocks were also disappointing, with companies like AT&T and Sprint making stock price losses. Where the Fund may be headed Market uncertainty should recede as it becomes clear whether Fed rate rises have succeeded in subduing economic growth. Employment data reported in early June suggested this was the case, but further monthly data is required to confirm the trend. In the long term, we continue to seek stocks with outstanding earnings growth prospects. While there has been considerable recent volatility in technology stocks, we believe that much of the economy's growth potential remains locked within this sector. 21 CHASE CORE EQUITY FUND As of June 30, 2000 (Unaudited) Percentage of Total Portfolio Investments [Pie chart data] Technology (33.0%) Consumer Cyclicals (15.0%) Financial (13.1%) Health Care (10.8%) Utilities (8.3%) Capital Goods (5.9%) Energy (5.6%) Consumer Staples (3.4%) Cash Equivalent & Short-Term Paper (3.1%) Transportation (1.0%) Basic Materials (0.8%)
[End chart data] Top Ten Equity Holdings of the Portfolio 1. General Electric Co. (4.5%) Develops, manufactures and markets products for the generation, distribution and utilization of electricity. Through General Electric Capital Services, Inc., offers a variety of financial services including mutual fund management, financing, asset management and insurance. General Electric also owns the National Broadcasting Company. 2. Intel Corp. (3.6%) Designs, manufactures and sells computer components and related products. Major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, system management software, conferencing products and digital imaging products. 3. Cisco Systems, Inc. (3.2%) Supplies data networking products to the corporate enterprise and public wide area service provider markets. Products include routers, LAN switches, frame relay/ATM and remote access concentrators. 4. Microsoft Corp. (3.2%) Develops, manufactures, licenses and supports computer software products. 5. Exxon Mobil Corp. (3.0%) Operates petroleum and petrochemicals businesses on a worldwide basis. Operations include exploration and production of oil and gas. 6. American International Group, Inc. (3.0%) Writes property and casualty insurance and life insurance and provides a variety of insurance and insurance- related services through its subsidiaries in the U.S. and overseas. 7. Wal-Mart Stores, Inc. (2.9%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware and other products 8. Pfizer, Inc. (2.8%) A research-based, global pharmaceutical company that discovers, develops, manufactures and markets medicines for humans and animals. Its products include prescription pharmaceuticals, non-prescription self- medications and animal health products. 9. American Express Co. (2.4%) Through its subsidiaries, the Company provides travel-related, financial advisory and international banking services around the world. Its products include the American Express Card, the Optima Card and American Express Travelers Cheques. 10. Citigroup, Inc. (2.2%) A diversified financial services holding company that provides investment services, including asset management, consumer finance services, property and casualty insurance services, and life insurance services. Top 10 equity holdings comprised 30.8% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 22 CHASE CORE EQUITY FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
Since Inception 1 Year 3 Years 5 Years 4/1/93 ---------------------------------------------------------------------------- Premier Shares 10.32% 22.07% 24.51% 18.77% ---------------------------------------------------------------------------- Investor Shares 10.08% 21.88% 24.39% 18.69% ----------------------------------------------------------------------------
Life of Fund Performance* [Line chart data]
Chase Lipper Core Equity Large Cap Core S&P 500 Fund Funds Index Index 4/93 10000 10000 10000 6/93 10010 10121 10048 6/94 10099 10231 10189 6/95 11627 12349 12840 6/96 14306 15176 16174 6/97 19126 19657 21780 6/98 25015 25464 29348 6/99 31565 30150 34798 6/00 34796 32979 37316
[End Line data] *Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Core Equity Fund, the Standard & Poor's 500 Index and the Lipper Large Cap Core Funds Index from April 1, 1993 to June 30, 2000. The performance of the Fund assumed the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares were introduced on 9/10/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 9/10/98 are based on the predecessor Premier Shares class and do not include Investor Share expenses. Chase Core Equity Fund is the successor to the AVESTA Trust Core Equity Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Core Equity Fund, a new investment portfolio of MFIT. Chase Core Equity Fund, unlike the AVESTA Core Equity Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Large Cap Core Funds Index consists of funds that invest in both growth and value stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's 500 Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in the index. 23 - -------------------------------------------------------------------------------- CHASE EQUITY GROWTH FUND As of June 30, 2000 (Unaudited) - -------------------------------------------------------------------------------- How the Fund performed Chase Equity Growth Fund, which seeks to provide capital appreciation through investment in growth stocks, generated a total return of 1.91% (Premier shares), compared to the 2.63% return from the S&P/BARRA Growth Index, for the six months ended June 30, 2000. How the Fund was managed For the first few months of 2000, the divergence between 'old' and 'new' economy stocks continued to grow, as technology valuations became increasingly extended. In March, however, the technology sector began a prolonged and violent correction that lasted through May. By the end of the first half, investors were taking a stock-by-stock approach that rewarded well-managed companies with good prospects, and punished those that disappointed. In spite of the volatility, technology names still made the greatest contribution to performance. The stocks of companies with perceived competitive advantage and strong growth prospects held up relatively well. Names like Intel, the maker of Pentium semiconductor chips, EMC Corp and Applied Materials performed well. But there was a wide dispersion of performance in the sector. Microsoft stock--dogged by fears of a corporate break-up--fell sharply. Some of Internet stocks also ended the period in negative territory. America Online and Yahoo both nursed substantial losses. Many defensive 'old economy' names had a strong first half. Healthcare stocks, in particular, bounced back from depressed levels. These companies had been overshadowed during 1999 by fears of legislation that would reduce the prices Medicare patients pay for drugs. But the price falls appeared overdone, and as technology stock prices started to weaken, investors sought refuge in drug stocks like Pfizer, Warner-Lambert and Eli Lilly. Biotechnology companies, like Amgen, received a boost as the mapping of the human genome sparked anticipation of a new era in drug discovery. Investors were unforgiving of stocks that disappointed. Procter & Gamble stock plummeted in early March after the company announced extremely disappointing first quarter earnings. Where the Fund may be headed For the market as a whole, the big question remains whether the economy is slowing to the extent that no further interest-rate rises are necessary. The FOMC refrained from tightening in late June as weaker economic and monetary data suggested that the 175 basis points of tightening over the past year might be beginning to lower the trend rate of economic growth, and to reduce rising price pressures. But the extent of any slowdown is still an open question. 24 CHASE EQUITY GROWTH FUND As of June 30, 2000 (Unaudited) Percentage of Total Portfolio Investments [Pie chart data] Technology (49.8%) Health Care (18.0%) Consumer Cyclicals (13.8%) Capital Goods (6.1%) Financial (6.0%) Consumer Staples (2.5%) Cash Equivalent & Short-Term Paper (2.3%) Utilities (1.5%)
[End Pie chart data] Top Ten Equity Holdings of the Portfolio 1. Intel Corp. (6.2%) Designs, manufactures and sells computer components and related products. Major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, system management software, conferencing products and digital imaging products. 2. Cisco Systems, Inc. (5.5%) Supplies data networking products to the corporate enterprise and public wide area service provider markets. Products include routers, LAN switches, frame relay/ATM and remote access concentrators. 3. General Electric Co. (5.5%) Develops, manufactures and markets products for the generation, distribution and utilization of electricity. Through General Electric Capital Services, Inc., offers a variety of financial services including mutual fund management, financing, asset management and insurance. General Electric also owns the National Broadcasting Company. 4. EMC Corp. (5.0%) Provides enterprise storage systems, software, networks and services. 5. Applied Materials, Inc. (4.6%) Develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. 6. Pfizer, Inc. (4.6%) A research-based, global pharmaceutical company that discovers, develops, manufactures and markets medicines for humans and animals. Its products include prescription pharmaceuticals, non-prescription self- medications and animal health products. 7. Novellus Systems, Inc. (3.8%) Manufactures, markets and services advanced automated wafer fabrication systems for the deposition of thin films. 8. Microsoft Corp. (3.6%) Develops, manufactures, licenses and supports computer software products. 9. Wal-Mart Stores, Inc. (3.6%) The "Wal-Mart" Company's discount stores and "Supercenters" offer merchandise such as apparel, housewares, small appliances, electronics, hardware and other products. 10. Amgen, Inc. (3.5%) Discovers, develops, manufactures and markets human therapeutics based on cellular and molecular biology. Focuses its research on secreted protein and small molecule therapeutics. Top 10 equity holdings comprised 45.9% of the Portfolio's market value of investments. Portfolio holdings are subject to change at any time. 25 CHASE EQUITY GROWTH FUND As of June 30, 2000 (Unaudited) Average Annual Total Returns
1 Year 3 Years 5 Years 10 Years ---------------------------------------------------------------------------- Premier Share s 20.14% 28.06% 27.81% 17.46% ---------------------------------------------------------------------------- Investor Shares 19.83% 27.84% 27.68% 17.40% ----------------------------------------------------------------------------
10 Year Performance* [Line chart data]
Chase Lipper S&P Equity Growth Large Cap Growth Barra Growth Fund Funds Index Index 6/90 10000 10000 10000 6/91 10083 10578 10893 6/92 11421 12156 12361 6/93 12464 13805 13350 6/94 12189 13978 13315 6/95 14658 17568 17407 6/96 17530 21803 22453 6/97 23799 27896 30645 6/98 32164 36741 41281 6/99 41599 46603 52920 6/00 49982 56077 62771
*Source: Lipper Analytical Services, Inc. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. The Fund is currently waiving certain fees. The voluntary waiver may be modified or terminated at any time, which would reduce performance. This chart represents the comparative performance for $10,000 invested in Premier Shares of Chase Equity Growth Fund, the Standard and Poor's Barra Growth Index and Lipper Large Cap Growth Funds Index from June 30, 1990 to June 30, 2000. The performance of the Fund assumes the reinvestment of all dividends and capital gains and does not include a sales charge. The performance of the indices does not include a sales charge and has been adjusted to reflect the reinvestment of all dividends and capital gains on the securities included in the benchmark. Premier Shares carry a $250,000 minimum initial investment and carry no sales charge. Investor Shares were introduced on 8/13/98 and have a minimum initial investment of $2,500. Please note internal expenses are greater for the Investor Shares class. Performance measurements for the Investor Shares prior to 8/13/98 are based on the predecessor Premier Shares class and do not include Investor Share class expenses. Chase Equity Growth Fund is the successor to the AVESTA Trust Equity Growth Fund. Effective 12/31/97, the AVESTA Trust was converted from a Texas Trust to Mutual Fund Investment Trust ("MFIT"), a Massachusetts business trust. As part of the conversion, the Fund transferred all of its assets to Chase Equity Growth Fund, a new investment portfolio of MFIT. Chase Equity Growth Fund, unlike the AVESTA Equity Growth Fund, is subject to certain diversification, distribution and other requirements imposed under the Internal Revenue Code, which may impact performance. The Lipper Large Cap Growth Funds Index consists of funds that invest in large-cap growth stocks. Lipper is an independent mutual fund performance monitor whose results are based on total return and do not reflect a sales charge. An individual cannot invest directly in an index. The Standard and Poor's Barra Growth Index is an unmanaged broad-based index that replicates the U.S. stock market. It includes 500 widely held common stocks. Total return figures include the reinvestment of dividends. An individual cannot invest directly in an index. 26 - -------------------------------------------------------------------------------- CHASE MONEY MARKET FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ---------------------------------------------------------------------------------------- Money Market Instruments -- 99.4% - ---------------------------------------------------------------------------------------- U.S. Government Agency Security -- 3.0% --------------------------------------- $10,000 Federal Home Loan Bank, DN, 6.13%, 12/22/00 $ 9,721 (Cost $9,721) State and Municipal Obligation -- 1.5% -------------------------------------- 5,000 Texas State, Taxable, Veterans Housing Assistance, Ser. A-2, FRDO, 6.60%, 07/03/00 5,000 (Cost $5,000) Corporate Notes & Bonds -- 54.1% -------------------------------- Automotive -- 12.5% 10,000 Chrysler Financial Co., LLC, Ser. R, MTN, FRN, 6.74%, 08/18/00 10,006 10,000 Ford Motor Credit Co., MTN, FRN, 6.74%, 08/18/00 9,999 10,000 General Motors Acceptance Corp., MTN, FRN, 7.00%, 08/09/00 10,010 Toyota Motor Credit Corp., MTN, 3,000 5.76%, 07/06/00 3,000 4,000 FRN, 6.80%, 08/18/00 4,000 4,000 FRN, 6.81%, 07/12/00 4,000 ------ 41,015 Banking -- 1.2% 4,000 American Express Centurion Bank, FRN, 6.85%, 09/29/00 4,000 Computers/Computer Hardware -- 0.6% 2,000 IBM Credit Corp., MTN, 5.93%, 08/07/00 2,000 Financial Services -- 26.6% 10,000 Associates Corp. of North America, SUB, FRN, 6.77%, 09/15/00 9,999 12,000 Bear Stearns Co., Inc., Ser. B, MTN, FRN, 6.71%, 07/24/00 11,999 5,000 Bollingbrent LTD Partnership, Ser. 1999, FRN, 6.77%, 07/03/00 5,000 10,000 CIT Group, Inc., MTN, FRN, 6.80%, 09/15/00 Citicorp, Ser. C, MTN, FRN, 9,998 5,000 6.46%, 07/24/00 5,005 9,000 7.31%, 11/22/00 9,008 6,000 Goldman Sachs Group LP, Ser. A, MTN, FRN, #, 6.36%, 07/17/00 6,000 5,000 Homeside Lending, Inc., MTN, FRN, 6.41%, 07/24/00 5,004 5,000 International Lease Finance Corp., FRN, 6.45%, 08/01/00 5,003 Merrill Lynch & Co., Inc., FRN, 5,000 6.72%, 08/14/00 5,000 2,000 MTN, 6.80%, 08/03/00 2,001 Morgan Stanley Dean Witter & Co., 8,000 6.95%, 08/10/00 8,011 5,000 MTN, FRN, 7.32%, 08/14/00 5,011 ------ 87,039 Machinery & Engineering Equipment -- 7.7% Caterpillar Financial Services Corp., Ser. F, 10,000 6.41%, 07/10/00 10,010 5,000 6.89%, 09/01/00 5,001 10,000 John Deere Capital Corp., MTN, FRN, 6.97%, 08/09/00 10,009 ------ 25,020
See notes to financial statements. 27 CHASE MONEY MARKET FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------------ Money Market Instruments -- Continued - ------------------------------------------------------------------------------------------ Telecommunications -- 4.9% $ 6,000 AT&T Corp., FRN, #, 6.24%, 07/13/00 $ 6,000 10,000 SBC Communications, Inc., FRN, #, 6.68%, 08/15/00 9,998 -------- 15,998 Utilities -- 0.6% 2,000 National Rural Utilities Co., Ser. C., MTN, FRN, 6.81%, 09/ 08/00 2,000 -------------------------------------------------------------------------- Total Corporate Notes & Bonds 177,072 (Cost $177,072) -------------------------------------------------------------------------- Commercial Paper -- 19.1% ------------------------- Asset Backed Securities -- 16.1% 3,487 Barton Capital Corp., 6.61%, 07/25/00 3,472 9,463 Blue Ridge Asset Funding Corp., 6.61%, 07/06/00 9,454 6,000 Eureka Securitization Inc., #, 6.70%, 08/09/00 5,957 15,000 Montauk Funding Corp., 6.69%, 08/17/00 14,871 9,560 Old Line Funding Corp., #, 6.60%, 07/17/00 9,532 9,476 Victory Receivables, 6.72%, 07/13/00 9,455 -------- 52,741 Banking -- 3.0% 10,000 Credit Suisse First Boston Corp. (Switzerland), 6.32%, 09/ 13/00 9,874 -------------------------------------------------------------------------- Total Commercial Paper 62,615 (Cost $62,615) -------------------------------------------------------------------------- Certificates of Deposit -- 19.9% -------------------------------- 10,000 Bayerische Hypo- und Vereinsbank AG, 9,997 (Germany), (Yankee), Floating Rate, 6.59%, 07/28/00 5,000 Bayerische Landesbank Girozentrale, 4,998 (Germany), (Yankee), Floating Rate, 6.58%, 07/17/00 10,000 Commerzbank AG, (Germany), (Yankee), 6.55%, 01/08/01 9,999 10,000 Dresdner Bank AG, (Germany), (Yankee), Floating Rate, 6.59%, 07/28/00 9,997 5,000 First Union National Bank, Floating Rate, 6.86%, 09/25/00 5,000 10,000 Landesbank Hessen-Thueringen Girozentrale (Germany), (Yankee), 6.90%, 04/30/01 9,998 10,000 Norddeutsche Landesbank Girozentrale (Germany), (Yankee), 6.60%, 01/18/01 9,997 5,000 Svenska Handelsbanken, Inc., (Sweden), (Yankee), 6.80%, 02/14/01 4,999 -------------------------------------------------------------------------- Total Certificates of Deposit 64,985 (Cost $64,985) -------------------------------------------------------------------------- Repurchase Agreement -- 1.8% ---------------------------- 5,762 Goldman Sachs Group LP, Tri Party, 6.88%, 07/03/00 (Dated 06/30/00, Proceeds $5,765, Secured by FHLMC, $5,795, 8.00%, due 08/01/23; Market Value $5,877) 5,762 (Cost $5,762) - ------------------------------------------------------------------------------------------ Total Investments--99.4% $325,155 (Cost $325,155) - ------------------------------------------------------------------------------------------
See notes to financial statements. 28 - -------------------------------------------------------------------------------- CHASE SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND Portfolio of Investments - ------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Long-Term Investments -- 92.8% - ------------------------------------------------------------------------------------ U.S. Treasury Securities -- 16.5% --------------------------------- U.S. Treasury Notes & Bonds, $ 800 5.50%, 12/31/00 $ 796 1,000 5.63%, 02/15/06 970 1,000 6.00%, 08/15/09 992 1,100 6.88%, 05/15/06 1,133 500 7.00%, 07/15/06 518 500 10.75%, 02/15/03 550 ---------------------------------------------------------------------- Total U.S. Treasury Securities 4,959 (Cost $4,958) ---------------------------------------------------------------------- U.S. Government Agency Securities -- 61.0% ------------------------------------------ 1,330 Federal Farm Credit Bank, MTN, 6.90%, 05/01/02 1,328 1,300 Federal Home Loan Bank, 6.79%, 04/17/01 1,298 Federal Home Loan Mortgage Corp., 1,500 6.25%, 10/15/02 1,478 4,500 7.00%, 02/15/03 4,498 1,000 7.38%, 05/15/03 1,010 Federal National Mortgage Association, 1,500 5.25%, 01/15/03 1,440 1,000 6.00%, 05/15/08 933 1,500 6.25%, 11/15/02 1,477 1,000 6.50%, 08/15/04 981 1,000 6.63%, 09/15/09 966 1,000 7.10%, 10/18/04 993 2,000 7.13%, 02/15/05 2,008 ---------------------------------------------------------------------- Total U.S. Government Agency Securities 18,410 (Cost $18,475) ---------------------------------------------------------------------- Mortgage Backed Securities -- 15.3% ----------------------------------- Collateralized Mortgage Obligation -- 4.6% 1,405 Federal Home Loan Mortgage Corp., Ser. 2196, Class MA, 7.00%, 11/15/06 1,388 Residential Mortgage Backed Pass-Through Securities -- 10.7% Federal National Mortgage Association, 894 Pool 190806, 6.00%, 05/01/01 886 2,414 Pool 251901, 6.50%, 08/01/13 2,331 ---------------------------------------------------------------------- Total Mortgage Backed Securities 4,605 (Cost $4,731) - ------------------------------------------------------------------------------------ Total Long-Term Investments 27,974 (Cost $28,164) - ------------------------------------------------------------------------------------ Short-Term Investment -- 8.9% - ------------------------------------------------------------------------------------ U.S. Government Agency Security -- 8.9% --------------------------------------- 2,669 Federal Home Loan Bank, DN, 6.57%, 07/03/00 2,668 (Cost $2,668) - ------------------------------------------------------------------------------------ Total Investments -- 101.7% $30,642 (Cost $30,832) - ------------------------------------------------------------------------------------
See notes to financial statements. 29 - -------------------------------------------------------------------------------- CHASE INTERMEDIATE TERM BOND FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - -------------------------------------------------------------------------------------- Long-Term Investments -- 86.6% - -------------------------------------------------------------------------------------- U.S. Treasury Securities -- 8.2% ---------------------------------- U.S. Treasury Notes & Bonds, $ 800 5.75%, 06/30/01 $ 794 300 6.13%, 08/15/29 303 600 6.25%, 08/15/23 605 1,900 8.13%, 08/15/19 2,297 ---------------------------------------------------------------------- Total U.S. Treasury Securities 3,999 (Cost $4,016) ---------------------------------------------------------------------- U.S. Government Agency Securities -- 9.0% ----------------------------------------- Federal Home Loan Bank, 1,400 5.40%, 03/01/04 1,324 500 7.00%, 04/02/07 498 Federal Home Loan Mortgage Corp., 1,300 5.75%, 03/15/09 1,184 650 6.25%, 07/15/04 632 800 Federal National Mortgage Association, 6.50%, 08/15/04 785 ---------------------------------------------------------------------- Total U.S. Government Agency Securities 4,423 (Cost $4,512) ---------------------------------------------------------------------- Foreign Government Security -- 1.6% ----------------------------------- 800 Quebec Province (Canada), 7.50%, 09/15/29 786 (Cost $786) Corporate Notes & Bonds -- 38.4% -------------------------------- Aerospace -- 0.7% 365 Raytheon Co., #, 7.90%, 03/01/03 367 Automotive -- 3.3% 800 Daimler Chrysler North America Holding Corp. (Germany), 8.00%, 06/15/10 819 750 TRW, Inc., #, 6.45%, 06/15/01 741 ----- 1,560 Banking -- 1.3% 750 U.S. Bank, NA, 5.70%, 12/15/08 645 Chemicals -- 1.0% 500 Rohm & Haas Co., 7.40%, 07/15/09 497 Computers/Computer Hardware -- 1.6% 800 Hewlett-Packard Co., 7.15%, 06/15/05 801 Consumer Products -- 1.6% 800 Procter & Gamble Co., 6.60%, 12/15/04 784 Electronics/Electrical Equipment -- 1.4% 700 General Electric Capital Corp., MTN, 5.91%, 05/07/01 693 Financial Services -- 11.2% 900 American Express Co., 8.50%, 08/15/01 913 600 Associates Corp. of North America, 6.63%, 05/15/01 596 600 International Lease Finance Corp., 5.95%, 06/01/01 592 800 Lehman Brothers Holdings, Inc., 7.75%, 01/15/05 793 1,000 Merrill Lynch & Co., Inc., MTN, 6.10%, 12/10/01 989 800 Morgan Stanley Dean Witter & Co., 7.75%, 06/15/05 806 National Rural Utilities Cooperative Finance Corp., 300 5.50%, 01/15/05 279 500 6.13%, 05/15/05 475 ----- 5,443
See notes to financial statements. 30 CHASE INTERMEDIATE TERM BOND FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ----------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ----------------------------------------------------------------------------------------- Food/Beverage Products -- 1.6% $ 800 Coca-Cola Enterprises, 7.13%, 09/30/09 $ 776 Insurance -- 1.5% 750 GE Global Insurance Holding Corp., 7.75%, 06/15/30 745 Oil & Gas -- 2.3% 800 Amerada Hess Corp., 7.88%, 10/01/29 782 330 PEMEX Finance LTD (Cayman Islands), #, 9.03%, 02/15/11 336 ------ 1,118 Paper/Forest Products -- 1.6% 800 International Paper Co., #, 8.13%, 07/08/05 805 Pipelines -- 1.1% 550 Enron Corp., 7.88%, 06/15/03 553 Retailing -- 1.6% 800 Wal-Mart Stores, Inc., 6.88%, 08/10/09 781 Telecommunications -- 4.3% 800 WorldCom, Inc., 7.55%, 04/01/04 795 750 Metronet Communications Corp. (Canada), SUB, 0.00%, 06/15/03 608 650 Vodafone AirTouch PLC (United Kingdom), #, 7.63%, 02/15/05 650 ------ 2,053 Utilities -- 2.3% 440 Cilcorp Inc., 8.70%, 10/15/09 443 700 Israel Electronic Corp. (Israel), MTN, #, 8.25%, 10/15/09 706 ------ 1,149 ------------------------------------------------------------------------ Total Corporate Notes & Bonds 18,770 (Cost $18,844) ------------------------------------------------------------------------ Mortgage Backed Securities -- 29.4% ----------------------------------- Residential Mortgage Backed Pass-Through Securities -- 29.4% 1,051 Federal Home Loan Mortgage Corp., Gold Pool C17245, 7.00%, 11/01/28 1,016 Federal National Mortgage Association, 601 Pool 253033, 7.00%, 02/01/15 589 334 Pool 398212, 6.50%, 02/01/13 323 1,545 Pool 398265, 6.00%, 03/01/28 1,416 895 Pool 429362, 6.00%, 08/01/29 819 900 Pool 442508, 6.00%, 09/01/13 852 2,260 Pool 498091, 6.50%, 05/01/29 2,133 418 Pool 510435, 6.50%, 01/01/15 403 743 Pool 527266, 6.50%, 11/01/14 716 1,494 Pool 528399, 8.00%, 01/01/30 1,500 Government National Mortgage Association, 746 Pool 448704, 7.50%, 10/15/27 741 1,394 Pool 486598, 6.50%, 10/15/28 1,323 1,092 Pool 504549, 7.00%, 09/15/29 1,061 1,497 Pool 508316, 8.00%, 02/15/30 1,513 ------------------------------------------------------------------------- Total Mortgage Backed Securities 14,405 (Cost $14,561) - ----------------------------------------------------------------------------------------- Total Long-Term Investments 42,383 (Cost $42,719) - -----------------------------------------------------------------------------------------
See notes to financial statements. 31 CHASE INTERMEDIATE TERM BOND FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------ Short-Term Investment -- 12.6% - ------------------------------------------------------------------------------ U.S. Government Agency Security -- 12.6% ----------------------------------------- $6,185 Federal Home Loan Bank, DN, 6.57%, 07/03/00 $ 6,183 (Cost $6,183) - ------------------------------------------------------------------------------ Total Investments -- 99.2% $48,566 (Cost $48,902) - ------------------------------------------------------------------------------
See notes to financial statements. 32 - -------------------------------------------------------------------------------- CHASE U.S. GOVERNMENT SECURITIES FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 93.4% - -------------------------------------------------------------------------------- U.S. Treasury Securities -- 28.0% --------------------------------- U.S. Treasury Notes & Bonds, $ 240 6.13%, 08/15/29 $ 242 300 6.50%, 08/31/01 300 1,000 8.13%, 08/15/19 1,209 ------------------------------------------------------------------ Total U.S. Treasury Securities 1,751 (Cost $1,681) ------------------------------------------------------------------ U.S. Government Agency Securities -- 7.7% ----------------------------------------- Federal National Mortgage Association, 250 6.38%, 06/15/09 238 250 6.50%, 08/15/04 245 ------------------------------------------------------------------ Total U.S. Government Agency Securities 483 (Cost $485) ------------------------------------------------------------------ Mortgage Backed Securities -- 57.7% ----------------------------------- Collateralized Mortgage Obligation -- 1.4% 94 Government National Mortgage Association, Ser. 1999-8, Class A, 6.25%, 06/16/25 90 Residential Mortgage Backed Pass-Through Securities -- 56.3% 383 Federal Home Loan Mortgage Corp., Gold Pool E00766, 7.00%, 12/01/14 376 Federal National Mortgage Association, 283 Pool 252921, 7.50%, 11/01/14 282 597 Pool 511599, 8.00%, 12/01/29 600 464 Pool 523930, 8.00%, 11/01/29 466 645 Pool 525908, 7.00%, 12/01/29 623 Government National Mortgage Association, 393 Pool 434628, 8.00%, 12/15/29 397 250 Pool 473829, 6.50%, 01/15/29 237 199 Pool 509443, 9.00%, 12/15/29 206 323 Pool 510845, 7.50%, 12/15/29 321 ------------------------------------------------------------------ Total Mortgage Backed Securities 3,598 (Cost $3,633) - -------------------------------------------------------------------------------- Total Long-Term Investments 5,832 (Cost $5,799) - -------------------------------------------------------------------------------- Short-Term Investment -- 5.5% - -------------------------------------------------------------------------------- U.S. Government Agency Security -- 5.5% --------------------------------------- 343 Federal Home Loan Bank, DN, 6.57%, 07/03/00 343 (Cost $343) - -------------------------------------------------------------------------------- Total Investments -- 98.9% $6,175 (Cost $6,142) - --------------------------------------------------------------------------------
See notes to financial statements. 33 - -------------------------------------------------------------------------------- CHASE INCOME FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 89.2% - -------------------------------------------------------------------------------- U.S. Treasury Securities -- 13.9% --------------------------------- U.S. Treasury Notes & Bonds, $1,400 7.13%, 02/15/23 - $1,556 2,000 7.63%, 02/15/25 - 2,365 3,400 8.13%, 08/15/19 - 4,111 500 11.25%, 02/15/15 737 ---------------------------------------------------------------- Total U.S. Treasury Securities 8,769 (Cost $8,571) ---------------------------------------------------------------- U.S. Government Agency Securities -- 8.3% ----------------------------------------- Federal Home Loan Bank, 1,600 7.25%, 05/13/05 1,614 1,600 7.63%, 05/15/07 1,644 Federal National Mortgage Association, 400 6.00%, 07/15/49 366 400 6.50%, 07/15/49 377 1,250 Government National Mortgage Association, 8.00%, 07/15/49 1,258 ---------------------------------------------------------------- Total U.S. Government Agency Securities 5,259 (Cost $5,243) ---------------------------------------------------------------- Foreign Government Securities -- 2.4% ------------------------------------- Quebec Province (Canada), 750 6.50%, 01/17/06 - 724 800 7.50%, 09/15/29 786 ---------------------------------------------------------------- Total Foreign Government Securities 1,510 (Cost $1,526) ---------------------------------------------------------------- Corporate Notes & Bonds -- 26.7% -------------------------------- Aerospace -- 1.1% 700 Raytheon Co., #, 7.90%, 03/01/03 - 704 Automotive -- 2.9% Ford Motor Credit Co., 1,000 6.25%, 12/08/05 - 936 900 7.38%, 10/28/09 - 871 ------ 1,807 Banking -- 2.3% 800 Bank of America Corp., 7.80%, 02/15/10 - 796 700 Korea Development Bank (South Korea), 6.50%, 11/15/02 - 678 ------ 1,474 Broadcasting/Cable -- 0.8% 500 Comcast Corp., 10.25%, 10/15/01 - 517 Diversified -- 0.8% 500 Textron, Inc., 6.38%, 07/15/04 - 477 Financial Services -- 2.7% Lehman Brothers Holdings Inc., 750 6.63%, 02/05/06 - 701 1,000 MTN, FRN, 6.60%, 09/04/01 - 1,000 ------ 1,701
See notes to financial statements. 34 CHASE INCOME FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ----------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ----------------------------------------------------------------------------------------- Insurance -- 2.1% $1,000 Conseco, Inc., 8.50%, 10/15/02 - $ 720 600 GE Global Insurance Holding Corp., 7.75%, 06/15/30 - 596 ------ 1,316 Multi-Media -- 2.5% 650 Clear Channel Communications, Inc., 7.88%, 06/15/05 652 1,100 Time Warner Inc., 6.63%, 05/15/29 - 908 ------ 1,560 Oil & Gas -- 1.2% 800 YPF Sociedad Anonima (Argentina), 7.25%, 03/15/03 - 773 Packaging -- 0.8% 500 Tenneco Packaging, Inc., 8.00%, 04/15/07 - 502 Pipelines -- 0.9% 600 El Paso Energy Corp., 6.75%, 05/15/09 - 558 Retailing -- 2.3% 675 SAKS Inc., 7.25%, 12/01/04 - 613 850 Wal-Mart Stores, Inc., 6.88%, 08/10/09 - 830 ------ 1,443 Telecommunications -- 3.4% 900 Sprint Capital Corp., 6.38%, 05/01/09 - 812 600 U.S. West Capital Funding, Inc., 6.25%, 07/15/05 - 562 800 Vodafone AirTouch PLC (United Kingdom), #, 7.63%, 02/15/05 - 801 ------ 2,175 Utilities -- 2.9% 650 Cilcorp Inc., 8.70%, 10/15/09 - 655 500 Israel Electric Corp. (Israel), MTN, #, 7.75%, 12/15/27 - 440 750 TXU Eastern Funding (United Kingdom), 6.15%, 05/15/02 - 729 ------ 1,824 ------ ------------------------------------------------------------------------ Total Corporate Notes & Bonds 16,831 (Cost $17,171) ------------------------------------------------------------------------ Mortgage Backed Securities -- 33.9% ----------------------------------- Residential Mortgage Backed Pass-Through Securities -- 33.9% Federal National Mortgage Association, 1,357 Pool 253033, 7.00%, 02/01/15 - 1,331 2,911 Pool 253036, 7.00%, 02/01/30 - 2,810 2,444 Pool 490445, 6.00%, 03/01/29 - 2,237 1,236 Pool 494272, 6.50%, 04/01/29 - 1,166 2,968 Pool 503599, 6.50%, 06/01/29 - 2,801 3,346 Pool 523193, 7.50%, 11/01/29 - 3,298 980 Pool 534064, 8.00%, 03/01/30 - 984 2,594 Pool 535054, 6.50%, 11/01/14 - 2,500 Government National Mortgage Association, 1,631 Pool 487224, 6.50%, 05/15/29 - 1,548 1,547 Pool 510285, 7.00%, 08/15/29 - 1,503 1,148 Pool 527141, 8.00%, 03/15/30 - 1,160 ------------------------------------------------------------------------ Total Mortgage Backed Securities 21,338 (Cost $21,511) ------------------------------------------------------------------------
See notes to financial statements. 35 CHASE INCOME FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount (USD) Issuer Value - ------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ------------------------------------------------------------------------------------- Asset Backed Securities -- 4.0% ------------------------------- MBNA Master Credit Card Trust, $ 900 Ser. 1999-J, Class A, 7.00%, 02/15/12 - $ 884 800 Ser. 1999-M, Class B, 6.80%, 04/16/07 - 783 850 Residential Funding Mortgage Securities II, Ser. 2000-HI1, Class AI4, 7.79%, 01/25/14 - 849 --------------------------------------------------------------------- Total Asset Backed Securities 2,516 (Cost $2,528) - ------------------------------------------------------------------------------------- Total Long-Term Investments 56,223 (Cost $56,550) - ------------------------------------------------------------------------------------- Short-Term Investment -- 13.6% - ------------------------------------------------------------------------------------- U.S. Government Agency Security -- 13.6% ---------------------------------------- 8,585 Federal Home Loan Bank, DN, 6.57%, 07/03/00 - 8,582 (Cost $8,582) - ------------------------------------------------------------------------------------- Total Investments -- 102.8% $64,805 (Cost $65,132) - -------------------------------------------------------------------------------------
See notes to financial statements. 36 - -------------------------------------------------------------------------------- CHASE BALANCED FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 98.8% - -------------------------------------------------------------------------------- Common Stock -- 60.3% --------------------- Advertising -- 0.3% 4 Omnicom Group $ 374 Airlines -- 0.6% 38 Southwest Airlines, Inc. 725 Automotive -- 0.5% 9 Ford Motor Co. 378 4 General Motors Corp. 209 1 Visteon Corp. * 14 ----- 601 Banking -- 1.0% 9 Bank of America Corp. 378 15 Bank of New York Co., Inc. 693 ----- 1,071 Biotechnology -- 0.7% 11 Amgen, Inc. * 776 Computer Networks -- 2.0% 35 Cisco Systems, Inc. * 2,247 Computer Software -- 3.5% 29 Microsoft Corp. * 2,294 15 Oracle Corp. * 1,261 7 Symantec Corp. * 375 ----- 3,930 Computers/Computer Hardware -- 4.2% 18 Dell Computer Corp. * 901 17 EMC Corp. * 1,336 6 Hewlett-Packard Co. 712 8 International Business Machines Corp. 920 9 Sun Microsystems, Inc. * 818 ----- 4,687 Consumer Products -- 1.7% 13 Avon Products, Inc. 561 15 Colgate-Palmolive Co. 868 9 Gillette Co. 314 12 Philip Morris Companies, Inc. 327 7 Procter & Gamble Co. 388 ----- 2,458 Diversified -- 3.4% 59 General Electric Co. 3,144 15 Tyco International LTD (Bermuda) 692 ----- 3,836 Electronics/Electrical Equipment -- 1.8% 2 Agilent Technologies, Inc. * 160 6 Molex, Inc. 289 8 Sanmina Corp. * 710 21 Solectron Corp. * 892 ----- 2,051 Financial Services -- 5.2% 32 American Express Co. 1,678 26 Charles Schwab Corp. 881 26 Citigroup, Inc. 1,548 8 Merrill Lynch & Co., Inc. 937 12 Morgan Stanley Dean Witter & Co. 962 ----- 6,006
See notes to financial statements. 37 CHASE BALANCED FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Food/Beverage Products -- 2.1% 8 Anheuser-Busch Companies, Inc. $ 616 13 Coca-Cola Co. 765 23 PepsiCo, Inc. 1,021 ----- 2,402 Health Care/Health Care Services -- 1.3% 12 Guidant Corp. * 603 17 Medtronic, Inc. 829 ----- 1,432 Insurance -- 1.9% 18 American International Group, Inc. 2,087 Internet Services/Software -- 0.9% 12 America Online, Inc. * 633 3 Yahoo! Inc. * 341 ----- 974 Machinery & Engineering Equipment -- 0.3% 7 Dover Corp. 284 Metals/Mining -- 0.5% 18 Alcoa, Inc. 522 Multi-Media -- 1.6% 24 The Walt Disney Co. 943 11 Time Warner, Inc. 832 ----- 1,775 Oil & Gas -- 3.5% 8 BJ Services Co. * 488 6 Chevron Corp. 466 27 Exxon Mobil Corp. 2,104 14 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 837 ----- 3,895 Pharmaceuticals -- 4.7% 7 American Home Products Corp. 423 11 Bristol-Myers Squibb Co. 641 6 Eli Lilly & Co. 639 7 Johnson & Johnson 690 12 Merck & Co., Inc. 950 41 Pfizer, Inc. 1,986 ----- 5,329 Retailing -- 5.2% 9 Albertson's, Inc. 303 12 Best Buy Co., Inc. * 787 16 Home Depot, Inc. 820 9 Target Corp. 539 36 Wal-Mart Stores, Inc. 2,053 26 Walgreen Co. 824 ----- 5,326 Semi-Conductors -- 4.9% 11 Altera Corp. * 1,121 11 Applied Materials, Inc. * 1,029 19 Intel Corp. 2,513 13 Texas Instruments, Inc. 879 ----- 5,542
See notes to financial statements. 38 CHASE BALANCED FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Telecommunications -- 3.5% 9 AT&T Corp. $ 289 14 BellSouth Corp. 584 8 GTE Corp. 524 19 SBC Communications, Inc. 830 12 Sprint Corp. (FON Group) 588 23 WorldCom, Inc. * 1,069 ------ 3,884 Telecommunications Equipment -- 3.3% 17 ADC Telecommunications, Inc. * 1,384 3 JDS Uniphase Corp. * 336 14 Lucent Technologies, Inc. 849 17 Nortel Networks Corp. (Canada) 1,126 ------ 3,695 Utilities -- 1.7% 13 AES Corp. * 584 6 Duke Energy Corp. 316 16 Enron Corp. 1,032 ------ 1,932 ------ Total Common Stock 67,841 (Cost $52,997) -------------------------------------------------------------------
Principal Amount U.S. Treasury Securities -- 6.1% -------------------------------- U.S. Treasury Notes & Bonds, $2,250 6.00%, 08/15/09 2,232 3,925 6.25%, 08/15/23 3,957 625 6.50%, 11/15/26 653 ------------------------------------------------------------------ Total U.S. Treasury Securities 6,842 (Cost $6,760) ------------------------------------------------------------------ U.S. Government Agency Securities -- 2.2% ----------------------------------------- 1,000 Federal Home Loan Bank, 4.88%, 01/22/02 970 Tennessee Valley Authority, 1,100 5.38%, 11/13/08 977 600 6.75%, 11/01/25 580 ------------------------------------------------------------------ Total U.S. Government Agency Securities 2,527 (Cost $2,558) ------------------------------------------------------------------ Corporate Notes & Bonds -- 17.6% -------------------------------- Aerospace -- 1.0% 1,000 United Technologies Corp., 8.75%, 03/01/21 1,107 Automotive -- 1.4% 1,425 DaimlerChrysler North America Holdings Corp., MTN, 6.63%, 09/21/01 1,412 225 Ford Motor Credit Co., 6.25%, 12/08/05 211 ----- 1,623 Banking -- 2.0% 1,950 Bank One Corp., 6.40%, 08/01/02 1,910 400 BankAmerica Corp., 6.20%, 02/15/06 371 ----- 2,281
See notes to financial statements. 39 CHASE BALANCED FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Long-Term Investments -- Continued - ------------------------------------------------------------------------------------- Biotechnology -- 0.9% $1,100 Monsanto Co., #, 5.88%, 12/01/08 $ 1,000 Computers/Computer Hardware -- 1.3% 1,425 IBM Credit Corp., MTN, 6.35%, 08/30/01 1,411 Consumer Products -- 0.3% 325 Procter & Gamble Co., 6.45%, 01/15/26 283 Financial Services -- 3.7% 20 American General Finance Corp., MTN, 6.04%, 07/02/01 20 1,625 Household Finance Corp., 5.88%, 09/25/04 1,515 1,265 International Lease Finance Corp., MTN, 8.35%, 02/04/02 1,289 1,330 Merrill Lynch & Co., Inc., Ser. B, MTN, 5.71%, 01/15/02 1,298 ------- 4,122 Food/Beverage Products -- 0.4% 500 Anheuser-Busch Companies, Inc., 6.75%, 08/01/03 492 Machinery & Engineering Equipment -- 1.2% 1,425 Caterpillar Financial Services Corp., MTN, 5.89%, 06/17/02 1,386 Oil & Gas -- 1.9% 2,200 BP Amoco PLC (United Kingdom), 6.50%, 08/01/07 2,113 Pharmaceuticals -- 0.5% 600 Abbott Laboratories, 5.60%, 10/01/03 574 Restaurants/Food Services -- 0.4% 450 McDonald's Corp., 7.05%, 11/15/25 420 Retailing -- 1.5% 1,775 Wal-Mart Stores, Inc., 6.55%, 08/10/04 1,742 Utilities -- 1.1% 1,300 Baltimore Gas & Electric Co., Ser. D, MTN, 6.90%, 02/01/05 1,276 ----------------------------------------------------------------------- Total Corporate Notes & Bonds 19,830 (Cost $20,243) ----------------------------------------------------------------------- Mortgage Backed Securities -- 12.6% ----------------------------------- Residential Mortgage Backed Pass-Through Securities -- 12.6% Federal Home Loan Mortgage Corp., 999 Gold Pool C00970, 7.00%, 04/01/30 966 1,721 Gold Pool C35363, 7.00%, 01/01/30 1,663 1,150 Gold Pool E00532, 6.50%, 02/01/13 1,112 3,427 Federal National Mortgage Association, Pool 526926, 6.50%, 12/01/14 3,303 Government National Mortgage Association, 1,367 Pool 423130, 8.50%, 10/15/29 1,399 2,575 Pool 487057, 6.50%, 03/15/29 2,444 1,369 Pool 503849, 6.50%, 04/15/29 1,299 1,092 Pool 505680, 6.50%, 06/15/29 1,036 990 Pool 510100, 7.00%, 07/15/29 962 ----------------------------------------------------------------------- Total Mortgage Backed Securities 14,184 (Cost $14,181) - ------------------------------------------------------------------------------------- Total Long-Term Investments 111,224 (Cost $96,739) - -------------------------------------------------------------------------------------
See notes to financial statements. 40 CHASE BALANCED FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------- Short-Term Investment -- 1.8% - ------------------------------------------------------------------------------------- Repurchase Agreement -- 1.8% ---------------------------- $ 2,003 Greenwich Capital Markets, Inc., in a joint trading account at 6.80%, due 07/03/00, (Dated 06/30/00, Proceeds $2,004, Secured by FHLMC, $2,080, 7.00%, due 11/15/21; Market Value $2,043) $ 2,003 (Cost $2,003) - ------------------------------------------------------------------------------------- Total Investments -- 100.6% $113,227 (Cost $98,742) - -------------------------------------------------------------------------------------
See notes to financial statements. 41 - -------------------------------------------------------------------------------- CHASE EQUITY INCOME FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 93.9% - -------------------------------------------------------------------------------- Common Stock -- 93.9% Automotive -- 1.5% 30 Ford Motor Co. $1,277 20 General Motors Corp. 1,138 4 Visteon Corp. * 47 ------ 2,462 Banking -- 2.1% 75 Bank of New York Co., Inc. 3,469 Chemicals -- 1.6% 43 Dow Chemical Co. 1,289 32 E.I. DuPont de Nemours Co. 1,383 ------ 2,672 Computer Networks -- 2.0% 53 Cisco Systems, Inc. * 3,388 Computer Software -- 7.1% 33 Computer Associates International, Inc. 1,705 61 Microsoft Corp. * 4,856 63 Oracle Corp. * 5,295 ------ 11,856 Computers/Computer Hardware -- 5.5% 23 Hewlett-Packard Co. 2,810 58 International Business Machines Corp. 6,387 ------ 9,197 Consumer Products -- 2.2% 29 Gillette Co. 1,006 24 Philip Morris Companies, Inc. 643 37 Procter & Gamble Co. 2,095 ------ 3,744 Diversified -- 4.2% 133 General Electric Co. 7,047 Financial Services -- 10.2% 65 American Express Co. 3,404 87 Citigroup, Inc. 5,266 13 J.P. Morgan & Co. 1,454 22 Merrill Lynch & Co., Inc. 2,519 53 Morgan Stanley Dean Witter & Co. 4,379 ------ 17,022 Food/Beverage Products -- 5.4% 27 Anheuser-Busch Companies, Inc. 2,002 32 Coca-Cola Co. 1,827 30 PepsiCo, Inc. 1,333 92 Sysco Corp. 3,858 ------ 9,020 Insurance -- 3.3% 46 American International Group, Inc. 5,462 Machinery & Engineering Equipment -- 1.4% 59 Dover Corp. 2,393 Manufacturing -- 0.4% 21 Honeywell International, Inc. 691 Multi-Media -- 0.7% 29 The Walt Disney Co. 1,141
See notes to financial statements. 42 CHASE EQUITY INCOME FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Oil & Gas -- 6.0% 28 BP Amoco PLC, ADR (United Kingdom) $ 1,587 26 Chevron Corp. 2,214 39 Exxon Mobil Corp. 3,026 43 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 2,639 8 Schlumberger LTD 575 ------- 10,041 Paper/Forest Products -- 0.4% 21 International Paper Co. 629 Pharmaceuticals -- 13.7% 54 Abbott Laboratories 2,397 39 American Home Products Corp. 2,274 48 Bristol-Myers Squibb Co. 2,808 41 Eli Lilly & Co. 4,125 19 Johnson & Johnson 1,915 31 Merck & Co., Inc. 2,406 98 Pfizer, Inc. 4,689 48 Pharmacia Corp. 2,455 ------- 23,069 Retailing -- 3.5% 18 Costco Wholesale Corp. * 587 35 Home Depot, Inc. 1,753 62 Wal-Mart Stores, Inc. 3,590 ------- 5,930 Semi-Conductors -- 7.9% 57 Intel Corp. 7,607 81 Texas Instruments, Inc. 5,536 ------- 13,143 Telecommunications -- 6.6% 44 AT&T Corp. 1,384 28 Bell Atlantic Corp. * 1,428 40 BellSouth Corp. 1,701 23 GTE Corp. 1,450 76 SBC Communications, Inc. 3,292 37 WorldCom, Inc. * 1,716 ------- 10,971 Telecommunications Equipment -- 3.7% 68 Lucent Technologies, Inc. 4,049 72 Motorola, Inc. 2,104 ------- 6,153 Utilities -- 4.5% 51 DQE, Inc. 2,026 32 Duke Energy Corp. 1,827 58 Enron Corp. 3,760 ------- 7,613 - -------------------------------------------------------------------------------- Total Long-Term Investments 157,113 (Cost $98,874) - --------------------------------------------------------------------------------
See notes to financial statements. 43 CHASE EQUITY INCOME FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - ------------------------------------------------------------------------------------ Short-Term Investment -- 8.4% - ------------------------------------------------------------------------------------ Repurchase Agreement -- 8.4% ---------------------------- $14,006 Greenwich Capital Markets, Inc., in a joint trading account at 6.80%, 07/03/00, (Dated 06/30/00, Proceeds $14,014, Secured by FHLMC, $14,329, 6.50% through 8.00%, due 07/25/21 through 04/25/30; Market Value $ 14,286) $ 14,006 (Cost $14,006) - ------------------------------------------------------------------------------------ Total Investments -- 102.3% $171,119 (Cost $112,880) - ------------------------------------------------------------------------------------
See notes to financial statements. 44 - -------------------------------------------------------------------------------- CHASE SMALL CAPITALIZATION FUND Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 97.0% - -------------------------------------------------------------------------------- Common Stock -- 97.0% --------------------- Advertising -- 2.6% 17 Catalina Marketing Corp. * $1,764 26 True North Communications Inc. 1,162 ------ 2,926 Aerospace -- 0.4% 37 AAR Corp. 442 Apparel -- 1.2% 22 Kenneth Cole Productions, Inc., Class A * 878 7 Timberland Co., Class A * 506 ------ 1,384 Automotive -- 1.7% 59 Copart, Inc. * 948 40 Lithia Motors, Inc., Class A * 528 35 Tower Automotive, Inc. * 438 ------ 1,914 Banking -- 4.4% 18 Amcore Financial, Inc. 330 35 City National Corp. 1,239 21 Commerce Bancorp., Inc. 947 33 Cullen/Frost Bankers, Inc. 876 31 Investors Financial Services Corp. 1,230 20 Trustmark Corp. 345 ------ 4,967 Biotechnology -- 1.1% 12 Inhale Therapeutic Systems, Inc. * 1,238 Broadcasting/Cable -- 1.4% 48 Westwood One, Inc. * 1,623 Business Services -- 6.3% 26 ChoicePoint, Inc. * 1,144 17 CSG Systems International, Inc. * 975 17 F.Y.I., Inc. * 583 42 Iron Mountain, Inc. * 1,437 14 Learning Tree International, Inc. * 867 32 On Assignment, Inc. * 970 70 Profit Recovery Group International * 1,164 ------ 7,140 Chemicals -- 1.3% 56 Spartech Corp. 1,524 Computer Networks -- 1.9% 28 Black Box Corp. * 2,181 Computer Software -- 6.5% 17 Accrue Software, Inc. * 586 23 Advent Software, Inc. * 1,477 20 Allaire Corp. * 748 13 FileNET Corp. * 247 34 National Computer Systems, Inc. 1,693 25 Remedy Corp. * 1,394 18 RSA Security, Inc. * 1,233 ------ 7,378 Computers/Computer Hardware -- 1.4% 38 Cybex Computer Products Corp. * 1,648
See notes to financial statements. 45 CHASE SMALL CAPITALIZATION FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Construction -- 0.9% 22 Dycom Industries Inc. * $1,007 Construction Materials -- 0.6% 79 Dal-Tile International Inc. * 648 Electronics/Electrical Equipment -- 13.8% 22 Amphenol Corp., Class A * 1,430 47 Artesyn Technologies, Inc. * 1,303 10 Coherent, Inc. * 797 37 CTS Corp. 1,679 25 Littelfuse, Inc. * 1,247 15 National Instruments Corp. * 641 29 PerkinElmer, Inc. 1,937 42 Sanmina Corp. * 3,603 14 Technitrol, Inc. 1,395 47 Vishay Intertechnology, Inc. * 1,773 ------ 15,805 Engineering Services -- 0.4% 14 Jacobs Engineering Group, Inc. * 469 Entertainment/Leisure -- 1.9% 4 Cinar Corp., Class B (Canada) * 12 9 Macrovision Corp. * 588 61 Station Casinos, Inc. * 1,517 ------ 2,117 Financial Services -- 1.0% 14 Federated Investors, Inc., Class B 498 15 SEI Investments Co. 609 ------ 1,107 Food/Beverage Products -- 0.6% 23 Performance Food Group Co. * 723 Health Care/Health Care Services -- 13.0% 59 Community Health Systems, Inc. * 947 37 Cooper Companies, Inc. 1,342 30 Datascope Corp. 1,062 77 Hooper Holmes, Inc. 616 24 MedQuist, Inc. * 826 37 Mentor Corp. 994 44 Molecular Devices Corp. * 3,062 37 Oxford Health Plans, Inc. * 881 15 Patterson Dental Co. * 768 55 Province Healthcare Co. * 1,987 5 Syncor International Corp. * 335 29 Varian Medical Systems, Inc. 1,125 40 Ventana Medical Systems, Inc. * 928 ------ 14,873 Insurance -- 2.7% 19 Arthur J. Gallagher & Co. 802 15 Brown & Brown, Inc. 801 26 Delphi Financial Group, Inc., Class A * 887 11 Radian Group, Inc. 569 ------ 3,059 Machinery & Engineering Equipment -- 3.1% 22 Cognex Corp. * 1,149 23 PRI Automation, Inc. * 1,520 19 Zebra Technologies Corp., Class A * 824 ------ 3,493
See notes to financial statements. 46 CHASE SMALL CAPITALIZATION FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Oil & Gas -- 5.2% 37 Louis Dreyfus Natural Gas * $ 1,168 61 Pride International, Inc. * 1,498 3 St. Mary Land & Exploration Co. 145 27 Triton Energy LTD (Cayman Islands) 1,075 45 Veritas DGC, Inc. * 1,166 38 Vintage Petroleum, Inc. 849 ------- 5,901 Pharmaceuticals -- 3.3% 30 Advance Paradigm, Inc. * 611 12 IDEC Pharmaceuticals Corp. * 1,349 1 K-V Pharmaceutical Co.* 30 40 King Pharmaceuticals, Inc. * 1,771 ------- 3,761 Real Estate Investment Trust -- 1.2% 39 Alexandria Real Estate Equities 1,331 Restaurants/Food Services -- 1.4% 63 Jack in the Box, Inc. * 1,553 Retailing -- 4.4% 58 BJ's Wholesale Club, Inc. * 1,901 27 Chico's FAS, Inc. * 540 26 Michaels Stores, Inc. * 1,203 62 Stein Mart, Inc. * 640 60 Wild Oats Markets, Inc. * 755 ------- 5,039 Semi-Conductors -- 7.9% 58 Actel Corp. * 2,629 15 Cree, Inc. * 1,989 17 Dallas Semiconductor Corp. 685 20 Semtech Corp. * 1,491 50 Varian, Inc. * 2,292 ------- 9,086 Shipping/Transportation -- 1.2% 26 C.H. Robinson Worldwide, Inc. 1,309 Telecommunications -- 1.9% 34 ITC-DeltaCom, Inc. * 750 58 Price Communications Corp. * 1,355 ------- 2,105 Telecommunications Equipment -- 0.7% 14 Inet Technologies, Inc. * 743 Utilities -- 1.6% 19 AGL Resources, Inc. 295 23 American States Water Co. 679 17 Laclede Gas Co. 321 17 Northwest Natural Gas Co. 373 5 United Water Resources, Inc. 176 ------- 1,844 - -------------------------------------------------------------------------------- Total Long-Term Investments 110,338 (Cost $84,215) - --------------------------------------------------------------------------------
See notes to financial statements. 47 CHASE SMALL CAPITALIZATION FUND Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands)
Principal Amount Issuer Value - -------------------------------------------------------------------------------------- Short-Term Investment -- 3.0% - -------------------------------------------------------------------------------------- Repurchase Agreement -- 3.0% ---------------------------- $3,369 Greenwich Capital Markets, Inc., in a joint trading account at 6.80%, due 07/03/00, (Dated 06/30/00, Proceeds $3,371, Secured by FHLMC, $3,666, 6.00%, due 03/18/28; Market Value $3,437) $ 3,369 (Cost $3,369) - -------------------------------------------------------------------------------------- Total Investments -- 100.0% $113,707 (Cost $87,584) - --------------------------------------------------------------------------------------
INDEX: * -- Non-income producing security. ~ -- All or a portion of this security is segregated for delayed delivery securities. # -- Security may only be sold to qualified institutional buyers. ADR -- American Depositary Receipt. DN -- Discount Note: The rate shown is the effective yield at the date of purchase. FHLMC -- Federal Home Loan Mortgage Corporation. FRDO -- Floating Rate Demand Obligation: The maturity date shown is the next interest rate reset date; the rate shown is the rate in effect at June 30, 2000. FRN -- Floating Rate Note: The maturity date shown is the actual maturity date; the rate shown is the rate in effect at June 30, 2000. MTN -- Medium Term Note. SUB -- Step-Up Bond: The maturity date shown is the call date; the rate shown is the rate in effect at June 30, 2000. See notes to financial statements. 48 - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES As of June 30, 2000 (unaudited) - -------------------------------------------------------------------------------- (Amounts in Thousands, Except Per Share Amounts)
Short- Intermediate Term U.S. U.S. Money Government Intermediate Government Market Securities Term Bond Securities Fund Fund Fund Fund =================================================================================================== ASSETS: Investment securities, at value (Note 1) .................... $325,155 $30,642 $48,566 $6,175 Cash .............................. 67 2 4 -- Receivables: Interest/Dividends ............... 2,565 467 537 72 Fund shares sold ................. -- -- 149 -- Expense reimbursement from Distributor ................. 2 2 2 22 - -------------------------------------------------------------------------------------------------- Total Assets ................... 327,789 31,113 49,258 6,269 - -------------------------------------------------------------------------------------------------- LIABILITIES: Payables: Fund shares redeemed ............. 1 946 174 -- Dividends ........................ 544 5 17 -- Accrued liabilities: (Note 2) Investment advisory fees ......... 66 3 10 -- Administration fees .............. 39 4 6 -- Custody and accounting fees ............................. 9 12 17 4 Other ............................ 124 21 74 19 - -------------------------------------------------------------------------------------------------- Total Liabilities .............. 783 991 298 23 - -------------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ................... 327,006 30,821 50,674 6,617 Accumulated undistributed/ (distributions in excess of) net investment income ............. 2 1 (2) (1) Accumulated net realized loss on investments ............... (2) (510) (1,376) (403) Net unrealized appreciation (depreciation) of investments -- (190) (336) 33 - -------------------------------------------------------------------------------------------------- Total Net Assets ............... $327,006 $30,122 $48,960 $6,246 ================================================================================================== Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares .................... 326,749 2,491 3,948 479 Investor Shares ................... 257 10 101 3 Net Asset Value, maximum offering and redemption price per share Premier Shares $ 1.00 $ 12.04 $ 12.09 $12.98 Investor Shares ................... $ 1.00 $ 12.04 $ 12.09 $12.98 Cost of Investments ................ $325,155 $30,832 $48,902 $6,142 ==================================================================================================
See notes to financial statements. 49 STATEMENT OF ASSETS AND LIABILITIES As of June 30, 2000 (unaudited) (Amounts in Thousands, Except Per Share Amounts)
Equity Small Income Balanced Income Capitalization Fund Fund Fund Fund =============================================================================================== ASSETS: Investment securities, at value (Note 1) ........................ $64,805 $113,227 $171,119 $113,707 Cash .................................. 5 5 -- 1 Receivables: Investment securities sold ........... -- -- -- 106 Interest and Dividends ............... 700 673 119 42 Fund shares sold ..................... 129 6 22 341 Expense reimbursement from Distributor ..................... 1 1 1 1 - ---------------------------------------------------------------------------------------------- Total Assets ....................... 65,640 113,912 171,261 114,198 - ---------------------------------------------------------------------------------------------- LIABILITIES: Payables: Investment securities purchased ............................ 2,001 1,109 -- -- Fund shares redeemed ................. 499 59 3,669 293 Dividends ............................ 23 -- 10 -- Accrued liabilities: (Note 2) Investment advisory fees ............. 16 65 102 62 Administration fees .................. 8 14 21 14 Custody and accounting fees .......... 7 19 20 15 Other ................................ 50 105 116 121 - ---------------------------------------------------------------------------------------------- Total Liabilities .................. 2,604 1,371 3,938 505 - ---------------------------------------------------------------------------------------------- NET ASSETS: Paid in capital ....................... 66,852 87,950 103,610 86,550 Accumulated undistributed/ (distributions in excess of) net investment income ................. 25 1 -- (90) Accumulated net realized gain (loss) on investments ................. (3,514) 10,105 5,474 1,110 Net unrealized appreciation (depreciation) of investments ......... (327) 14,485 58,239 26,123 - ---------------------------------------------------------------------------------------------- Total Net Assets ................... $63,036 $112,541 $167,323 $113,693 ============================================================================================== Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares ........................ 3,324 2,833 3,210 4,350 Investor Shares ....................... 56 49 112 149 Net Asset Value, maximum offering and redemption price per share Premier Shares ........................ $ 18.65 $ 39.06 $ 50.38 $ 25.28 Investor Shares ....................... $ 18.67 $ 39.02 $ 50.41 $ 25.14 Cost of Investments .................... $65,132 $ 98,742 $112,880 $ 87,584
See notes to financial statements. 50 STATEMENT OF ASSETS AND LIABILITIES As of June 30, 2000 (unaudited) (Amounts in Thousands, Except Per Share Amounts)
Equity Core Equity Growth Fund Fund ==================================================================================== ASSETS: Investment in Portfolio, at value (Note 1) ....................................... $201,617 $396,825 Receivables: Fund shares sold .................................... 71 118 - ------------------------------------------------------------------------------------ Total Assets ...................................... 201,688 396,943 - ------------------------------------------------------------------------------------ LIABILITIES: Accrued liabilities: (Note 2) Administration fees ................................. 16 32 Other ............................................... 100 125 - ------------------------------------------------------------------------------------ Total Liabilities ................................. 116 157 - ------------------------------------------------------------------------------------ NET ASSETS: Paid in capital ...................................... 138,271 249,260 Accumulated distributions in excess of net investment income ................................ (59) (722) Accumulated net realized gain on investments ......... 5,681 5,521 Net unrealized appreciation of investments ....................................... 57,679 142,727 - ------------------------------------------------------------------------------------ Total Net Assets .................................. $201,572 $396,786 ==================================================================================== Shares of beneficial interest outstanding ($.001 par value; unlimited number of shares authorized) Premier Shares ....................................... 5,922 5,259 Investor Shares ...................................... 273 461 Net Asset Value, maximum offering and redemption price per share Premier Shares ....................................... $ 32.54 $ 69.39 Investor Shares ...................................... $ 32.45 $ 69.05 ====================================================================================
See notes to financial statements. 51 - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS For the six months ended June 30, 2000 (unaudited) - -------------------------------------------------------------------------------- (Amounts in Thousands)
Short- Intermediate Term U.S. U.S. Money Government Intermediate Government Market Securities Term Bond Securities Fund Fund Fund Fund ================================================================================================ INTEREST INCOME ..................... $9,338 $976 $1,432 $223 - ------------------------------------------------------------------------------------------------ EXPENSES: (Note 2) Investment advisory fees ........... 449 76 106 15 Administration fees ................ 224 23 32 5 Distribution fees .................. -- -- 1 -- Custody and accounting fees ............................... 38 24 24 27 Printing and postage ............... 29 12 11 1 Professional fees .................. 22 18 19 16 Registration expenses .............. 28 4 9 4 Transfer agent fees ................ 40 20 24 16 Trustees' fees ..................... 7 1 1 -- Other .............................. 7 6 1 2 - ------------------------------------------------------------------------------------------------ Total expenses .................. 844 184 228 86 - ------------------------------------------------------------------------------------------------ Less amounts waived (Note 2D) .......................... 85 61 57 20 Less earnings credits (Note 2E) .......................... 1 -- 1 -- Less expense reimbursements (Note 2E) ........... 10 9 10 41 - ------------------------------------------------------------------------------------------------ Net expenses ..................... 748 114 160 25 - ------------------------------------------------------------------------------------------------ Net investment income .......................... 8,590 862 1,272 198 - ------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions ............ -- (326) (506) (70) Change in net unrealized appreciation/depreciation of investments ..................... -- 307 626 129 - ------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments ......... -- (19) 120 59 - ------------------------------------------------------------------------------------------------ Net increase in net assets from operations .................... $8,590 $843 $1,392 $257 ================================================================================================
See notes to financial statements. 52 STATEMENT OF OPERATIONS For the six months ended June 30, 2000 (unaudited) (Amounts in Thousands)
Equity Small Income Balanced Income Capitalization Fund Fund Fund Fund ================================================================================================ INVESTMENT INCOME: Interest ................................ $2,224 $1,522 $ 359 $ 213 Dividend ................................ -- 219 965 216 - ------------------------------------------------------------------------------------------------ Total investment income .............. 2,224 1,741 1,324 429 - ------------------------------------------------------------------------------------------------ EXPENSES: (Note 2) Investment advisory fees ................ 160 407 638 388 Administration fees ..................... 48 81 128 78 Distribution fees ....................... 1 2 6 3 Custody and accounting fees ............. 33 37 34 36 Printing and postage .................... 17 14 31 18 Professional fees ....................... 18 17 19 19 Registration expenses ................... 9 19 14 19 Transfer agent fees ..................... 27 35 45 36 Trustees' fees .......................... 1 2 4 2 Other ................................... 1 -- 8 2 - ------------------------------------------------------------------------------------------------ Total expenses ....................... 315 614 927 601 - ------------------------------------------------------------------------------------------------ Less amounts waived (Note 2D) ........... 65 52 47 68 Less earnings credits (Note 2E) ......... -- 3 -- -- Less expense reimbursements (Note 2E) ............................... 10 14 22 14 - ------------------------------------------------------------------------------------------------ Net expenses ........................... 240 545 858 519 - ------------------------------------------------------------------------------------------------ Net investment income (loss) ............................... 1,984 1,196 466 (90) - ------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investment transactions ................. (885) 10,547 5,980 9,767 Change in net unrealized appreciation/depreciation of investments .......................... 638 (8,767) (4,235) 2,186 - ------------------------------------------------------------------------------------------------ Net realized and unrealized gain (loss) on investments ................... (247) 1,780 1,745 11,953 - ------------------------------------------------------------------------------------------------ Net increase in net assets from operations .................. $1,737 $2,976 $2,211 $11,863 ================================================================================================
See notes to financial statements. 53 STATEMENT OF OPERATIONS For the six months ended June 30, 2000 (unaudited) (Amounts in Thousands)
Equity Core Equity Growth Fund Fund ================================================================================== INVESTMENT INCOME: Investment income from Portfolio ................. $ 903 $ 1,133 Expenses from Portfolio .......................... (772) (1,498) - ---------------------------------------------------------------------------------- Total investment income (loss) ................ 131 (365) - ---------------------------------------------------------------------------------- EXPENSES: (Note 2) Administration fees .............................. 95 183 Distribution fees ................................ 9 29 Custody and accounting fees ...................... 14 20 Printing and postage ............................. 24 43 Professional fees ................................ 10 13 Registration expenses ............................ 14 21 Transfer agent fees .............................. 52 99 Trustees' fees ................................... 2 4 Other ............................................ 1 7 - ---------------------------------------------------------------------------------- Total expenses ................................ 221 419 - ---------------------------------------------------------------------------------- Less amounts waived (Note 2D) .................... 9 29 Less expense reimbursements (Note 2E) ............ 22 33 - ---------------------------------------------------------------------------------- Net expenses .................................... 190 357 - ---------------------------------------------------------------------------------- Net investment loss ........................... (59) (722) - ---------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions .......................... 3,454 6,398 Change in net unrealized appreciation/depreciation of investments ......... (711) 1,539 - ---------------------------------------------------------------------------------- Net realized and unrealized gain on investments ................................... 2,743 7,937 - ---------------------------------------------------------------------------------- Net increase in net assets from operations ....................................... $2,684 $ 7,215 ==================================================================================
See notes to financial statements. 54 - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (unaudited) - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
Short-Intermediate Term U.S. Government Intermediate Money Market Fund Securities Fund Term Bond Fund ----------------------- --------------------- --------------------- 01/01/00 Year 01/01/00 Year 01/01/00 Year Through Ended Through Ended Through Ended 06/30/00 12/31/99 06/30/00 12/31/99 06/30/00 12/31/99 ================================================================================================================================== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ................................ $ 8,590 $ 11,119 $ 862 $ 1,538 $ 1,272 $ 1,963 Net realized loss on investment transactions ......................................... -- (1) (326) (174) (506) (865) Change in net unrealized appreciation/ depreciation of investments .......................... -- -- 307 (1,131) 626 (1,474) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations ......................................... 8,590 11,118 843 233 1,392 (376) - ---------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ................................ (8,591) (11,116) (863) (1,538) (1,277) (1,963) Net realized gain on investment transactions ......... -- -- -- (115) -- (30) - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions to shareholders ................ (8,591) (11,116) (863) (1,653) (1,277) (1,993) - ---------------------------------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 6) ................................. 30,727 100,785 (1,686) 2,684 8,950 9,384 - ---------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets ............ 30,726 100,787 (1,706) 1,264 9,065 7,015 NET ASSETS: Beginning of period .................................. 296,280 195,493 31,828 30,564 39,895 32,880 - ---------------------------------------------------------------------------------------------------------------------------------- End of period ........................................ $327,006 $296,280 $30,122 $31,828 $48,960 $39,895 ==================================================================================================================================
See notes to financial statements. 55 - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (unaudited) - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
U.S. Government Securities Fund Income Fund ---------------------- --------------------- 01/01/00 Year 01/01/00 Year Through Ended Through Ended 06/30/00 12/31/99 06/30/00 12/31/99 ================================================================================================== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................... $ 198 $ 319 $ 1,984 $ 3,468 Net realized gain (loss) on investment transactions .................................... (70) (333) (885) (2,604) Change in net unrealized appreciation/ depreciation of investments ..................... 129 (128) 638 (2,648) - ------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations .................................... 257 (142) 1,737 (1,784) - ------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ........................... (199) (319) (1,981) (3,468) Net realized gain on investment transactions..... -- -- -- (584) - ------------------------------------------------------------------------------------------------- Total distributions to shareholders ........... (199) (319) (1,981) (4,052) - ------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 6) ...................... (1,551) 4,566 (2,773) 11,811 - ------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets ....... (1,493) 4,105 (3,017) 5,975 NET ASSETS: Beginning of period ............................. 7,739 3,634 66,053 60,078 - ------------------------------------------------------------------------------------------------- End of period ................................... $ 6,246 $7,739 $63,036 $66,053 ================================================================================================== Equity Balanced Fund Income Fund ------------------------- ------------------------- 01/01/00 Year 01/01/00 Year Through Ended Through Ended 06/30/00 12/31/99 06/30/00 12/31/99 ======================================================================================================== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income ........................... $ 1,196 $ 1,856 $ 466 $ 988 Net realized gain (loss) on investment transactions .................................... 10,547 (61) 5,980 6,287 Change in net unrealized appreciation/ depreciation of investments ..................... (8,767) 10,256 (4,235) 10,874 - -------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from operations .................................... 2,976 12,051 2,211 18,149 - -------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ........................... (1,344) (1,710) (466) (978) Net realized gain on investment transactions..... -- (521) -- (6,799) - -------------------------------------------------------------------------------------------------------- Total distributions to shareholders ........... (1,344) (2,231) (466) (7,777) - -------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 6) ...................... 5,963 36,093 (8,225) 35,513 - -------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets ....... 7,595 45,913 (6,480) 45,885 NET ASSETS: Beginning of period ............................. 104,946 59,033 173,803 127,918 - -------------------------------------------------------------------------------------------------------- End of period ................................... $112,541 $104,946 $167,323 $173,803 ========================================================================================================
See notes to financial statements. 56 STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (unaudited) STATEMENT OF CHANGES IN NET ASSETS For the periods indicated (Amounts in Thousands)
Small Core Capitalization Fund Equity Fund ----------------------- ------------------------- 01/01/00 Year 01/01/00 Year Through Ended Through Ended 06/30/00 12/31/99 06/30/00 12/31/99 =============================================================================================================== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ............................. $ (90) $ (95) $ (59) $ 192 Net realized gain (loss) on investment transactions ............................................. 9,767 (6,607) 3,454 5,082 Change in net unrealized appreciation/ depreciation of investments .............................. 2,186 17,986 (711) 26,635 - --------------------------------------------------------------------------------------------------------------- Increase in net assets from operations ............................................... 11,863 11,284 2,684 31,909 - --------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income .................................... -- -- -- (192) Net realized gain on investment transactions ............. -- -- -- (3,154) - --------------------------------------------------------------------------------------------------------------- Total distributions to shareholders .................... -- -- -- (3,346) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 6) ......... 8,085 17,669 11,999 69,766 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets ........................... 19,948 28,953 14,683 98,329 NET ASSETS: Beginning of period ...................................... 93,745 64,792 186,889 88,560 - --------------------------------------------------------------------------------------------------------------- End of period ............................................ $113,693 $93,745 $201,572 $186,889 =============================================================================================================== Equity Growth Fund ------------------------ 01/01/00 Year Through Ended 06/30/00 12/31/99 ======================================================================================== INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ............................. $ (722) $ (592) Net realized gain (loss) on investment transactions ............................................. 6,398 4,029 Change in net unrealized appreciation/ depreciation of investments .............................. 1,539 69,875 - --------------------------------------------------------------------------------------- Increase in net assets from operations ............................................... 7,215 73,312 - --------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: (Note 1) Net investment income .................................... -- -- Net realized gain on investment transactions ............. -- (4,405) - --------------------------------------------------------------------------------------- Total distributions to shareholders .................... -- (4,405) - --------------------------------------------------------------------------------------- Increase from capital share transactions (Note 6) ......... 54,828 85,511 - --------------------------------------------------------------------------------------- Total increase in net assets ........................... 62,043 154,418 NET ASSETS: Beginning of period ...................................... 334,743 180,325 - --------------------------------------------------------------------------------------- End of period ............................................ $396,786 $334,743 ========================================================================================
See notes to financial statements. 57 - -------------------------------------------------------------------------------- CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies Mutual Fund Investment Trust (the "Trust") was organized on September 23, 1997 as a Massachusetts Business Trust, and is registered under the Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end management investment company. Chase Money Market Fund ("MMF"), Chase Short-Intermediate Term U.S. Government Securities Fund ("STGSF"), Chase Intermediate Term Bond Fund ("ITBF"), Chase U.S. Government Securities Fund ("GSF"), Chase Income Fund ("IF"), Chase Balanced Fund ("BF"), Chase Equity Income Fund ("EIF"), Chase Small Capitalization Fund ("SCF"), Chase Core Equity Fund ("CEF") and Chase Equity Growth Fund ("EGF"), collectively the "Funds", are separate series of the Trust. Each Fund offers Premier and Investor classes of shares. All classes of shares have equal voting rights as to earnings, assets and voting privileges, except that each class may bear different transfer agent, distribution, and shareholder servicing expenses, and each class has exclusive voting rights with respect to its distribution plan and shareholder servicing agreement. Premier Shares may be purchased only by Financial Intermediaries who are able to meet the minimum investment requirement. The Funds were established on January 1, 1998 for the conversion of the AVESTA Trust to the newly created Chase Funds of the Mutual Fund Investment Trust. AVESTA Trust contributed securities and other assets (net of liabilities) in a tax-free exchange for shares of the corresponding portfolio of the newly created Funds. The Chase Manhattan Bank agreed to bear all costs related to conversion. On August 12, 1999, CEF and EGF adopted Master Feeder Fund Structures by contributing substantially all of their assets and liabilities to Core Equity Portfolio ("CEP") and Equity Growth Portfolio ("EGP"), respectively (collectively, the "Portfolios") in a tax-free exchange for beneficial ownership of those Portfolios. The following is a summary of significant accounting policies followed by the Funds: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. CEF and EGF CEF and EGF utilize the Master Feeder Fund Structure and seek to achieve their investment objectives by investing all of their investable assets in CEP and EGP, respectively, which like the Funds, are open-end management investment companies having the same investment objectives as the Funds. As of June 30, 2000, CEF and EGF owned 76.76% and 86.52% of the net assets of their respective Portfolios. The financial statements of the Portfolios, including the Portfolios of Investments, are included elsewhere in this report and should be read in conjunction with the financial statements of the Funds. 58 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) 1. Valuation of investments -- CEF and EGF record their investments in their respective Portfolios at value. Securities of the Portfolios are recorded at value as more fully discussed in the notes to those financial statements. 2. Investment income and expenses -- CEF and EGF record daily their pro-rata share of their respective Portfolio's income, expenses and realized and unrealized gains and losses. In addition, the Funds accrued their own expenses daily as incurred. Realized gains/losses and changes in unrealized appreciation/depreciation represent the Fund's share of such elements allocated from the Portfolio. B. MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF 1. Valuation of investments -- Equity securities are valued at the last sale price on the exchange on which they are primarily traded, including the NASDAQ National Market. Securities for which sale prices are not available and other over-the-counter securities are valued at the last quoted bid price. Except for MMF, bonds and other fixed income securities (other than short-term obligations), including listed issues, are valued on the basis of valuations supplied by pricing services or by matrix pricing systems of a major dealer in bonds. Short-term debt securities with 61 days or more to maturity at time of purchase are valued, through the 61st day prior to maturity, at market value based on quotations obtained from market makers or other appropriate sources; thereafter, the value on the 61st day is amortized on a straight-line basis over the remaining number of days to maturity. Short-term investments with 60 days or less to maturity at time of purchase are valued at amortized cost, which approximates market. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees. Money Market instruments held by MMF are valued at amortized cost, which approximates market value. The Trust's use of amortized cost is subject to the Trust's compliance with certain conditions specified under Rule 2a-7 of the 1940 Act. 2. Repurchase agreements -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Funds of the Trust may transfer uninvested cash balances into one or more joint trading accounts for the purpose of investing in repurchase agreements. It is the Funds' policy that repurchase agreements are fully collateralized by U.S. Treasury and Government Agency securities. All collateral is held in one or more joint trading accounts by the Trust's custodian bank, subcustodian, or a bank with which the custodian bank has entered into a subcustodian agreement, or is segregated in the Federal Reserve Book Entry System. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the collateral by the Fund may be delayed or limited. 59 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) 3. Security transactions and investment income -- Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Securities purchased or sold on a when-issued, to be announced (TBA) or delayed-delivery basis may be settled a month or more after the trade date; interest income is not accrued until settlement date. Each Fund segregates assets with a current value at least equal to the amount of its when-issued and TBA purchase commitments. C. General Policies 1. Expenses -- Expenses directly attributable to a Fund are charged to that Fund; other expenses are allocated proportionately among the Funds within the Trust in relation to the net assets of each Fund or on another reasonable basis. Expenses directly attributable to a particular class are charged directly to such class. In calculating the net asset value per share of each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses (including transfer agent fees) are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of each day. 2. Federal income taxes -- Each Fund is treated as a separate taxable entity for Federal income tax purposes. Each Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute to shareholders all of its distributable net investment income and net realized gain on investments. In addition, each Fund intends to make distributions as required to avoid excise taxes. Accordingly, no provision for Federal income or excise tax is necessary. 3. Distributions to shareholders -- Dividends and distributions paid to shareholders are recorded on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains is determined in accordance with Federal income tax regulations, which may differ from generally accepted accounting principles. To the extent these "book/tax" differences are permanent in nature (i.e., that they result from other than timing of recognition-- "temporary differences"), such amounts are reclassified within the capital accounts based on their Federal tax-basis treatment. Dividends and distributions which exceed net investment income or net realized capital gains for financial reporting purposes but not for tax purposes are reported as distributions in excess of net investment income or net realized capital gains. 60 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) 2. Fees and Other Transactions with Affiliates A. Investment advisory fee -- Pursuant to separate Investment Advisory Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor"), acts as the Investment Advisor to MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF. Chase is a direct wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase supervises the investments of the Funds and for such services is paid a fee. The fee is computed daily and paid monthly at an annual rate equal to 0.30% for MMF, 0.50% for STGSF, ITBF, GSF and IF, and 0.75% for BF, EIF and SCF of average daily net assets. The Advisor voluntarily waived fees as outlined in Note 2.D. Chase Bank of Texas N.A. ("Chase Texas"), a wholly-owned subsidiary of The Chase Manhattan Corporation, is the Sub-Investment Advisor to MMF, STGSF, ITBF, GSF, IF, BF, EIF and SCF. Pursuant to the Sub-Investment Advisory Agreement between Chase Texas and Chase, Chase Texas is entitled to receive a fee payable by Chase from its advisory fee, at an annual rate equal to 0.15% for MMF, 0.25% for STGSF, ITBF, GSF and IF, and 0.375% for BF, EIF and SCF of average daily net assets. B. Distribution and sub-administration fees -- Pursuant to a Distribution and Sub-Administration Agreement, CFD Fund Distributors, Inc. ("CFD" or the "Distributor"), a wholly-owned subsidiary of The BISYS Group, Inc. ("BISYS"), acts as the Funds' distributor and sub-administrator. The Trust has adopted a Rule 12b-1 distribution plan for Investor Class shares, which provides for the payment of distribution fees at an annual rate of up to 0.10% of the average daily net assets attributable to Investor Class Shares of the Money Market Fund and at an annual rate of up to 0.25% of the average daily net assets attributable to Investor Class Shares of each other Fund. For the sub-administrative services it performs, CFD is entitled to receive a fee from each Fund at an annual rate equal to 0.05% of the Fund's average daily net assets. 61 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) The Distributor voluntarily waived fees as outlined in Note 2.D. C. Administration fee -- Pursuant to an Administration Agreement, Chase (the "Administrator") provides certain administration services to the Trust. For these services and facilities, the Administrator receives from the Funds (except for CEF and EGF) a fee computed at the annual rate equal to 0.10% of the respective Fund's average daily net assets. The Administrator receives from CEF and EGF a fee computed at an annual rate equal to 0.05% of average daily net assets. The Administrator voluntarily waived fees as outlined in Note 2.D. D. Waiver of fees -- For the six months ended June 30, 2000, the Funds' vendors voluntarily waived fees for each of the Funds as follows (in thousands):
Investment Fund Advisory Administration Distribution Total =============================================================================== MMF ........... $85 $-- $-- $85 STGSF ......... 61 -- -- 61 ITBF .......... 56 -- 1 57 GSF ........... 15 5 -- 20 IF ............ 64 -- 1 65 BF ............ 50 -- 2 52 EIF ........... 41 -- 6 47 SCF ........... 65 -- 3 68 CEF ........... -- -- 9 9 EGF ........... -- -- 29 29
E. Other -- Certain officers of the Trust are officers of CFD or of its parent corporation, BISYS. Chase provides portfolio accounting and custody services for the Funds, except for CEF and EGF. Compensation for such services is presented in the Statement of Operations as custodian fees. Custodian fees are subject to reduction by credits earned by each Fund, based on cash balances held by Chase as custodian. Such earnings credits are presented separately in the Statement of Operations. The Funds could have invested the cash balances utilized in connection with the earnings credit arrangements in income producing assets if they had not entered into such arrangements. The Distributor voluntarily reimbursed expenses of the Funds in the amounts as shown on the Statement of Operations. 3. Investment Transactions For the six months ended June 30, 2000, purchases and sales of investments (excluding short-term investments) were as follows (in thousands): 62 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
Purchases Sales Purchases Sales (excluding U.S. (excluding U.S. of U.S. of U.S. Government) Government) Government Government ================================================================================ STGSF ......... $ -- $ -- $ 16,531 $19,386 ITBF .......... 17,900 13,584 12,762 8,389 GSF ........... -- -- 2,939 4,428 IF ............ 22,286 21,145 29,837 31,585 BF ............ 46,317 37,144 38,299 40,583 EIF ........... 10,233 15,383 -- -- SCF ........... 40,713 31,085 -- --
4. Federal Income Tax Matters For Federal income tax purposes, the cost and unrealized appreciation (depreciation) in value of the investment securities at June 30, 2000, are as follows (in thousands):
Gross Gross Net unrealized Aggregate unrealized unrealized appreciation/ cost appreciation depreciation (depreciation) =============================================================================== STGSF ......... $ 30,832 $ 106 $ (296) $ (190) ITBF .......... 48,902 188 (524) (336) GSF ........... 6,142 80 (47) 33 IF ............ 65,132 283 (610) (327) BF ............ 98,742 17,886 (3,401) 14,485 EIF ........... 112,880 63,465 (5,226) 58,239 SCF ........... 87,584 30,614 (4,491) 26,123
5. Concentrations At June 30, 2000, EIF and SCF invested 25.6% and 32.6%, respectively, of their portfolios in securities issued by technology sector companies, such as computer hardware and software companies, internet connectivity providers, and telecommunications equipment manufacturers. Valuations of companies in the technology sector are typically subject to greater volatility than other sectors. 63 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) 6. Capital Share Transactions Capital share transactions were as follows for the periods presented (amounts in thousands): MONEY MARKET FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 191,666 191,666 $ 255 255 Shares issued in reinvestment of distributions 6,031 6,031 6 6 Shares redeemed (167,068) (167,068) (163) (163) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 30,629 30,629 $ 98 98 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 329,869 329,869 $ 215 215 Shares issued in reinvestment of distributions 8,626 8,626 4 4 Shares redeemed (237,852) (237,852) (77) (77) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 100,643 100,643 $ 142 142 =========================================================================================================
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 4,876 407 $ 63 5 Shares issued in reinvestment of distributions 836 70 2 -- Shares redeemed (7,454) (622) (9) (1) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) in Fund shares outstanding $ (1,742) (145) $ 56 4 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 10,757 872 $ 77 6 Shares issued in reinvestment of distributions 1,622 132 1 -- Shares redeemed (9,760) (794) (13) (1) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 2,619 210 $ 65 5 =========================================================================================================
64 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) INTERMEDIATE TERM BOND FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 14,248 1,182 $ 798 66 Shares issued in reinvestment of distributions 1,183 98 17 2 Shares redeemed (7,240) (602) (56) (5) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 8,191 678 $ 759 63 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 16,653 1,339 $ 482 39 Shares issued in reinvestment of distributions 1,892 153 12 1 Shares redeemed (9,622) (776) (33) (3) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 8,923 716 $ 461 37 =========================================================================================================
U.S. GOVERNMENT SECURITIES FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 841 65 $ 15 1 Shares issued in reinvestment of distributions 194 15 2 -- Shares redeemed (2,564) (200) (39) (3) - --------------------------------------------------------------------------------------------------------- Net decrease in Fund shares outstanding $ (1,529) (120) $(22) (2) ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 6,505 489 $ 56 4 Shares issued in reinvestment of distributions 316 24 2 -- Shares redeemed (2,303) (176) (10) (1) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 4,518 337 $ 48 3 =========================================================================================================
65 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) INCOME FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 8,108 435 $ 616 33 Shares issued in reinvestment of distributions 1,843 99 10 -- Shares redeemed (13,274) (713) (76) (4) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) in Fund shares outstanding $ (3,323) (179) $ 550 29 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 25,281 1,289 $ 586 30 Shares issued in reinvestment of distributions 3,825 198 10 1 Shares redeemed (17,803) (918) (88) (5) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 11,303 569 $ 508 26 =========================================================================================================
BALANCED FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 27,627 717 $ 790 21 Shares issued in reinvestment of distributions 1,324 33 19 -- Shares redeemed (23,126) (598) (671) (17) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 5,825 152 $ 138 4 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 54,740 1,536 $ 4,478 124 Shares issued in reinvestment of distributions 2,202 61 28 1 Shares redeemed (22,470) (625) (2,885) (81) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 34,472 972 $ 1,621 44 =========================================================================================================
66 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) EQUITY INCOME FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 23,476 473 $ 3,363 68 Shares issued in reinvestment of distributions 443 9 8 -- Shares redeemed (33,951) (687) (1,564) (31) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) in Fund shares outstanding $(10,032) (205) $ 1,807 37 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 55,841 1,131 $ 4,015 81 Shares issued in reinvestment of distributions 7,374 151 145 3 Shares redeemed (31,339) (637) (523) (11) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 31,876 645 $ 3,637 73 =========================================================================================================
SMALL CAPITALIZATION FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 19,433 827 $2,882 119 Shares issued in reinvestment of distributions -- -- -- -- Shares redeemed (13,996) (586) (234) (10) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 5,437 241 $2,648 109 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 34,842 1,764 $ 776 41 Shares issued in reinvestment of distributions -- -- -- -- Shares redeemed (17,865) (898) (84) (4) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 16,977 866 $ 692 37 =========================================================================================================
67 CHASE FUNDS NOTES TO FINANCIAL STATEMENTS (unaudited) (continued) CORE EQUITY FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 40,955 1,285 $ 4,401 139 Shares issued in reinvestment of distributions -- -- -- -- Shares redeemed (31,575) (970) (1,782) (57) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 9,380 315 $ 2,619 82 ========================================================================================================= Year Ended December 31, 1999 - --------------------------------------------------------------------------------------------------------- Shares sold $ 99,241 3,481 $ 6,109 205 Shares issued in reinvestment of distributions 3,169 102 68 2 Shares redeemed (38,291) (1,315) (530) (17) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 64,119 2,268 $ 5,647 190 =========================================================================================================
EQUITY GROWTH FUND
========================================================================================================= Premier Shares Investor Shares ========================================================================================================= Six Months Ended June 30, 2000 Amount Shares Amount Shares - --------------------------------------------------------------------------------------------------------- Shares sold $ 88,251 1,287 $19,675 282 Shares issued in reinvestment of distributions -- -- -- -- Shares redeemed (50,268) (724) (2,830) (42) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 37,983 563 $16,845 240 ========================================================================================================= Year Ended December 31, 1999 Shares sold $121,695 2,098 $11,697 201 Shares issued in reinvestment of distributions 4,136 63 188 3 Shares redeemed (51,649) (883) (556) (9) - --------------------------------------------------------------------------------------------------------- Net increase in Fund shares outstanding $ 74,182 1,278 $11,329 195 =========================================================================================================
68 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (unaudited)
Chase Money Market Fund ----------------------------------------------------------------- Premier Shares ----------------------------------------------------------------- 1/1/00 For the Years Ended December 31, Through ----------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 ---------- -------- ------- ------- ------- ------- Per share operating performance: Net asset value, beginning of period .......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- ------ Income from investment operations: Net investment income ........................ 0.03 0.05 0.05 0.05 0.05 0.05 Net gains or losses in investments (both realized and unrealized) .................... -- -- -- -- -- -- ----- ----- ----- ---- ----- ----- Total from investment operations ............ 0.03 0.05 0.05 0.05 0.05 0.05 ----- ----- ----- ---- ----- ----- Less distributions: Dividends from net investment income ......... 0.03 0.05 0.05 0.05 0.05 0.05 Distributions from capital gains ............. -- -- -- -- -- -- ----- ----- ----- ---- ----- ----- Total distributions ......................... 0.03 0.05 0.05 0.05 0.05 0.05 ----- ----- ----- ---- ----- ----- Net asset value, end of period ................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ===== ===== ===== ===== ===== ===== Total return .................................. 2.89% 4.89% 5.20% 5.18% 5.06% 5.57% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 327 $ 296 $ 195 $ 135 $ 119 $ 71 Ratios to average net assets:# Expenses ..................................... 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% Net investment income ........................ 5.74% 4.81% 5.07% 5.09% 4.93% 5.43% Expenses without waivers, reimbursements and earnings credits ........................ 0.56% 0.58% 0.60% 0.74% 0.72% 0.72% Net investment income without waivers, reimbursements and earnings credits ......... 5.68% 4.73% 4.97% 4.85% 4.71% 5.21% =================================================================================================================
Chase Money Market Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 11/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 --------- -------- ---------- Per share operating performance: Net asset value, beginning of period .......... $1.00 $ 1.00 $1.00 ----- ------ ----- Income from investment operations: Net investment income ........................ 0.03 0.05 0.01 Net gains or losses in investments (both realized and unrealized) .................... -- -- -- ----- ------ ----- Total from investment operations ............ 0.03 0.05 0.01 ----- ------ ----- Less distributions: Dividends from net investment income ......... 0.03 0.05 0.01 Distributions from capital gains ............. -- -- -- ----- ------ ----- Total distributions ......................... 0.03 0.05 0.01 ----- ------ ----- Net asset value, end of period ................ $1.00 $ 1.00 $1.00 ===== ====== ===== Total return .................................. 2.84% 4.78% 0.69% Ratios/supplemental data: Net assets, end of period (millions) ......... $ + $ + $ + Ratios to average net assets:# Expenses ..................................... 0.60% 0.60% 0.60% Net investment income ........................ 5.66% 4.71% 4.72% Expenses without waivers, reimbursements and earnings credits ........................ 9.30% 25.25% 0.80% Net investment income without waivers, reimbursements and earnings credits ......... (3.04%) (19.94%) 4.52% ========================================================================================
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 69 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (unaudited)
Chase Short-Intermediate Term U.S. Government Securities Fund ----------------------------------------------------------------------- Premier Shares ----------------------------------------------------------------------- 1/1/00 For the Years Ended December 31, Through ---------------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- -------- -------- -------- ------- ------- Per share operating performance: Net asset value, beginning of period .......... $12.05 $12.60 $12.39 $11.66 $11.35 $10.14 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ 0.34 0.60 0.63 0.67 0.60 0.58 Net gains or losses in investments (both realized and unrealized) .................... (0.01) (0.51) 0.25 0.06 (0.29) 0.63 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.33 0.09 0.88 0.73 0.31 1.21 ------ ------ ------ ----- ------ ------ Less distributions: Dividends from net investment income ......... 0.34 0.60 0.63 -- -- -- Distributions from capital gains ............. -- 0.04 0.04 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... 0.34 0.64 0.67 -- -- -- ------ ------ ------ ------ ----- ------ Net asset value, end of period ................ $12.04 $12.05 $12.60 $12.39 $11.66 $11.35 ====== ====== ====== ====== ====== ====== Total return .................................. 2.78% 0.72% 7.35% 6.30% 2.68% 12.01% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 30 $ 31 $ 31 $ 24 $ 29 $ 29 Ratios to average net assets:# Expenses ..................................... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Net investment income ........................ 5.68% 4.82% 5.06% 5.40% 5.26% 5.38% Expenses without waivers, reimbursements and earnings credits ........................ 1.15% 1.12% 1.12% 1.01% 0.88% 0.91% Net investment income without waivers, reimbursements and earnings credits ......... 5.28% 4.45% 4.69% 5.14% 5.13% 5.22% Portfolio turnover rate ....................... 59% 91% 87% 63% 177% 187% =======================================================================================================================
Chase Short-Intermediate Term U.S. Government Securities Fund ---------------------------------- Investor Shares ---------------------------------- 1/1/00 Year 11/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 --------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $12.04 $12.59 $12.64 ------ ------ ------ Income from investment operations: Net investment income ........................ 0.32 0.57 0.08 Net gains or losses in investments (both realized and unrealized) .................... -- (0.51) -- ------ ------ ------ Total from investment operations ............ 0.32 0.06 0.08 ------ ------ ------ Less distributions: Dividends from net investment income ......... 0.32 0.57 0.09 Distributions from capital gains ............. -- 0.04 0.04 ------ ------ ------ Total distributions ......................... 0.32 0.61 0.13 ------- ------- ------ Net asset value, end of period ................ $12.04 $12.04 $12.59 ====== ====== ====== Total return .................................. 2.74% 0.48% 0.60% Ratios/supplemental data: Net assets, end of period (millions) ......... $ + $ + $ + Ratios to average net assets:# Expenses ..................................... 1.00% 0.99% 1.03% Net investment income ........................ 5.43% 4.58% 4.47% Expenses without waivers, reimbursements and earnings credits ........................ 17.71% 57.39% 1.58% Net investment income without waivers, reimbursements and earnings credits ......... (11.28%) (51.82%) 3.92% Portfolio turnover rate ....................... 59% 91% 87% ==================================================================================
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 70 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (unaudited)
Chase Intermediate Term Bond Fund ---------------------------------------------------------------------- Premier Shares ---------------------------------------------------------------------- 1/1/00 For the Years Ended December 31, Through -------------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- -------- -------- -------- -------- -------- Per share operating performance: Net asset value, beginning of period .......... $12.06 $12.87 $12.75 $11.89 $11.67 $ 9.99 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ 0.36 0.66 0.68 0.56 0.61 0.64 Net gains or losses in investments (both realized and unrealized) .................... 0.03 (0.80) 0.27 0.30 (0.39) 1.04 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.39 (0.14) 0.95 0.86 0.22 1.68 ------ ------ ------ ------ ------ ----- Less distributions: Dividends from net investment income ......... 0.36 0.66 0.68 -- -- -- Distributions from capital gains ............. -- 0.01 0.15 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... 0.36 0.67 0.83 -- -- -- ------ ------ ------- ------ ------ ------ Net asset value, end of period ................ $12.09 $12.06 $12.87 $12.75 $11.89 $11.67 ====== ====== ====== ====== ====== ====== Total return .................................. 3.26% (1.11%) 7.63% 7.26% 1.86% 16.79% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 48 $ 39 $ 33 $ 19 $ 7 $ 5 Ratios to average net assets:# Expenses ..................................... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Net investment income ........................ 5.97% 5.33% 5.25% 5.61% 5.32% 5.89% Expenses without waivers, reimbursements and earnings credits ........................ 1.02% 1.18% 1.27% 1.25% 1.42% 1.43% Net investment income without waivers, reimbursements and earnings credits ......... 5.70% 4.90% 4.73% 5.11% 4.65% 5.21% Portfolio turnover rate ....................... 60% 85% 135% 14% 134% 198% ======================================================================================================================
Chase Intermediate Term Bond Fund ------------------------------------ Investor Shares ------------------------------------ 1/1/00 Year 11/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ---------- --------- --------- Per share operating performance: Net asset value, beginning of period .......... $12.06 $12.87 $12.91 ------ ------ ------ Income from investment operations: Net investment income ........................ 0.34 0.63 0.09 Net gains or losses in investments (both realized and unrealized) .................... 0.03 (0.80) 0.11 ------- ------ ------ Total from investment operations ............ 0.37 (0.17) 0.20 ------ ------ ------ Less distributions: Dividends from net investment income ......... 0.34 0.63 0.09 Distributions from capital gains ............. -- 0.01 0.15 ------ ------ ------ Total distributions ......................... 0.34 0.64 0.24 ------ ------ ------ Net asset value, end of period ................ $12.09 $12.06 $12.87 ====== ====== ====== Total return .................................. 3.13% (1.36%) 1.52% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 1 $ + $ + Ratios to average net assets:# Expenses ..................................... 1.00% 0.99% 1.03% Net investment income ........................ 5.74% 5.09% 4.64% Expenses without waivers, reimbursements and earnings credits ........................ 4.80% 9.79% 1.72% Net investment income without waivers, reimbursements and earnings credits ......... 1.94% (3.71%) 3.95% Portfolio turnover rate ....................... 60% 85% 135% =========================================================================================
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 71 - -------------------------------------------------------------------------------- CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (unaudited)
Chase U.S. Government Securities Fund -------------------------------------------------------------- Premier Shares -------------------------------------------------------------- 1/1/00 For the Years Ended December 31, Through --------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 -------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $12.84 $13.83 $13.98 $12.76 $13.01 $10.00 ------ ------ ------ ------- ------ ------ Income from investment operations: Net investment income ........................ 0.41 0.64 0.72 0.75 0.74 0.73 Net gains or losses in investments (both realized and unrealized) .................... 0.14 (0.99) 0.54 0.47 (0.99) 2.28 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.55 (0.35) 1.26 1.22 (0.25) 3.01 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ......... 0.41 0.64 0.72 -- -- -- Distributions from capital gains ............. -- -- 0.68 -- -- -- In excess of realized capital gains .......... -- -- 0.01 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... 0.41 0.64 1.41 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ $12.98 $12.84 $13.83 $13.98 $12.76 $13.01 ====== ====== ====== ====== ====== ====== Total return .................................. 4.37% (2.55%) 9.28% 9.55% (1.89%) 30.11% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 6 $ 8 $ 4 $ 3 $ 3 $ 3 Ratios to average net assets:# Expenses ..................................... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Net investment income ........................ 6.38% 4.87% 5.07% 5.73% 6.01% 6.38% Expenses without waivers, reimbursements and earnings credits ........................ 2.44% 2.44% 3.85% 3.15% 2.09% 2.22% Net investment income without waivers, reimbursements and earnings credits ......... 4.69% 3.18% 1.97% 3.33% 4.67% 4.91% Portfolio turnover rate ....................... 50% 19% 110% 87% 48% 17%
Chase U.S. Government Securities Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 11/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $ 12.84 $ 13.83 $14.42 ------- ------- ------ Income from investment operations: Net investment income ........................ 0.40 0.61 0.09 Net gains or losses in investments (both realized and unrealized) .................... 0.14 (0.99) 0.10 ------- ------- ------ Total from investment operations ............ 0.54 (0.38) 0.19 ------- ------- ------ Less distributions: Dividends from net investment income ......... 0.40 0.61 0.09 Distributions from capital gains ............. -- -- 0.68 In excess of realized capital gains .......... -- -- 0.01 ------- ------- ------ Total distributions ......................... 0.40 0.61 0.78 ------- ------- ------ Net asset value, end of period ................ $ 12.98 12.84 $13.83 ======= ======= ====== Total return .................................. 4.23% (2.79%) 1.37% Ratios/supplemental data: Net assets, end of period (millions) ......... $ + $ + $ + Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.03% Net investment income ........................ 6.13% 4.62% 4.45% Expenses without waivers, reimbursements and earnings credits ........................ 28.53% 45.80% 1.92% Net investment income without waivers, reimbursements and earnings credits ......... (21.40%) (40.18%) 3.56% Portfolio turnover rate ....................... 50% 19% 110%
* Commencement of offering of class of shares. # Short periods have been annualized. + Amount rounds to less than one million. See notes to financial statements. 72 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Income Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $18.71 $20.47 $20.18 $18.56 $18.21 $15.39 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ 0.57 1.03 1.09 1.14 1.00 0.97 Net gains or losses in investments (both realized and unrealized) .................... (0.06) 1.59) 0.77 0.48 (0.65) 1.85 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.51 (0.56) 1.86 1.62 0.35 2.82 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ......... 0.57 1.03 1.09 -- -- -- Distributions from capital gains ............. -- 0.17 0.48 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... 0.57 1.20 1.57 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ $18.65 $18.71 $20.47 $20.18 $18.56 $18.21 ====== ====== ====== ====== ====== ====== Total return .................................. 2.78% (2.78%) 9.47% 8.73% 1.91% 18.38% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 62 $ 65 $ 60 $ 51 $ 54 $ 57 Ratios to average net assets:# Expenses ..................................... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% Net investment income ........................ 6.19% 5.28% 5.28% 5.82% 5.58% 5.77% Expenses without waivers, reimbursements and earnings credits ........................ 0.95% 0.93% 0.94% 1.14% 1.07% 1.08% Net investment income without waivers, reimbursements and earnings credits ......... 5.99% 5.10% 5.09% 5.43% 5.26% 5.44% Portfolio turnover rate ....................... 95% 120% 54% 97% 72% 93%
Chase Income Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 11/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $18.72 $ 20.46 $20.77 ------ ------- ------ Income from investment operations: Net investment income ........................ 0.55 0.98 0.14 Net gains or losses in investments (both realized and unrealized) .................... (0.05) (1.57) 0.18 ------ ------- ------ Total from investment operations ............ 0.50 (0.59) 0.32 ------ ------- ------ Less distributions: Dividends from net investment income ......... 0.55 0.98 0.15 Distributions from capital gains ............. -- 0.17 0.48 ------ ------- ------ Total distributions ......................... 0.55 1.15 0.63 ------ ------- ------ Net asset value, end of period ................ $18.67 $ 18.72 $20.46 ====== ======= ====== Total return .................................. 2.71% (2.92% 1.54% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 1 $ 1 $ 1 Ratios to average net assets:# Expenses ..................................... 0.99% 0.99% 1.03% Net investment income ........................ 5.94% 5.04% 4.72% Expenses without waivers, reimbursements and earnings credits ........................ 4.55% 6.22% 1.44% Net investment income without waivers, reimbursements and earnings credits ......... 2.38% (0.19%) 4.31% Portfolio turnover rate ....................... 95% 120% 54%
* Commencement of offering of class of shares. # Short periods have been annualized. See notes to financial statements. 73 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Balanced Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $38.50 $34.54 $29.26 $23.66 $21.25 $17.16 ------ ------ ------ ------ ------- ------- Income from investment operations: Net investment income ........................ 0.42 0.78@ 0.73 0.74 0.63 0.57 Net gains or losses in investments (both realized and unrealized) .................... 0.62 4.07 6.53 4.86 1.78 3.52 ------ ------ ------ ------ ------- ------- Total from investment operations ............ 1.04 4.85 7.26 5.60 2.41 4.09 ------ ------ ------ ------ ------- ------- Less distributions: Dividends from net investment income ......... 0.48 0.70 0.73 -- -- -- Distributions from capital gains ............. -- 0.19 1.25 -- -- -- ------ ------ ------ ------ ------- ------- Total distributions ......................... 0.48 0.89 1.98 -- -- -- ------ ------ ------ ------ ------- ------- Net asset value, end of period ................ $39.06 $38.50 $34.54 $29.26 $23.66 $21.25 ====== ====== ====== ====== ======= ======= Total return .................................. 2.68% 14.23% 25.15% 23.67% 11.31% 23.83% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 111 $ 103 $ 59 $ 36 $ 23 $ 21 Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Net investment income ........................ 2.21% 2.19% 2.32% 2,73% 2.82% 2.94% Expenses without waivers, reimbursements and earnings credits ........................ 1.10% 1.19% 1.28% 1.28% 1.17% 1.17% Net investment income without waivers, reimbursements and earnings credits ......... 2.11% 2.00% 2.04% 2.45% 2.65% 2.77% Portfolio turnover rate ....................... 74% 45% 58% 64% 70% 98%
Chase Balanced Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 10/16/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- er share operating performance: Net asset value, beginning of period .......... $38.46 $34.51 $ 31.87 ------ ------ -------- Income from investment operations: Net investment income ........................ 0.39 0.70@ 0.10 Net gains or losses in investments (both realized and unrealized) .................... 0.60 4.05 3.95 ------ ------ -------- Total from investment operations ............ 0.99 4.75 4.05 ------ ------ -------- Less distributions: Dividends from net investment income ......... 0.43 0.61 0.16 Distributions from capital gains ............. -- 0.19 1.25 ------ ------ -------- Total distributions ......................... 0.43 0.80 1.41 ------ ------ -------- Net asset value, end of period ................ $39.02 $38.46 $ 34.51 ====== ====== ======== Total return .................................. 2.55% 13.94% 12.78% Ratios/supplemental data: Net assets, end of period (millions) ......... 2 $ 2 $ 1 Ratios to average net assets:# Expenses ..................................... 1.25% 1.25% 1.25% Net investment income ........................ 1.97% 1.94% 1.84% Expenses without waivers, reimbursements and earnings credits ........................ 3.07% 3.34% 107.16% Net investment income without waivers, reimbursements and earnings credits ......... 0.15% (0.15%) (104.07%) Portfolio turnover rate ....................... 74% 45% 58%
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 74 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Equity Income Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $49.80 $46.14 $36.97 $28.21 $23.93 $17.90 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ 0.14 0.32@ 0.33 0.40 0.43 0.44 Net gains or losses in investments (both realized and unrealized) .................... 0.58 5.65 9.32 8.36 3.85 5.59 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.72 5.97 9.65 8.76 4.28 6.03 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ......... 0.14 0.31 0.34 -- -- -- Distributions from capital gains ............. -- 2.00 0.14 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... 0.14 2.31 0.48 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ 50.38 $49.80 $46.14 $36.97 $28.21 $23.93 ====== ====== ====== ====== ====== ====== Total return .................................. 1.44% 13.06% 26.20% 31.50% 17.87% 33.72% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 162 $ 170 $ 128 $ 75 $ 63 $ 55 Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Net investment income ........................ 0.56% 0.66% 0.82% 1.67% 1.67% 2.10% Expenses without waivers, reimbursements and earnings credits ........................ 1.05% 1.09% 1.10% 1.11% 1.07% 1.09% Net investment income without waivers, reimbursements and earnings credits ......... 0.51% 0.57% 0.72% 1.56% 1.60% 2.01% Portfolio turnover rate ....................... 6% 16% 3% 14% 24% 11%
Chase Equity Income Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 8/24/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $49.83 $46.23 $ 40.49 ------ ------ ------- Income from investment operations: Net investment income ........................ 0.07 0.20@ 0.06 Net gains or losses in investments (both realized and unrealized) .................... 0.58 5.63 5.89 ------ ------ ------- Total from investment operations ............ 0.65 5.83 5.95 ------ ------ ------- Less distributions: Dividends from net investment income ......... 0.07 0.23 0.07 Distributions from capital gains ............. -- 2.00 0.14 ------ ------ ------- Total distributions ......................... 0.07 2.23 0.21 ------ ------ ------- Net asset value, end of period ................ $50.41 $49.83 $46.23 ====== ====== ======= Total return .................................. 1.32% 12.70% 14.70% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 5 $ 4 $ 1 Ratios to average net assets:# Expenses ..................................... $ 1.25% 1.24% 1.18% Net investment income ........................ 0.30% 0.42% 0.57% Expenses without waivers, reimbursements and earnings credits ........................ 2.40% 3.33% 37.61% Net investment income without waivers, reimbursements and earnings credits ......... (0.85%) (1.67%) (35.86%) Portfolio turnover rate ....................... 6% 16% 3%
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 75 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Small Capitalization Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $22.60 $19.96 $21.78 $17.55 $13.41 $10.23 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ (0.02)@ (0.02)@ (0.01) 0.02 0.01 0.05 Net gains or losses in investments (both realized and unrealized) .................... 2.70 2.66 (0.46) 4.21 4.13 3.13 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 2.68 2.64 (0.47) 4.23 4.14 3.18 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from capital gains ................. -- -- 0.71 -- -- -- In excess of net realized gain on investment -- -- 0.64 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... -- -- 1.35 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ $25.28 $22.60 $19.96 $21.78 $17.55 $13.41 ====== ====== ====== ====== ====== ====== Total return .................................. 11.86% 13.23% (1.83%) 24.08% 30.88% 31.14% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 110 $ 93 $ 65 $ 40 $ 21 $ 13 Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.00% 1.00% 1.22% 1.35% Net investment income ........................ (0.17%) (0.13%) (0.03%) 0.13% 0.04% 0.46% Expenses without waivers and reimbursements .............................. 1.13% 1.21% 1.26% 1.40% 1.37% 1.50% Net investment income without waivers and reimbursements .......................... (0.30%) (0.34%) (0.29%) (0.27%) (0.11%) 0.31% Portfolio turnover rate ....................... 32% 60% 45% 43% 68% 89%
Chase Small Capitalization Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 8/12/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $22.51 $19.94 $ 19.86 ------ ------ ------- Income from investment operations: Net investment income ........................ (0.04)@ (0.08)@ (0.01) Net gains or losses in investments (both realized and unrealized) .................... 2.67 2.65 1.44 ------ ------ ------- Total from investment operations ............ 2.63 2.57 1.43 ------ ------ ------- Less distributions: Dividends from capital gains ................. -- -- 0.71 In excess of net realized gain on investment -- -- 0.64 ------ ------ ------- Total distributions ......................... -- -- 1.35 ------ ------ ------- Net asset value, end of period ................ $25.14 $22.51 $ 19.94 ====== ====== ======= Total return .................................. 11.68% 12.89% 7.56% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 4 $ 1 $ 1 Ratios to average net assets:# Expenses ..................................... 1.24% 1.24% 1.24% Net investment income ........................ (0.38%) (0.37%) ( 0.18%) Expenses without waivers and reimbursements .............................. 2.89% 6.02% 74.81% Net investment income without waivers and reimbursements .......................... (2.03%) (5.15%) (73.75%) Portfolio turnover rate ....................... 32% 60% 45%
* Commencement of offering of class of shares. # Short periods have been annualized. @ Calculated based upon average shares outstanding. See notes to financial statements. 76 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Core Equity Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $32.24 $26.52 $21.25 $15.94 $13.01 $10.36 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ (0.01)@ 0.04@ 0.09 0.14 0.16 0.17 Net gains or losses in investments (both realized and unrealized) .................... 0.31 6.27 6.44 5.17 2.77 2.48 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 0.30 6.31 6.53 5.31 2.93 2.65 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ......... -- 0.04 0.09 -- -- -- Distributions from capital gains ............. -- 0.55 1.17 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... -- 0.59 1.26 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ $32.54 $32.24 $26.52 $21.25 $15.94 $13.01 ====== ====== ====== ====== ====== ====== Total return .................................. 0.93% 23.89% 30.95% 33.33% 22.54% 25.53% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 193 $ 181 $ 89 $ 51 $ 29 $ 24 Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Net investment income ........................ (0.05%) 0.13% 0.39% 0.74% 1.10% 1.44% Expenses without waivers and reimbursements .............................. 1.06% 1.11% 1.18% 1.20% 1.14% 1.17% Net investment income without waivers and reimbursements .......................... 0.11% 0.02% 0.21% 0.54% 0.96% 1.27% Portfolio turnover rate ....................... -- 11%- 32% 24% 29% 133%
Chase Core Equity Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 9/10/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $32.19 $26.52 $ 21.49 ------ ------ ------- Income from investment operations: Net investment income ........................ (0.05)@ (0.05)@ -- Net gains or losses in investments (both realized and unrealized) .................... 0.31 6.28 6.22 ------ ------ ------- Total from investment operations ............ 0.26 6.23 6.22 ------ ------ ------- Less distributions: Dividends from net investment income ......... -- 0.01 0.02 Distributions from capital gains ............. -- 0.55 1.17 ------ ------ ------- Total distributions ......................... -- 0.56 1.19 ------ ------ ------- Net asset value, end of period ................ $32.45 $32.19 $ 26.52 ====== ====== ======= Total return .................................. 0.81% 23.59% 29.08% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 9 $ 6 $ 1 Ratios to average net assets:# Expenses ..................................... 1.25% 1.24% 1.23% Net investment income ........................ (0.30%) (0.13%) (0.03%) Expenses without waivers and reimbursements .............................. 2.15% 3.02% 140.46% Net investment income without waivers and reimbursements .......................... (1.20%) (1.89%) (139.26%) Portfolio turnover rate ....................... -- 11%- 32%
* Commencement of offering of class of shares. # Short periods have been annualized. - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in CEP see Note 1), and the portfolio turnover rate is disclosed at the Portfolio level. @ Calculated based upon average shares outstanding. See notes to financial statements. 77 - ------------------------------------------------------------ CHASE FUNDS FINANCIAL HIGHLIGHTS (unaudited) - ------------------------------------------------------------ FINANCIAL HIGHLIGHTS (unaudited)
Chase Equity Growth Fund ------------------------------------------------------------ Premier Shares ------------------------------------------------------------ 1/1/00 For the Years Ended December 31, Through ------------------------------------------------- 6/30/00 1999 1998 1997 1996 1995 --------- ------ ------ ------ ------ ------ Per share operating performance: Net asset value, beginning of period .......... $68.09 $52.36 $38.36 $27.95 $23.20 $18.44 ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income ........................ (0.13)@ (0.14)@ 0.03 0.07 0.10 0.17 Net gains or losses in investments (both realized and unrealized) .................... 1.43 16.78 15.78 10.34 4.65 4.59 ------ ------ ------ ------ ------ ------ Total from investment operations ............ 1.30 16.64 15.81 10.41 4.75 4.76 ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income ......... -- -- 0.03 -- -- -- Distributions from capital gains ............. -- 0.91 1.78 -- -- -- ------ ------ ------ ------ ------ ------ Total distributions ......................... -- 0.91 1.81 -- -- -- ------ ------ ------ ------ ------ ------ Net asset value, end of period ................ $69.39 $68.09 $52.36 $38.36 $27.95 $23.20 ====== ====== ====== ====== ====== ====== Total return .................................. 1.91% 31.85% 41.38% 37.20% 20.52% 25.78% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 365 $ 320 $ 179 $ 74 $ 57 $ 46 Ratios to average net assets:# Expenses ..................................... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Net investment income ........................ (0.38%) (0.24%) 0.05% 0.20% 0.41% 0.78% Expenses without waivers and reimbursements .............................. 1.02% 1.03% 1.09% 1.11% 1.08% 1.10% Net investment income without waivers and reimbursements .......................... (0.40%) (0.27%) (0.04%) 0.09% 0.33% 0.68% Portfolio turnover rate ....................... -- 15%- 35% 35% 62% 99%
Chase Equity Growth Fund ------------------------------------- Investor Shares ------------------------------------- 1/1/00 Year 8/13/98* Through Ended Through 6/30/00 12/31/99 12/31/98 ------- -------- --------- Per share operating performance: Net asset value, beginning of period .......... $67.85 $52.30 $45.57 ------ ------ ------ Income from investment operations: Net investment income ........................ (0.21)@ (0.29)@ (0.02) Net gains or losses in investments (both realized and unrealized) .................... 1.41 16.75 8.53 ------ ------ ------ Total from investment operations ............ 1.20 16.46 8.51 ------ ------ ------ Less distributions: Dividends from net investment income ......... -- -- -- Distributions from capital gains ............. -- 0.91 1.78 ------ ------ ------ Total distributions ......................... -- 0.91 1.78 ------ ------ ------ Net asset value, end of period ................ $69.05 $67.85 $52.30 ====== ====== ====== Total return .................................. 1.77% 31.54% 18.80% Ratios/supplemental data: Net assets, end of period (millions) ......... $ 32 $ 15 $ 1 Ratios to average net assets:# Expenses ..................................... 1.25% 1.24% 1.25% Net investment income ........................ ( 0.64%) (0.48%) (0.19%) Expenses without waivers and reimbursements .............................. 1.81% 2.34% 5.88% Net investment income without waivers and reimbursements .......................... (1.20%) (1.58%) 4.82% Portfolio turnover rate ....................... -- 15%- 35%
* Commencement of offering of class of shares. # Short periods have been annualized. - Portfolio turnover reflects the period January 1, 1999 to August 11, 1999. After August 11, 1999, all the Fund's investable assets were invested in EGP (see Note 1), and the portfolio turnover rate is disclosed at the Portfolio level. @ Calculated based upon average shares outstanding. See notes to financial statements. 78 - -------------------------------------------------------------------------------- CORE EQUITY PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands) Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 96.9% - -------------------------------------------------------------------------------- Common Stock -- 96.9% --------------------- Advertising -- 0.5% 16 Omnicom Group $1,421 Airlines -- 1.0% 144 Southwest Airlines, Inc. 2,727 Automotive -- 0.9% 33 Ford Motor Co. 1,437 14 General Motors Corp. 794 4 Visteon Corp. * 53 ------ 2,284 Banking -- 1.5% 32 Bank of America Corp. 1,397 56 Bank of New York Co., Inc. 2,615 ------ 4,012 Biotechnology -- 1.1% 42 Amgen, Inc. * 2,915 Computer Networks -- 3.2% 134 Cisco Systems, Inc. * 8,492 Computer Software -- 5.6% 105 Microsoft Corp. * 8,438 57 Oracle Corp. * 4,787 26 Symantec Corp. * 1,400 ------ 14,625 Computers/Computer Hardware -- 6.7% 69 Dell Computer Corp. * 3,389 66 EMC Corp. * 5,086 22 Hewlett-Packard Co. 2,691 31 International Business Machines Corp. 3,410 34 Sun Microsystems, Inc. * 3,087 ------ 17,663 Consumer Products -- 3.5% 47 Avon Products, Inc. 2,096 55 Colgate-Palmolive Co. 3,277 34 Gillette Co. 1,170 47 Philip Morris Companies, Inc. 1,240 25 Procter & Gamble Co. 1,433 ------ 9,216 Diversified -- 5.5% 224 General Electric Co. 11,862 56 Tyco International LTD (Bermuda) 2,660 ------ 14,522 Electronics/Electrical Equipment -- 2.9% 8 Agilent Technologies, Inc. * 604 23 Molex, Inc. 1,092 31 Sanmina Corp. * 2,676 78 Solectron Corp. * 3,273 ------ 7,645 Financial Services -- 8.6% 120 American Express Co. 6,244 98 Charles Schwab Corp. 3,310 97 Citigroup, Inc. 5,852 31 Merrill Lynch & Co., Inc. 3,554 44 Morgan Stanley Dean Witter & Co. 3,621 ------ 22,581
See notes to financial statements. 79 CORE EQUITY PORTFOLIO Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands) Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Food/Beverage Products -- 3.4% 31 Anheuser-Busch Companies, Inc. $ 2,340 49 Coca-Cola Co. 2,806 86 PepsiCo, Inc. 3,799 ------- 8,945 Health Care/Health Care Services -- 2.1% 46 Guidant Corp. * 2,262 63 Medtronic, Inc. 3,126 ------- 5,388 Insurance -- 3.0% 67 American International Group, Inc. 7,842 Internet Services/Software -- 1.4% 44 America Online, Inc. * 2,318 10 Yahoo! Inc. * 1,270 ------- 3,588 Machinery & Engineering Equipment -- 0.4% 27 Dover Corp. 1,083 Metals/Mining -- 0.8% 68 Alcoa, Inc. 1,982 Multi-Media -- 2.5% 90 The Walt Disney Co. 3,503 41 Time Warner, Inc. 3,152 ------- 6,655 Oil & Gas -- 5.6% 29 BJ Services Co. * 1,816 21 Chevron Corp. 1,768 101 Exxon Mobil Corp. 7,921 51 Royal Dutch Petroleum Co., N.Y. Registered Shares (Netherlands) 3,109 ------- 14,614 Pharmaceuticals -- 7.6% 28 American Home Products Corp. 1,622 40 Bristol-Myers Squibb Co. 2,352 24 Eli Lilly & Co. 2,427 25 Johnson & Johnson 2,544 47 Merck & Co., Inc. 3,565 156 Pfizer, Inc. 7,477 ------- 19,987 Retailing -- 7.6% 35 Albertson's, Inc. 1,154 47 Best Buy Co., Inc. * 2,952 61 Home Depot, Inc. 3,044 35 Target Corp. 2,036 131 Wal-Mart Stores, Inc. 7,555 97 Walgreen Co. 3,114 ------- 19,855 Semi-Conductors -- 7.9% 41 Altera Corp. * 4,149 42 Applied Materials, Inc. * 3,829 71 Intel Corp. 9,529 48 Texas Instruments, Inc. 3,276 ------- 20,783
See notes to financial statements. 80 CORE EQUITY PORTFOLIO Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands) Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- Continued - -------------------------------------------------------------------------------- Telecommunications -- 5.5% 34 AT&T Corp. $ 1,080 52 BellSouth Corp. 2,219 31 GTE Corp. 1,938 71 SBC Communications, Inc. 3,053 43 Sprint Corp. (FON Group) 2,206 89 WorldCom, Inc. * 4,066 -------- 14,562 Telecommunications Equipment -- 5.3% 61 ADC Telecommunications, Inc. * 5,149 10 JDS Uniphase Corp. * 1,247 53 Lucent Technologies, Inc. 3,157 63 Nortel Networks Corp., (Canada) 4,266 -------- 13,819 Utilities -- 2.8% 48 AES Corp. * 2,176 21 Duke Energy Corp. 1,206 61 Enron Corp. 3,922 -------- 7,304 - -------------------------------------------------------------------------------- Total Long-Term Investments 254,510 (Cost $193,218) - -------------------------------------------------------------------------------- Short-Term Investment -- 3.1% - --------------------------------------------------------------------------------
Principal Amount Repurchase Agreement -- 3.1% ---------------------------- $8,261 Greenwich Capital Markets, Inc., in a joint trading account at 6.80%, due 07/03/00, (Dated 06/30/00, Proceeds $8,266, Secured by GNMA & FHLMC, $8,479, 7.00% through 7.50%, due 11/15/21 through 07/16/24; Market Value $8,427) 8,261 (Cost $8,261) - -------------------------------------------------------------------------------- Total Investments -- 100.0% $262,771 (Cost $201,479) - --------------------------------------------------------------------------------
See notes to financial statements. 81 - -------------------------------------------------------------------------------- EQUITY GROWTH PORTFOLIO Portfolio of Investments - -------------------------------------------------------------------------------- As of June 30, 2000 (unaudited) (Amounts in Thousands) Shares Issuer Value - -------------------------------------------------------------------------------- Long-Term Investments -- 97.7% - -------------------------------------------------------------------------------- Common Stock -- 97.7% --------------------- Biotechnology -- 5.8% 226 Amgen, Inc. * $15,907 85 Biogen, Inc. * 5,486 68 MedImmune, Inc. * 5,051 ------- 26,444 Computer Networks -- 5.5% 400 Cisco Systems, Inc. * 25,435 Computer Software -- 7.0% 205 Microsoft Corp. * 16,392 186 Oracle Corp. * 15,669 ------- 32,061 Computers/Computer Hardware -- 11.1% 164 Dell Computer Corp. * 8,068 301 EMC Corp. * 23,147 95 International Business Machines Corp. 10,433 103 Sun Microsystems, Inc. * 9,394 ------- 51,042 Consumer Products -- 1.6% 114 Gillette Co. 3,987 58 Procter & Gamble Co. 3,316 ------- 7,303 Diversified -- 6.1% 477 General Electric Co. 25,292 60 Tyco International LTD (Bermuda) 2,824 ------- 28,116 Electronics/Electrical Equipment -- 1.9% 92 Molex, Inc. 4,413 76 Symbol Technologies, Inc. 4,109 ------- 8,522 Financial Services -- 6.0% 337 Charles Schwab Corp. 11,322 77 Merrill Lynch & Co., Inc. 8,907 86 Morgan Stanley Dean Witter & Co. 7,197 ------- 27,426 Food/Beverage Products -- 2.5% 94 Coca-Cola Co. 5,383 141 PepsiCo, Inc. 6,269 ------- 11,652 Health Care/Health Care Services -- 1.4% 35 Medtronic, Inc. 1,748 54 UnitedHealth Group Inc. 4,614 ------- 6,362 Multi-Media -- 3.7% 260 The Walt Disney Co. 10,072 90 Time Warner, Inc. 6,823 ------- 16,895 Pharmaceuticals -- 10.8% 59 Bristol-Myers Squibb Co. 3,429 74 Eli Lilly & Co. 7,426 54 Johnson & Johnson 5,509
See notes to financial statements. 82 EQUITY GROWTH PORTFOLIO Portfolio of Investments (Continued) As of June 30, 2000 (unaudited) (Amounts in Thousands) Shares Issuer Value - --------------------------------------------------------------------------- Long-Term Investments -- Continued - --------------------------------------------------------------------------- Pharmaceuticals -- Continued 105 Merck & Co., Inc. $ 8,017 437 Pfizer, Inc. 20,993 83 Pharmacia Corp. 4,275 ------- 49,649 Restaurants/Food Services -- 1.2% 191 Tricon Global Restaurants, Inc. * 5,394 Retailing --7.3% 133 Best Buy Co., Inc. * 8,406 178 Home Depot, Inc. 8,883 283 Wal-Mart Stores, Inc. 16,307 ------- 33,596 Semi-Conductors -- 17.9% 232 Applied Materials, Inc. * 21,025 211 Intel Corp. 28,238 143 KLA-Tencor Corp. * 8,372 310 Novellus Systems, Inc. * 17,556 105 Texas Instruments, Inc. 7,185 ------- 82,376 Telecommunications -- 1.5% 77 Nextel Communications, Inc., Class A * 4,726 39 Sprint Corp. (FON Group) 2,006 ------- 6,732 Telecommunications Equipment -- 6.4% 38 ADC Telecommunications, Inc. * 3,204 47 JDS Uniphase Corp. * 5,682 148 Lucent Technologies, Inc. 8,745 170 Nortel Networks Corp. (Canada) 11,630 ------- 29,261 - --------------------------------------------------------------------------- Total Long-Term Investments 448,266 (Cost $299,713) - --------------------------------------------------------------------------- Short-Term Investment -- 2.3% - ---------------------------------------------------------------------------
Principal Amount Repurchase Agreement -- 2.3% ---------------------------- $10,602 Greenwich Capital Markets, Inc., in a joint trading account at 6.80%, due 07/03/00, (Dated 06/30/00, Proceeds $10,608, Secured by GNMA, $10,695, 7.50%, due 07/16/24; Market Value $10,817) 10,602 (Cost $10,602) - --------------------------------------------------------------------------- Total Investments -- 100.0% $458,868 (Cost $310,315) - ---------------------------------------------------------------------------
INDEX: * -- Non-income producing security. FHLMC -- Federal Home Loan Mortgage Corporation. GNMA -- Government National Mortgage Association. See notes to financial statements. 83 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Assets and Liabilities As of June 30, 2000 (unaudited) - -------------------------------------------------------------------------------- (Amounts in Thousands) Equity Core Equity Growth Portfolio Portfolio ASSETS: Investment securities, at value (Note 1) ......... $262,771 $458,868 Cash ............................................. 1 1 Receivables: Interest and dividends .......................... 103 113 - ----------------------------------------------------------------------------- Total Assets .................................. 262,875 458,982 - ----------------------------------------------------------------------------- LIABILITIES: Accrued liabilities: (Note 2) Investment advisory fees ........................ 147 265 Administration fees ............................. 10 18 Other ........................................... 56 47 - ----------------------------------------------------------------------------- Total Liabilities ............................. 213 330 - ----------------------------------------------------------------------------- NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS .............................. $262,662 $458,652 - ----------------------------------------------------------------------------- Cost of investments .............................. $201,479 $310,315
See notes to financial statements. 84 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Operations For the six months ended June 30, 2000 (unaudited) - -------------------------------------------------------------------------------- (Amounts in Thousands) Equity Core Equity Growth Portfolio Portfolio INVESTMENT INCOME: Dividend ..................................................... $ 789 $ 730 Interest ..................................................... 325 545 Foreign taxes withheld ....................................... (4) (1) - ------------------------------------------------------------------------------------------------- Total investment income ................................... 1,110 1,274 - ------------------------------------------------------------------------------------------------- EXPENSES: (Note 2) Investment advisory fees ..................................... 879 1,544 Administration fees .......................................... 59 103 Custody and accounting fees .................................. 41 43 Professional fees ............................................ 28 29 Trustees' fees and expenses .................................. 3 4 Other ........................................................ 13 16 - ------------------------------------------------------------------------------------------------- Total expenses ............................................ 1,023 1,739 Less amounts waived (Note 2A) ................................ 71 51 - ------------------------------------------------------------------------------------------------- Net expenses ............................................... 952 1,688 - ------------------------------------------------------------------------------------------------- Net investment income (loss) .............................. 158 (414) - ------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions ................. 3,089 5,683 Change in net unrealized appreciation of investments ......... 628 3,222 - ------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments .............. 3,717 8,905 - ------------------------------------------------------------------------------------------------- Net increase in net assets from operations ................... $3,875 $8,491
See notes to financial statements. 85 - -------------------------------------------------------------------------------- CORE EQUITY AND EQUITY GROWTH PORTFOLIOS Statement of Changes in Net Assets For the periods indicated (unaudited) - -------------------------------------------------------------------------------- (Amounts in Thousands) Core Equity Equity Growth Portfolio Portfolio 01/01/00 08/12/99* 01/01/00 08/12/99* Through Through Through Through 06/30/00 12/31/99 06/30/00 12/31/99 - ----------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income (loss) ........... $ 158 $ 173 $ (414) $ (85) Net realized gain (loss) on investment transactions ................ 3,089 2,121 5,683 (283) Change in net unrealized appreciation of investments ............ 628 23,715 3,222 67,192 - --------------------------------------------------------------------------------------------------------------------- Increase in net assets from operations ........................... 3,875 26,009 8,491 66,824 - --------------------------------------------------------------------------------------------------------------------- TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS (Note 1): Contributions .......................... 84,917 207,886 147,474 332,120 Withdrawals ............................ (39,459) (20,566) (61,494) (34,763) - --------------------------------------------------------------------------------------------------------------------- Net increase from transactions in investors' beneficial interests 45,458 187,320 85,980 297,357 - --------------------------------------------------------------------------------------------------------------------- Total increase in net assets ......... 49,333 213,329 94,471 364,181 NET ASSETS: Beginning of period .................... 213,329 -- 364,181 -- - --------------------------------------------------------------------------------------------------------------------- End of period .......................... $ 262,662 $ 213,329 $ 458,652 $ 364,181
* Commencement of operations. See notes to financial statements. 86 - -------------------------------------------------------------------------------- PORTFOLIOS Notes to Financial Statements (unaudited) - -------------------------------------------------------------------------------- 1. Organization and Significant Accounting Policies Mutual Fund Master Investment Trust (the "Trust") was organized as a Massachusetts Business Trust, and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Core Equity Portfolio ("CEP") and Equity Growth Portfolio ("EGP"), collectively the "Portfolios," are separate series of the Trust. The declaration of trust permits the Trustees to issue beneficial interests in the Portfolios. On August 12, 1999, the Chase Core Equity Fund and Chase Equity Growth Fund (separate portfolios of Mutual Fund Investment Trust) contributed 100% of their investable net assets ($156,409,317 and $240,616,354, respectively) to the newly created CEP and EGP, in a tax-free exchange. The following is a summary of significant accounting policies followed by the Portfolios: The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. Valuation of investments -- Equity securities, purchased options and futures are valued at the last sale price on the exchange on which they are primarily traded, including the NASDAQ National Market. Securities for which sale prices are not available and other over-the-counter securities are valued at the last quoted bid price. Bonds and other fixed income securities (other than short-term obligations), including listed issues, are valued on the basis of valuations supplied by pricing services or by matrix pricing systems of a major dealer in bonds. Short-term debt securities with 61 days or more to maturity at time of purchase are valued, through the 61st day prior to maturity, at market value based on quotations obtained from market makers or other appropriate sources; thereafter, the value on the 61st day is amortized on a straight-line basis over the remaining number of days to maturity. Short-term investments with 60 days or less to maturity at time of purchase are valued at amortized cost, which approximates market. Portfolio securities for which there are no such quotations or valuations are valued at fair value as determined in good faith by or at the direction of the Trustees. B. Repurchase agreements -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Portfolios may transfer uninvested cash balances into one or more joint trading accounts for the purpose of investing in repurchase agreements. It is the Portfolios' policy that repurchase agreements are fully collateralized by U.S. Treasury and Government Agency securities. All collateral is held in one or more joint trading accounts by the Portfolios' custodian bank, subcustodian, or a bank with which the custodian bank has entered into a subcustodian agreement, or is segregated in the Federal Reserve Book Entry System. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the collateral by the Trusts may be delayed or limited. 87 PORTFOLIOS Notes to Financial Statements (unaudited) (continued) C. Security transactions and investment income -- Investment transactions are accounted for on the trade date (the date the order to buy or sell is executed). Securities gains and losses are calculated on the identified cost basis. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. D. Federal income taxes -- The Portfolios intend to continue to qualify as partnerships and therefore net investment income and net realized gains are taxed to the partners. Accordingly, no tax provisions are recorded by the Portfolios. The investors in the Portfolios must take into account their proportionate share of the Portfolios' income, gains, losses, deductions, credits and tax preference items in computing their federal income tax liability, without regard to whether they have received any cash distributions from the Portfolio. The Portfolios do not intend to distribute to investors their net investment income or their net realized gains, if any. It is intended that the Portfolios will be managed in such a way that investors in the Portfolio will be able to satisfy the requirements of subchapter M of the Internal Revenue Code to be taxed as regulated investment companies. E. Expenses -- Expenses directly attributable to a Portfolio are charged to that Portfolio; other expenses are allocated on another reasonable basis. 2. Fees and Other Transactions with Affiliates A. Investment advisory fee -- Pursuant to separate Investment Advisory Agreements, The Chase Manhattan Bank ("Chase" or the "Advisor") acts as the Investment Advisor to the Portfolios. Chase is a direct wholly-owned subsidiary of The Chase Manhattan Corporation. As Investment Advisor, Chase supervises the investments of the Portfolios and for such services is paid a fee. The fee is computed daily and paid monthly at an annual rate equal to 0.75% of the Portfolios' average daily net assets. Chase Bank of Texas N.A. ("Chase Texas"), a registered investment advisor, is the sub-investment advisor to each of the Portfolios pursuant to a Sub-Investment Advisory Agreement between Chase Texas and Chase. Chase Texas is a wholly-owned subsidiary of Chase and is entitled to receive a fee, payable by Chase from its advisory fee, at an annual rate equal to 0.375% of each Portfolio's average daily net assets. For the six months ended June 30, 2000, the Advisor voluntarily waived advisory fees of $71,210 and $51,043 for CEP and EGP, respectively. B. Administration fee -- Pursuant to an Administration Agreement, Chase (the "Administrator") provides certain administration services to the Portfolios. For these services and facilities, the Administrator receives from each Portfolio a fee computed at the annual rate equal to 0.05% of the respective Portfolio's average daily net assets. 88 PORTFOLIOS Notes to Financial Statements (unaudited) (continued) 3. Investment Transactions For the six months ended June 30, 2000, purchases and sales of investments (excluding short-term investments) were as follows (in thousands): CEP EGP - -------------------------------------------------------------------------------- Purchases (excluding U.S. Government).......... $88,762 $205,515 Sales (excluding U.S. Government) .............. 41,085 112,272
The portfolio turnover rates of CEP and EGP for the six months ended June 30, 2000, were 18% and 28% respectively. 4. Federal Income Tax Matters For Federal income tax purposes, the cost and unrealized appreciation (depreciation) in value of the investment securities at June 30, 2000, are as follows (in thousands): CEP EGP - -------------------------------------------------------------------------------- Aggregate cost ......................... $201,479 $310,315 -------- -------- Gross unrealized appreciation.......... $ 65,096 $156,084 Gross unrealized depreciation.......... (3,804) (7,531) -------- -------- Net unrealized appreciation ............ $ 61,292 $148,553 ======== ========
5. Concentrations At June 30, 2000, CEP and EGP invested 33.0% and 49.8%, respectively, of their portfolios in securities issued by technology sector companies, such as computer hardware and software companies, internet connectivity providers, and telecommunications equipment manufacturers. Valuations of companies in the technology sector are typically subject to greater volatility than other sectors. 89 - -------------------------------------------------------------------------------- CHASE FUNDS SEMI-ANNUAL REPORT - -------------------------------------------------------------------------------- Investment Adviser, Administrator, This report is submitted for the general Shareholder and Fund Servicing information of the shareholders of Agent and Custodian the Funds. It is not authorized for Chase Funds Service Center distribution to prospective investors 210 West 10th Street in the Funds unless preceded or Kansas City, MO 64105 accompanied by a prospectus. Legal Counsel The financial information in this report Simpson Thacher & Bartlett has been taken from the books and 425 Lexington Avenue records of the Funds without examina- New York, NY 10017 tion by independent accountants, who express no opinion thereto. Independent Accountants PricewaterhouseCoopers LLP To obtain a prospectus for any 1177 Avenue of the Americas of the Chase Funds, call New York, NY 10036 1-800-5-CHASE-0. The prospectus contains more complete information, Chase Funds are distributed by Chase including charges and ongoing expenses. Fund Distributors, Inc., which is Please read it carefully before you unaffiliated with The Chase Manhattan invest or send money. Bank. Chase and its respective affiliates receive compensation from Chase Funds for providing investment advisory and other services.
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