<PAGE>
CHASE VISTA BALANCED FUND
A SERIES OF MUTUAL FUND GROUP
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 Vista Balanced Fund, a series
of Mutual Fund Group ("MFG"), 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 Vista Balanced Fund
into Chase Balanced Fund, a series of Mutual Fund Investment Trust ("MFIT") (the
"Reorganization"). After the Reorganization, shareholders will hold an interest
in Chase Balanced Fund, which is also advised by The Chase Manhattan Bank
("Chase"). The investment objective and policies for Chase Vista Balanced Fund
are similar to those of Chase Balanced Fund. MFIT is comprised of 11 portfolios,
each managed by Chase, consisting of income and equity funds. In connection with
the Reorganization, Chase Balanced Fund will be renamed "Chase Vista Balanced
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 Balanced Fund and Chase Vista
Balanced Fund is Chase. The sub-adviser for Chase Vista Balanced Fund is Chase
Fleming Asset Management (USA) Inc. ("CFAM"). Chase Balanced Fund has no
sub-adviser; however, 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 Balanced Fund and MFG to Chase Balanced 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 Vista Balanced Fund, MFG, Chase
Balanced Fund, MFIT or their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive shares of Chase Balanced Fund.
The Proposal has been carefully reviewed by the Board of Trustees of MFG,
which has approved the Proposal.
THE BOARD OF TRUSTEES OF MFG 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 1-800-34-VISTA.
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.
PX4-1100
<PAGE>
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed to increase operational and
administrative efficiencies by combining two funds which have 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 Vista Balanced Fund would transfer all of
its assets and liabilities to Chase Balanced Fund and would receive, in
exchange, shares of Chase Balanced Fund. Chase Vista Balanced Fund would then be
liquidated and the shares of Chase Balanced Fund would be distributed to
shareholders such as you. After the Reorganization, you would own shares in
Chase Balanced Fund rather than Chase Vista Balanced Fund. Holders of Class A
Shares would receive Class A Shares in Chase Balanced Fund (but will not pay a
sales load), holders of Class B Shares would receive Class B Shares in Chase
Balanced Fund and holders of Class C Shares would receive Class C Shares in
Chase Balanced Fund.
WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY
INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED?
Chase Balanced Fund and Chase Vista Balanced Fund have similar investment
objectives and policies. Chase Balanced Fund normally invests 30% to 70% of its
assets in equity securities while Chase Vista Balanced Fund normally invests 35%
to 70% of its total assets in equity securities. Unlike Chase Vista Balanced
Fund, most of whose equity securities are in well-known, established companies
with market capitalizations equal to those within the universe of S&P 500
stocks, Chase Balanced Fund invests primarily in companies with one or more of a
set of characteristics. One of those characteristics is a market capitalization
of more than $500 million. In addition, Chase Balanced Fund may invest up to 30%
of its total assets in foreign securities, as opposed to 20% for Chase Vista
Balanced Fund. Therefore, the Reorganization is not intended to have any
immediate significant impact on the investment strategy implemented in respect
of your investment.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
The contractual (or pre-waiver), if applicable, and actual (or post-waiver)
total expense ratios are expected to be the same or less for Chase Balanced Fund
than they are for Chase Vista Balanced Fund. If an increase does arise, Chase
has contractually agreed 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 Balanced Fund also manages Chase Balanced 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 Vista
Balanced Fund or Chase Balanced Fund (or shareholders of either fund).
HOW WILL SHAREHOLDER SERVICES CHANGE?
Substantially similar services are available to shareholders of both Chase
Vista Balanced Fund and Chase Balanced 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 Balanced Fund.
AS A HOLDER OF SHARES OF CHASE VISTA BALANCED 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.
<PAGE>
CHASE VISTA BALANCED FUND,
A SERIES OF MUTUAL FUND GROUP
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 Vista Balanced Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of Chase Vista Balanced Fund ("Chase Vista Balanced Fund"), a
series of Mutual Fund Group ("MFG"), 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 Mutual
Fund Group ("MFG") on behalf of Chase Vista Balanced Fund, and Mutual
Fund Investment Trust ("MFIT"), on behalf of Chase Balanced Fund, and
the transactions contemplated thereby, including (a) the transfer of
all of the assets and liabilities of Chase Vista Balanced Fund to
Chase Balanced Fund, a series of MFIT in exchange for (i) Class A
Shares of Chase Balanced Fund (the "Class A Shares"), (ii) Class B
Shares of Chase Balanced Fund (the "Class B Shares") and
(iii) Class C Shares of Chase Balanced Fund ("Class C Shares" and
together with the Class A Shares and Class B Shares, the "Chase
Balanced Fund Shares"), as applicable; and (b) the distribution of
such Chase Balanced Fund Shares to the Shareholders of Chase Vista
Balanced 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 MFG. 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 VISTA BALANCED 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
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
DATED DECEMBER 1, 2000
ACQUISITION OF THE ASSETS AND LIABILITIES OF
CHASE VISTA BALANCED FUND,
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 34-VISTA
BY AND IN EXCHANGE FOR SHARES OF
CHASE BALANCED FUND,
A SERIES OF MUTUAL FUND INVESTMENT TRUST
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 5-CHASE-0
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of Chase Vista Balanced Fund ("Chase Vista Balanced Fund"), a
series of Mutual Fund Group ("MFG"), into Chase Balanced Fund ("Chase Balanced
Fund"), a series of Mutual Fund Investment Trust ("MFIT"). If approved by
Shareholders, the proposed reorganization would be effected by transferring all
of the assets and liabilities of Chase Vista Balanced Fund, which is a series of
MFG, to Chase Balanced Fund, a series of MFIT having similar investment
objectives and policies as Chase Vista Balanced Fund, in exchange for shares of
Chase Balanced Fund (the "Reorganization"). MFG and MFIT 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 Balanced Fund will be renamed "Chase Vista
Balanced Fund."
Under the proposed Reorganization, each shareholder of Chase Vista Balanced
Fund (the "Chase Vista Balanced Fund Shareholders") would receive Shares (the
"Chase Balanced Fund Shares") of Chase Balanced Fund with a value equal to such
Chase Vista Balanced Fund Shareholder's holdings in Chase Vista Balanced Fund.
Holders of Class A Shares would receive Class A Shares (the "Class A Shares") in
Chase Balanced Fund, holders of Class B Shares would receive Class B Shares (the
"Class B Shares") in Chase Balanced Fund and holders of Class C Shares would
receive Class C Shares (the "Class C Shares") in Chase Balanced Fund. Therefore,
as a result of the proposed Reorganization, current Shareholders of Chase Vista
Balanced Fund will become shareholders of Chase Balanced Fund ("Chase Balanced
Fund Shareholders"). In connection with the Reorganization, Chase Balanced Fund
will implement a new multi-class structure under which it will offer Class A,
Class B, Class C and Institutional Class Shares.
MFG is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act") and currently has 20
series of mutual fund portfolios. MFIT 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 Balanced Fund and Chase Vista Balanced Fund. Chase
Fleming Asset Management (USA), Inc. ("CFAM") serves as sub-adviser for Chase
Vista Balanced Fund. There is no sub-adviser for Chase Balanced Fund; however,
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 Balanced Fund and
employed the same portfolio management team as CFAM. 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 MFG, on behalf of Chase Vista
Balanced Fund, and MFIT, on behalf of Chase Balanced Fund, attached to this
Combined Prospectus/Proxy Statement as Appendix A.
The Board of Trustees of MFG 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
<PAGE>
Chase Manhattan Bank, One Chase Square, Third Floor Garden Room, Rochester, New
York 14643, at which meeting shareholders in Chase Vista Balanced 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 Vista
Balanced Fund for the meeting of its Shareholders and also constitutes MFIT's
prospectus for Chase Balanced 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 MFG and MFIT that a
prospective investor should know before voting on the Proposal. The current
prospectuses for Chase Vista Balanced Fund and Chase Balanced Fund are
incorporated herein by reference and the prospectus for Chase Balanced Fund is
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 MFG and MFIT 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 MFG at its address noted above or by calling 1-800-34-VISTA.
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 MFG.
INVESTMENTS IN CHASE BALANCED FUND ARE SUBJECT TO RISK--INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. NO SHARES IN CHASE BALANCED 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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INTRODUCTION...................................... 1
SUMMARY........................................... 1
RISK FACTORS...................................... 7
INFORMATION RELATING TO THE PROPOSED
REORGANIZATION................................... 8
INVESTMENT POLICIES............................... 11
PURCHASES, REDEMPTIONS AND EXCHANGES.............. 14
DISTRIBUTIONS AND TAXES........................... 18
COMPARISON OF CHASE VISTA BALANCED FUND'S AND
CHASE BALANCED FUND'S ORGANIZATION STRUCTURES.... 18
INFORMATION RELATING TO THE ADVISORY CONTRACTS.... 20
BOARD OF TRUSTEES................................. 22
INFORMATION RELATING TO VOTING MATTERS............ 24
ADDITIONAL INFORMATION ABOUT MFG.................. 26
ADDITIONAL INFORMATION ABOUT MFIT................. 26
FINANCIAL STATEMENTS AND EXPERTS.................. 26
OTHER BUSINESS.................................... 27
LITIGATION........................................ 27
SHAREHOLDER INQUIRIES............................. 27
APPENDIX A--AGREEMENT AND PLAN OF
REORGANIZATION................................... A-1
</TABLE>
<PAGE>
INTRODUCTION
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of Chase Vista Balanced Fund, a portfolio of Mutual Fund Group
("MFG"), an open-end management investment company, in connection with the
solicitation by the Board of Trustees of MFG ("MFG Board") of proxies to be used
at a Special Meeting of Shareholders of Chase Vista Balanced 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 Vista Balanced Fund shareholders (the "Chase Vista
Balanced Fund Shareholders") will consider and vote upon the Agreement and Plan
of Reorganization (the "Reorganization Plan") dated October 31, 2000 between
MFG, on behalf of Chase Vista Balanced Fund, and MFIT, on behalf of Chase
Balanced Fund ("Chase Balanced Fund," together with Chase Vista Balanced Fund,
the "Funds"), pursuant to which all of the assets and liabilities of Chase Vista
Balanced Fund will be transferred to Chase Balanced Fund in exchange for shares
("Chase Balanced Fund Shares") of Chase Balanced Fund. As a result of this
transaction (the "Reorganization"), Chase Vista Balanced Fund Shareholders will
become shareholders of Chase Balanced Fund and will receive Chase Balanced Fund
Shares equal in value to their holdings in Chase Vista Balanced Fund on the date
of the Reorganization. Holders of Class A Shares in Chase Vista Balanced Fund
would receive Class A Shares ("Class A Shares") in Chase Balanced Fund, holders
of Class B Shares in Chase Vista Balanced Fund would receive Class B Shares
("Class B Shares") in Chase Balanced Fund and holders of Class C Shares in Chase
Vista Balanced Fund would receive Class C Shares ("Class C Shares") in Chase
Balanced Fund. In connection with the Reorganization, Chase Balanced Fund will
be renamed "Chase Vista Balanced Fund." Further information relating to Chase
Balanced Fund is set forth herein. The proposed Reorganization is occasionally
referred to herein as the "Proposal."
THE MFG BOARD HAS RECOMMENDED THAT SHAREHOLDERS
VOTE "FOR" THE PROPOSAL
Approval of the Reorganization Plan by Chase Vista Balanced Fund requires
the affirmative vote of the lesser of (i) 67% or more of the Chase Vista
Balanced Fund Shares present at the Meeting and (ii) more than 50% of all
outstanding Chase Vista Balanced Fund Shares. If the Reorganization Plan is not
approved by Chase Vista Balanced Fund Shareholders, the MFG 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 Balanced Fund
Shares, and the Reorganization Plan attached to this Combined Prospectus/Proxy
Statement as Appendix A. Chase Balanced Fund's Semi-Annual Report to
Shareholders and Annual Report to Shareholders are enclosed with this Combined
Prospectus/Proxy Statement.
PROPOSED TRANSACTION
Pursuant to the proposed Reorganization Plan, Chase Vista Balanced Fund, an
existing series of MFG, will transfer all of its assets and liabilities to Chase
Balanced Fund in exchange for shares of Chase Balanced Fund, a series of MFIT.
Under the proposed Reorganization, each Chase Vista Balanced Fund
Shareholder would receive a number of Chase Balanced 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 Vista Balanced Fund Shares on such date.
Therefore, following the proposed Reorganization, Chase Vista Balanced Fund
Shareholders will be Chase Balanced Fund Shareholders. Chase Vista Balanced Fund
Shareholders holding Class A Shares will receive Class A Shares in the
Reorganization, but will not have to pay a sales charge. However, such
Shareholders will have to pay a sales charge if they buy additional Class A
Shares in the future.
The contractual (or pre-waiver) and, if applicable, actual (or post-waiver)
total expense ratios are expected to be the same or less for Chase Balanced Fund
than they are for Chase Vista Balanced Fund.
1
<PAGE>
Based upon their evaluation of the relevant information presented to them,
including an analysis of the operation of Chase Balanced 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 MFG Board and the MFIT 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 Balanced Fund and Chase Vista Balanced
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-adviser to Chase Vista Balanced Fund pursuant to an agreement with Chase and
manages Chase Vista Balanced Fund on a day-to-day basis. The same portfolio
management team which manages Chase Vista Balanced Fund manages and will
continue to manage Chase Balanced Fund. Prior to August 1, 2000, Chase Bank of
Texas, N.A. ("Chase Texas") was the sub-adviser for Chase Balanced Fund and
employed the same portfolio management team as CFAM. 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 Balanced Fund and Chase Balanced Fund.
REASONS FOR THE REORGANIZATION
The MFG Board and MFIT Board decided to reorganize Chase Vista Balanced Fund
into Chase Balanced Fund to increase operational and administrative
efficiencies, since the two funds have similar investment objectives and
policies and are managed by the same portfolio management team.
FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett, counsel to MFG, 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 Vista Balanced Fund, Chase
Balanced Fund or their respective shareholders. The holding period and tax basis
of the Chase Balanced Fund Shares will be the same as the holding period and tax
cost basis of the shareholder's shares of Chase Vista Balanced Fund. In
addition, the holding period and tax basis of those assets owned by Chase Vista
Balanced Fund transferred to Chase Balanced Fund will be identical for Chase
Vista Balanced Fund. See "Information Relating to the Proposed
Reorganization--Federal Income Tax Consequences."
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of both Chase Vista Balanced Fund and Chase
Balanced Fund is to seek to maximize total return through long-term capital
growth and earning current income provide capital appreciation.
The investment policies of Chase Vista Balanced Fund and Chase Balanced Fund
are similar. Chase Balanced Fund normally invests 30% to 70% of its assets in
equity securities while Chase Vista Balanced Fund normally invests 35% to 70% of
its total assets in equity securities. Unlike Chase Vista Balanced Fund, most of
whose equity securities are in well-known, established companies with market
capitalizations equal to those within the universe of S&P 500 stocks, Chase
Balanced Fund invests primarily in companies with one or more of a set of
characteristics. One of those characteristics is a market capitalization of more
than $500 million. In addition, Chase Balanced Fund may invest up to 30% of its
total assets in foreign securities, as opposed to 20% for Chase Vista Balanced
Fund.
ADDITIONAL TRUST PORTFOLIOS
In addition to Chase Balanced Fund, MFIT currently offers ten additional
portfolios:
<TABLE>
<S> <C>
Core Equity Fund Intermediate Bond Fund
Equity Growth Fund Money Market Fund
Equity Growth II Short-Intermediate Term U.S. Government Securities Fund
Equity Income Fund Small Capitalization Fund
Income Fund U.S. Government Securities Fund
</TABLE>
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
<PAGE>
However, in connection with other concurrent reorganizations, it is anticipated
that some of these portfolios will be liquidated.
In addition to Chase Vista Balanced Fund, MFG currently offers 19 additional
portfolios:
<TABLE>
<S> <C>
Bond Fund Japan Fund
Capital Growth Fund Large Cap Equity Fund
Core Equity Fund Select Growth and Income Fund
Equity Growth Fund Short-Term Bond Fund
Equity Income Fund Small Cap Equity Fund
European Fund Small Cap Opportunities Fund
Focus Fund Strategic Income Fund
Growth and Income Fund U.S. Government Securities Fund
H&Q Technology Fund U.S. Treasury Income Fund
International Equity Fund
</TABLE>
Detailed descriptions of each MFG portfolio can be found in the MFG
prospectuses and Statement of Additional Information. MFG 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 BALANCED FUND
The following discussion highlights the principal risk factors associated
with an investment in Chase Balanced Fund. Chase Balanced Fund experiences the
risks of investing in both equity and fixed income securities. For example, 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.
UNLIKE CHASE VISTA BALANCED FUND, MOST OF WHOSE EQUITY SECURITIES ARE IN
WELL-KNOWN, ESTABLISHED COMPANIES WITH MARKET CAPITALIZATIONS EQUAL TO THOSE
WITHIN THE UNIVERSE OF S&P 500 STOCKS, CHASE BALANCED FUND MAY INVEST IN
SECURITIES WHICH TRADE LESS FREQUENTLY AND IN SMALLER VOLUMES THAN SECURITIES OF
LARGER, MORE ESTABLISHED COMPANIES. AS A RESULT, CHANGES IN SHARE PRICES MAY BE
MORE SUDDEN OR ERRATIC. With respect to its debt securities, the value of the
Fund's fixed income securities tends to fall when prevailing interest rates
rise. 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.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for both Chase Balanced Fund and Chase Vista Balanced
Fund is Chase. Chase oversees the asset management and administration of both
Chase Balanced Fund and Chase Vista Balanced Fund. As compensation for its
services, Chase receives a management fee from each of Chase Balanced Fund and
Chase Vista Balanced Fund at an annual rate of 0.75% and 0.50%, respectively, of
their respective average daily net assets. In connection with the
Reorganization, it is anticipated that the management fee for Chase Balanced
Fund will be reduced to 0.50%. A portion of the fee generated with respect to
Chase Vista Balanced Fund is used to pay CFAM, Chase Vista Balanced Fund's
sub-adviser.
Pursuant to the terms of advisory agreements between Chase and MFIT and
between Chase and MFG (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 the Chase Balanced Fund, subject to the
general supervision of the MFIT Board, and Chase Vista Balanced Fund, subject to
the general supervision of the MFG 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 Balanced
Fund. For the investment sub-advisory services rendered to Chase Vista Balanced
Fund and Chase, CFAM is entitled to receive from Chase an annual fee of 0.25% of
Chase Vista Balanced 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 Balanced Fund and Chase Balanced 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
Balanced Fund. CFD Fund Distributors, Inc. ("CFD"), another
3
<PAGE>
wholly-owned indirect subsidiary of BISYS, is the distributor for Chase Balanced
Fund. VFD and CFD are unaffiliated with Chase.
Chase serves as administrator, fund accountant and custodian for both Chase
Balanced Fund and Chase Vista Balanced 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 Balanced Fund and Chase Vista Balanced Fund.
PricewaterhouseCoopers LLP ("PwC") serves as both Chase Vista Balanced
Fund's and Chase Balanced 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 MFG or MFIT engages it to do so.
ORGANIZATION
Each of MFG and MFIT is organized as a Massachusetts business trust. Chase
Vista Balanced Fund is organized as a series of MFG and Chase Balanced Fund is
organized as a series of MFIT.
PURCHASES, REDEMPTIONS AND EXCHANGES
The procedures for making purchases, redemptions and exchanges of shares of
Chase Balanced Fund are substantially similar to those with respect to shares of
Chase Vista Balanced Fund.
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses paid
by each of Chase Vista Balanced Fund and Chase Balanced Fund that reflect the
current expense arrangements, and (ii) estimated fees and expenses on a pro
forma basis for Chase Balanced Fund after giving effect to the proposed
Reorganization. Under the proposed Reorganization, holders of Class A Shares in
Chase Vista Balanced Fund would receive Class A Shares in Chase Balanced Fund,
holders of Class B Shares in Chase Vista Balanced Fund would receive Class B
Shares in Chase Balanced Fund and holders of Class C shares in Chase Vista
Balanced Fund would receive Class C Shares in Chase Balanced Fund. SHAREHOLDERS
RECEIVING CLASS A SHARES WILL NOT PAY A SALES LOAD ON SHARES RECEIVED IN THE
REORGANIZATION BUT WILL PAY A SALES LOAD ON ADDITIONAL CLASS A SHARES THEY BUY
IN THE FUTURE. Please note that Chase Balanced Fund currently has two classes of
shares, Premier Class and Investor Class. In connection with the Reorganization,
the Premier Class will be renamed "Institutional Class," the Investor
Class will be renamed "Class A," and the Class B and Class C share classes will
be introduced.
The table indicates that both contractual (pre-waiver) and, if applicable,
actual (post-waiver) total expense ratios for current Chase Vista Balanced Fund
Shareholders 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 expenses do not increase for at
least one year.
<TABLE>
<CAPTION>
CHASE VISTA BALANCED FUND(A)
----------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
-------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (Load) When
You Buy Shares, Shown As % Of The
Offering Price 5.75% None None
Maximum Deferred Sales Charge
(Load) Shown As Lower Of % Of The
Offering Price Or Redemption
Proceeds None 5.00% 1.00%
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
(as a percentage of average net
assets)
Management Fees 0.50% 0.50% 0.50%
Distribution (12b-1) Fees 0.25% 0.75% 0.75%
Other Expenses 0.72% 0.72% 0.72%
---- ---- ----
Total Annual Fund Operating
Expenses 1.47% 1.97% 1.97%
==== ==== ====
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CHASE BALANCED FUND(B)
----------------------
INVESTOR PREMIER
CLASS CLASS
SHARES SHARES
---------- ----------
<S> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (Load) When You Buy
Shares, Shown As % Of The Offering
Price None None
Maximum Deferred Sales Charge (Load)
Shown As Lower Of % Of The Offering
Price Or Redemption Proceeds None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)
(as a percentage of average net
assets)
Management Fees 0.75% 0.75%
Distribution (12b-1) Fees 0.25% None
Other Expenses 0.53% 0.28%
---- ----
Total Annual Fund Operating Expenses 1.53% 1.03%
==== ====
</TABLE>
<TABLE>
<CAPTION>
CHASE BALANCED FUND(COMBINED)(C)
----------------------------------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA
CLASS A CLASS B CLASS C INSTITUTIONAL
SHARES SHARES SHARES CLASS SHARES
--------- --------- --------- -------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum Sales Charge (Load)
When You Buy Shares, Shown
As % Of The Offering Price 5.75% None None None
Maximum Deferred Sales Charge
(Load) Shown As Lower Of %
Of The Offering Price Or
Redemption Proceeds None 5.00% 1.00% None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
(as a percentage of average
net assets)
Management Fees 0.50% 0.50% 0.50% 0.50%
Distribution (12b-1) Fees 0.25% 0.75% 0.75% None
Other Expenses 0.68% 0.68% 0.68% 0.50%
---- ---- ---- ----
Total Annual Fund Operating
Expenses 1.43% 1.93% 1.93% 1.00%
Contractual Fee Waivers and
Expense Reimbursements 0.18% N.A. N.A. N.A.
---- ---- ---- ----
Net Expenses 1.25% 1.93% 1.93% 1.00%
==== ==== ==== ====
</TABLE>
---------------------
(a) The actual Other Expenses for Class A shares of Chase Vista Balanced Fund
are expected to be 0.50% and Total Annual Fund Operating Expenses for
Class A shares are not expected to exceed 1.25%. 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.
(b) The actual Management Fees for Investor and Premier Class shares of Chase
Balanced Fund, prior to the Reorganization, are expected to be 0.72% and
0.72%, respectively, the 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 1.25% and
1.00%, 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 Class A shares of Chase Balanced Fund,
subsequent to the reorganization, are expected to be 0.50% and Total Annual
Fund Operating Expenses for Class A shares are not expected to exceed
1.25%. That is because Chase and some of the other service providers have
contractually agreed not to collect a portion of their fees and to
reimburse others for one year after the Reorganization. Chase and these
other service providers may terminate this arrangement after the one-year
period expires.
5
<PAGE>
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:
If you sell your shares, your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- ----------
<S> <C> <C> <C> <C>
CHASE VISTA BALANCED FUND
CLASS A SHARES* $ 716 $ 1,013 $ 1,332 $ 2,231
CLASS B SHARES** $ 700 $ 918 $ 1,262 $ 2,167***
CLASS C SHARES** $ 300 $ 618 $ 1,062 $ 2,296
CHASE BALANCED FUND
INVESTOR CLASS SHARES $ 156 $ 483 $ 834 $ 1,824
PREMIER CLASS SHARES $ 105 $ 328 $ 569 $ 1,259
PRO FORMA CHASE BALANCED FUND
CLASS A SHARES* $ 712 $ 1,001 $ 1,312 $ 2,190
CLASS A SHARES (WITHOUT
SALES CHARGE) $ 146 $ 452 $ 782 $ 1,713
CLASS B SHARES** $ 696 $ 906 $ 1,242 $ 2,124***
CLASS C SHARES** $ 296 $ 606 $ 1,042 $ 2,254
INSTITUTIONAL CLASS SHARES $ 102 $ 318 $ 552 $ 1,225
</TABLE>
If you don't sell your shares, your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- ----------
<S> <C> <C> <C> <C>
CHASE VISTA BALANCED FUND
CLASS B SHARES $ 200 $ 618 $ 1,062 $ 2,167***
CLASS C SHARES $ 200 $ 618 $ 1,062 $ 2,296
PRO FORMA CHASE BALANCED FUND
CLASS B SHARES $ 196 $ 606 $ 1,042 $ 2,124***
CLASS C SHARES $ 196 $ 606 $ 1,042 $ 2,254
</TABLE>
-------------------
* Assumes sales charge is deducted when shares are purchased. Shareholders
who received Class A Shares as a result of the proposed reorganization
will not be charged a sales load.
** Assumes applicable deferred sales charge is deducted when shares are sold.
*** Reflects conversion of Class B Shares to Class A Shares after they have
been owned for eight years.
6
<PAGE>
RISK FACTORS
The following discussion highlights the principal risk factors associated
with an investment in Chase Balanced Fund. Chase Balanced Fund has investment
policies and investment restrictions similar to Chase Vista Balanced Fund.
Therefore, there should be similarities between the risk factors associated with
Chase Balanced Fund and Chase Vista Balanced Fund; however, an important
difference is described below. 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 Balanced Fund, which are
incorporated herein by reference.
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 Chase
Balanced Fund.
The Fund may not achieve its objective if the advisers' expectations
regarding particular securities or markets are not met.
The value of shares of the Fund will be influenced by conditions in stock
markets as well as the performance of the companies selected for the Fund's
portfolio.
The Fund may not achieve its objective if securities which the advisers
believe are undervalued do not appreciate as much as the advisers anticipate or
if companies which the advisers believe will experience earnings growth do not
grow as expected.
The securities of small and 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.
Small and mid-sized companies may have limited product lines, markets or
financial resources, and they may depend on a small management group. BECAUSE
MOST OF CHASE VISTA BALANCED FUND'S EQUITY SECURITIES ARE IN WELL-KNOWN,
ESTABLISHED COMPANIES WITH MARKET CAPITALIZATIONS EQUAL TO THOSE WITHIN THE
UNIVERSE OF S&P 500 STOCKS, THIS RISK WAS NOT GENERALLY APPLICABLE TO CHASE
VISTA BALANCED FUND.
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 value of shares of the Fund.
The value of the Fund's fixed income securities tends to fall when
prevailing interest rates rise. Such a drop could be worse if the Fund invests a
larger portion of its assets in debt securities with longer maturities. That's
because long-term debt securities are more sensitive to interest rate changes
than other fixed income securities. Note that conversely the value of fixed
income investments tends to increase when prevailing interest rates fall.
When the Fund invests in mortgage-related securities, the value of the Fund
could change more often and to a greater degree than if it did not buy
mortgage-related securities. That's because the prepayment features on some
mortgage-related securities make them more sensitive to interest rate changes.
Mortgage-related securities are subject to scheduled and unscheduled principal
payments as property owners pay down or prepay their mortgages. As these
payments are received, they must be reinvested when interest rates may be higher
or lower than on the original mortgage security. When interest rates are rising,
the value of fixed-income securities with pre-payment features are likely to
decrease as much or more than securities without pre-payment 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 with-out 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
7
<PAGE>
receiving principal payments or earning interest. As a result, the value of some
classes in which the Fund invests may be more volatile and may be subject to
higher risk of nonpayment.
The value of interest-only and principal-only mortgage backed securities are
more volatile than other types of mortgage-related securities. That's because
they are very sensitive not only to changes in interest rates, but also to the
rate of prepayments. A rapid or unexpected increase in prepayments can
significantly depress the price of interest-only securities, while a rapid or
unexpected decrease could have the same effect on principal-only securities. In
addition, these instruments may be illiquid.
Certain securities which the Fund may hold, such as stripped obligations and
zero coupon securities, are more sensitive to changes in interest rates than
ordinary interest-paying securities. As a result, they may be more volatile than
other types of investments.
The Fund's performance will also depend on the credit quality of its
investments. Securities which are rated Baa by Moody's or BBB by S&P may have
fewer protective provisions and are generally more risky than higher rated
securities. The issuer may have trouble making principal and interest payments
when difficult economic conditions exist.
Some asset-backed securities may have additional risk because they may
receive little or no collateral protection from the underlying assets.
Because the interest rate changes on floating and variable rate securities,
the Fund's yield may decline and it may lose the opportunity for capital
appreciation when interest rates decline.
Dollar rolls, forward commitments and repurchase agreements involve some
risk to the Fund if the other party does not live up to its obligations under
the agreement.
The market value of convertible securities tends to decline as interest
rates increase, and increase as interest rates decline. Their value also tends
to change whenever the market value of the underlying common or preferred stock
fluctuates.
The value of real estate investment trusts ("REITs") will depend on the
value of the underlying properties or the underlying loans or interest. The
value of REITs may decline when interest rates rise. The value of a REIT will
also be affected by the real estate market and by the management of the REIT's
underlying properties. REITs may be more volatile or more illiquid than other
types of securities.
If the Fund invests a substantial portion of its assets in money market
instruments, repurchase agreements and debt securities, including where the Fund
is investing for temporary defensive purposes, it could reduce the Fund's
potential return.
Derivatives may be more risky than other types of investments because they
may respond more to changes in economic conditions than other types of
investments. If they are used for non-hedging purposes, they could cause losses
that exceed the Fund's original investment.
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 Vista Balanced Fund will be transferred to and assumed by Chase Balanced
Fund. In exchange for the transfer of the assets, and the assumption of the
liabilities, of Chase Vista Balanced Fund, MFIT will issue at the Effective Time
of the Reorganization full and fractional (a) Class A Shares of Chase Balanced
Fund equal in aggregate dollar value to the aggregate net asset value of full
and fractional outstanding Class A Shares of Chase Vista Balanced Fund,
(b) Class B Shares of Chase Balanced Fund equal in aggregate dollar value to the
aggregate net asset value of full and fractional outstanding Class B Shares of
Chase Vista Balanced Fund and (c) Class C Shares of Chase Balanced Fund equal in
aggregate dollar value to the aggregate net asset value of full and fractional
outstanding Class C Shares of Chase Vista Balanced Fund, in each case as
determined at the valuation time specified in the Reorganization Plan. The
Reorganization Plan provides that Chase Vista Balanced Fund will declare a
dividend or dividends prior to the Effective Time of the Reorganization which,
together with all
8
<PAGE>
previous dividends, will have the effect of distributing to the Chase Vista
Balanced 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 Vista Balanced Fund by Chase Balanced Fund, Chase Vista Balanced Fund
will distribute Chase Balanced Fund Shares received from MFIT to the Chase Vista
Balanced Fund Shareholders in liquidation of Chase Vista Balanced Fund. Each
Chase Vista Balanced Fund Shareholder at the Effective Time of the
Reorganization will receive an amount of Class A Shares, Class B Shares or
Class C Shares, as the case may be, with a total net asset value equal to the
net asset value of their Chase Vista Balanced 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 Vista Balanced Fund.
Chase Balanced Fund expects to maintain most of the portfolio investments of
Chase Vista Balanced Fund in light of the similar investment policies of Chase
Vista Balanced Fund and the strategies of its investment adviser.
After the Reorganization, all of the issued and outstanding shares of Chase
Vista Balanced Fund Shares will be canceled on the books of Chase Vista Balanced
Fund and the stock transfer books of Chase Vista Balanced 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 Vista Balanced 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 Vista Balanced Fund and Chase Balanced Fund in
connection with the Reorganization will be borne by Chase.
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
September 19, 2000 and October 24, 2000, the MFG Board considered and discussed
the future of Chase Vista Balanced Fund and how to best serve the Chase Vista
Balanced Fund Shareholders' interests. The Trustees discussed the size of Chase
Vista Balanced Fund's investment portfolio (approximately $139 million as of
August 31, 2000) and the increasing advantages of reorganizing Chase Vista
Balanced Fund into Chase Balanced Fund. The Trustees reviewed the Proposal.
After discussions, it was decided to pursue the Reorganization with Chase
Balanced Fund.
In considering the Reorganization, the Trustees noted that all Chase
Balanced Fund Shareholders wishing to invest in other types of funds would be
able to exchange into other Chase Vista funds without being charged a front-end
sales charge. In its consideration and approval of the Reorganization, the MFG
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 Vista Balanced Fund and Chase
Balanced Fund; the effect of such Reorganization on Chase Vista Balanced 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
Balanced Fund; the similarities and differences in the investment objective and
policies of the Funds; the opportunity to combine Chase Vista Balanced Fund with
Chase Balanced Fund in an effort to realize operational and administrative
efficiencies; the recommendations of Chase with respect to the proposed
Reorganization; the fact that all costs and expenses of the Reorganization will
be borne by Chase; and the fact that the Reorganization would constitute a
tax-free reorganization.
9
<PAGE>
After considering the foregoing factors, together with such information as
they believed to be relevant, the MFG Board determined that the proposed
Reorganization is in the best interests of Chase Vista Balanced Fund and that
the interests of the Chase Vista Balanced 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 Vista Balanced
Fund Shareholders for approval.
The MFIT Board considered the proposed Reorganization from the perspective
of Chase Balanced 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; the fact that all
costs and expenses of the Reorganization will be borne by Chase; and the fact
that the Reorganization would constitute 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 MFIT Board determined that the
proposed Reorganization is in the best interests of the shareholders of Chase
Balanced Fund and the interests of Chase Balanced 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 MFIT Board approved the
Reorganization Plan.
THE MFG BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
The MFG Board has not determined what action Chase Vista Balanced 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 MFG
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 Vista Balanced Fund to Chase Balanced Fund in exchange for
Chase Balanced Fund Shares and the liquidating distributions to Shareholders of
Chase Balanced 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 Vista Balanced Fund and Chase Balanced Fund will each be
considered "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized by Chase
Vista Balanced Fund as a result of such transaction; (iii) no gain or loss will
be recognized by Chase Balanced Fund as a result of such transaction; (iv) no
gain or loss will be recognized by the Chase Vista Balanced Fund Shareholders on
the distribution to Chase Vista Balanced Fund Shareholders of the Chase Balanced
Fund Shares in exchange for their Chase Vista Balanced Fund Shares; (v) the
aggregate basis of Shares of Chase Balanced Fund received by a Shareholder of
Chase Vista Balanced Fund will be the same as the aggregate basis of such Chase
Vista Balanced Fund Shareholder's Chase Vista Balanced Fund Shares immediately
prior to the Reorganization; (vi) the basis of Chase Balanced Fund in the assets
of Chase Vista Balanced Fund received pursuant to such transaction will be the
same as the basis of such assets in the hands of Chase Vista Balanced Fund
immediately before such transaction; (vii) a Chase Vista Balanced Fund
Shareholder's holding period for Chase Balanced Fund Shares will be determined
by including the period for which each Chase Vista Balanced Fund Shareholder
held Chase Vista Balanced Fund Shares exchanged therefor, provided that the
Shareholder held such Shares in Chase Vista Balanced Fund Shares as a capital
asset; and (viii) Chase Balanced 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 Vista Balanced Fund.
MFG 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 Vista Balanced Fund will be combined with Chase Balanced Fund
in the Reorganization, the total capitalization of Chase Balanced Fund after the
Reorganization is expected to be greater than the current capitalization of
Chase Vista Balanced Fund. The following table sets forth as of August 31, 2000:
(i) the capitalization of Chase Vista Balanced Fund; (ii) the capitalization of
Chase Balanced Fund; and (iii) the pro forma capitalization of Chase Balanced
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 Balanced Fund and Chase Vista Balanced
Fund are likely to be
10
<PAGE>
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. Please note that Chase Balanced
Fund currently has two classes of shares, Premier Class and Investor Class. In
connection with the Reorganization, the Premier Class will be renamed
"Institutional Class," the Investor Class will be renamed "Class A," and the
Class B and Class C share classes will be introduced.
<TABLE>
<CAPTION>
CHASE VISTA CHASE BALANCED PRO FORMA
BALANCED FUND FUND COMBINED
------------- -------------- ------------
<S> <C> <C> <C>
Total Net Assets
Class A Shares $108,263,064 $ -- $110,245,645
Class B Shares 29,555,588 -- 29,555,588
Class C Shares 1,601,096 -- 1,601,096
Institutional Class Shares -- -- 114,917,623
Investor Class Shares -- 1,982,581 --
Premier Class Shares -- 114,917,623 --
------------ ------------ ------------
Total $139,419,748 $116,900,204 $256,319,952
============ ============ ============
Shares Outstanding
Class A Shares 6,699,472 -- 2,722,790
Class B Shares 1,867,788 -- 729,948
Class C Shares 101,577 -- 39,543
Institutional Class Shares -- -- 2,834,352
Investor Class Shares -- 48,968 --
Premier Class Shares -- 2,834,352 --
------------ ------------ ------------
Total 8,668,837 2,883,320 6,326,633
============ ============ ============
Net Asset Value Per Share
Class A Shares $16.16 -- $40.49
Class B Shares $15.82 -- $40.49
Class C Shares $15.76 -- $40.49
Institutional Class Shares -- -- $40.54
Investor Class Shares -- $40.49 --
Premier Class Shares -- $40.54 --
</TABLE>
INVESTMENT POLICIES
The following discussion summarizes some of the investment policies of Chase
Balanced Fund. Chase Balanced Fund has substantially similar investment policies
to Chase Vista Balanced 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 Balanced Fund, which are
incorporated herein by reference.
OBJECTIVE
The investment objective of Chase Balanced Fund is to provide a balance of
current income and growth of capital. THE INVESTMENT OBJECTIVE OF CHASE VISTA
BALANCED FUND IS TO SEEK TO MAXIMIZE TOTAL RETURN THROUGH LONG-TERM CAPITAL
GROWTH AND EARNING CURRENT INCOME.
MAIN INVESTMENT STRATEGY
Chase Balanced Fund seeks a balance of current income and growth by using an
active equity management style that focuses on strong earnings momentum and
profitability within a universe of large capitalization stocks combined with an
active fixed income management style that focuses primarily on domestic fixed
income securities.
Under normal market conditions, the Chase Balanced Fund invests 30% to 70%
of its total assets in equity securities and at least 25% of its total assets in
investment grade debt securities.
Chase Balanced Fund's debt securities include non-convertible corporate
debt, and U.S. Government debt securities. The Fund invests in corporate debt
securities that are rated Baa or higher by Moody's
11
<PAGE>
Investors Service, Inc., BBB or higher by Standard & Poor's Corporation, or the
equivalent rating by another national rating organization. It may also invest in
unrated securities of comparable quality. There is no restriction on the
maturity of the Fund's debt portfolio or on any individual security in the
portfolio. The average maturity, or time until debt investments come due, will
vary as market conditions change.
Chase Balanced Fund's advisers may change the balance between equity and
fixed income investments to suit market conditions.
Chase Balanced 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.
In selecting equity securities, Chase Balanced Fund will invest primarily in
companies with one or more of the following characteristics: (i) a projected
rate of earnings growth that's equal to or greater than the equity markets;
(ii) a return on assets and equity that's equal to or greater than the equity
markets; (iii) above-average price/earnings ratios; (iv) below-average dividend
yield; (v) above-average market volatility; or (vi) a market capitalization of
more than $500 million. MOST OF CHASE VISTA BALANCED FUND'S EQUITY SECURITIES
ARE IN WELL-KNOWN, ESTABLISHED COMPANIES WITH MARKET CAPITALIZATIONS EQUAL TO
THOSE WITHIN THE UNIVERSE OF S&P 500 STOCKS.
Market capitalization is the total market value of a company's shares.
Equity securities include common stocks, preferred stocks and securities that
are convertible into common stocks, and warrants to buy common stocks.
In determining whether to sell a stock, the advisers will use the same type
of analysis that they use in buying stocks in order to determine whether the
stock is still an attractive investment opportunity.
Chase Balanced 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.
When making investment decisions with respect to Chase Balanced Fund's debt
securities, the Fund's advisers consider many factors in addition to current
yield, including preservation of capital, maturity and yield to maturity. The
Fund's advisers will adjust the Fund's investments in certain types of
securities based on their analysis of changing economic conditions and trends.
The Fund's advisers may sell one security and buy another security of comparable
quality and maturity in order to take advantage of what they believe to be
short-term differences in market rates or yields.
In determining whether to sell a debt security, the advisers will use the
same type of analysis that they use in buying debt securities in order to
determine whether the debt security is still an attractive investment
opportunity.
Chase Balanced Fund may invest up to 30% of its total assets in foreign
securities. These investments may take the form of depositary receipts. CHASE
VISTA BALANCED FUND MAY INVEST UP TO 20% OF ITS TOTAL ASSETS IN FOREIGN
SECURITIES. It may also invest in convertible securities, which generally pay
interest or dividends and which can be converted into common or preferred stock.
Chase Balanced Fund's equity holdings may also include REITs, which are
pools of investments primarily in income-producing real estate or loans related
to real estate.
Chase Balanced 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.
Chase Balanced 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.
Chase Balanced 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.
Chase Balanced Fund may also invest in high quality money market instruments
and repurchase agreements. To temporarily defend its assets, the Fund may put
any amount of its assets in these types of investments.
12
<PAGE>
Chase Balanced 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.
Chase Balanced Fund may change any of these investment policies (including
its investment objective) without shareholder approval. THE CHASE VISTA BALANCED
FUND MAY NOT CHANGE ITS INVESTMENT OBJECTIVE WITHOUT SHAREHOLDER APPROVAL.
INVESTMENT RESTRICTIONS
Chase Balanced Fund and Chase Vista Balanced 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 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
13
<PAGE>
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 15% 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
Balanced Fund are similar to those of Chase Vista Balanced Fund. Please note
that Chase Balanced Fund currently has two classes of shares, Premier Class and
Investor Class. In connection with the Reorganization, the Premier Class will be
renamed "Institutional Class," the Investor Class will be renamed "Class A," and
Class B and Class C share classes will be introduced. The following discussion
reflects the new class structure.
SALES CHARGES
There is normally a sales charge (sometimes called a "load") to buy
Class A, Class B and Class C Shares of Chase Balanced Fund. There are also
ongoing charges that holders of Class A, Class B and Class C Shares pay as long
as they own their shares, as more fully explained below.
Shareholders holding Class A Shares of Chase Vista Balanced Fund will
receive Class A Shares of Chase Balanced Fund in the Reorganization but will not
have to pay a sales charge. However, such Shareholders will have to pay a sales
charge if they buy additional Class A Shares in the future. Shareholders holding
Class B and Class C Shares of Chase Vista Balanced Fund will receive Class B and
Class C Shares, respectively, of Chase Balanced Fund in the Reorganization, but
the holding period used to determine applicable sales charges on the Class B and
Class C Shares received in the Reorganization, as well as to determine the
conversion of Class B Shares received in the Reorganization, will be calculated
by reference to when such Shareholders acquired their Class B and Class C Shares
of Chase Vista Balanced Fund.
There are a number of plans and special discounts which can decrease or even
eliminate these charges.
CLASS A SHARES
Class A Shares have an initial sales charge that is deducted directly from
the money you invest. As the table shows, the charge is lower the more you
invest. The public offering price of Class A Shares is the net asset value plus
the initial sales charge. Net asset value is the value of everything the Fund
owns, minus everything it owes, divided by the number of shares held by
investors. The Fund receives the net asset value.
14
<PAGE>
The following chart shows the sales charges for Class A Shares.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
---------------------------
AS % OF THE AS % OF NET
OFFERING PRICE AMOUNT
AMOUNT OF INVESTMENT PER SHARE INVESTED
-------------------- -------------- -----------
<S> <C> <C>
LESS THAN $100,000 5.75% 6.10%
$100,000 BUT UNDER $250,000 3.75% 3.90%
$250,000 BUT UNDER $500,000 2.50% 2.56%
$500,000 BUT UNDER $1 MILLION 2.00% 2.04%
</TABLE>
There is no sales charge for investments of $1 million or more.
CLASS B SHARES
Class B Shares have a deferred sales charge that is deducted directly from
your assets when you sell your shares. It's a percentage of the original
purchase price or the current value of the shares, whichever is lower. As the
table shows, the deferred sales charge gets lower the longer you hold the shares
and disappears altogether after six years. Class B shares automatically convert
into Class A shares at the beginning of the ninth year after you bought them.
<TABLE>
<CAPTION>
DEFERRED
YEAR SALES CHARGE
---- ------------
<S> <C>
1 5%
2 4%
3 3%
4 3%
5 2%
6 1%
7 NONE
8 NONE
</TABLE>
We calculate the deferred sales charge from the month you buy your shares.
We always sell the shares with the lowest deferred sales charge first. Shares
acquired by reinvestment distribution can be sold without a deferred sales
charge.
CLASS C SHARES
Class C Shares have a deferred sales charge that is deducted directly from
your assets when you sell your shares. It's equal to 1% of the original purchase
price or the current value of the shares, whichever is lower. The deferred sales
charge on Class C shares disappears altogether after one year. We calculate the
deferred sales charge from the month you buy your shares. We always sell the
shares with the lowest deferred sales charge first.
Like Class B shares, Class C shares have higher combined distribution and
service fees. Unlike Class B shares, Class C shares are never converted to
Class A shares. That means you keep paying the higher service and distribution
fees as long as you hold them. Over the long term, this can add up to higher
total fees than either Class A or Class B shares.
12b-1 FEES
VFD is the distributor for Chase Vista Balanced Fund and, in connection with
the Reorganization, will become the distributor for Chase Balanced Fund. Chase
Balanced Fund will adopt a Rule 12b-1 distribution plan for Class A Shares under
which it will pay annual distribution fees of up to 0.25% of the average daily
net assets attributable to Class A Shares and Rule 12b-1 distribution plans for
Class B Shares and Class C Shares under which it will pay annual distribution
fees of up to 0.75% of the average daily net assets attributable to Class B
Shares and Class C Shares. Similar 12b-1 distribution plans (with annual
distribution fees of up to 0.25%, 0.75% and 0.75%) are currently in effect for
Class A Shares, Class B Shares and Class C Shares of Chase Vista Balanced Fund.
15
<PAGE>
This payment covers such things as compensation for services provided by
broker-dealers and expenses connected with the sale of shares. Payments are not
tied to actual expenses incurred.
Because 12b-1 expenses are paid out of Chase Balanced Fund's assets on an
ongoing basis, over time these fees will increase the cost of a shareholder's
investment and may cost more than other types of sales charges, used by other
mutual funds.
BUYING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF CHASE BALANCED FUND SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS
STRUCTURE.
The price shareholders pay for their shares is based on 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
generally values its assets at fair market values but may use fair value if
market prices are unavailable.
The NAV of each class of the Fund's shares is generally calculated once each
day at the close of regular trading on the New York Stock Exchange each day the
Fund is accepting purchase orders. A shareholder will pay the public offering
price which is based on 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 New York
Stock Exchange is open. If an order is received in proper form by the close of
regular trading on the New York Stock Exchange, 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 the close of regular trading on the New York
Stock Exchange, it will generally be processed at the next day's price. If a
purchaser pays by check for Fund shares before the close of regular trading on
the New York Stock Exchange, it will generally be processed the next day the
Fund is open for business.
If a shareholder buys through an agent and not directly from the Center, the
agent could set earlier cut-off times. 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.
For Class A Shares, Class B Shares and Class C 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 Class A Shares, Class B Shares or Class C 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 Class A Shares, Class B Shares
and Class C Shares.
SELLING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF CHASE BALANCED FUND SHARES THAT
YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW CLASS STRUCTURE.
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, less any applicable sales charges.
Under normal circumstances, if a request is received before the close of
regular trading on the New York Stock Exchange, 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.
16
<PAGE>
Generally, proceeds are sent by electronic transfer or wire for Class A
Shares, Class B Shares and Class C Shares. However, 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.
For Class A Shares, Class B Shares and Class C 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 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.
Class A, Class B and Class C shareholders may contact 1-800-34-VISTA.
A systematic withdrawal plan is available for Class A Shares, Class B Shares
and Class C Shares.
EXCHANGING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF CHASE BALANCED FUND SHARES
THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Shares of the 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 MFIT. 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 BALANCED FUND
For Class A Shares, Class B Shares and Class C Shares, Chase Balanced Fund
may close an account if the balance falls below $500. Chase Balanced 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. 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 the 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.
MFIT will enter into agreements with certain shareholder servicing agents
(including Chase) under which the shareholder servicing agents will agree to
provide certain support services to their customers. For performing these
services, each shareholder servicing agent will receive an annual fee of up to
0.25% of the average daily net assets of the Class A Shares, Class B Shares and
Class C Shares held by investors serviced by the shareholder servicing agent.
MFG HAS SIMILAR AGREEMENTS WITH SHAREHOLDER SERVICING AGENTS. ACCORDINGLY, CHASE
VISTA BALANCED FUND ALSO PAYS SHAREHOLDER SERVICING FEES OF 0.25%.
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.
17
<PAGE>
Chase Balanced 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 Balanced Fund and, in connection with
the Reorganization, will become distributor for Chase Balanced Fund.
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 distributes any net investment income at least quarterly. Net
capital gain is distributed annually. You have three options for your
distributions. You may:
- reinvest all of them in additional Fund shares without a sales charge;
- 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
- take all distributions in cash or as a deposit in a pre-assigned bank
account.
If you don't select an option when you open your account, we'll reinvest all
distributions. If your distributions are reinvested, they will be in the form of
shares of the same class. The taxation of dividends won't be affected by the
form in which you receive them.
Dividends of net investment income are usually taxable as ordinary income at
the federal, state and local levels. The state or municipality where you live
may not charge you state and local taxes on tax-exempt interest earned on
certain bonds.
Dividends earned on bonds issued by the U.S. government and its agencies may
also be exempt from some types of state and local taxes.
If you receive distributions of net capital gain, the tax rate will be based
on how long a Fund held a particular asset, not on how long you have owned your
shares. If you buy shares just before a distribution, you will pay tax on the
entire amount of the taxable distribution you receive, even though the NAV will
be higher on that date because it includes the distribution amount.
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 VISTA BALANCED FUND'S
AND CHASE BALANCED FUND'S ORGANIZATION STRUCTURES
There are no differences in the organizational structure of Chase Vista
Balanced Fund and Chase Balanced Fund. Set forth below are descriptions of the
structure, voting rights, shareholder liability and the liability of Trustees.
STRUCTURE OF THE CHASE VISTA BALANCED FUND
Chase Vista Balanced Fund is organized as a series of MFG, which is
organized under the law of the Commonwealth of Massachusetts. As a Massachusetts
business trust, MFG's operations are governed by MFG's Declaration of Trust and
By-Laws (the "MFG Trust Documents") and applicable Massachusetts law. The
operations of Chase Vista Balanced Fund are also subject to the provisions of
the 1940 Act and the rules and regulations thereunder.
18
<PAGE>
STRUCTURE OF THE CHASE BALANCED FUND
Chase Balanced 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 Balanced 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
Vista Balanced Fund is managed by MFG's Trustees and the business of Chase
Balanced Fund is managed by MFIT'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 MFG are identical.
Information concerning the current Trustees of the MFG Board and the MFIT
Board is set forth later in this document.
SHARES OF FUNDS
Each of MFG and MFIT 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 MFG or MFIT participate equally in the earnings,
dividends and assets of the particular portfolio or class. Fractional shares
have proportionate rights to full shares. Expenses of MFG or MFIT 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 MFG nor MFIT 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 MFG or MFIT.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of either MFG or MFIT 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 MFG or MFIT could, under
certain circumstances, be held personally liable as partners for the obligations
of that trust. However, the Declaration of Trust of each of MFG and MFIT
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 MFG and MFIT 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.
19
<PAGE>
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of each of MFG and MFIT, 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 MFG and MFIT, 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 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 MFG and MFIT are available without charge upon
written request to that trust.
INFORMATION RELATING TO THE ADVISORY CONTRACTS
GENERAL INFORMATION
As noted above, Chase Balanced Fund and Chase Vista Balanced Fund are both
managed by Chase pursuant to the Advisory Agreements. Under an Advisory
Agreement, Chase has delegated most of its responsibilities with respect to
Chase Vista Balanced 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 Balanced Fund. However, the same portfolio
management team is responsible for the day-to-day management functions for both
Chase Balanced Fund and Chase Vista Balanced 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
Balanced Fund and Chase Balanced 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 Fund's 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 Fund's investments and complying with regulatory reporting
requirements. Chase delegates certain of these responsibilities with respect to
Chase Vista Balanced 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 Vista Balanced Fund and Chase Balanced 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 0.50% for Chase Vista Balanced Fund
and 0.75% for Chase Balanced Fund. In connection with the Reorganization, it is
anticipated that this management fee for Chase Balanced Fund will be reduced to
0.50%. 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
20
<PAGE>
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 June 30, 2000, Chase accrued management fees and
management fee waivers of approximately $772,000 and $135,000, respectively, for
Chase Balanced Fund. For the twelve months ended June 30, 2000, Chase accrued
management fees of approximately $720,000 for Chase Vista Balanced Fund.
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.
For the twelve months ended June 30, 2000, Chase paid approximately $360,000
in subadvisory fees to CFAM. THIS FEE WAS PAID BY CHASE OUT OF THE ADVISORY FEE
IT RECEIVED FOR CHASE VISTA BALANCED FUND AND WAS NOT AN ADDITIONAL CHARGE TO
THE FUND.
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 MFG, MFIT 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 MFG, MFIT
or either Fund, as the case may be, 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, only so long as such continuation is approved at least annually by
(i) the Board of Trustees of either MFG or MFIT, 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 without penalty by either the MFG or MFIT 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 MFG or MFIT, as the case may be.
PORTFOLIO MANAGER
Henry Lartigue, Chief Investment Officer at Chase, is responsible for asset
allocation and investment strategy for Chase's U.S. domestic equity portfolios.
Mr. Lartigue 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.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Chase, as the investment adviser to both Chase Balanced Fund and Chase Vista
Balanced Fund, has responsibilities with respect to portfolio transactions and
brokerage arrangements pursuant to the Fund's policies, subject to the overall
authority of either the MFG or MFIT Board, as the case may be.
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 Balanced Fund and
Chase Vista Balanced 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.
21
<PAGE>
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 MFG or
MFIT 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 Balanced Fund or Chase Vista
Balanced 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 MFG's
or MFIT'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.
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, MFG or any of its
portfolios, including Chase Vista Balanced Fund, and MFIT or any of its
portfolios, including Chase Balanced 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 MFG and MFIT are identical. Set forth below are the current
members of the MFG Board and the MFIT Board.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
---- ------------------------------------------
<S> <C>
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. Consultant, Eduneering, Inc.; 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, Janel
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 1990.
He had been employed by Chase in numerous
capacities and offices from 1954 through 1990.
Director of Jefferson Insurance Company of New
York and Monticello Insurance Company. Age: 69.
Address: 257 Plantation Circle South, Ponte Vedra
Beach, FL 32082.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION
---- ------------------------------------------
<S> <C>
*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 Petroleum & Resources
Corp. and The Adams Express Co. Age: 73. 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.
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.
</TABLE>
------------------------
* 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 MFG and MFIT are identical. Set forth below as to
each executive officer of MFG and MFIT is his or her name, age, principal
occupation during the past five years and other directorships held in public
companies.
<TABLE>
<CAPTION>
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------- --- ------------------------------------------
<S> <C> <C>
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.
</TABLE>
The Trustees and officers of MFG and MFIT appearing in the tables above also
serve in the same capacities with respect to Mutual Fund Trust, Mutual Fund
Variable Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust,
Capital Growth Portfolio, Growth and Income Portfolio and International Equity
Portfolio (these entities, together with MFG and MFIT, 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 MFG or MFIT 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,
23
<PAGE>
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 MFG Board for use at the Meeting. It is
expected that the solicitation of proxies will be primarily by mail. MFG's
officers and service providers may also solicit proxies by telephone, facsimile
machine, telegraph, the Internet or personal interview. In addition, MFG 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 MFG to forward solicitation materials
to their principals to obtain authorizations for the execution of proxies. Any
Chase Vista Balanced Fund Shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to MFG a written notice of revocation or a
subsequently executed proxy or by attending the Meeting and electing to vote in
person.
Only Chase Vista Balanced 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 8,187,862.62 Chase Vista
Balanced 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 Vista Balanced 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 Vista Balanced Fund
Shareholders determine to adjourn the Meeting for any other reason, the Chase
Vista Balanced 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 Vista
Balanced Fund Shareholders holding a majority of the Chase Vista Balanced 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 Vista Balanced 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 Vista Balanced 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 Vista Balanced Fund Shares represented by each properly signed
proxy received prior to the Meeting will be voted at the Meeting. If a Chase
Vista Balanced 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 Vista Balanced 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 Vista
Balanced 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 Vista Balanced Fund Shareholder may be revoked
by such Chase Vista Balanced Fund Shareholder at any time prior to its use by
written notice to MFG, 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.
24
<PAGE>
EXPENSES OF PROXY SOLICITATION
Chase, and not Chase Vista Balanced Fund or Chase Balanced 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 MFG 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 Vista Balanced Fund Shares present at the Meeting and (ii) more than 50%
of all outstanding Chase Vista Balanced Fund Shares. In tallying Chase Vista
Balanced 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.
INTERESTED PARTIES
On the Record Date, the Trustees and officers of Chase Vista Balanced Fund
as a group owned less than 1% of the outstanding shares of Chase Vista Balanced
Fund. On the Record Date, the name, address and percentage ownership of the
persons who owned of record more than 5% of the shares of Chase Vista Balanced
Fund and the percentage of shares of Chase Balanced Fund that would be owned by
such persons upon consummation of the Reorganization based upon their holdings
at November 10, 2000 are as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
CHASE VISTA PERCENTAGE OF CHASE
AMOUNT OF BALANCED FUND BALANCED FUND
SHARES SHARES OWNED ON SHARES OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
----------------------------------- ------------ ----------------- --------------------
<S> <C> <C> <C>
BCO Popular TTEE
FBO Texaco Pr Inc Pension Plan
Attn Yanira Nazario
P.O. Box 362708
San Juan, PR 00936-2708
613,433,4220 7.49% 5.82%
Hamill & Co.
FBO Texas New Mexico Power
Mail Sta. 16-HCB-09
P.O. Box 2558
Houston, TX 77252-2558
537,775.6540 6.57% 5.11%
MLPF&S for the Sole Benefit of
ITS Customers
Attn Fund Administration
Sec. #97FB6
4800 Deer Lake Dr. East 2nd Flr
Jacksonville, FL 32246-6484
484,138.5640 5.91% 4.60%
</TABLE>
At November 10, 2000, the Trustees and officers of MFIT as a group owned
less than 1% of the outstanding shares of Chase Balanced Fund. At November 10,
2000, the name, address and share ownership of the persons who owned of record
more than 5% of the shares of Chase Balanced Fund and the
25
<PAGE>
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:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
FUND SHARES FUND SHARES
AMOUNT OF OWNED ON OWNED UPON
NAME AND ADDRESS SHARES OWNED RECORD DATE CONSUMMATION
----------------------------------- -------------- ------------- --------------
<S> <C> <C> <C>
Texas Commerce Bank
Attn: Asset Trading
1111 Fannin Suite 10
Houston, TX 77002-6925
1,446,673.4770 60.39% 13.67%
Hamill & Co. FBO Chase Bank of
Texas, N.A.
Attn Mutual Fund Unit
16HCB09
P.O. Box 2558
Houston, TX 77252-2558
430,798.9780 17.98% 3.82%
Mr. Brian Thompson
Senior Vice President
Human Resources Juli Bank Limited
World Trade Center
New York, NY 10048
191,896.79 8.01% 1.81%
</TABLE>
ADDITIONAL INFORMATION ABOUT MFG
Information about Chase Vista Balanced Fund is included in the Prospectus
dated February 28, 2000, as revised June 1, 2000, which is incorporated by
reference herein. Additional information about Chase Vista Balanced Fund is also
included in MFG's Statement of Additional Information dated February 28, 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 1-800-34-VISTA. MFG 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, New York 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 MFIT
Information about Chase Balanced Fund is included in the Prospectus dated
April 30, 2000, which is incorporated by reference and enclosed herein.
Additional information about Chase Balanced 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, New York 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 Vista Balanced Fund for the six-month period ended April 30,
2000 and of Chase Balanced Fund for the six-month period
26
<PAGE>
ended June 30, 2000 and the audited financial statements and financial
highlights and notes thereto of Chase Vista Balanced Fund for the fiscal year
ended October 31, 1999 and Chase Balanced Fund for the fiscal year ended
December 31, 1999 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 Vista Balanced
Fund and Chase Balanced 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 MFG 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 MFG 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 MFG nor MFIT is involved in any litigation that would have any
material adverse effect upon either Chase Vista Balanced Fund or Chase Balanced
Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to MFG in writing at the address on
the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-34-VISTA.
* * *
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.
27
<PAGE>
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 Group (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the Chase Vista Balanced Fund (the
"Transferor Portfolio") and Mutual Fund Investment Trust (the "Acquiring Trust")
and the Chase Balanced 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 Class A share class in exchange for Class A Shares of the
Transferor Portfolio, and the Class B share class in exchange for Class B Shares
of the Transferor Portfolios, and the Class C share class in exchange for the
Class C 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
<PAGE>
(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 Class A 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 Class A shares shall be determined by an exchange ratio computed by
dividing the net value of the Transferor Portfolio's assets attributable to
Class A shares by the net asset value per share of the Class A shares of the
Acquiring Portfolio, both as determined in accordance with Section 1(c)(i). The
number of Class B 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
Class B shares shall be determined by an exchange ratio computed by dividing the
net value of the Transferor Portfolio's assets attributable to Class B shares by
the net asset value per share of the Class B shares of the Acquiring Portfolio,
both as determined in accordance with Section 1(c)(i). The number of Class C
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 Class C shares
shall be determined by an exchange ratio computed by dividing the net value of
the Transferor Portfolio's assets attributable to Class C shares by the net
asset value per share of the Class C 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.
A-2
<PAGE>
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 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 48,968 Investor Class shares and
2,834,352 Premier 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 December 31,
1999, which have been audited by PricewaterhouseCoopers LLP, and the unaudited
financial statements of the Acquiring Trust with respect to the Acquiring
Portfolio for the six months ended June 30, 2000 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 June 30, 2000 or
otherwise previously disclosed to the Acquiring Trust with
A-3
<PAGE>
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 December 31, 1999, 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).
(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 December 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 6,699,472 Class A shares, 1,867,788
Class B shares and 101,577 Class C 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
A-4
<PAGE>
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 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 October 31,
1999, which have been audited by PricewaterhouseCoopers LLP, the financial
statements for the Transferor Trust with respect to the Transferor Portfolio for
the fiscal year ended October 31, 2000, when such statements are available, and
the unaudited financial statements for the Trust with respect to the Transferor
Portfolio for the six months ended April 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 October 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'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 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 October 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.
A-5
<PAGE>
(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.
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
A-6
<PAGE>
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 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
December 31, 1999.
(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
A-7
<PAGE>
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 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 October 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
A-8
<PAGE>
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 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
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.
In addition, Chase will waive fees payable to it or reimburse expenses to the
extent necessary such that the actual (post-waiver) total expense ratios of the
Acquiring Portfolio are not higher than those of the Transferor Portfolio as set
forth in the Registration Statement for a period of one year after the Exchange
Date.
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
A-9
<PAGE>
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.
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 Group" is the designation of its Trustees under a
Declaration of Trust dated May 11, 1987, 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 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 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
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date first
above written.
MUTUAL FUND GROUP
on behalf of Chase Vista Balanced Fund
By:
________________________________________
Name:
Title:
MUTUAL FUND INVESTMENT TRUST
on behalf of Chase Balanced Fund
By:
________________________________________
Name:
Title:
Agreed and acknowledged with respect to Section 9:
THE CHASE MANHATTAN BANK
By: ________________________________________
Name:
Title:
A-11
