As filed with the Securities and Exchange Commission on March 11, 1996
File No. 333-387
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
o Post-Effective Amendment No. ____
(Check appropriate box or boxes)
--------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
MUTUAL FUND GROUP
(Registrant's Telephone Number, Including Area Code)
(212) 492-1600
(Address of Principal Executive Offices)
125 West 55th Street
New York, New York 10019
(Name and Address of Agent for Service)
George Martinez
Mutual Fund Group
125 West 55th Street
New York, New York 10019
Copy to:
Carl Frischling, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, New York 10022
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective. The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest, without par value, has previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Registrant's Rule 24f-2 Notice for its most recent fiscal year was
filed on November 27, 1995.
<PAGE>
BALANCED FUND
series of
MUTUAL FUND GROUP
Cross Reference Sheet
Items Required by Form N-14
PART A
N-14
Item No. Item Caption Prospectus Caption
1. Beginning of Registration Statement COVER PAGE OF
and Outside Front Cover Page of REGISTRATION
Prospectus STATEMENT; FRONT
COVER OF
PROSPECTUS/PROXY
STATEMENT
2. Beginning and Outside Back Cover TABLE OF CONTENTS
Page of Prospectus
3. Fee Table, Synopsis Information and SUMMARY
Risk Factors
4. Information About the Transaction SUMMARY; PROPOSED
REORGANIZATION
5. Information About the Registrant COVER PAGE;
SUMMARY;
COMPARISON OF THE
BALANCED FUND AND
THE IEEE FUND;
ADDITIONAL
INFORMATION ABOUT
THE TRUST
6. Information About the Company COVER PAGE;
Being Acquired SUMMARY;
COMPARISON OF THE
BALANCED FUND AND
THE IEEE FUND;
ADDITIONAL
INFORMATION ABOUT
THE TRUST;
ADDITIONAL
INFORMATION ABOUT
THE IEEE FUND
2
<PAGE>
PART A
N-14
Item No. Item Caption Prospectus Caption
7. Voting Information COVER PAGE; NOTICE
OF SPECIAL MEETING
OF SHAREHOLDERS;
SUMMARY;
INFORMATION
RELATING TO VOTING
MATTERS
8. Interest of Certain Persons and Experts INFORMATION
RELATING TO THE
PROPOSED
REORGANIZATION
9. Additional Information Required for NOT APPLICABLE
Reoffering by Persons Deemed to be
Underwriters
10. Cover Page COVER PAGE
11. Table of Contents INCORPORATION OF
DOCUMENTS BY
REFERENCE IN
STATEMENT OF
ADDITIONAL
INFORMATION
12. Additional Information About the INCORPORATION OF
Registrant DOCUMENTS BY
REFERENCE IN
STATEMENT OF
ADDITIONAL
INFORMATION
13. Additional Information About the NOT APPLICABLE
Company Being Acquired
3
<PAGE>
14. Financial Statements EXHIBITS TO
STATEMENT OF
ADDITIONAL
INFORMATION
PART A
N-14
Item No. Item Caption Prospectus Caption
15. Indemnification INDEMNIFICATION
16. Exhibits EXHIBITS
17. Undertakings UNDERTAKINGS
SIGNATURES
4
<PAGE>
Preliminary Proxy Material for the Information
of the Securities and Exchange Commission Only
IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on ___________, 1996
Dear Valued Shareholder:
As you may be aware, The Chase Manhattan Corporation ("Chase") has
entered an Agreement and Plan of Merger with Chemical Banking Corporation
("Chemical") pursuant to which Chase will merge with and into Chemical (the
"Holding Company Merger"). As required by the Investment Company Act of 1940, as
amended, consummation of the Holding Company Merger will result in the automatic
termination of the investment advisory agreement between the IEEE Balanced Fund
and The Chase Manhattan Bank, N.A. (the "Adviser") and the sub-advisory
agreement between the Adviser and Atlanta Capital Management Company. In
addition, subsequent to the Holding Company Merger, the Adviser will be merged
with and into Chemical Bank in a secondary merger of the principal operating
entities of Chase and Chemical (the "Bank Merger"). The Bank Merger may also be
deemed to result in the automatic termination of the investment advisory
agreement and sub-advisory agreement. In anticipation of the completion of the
Holding Company Merger and the Bank Merger, and to provide continuity in
investment advisory services to the IEEE Balanced Fund, we urge you to review
the enclosed proxy statement. In the proxy statement you are asked to vote on
the approval of new advisory agreements between and sub-advisory agreements in
addition to other items.
You are also being asked to approve a Plan of Reorganization (the
"Reorganization Plan") whereby all of the assets of the IEEE Balanced Fund will
be transferred to the Vista Balanced Fund, another series of Mutual Fund Group
(the "Trust"). Currently, Atlanta Capital Management Company ("Atlanta Capital")
serves as sub-adviser to the IEEE Balanced Fund.
If shareholders approve the reorganization of IEEE Balanced Fund into
Vista Balanced Fund, Atlanta Capital will no longer serve as sub-adviser. This
is being proposed as a result of the Adviser's determination that portfolio
management of the equity and fixed income portfolios of the Vista Funds should
be consolidated within Chase and its affiliates.
<PAGE>
Balanced Fund shareholders are being asked to vote upon an arrangement whereby
Chase Asset Management, Inc. ("CAM Inc."), a wholly-owned subsidiary of Chase,
will provide sub-advisory services to the Balanced Fund.
The Board of Trustees has voted unanimously in favor of each
proposal and recommends that you vote "FOR" them as well. You will find more
information on the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the contractual
advisory fee rate in the proposed advisory agreement.
PLEASE VOTE YOUR PROXIES AND RETURN THEM AS SOON AS POSSIBLE
IN THE POSTAGE PAID ENVELOPE PROVIDED. EVERY VOTE COUNTS.
-------------------------------
_______________, 1996
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<PAGE>
Preliminary Proxy Material for the Information
of the Securities and Exchange Commission Only
IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on ___________, 1996
To the Shareholders of the IEEE Balanced Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of
the IEEE Balanced Fund (the "IEEE Fund") a series of Mutual Fund Group (the
"Trust") will be held at the offices of the Trust, 125 W. 55th Street, New York,
New York at 9:00 a.m., Eastern Time on ____________, 1996 for the following
purposes:
1. To consider and act upon a Plan of Reorganization (the
"Reorganization Plan") and the transactions contemplated thereby
providing for (a) the transfer of all of the assets of the IEEE
Fund to the Vista Balanced Fund (the "Balanced Fund"), another
series of the Trust, in exchange for the assumption of the
liabilities of the IEEE Fund by the Balanced Fund and the
delivery to the IEEE Fund of Class A shares of the Balanced Fund;
(b) the pro rata distribution of the Class A shares of the
Balanced Fund so received to the shareholders of the IEEE Fund in
liquidation of their interests in IEEE Fund; and (c) the
termination of IEEE Fund;
2. To approve or disapprove a new investment advisory agreement
between the IEEE Fund and The Chase Manhattan Bank, N.A. (or the
successor entity thereto) (the "Adviser") and a sub-advisory
agreement between the Adviser and Atlanta Capital Management
Company to take effect after the merger of The Chase Manhattan
Corporation (the parent company of the Adviser) and Chemical
Banking Corporation. No fee increase is proposed;
3. To elect eleven trustees to serve as members of the Board of
Trustees of the Trust;
<PAGE>
4. To ratify the selection of Price Waterhouse LLP as independent
accountants for the 1996 fiscal year of IEEE Fund; and
5. To approve or disapprove an amendment to the Trust's Declaration
of Trust.
To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
Shareholders of record as of the close of business on ___________,
1996, are entitled to notice of, and to vote at, the Special Meeting and any
adjournment(s) thereof. The proposed Reorganization, including the actions that
will occur without the need for further shareholder consideration (if
shareholders approve the Reorganization), are described in the attached Combined
Proxy Statement/Prospectus. Appendix A to the Combined Proxy
Statement/Prospectus is a copy of the Reorganization Plan.
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 THE TRUST ON BEHALF OF IEEE FUND. THIS IS IMPORTANT TO
ENSURE A QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY
ARE EXERCISED BY SUBMITTING TO THE IEEE FUND A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
-------------------------------
Ann Bergin
Secretary
_______________, 1996
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<PAGE>
Preliminary Proxy Material for the
Information of the Securities and
Exchange Commission Only
IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
800-348-4782
VISTA BALANCED FUND
125 West 55th Street
New York, New York 10019
800-348-4782
PROSPECTUS/PROXY STATEMENT
Dated __________, 1996
This Combined Proxy Statement/Prospectus is furnished in connection
with the solicitation of proxies by the Board of Mutual Fund Group on behalf of
IEEE (the "IEEE Fund") in connection with a Special Meeting of Shareholders (the
"Meeting") to be held at the offices of the IEEE Fund, 125 W. 55th Street, New
York, New York on _____, 1996 at 9:00 a.m., Eastern Time, at which shareholders
will be asked to consider and approve a proposed Plan of Reorganization adopted
December 14, 1995 (the "Reorganization Plan"), by the Board of Trustees of the
Mutual Fund Group, a Massachusetts business trust (the "Trust"), with respect to
two of the Trust's existing investment portfolios: the Vista Balanced Fund (the
"Balanced Fund") and the IEEE Fund.
The Trust is an open-end management investment company; the Trust is
organized as a "series company" which means that separate investment portfolios
are organized under the common company with each portfolio having separate
assets and shareholders. The Balanced Fund and the IEEE Fund are both such
portfolios. The investment objective and policies of the Balanced Fund are
substantially identical to those of the IEEE Fund. Both seek to provide their
shareholders with maximum total return through a combination of long-term growth
of capital and current income by investing in a diversified portfolio of equity
and debt securities, including common stocks, convertible securities and
government and corporate fixed-income senior securities. The Chase Manhattan
Bank, N.A. ("Chase" or the "Adviser") serves as investment adviser to both the
IEEE Fund and the Balanced Fund, and if the Reorganization Plan is approved by
shareholders of the IEEE Fund, Chase will continue to provide investment
advisory services to the Balanced Fund.
<PAGE>
The Reorganization Plan provides that all of the assets of the IEEE
Fund will be transferred to the Balanced Fund. In exchange for the transfer of
those assets, the Balanced Fund will assume all liabilities of the IEEE Fund and
issue Class A shares of the Balanced Fund to the IEEE Fund. The IEEE Fund will
then make a liquidating pro rata distribution of the Balanced Fund's shares to
the shareholders of the IEEE Fund, so that someone who is an IEEE Fund
shareholder at the time of the reorganization will receive full and fractional
Class A shares of the Balanced Fund with an aggregate net asset value equal to
the aggregate net asset value of the shares of the IEEE Fund held by the
shareholder immediately before the reorganization.
The above described transfer of assets, assumption of all liabilities,
delivery of shares of the Balanced Fund, and pro rata distribution of such
shares to the shareholders of the IEEE Fund are collectively referred to as a
"Reorganization" with respect to the IEEE Fund. Following the Reorganization of
the IEEE Fund, it will be terminated.
No commissions, sales loads or similar charges will be incurred by
shareholders of the IEEE Fund in connection with the Reorganization. In
addition, all ordinary and reasonable expenses incurred in connection with the
Reorganization will be borne by Chase or its affiliates.
As a result of the Reorganization, an account will be established for
the Shareholders of the IEEE Fund, which will be credited with full and
fractional Class A shares of the Balanced Fund equal in value to the value of
the shares of the IEEE Fund held by its shareholders immediately prior to the
Reorganization.
As you may be aware, The Chase Manhattan Corporation ("Chase") has
entered an Agreement and Plan of Merger with Chemical Banking Corporation
("Chemical") pursuant to which Chase will merge with and into Chemical (the
"Holding Company Merger"). As required by the Investment Company Act of 1940, as
amended, consummation of the Holding Company Merger will result in the automatic
termination of the investment advisory agreement between the IEEE Fund and The
Chase Manhattan Bank, N.A. (the "Adviser") and the sub-advisory agreement
between the Adviser and Atlanta Capital Management Company ("Atlanta Capital").
In addition, subsequent to the Holding Company Merger, the Adviser will be
merged with and into Chemical Bank in a secondary merger of the principal
operating entities of Chase and Chemical (the "Bank Merger"). The Bank Merger
may also be deemed to result in the automatic termination of the investment
advisory agreement and sub-advisory agreement. Balanced Fund shareholders are
being asked to vote upon the investment advisory agreements. In anticipation of
the completion of the Holding Company Merger and the Bank Merger, and to provide
continuity in investment advisory services to the IEEE Fund, we urge you to
review the enclosed proxy statement. In the proxy statement you are asked to
vote on the approval of a new advisory agreement between the IEEE Fund and the
Adviser and a sub-advisory agreement between the Adviser and Atlanta Capital
Management in addition to other items.
-2-
<PAGE>
The Board of Trustees has voted unanimously in favor of each
proposal and recommends that you vote "FOR" them as well. You will find more
information on the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the contractual
advisory fee rates in the proposed advisory agreements.
This Combined Prospectus/Proxy Statement sets forth concisely the
information that a shareholder should know before voting, and should be retained
for future reference. This Combined Proxy Statement/Prospectus is expected to
first be sent to Shareholders on or about ________, 1996. The current Prospectus
and Statement of Additional Information for the IEEE Fund, dated March 1, 1996,
have been filed with the Securities and Exchange Commission (the 1996 "SEC") and
are incorporated by reference into this Combined Prospectus/Proxy Statement. A
copy of the Vista Balanced Fund Prospectus dated March 1, 1996 is attached to
the copy of this Combined Prospectus/Proxy Statement. Copies of the Prospectus
and Statement of Additional Information are available without charge upon oral
or written request by writing or calling the IEEE Fund at the address or
telephone number indicated on the previous page.
- --------------------------------------------------------------------------------
THE SECURITIES OF THE VISTA BALANCED FUND 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 PROXY
STATEMENT/PROSPECTUS. 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 REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY IEEE BALANCED FUND OR THE VISTA
BALANCED FUND.
- --------------------------------------------------------------------------------
-3-
<PAGE>
TABLE OF CONTENTS Page
Summary ................................................................ 1
Proposed Reorganization......................................... 1
Reasons for Reorganization...................................... 1
Voting Information.............................................. 3
Federal Income Tax Consequences................................. 3
Organizational Structure........................................ 3
Risk Factors.................................................... 4
Information Relating to the Proposed Reorganization...................... 4
Description of the Reorganization Plan.......................... 4
Board Consideration............................................. 5
Federal Income Tax Consequences................................. 6
Comparison of the Balanced Fund and the IEEE Fund........................ 8
Investment Objectives, Policies and Restrictions................ 8
Investment Advisory Fees and Other Expenses..................... 9
Shareholder Service Agreements.................................. 11
Distribution and Purchase Procedures............................ 11
Plan of Distribution............................................ 12
Redemption and Exchange Procedures.............................. 12
Income Dividends, Capital Gain Distributions and Taxes.......... 13
Governance and Shareholders' Rights............................. 13
Information Relating To Voting Matters................................... 13
General Information............................................. 13
Quorum ....................................................... 14
Shareholder Approvals........................................... 14
Appraisal Rights................................................ 14
Information About the Balanced and IEEE Funds' Investment Adviser
Administrator, Distributor and Sub-Administrator,
Distribution Plan, Shareholder Servicing Agents, Transfer
Agent, Custodian, Independent Accountants and
Counsel........................................................ 15
The Investment Adviser......................................... 15
The Administrator.............................................. 16
The Glass-Steagall Act......................................... 17
The Distributor and Sub-Administrator.......................... 18
The Distribution Plans......................................... 18
Shareholder Servicing Agents................................... 18
Transfer Agent and Custodian................................... 19
Independent Accountants........................................ 20
Counsel ....................................................... 20
-i-
<PAGE>
Information about the IEEE Fund's Sub-Adviser and Other Relationships.... 20
The IEEE Fund's Sub-Adviser..................................... 20
The IEEE Fund's Other Relationships............................. 20
Additional Information About the Trust................................... 20
Trustees ....................................................... 21
Additional Information About the IEEE Fund............................... 22
Financial Statements..................................................... 22
Shareholder Inquiries.................................................... 23
Appendix A - Plan of Reorganization
Appendix B - Form of Investment Advisory Agreement
Appendix C - Form of Proposed Investment Advisory Agreement
Appendix D - Form of Proposed CAM Inc. Sub-Advisory Agreement
Appendix E - Form of Proposed Atlanta Capital Management Company
Sub-Advisory Agreement
Appendix F - Form of Rule 12b-1 Distribution Plan for Class A Shares
-ii-
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF A REORGANIZATION OF
IEEE BALANCED FUND INTO VISTA BALANCED FUND
Summary
The following is a summary of certain information relating to the
proposed Reorganization, the parties thereto and the related transactions, and
is qualified in its entirety by the more detailed information appearing
elsewhere in this Combined Prospectus/Proxy Statement, the Reorganization Plan,
and the prospectuses and statements of additional information of the IEEE Fund
and the Balanced Fund.
Proposed Reorganization
Based upon their evaluation of the relevant information presented to
them, and in light of their fiduciary duties under federal and state law, the
Board of Trustees of the Trust including its members who are not "interested
persons" of the Trust, as defined by the Investment Company Act of 1940, as
amended (the "1940 Act"), have unanimously determined that the proposed
Reorganization is in the best interests of the IEEE Fund and the Balanced Fund
and their respective shareholders.
Subject to shareholder approval, the Reorganization Plan provides for:
(a) the acquisition by the Balanced Fund of all of the assets of the IEEE Fund
in exchange for the assumption of all of the liabilities of the IEEE Fund by the
Balanced Fund and the delivery to the IEEE Fund of Class A shares of the
Balanced Fund; (b) the pro rata distribution by the IEEE Fund of Balanced Fund
shares to the shareholders of the IEEE Fund in liquidation of the IEEE Fund; and
(c) the termination of the IEEE Fund following the Reorganization. Consummation
of the Reorganization with respect to the IEEE Fund is contingent on the
Reorganization Plan being approved by shareholders of the IEEE Fund.
If the proposed Reorganization is consummated, each shareholder of the
IEEE Fund will become a shareholder of the Balanced Fund and will hold,
immediately after the time the Reorganization becomes effective (the "Effective
Time of Reorganization"), full and fractional Class A shares of the Balanced
Fund with an aggregate net asset value equal to the aggregate net asset value of
the shares of the IEEE Fund held by the shareholder immediately before the
Effective Time of Reorganization.
Reasons for Reorganization
At a meeting of the Board of Trustees (the "Trustees" or the "Board")
of the Trust held on December 14, 1995, the Trustees, including all of the
Trustees who are not "interested persons," as defined in the 1940 Act, of the
Trust, Chase, or Atlanta Capital
<PAGE>
Management Company, unanimously approved the proposed Reorganization and
Reorganization Plan as in the best interest of the IEEE Fund, the Balanced Fund
and their respective shareholders. The Trustees considered all factors they
considered relevant, including, among other factors, (i) the fact that (A) Chase
will continue to serve as Investment Adviser, Administrator, Shareholder
Servicing Agent, and Custodian to the Balanced Fund and (B) Vista Broker-Dealer
Services, Inc., a wholly-owned subsidiary of The BISYS Group, Inc., will
continue to serve as Distributor; (ii) the experience, reputation and financial
resources of Chase; (iii) the experience, reputation and financial resources of
Vista Broker-Dealer Services, Inc.; (iv) the expenses and expense ratio proposed
for the Balanced Fund, compared with those of the IEEE Fund; and (v) the fact
that the various shareholder services available to shareholders of the IEEE Fund
are substantially identical to those currently available to Balanced Fund
shareholders. The Trustees also determined that the opportunity to continue to
exchange shares of the Balanced Fund for shares of the other funds of the Trust
would be beneficial to IEEE Fund shareholders. For more detailed information,
see "Information Relating to the Proposed Reorganization - Board Consideration."
If for any reason the Reorganization of the IEEE Fund is not approved or
consummated, then the IEEE Fund will continue to operate with its then-current
advisory and distribution arrangements.
The Board of Trustees recommends that shareholders vote FOR the
proposed Reorganization.
Voting Information
Only shareholders of the IEEE Fund of record at the close of business
on _______, 1996 (the "Record Date"), will be entitled to notice of and to vote
at the meeting, including any adjournments thereof. The votes of shareholders of
the Balanced Fund are not being solicited in connection with the Reorganization
because their approval or consent is not necessary for the Reorganization. Any
proxy which is properly executed and returned in time to be voted at the Meeting
will be counted in determining whether a quorum is present and will be voted in
accordance with the instructions marked thereon, or in the absence of any
instructions, such proxy will be voted to approve the Reorganization Plan and
the transactions contemplated thereby. A Shareholder may revoke his or her proxy
at any time prior to its exercise by delivering written notice of revocation or
by executing and delivering a later dated proxy to the address of the IEEE Fund
set forth on the cover page of this combined Prospectus/Proxy Statement, or by
attending and voting at the Meeting.
As of __________, 1996, the following shareholders of record owned 5%
or more of the outstanding shares of the IEEE Fund:
[insert 5% shareholders]
Federal Income Tax Consequences
-2-
<PAGE>
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Trust,
is expected to issue an opinion as of the Effective Time of Reorganization
stating that the Reorganization will not give rise to the recognition of income,
gain or loss for Federal income tax purposes to the IEEE Fund, the Balanced
Fund, or their respective shareholders. See "Information Relating to the
Proposed Reorganization -- Federal Income Tax Consequences."
Organizational Structure
The Trust is an open-end, management investment company organized as a
Massachusetts business trust with 15 existing investment portfolios and
aggregate assets, as of , 1995, of approximately $ billion. Of the 15 investment
portfolios of the Trust, two are covered by this Combined Prospectus/Proxy
Statement: the Balanced Fund and the IEEE Fund. Assuming that the IEEE Fund
obtains the necessary shareholder approval and is reorganized with the Balanced
Fund, the Trust will have 14 separate investment portfolios: Vista U.S.
Government Income Fund, Vista Balanced Fund, Vista Equity Income Fund, Vista
Bond Fund, Vista Short Term Bond Fund, Vista Equity Fund, Vista Growth and
Income Fund, Vista Capital Growth Fund, Vista International Equity Fund, Vista
Global Fixed Income Fund, Vista Small Cap Equity Fund, Vista Southeast Asia
Fund, Vista Japan Fund and Vista European Fund. Certain of the series, including
the Balanced Fund, are authorized to issue multiple classes of shares. Chase,
one of the largest commercial banks in the United States, serves as investment
adviser to the Vista Funds. The investment objectives, restrictions and policies
of the IEEE Fund are substantially identical to those of the Balanced Fund. See
"Comparison of the Balanced Fund and the IEEE Fund" for a more complete
description.
Risk Factors
Because of the similarities of the investment objectives, restrictions
and policies of the IEEE Fund and the Balanced Fund, the Adviser believes that
an investment in the Balanced Fund involves investment risks that are
substantially similar to those of the IEEE Fund. There are differences, however,
between the IEEE Fund and the Balanced Fund with respect to some features. See
"Comparison of the Balanced Fund and the IEEE Fund" for a discussion of these
differences.
Information Relating to the Proposed Reorganization
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 Proxy Statement/Prospectus.
Description of the Reorganization Plan
-3-
<PAGE>
The Reorganization Plan provides that at the Effective Time of
Reorganization, all of the assets of the IEEE Fund will be transferred to the
Balanced Fund.
In exchange for the transfer of the assets of the IEEE Fund, the
Balanced Fund will assume all of the liabilities and obligations of the IEEE
Fund and simultaneously will issue to the IEEE Fund at the Effective Time of
Reorganization full and fractional Class A shares in the Balanced Fund. The
aggregate net asset value of the Class A shares issued by the Balanced Fund will
be equal to the aggregate net asset value of the shares of the IEEE Balanced
Fund that will be outstanding immediately prior to the Effective Time of the
Reorganization.
Following the transfer of the assets and assumption of the liabilities
and obligations existing at the Effective Time of Reorganization, the IEEE Fund
will distribute the Balanced Fund shares so received to the IEEE Fund's
shareholders in liquidation of the IEEE Fund. Each shareholder owning shares of
the IEEE Fund at the Effective Time of Reorganization will receive the same
dollar amount in Balanced Fund shares as the shareholder had in the IEEE Fund,
plus the right to receive any unpaid dividends or distributions which were
declared before the Effective Time of Reorganization on shares of the IEEE Fund.
If the Reorganization of the IEEE Fund is approved and consummated, the IEEE
Fund will be terminated.
The share transfer books of the IEEE Fund will be permanently closed as
of the close of business immediately preceding the Effective Time of
Reorganization. Redemption requests received thereafter by the IEEE Fund will be
deemed to be redemption requests for shares of the Balanced Fund to be
distributed to the former IEEE Fund shareholders. If any IEEE Fund shares held
by a former IEEE Fund shareholder are represented by a share certificate, the
certificate must be surrendered to the Balanced Fund's transfer agent for
cancellation before the Balanced Fund shares issued to the shareholder in the
Reorganization will be redeemed.
The current fundamental policies (changeable only by shareholder vote)
of the IEEE Fund might be deemed to prevent it from taking the actions necessary
to effectuate the Reorganization as described in this Combined Proxy
Statement/Prospectus. In general, these policies prohibit the IEEE Fund from
purchasing more than a stated percentage of another company, including the
Balanced Fund, such as would occur in connection with this Reorganization. By
approving the Reorganization Plan, shareholders of the IEEE Fund will be deemed
to have agreed to waive the application of the fundamental policies to the
extent necessary to consummate the Reorganization.
The Reorganization is subject to a number of other conditions,
including the receipt of certain legal opinions described in the Reorganization
Plan; certain regulatory approvals; 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 Reorganization will be on _________, 1996 or such other date
as is agreed to by the parties.
-4-
<PAGE>
The Reorganization Plan provides that the Board of Trustees of the
Trust may terminate the Reorganization Plan and abandon the Reorganization
contemplated thereby at any time prior to the Effective Time of Reorganization,
notwithstanding approval thereof by the shareholders of the IEEE Fund, if, in
the judgment of the Board, proceeding with the Reorganization would be
inadvisable. The Board of Trustees of the Trust may terminate the Reorganization
Plan and abandon the Reorganization contemplated thereby if any of the
conditions set forth in the Reorganization Plan have not been satisfied or the
Reorganization has not occurred by the mutually agreed upon date of closing of
the Reorganization. In the event of any such termination, there will be no
liability for damages on the part of either party to the other.
Chase or its affiliates shall pay the costs and expenses of the
Reorganization and all transactions contemplated therein.
Board Consideration
On December 14, 1995, the Board of Trustees of the Trust approved the
proposed Reorganization Plan and the transactions contemplated therein, subject
to shareholder approval. The Board of Trustees voted to approve the
Reorganization because the Board believed that the opportunity for shareholders
of the IEEE Fund to become shareholders of the Balanced Fund would provide them
with substantial advantages.
In determining to recommend approval of the Reorganization to the
shareholders, the Board of Trustees inquired into a number of matters and
considered the following factors, among others:
(1) the terms and conditions of the Reorganization Plan,
including the fact that the IEEE Fund would not bear the
expense of the reorganization transactions;
(2) the current and anticipated size of the IEEE Fund and the
Balanced Fund, including recent sales and redemptions, and
the potential for greater economies of scale and
diversification that would be achieved for shareholders of
the IEEE Fund as investors in a larger portfolio;
(3) the substantial similarity of the investment objectives and
policies of the IEEE Fund and the Balanced Fund;
(4) the fact that Chase will continue to serve as Investment
Adviser, Administrator, shareholder Servicing Agent, and
custodian of the Balanced Fund, and its experience,
capabilities and resources;
(5) the fact that Vista Broker-Dealer Services, Inc. ("VBDS")
will continue to serve as Distributor, and its experience,
capabilities and resources;
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<PAGE>
(6) the federal tax consequences to the IEEE Fund, the Balanced
Fund and their shareholders resulting from the proposed
Reorganization, and the likelihood that no recognition of
income, gain or loss for federal income tax purposes to the
IEEE Fund, the Balanced Fund or their shareholders will
occur as a result thereof; and
(7) the alternative options to the proposed Reorganization.
In considering these factors and reaching the decision to recommend
that the shareholders of the IEEE Fund vote to approve the Reorganization and
the Reorganization Plan, the Board concluded that the Reorganization is in the
best interests of the shareholders of the IEEE Fund.
Federal Income Tax Consequences
Consummation of the Reorganization is subject to the condition that the
Trust receives an opinion from Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
counsel to the Trust, stating that for Federal income tax purposes: (i) the
transfer of all of the assets of the IEEE Fund to the Balanced Fund in exchange
for the assumption of all the liabilities of the IEEE Fund by the Balanced Fund
and the delivery to the IEEE Fund of shares of the Balanced Fund, and the
distribution by the IEEE Fund pro rata to its shareholders of such shares of the
Balanced Fund and the termination of the IEEE Fund, as described in the
Reorganization Plan, will constitute a reorganization within the meaning of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended; (ii) no gain
or loss will be recognized by the IEEE Fund as a result of such transactions;
(iii) no gain or loss will be recognized by the Balanced Fund as a result of
such transactions; (iv) no gain or loss will be recognized by the shareholders
of the IEEE Fund on the distribution to them by the IEEE Fund of shares of the
Balanced Fund in exchange for their shares of the IEEE Fund; (v) the basis of
Balanced Fund shares received by a shareholder of the IEEE Fund will be the same
as the basis of the shareholder's IEEE Fund shares immediately prior to the
transactions; (vi) the basis to the Balanced Fund of the assets of the IEEE Fund
received pursuant to such transactions will be the same as the basis of the
assets in the hands of the IEEE Fund immediately before such transactions; (vii)
a shareholder's holding period for Balanced Fund shares will be determined by
including the period for which the shareholder held IEEE Fund shares exchanged
therefor, provided that the shareholder held IEEE Fund shares as a capital
asset; and (viii) the Balanced Fund's holding period with respect to the assets
received in the transactions will include the period for which such assets were
held by the IEEE Fund.
The IEEE Fund and the Balanced Fund have not sought a tax ruling from
the Internal Revenue Service (the "IRS") with respect to the tax aspects of the
Reorganization, but will act in reliance upon the opinion of counsel discussed
in the previous paragraph. Such opinion is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. If for any reason the
Reorganization did not qualify as a tax-free Reorganization
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<PAGE>
for Federal income tax purposes, then the Reorganization would be treated as a
taxable asset sale and purchase. In such event, the IEEE Fund would recognize
gain or loss on the transaction measured by the difference between the
consideration received by the IEEE Fund and the tax basis of the IEEE Fund
assets; the tax basis of the assets acquired by the Balanced Fund would equal
the purchase price plus the amount of any liabilities transferred to the
Balanced Fund; and upon distribution of the shares of the Balanced Fund in
dissolution of the IEEE Fund, the shareholders of the IEEE Fund would recognize
gain or loss on the disposition of their IEEE Fund shares measured by the
difference between the fair market value of the Balanced Fund shares received by
them and the basis of the IEEE Fund shares held by them. Shareholders should
consult their own advisers concerning the potential tax consequences of the
Reorganization to them, including state and local income tax consequences.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSED REORGANIZATION
ADDITIONAL INFORMATION
Chase also serves as each Fund's administrator pursuant to separate
Administration Agreements. Under the Administration Agreement, Chase generally
assists in all aspects of each Fund's operations, other than providing
investment advice, subject to the overall authority of the Board of Trustees in
accordance with applicable state law. Under the terms of the relevant
Administration Agreement, Chase receives a monthly fee at the annual rate of
.10% of the value of each Fund's average daily net assets. For each Fund, the
administration fee payable, the amount by which such fee was reduced pursuant to
a waiver by Chase, and the net administration fees paid by each Fund under the
Administration Agreement for the indicated period are set forth below under
"Fees and Fee Waivers."
The Funds have engaged Vista Broker-Dealer Services, Inc. (the
"Sub-Administrator"), a wholly-owned subsidiary of BISYS Fund Services, Inc.,
located at 125 West 55th Street, New York, New York 10019, to assist it in
providing certain administrative services for the Funds pursuant to a
Sub-Administration Agreement between the Trust, on behalf of the Funds, and the
Sub-Administrator. The Sub-Administrator receives an annual fee, payable
monthly, of .05% of the average daily net assets of each Fund.
On November 6, 1995, the Trust, other investment companies advised by
Chase, and Chase filed an application (the "Application") with the Securities
and Exchange Commission (the "Commission") requesting an order of the Commission
permitting implementation, without prior stockholder approval, of the New
Advisory Agreements during the interim period commencing on the date of the
closing on the Holding Company Merger and ending at the earlier of such time as
sufficient votes are cast by the IEEE Fund's shareholders to approve or
disapprove the relevant Agreement or April __, 1996 (but in no event later than
_______, 1996) (the "Interim Period").
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<PAGE>
As a condition to the requested exemptive relief, the Trust has
undertaken in the Application that the advisory compensation payable by the IEEE
Fund during the Interim Period will be maintained in an interest-bearing escrow
account and amounts in the account will be paid to Chase only upon approval by
the shareholders of the IEEE Fund of the New Advisory Agreement and the
compensation payable thereunder. In addition, the Application contains
representations that Chase (and its successor, if applicable), will take all
appropriate steps so that the scope and quality of its advisory and other
services provided to the Funds during the Interim Period will be at least
equivalent to the scope and quality of the services previously provided; and
that, in the event of any material change in the personnel providing services
pursuant to the New Advisory Agreements during the Interim Period, the Board
will be apprised and consulted to assure that they are satisfied that the
services provided will not be diminished in scope or quality.
The Trust's Board of Trustees concluded that payment of the investment
advisory fee under the New Advisory Agreement, during the Interim Period would
be appropriate and fair considering that (1) the fee would be paid at the same
rate as was previously in effect under the Existing Advisory Agreement and
services would be provided in the same manner, (2) because of the relatively
short time frame necessary to complete the Mergers, there was a possibility that
the IEEE Fund would not obtain the requisite number of votes to approve the New
Advisory Agreement prior to the Mergers, and (3) the non-payment of advisory
fees during the Interim Period would be an unduly harsh result in view of the
services provided to IEEE Fund under the New Advisory Agreement.
Comparison of the Balanced Fund and the IEEE Fund
Investment Objectives, Policies and Restrictions
1. Investment Objectives and Policies
The investment objectives and policies of the Balanced Fund are similar
but not identical to those of the IEEE Fund. The discussion below summarizes the
material differences between the investment objectives and policies of the Funds
and is qualified in its entirety by the discussion elsewhere herein and in the
prospectuses and statements of additional information of the Balanced Fund and
the IEEE Fund.
The investment objective of both the Balanced Fund and the IEEE Fund is
to provide shareholders with a maximum total return through a combination of
long-term growth of capital and current income.
Both the IEEE Fund and the Balanced Fund seek to achieve their
investment objective through a policy of diversified investments in equity and
debt securities, including common stocks, convertible securities, and government
and corporate fixed-income senior securities. Under normal market conditions,
between 40%-70% of the IEEE Fund's total assets are invested in common stocks
and other equity investments (including preferred stocks,
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<PAGE>
convertible debt, warrants and other securities convertible into or exchangeable
for common stocks). Similarly, the Balanced Fund normally invests between
35%-70% of its assets in such instruments. The majority of both Funds' common
stock and other equity investments are invested in companies with a market
capitalization of at least $200 million. In addition, the IEEE Fund and the
Balanced Fund invest at least 30% and 35%, respectively, of their assets in
fixed-income senior securities, defined for this purpose to include
non-convertible corporate debt securities and government obligations.
Non-convertible corporate debt obligations held in both Funds' portfolios are
rated, at the time of purchase, BBB or higher by Standard & Poor's Corporation
("S&P") or Baa or higher by Moody's Investor Service, Inc. ("Moody's"), or if
unrated, determined to be of comparable quality by the Adviser or the Fund under
criteria approved by the Adviser and the Board of Trustees. Both Funds may also
purchase obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and may invest in high quality short-term debt securities
such as commercial paper rated A-1 by S&P or P-1 by Moody's.
2. Investment Restrictions
In general, the investment restrictions of the Balanced Fund are, in
substantial respects, similar to those of the IEEE Fund. There are, however,
differences. The following discussion summarizes some of the significant
differences in the investment restrictions of the Balanced Fund and the IEEE
Fund, and is qualified in its entirety by the discussion elsewhere herein and in
the prospectuses and statements of additional information of the Balanced Fund
and the IEEE Fund.
The significance of any investment restriction being fundamental is
that it may not be changed without the approval of a "majority of outstanding
voting securities" (within the meaning of the 1940 Act) of the Balanced Fund or
the IEEE Fund, as the case may be.
One distinction between the Balanced Fund and the IEEE Fund derives
from the circumstances under which each fund is allowed to make loans to other
persons. The Balanced Fund is not permitted to make loans to other persons,
except (i) through the lending of its portfolio securities and provided that any
such loans not exceed 30% of the Fund's total assets (taken at market value),
(ii) through the use of repurchase agreements or the purchase of short-term
obligations and provided that not more than 10% of the Fund's total assets will
be invested in repurchase agreements maturing in more than seven days, or (iii)
by purchasing a portion of an issue of debt securities of types commonly
distributed privately to financial institutions, for which purposes the purchase
of short-term commercial paper or a portion of an issue of debt securities which
are part of an issue to the public shall not be considered the making of a loan.
The IEEE Fund is subject to a restriction which is identical in all respects
except that with regard to the use of repurchase agreements or the purchase of
short-term obligations it requires that not more that 15% of the Fund's total
assets be invested in repurchase agreements maturing in more than seven days.
The Balanced Fund has a fundamental investment restriction prohibiting
the writing, purchasing or selling of any put or call option or any combination
thereof. The IEEE Fund,
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<PAGE>
for the purpose of hedging its portfolio, will "write" or sell covered call and
put option contracts on its portfolio securities in an amount not to exceed 25%
of its net assets.
Currently, the fundamental investment restrictions of IEEE Fund and
Balanced Fund are substantially identical.
At this time, Balanced Fund shareholders are being asked to consider
the approval of amendments to, defundamentalization of and/or elimination of
certain fundamental investment restrictions for purposes of clarification,
modernization or adding flexibility to the Balanced Fund's investment program.
In each case, the current Restriction is set forth in the left hand column under
"Current" and it is proposed that the Restriction be restated, eliminated,
reclassified, or otherwise changed as indicated in the right hand column under
"Proposed".
Current: Proposed:
The Fund may not borrow money or Fundamental Restriction The Fund
pledge, mortgage or hypothecate its may not borrow money, except that
assets and, except that, as a the Fund may borrow money for
temporary measure for extraordinary temporary or emergency purposes, or
or emergency purposes it may borrow by engaging in reverse repurchase
in an amount not to exceed 1/3 of transactions, in an amount not
the current value of its net exceeding 33 1/3% of the value of
assets, including the amount its total assets at the time when
borrowed, and may pledge, mortgage the loan is made and may pledge,
or hypothecate not more than 1/3 of mortgage or hypothecate no more
such assets to secure such than 1/3 of its net assets to
borrowings (it is intended that secure such borrowings. Any
money would be borrowed by the Fund borrowings representing more than
only from banks and only to 5% of the Fund's total assets must
accommodate requests for the be repaid before the Fund may make
repurchase of shares of the Fund additional investments.
while effecting an orderly
liquidation of portfolio
securities), provided that
collateral arrangements with
respect to the Fund's permissible
futures and options transactions,
including initial and variation
margin, are not considered to be a
pledge of assets for purposes of
this restriction; the Fund will not
purchase investment securities if
its outstanding borrowing,
including repurchase agreements,
exceeds 5% of the value of the
Fund's total assets.
Current: Proposed:
The Fund may not purchase Nonfundamental Restriction The Fund
securities of any issuer if such may not, with respect to 75% of its
purchase at the time thereof would assets, hold more than 10% of the
cause more than 10% of the voting outstanding voting securities of an
securities of such issuer to be issuer.
held by the Fund.
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<PAGE>
Current: Proposed:
The Fund may not purchase any Nonfundamental Restriction
security or evidence of interest The Fund may not make short sales
therein on margin, except that such of securities, other than short
short-term credit as may be sales "against the box," or
obtained as may be necessary for purchase securities on margin
the clearance of purchases and except for short-term credits
sales of securities and except necessary for clearance of
that, with respect to the Fund's portfolio transactions, provided
permissible options and futures that this restriction will not be
transactions, deposits of initial applied to limit the use of
and variation margin may be made in options, futures contracts and
connection with the purchase, related options, in the manner
ownership, holding or sale of otherwise permitted by the
futures or options positions. investment restrictions, policies
and investment program of the Fund.
Current: Proposed:
The Fund may not concentrate its Fundamental Restriction
investments in any particular The Fund may not purchase the
industry, but if it is deemed securities of any issuer (other
appropriate for the achievement of than securities issued or
the Fund's investment objective, up guaranteed by the U.S. government
to 25% of its assets at market or any of its agencies or
value at the time of each instrumentalities, or repurchase
investment, may be invested in any agreements secured thereby) if, as
one industry, except that this a result, more than 25% of the
restriction does not apply to U.S. Fund's total assets would be
Government securities (in addition, invested in the securities of
so long as a single foreign companies whose principal business
government or supra-national activities are in the same
organization is considered to be an industry. Notwithstanding the
"industry" for purposes of this 25% foregoing, with respect to the
limitation, the Fund will comply Fund's permissible futures and
therewith), and except that, with options trans- actions, positions
respect to the Fund's permissible in options and futures shall not be
futures and options transactions, subject to this restriction.
positions in options and futures
shall not be subject to this
restriction.
For purposes of this restriction,
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".
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<PAGE>
Current: Current:
The Fund may not purchase or sell Fundamental Restriction
real estate (including limited The Fund may not purchase or sell
partnership interests but excluding physical commodities unless
securities secured by real estate acquired as a result of ownership
or interests therein), interests in of securities or other instruments
oil, gas or mineral leases, (but this shall not prevent the
commodities or commodity contracts Fund from (i) purchasing or selling
in the ordinary course of business, options and futures contracts or
other than with respect to the from investing in securities or
Fund's permissible futures and other instruments backed by
options transactions (the Fund physical commodities or (ii)
reserves the freedom of action to engaging in forward purchases or
hold and to sell real estate sales of foreign currencies or
acquired as a result of its securities).
ownership of securities).
Fundamental Restriction
The Fund may not purchase or sell
real estate unless acquired as a
result of ownership of securities
or other instruments (but this
shall not prevent the Fund from
investing in securities or other
instruments backed by real estate
or securities of companies engaged
in the real estate business).
Investments by the Fund in
securities backed by mortgages on
real estate or in marketable
securities of companies engaged in
such activities are not hereby
precluded.
Nonfundamental Restriction
The Fund may not purchase or sell
interests in oil, gas or mineral
leases.
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<PAGE>
Current: Proposed:
The Fund may not knowingly invest Nonfundamental Restriction
in securities which are subject to The Fund may not invest more than
legal or contractual restrictions 15% of its net assets in illiquid
on resale (including securities securities. This limitation may be
that are not readily marketable, subject to additional restrictions
but not including repurchase imposed by jurisdictions in which
agreements maturing in not more the Fund's shares are offered for
than seven days) if, as a result sale.
thereof, more than 15% of the
Fund's total assets (taken at
market value) would be so invested
(including repurchase agreements
maturing in more than seven days).
This limitation may be subject to
additional restrictions imposed by
jurisdictions in which the Fund's
shares are offered for sale
(currently 10%).
Current: Proposed:
The Fund may not write, purchase or It is proposed that this
sell any put or call option or any restriction be reclassified as
combination thereof, provided that nonfundamental.
this shall not prevent the writing,
purchasing or selling of puts,
calls or combinations thereof with
respect to U.S. government
securities or with respect to the
Fund's permissible futures and
options transactions, the writing,
purchasing, ownership, holding or
selling of futures and options
positions or of puts, calls or
combinations thereof with respect
to futures.
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<PAGE>
Current Proposed:
The Fund may not issue any senior Fundamental Restriction
security (as that term is defined The Fund may not issue any senior
in the 1940 Act) if such issuance security (as defined in the 1940
is specifically prohibited by the Act), except that (a) the Fund may
1940 Act or the rules and engage in transactions that may
regulations promulgated thereunder, result in the issuance of senior
provided that collateral securities to the extent permitted
arrangements with respect to the under applicable regulations and
Fund's permissible options and interpretations of the 1940 Act or
futures transactions, including an exemptive order; (b) the Fund
deposits of initial and variation may acquire other securities, the
margin, are not considered to be acquisition of which may result in
the issuance of a senior security the issuance of a senior security,
for purposes of this restriction. to the extent permitted under
applicable regulations or
interpretations of the 1940 Act;
(c) subject to the restrictions set
forth below, the Fund may borrow
money as authorized by the 1940
Act. For purposes of this
restriction, collateral
arrangements with respect to the
Fund's permissible options and
futures transactions, including
deposits of initial and variation
margin, are not considered to be
the issuance of a senior security.
Current: Proposed:
The Fund may not make short sales It is proposed that this
of securities or maintain a short restriction be eliminated, as it
position; except combined with a has been nonfundamental restriction
that the Fund may only make such concerning purchases of securities
short sales of securities or on margin.
maintain a short position if when a
short position is open the Fund
owns an equal amount of such or
securities convertible into or
exchangeable, without payment of
any further consideration, for
securities of the same issue as,
and equal in amount to, the
securities sold short, and not more
than 10% of the Fund's net assets
(taken at market value) is held as
collateral for such sales at any
one time (it is the present
intention of management to make
such sales only for the purpose of
deferring realization of gain or
loss for federal income tax
purposes; such sales would not be
made of securities subject to
outstanding options).
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<PAGE>
Vista
Balanced IEEE
Fund Balanced
Class A Fund
Shareholder Transaction Expenses
Maximum Initial Sales Charge Imposed on Purchases
(as a percentage of offering price)*.................... 4.50% None
Maximum Sales Charge Imposed on Reinvested
Dividends............................................... None None
Exchange Fee None None
Annual Fund Operating Expenses (as a percentage of net
assets)
Investment Advisory Fee (After waivers of fees)......... .12% .60%
Rule 12b-1 Distribution Plan Fee (After waivers of fees) .20% .25%
Administration Fee (After waiver of fees)............... .03% .10%
-- Sub-administration Fee..................... .05% .05%
-- Shareholder Servicing Fee.................. .05% .25%
-- Other Operating Expenses+.................. .80% 00%
----- ---
Total Fund Operating Expenses.......................... 1.25% 1.25%
* No commission, sales load, or other similar charge will be incurred by
shareholders of the IEEE Fund in connection with the Reorganization.
The rules of the Securities and Exchange Commission require that the
Fund's maximum sales charge be reflected in the expense summary.
+ A shareholder may incur a $10.00 charge for certain wire redemptions.
Chase serves as Administrator, Shareholder Servicing Agent, and
Custodian to both the IEEE Fund and the Balanced Fund. VBDS serves as
Distributor to both the IEEE Fund and the Balanced Fund. DST Systems, Inc.
("DST") acts as transfer agent and dividend disbursing agent (the "Transfer
Agent") for the Balanced Fund and the IEEE Fund.
For further information about the advisory and administrative
arrangements for the Balanced Fund and the IEEE Fund, see "Information About the
IEEE and Balanced Funds' Investment Adviser, Administrator, Distributor and
Sub-Administrator, Distribution Plans, Shareholder Servicing Agents, Independent
Accountants, Counsel, Transfer Agent and Custodian" and "Information About The
IEEE Fund's Sub-Adviser and Other Relationships" below.
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<PAGE>
Shareholder Service Agreements
The Trust, on behalf of the Balanced Fund and the IEEE Fund, has
entered into shareholder servicing agreements with each Shareholder Servicing
Agent to provide certain services for a fee which will not exceed, an on
annualized basis, 0.25% of each Fund's average daily net assets represented by
shares owned during the period for which payment is being made by investors with
whom such Shareholder Servicing Agent maintains a servicing relationship.
Services to be provided include, among others, account maintenance, including
responding to shareholder inquiries, directing shareholder communications,
account balances, and dividend policy. Each Shareholder Servicing Agent may,
from time to time, voluntarily waive all or a portion of the fees payable to it.
Distribution and Purchase Procedures
No sales charge is imposed by the IEEE Fund on the purchase of shares
or on the reinvestment of dividends or capital gains distributions. Balanced
Fund Class A shares however, are sold at net asset value plus an initial sales
charge of up to a maximum of 4.50% of the public offering price.
The IEEE Fund and the Balanced Fund have identical minimum initial and
additional investments for the purchase of shares. The minimums detailed below
vary by the type of account being established:
Account Type Minimum Initial Investment
Individual.......................................... $ 2,500 (1)
Individual Retirement Account (IRA)................. $ 1,000 (2)
Spousal IRA......................................... $ 250
SEP-IRA............................................. $ 1,000 (2)
Purchase Accumulation Plan.......................... $ 250 (3)
Payroll Deduction Program........................... $ 100 (4)
(401K, 403B, Keogh)
- ------------------------------------
(1) Employees of the Adviser and its affiliates, and Qualified Persons are
eligible for a $1,000 minimum initial investment.
(2) A $250 minimum initial investment is allowed if the new account is
established with a $100 minimum monthly Systematic Investment Plan as
described below.
(3) Account must be established with a $200 minimum monthly Systematic
Investment Plan as described below.
(4) A $25 minimum monthly investment must be established through an automated
payroll cycle.
The minimum additional investment is $100 for all types of accounts.
Shares of the IEEE Fund and the Balanced Fund may be purchased through
selected financial service firms such as broker-dealer firms and banks, who have
entered into a selected dealer agreement with VBDS, at net asset value which is
computed once daily as of the close of trading on the New York Stock Exchange
(the "Exchange") (normally 4:00 p.m.
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<PAGE>
Eastern time) on each business day during which the Exchange is open for
trading. The net asset value becomes effective at the New York Stock Exchange
closing time. The public offering price of Class A shares is the next determined
net asset value, plus applicable initial sales charge.
Plan of Distribution
The Balanced Fund has adopted a Distribution Plan (the "Class A
Distribution Plan") for Class A shares in accordance with Rule 12b-1 under the
1940 Act which provides that Class A shares shall pay a distribution fee (the
"Basic Distribution Fee"), including payments to the Distributor, brokers and
shareholder servicing agents, at an annual rate not to exceed 0.20% of its
Shares' average daily net assets for distribution services (exclusive of any
expenses incurred by the Distributor in connection with print or electronic
media advertising). The Distributor may use all or any portion of such Basic
Distribution Fee to pay for Fund expenses of printing prospectuses and reports
used for sales purposes, expenses of the preparation and printing of sales
literature and other such distribution-related expenses. The Balanced Fund Class
A is also permitted to pay an additional fee not to exceed 0.05% per annum of
its Shares' average daily net assets in anticipation of, or as reimbursement
for, expenses incurred in connection with print or electronic media advertising
for its shares.
Management has proposed, and the Board of Trustees, including a majority of the
disinterested Trustees, has unanimously approved, a modification to the Class A
Distribution Plan of the Balanced Fund whereby the additional .05% fee be
changed to a "compensation" fee from a "reimbursement" fee. Class A shareholders
of the Balanced Fund are being asked to approve this proposed modification.
The IEEE Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act which provides that the IEEE Fund shall pay a distribution
fee to the Distributor at an annual rate not to exceed 0.25% of the average
daily net assets for distribution.
Redemption and Exchange Procedures
The Balanced Fund, except for having different procedures for Class A
and Class B shares, has substantially the same exchange rights and redemption
procedures as the IEEE Fund. Shares of the IEEE Fund and the Balanced Fund may
be redeemed through an authorized broker, by mail, wire or telephone.
Shares of the IEEE Fund may be redeemed, in whole or in part, on any
business day at the net asset value as next determined after receipt of a
redemption request in good order. Shareholders may exchange, at respective net
asset value, shares of the IEEE Fund for shares of the other Vista Funds, in
accordance with the terms of the other current prospectus of the Fund being
acquired.
Class A shares of the Balanced Fund may also be redeemed, in whole or
in part, on any business day at the net asset value as next determined after
receipt of a redemption request in good order. Balanced Fund shareholders may
exchange, at respective net asset
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<PAGE>
value, Class A shares of the Fund for Class A shares of the other Vista Funds
which has a similar class of shares in accordance with the terms of the then
current prospectus of the Funds being acquired. No initial shares charge is
imposed on the Class A shares being acquired.
Both the IEEE Fund and the Balanced Fund may redeem shares in an
account that has been reduced below $500, unless the Shareholder makes an
additional investment within 60 days to bring the value of the account to $500.
The Balanced Fund has substantially the same special investor services
as those provided by the IEEE Fund, including the Systematic Investment Plan,
the Systematic Redemption Plan, and the ability to invest through certain
retirement plans.
Income Dividends, Capital Gain Distributions and Taxes
The IEEE Fund and the Balanced Fund have substantially the same
policies with respect to dividends, distributions and taxes. The IEEE Fund and
the Balanced Fund distribute substantially all net capital gains, if any, to
shareholders each year, to the extent necessary to qualify for favorable federal
tax treatment. Both funds distribute net realized short-term and long-term
capital gains, if any, to shareholders annually after the close of the fiscal
year. Both funds distribute substantially all of the net income from dividends
and interest (if any) to shareholders quarterly. It is the intention of both the
IEEE Fund and the Balanced Fund to qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as amended.
Governance and Shareholders' Rights
The Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts. The Board of Trustees oversees all aspects of the
operations of the Trust. Because the Balanced Fund is a separate series of the
Trust, its operations will be governed by the Trust's Declaration of Trust and
By-laws, and applicable Massachusetts law. The Trust's Declaration of Trust
permits the issuance of an unlimited number of shares of beneficial interest in
each of the Vista Funds, and the creation of an unlimited number of series.
Shares of each of the Vista Funds are entitled to one vote per share (including
a fractional vote for fractional shares) and are voted in the aggregate and not
by series except as otherwise required by law and when the matter to be voted
upon affects only the interests of shareholders of a particular fund. Voting
rights are non-cumulative. None of the shares of any of the Vista Funds has
preemptive or conversion rights. The Trust does not intend to hold annual
meetings of shareholders. Such meetings may be called, however, at the
discretion of the Board of Trustees or upon demand of the holders of at least
10% of the outstanding shares of any Fund. In the event of such demand by the
shareholders of at least 10% of the outstanding securities, the Trust will call
a meeting and assist in communicating with other shareholders as required under
the Section 16(c) of the 1940 Act.
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Information Relating To Voting Matters
General Information
This Combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Trustees in
connection with the Meeting. It is expected that the solicitation of proxies
will be primarily by mail. The IEEE Fund's officers and service contractors may
also solicit proxies by telephone, telegraph or personal interview. Chase or its
affiliates will bear the cost of solicitation of proxies. It is anticipated that
banks, brokerage houses and other institutions, nominees and fiduciaries will be
requested to forward proxy materials to beneficial owners and to obtain
authorization for the execution of proxies. Chase or its affiliates may, upon
request, reimburse banks, brokerage houses and other institutions, nominees and
fiduciaries for their expenses in forwarding proxy materials to beneficial
owners.
Only shareholders of record at the close of business on _______, 1995
(the "Record Date"), will be entitled to vote at the Meeting. As of the Record
Date, the IEEE Fund had __________ shares outstanding and entitled to vote. Each
share or fraction thereof is entitled to one vote or fraction thereof.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the
instructions thereon. Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to the IEEE Fund a written notice of
revocation or a subsequently executed proxy, or by attending the Meeting and
voting in person.
Quorum
A quorum is constituted with respect to the IEEE Fund by the presence
in person or by proxy of the holders of a majority of the total number of
outstanding shares of the IEEE Fund entitled to vote at the Meeting. In the
event that a quorum is not present at the Meeting, or in the event that a quorum
is present at the Meeting but sufficient votes to approve the Reorganization
Plan and the transactions contemplated thereby are not received, the persons
named as proxies may propose one or more adjournments of the Meeting to permit
further solicitation of proxies, without notice other than announcement at the
Meeting. Any such adjournment will require the affirmative vote of a majority of
those shares affected by the adjournment that are represented at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the Reorganization Plan,
in favor of such adjournment, and will vote those proxies required to be voted
AGAINST or to abstain from voting on such proposal against any adjournment.
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Shareholder Approvals
Pursuant to applicable provisions of the Declaration of Trust, approval
of the Reorganization Plan and the transactions contemplated thereby requires
approval by the holders of at least two thirds of the outstanding shares of the
IEEE Fund.
The Board of Trustees of the Trust may terminate the Reorganization
Plan and abandon the Reorganization at any time prior to the Closing,
notwithstanding approval of the Reorganization Plan by the shareholders of the
IEEE Fund if, in the judgment of such Board, proceeding with the Reorganization
would be inadvisable.
Appraisal Rights
The Declaration of Trust and Bylaws of the Trust do not grant
shareholders any rights of appraisal. A shareholder intending to dissent from
the Reorganization and demand payment for the shares may do so by notifying the
IEEE Fund, in writing, of the shareholders's intent to demand payment, if the
Reorganization is effected, and by not voting in favor of the Reorganization.
The exercise of any appraisal rights existing under the laws of the Commonwealth
of Massachusetts are subject to the "forward pricing" requirements of Rule 22c-1
under the 1940 Act, which supersedes any contrary provision of state law. Under
such requirements, shareholders have the right to redeem their shares from the
IEEE Fund at net asset value at any time until the Effective Time of
Reorganization and, thereafter, shareholders may redeem from the Balanced Fund
the shares acquired by them in the Reorganization at net asset value.
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Information About the Balanced and IEEE Funds' Investment Adviser,
Administrator, Distributor and Sub-Administrator, Distribution Plans,
Shareholder Servicing Agents, Transfer Agent, Custodian, Independent
Accountants and Counsel.
The Balanced Fund and the IEEE Fund, as two series of the same trust,
share many of the same service providers. For example, the Adviser,
Administrator, Distributor, Transfer Agent, Custodian, Independent Accountants
and Counsel are the same for both of the Funds. The form of relationship with
each of these service providers is substantially similar for both of the Funds
and is described below. Significant distinctions in the arrangements are also
discussed below. The IEEE Fund has certain relationships with service providers
in addition to those described below. For further information concerning the
IEEE Fund's other relationships, see "Information About The IEEE Fund's
Sub-Adviser and Other Relationships" below.
The Investment Adviser
The Chase Manhattan Bank, N.A. manages the assets of both the Balanced
Fund and the IEEE Fund. Subject to such policies as the Board of Trustees may
determine, the
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Adviser makes investment decisions for the Fund. For its services under the
Investment Advisory Agreement, Chase is entitled to receive an annual fee
computed daily and paid monthly based at an annual rate equal to 0.50% and 0.65%
of the average daily net assets of the Balanced Fund and the IEEE Fund,
respectively. The Adviser may, from time to time, voluntarily waive all or a
portion of its fees payable under the Advisory Agreement. With respect to the
IEEE Fund only, the Adviser has retained a "Sub-Adviser" to provide portfolio
advisory services. For information concerning this relationship, see
"Information About the IEEE Fund's Sub-Adviser and Other Relationships" below.
Under the Existing Advisory Agreement and the New Advisory Agreement,
the Adviser may periodically reduce all or a portion of its advisory fee with
respect to the IEEE Fund. In the fiscal year ended October 31, 1995, the IEEE
Fund paid to the Adviser aggregate investment advisory fees of $62,347, of which
$14,796 was waived by the Adviser.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, is a commercial bank offering a
wide range of banking and investment services to customers throughout the United
States and around the world. Its headquarters is at One Chase Manhattan Plaza,
New York, NY 10081. The Adviser, including its predecessor organizations, has
over 100 years of money management experience and renders investment advisory
services to others. Also included among the Adviser's accounts are commingled
trust funds and a broad spectrum of individual trust and investment management
portfolios. These accounts have varying investment objectives.
Chase has entered an Agreement and Plan of Merger with Chemical
pursuant to which Chase will merge with and into Chemical. As required by the
Investment Company Act of 1940, as amended, consummation of the Holding Company
Merger will result in the automatic termination of the investment advisory
agreement between the IEEE Fund, the Adviser and the sub-advisory agreement
between the Adviser and Atlanta Capital Management Company. In addition,
subsequent to the Holding Company Merger, the Adviser will be merged with and
into Chemical Bank in a secondary merger of the principal operating entities of
Chase and Chemical. The Bank Merger may also be deemed to result in the
automatic termination of the investment advisory agreement and sub-advisory
agreement. Balanced Fund shareholders are being asked to vote upon new
investment advisory agreements. The Adviser also recommended to the Board that
the Adviser be permitted to utilize the services of its wholly-owned subsidiary,
Chase Asset Management, Inc. ("CAM Inc."), to render advisory services to the
Funds. CAM Inc. is a registered investment adviser which was recently
incorporated for the purpose of rationalizing the delivery of investment
advisory services by The Chase Manhattan Bank to its institutional clients. CAM
Inc. will be retained pursuant to a proposed Sub-Advisory Agreement (the "CAM
Inc. Agreement"). The Board has approved, and recommends that the shareholders
of the Balanced Fund approve, the Proposed Advisory Agreement and CAM Inc.
Agreement (collectively, the "Agreements"). In addition, the Board of Trustees
approved the continuation of the Agreements after the Bank Merger, on the same
terms and conditions as in effect immediately prior to the merger (except for
effective and termination dates) in the event the Agreements are deemed to
terminate as a result of the Bank Merger. Shareholder
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approval of the Agreements will also be deemed to approve such continuation of
the Agreements after the Bank Merger, if applicable. In the event shareholder
approval is not obtained, the Trust's Board of Trustees will then decide on the
appropriate course of action for the Vista Balanced Fund.
No increase is proposed to the contractual fee rates under the Proposed
Advisory Agreement and the Adviser, and not the Balanced Fund, will compensate
CAM Inc. for its services as Sub-Adviser. Therefore, the Balanced Fund will not
bear any increase in the contractual advisory fee rates resulting from the
Proposed New Advisory Agreement or the CAM Inc. Agreement.
While the Proposed Advisory Agreement is described below, the
discussion is qualified by the provisions of the complete agreement, a copy of
which is attached as Appendix C. If the shareholders of the Balanced Fund do not
approve this Proposal, then Chase will continue to act, commencing on the
Holding Company Merger, as the adviser to the Balanced Fund under the terms of
the New Advisory Agreement. The New Advisory Agreement should be read in
conjunction with the following.
Background. In connection with the Mergers, New Chase intends to
rationalize its corporate wide investment management operations in order to more
fully take advantage of portfolio management skills that will exist within the
various corporate entities controlled by New Chase. As part of this structuring,
New Chase would like to consolidate its mutual fund supervisory functions within
one entity (Chase), and its portfolio management responsibilities within another
entity (CAM Inc.). The Adviser also seeks to retain the ability to utilize
portfolio managers employed by the various investment management entities
affiliated with the Adviser through common ownership by New Chase.
Thus, the Proposed Advisory Agreement would provide the Adviser with
the ability to utilize the specialized portfolio skills of employees of all its
various affiliates, thereby providing the Balanced Fund with greater
opportunities and flexibility in accessing investment expertise. For the
foreseeable future, the Adviser would employ certain members of the Adviser's
senior management.
Similarities Between the Current and Proposed Advisory Agreements:
The Proposed Advisory Agreement is similar in many respects to the
Current Advisory Agreement and New Advisory Agreement. The Proposed Advisory
Agreement contains the material terms of the Current Advisory Agreement, but
reflects the proposed change of the investment adviser from The Chase Manhattan
Bank, N.A. to its successor entity, and incorporates additional provisions
designed to clarify and supplement the rights and obligations of the parties.
Most importantly, the contractual rate at which fees are required to be
paid by the Balanced Fund for investment advisory services, as a percentage of
average daily net assets, will remain the same. Under the provisions of both the
Current and the Proposed Advisory Agreements, the Balanced Fund is required to
pay the Adviser a monthly fee equal
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to a stated percentage per annum of its average daily net assets. These amounts
are set forth below under "Fees and Fee Waivers."
The following summarizes certain additional aspects of the Current and
Proposed Advisory Agreements (collectively, the "Agreements") which are
materially the same in both Agreements:
In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties of the Adviser, the Adviser
shall not be liable to the Balanced Fund or to any shareholder for any losses
that may be sustained by the Balanced Fund in connection with its performance of
the Agreement.
The Adviser bears all expenses in connection with the performance of
its services under the Agreement. The Balanced Fund bears the expenses incurred
in its operations. Both agreements provide that the Adviser shall, at its
expense, provide the Balanced Fund with office space, furnishings and equipment
and personnel required by it to perform the services to be provided by the
Adviser and that the Trust shall be responsible for all of the Balanced Fund
expenses and liabilities.
Under the Agreement, if the aggregate expenses incurred by the Balanced
Fund in any fiscal year is in excess of the lowest applicable expense limitation
imposed by state securities laws or regulations thereunder, the Adviser shall
reduce its investment advisory fee, but not below zero, to the extent of its
share of such excess expenses; provided, however, that certain provided expenses
are specifically excluded from such calculation. No such reimbursement was
required during the Balanced Fund's most recent fiscal period.
The Balanced Fund may terminate the Agreement as to the Balanced Fund
without penalty on not more than 60 days' written notice when authorized by
either a vote of shareholders holding a "majority of the outstanding voting
securities" (within the meaning of the 1940 Act) of the Balanced Fund or by a
vote of a majority of the Trust's Board of Trustees. The Adviser may terminate
the Agreement on 60 days' written notice to the Trust. The Agreement terminates
in the event of its assignment (as defined in the 1940 Act).
Differences Between the Current and Proposed Advisory Agreements:
The following highlights summarize some of the additional provisions
which are included in the Proposed Advisory Agreement:
After the Bank Merger, Chase Manhattan Bank, a New York state chartered
bank, the successor entity to The Chase Manhattan Bank, N.A., will be the
adviser to the Balanced Fund rather than The Chase Manhattan Bank, N.A., and
will continuously supervise the investment and reinvestment of cash, securities
and other property comprising the assets of the Balanced Fund. The Chase
Manhattan Bank, N.A. will be the Adviser to the Balanced Fund until the Bank
Merger.
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Details Regarding the Adviser's Duties. The Proposed Advisory Agreement
clearly specifies the duties of the Adviser. For example, the Adviser will be
required to obtain and evaluate pertinent data and other significant events and
developments which affect the economy, the Balanced Fund's investment program,
the issuers of securities and the industries in which they engage, and furnish a
continuous investment program for the Balanced Fund. The Adviser will be
obligated to furnish such reports, evaluations, information or analyses to the
Trust as the Board may request, make recommendations to the Board with respect
to Trust policies, and carry out such policies as are adopted by the Board.
Use of Affiliated Entities. The Proposed Advisory Agreement clarifies
that the Adviser may render services through its own employees or the employees
of one or more affiliated companies that are qualified to act as an investment
adviser to the Trust under applicable laws and are under the common control of
New Chase as long as all such persons are functioning as part of an organized
group of persons, and such organized group of persons is managed at all times by
authorized officers of the Adviser. The Adviser will be as fully responsible to
the Trust for the acts and omissions of such persons as it is for its own acts
and omissions.
Use of a Sub-Adviser. The Proposed Advisory Agreement clarifies that
the Adviser may from time to time employ or associate with such other entities
or persons (a "Sub-Adviser") as it believes appropriate to assist in the
performance of the Proposed Advisory Agreement with respect to the Balanced
Fund. However, the Balanced Fund will not pay any additional compensation for
any Sub-Adviser, and the Adviser will be as fully responsible to the Trust for
the acts and omissions of the Sub-Adviser as it is for its own acts and
omissions, and the Adviser must review, monitor and report to the Board
regarding the performance and investment procedures of any Sub-Adviser.
Execution of Portfolio Transactions. The Proposed Advisory Agreement
sets forth specific terms as to brokerage transactions and the Adviser's use of
broker-dealers. For example, the Adviser will be obligated to use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the most favorable to the
Balanced Fund. In assessing the best overall terms available for any
transaction, the Adviser will 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 and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis.
"Soft Dollars." A provision of the Proposed Advisory Agreement
explicitly allows the Adviser to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Adviser, the funds and/or the other
accounts over which the Adviser exercises investment discretion, and provides
that, notwithstanding the above, the Adviser may pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Balanced Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that the total commission is
reasonable in relation to the value of the
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brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Adviser with respect to accounts over which it exercises investment
discretion.
Aggregation of Orders. There is also a clarification of the authority
of the Adviser to aggregate the securities to be sold or purchased with those of
other funds or its other clients if, in the Adviser's reasonable judgment, such
aggregation will result in an overall benefit to a fund, taking into
consideration the advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements.
Other Clarifications. The Proposed Advisory Agreement contains certain
additional provisions which are intended to clarify the status, rights or
obligations of the parties. For example, the Adviser is deemed to be an
independent contractor and the provisions of the Proposed Advisory Agreement are
deemed to apply to the Balanced Fund severally and not jointly.
The Advisory Agreements currently in effect for each Fund were approved
by the full Board and by those Trustees who were not interested persons of any
party to the agreements, as defined by the 1940 Act (the "Disinterested
Trustees"), and by the shareholders of each of the Funds. After its initial
term, each Advisory Agreement continues in effect from year to year thereafter,
provided that each Advisory Agreement is approved at least annually by the Board
of Trustees, including the vote of a majority of the Disinterested Trustees cast
in person at a meeting called for the purpose of voting on approval, or by the
vote of the holders of a "majority" of the outstanding voting securities of the
Fund.
The Trust, on behalf of each Fund, may terminate any Advisory Agreement
without penalty on not more than 60 days' nor less than 30 days' written notice
when authorized by either a vote of the shareholders of a Fund or by a vote of a
majority of the Board of Trustees, including the vote of a majority of the
Disinterested Trustees. The investment adviser may terminate an Advisory
Agreement on not more than 60 days' nor less than 30 days' written notice. The
Advisory Agreements terminate in the event of their assignment (as defined in
the 1940 Act).
The Administrator
Pursuant to an Administration Agreement, Chase serves as administrator
of each of the Balanced and IEEE Funds. The Administrator provides certain
administrative services, including, among other responsibilities, coordinating
relationships with independent contractors and agents; preparing for signature
by officers and filing of certain documents required for compliance with
applicable laws and regulations excluding those of the securities laws of the
various states; preparing financial statements; arranging for the maintenance of
books and records; and providing office facilities necessary to carry out the
duties thereunder. The Administrator is entitled to receive from each Fund a fee
computed daily and paid monthly at an annual rate equal to 0.10% of each Fund's
average daily net assets. The Administrator may, from time to time, voluntarily
waive all or a portion of its fees payable to it under the Administration
Agreement. The Administrator does not have any
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responsibility or authority for the Fund's investments, the determination of
investment policy, or for any matter pertaining to the distribution of Fund
shares.
The Glass-Steagall Act
The Glass-Steagall Act prohibits banks from engaging in the business of
issuing, underwriting, selling or distributing securities, although national and
state-chartered banks generally are permitted to purchase and sell securities
upon the order and for the account of their customers. In 1971, the United
States Supreme Court held in Investment Company Institute v. Camp that the
Glass-Steagall Act prohibits a national bank from operating a fund for the
collective investment of managed agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board of Governors") issued a
regulation and interpretation to the effect that the Glass-Steagall Act and such
decision forbid a bank holding company registered under the Bank Holding Company
Act of 1956, as amended, or any non-bank affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company continuously
engaged in the issuance of its shares, but does not prohibit such a holding
company or affiliate from acting as investment adviser, transfer agent and
custodian to such an investment company. In 1981, the United States Supreme
Court held in Board of Governors of the Federal Reserve System v. Investment
Company Institute that the Board of Governors did not exceed its authority when
it adopted its regulation and interpretation authorizing bank holding companies
and their non-bank affiliates to act as investment advisers to registered
open-end investment companies.
Legislation has been proposed from time to time, has been introduced in
Congress, and may be reintroduced, which would permit a bank, a bank holding
company or a subsidiary thereof to organize, sponsor, control, and distribute
shares of an investment company such as the Trust notwithstanding present
restrictions under the Glass-Steagall Act and the Bank Holding Company Act of
1956. As described herein, each Fund is currently distributed by VBDS. If
current restrictions preventing a bank or a bank holding company affiliate from
legally sponsoring, organizing, controlling, or distributing shares of an
investment company were relaxed, the Funds expect that the Adviser would
consider the possibility of offering to perform some or all of the services now
provided by VBDS or its affiliates. It is not possible, of course, to predict
whether or in what form such legislation might be enacted or the terms under
which the Adviser might offer to provide services for consideration by the
Trustees.
The Distributor and Sub-Administrator
Vista Broker-Dealer Services, Inc. (the "Distributor") serves as the
principal underwriter of each of the IEEE and Balanced Funds' shares pursuant to
a Distribution and Sub-Administration Agreement (the "Distribution Agreement")
The Distribution Agreement provides that the Distributor shall bear the expenses
of printing, distributing and filing prospectuses and statements of additional
information and reports used for sales purposes, and of preparing and printing
sales literature and advertisements not paid for by the Distribution Plan. In
addition, the Distributor will provide certain sub-administration services,
including providing officers, clerical staff and office space. The Distributor
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currently receives a fee for sub-administration from each Fund at an annual rate
equal to 0.05% of each Fund's average daily net assets, on an annualized basis
for the Fund's then-current fiscal year. The Distributor may, from time to time,
waive all or a portion of the fees payable to it under the Distribution
Agreement.
The Distribution Plans
The Balanced Fund Distribution Plan. The Trustees have adopted a
Distribution Plan for the Class A shares of the Balanced Fund (the "Balanced
Fund Distribution Plan") in accordance with Rule 12b-1 under the 1940 Act, after
having concluded that there is a reasonable likelihood that the Distribution
Plan will benefit that class and its respective shareholders. The Class A
Distribution Plan provides that the Fund shall pay distribution fees including
payments to the Distributor, at an annual rate not to exceed 0.20% of its
average daily net assets for distribution services. Some payments under the
Distribution Plan may be used to compensate broker-dealers with trail or
maintenance commissions in amounts not to exceed 0.20% annualized of the average
net asset value of Class A shares. The distribution fees are not directly tied
to expenses; therefore, the amount of distribution fees paid by the Fund during
any year may be more or less than actual expenses incurred pursuant to the
Distribution Plan. Under its Distribution Plan, the Class A shares are also
permitted to pay an additional fee at an annual rate not to exceed 0.05% of its
average daily net assets in anticipation of, or as reimbursement for, expenses
incurred in connection with print or electronic media advertising in connection
with the sale of Fund shares.
Management has proposed, and the Board of Trustees, including a
majority of the disinterested Trustees, has unanimously approved, a modification
to the Class A Distribution Plans of the Balanced Fund whereby the additional
.05% fee be changed to a "compensation" fee from a "reimbursement" fee. Class A
shareholders of the Balanced Fund are being asked to approve this proposed
modification.
The IEEE Fund Distribution Plan. The Trustees have adopted a
Distribution Plan on behalf of the IEEE Fund (the "IEEE Distribution Plan") in
accordance with Rule 12b-1 under the 1940 Act, after having concluded that there
is a reasonable likelihood that the Distribution Plan will benefit the IEEE Fund
and its shareholders. The IEEE Distribution Plan provides that the IEEE Fund
shall pay distribution fees (the "Distribution Fee"), including payments to the
Distributor, at an annual rate not to exceed 0.25% of its average daily net
assets for distribution services. Some payments under the Plan may be used to
compensate broker-dealers with trail or maintenance commissions in an amount not
to exceed 0.25% annualized, of the assets maintained in the Fund by such
broker-dealers' customers. However, the IEEE Fund is not liable for any
distribution expenses incurred in excess of the Distribution Fee paid.
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The Shareholder Servicing Agents
The Trust, on behalf of the IEEE Fund and the Balanced Fund, has
adopted a Shareholder Servicing Agreement to compensate various shareholder
Servicing Agents for services performed on behalf of each Fund. The shareholder
servicing agreement with each Shareholder Servicing Agent provides that such
Shareholder Servicing Agent will, as agent for its customers perform various
services, including but not limited to the following: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares may be effected for each Fund as to which the Shareholder
Servicing Agent is so acting and certain other matters pertaining to the Fund;
assist shareholders in designating and changing dividend options, account
designations and addresses; provide necessary personnel and facilities to
establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by a Shareholder Servicing Agent) quarterly and year-end
statements and confirmations of purchases and redemptions; transmit, on behalf
of each Fund, proxy statements, annual reports, updated prospectuses and other
communications to shareholders of the Fund; receive, tabulate and transmit to
each Fund proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as each Fund
or a shareholder may request. For performing these services, each Shareholder
Servicing Agent receives certain fees, which may be paid periodically,
determined by a formula based upon the number of accounts serviced by such
Shareholder Servicing Agent during the period for which payment is being made,
the level of activity in accounts serviced by such Shareholder Servicing Agent
during such period, and the expenses incurred by such Shareholder Servicing
Agent. The fees relating to acting as liaison to shareholders and providing
personal services to shareholders will not exceed, on an annual basis, 0.25% of
the average daily net assets of each class of each Fund represented by shares
owned during the period for which payment is being made by investors for whom
such Shareholder Servicing Agent maintains a servicing relationship. Each
Shareholder Servicing Agent may, from time to time, voluntarily waive all or a
portion of the fees payable to it. In addition, Chase may provide other related
services to each Fund, for which it may receive compensation.
The Shareholder Servicing Agent, and its affiliates, agents and
representatives acting as Shareholder Servicing Agents, may establish custodial
investment accounts ("Accounts"), known as Chase Investment Accounts or by any
other name designated by a Shareholder Servicing Agent. Through such Accounts,
customers can purchase, exchange and redeem shares, receive dividends and
distributions on Fund investments, and take advantage of any services related to
an Account offered by such Shareholder Servicing Agent from time to time. All
Accounts and any related privileges or services shall be governed by the laws of
the State of New York, without regard to its conflicts of laws provisions.
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Transfer Agent and Custodian
DST Systems, Inc. ("DST") acts as transfer agent and dividend
disbursing agent (the "Transfer Agent") for both Funds. In this capacity, DST
maintains the account records of all shareholders in the Funds, including
statement preparation and mailing. DST is also responsible for disbursing
dividend and capital gain distributions to shareholders, whether taken in cash
or additional shares. From time to time, DST and/or the Fund may contract with
other entities to perform certain services for the Transfer Agent. For its
services as Transfer Agent, DST receives such compensation as is from time to
time agreed upon by the Trust and DST. DST's address is 127 W. 10th Street,
Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the IEEE Fund and the Balanced Fund for which Chase receives
compensation as is from time to time agreed upon by the Trust and Chase. The
Custodian's responsibilities include safeguarding and controlling the Funds'
cash and securities, handling the receipt and delivery of securities,
determining income and collecting interest on the Funds' investments,
maintaining books or original entry for portfolio and fund accounting and other
required books and accounts, and calculating the daily net asset value of shares
of the Funds. Portfolio securities and cash may be held by sub-custodian banks
if such arrangements are reviewed and approved by the Trustees. The internal
division of Chase which serves as the Funds' Custodian does not determine the
investment policies of the Funds or decide which securities will be bought or
sold on behalf of the Funds or otherwise have access to or share material inside
information with the internal division that performs advisory services for the
Funds.
Independent Accountants
Price Waterhouse, LLP, 1177 Avenue of the Americas, New York, New York
10036, is the independent accountant of the Trust. Price Waterhouse provides the
Trust with audit services, preparation and signing of tax returns, and
assistance and consultation with respect to the preparation of filings with the
SEC.
Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022, acts as counsel to the Trust.
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Information About the IEEE Fund's Sub-Adviser and
Other Relationships
The IEEE Fund's Sub-Adviser
With respect to the IEEE Fund only, the Adviser has retained a
"Sub-Adviser" to provide portfolio advisory services. The Sub-Adviser is Atlanta
Capital Management Company, an investment advisory firm in operation since 1969.
The Sub-Adviser currently manages over $2.5 billion and has 25 years experience
in equity management. The Sub-Adviser is registered as an investment adviser
with the Securities and Exchange Commission.
The Adviser retained the Sub-Adviser to provide portfolio management
services pursuant to a Sub-Advisory Agreement ("Agreement") dated July 26, 1993.
Pursuant to this Agreement the Adviser agreed to pay the Sub-Adviser a monthly
fee at the annual rate of .65% of the average daily net assets of the Fund less
any amount of the advisory fee waived by the Adviser.
Under the terms of the Agreement, the Sub-Adviser has discretion to
purchase and sell securities for the Fund, except as limited by the Fund's
investment objective, policies and restrictions. Although the Sub-Adviser's
activities are subject to general oversight by the Adviser and the Fund's
trustees, specific portfolio securities decisions are made by the Sub-Adviser.
Atlanta Capital, founded in 1969, manages institutional funds for a
limited number of corporate sponsors, governments and foundations. The firm was
acquired in April 1990 by London-based Hill Samuel Investment Management Group
Limited, but operates as an independent subsidiary.
IEEE Fund's Other Arrangements
The Sub-Adviser has entered into a Fixed Income Management Agreement
with the Institute of Electrical and Electronics Engineers, Inc. ("IEEE"), dated
as of August 30, 1993, pursuant to which IEEE will provide advice and
recommendations with respect to fixed income instruments, futures contracts and
options on fixed income instruments for the Fund's portfolio. In compensation
for IEEE's services to the Fund, IEEE will receive from the Sub-Adviser 50% of
the sub-advisory fee (after waivers, if any). IEEE is a professional
organization and is registered as an investment adviser with the Securities and
Exchange Commission.
-30-
<PAGE>
- ---------------------------------------------------------------------
Additional Information About the Trust
This Combined Proxy Statement/Prospectus constitutes the Proxy
Statement of the IEEE Fund for the meeting of its shareholders. Because the
operations of the IEEE Fund will be continued by the Balanced Fund, this
Combined Proxy Statement/Prospectus constitutes a preliminary prospectus for the
shares that will be issued in the Reorganization and shareholders of the IEEE
Fund will receive a final prospectus with their confirmations following the
closing of the Reorganization. Information about other portfolios of the Vista
Funds is contained in prospectuses and statements of additional information
dated ________________ and ______________, copies of which may be obtained
without charge by writing to or calling the Vista Funds at the address or
telephone number shown on the cover page of this Combined Proxy
Statement/Prospectus. The Trust is subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, as applicable, and, in
accordance with such requirements, files proxy materials, 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. 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.
Trustees. The current Trustees of the Trust will continue as Trustees
following the Reorganization. The name of each Trustee as well as information
concerning his principal occupation during the past five years are set forth
below. Their titles may have varied during that period. Asterisks indicate those
Trustees and officers that are "interested persons" (as defined in the 1940
Act).
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE FUND
AND THE CHASE MANHATTAN BANK, N.A. (OR THE
SUCCESSOR ENTITY THERETO) AND A SUB-ADVISORY AGREEMENT
BETWEEN THE CHASE MANHATTAN BANK, N.A. (OR THE SUCCESSOR
THERETO) AND ATLANTA CAPITAL MANAGEMENT COMPANY
INTRODUCTION
The Chase Manhattan Bank, N.A. (the "Adviser") currently serves as the
IEEE Fund's investment adviser pursuant to a separate Investment Advisory
Agreement (the "Existing Advisory Agreement"). The Adviser is a wholly-owned
subsidiary of The Chase Manhattan Corporation, a registered bank holding
company. Atlanta Capital Management Company ("Atlanta Capital") currently serves
as sub-adviser to the IEEE Fund pursuant to an investment sub-advisory agreement
between the Adviser and Atlanta Capital.
On August 27, 1995, The Chase Manhattan Corporation announced its entry
into an Agreement and Plan of Merger (the "Merger Agreement") with Chemical
Banking
-31-
<PAGE>
Corporation ("Chemical"), a bank holding company, pursuant to which The Chase
Manhattan Corporation will merge with and into Chemical (the "Holding Company
Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of directors and shareholders of each
holding company has approved the Holding Company Merger, which will create the
second largest bank holding company in the United States based on assets. The
consummation of the Holding Company Merger is subject to certain closing
conditions. The Holding Company Merger is expected to be completed during the
first quarter of 1996.
Subsequent to the Holding Company Merger, it is expected that the
Adviser will be merged with and into Chemical Bank, a New York State chartered
bank ("Chemical Bank") and one of the two principal operating subsidiaries of
Chemical (the "Bank Merger" and together with the Holding Company Merger, the
"Mergers"). The surviving bank will continue operations under the name The Chase
Manhattan Bank (as used herein, the term "Chase" refers to The Chase Manhattan
Bank, N.A. and its successor in the Bank Merger, and the term "Adviser" means
Chase (including its successor in the Bank Merger) in its capacity as investment
Adviser to the Funds). The consummation of the Bank Merger is subject to certain
closing conditions, including the receipt of certain regulatory approvals. The
Bank Merger is expected to be completed on or about July 31, 1996.
Chemical is a publicly owned bank holding company incorporated under
Delaware law and registered under the Federal Bank Holding Company Act of 1956,
as amended. Through its subsidiaries, Chemical managed as of December 31, 1995,
more than $___ billion in assets, including approximately $6.9 billion in mutual
fund assets in 11 mutual fund portfolios. Chemical Bank is a wholly-owned
subsidiary of Chemical and is a New York State chartered bank.
As required by the 1940 Act, the Existing Advisory Agreement provides
for its automatic termination upon its "assignment." Consummation of the Holding
Company Merger may be deemed to be an assignment (as defined in the 1940 Act) of
the Existing Advisory Agreement and, consequently, to terminate the Existing
Advisory Agreement in accordance with its terms. Similarly, the consummation of
the Bank Merger may also be deemed to be an assignment and consequently,
terminate the then-existing investment advisory contract. In anticipation of the
consummation of the Mergers and to provide continuity in investment advisory
services, at a meeting held on December 14, 1995, the Trust's Board, including a
majority of the Board members who are not "interested persons" (as defined in
the 1940 Act) of the Investment Company, approved the New Advisory Agreement
between the Trust, on behalf of the IEEE Fund, and the Adviser to take effect
upon the consummation of the Holding Company Merger. The Board also directed
that such agreement be submitted to shareholders for approval at this meeting.
In addition, the Board of Trustees approved the continuation of the New Advisory
Agreement after the Bank Merger, on the same terms and conditions as in effect
immediately prior to the merger (except for effective and termination dates) in
the event the New Advisory Agreement is deemed to terminate as a result of the
Bank Merger. Approval of Proposal 2 will also be
-32-
<PAGE>
deemed approval of such continuation of the New Advisory Agreement after the
Bank Merger, if applicable.
Subject to shareholder approval of Proposal 1 and this Proposal 2, the
New Advisory Agreement will be effective from the consummation of the Holding
Company Merger until the Reorganization. EACH NEW ADVISORY AGREEMENT IS
IDENTICAL TO THE EXISTING ADVISORY AGREEMENT, EXCEPT FOR ITS EFFECTIVE DATE. THE
AGGREGATE CONTRACTUAL RATE CHARGEABLE FOR INVESTMENT ADVISORY SERVICES WILL
REMAIN THE SAME.
In connection with the IEEE Fund's approval of the New Advisory
Agreement, the Board considered that the terms of the Mergers do not require any
change in IEEE Fund's investment objective or policies, the Adviser's investment
management or operation of the IEEE Fund, or the shareholder services or other
business activities of the IEEE Fund. Chemical and the Adviser have informed the
Board of Trustees that the Mergers will not at this time result in any such
change, although no assurance can be given that such a change will not occur.
Each also has advised that, at present, neither plans nor proposes to make any
material changes in the business, corporate structure or composition of senior
management or personnel of the Adviser (or the successor entity thereto), or in
the manner in which the Adviser (or the successor entity thereto) renders
investment advisory services to each. If, after the Mergers, changes in the
Adviser (or the successor entity thereto) are proposed that might materially
affect its services to the IEEE Fund, the Board will consider the effect of
those changes and take such action as it deems advisable under the
circumstances.
The Adviser has informed the Trust that it proposes to comply with
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe
harbor for an investment adviser or any of its affiliated persons to receive any
amount or benefit in connection with a change in control of the investment
adviser as long as two conditions are met. First, for a period of three years
after the transaction, at least 75% of the Board members of the investment
company must not be interested persons of such investment adviser. Second, an
"unfair burden" must not be imposed on the investment company as a result of
such transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction whereby
the investment adviser, or any interested person of any such adviser, receives
or is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or, with certain exceptions, from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company. The Adviser, after due inquiry,
is not aware of any express or implied term, condition, arrangement or
understanding which would impose an "unfair burden" on the Trust as a result of
the Mergers. New Chase Holding, the Adviser and their affiliates have agreed to
take no action that would have the effect of imposing an "unfair burden" on the
Trust as a result of the Mergers. Chase, Chemical and/or one or more of their
affiliates have undertaken to pay all costs relating to the Mergers, including
the costs of the shareholders' meetings.
-33-
<PAGE>
The Investment Adviser
The Advisory Agreements. The Chase Manhattan Bank, N.A., One Chase
Manhattan Plaza, New York, New York 10081, currently serves as investment
adviser (the "Adviser") to the IEEE Fund pursuant to an investment advisory
agreement between the Adviser and the Trust on behalf of the IEEE Fund (the
"Existing Advisory Agreement"). The Adviser (or the successor entity thereto)
will serve as investment adviser to the IEEE Fund after the Mergers under an
investment advisory agreement with the Trust on behalf of the IEEE Fund (the
"New Advisory Agreement") which is identical in all material respects to the
Existing Advisory Agreement except for its effective date. A copy of the form of
the New Advisory Agreement is attached hereto as Appendix B and should be read
in conjunction with the following.
EXISTING AND NEW ADVISORY AGREEMENTS
The Existing and New Advisory Agreements are identical, except for
their effective dates. The Existing and New Advisory Agreements provide for the
Adviser to render investment, supervisory and certain corporate administrative
services subject to the control of the Board of Trustees. The Existing and New
Advisory Agreements state that the Adviser shall, at its expense, provide to the
IEEE Fund all office space and facilities, equipment and clerical personnel
necessary to carry out its duties under each Advisory Agreement and keep the
accounting records of the IEEE Fund, including the computation of net asset
values per share and dividends.
Under the Existing and New Advisory Agreements, the Adviser pays all
compensation of those officers and employees of the Trust and of those Trustees
who are affiliated with the Adviser. The IEEE Fund bears the cost of the
preparation and setting in type of its prospectuses and reports to shareholders
and the costs of printing and distributing those copies of such prospectuses and
reports as are sent to shareholders. Under the Existing and New Advisory
Agreements all other expenses of the IEEE Fund not expressly assumed by the
Adviser are paid by the IEEE Fund. Each Advisory Agreement lists examples of
such expenses; the major categories of such expenses relate to interest, taxes,
legal and audit expenses, custodian and transfer agent or shareholder servicing
agency expenses, stock issuance and redemption costs, certain printing costs,
registration costs of the Trust and its shares under federal and state
securities laws, and non-recurring expenses, including litigation.
For the services it provides under the terms of the Existing and New
Advisory Agreements, the IEEE Fund pays the Adviser a monthly fee equal to a
specified percentage per annum of its average daily net assets computed at the
close of each business day. See "Fees and Fee Waivers" below which sets forth
the applicable percentage for the IEEE Fund. The Adviser may voluntarily agree
to waive a portion of the fees payable to it.
The Existing Advisory Agreement is currently in effect until
________________ and continues from year to year thereafter, provided that the
Agreement is specifically approved in a manner consistent with the 1940 Act. The
Existing Advisory Agreement was approved
-34-
<PAGE>
by sole shareholder consent on September 6, 1993. The 1940 Act requires approval
at least annually by the Board of Trustees, including the vote of a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
any party to the Agreement cast in person at a meeting called for the purpose of
voting on approval, or by the vote of the holders of a "majority" of the
outstanding voting securities (as defined in the 1940 Act) of the IEEE Fund.
The Trust, on behalf of the IEEE Fund, may terminate the Existing and
New Advisory Agreements without penalty on not more than 60 days' nor less than
30 days' written notice when authorized by either a vote of the shareholders of
the IEEE Fund or by a vote of a majority of the Trust's Board of Trustees,
including the vote of a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to the Agreement. The Adviser
may terminate the Existing and New Advisory Agreements on not more than 60 days'
nor less than 30 days' written notice. Both Advisory Agreements will
automatically terminate in the event of their assignment (as defined in the 1940
Act).
In addition, the Existing and New Advisory Agreements provide that, in
the event the operating expenses of the IEEE Fund, including all investment
advisory and administration fees, but excluding brokerage commissions and fees,
distribution fees, taxes, interest and extraordinary expenses such as litigation
expenses, for any fiscal year exceed the most restrictive expense limitation
applicable to the IEEE Fund imposed by the securities laws or regulations
thereunder of any state in which the shares of the IEEE Fund are qualified for a
sale, as such limitations may be raised or lowered from time to time, the
Adviser shall reduce its advisory fee described above to the extent of its share
of such excess expenses. The amount of any such reduction to be borne by the
Adviser will be deducted from the monthly fee otherwise payable to the Adviser
during such fiscal year; and if such amounts should exceed the monthly fee, the
Adviser will pay to the IEEE Fund its share of such excess expenses no later
than the last day of the first month of the next succeeding fiscal year.
The Chase Manhattan Bank, N.A. Chase, a wholly-owned subsidiary of The
Chase Manhattan Corporation, a registered bank holding company, is a commercial
bank offering a wide range of banking and investment services to customers
throughout the United States and around the world. Its headquarters are at One
Chase Manhattan Plaza, New York, New York 10081. As of December 31, 1995, Chase
was one of the largest commercial banks in the United States, with assets of
$____ billion. As of such date, The Chase Manhattan Corporation was one of the
largest bank holding companies in the United States, having total assets of
approximately $___ billion. As of December 31, 1995, The Chase Manhattan
Corporation through various subsidiaries provided personal, corporate and
institutional investment management services for approximately $___ billion in
assets, of which Chase provided investment management services to portfolios
containing approximately $___ billion in assets. Included among Chase's accounts
are commingled trust funds and a broad spectrum of individual trust and
investment management portfolios. These accounts have varying investment
objectives.
-35-
<PAGE>
The other mutual funds for which the Adviser also serves as investment
adviser, their assets as of December 31, 1995, and their advisory fees are:
Total Assets
Mutual Fund Trust Advisory Fee as of 12/31/95
Vista California Tax Free Money Market Fund 0.10%
Vista New York Tax Free Money Market Fund 0.10
Vista Tax Free Money Market Fund 0.10
Vista U.S. Government Money Market Fund 0.10
Vista Global Money Market Fund 0.10
Vista Federal Money Market Fund 0.10
Vista Treasury Plus Money Market Fund 0.10
Vista Prime Money Market Fund 0.10
Vista Tax Free Income Fund 0.30
Vista New York Tax Free Income Fund 0.30
Vista California Intermediate Tax Free Income Fund 0.30
Total Assets
Mutual Fund Variable Annuity Trust Fee as of 12/31/95
International Equity Portfolio 0.80%
Capital Growth Portfolio 0.60
Growth and Income Portfolio 0.60
Asset Allocation Portfolio 0.55
Treasury Portfolio 0.50
Money Market Portfolio 0.25
Total Assets
Mutual Fund Group Fee as of 12/31/95
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista U.S. Government Securities Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund 0.40
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 1.00
Vista Japan Fund 1.00
Vista European Fund 1.00
[Vista Global Fixed Income Fund] 0.00
-36-
<PAGE>
The Adviser is currently a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, and is a commercial bank
offering a wide range of banking and investment services to customers throughout
the U.S. and around the world. Effective upon consummation of the Holding
Company Merger, the Adviser will be a wholly-owned subsidiary of New Chase. Upon
consummation of the Bank Merger, the Adviser will continue to be a wholly-owned
subsidiary of New Chase.
Certain Relationships and Activities. Chase and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of the IEEE Fund, including outstanding loans to
such issuers which may be repaid in whole or in part with the proceeds of
securities so purchased. Chase and its affiliates deal, trade and invest for
their own accounts in U.S. Government obligations and municipal obligations and
are among the leading dealers of various types of U.S. Government obligations
and municipal obligations. Chase and its affiliates may sell U.S. Government
obligations and municipal obligations to and purchase them from other investment
companies distributed by Vista Broker Dealer Services. The Adviser will not
invest any IEEE Fund assets in any U.S. Government obligations or municipal
obligations purchased from itself or any affiliate, although under certain
circumstances such securities may be purchased from other members of an
underwriting syndicate in which the Adviser or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations or municipal obligations available to be purchased on behalf of the
IEEE Fund. The Adviser has informed the IEEE Fund that in making its investment
decisions it does not obtain or use material inside information in the
possession of any other division or department of the Adviser or in the
possession of any affiliate of the Adviser.
Both the Existing and New Advisory Agreements provide that, in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard for its obligations thereunder, the Adviser shall not be liable for
any act or omission in the course of or in connection with the rendering of its
services thereunder.
BOARD CONSIDERATION
In considering whether to approve the New Advisory Agreement and to
submit it to the shareholders for their approval, the Board of Trustees
considered the following factors: (1) the representation that there would be no
diminution in the scope and quality of advisory and other services provided by
the Adviser under the New Advisory Agreement, and (2) the identical nature of
the terms and conditions contained in the New Advisory Agreement as compared to
the Existing Advisory Agreement. Additionally, the Board considered the benefits
that would be obtained by the IEEE Fund in maintaining continuity in the
advisory services provided to it, and determined that continuity was
advantageous to the IEEE Fund as it would serve to minimize uncertainty and
confusion, provide for the continued utilization of the demonstrated skills and
capability of the staff of the Adviser and its familiarity with the operations
of the Trust, and avoid the possibility of disruptive effects on the Trust that
might otherwise result from a change in the management and operations of the
Trust.
-37-
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement will require the affirmative
vote of a "majority of the outstanding voting securities" of the IEEE Fund,
which for this purpose means the affirmative vote of the lesser of (1) more than
50% of the outstanding shares of the IEEE Fund or (2) 67% or more of the shares
of the IEEE Fund present at the meeting if more than 50% of the outstanding
shares of the IEEE Fund are represented at the meeting in person or by proxy (a
"Majority Vote"). If the shareholders of the IEEE Fund do not approve the New
Advisory Agreement, Chase and Chemical nevertheless intend to proceed with the
Holding Company Merger and, in such case, the affected Existing Advisory
Agreement will terminate automatically. In that event, the Board will take such
further action as it may deem to be in the best interests of the IEEE Fund's
shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 3
ELECTION OF TRUSTEES
It is proposed that shareholders of the IEEE Fund consider the election
of the individuals listed below (the "Nominees") to the Board of Trustees of the
Trust, which is currently organized as a Massachusetts business trust.
Biographical information about the Nominees and other relevant information is
set forth below. Each Nominee has consented to being named in this Proxy
Statement and has agreed to serve as a Board member if elected.
Certain Directors of The Hanover Funds, Inc. and The Hanover Investment
Funds, Inc. have been nominated to serve as Trustees of the Trust. Therefore,
the Nominees consist of all current Trustees of the Trust and three other
individuals who are presently Directors of the Hanover Funds.
The persons named in the accompanying form of proxy intend to vote each
such proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
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<PAGE>
The following are the Nominees:
Year First
Principal Occupations Became a
Nominee Age for the Last Five Years Trustee
- ------- --- ----------------------- ----------
Fergus Reid, III 63 Chairman and Chief Executive 1984
971 West Road Officer, Lumelite Corporation,
New Canaan, CT 06840 since September 1985; Trustee,
Morgan Stanley Funds, from
January 1985 through September
1985, Director of Corporate
Finance, Noyes Partners
(investment advisory firm);
from 1982 through 1984,
Managing Director, Bernhard
Associates (venture capital
firm).
Richard E. Ten Haken 61 Former District Superintendent 1984
4 Barnfield Road of Schools, Monroe No. 2 and
Pittsford, NY 14534 Orleans Counties, New York;
Chairman of the Finance and the
and the Audit and Accounting
Committees, Member of the
Executive Committee; Chairman of
the Board and President, New York
State Teachers' Retirement System.
William J. Armstrong 54 Vice President and Treasurer, 1987
49 Aspen Way Ingersoll-Rand Company.
Upper Saddle River, NJ
07458
John R.H. Blum 66 Attorney in Private Practice; 1984
322 Main Street formerly, partner in the law
Lakeville, CT 06039 firm of Richards, O'Neil &
Allegaert (19__-1994);
Commissioner of Agriculture State
of Connecticut, 1992-1995.
-39-
<PAGE>
Year First
Principal Occupations Became a
Nominee Age for the Last Five Years Trustee
- ------- --- ----------------------- ----------
[*]Joseph J. Harkins 64 Retired; Commercial Sector 1990
257 Plantation Circle Sth. Executive and Executive Vice
Ponte Vedra Beach, FL President of The Chase
32082 Manhattan Bank, N.A. from 1985
through 1989. He has been
been employed by Chase in
numerous capacities and offices
since 1954. Director of
Blessings Corporation,
Jefferson Insurance Company of
New York, Monticello Insurance
Company and Nationar.
[*]
H. Richard Vartabedian 60 Consultant, Republic Bank of 1992
P.O. Box 296 New York; formerly, Senior
Beach Road Investment Officer, Division
Hendrick's Head Executive of the Investment
Southport, ME 04576 Management Division of The Chase
Manhattan Bank, N.A., 1980 through
1991.
Stuart W. Cragin, Jr. 63 Retired; formerly President, 1992
108 Valley Road Fairfield Testing Laboratory,
Cos Cob, CT 06807 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.
Irving L. Thode 64 Retired; Vice President of 1992
80 Perkins Road Quotron Systems. He has
Greenwich, CT 06830 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.
-40-
<PAGE>
Year First
Principal Occupations Became a
Nominee Age for the Last Five Years Trustee
- ------- --- ----------------------- ----------
*W. Perry Neff 67 Independent Financial Consultant; Proposed
RR 1 Box 102A Director of North American Life
Weston, VT 05181 Assurance Co., Petroleum &
Resources Corp. and The Adams
Express Co.: Director and Chairman
of The Hanover Funds, Inc.;
Director, Chairman and President
of The Hanover Investment Funds,
Inc.
Roland R. Eppley, Jr. 62 Retired: formerly President and Proposed
105 Ceventry Place Chief Executive Officer, Eastern
Palm Beach Gardens, States Bankcard Association Inc,
FL 33418 (1971-1988); Director, Janel
Hydraulics, Inc and The Hanover
Funds, Inc.
W.D. MacCallan 67 Director of The Adams Express Proposed
624 East 45th Street Co., The Hanover Funds, Inc.,
Savannah, GA 31405 The Hanover Investment Funds, Inc.
and Petroleum & Resources Corp.;
formerly Chairman of the Board
and Chief Executive Officer of The
Adams Express Co. and Petroleum &
Resources Corp.
The Board of Trustees of the Trust presently has an Audit Committee.
The members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum,
Armstrong, Harkins, Reid, and Vartabedian who will serve until [Date]. The
function of the Audit Committee is to recommend independent auditors and monitor
accounting and financial matters.
The Audit Committee met times during the fiscal year ended October 31,
1995.
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each
meeting of the Board of Trustees or any committee thereof. Each Trustee who is
not an affiliate of the Adviser is compensated for his or her services according
to a fee schedule which recognizes
- --------
* Interested Trustee as defined under the 1940 Act.
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<PAGE>
the fact that each Trustee also serves as a Trustee of other investment
companies advised by the Adviser. Each Trustee receives a fee, allocated among
all investment companies for which the Trustee serves, which consists of an
annual retainer component and a meeting fee component. Effective August 21,
1995, each Trustee of the Vista Funds receives a quarterly retainer of $12,000
and an additional per meeting fee of $1,500. Prior to August 21, 1995, the
quarterly retainer was $9,000 and the per-meeting fee was $1,000. The Chairman
of the Trustees and the Chairman of the Investment Committee each receive a 50%
increment over regular Trustee total compensation for serving in such capacities
for all the investment companies advised by the Adviser.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended October 31, 1995 for each Trustee of the Trust:
<TABLE>
<CAPTION>
Growth
Equity and Capital IEEE
Balanced Income Income Growth Equity Bond Balanced
Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee 241.30 $96.13 $14,393.16 $7,594.67 $540.99 $468.64 62.24
Richard E. Ten Haken, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
William J. Armstrong, Trustee 160.88 64.07 9595.45 5,063.12 360.67 312.41 41.48
John R.H. Blum, Trustee 190.83 62.60 9,376.63 4,955.42 352.06 305.11 41.48
Joseph J. Harkins, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
H. Richard Vartabedian, Trustee 169.60 67.79 10,159.13 5,376.61 330.18 330.18 41.48
Stuart W. Cragin, Jr., Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
Irving L. Thode, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
</TABLE>
<TABLE>
<CAPTION>
Short Small Inter- Global
Term U.S. Cap national Fixed Southeast
Bond Government Equity Equity Income Asian Japan European
Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee 298.13 $919.27 $172.16 $315.97 $8.47 0 0 0
Richard E. Ten Haken, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
William J. Armstrong, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
John R.H. Blum, Trustee 190.83 598.68 114.79 205.42 5.64 0 0 0
Joseph J. Harkins, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
H. Richard Vartabedian, Trustee 206.44 646.75 133.68 219.47 5.64 0 0 0
Stuart W. Cragin, Jr., Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
Irving L. Thode, Trustee 195.40 612.85 114.79 210.64 5.64 0 0 0
</TABLE>
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<PAGE>
Pension or Total
Retirement Compensation
Benefits Accrued from
as Fund Expenses "Fund Complex"(1)
Fergus Reid, III, Trustee 0 $78,456.65
Richard E. Ten Haken, 0 52,304.39
Trustee
William J. Armstrong, 0 46,632.34
Trustee
John R.H. Blum, Trustee 0 51,304.37
Joseph J. Harkins, 0 52,304.39
Trustee
H. Richard Vartabedian, 0 74,804.44
Trustee
Stuart W. Cragin, Jr., 0 52,304.39
Trustee
Irving L. Thode, Trustee 0 52,304.39
(1) Data reflect total compensation earned during the period January 1,
1995 to December 31, 1995.
Vista Funds Retirement Plan for Eligible Trustees
Effective August 21, 1995, the Trustees also instituted a Retirement
Plan for Eligible Trustees (the "Plan") pursuant to which each Trustee (who is
not an employee of any of the Funds, the Adviser, Administrator or distributor
or any of their affiliates) may be entitled to certain benefits upon retirement
from the Board of Trustees. Pursuant to the Plan, the normal retirement date is
the date on which the eligible Trustee has attained age 65 and has completed at
least five years of continuous service with one or more of the investment
companies advised by the Adviser (collectively, the "Covered Funds"). Each
Eligible Trustee is entitled to receive from the Covered Funds an annual benefit
commencing on the first day of the calendar quarter coincident with or following
his date of retirement equal to 10% of the highest annual compensation received
from the Covered Funds multiplied by the number of such Trustee's years of
service (not in excess of 10 years) completed with respect to any of the Covered
Funds. Such benefit is payable to each eligible Trustee in monthly installments
for the life of the Trustee.
Set forth below in the table below are the estimated annual benefits
payable to an eligible Trustee upon retirement assuming various compensation and
years of service classifications. The estimated credited years of service for
Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian, Cragin, and
Thode are 11, 11, 8, 11, 3, 3 and 3 respectively.
-43-
<PAGE>
<TABLE>
<CAPTION>
Years of
Service Highest Annual Compensation Paid by All Vista Funds
<S> <C> <C> <C> <C>
40,000 45,000 50,000 55,000
10 40,000 45,000 50,000 55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
</TABLE>
Effective August 21, 1995, the Trustees instituted a Deferred
Compensation Plan for Eligible Trustees (the "Deferred Compensation Plan")
pursuant to which each Trustee (who is not an employee of any of the Funds, the
Adviser, Administrator or Distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination of
service). The deferred amounts are deemed invested in shares of the Fund on
whose Board the Trustee sits. The deferred amounts are paid out in a lump sum or
over a period of several years as elected by the Trustee at the time of
deferral. If a deferring Trustee dies prior to the distribution of amounts held
in the deferral account, the balance of the deferral account will be distributed
to the Trustee's designated beneficiary in a single lump sum payment as soon as
practicable after such deferring Trustee's death. The following Eligible
Trustees have executed a deferred compensation agreement for the 1996 calendar
year:[INSERT NAMES].
Principal Executive Officers:
The principal executive officers of the Trust are as follows:
H. Richard Vartabedian President and Trustee.
Martin R. Dean Treasurer and Assistant Secretary; Vice President,
BISYS Funds Group, Inc.
Ann Bergin Secretary; Vice President, BISYS Funds Group, Inc,;
Chief Compliance Officer and Secretary, Vista Broker-
Dealer Services, Inc.
Ownership of Shares of the Funds. The Trustees and officers as a group
directly or beneficially own less than 1% of each Fund.
-44-
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The election of each of the Nominees listed above requires the
affirmative vote of a plurality of the votes entitled to be cast at the Meeting
by all shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 4
RATIFICATION OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board, including a majority of the trustees who are not interested
persons of the Trust, is recommending Price Waterhouse LLP to serve as
independent public accountants of each Fund for each Fund's next fiscal year,
subject to the right of the Fund to terminate such employment immediately
without penalty by vote of a majority of the outstanding voting securities of
the Fund at any meeting called for such purpose. The Board's selection is hereby
submitted to the shareholders for ratification.
Price Waterhouse LLP served as the independent auditors for each of the
Funds during its most recent fiscal period ended October 31, 1995. Services
performed by Price Waterhouse LLP during such time have included the audit of
the financial statements of the Trust and services related to filings of the
Trust with the Commission. Price Waterhouse LLP has informed each Fund that
neither Price Waterhouse LLP nor any of its partners has any direct or material
indirect financial interest in the Trust. Representatives of Price Waterhouse
LLP are not expected to be present at the Meeting but have been given the
opportunity to make a statement if they so desire, and will be available should
any matter arise requiring their participation.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The ratification of the selection of Price Waterhouse LLP as the
independent public accountants of a Fund requires the affirmative vote of a
majority of the votes entitled to be cast at the Meeting by the shareholders of
such Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
-45-
<PAGE>
PROPOSAL 5
APPROVAL OR DISAPPROVAL OF AN
AMENDMENT TO THE TRUST'S DECLARATION OF TRUST
Introduction
The Trust is organized as a Massachusetts business trust under the laws
of the Commonwealth of Massachusetts. The Trust's Declaration of Trust provides,
among other things, that the Board of Trustees has the authority to make certain
amendments to the Declaration of Trust without the vote or consent of the
Trust's Shareholders in order to, among other things, designate series, change
the name of the Trust to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision thereof, or if they deem it
necessary or advisable to conform the Declaration of Trust to the requirements
of applicable federal laws or regulations or the requirements of the regulated
investment company provisions of the Internal Revenue Code of 1986, as amended.
Management has proposed, and the Board of Trustees has approved, a modification
to the Declaration of Trust which would allow the Trustees to amend the
Declaration of Trust with respect to items which do not effect the economic
value or legal rights of a shareholder upon majority vote of the Board of
Trustees. This would enable the Trustees to amend and modify the Declaration of
Trust when necessary to react to changes in Massachusetts and other regulatory
laws and to provide maximum flexibility to the Trust, and therefore, the Funds
and their shareholders.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATIONS
The approval of the proposed modification to the Declaration of Trust
requires the affirmative vote of a majority of the shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
- ------------------------------------------------------------
Additional Information About the IEEE Fund
Information about the IEEE Fund is incorporated herein by reference from the
IEEE Fund's prospectus dated March 1, 1995. Additional information about the
IEEE Fund is included in the IEEE Fund's statement of additional information
dated March 1, 1995. Copies of such prospectus and statement of additional
information may be obtained without charge by writing or calling the IEEE Fund
at the address or telephone number shown on the cover page of this Combined
Proxy Statement/Prospectus. Reports and other information filed by the IEEE Fund
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 copies of such
material can be obtained from the Public Reference Branch, Office of Consumer
Affairs and
-46-
<PAGE>
Information Services, Securities and Exchange Commission, Washington, D.C.
20549, at prescribed rates.
- -------------------------------
Financial Statements
The financial statements and selected per share data and ratios for
shares of the IEEE Fund for the fiscal year ended October 31, 1995, are
contained in the IEEE Fund's Annual Report to Shareholders which was mailed to
shareholders on or about December 30, 1995 (the "Annual Report").
The financial statements and selected per share data and ratios for the
IEEE Fund, incorporated by reference or included in its prospectus and statement
of additional information are incorporated by reference herein for the year
ended October 30, 1995, and have been so included or incorporated by reference
in reliance on the report of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in accounting and auditing.
Capitalization. The following tables show the capitalization
(unaudited) of IEEE Balanced Fund and Vista Balanced Fund as of October 31,
1995, and on a pro forma combined basis as of that date for the Reorganization
giving effect to the proposed acquisition of assets at net asset value.
<TABLE>
<CAPTION>
Capitalization Tables for the Vista Balanced and
IEEE Merger as of October 31, 1995
Pro Forma
Vista Balanced Fund IEEE Balanced Fund Reorganization
<S> <C> <C> <C>
Net Assets
A Shares $33,732,838 $10,771,888 $44,504,727
B Shares $8,335,693 - $ 5,335,893
Net Asset Value per Share - A $12.45 $10.98 $12.45
Net Asset Value per Share - B $12.36 - $12.36
Shares Outstanding - A 2,710,839 980,997 3,576,094
Shares Outstanding - B 512,572 - 512,572
-47-
<PAGE>
VISTA BALANCED FUND
PROFORMA PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
UNAUDITED
Vista Balanced Fund IEEE Balanced Fund Combined
Portfolio of Investments Portfolio of Investments Portfolio of Investments
October 31, 1995 October 31, 1995 October 31, 1995
Issuer Shares Value Shares Value Shares Value
Long-Term Investments -
Common Stock -
Aerospace -
AlliedSignal, Inc. ............................. 3,900 $ 165,750 -- -- 3,900 $ 165,750
Boeing Co. ..................................... -- -- 2,900 $ 190,312 2,900 190,312
Lockheed Martin Corp. .......................... 1,300 88,562 -- -- 1,300 88,562
Loral Corp. .................................... -- -- 6,400 189,600 6,400 189,600
OEA, Inc. ...................................... -- -- 400 10,900 400 10,900
Sundstrand Corp. ............................... 1,200 73,500 -- -- 1,200 73,500
United Technologies, Corp. ..................... 1,800 159,750 -- -- 1,800 159,750
---------- ---------- ---------- ---------- ---------- ----------
487,562 390,812 878,374
---------- ---------- ---------- ---------- ---------- ----------
Agriculture -
Case Corp. ..................................... 6,000 228,750 -- 6,000 228,750
---------- ---------- ---------- ---------- ---------- ----------
Airlines -
AMR Corp. * .................................... 1,100 72,600 -- 1,100 72,600
---------- ---------- ---------- ---------- ---------- ----------
Apparel / Textiles -
Kellwood Co. ................................... -- -- 650 12,188 650 12,188
Phillips-Van Heusen ............................ -- -- 600 6,075 600 6,075
Springs Industries, Inc., Class A .............. 1,900 81,463 -- -- 1,900 81,463
V.F. Corp. ..................................... 1,000 47,875 -- -- 1,000 47,875
---------- ---------- ---------- ---------- ---------- ----------
129,338 18,263 147,601
---------- ---------- ---------- ---------- ---------- ----------
Appliances & Household Durables -
La-Z-Boy Chair Co. ............................. -- -- 400 11,900 400 11,900
---------- ---------- ---------- ---------- ---------- ----------
Automotive -
Chrysler Corp. ................................. 1,825 94,216 -- -- 1,825 94,216
Echlin, Inc. ................................... 6,500 232,375 -- -- 6,500 232,375
TRW Inc. ....................................... 1,100 72,325 -- -- 1,100 72,325
---------- ---------- ---------- ---------- ---------- ----------
398,916 398,916
---------- ---------- ---------- ---------- ---------- ----------
Banking -
Bank of New York Company, Inc. ................. 3,800 159,600 -- -- 3,800 159,600
Citicorp ....................................... 3,500 227,062 -- -- 3,500 227,062
Deposit Guaranty Corp. ......................... -- -- 300 13,350 300 13,350
First Bank System Inc. ......................... 2,600 129,350 -- -- 2,600 129,350
First Commercial Corp. ......................... -- -- 400 12,000 400 12,000
First Financial Corp. of Wisconsin ............. -- -- 700 14,962 700 14,962
FirstMerit Corp. ............................... -- -- 400 10,800 400 10,800
Mark Twain Bancshares, Inc. .................... -- -- 300 10,575 300 10,575
NationsBank Corp. .............................. 2,400 157,800 -- -- 2,400 157,800
Norwest Corp. .................................. 3,300 97,350 -- -- 3,300 97,350
U.S. Trust Corp. ............................... -- -- 200 9,700 200 9,700
Washington Federal, Inc. ....................... -- -- 600 13,725 600 13,725
Standard Federal Bancorporation ................ 2,100 74,550 -- -- 2,100 74,550
Zions Bancorporation ........................... 1,400 96,950 -- -- 1,400 96,950
---------- ---------- ---------- ---------- ---------- ----------
942,662 85,112 1,027,774
---------- ---------- ---------- ---------- ---------- ----------
Business Products -
Pitney-Bowes, Inc. ............................. -- -- 3,400 148,325 3,400 148,325
---------- ---------- ---------- ---------- ---------- ----------
Business Services -
American Business Products, Inc. ............... -- -- 750 16,406 750 16,406
Equifax, Inc. .................................. -- -- 3,900 152,100 3,900 152,100
National Computer Systems, Inc. ................ -- -- 700 13,300 700 13,300
Standard Register Co. .......................... -- -- 600 13,500 600 13,500
---------- ---------- ---------- ---------- ---------- ----------
-- 195,306 195,306
---------- ---------- ---------- ---------- ---------- ----------
Chemicals -
Air Products & Chemicals, Inc., ................ 4,400 227,150 -- -- 4,400 227,150
Applied Extrusion Technologies, Inc. * ......... 6,000 92,250 -- -- 6,000 92,250
Arcadian Corp. * ............................... 8,200 169,125 -- -- 8,200 169,125
Cabot Corp. .................................... 1,200 57,000 -- -- 1,200 57,000
duPont (EI) deNemours .......................... 2,800 174,650 -- -- 2,800 174,650
Eastman Chemical Co. ........................... 1,200 71,400 -- -- 1,200 71,400
Fuller (H.B.) Co. .............................. -- -- 300 9,450 300 9,450
IMC Global, Inc. ............................... 1,100 77,000 -- -- 1,100 77,000
Lilly Industries, Inc., Class A ................ -- -- 900 11,475 900 11,475
Millipore Corp. ................................ -- -- 3,200 113,200 3,200 113,200
Nalco Chemical Co. ............................. -- -- 3,600 108,000 3,600 108,000
Prazair, Inc. .................................. 2,700 72,900 -- -- 2,700 72,900
---------- ---------- ---------- ---------- ---------- ----------
941,475 242,125 1,183,600
---------- ---------- ---------- ---------- ---------- ----------
Computer Software -
Computer Associates International .............. 2,250 123,750 1,500 82,500 3,750 206,250
General Motors Corp., Class E .................. 2,700 127,237 -- -- 2,700 127,237
Harbinger Corp. * .............................. 5,000 70,000 -- -- 5,000 70,000
Maxis, Inc. * .................................. 3,000 132,750 -- -- 3,000 132,750
Microsoft Corp. * .............................. -- -- 2,300 230,000 2,300 230,000
Reynolds & Reynolds, Inc., Class A ............. 2,000 71,250 -- -- 2,000 71,250
---------- ---------- ---------- ---------- ---------- ----------
524,987 312,500 837,487
---------- ---------- ---------- ---------- ---------- ----------
Computers/Computer Hardware -
Comdisco, Inc. ................................. 2,100 64,050 -- -- 2,100 64,050
Compaq Computer * .............................. 4,500 250,875 -- -- 4,500 250,875
Fair Issac & Company, Inc. ..................... -- -- 400 10,800 400 10,800
International Business Machines Corp. .......... 800 77,800 -- -- 800 77,800
SCI Systems, Inc. * ............................ 2,500 87,813 500 17,563 3,000 105,376
Stratus Computer, Inc. * ....................... -- -- 400 12,450 400 12,450
Sun Microsystems, Inc. * ....................... 3,200 249,600 -- -- 3,200 249,600
---------- ---------- ---------- ---------- ---------- ----------
730,138 40,813 770,951
---------- ---------- ---------- ---------- ---------- ----------
Construction Machinery -
Caterpillar Inc. ............................... 3,000 168,375 -- -- 3,000 168,375
---------- ---------- ---------- ---------- ---------- ----------
Construction Materials -
Carlisle Companies, Inc. ....................... -- -- 300 12,337 300 12,337
Justin Industries .............................. -- -- 1,100 11,000 1,100 11,000
Manville Corp. * ............................... 3,500 40,688 -- -- 3,500 40,688
Ply Gem Industries, Inc. ....................... -- -- 700 12,075 700 12,075
Texas Industries Inc. .......................... 1,700 89,462 -- -- 1,700 89,462
---------- ---------- ---------- ---------- ---------- ----------
130,150 35,412 165,562
---------- ---------- ---------- ---------- ---------- ----------
Consumer Products -
BIC Corp. ...................................... -- -- 300 12,075 300 12,075
Black & Decker Corp. ........................... 4,000 135,500 -- -- 4,000 135,500
Danaher Corp. .................................. 2,300 71,300 -- -- 2,300 71,300
Gillette Co. ................................... -- -- 2,500 120,937 2,500 120,937
Philip Morris Companies, Inc. .................. 2,400 202,800 2,400 202,800
Rubbermaid, Inc. ............................... -- -- 4,200 109,725 4,200 109,725
USA Detergents, Inc. * ......................... 3,000 76,500 -- -- 3,000 76,500
Whirlpool Corp. ................................ 1,500 79,500 -- -- 1,500 79,500
---------- ---------- ---------- ---------- ---------- ----------
565,600 242,737 808,337
---------- ---------- ---------- ---------- ---------- ----------
Diversified -
AMCOL International Corp. ...................... -- -- 800 13,500 800 13,500
Dover Corp. .................................... -- -- 3,400 134,300 3,400 134,300
Lawson Products, Inc. .......................... -- -- 400 9,600 400 9,600
Textron, Inc. .................................. 2,200 151,250 -- -- 2,200 151,250
Tyco International Ltd. ........................ -- -- 1,400 85,050 1,400 85,050
---------- ---------- ---------- ---------- ---------- ----------
151,250 242,450 393,700
---------- ---------- ---------- ---------- ---------- ----------
Electronics / Electrical Equipment -
AMP, Inc. ...................................... -- -- 2,400 94,200 2,400 94,200
Dionex Corp. * ................................. -- -- 300 16,200 300 16,200
Eaton Corp. .................................... 2,500 128,125 -- -- 2,500 128,125
General Electric Co. ........................... -- -- 2,700 170,775 2,700 170,775
General Motors Corp., Class H .................. 3,300 138,600 3,300 138,600
Grainger (W.W.), Inc. .......................... -- -- 1,400 87,500 1,400 87,500
Hewlett-Packard Co. ............................ -- -- 2,600 240,825 2,600 240,825
Integrated Device Technology, Inc. * ........... 3,000 57,000 -- -- 3,000 57,000
Logicon, Inc. .................................. -- -- 600 13,725 600 13,725
Molex, Inc. .................................... -- -- 1,718 56,694 1,718 56,694
Motorola, Inc. ................................. -- -- 1,300 85,313 1,300 85,313
MTS Systems Corp. .............................. -- -- 400 11,300 400 11,300
Park Electrochemical Corp. ..................... -- -- 400 12,500 400 12,500
Pioneer Standard Electronics, Inc. ............. 4,650 64,519 750 10,406 5,400 74,925
Recoton Corp. * ................................ 2,400 53,400 -- -- 2,400 53,400
Scientific-Atlanta, Inc. ....................... -- -- 2,700 33,412 2,700 33,412
Teleflex, Inc. ................................. -- -- 300 12,713 300 12,713
Texas Instruments .............................. 2,800 191,100 -- -- 2,800 191,100
Wyle Electronics ............................... -- -- 400 17,050 400 17,050
Xilinx, Inc. * ................................. 2,400 110,400 -- -- 2,400 110,400
X-Rite, Inc. ................................... -- -- 600 9,375 600 9,375
---------- ---------- ---------- ---------- ---------- ----------
743,144 871,988 1,615,132
---------- ---------- ---------- ---------- ---------- ----------
Engineering Services -
Foster Wheeler Corp. ........................... -- -- 1,500 56,250 1,500 56,250
---------- ---------- ---------- ---------- ---------- ----------
Entertainment -
Carnival Corp., Class A ........................ -- -- 4,000 93,000 4,000 93,000
Showboat, Inc. ................................. 2,000 48,000 -- -- 2,000 48,000
Time Warner, Inc. .............................. 1,500 54,750 -- -- 1,500 54,750
---------- ---------- ---------- ---------- ---------- ----------
102,750 93,000 195,750
---------- ---------- ---------- ---------- ---------- ----------
Environmental Services -
Browning-Ferris Industries, Inc. ............... 1,500 43,687 -- -- 1,500 43,687
WMX Technologies, Inc. ......................... -- -- 4,700 132,188 4,700 132,188
---------- ---------- ---------- ---------- ---------- ----------
43,687 132,188 175,875
---------- ---------- ---------- ---------- ---------- ----------
Financial Services -
American General Delaware ...................... 4,800 157,800 -- -- 4,800 157,800
Dean Witter, Discover & Co. .................... 3,500 174,125 -- -- 3,500 174,125
Donaldson Lufkin & Jenrette * .................. 8,000 238,000 -- -- 8,000 238,000
Eaton Vance Corp. .............................. -- -- 300 10,950 300 10,950
Federal National Mortgage Assoc ................ 1,500 157,313 -- -- 1,500 157,313
Household International, Inc. .................. 1,100 61,875 -- -- 1,100 61,875
Legg Mason, Inc. ............................... -- -- 400 11,500 400 11,500
Quick & Reilly Group, Inc. ..................... -- -- 450 10,688 450 10,688
Raymond James Financial, Inc. .................. -- -- 700 15,050 700 15,050
---------- ---------- ---------- ---------- ---------- ----------
789,113 48,188 837,301
---------- ---------- ---------- ---------- ---------- ----------
Food/Beverage Products -
Coca-Cola Enterprises, Inc. .................... 8,000 213,000 2,500 179,688 10,500 392,688
ConAgra, Inc. .................................. 2,500 96,563 -- -- 2,500 96,563
CPC International, Inc. ........................ 1,500 99,562 1,300 86,288 2,800 185,850
IBP, Inc. ...................................... 1,400 83,825 -- -- 1,400 83,825
International Multifoods Corp. ................. -- -- 600 12,300 600 12,300
J.M. Smucker Co., Class A ...................... -- -- 500 9,813 500 9,813
PepsiCo., Inc. ................................. 2,100 110,775 -- -- 2,100 110,775
RJR Nabisco Holdings Corp. ..................... 3,000 92,250 -- -- 3,000 92,250
---------- ---------- ---------- ---------- ---------- ----------
695,975 288,089 984,064
---------- ---------- ---------- ---------- ---------- ----------
Health Care -
American Oncology Resources, Inc. * ............ 1,900 66,500 -- -- 1,900 66,500
Apria Healthcare Group, Inc. * ................. 3,400 73,525 -- -- 3,400 73,525
Baxter International Inc. ...................... 3,000 115,875 -- -- 3,000 115,875
Beverly Enterprises * .......................... 4,500 52,875 -- -- 4,500 52,875
Biomet, Inc. * ................................. -- -- 6,700 111,388 6,700 111,388
Columbia/HCA Healthcare Corp. .................. 3,000 147,375 -- -- 3,000 147,375
Diagnostic Products Corp. ...................... -- -- 300 11,100 300 11,100
FHP International Corp. * ...................... 2,000 48,500 -- -- 2,000 48,500
Gelman Sciences, Inc. * ........................ 2,500 53,437 -- -- 2,500 53,437
Humana, Inc. * ................................. 4,000 84,500 4,900 103,513 8,900 188,013
Life Technologies, Inc. ........................ -- -- 600 14,700 600 14,700
Manor Care, Inc. ............................... 1,800 58,950 -- -- 1,800 58,950
OrNda Healthcorp * ............................. 3,500 61,688 -- -- 3,500 61,688
Owens & Minor, Inc. ............................ -- -- 600 7,125 600 7,125
Physician Corp. of America* .................... 1,500 23,062 -- -- 1,500 23,062
Rotech Medical Corp. ........................... -- -- 400 9,100 400 9,100
Tenet Healthcare Corp. * ....................... 3,900 69,713 -- -- 3,900 69,713
U.S. HealthCare, Inc. .......................... -- -- 2,900 111,650 2,900 111,650
---------- ---------- ---------- ---------- ---------- ----------
856,000 368,576 1,224,576
---------- ---------- ---------- ---------- ---------- ----------
Hotels/Other Lodging -
Renaissance Hotel Group N.V. * ................. 7,000 136,500 -- -- 7,000 136,500
---------- ---------- ---------- ---------- ---------- ----------
Industrial Services -
Unifirst Corp. ................................. -- -- 800 11,200 800 11,200
---------- ---------- ---------- ---------- ---------- ----------
Insurance -
American Bankers Insurance Group, Inc. ......... -- -- 350 12,556 350 12,556
American International Group ................... 1,950 164,531 1,950 164,531 3,900 329,062
Chubb Corp. .................................... 1,100 98,863 -- -- 1,100 98,863
Crawford & Company, Class B .................... -- -- 700 10,850 700 10,850
Frontier Insurance Group, Inc. ................. -- -- 500 14,313 500 14,313
Gainsco, Inc. .................................. -- -- 1,323 11,410 1,323 11,410
General Re Corp. ............................... -- -- 1,000 144,875 1,000 144,875
Liberty Corp. .................................. -- -- 400 13,400 400 13,400
Mid Ocean Ltd. ................................. 1,100 38,912 -- -- 1,100 38,912
Progressive Corp. .............................. -- -- 2,000 83,000 2,000 83,000
Prudential Reinsurance Holdings, Inc.* ......... 5,000 101,875 -- -- 5,000 101,875
St. Paul Companies, Inc. ....................... 2,900 147,175 -- -- 2,900 147,175
Transatlantic Holdings, Inc. ................... 1,200 80,850 -- -- 1,200 80,850
---------- ---------- ---------- ---------- ---------- ----------
632,206 454,935 1,087,141
---------- ---------- ---------- ---------- ---------- ----------
Leasing -
Rollins Truck Leasing Corp. .................... -- -- 1,100 10,588 1,100 10,588
---------- ---------- ---------- ---------- ---------- ----------
Machinery & Engineering Equipment -
AGCO Corp. ..................................... 2,500 111,875 -- -- 2,500 111,875
Precision Castparts Corp. ...................... -- -- 400 14,300 400 14,300
---------- ---------- ---------- ---------- ---------- ----------
111,875 14,300 126,175
---------- ---------- ---------- ---------- ---------- ----------
Manufacturing -
CLARCOR Inc. ................................... -- -- 500 11,375 500 11,375
Commercial Intertech Corp. ..................... -- -- 700 11,812 700 11,812
Furon Co. ...................................... -- -- 500 7,750 500 7,750
Graco, Inc. .................................... -- -- 500 16,812 500 16,812
Ingersoll-Rand Co. ............................. -- -- 1,300 45,987 1,300 45,987
Johnson Controls ............................... 3,600 209,700 -- -- 3,600 209,700
Kennametal Inc. ................................ 2,200 68,475 -- -- 2,200 68,475
Mark IV Industries ............................. 2,100 40,950 -- -- 2,100 40,950
Modine Manufacturing Co. ....................... 2,000 55,000 -- -- 2,000 55,000
Oakley, Inc. * ................................. 3,500 120,750 -- -- 3,500 120,750
Tennant Co. .................................... -- -- 400 9,900 400 9,900
Trinity Industries, Inc. ....................... -- -- 1,600 47,400 1,600 47,400
Varity Corp.* .................................. 5,200 188,500 -- -- 5,200 188,500
---------- ---------- ---------- ---------- ---------- ----------
683,375 151,036 834,411
---------- ---------- ---------- ---------- ---------- ----------
Metals / Mining -
Aluminum Co. of America (ALCOA) ................ 3,000 153,000 -- -- 3,000 153,000
Inco, Ltd. ..................................... 7,300 250,938 -- -- 7,300 250,938
---------- ---------- ---------- ---------- ---------- ----------
403,938 -- 403,938
---------- ---------- ---------- ---------- ---------- ----------
Office/Business Euqipment -
Xerox Corp. .................................... 500 64,875 -- -- 500 64,875
---------- ---------- ---------- ---------- ---------- ----------
Oil & Gas -
Amoco Corp. .................................... 1,400 89,425 -- -- 1,400 89,425
Ashland Inc. ................................... 2,700 85,387 -- -- 2,700 85,387
Halliburton Company ............................ 5,200 215,800 -- -- 5,200 215,800
Mobil Corp. .................................... 2,000 201,500 -- -- 2,000 201,500
NGC Corp. ...................................... 15,000 135,000 -- -- 15,000 135,000
Panhandle Eastern Corp. ........................ 8,200 207,050 -- -- 8,200 207,050
Phillips Petroleum Co. ......................... 3,500 112,875 -- -- 3,500 112,875
Production Operators Corp. ..................... -- -- 400 12,000 400 12,000
Smith International * .......................... 4,800 76,800 -- -- 4,800 76,800
Triton Energy Corp. ............................ 1,300 60,613 -- -- 1,300 60,613
Union Texas Petroleum Holdings ................. 2,500 45,000 -- -- 2,500 45,000
Unocal Corp. ................................... 3,500 91,875 -- -- 3,500 91,875
Williams Companies, Inc. ....................... 1,800 69,525 -- -- 1,800 69,525
---------- ---------- ---------- ---------- ---------- ----------
1,390,850 12,000 1,402,850
---------- ---------- ---------- ---------- ---------- ----------
Packaging -
Sealright Company, Inc. ........................ -- -- 600 6,750 600 6,750
---------- ---------- ---------- ---------- ---------- ----------
Paper/Forest Products -
Boise Cascade Corp. ............................ 2,100 76,125 -- -- 2,100 76,125
Champion International Corp. ................... 3,900 208,650 -- -- 3,900 208,650
Mead Corp. ..................................... 1,500 86,437 -- -- 1,500 86,437
Willamette Industries .......................... 2,500 145,000 -- -- 2,500 145,000
---------- ---------- ---------- ---------- ---------- ----------
516,212 -- 516,212
---------- ---------- ---------- ---------- ---------- ----------
Pharmaceuticals -
Abbot Laboratories ............................. -- -- 2,900 115,275 2,900 115,275
Allergan, Inc. ................................. 4,500 132,188 -- -- 4,500 132,188
Alpharma, Inc., Class A ........................ -- -- 600 14,400 600 14,400
American Home Products Corp. ................... 2,000 177,250 -- -- 2,000 177,250
Johnson & Johnson .............................. -- -- 1,600 130,400 1,600 130,400
Medtronic, Inc. ................................ -- -- 3,600 207,900 3,600 207,900
Merck & Company, Inc. .......................... -- -- 2,200 126,500 2,200 126,500
Mylan Laboratories ............................. -- -- 5,300 100,700 5,300 100,700
Schering-Plough Corp. .......................... 2,000 107,250 2,800 150,150 4,800 257,400
---------- ---------- ---------- ---------- ---------- ----------
416,688 845,325 1,262,013
---------- ---------- ---------- ---------- ---------- ----------
Printing & Publishing -
Bowne & Co., Inc. .............................. -- -- 600 11,175 600 11,175
Harcourt General, Inc. ......................... 3,200 126,800 -- -- 3,200 126,800
Houghton Mifflin Co. ........................... -- -- 200 8,200 200 8,200
Readers Digest Association, Inc., Class A ...... -- -- 3,100 155,775 3,100 155,775
Tribune Co. .................................... 1,000 63,125 -- -- 1,000 63,125
---------- ---------- ---------- ---------- ---------- ----------
189,925 175,150 365,075
---------- ---------- ---------- ---------- ---------- ----------
Real Estate Investment Trust -
Bay Apartment Communities, Inc. ................ 4,000 82,500 -- -- 4,000 82,500
---------- ---------- ---------- ---------- ---------- ----------
Restaurants/Food Services -
Wendy's International, Inc. .................... 5,500 109,312 -- -- 5,500 109,312
---------- ---------- ---------- ---------- ---------- ----------
Retailing -
Albertson's, Inc. .............................. -- -- 3,100 103,075 3,100 103,075
American Stores Co. ............................ 3,600 107,550 -- -- 3,600 107,550
Arbor Drugs, Inc. .............................. -- -- 750 13,875 750 13,875
Burlington Coat Factory Warehouse * ............ -- -- 900 10,012 900 10,012
Baker J., Inc. ................................. 2,900 16,675 -- -- 2,900 16,675
Casey's General Stores, Inc. ................... -- -- 800 18,400 800 18,400
Circuit City Stores, Inc. ...................... 7,500 250,313 7,500 250,313
Claire's Stores, Inc. .......................... -- -- 600 11,775 600 11,775
Dayton-Hudson Corp. ............................ 2,400 165,000 -- -- 2,400 165,000
Eckerd Corp. * ................................. 3,400 134,725 -- -- 3,400 134,725
Ethan Allen Interiors, Inc.* ................... 3,100 61,225 -- -- 3,100 61,225
K-Mart Corp. ................................... 6,500 52,812 -- -- 6,500 52,812
Kroger Co. * ................................... 6,300 210,263 -- -- 6,300 210,263
May Department Stores .......................... 4,400 172,700 -- -- 4,400 172,700
Nordstrom, Inc. ................................ 1,200 44,475 -- -- 1,200 44,475
Sbarro, Inc. ................................... -- -- 500 10,438 500 10,438
Wal-Mart Stores, Inc. .......................... -- -- 5,600 121,100 5,600 121,100
---------- ---------- ---------- ---------- ---------- ----------
1,215,738 288,675 1,504,413
---------- ---------- ---------- ---------- ---------- ----------
Shipping / Transportation -
Arnold Industries, Inc. ........................ -- -- 700 11,375 700 11,375
Consolidated Railway, Inc. ..................... 1,000 68,750 -- -- 1,000 68,750
Pittston Services Group ........................ 2,000 55,000 -- -- 2,000 55,000
CSX Corp. ...................................... 2,400 201,000 -- -- 2,400 201,000
Ryder System ................................... 3,100 74,787 -- -- 3,100 74,787
---------- ---------- ---------- ---------- ---------- ----------
399,537 11,375 410,912
---------- ---------- ---------- ---------- ---------- ----------
Steel -
Commercial Metals Co. .......................... -- -- 400 10,300 400 10,300
USX-US Steel Group, Inc. ....................... 3,600 107,550 -- -- 3,600 107,550
---------- ---------- ---------- ---------- ---------- ----------
107,550 10,300 117,850
---------- ---------- ---------- ---------- ---------- ----------
Telecommunications -
A T & T Corp., ................................. 2,600 166,400 2,900 185,600 5,500 352,000
GTE Corp. ...................................... 4,200 173,250 -- -- 4,200 173,250
Liberty Media Group, Class A * ................. 500 12,312 -- -- 500 12,312
NYNEX Corp. .................................... 1,400 65,800 -- -- 1,400 65,800
Sprint Corp. ................................... 1,484 57,134 -- -- 1,484 57,134
Tele-Communications, Class A * ................. 2,000 34,000 -- -- 2,000 34,000
U S West, Inc. ................................. 2,000 95,250 -- -- 2,000 95,250
---------- ---------- ---------- ---------- ---------- ----------
604,146 185,600 789,746
---------- ---------- ---------- ---------- ---------- ----------
Textiles -
Interface, Inc. ................................ -- -- 900 13,613 900 13,613
---------- ---------- ---------- ---------- ---------- ----------
Tire & Rubber -
Bandag, Inc. ................................... -- -- 1,100 56,375 1,100 56,375
---------- ---------- ---------- ---------- ---------- ----------
Toys & Games -
Mattel, Inc. ................................... 2,500 71,875 -- -- 2,500 71,875
---------- ---------- ---------- ---------- ---------- ----------
Utilities -
Bay State Gas Co. .............................. -- -- 500 12,500 500 12,500
CMS Energy Corp. ............................... 4,600 127,075 -- -- 4,600 127,075
DQE, Inc. ...................................... 2,750 75,625 -- -- 2,750 75,625
Eastern Enterprises ............................ -- -- 400 11,950 400 11,950
Florida Progress Corp. ......................... 2,900 96,062 -- -- 2,900 96,062
FPL Group Inc. ................................. 4,200 175,875 -- -- 4,200 175,875
Nipsco Industries Inc., ........................ 4,600 167,900 -- -- 4,600 167,900
Northwest Natural Gas Co. ...................... -- -- 400 12,800 400 12,800
Pacific Enterprises ............................ 1,800 44,550 -- -- 1,800 44,550
PECO Energy Co. ................................ 3,000 87,750 -- -- 3,000 87,750
Piedmont Natural Gas Company, Inc. ............. -- -- 500 11,000 500 11,000
Pinnacle West Capital Corp. .................... 6,600 181,500 -- -- 6,600 181,500
Portland General Corp. ......................... 3,200 86,800 -- -- 3,200 86,800
Public Service Co. of Colorado ................. 2,000 68,250 -- -- 2,000 68,250
Southwestern Energy Co. ........................ -- -- 800 10,000 800 10,000
United Water Resources, Inc. ................... -- -- 800 10,100 800 10,100
---------- ---------- ---------- ---------- ---------- ----------
1,111,387 68,350 1,179,737
---------- ---------- ---------- ---------- ---------- ----------
Wholesaling -
Handleman Co. .................................. -- -- 12,000 9,300 12,000 9,300
---------- ---------- ---------- ---------- ---------- ----------
Total Common Stock ............................. 16,950,961 6,148,906 23,099,867
---------- ---------- ---------- ---------- ---------- ----------
Convertible Preferred Stock -
Financial Services -
American General Delaware, $3.00, Ser. A ....... 2,000 103,500 -- -- 2,000 103,500
St. Paul Capital Corp., 6.00% .................. 5,000 270,000 -- -- 5,000 270,000
Food/Beverage Products -
RJR Nabisco Holdings Corp., $0.6012, Ser. C .... 20,000 125,000 -- -- 20,000 125,000
---------- ---------- ---------- ---------- ---------- ----------
Total Convertible Preferred Stock .............. 498,500 -- 498,500
---------- ---------- ---------- ---------- ---------- ----------
Preferred Stock -
Banking -
National Westminster Bank, 7.875%, Ser. A ...... -- -- 5,000 121,875 5,000 121,875
Financial Services -
Morgan Stanley Financial Placing Corp., 7.8% ... -- -- 5,000 122,500 5,000 122,500
---------- ---------- ---------- ---------- ---------- ----------
Total Preferred Stock .......................... -- 244,375 244,375
---------- ---------- ---------- ---------- ---------- ----------
Convertible Corporate Notes -
Consumer Products -
Grand Metropoliton Placing, 6.500%, due 01/30/00 # 150,000 169,283 -- -- 150,000 169,283
Health Care -
Assisted Living Concepts, 7.000% , due 08/15/05 # 150,000 164,500 -- -- 150,000 164,500
Insurance -
American Travellers Corp.,6.500% due 10/01/05 . 200,000 237,500 -- -- 200,000 237,500
Manufacturing -
3 Com Corp.,10.250%, due 11/01/01 # ............ 100,000 163,511 -- -- 100,000 163,511
---------- ---------- ---------- ---------- ---------- ----------
Total Convertible Corporate Notes .............. 734,794 -- 734,794
---------- ---------- ---------- ---------- ---------- ----------
Non-Convertible Corporate Bonds & Notes -
Banking -
BankAmerica Corp.,7.200%, due 4/15/06 .......... -- -- 250,000 258,065 250,000 258,065
Security Pacific Corp., 10.300% , due 05/15/01 . 550,000 650,425 -- -- 550,000 650,425
Consumer Products -
Colgate Palmolive Co.,6.020%, due 08/15/03 ..... -- -- 200,000 195,308 200,000 195,308
Electronics/ Electrical Equipment -
Motorola, Inc.,0.076%, due 01/01/07 ............ -- -- 250,000 271,850 250,000 271,850
Entertainment -
Walt Disney, Inc., 0.08 %, due 10/27/06 ........ -- -- 200,000 223,244 200,000 223,244
Financial Services -
Ford Capital BV, 9.000%, due 08/15/98 .......... 400,000 428,564 -- -- 400,000 428,564
General Electric Capital Corp., 9.180%, due 12/30/08 500,000 603,220 -- -- 500,000 603,220
General Motors Acceptance Corp., 8.625%, due 06/15/9 650,000 697,586 -- -- 650,000 697,586
Goldman Sachs Group, 6.200%, due 02/15/01 # .... 700,000 687,043 -- -- 700,000 687,043
Household Finance Co., 7.750%, due 06/15/97 .... 500,000 512,845 -- -- 500,000 512,845
IBM Credit Corp., 0.085%, due 01/26/00 ......... -- -- 50,000 50,267 50,000 50,267
Norwest Financial, Inc., 0.06875%, due 12/15/99 -- -- 120,000 122,640 120,000 122,640
Retailing -
Wal-Mart Strores, Inc., 0.075% due 05/15/04 .... 100,000 106,659 100,000 106,659
Telecommunications - ........................... -- -- 100,000 96,581 100,000 96,581
---------- ---------- ---------- ---------- ---------- ----------
Northern Telecom, Inc., 0.06%, due 09/01/03
Total Non-Convertible Corporate Bonds & Notes . 3,579,683 1,324,614 4,904,297
---------- ---------- ---------- ---------- ---------- ----------
Collateralized Mortgage Obligations -
Federal Home Loan Mortgage Corp., Ser. 1661, Class PG, -- -- 250,000 244,140 250,000 244,140
Government National Mortgage Association, II, Pool 8315, -- -- 225,527 226,549 225,527 226,549
---------- ---------- ---------- ---------- ---------- ----------
Total Collateralized Mortgage Obligations ...... -- 470,689 470,689
---------- ---------- ---------- ---------- ---------- ----------
U.S. Government Obligations -
U.S. Treasury Bonds,
7.500%, due 11/15/24 ........................... 900,000 1,028,250 -- -- 900,000 1,028,250
8.500%, due 02/15/20 ........................... 1,400,000 1,750,224 -- -- 1,400,000 1,750,224
0.625%, due 08/15/23 ........................... -- -- 300,000 293,202 300,000 293,202
---------- ---------- ---------- ---------- ---------- ----------
2,778,474 293,202 3,071,676
---------- ---------- ---------- ---------- ---------- ----------
U.S. Treasury Notes,
6.500%, due 08/15/05 ........................... 1,480,000 1,532,718 -- -- 1,480,000 1,532,718
0.0425%, due 11/30/95 .......................... -- -- 100,000 99,891 100,000 99,891
0.04375,% due 11/15/96 ......................... -- -- 150,000 148,171 150,000 148,171
0.05125%, due 11/30/98 ......................... -- -- 150,000 147,516 150,000 147,516
0.055%, due 04/15/00 ........................... -- -- 100,000 98,984 100,000 98,984
0.0575% due 08/15/03 ........................... -- -- 300,000 295,923 300,000 295,923
0.06% due 06/30/96 ............................. -- -- 250,000 250,625 250,000 250,625
0.0675%, due 6/30/99 ........................... -- -- 250,000 257,930 250,000 257,930
0.0775%, due 01/31/00 .......................... -- -- 100,000 107,172 100,000 107,172
---------- ---------- ---------- ---------- ---------- ----------
Total U.S. Teasury Notes ....................... 1,532,718 1,406,212 2,938,930
---------- ---------- ---------- ---------- ---------- ----------
Total U.S. Government Obligations .............. 4,311,192 1,699,414 6,010,606
---------- ---------- ---------- ---------- ---------- ----------
U.S. Government Agency -
Federal National Mortgage Assoc.,4.680% due 01/25/96 1,000,000 997,490 -- -- 1,000,000 997,490
---------- ---------- ---------- ---------- ---------- ----------
Floating Rate Note -
Financial Services -
Goldman Sachs & Co., 5.630% due 7/22/96 # ...... 1,000,000 1,000,000 -- -- 1,000,000 1,000,000
---------- ---------- ---------- ---------- ---------- ----------
Total Long-Term Investments .................... 28,072,620 9,887,998 37,960,618
---------- ---------- ---------- ---------- ---------- ----------
Short-Term Investments -
Commercial Paper -
Financial Services -
Broadway Capital Corp., 5.750%, due11/15/95 # .. 2,000,000 1,995,529 -- -- 2,000,000 1,995,529
Household Finance Corp., 5.800%, due 11/01/95 .. 7,796,000 7,796,000 -- -- 7,796,000 7,796,000
Receivables Capital Corp., 5.730%, due 12/05/95 # 2,000,000 1,989,176 -- -- 2,000,000 1,989,176
U.S. Government Obligation -
U.S. Treasury Bill, 0.0527%, due11/30/95 @ ..... -- -- 10,000 9,957 10,000 9,957
U.S. Government Sponsored Agency Obligations -
Federal Home Loan Mortgage Corp., Discount Notes -
0.0562%, due 11/08/95 .......................... -- -- 65,000 64,929 65,000 64,929
0.0562% due 11/08/95 ........................... -- -- 75,000 74,918 75,000 74,918
0.0562%, due 11/09/95 .......................... -- -- 380,000 379,525 380,000 379,525
0.0565%, due 11/06/95 .......................... -- -- 150,000 149,882 150,000 149,882
---------- ---------- ---------- ---------- ---------- ----------
Total Short-Term Investments ................... 11,780,705 679,211 12,459,916
---------- ---------- ---------- ---------- ---------- ----------
Total Investments .............................. $39,853,325 $10,567,209 $50,420,534
---------- ---------- ---------- ---------- ---------- ----------
Written Option Outstanding
Number of Strike Unrealized
U.S. Treasury Bond Futures, due November 18, 1995 Contracts Price (Depreciation)
(Premium received $2,596) 2 $114 ($3,841)
Original Nominal
Purchased Index Futures Outstanding Expiration Number of Nominal Value at Unrealized
Date Contracts Value 10/31/95 Appreciation
U.S. Long Bond 12/19/95 2 $225,187 $234,125 $8,938
# = Security may only be sold to qualified institutional investors.
* = Non Income producing.
Note: Rates indicated for floating rate investments are rates in effect at October 31, 1995.
@ = Security is pledged to cover written options on futures contracts.
See notes to financial statements.
</TABLE>
<PAGE>
VISTA BALANCED FUND
PROFORMA STATEMENT OF ASSETS AND LIABILITIES
10/31/95
UNAUDITED
<TABLE>
<CAPTION>
VISTA BALANCED FUND
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
10/31/95
UNAUDITED
VISTA IEEE PRO FORMA PRO FORMA
BALANCED FUND BALANCED FUND ADJUSTMENTS COMBINED
--------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value ............... $39,853,325 $10,567,209 0 $50,420,534
(See "Cost of Investments" below)
Cash .......................................... -- 21,076 0 21,076
Receivables
Investment securities sold ................. 149,845 76,188 0 226,033
Interest ................................... 173,417 51,947 0 225,364
Dividends .................................. 17,240 4,136 0 21,376
Trust shares sold .......................... 71,645 49,500 0 121,145
Variation margin receivable ................ -- 562 0 562
Expense reimbursement from distributor ..... 11,087 41,957 0 53,044
----------- ----------- ----------- -----------
Total Assets ............................ 40,276,559 10,812,575 0 51,089,134
----------- ----------- ----------- -----------
LIABILITIES:
Payable for Trust shares redeemed ............. 36,873 -- 0 36,873
Payable to custodian .......................... 61,386 -- 0 61,386
Options Written ............................... -- 2,596 0 2,596
Depreciation on Options Written ............... -- 3,841 0 3,841
Accrued liabilities:
Administration fee ......................... -- 905 0 905
Custodian fees ............................. 14,605 9,740 0 24,345
Distribution fee ........................... 8,900 2,261 0 11,161
Investment advisory fee .................... -- 5,429 0 5,429
Shareholder servicing fees ................. 2,557 2,261 0 4,818
Sub-administration fee ..................... -- 452 0 452
Other ...................................... 83,706 13,202 0 96,908
----------- ----------- ----------- -----------
Total liabilities .................... 208,027 40,687 0 248,714
----------- ----------- ----------- -----------
NET ASSETS
Paid in capital ............................... 36,517,465 9,742,985 0 46,260,450
Accumulated undistributed net investment income 0 5,576 0 5,576
Accumulated undistributed net realized
gain (loss)on investement transactions .... 995,554 -294,959 0 700,595
Net unrealized appreciation of investments .... 2,555,513 1,318,286 0 3,873,799
----------- ----------- ----------- -----------
Net assets .......................... $40,068,532 $10,771,888 0 $50,840,420
=========== =========== =========== ===========
Net assets by class
A .......................................... $33,732,839 $10,771,888 $ 0 $44,504,727
----------- ----------- ----------- -----------
B .......................................... 6,335,693 0 0 6,335,693
----------- ----------- ----------- -----------
Total combined net assets by class ..... $40,068,532 $10,771,888 $ 0 $50,840,420
=========== =========== =========== ===========
Shares of beneficial interest outstanding
(no par value; unlimited number of
shares authorized):
A .......................................... 2,710,539 980,997 -116,859 (6) 3,574,677
=========== =========== =========== ===========
B .......................................... 512,572 0 0 512,572
=========== =========== =========== ===========
Net asset value and redemption price per
share Class A (net assets/shares outstanding) ... $ 12.45 $ 10.98 0.00 $ 12.45
=========== =========== =========== ===========
Maximum offering price per share
(net asset value per
share/95.5%; 95.25% for SCE) .................... 13.04
===========
Net asset value and redemption price per
share Class B (net assets/shares outstanding) ... $ 12.36 $ 0.00 0.00 $ 12.36
=========== =========== =========== ===========
Cost of Investments .............................. $37,297,812 $ 9,254,020 $ 0 $46,551,832
=========== =========== =========== ===========
<PAGE>
VISTA BALANCED FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED 10/31/95
UNAUDITED
UNAUDITED
VISTA IEEE PRO FORMA PRO FORMA
BALANCED FUND BALANCED FUND ADJUSTMENTS COMBINED
--------------------------------------------------------
INVESTMENT INCOME:
Interest ....................................... $ 1,027,055 $ 233,600 $ 0 $ 1,260,655
Dividend ....................................... 291,935 114,251 0 406,186
----------- ----------- ----------- -----------
Total Investment Income .................... 1,318,990 347,851 0 1,666,841
----------- ----------- ----------- -----------
EXPENSES
Distribution fees
A .......................................... 60,657 23,980 0 84,637
B .......................................... 35,952 0 0 35,952
Shareholder Servicing fees
A .......................................... 60,657 23,980 0 84,637
B .......................................... 11,984 0 0 11,984
Administration fees ........................... 29,053 9,592 0 38,645
Advisory fees ................................. 145,295 62,347 -14,388 (1) 193,254
Sub-Administration fees ....................... 14,527 4,796 0 19,323
Professional fees ............................. 46,462 32,678 -32,678 (3) 46,462
Custodian fees ................................ 53,483 8,980 21,221(2) 83,684
Printing and postage .......................... 6,001 13,001 0 19,002
Registration costs ............................ 28,048 18,369 0 46,417
Transfer agent fees ........................... 147,704 19,959 -59,663 (2) 108,000
Trustee fees .................................. 1,582 524 429 (4) 2,535
Other ......................................... 24,044 8,007 0 32,051
----------- ----------- ----------- -----------
Total expenses .................... 665,449 226,213 -85,079 806,583
----------- ----------- ----------- -----------
Less amounts waived by the Administrator,
Shareholder Servicing Agents, Adviser and
Distributor ......................... 249,525 4,796 4,252 (5) 258,573
Less expenses borne by Distributor ..... 71,666 101,519 -144,210 (5) 28,975
----------- ----------- ----------- -----------
Net expenses ......................... 344,258 119,898 54,879 519,035
----------- ----------- ----------- -----------
Net investment income ............ 974,732 227,953 -54,879 1,147,806
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized gain (loss) on investment transactions 1,024,866 -88,623 0 936,243
----------- ----------- ----------- -----------
Net realized gain (loss) ...................... 1,024,866 -88,623 0 936,243
----------- ----------- ----------- -----------
Change in net unrealized appreciation/depreciation on:
Investments ................................. 2,769,570 1,610,625 0 4,380,195
Options contracts and futures ............... 0 5,097 0 5,097
----------- ----------- ----------- -----------
Change in net unrealized appreciation/depreciation 2,769,570 1,615,722 0 4,385,292
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) ....... 3,794,436 1,527,099 0 5,321,535
----------- ----------- ----------- -----------
Net increase in net assets from operations .... $ 4,769,168 $ 1,755,052 ($ 54,879) $ 6,469,341
=========== =========== =========== ===========
</TABLE>
-48-
<PAGE>
Vista Balanced & IEEE Reorganization
Explanation of Note References:
(1) Reflects adjustment of additional IEEE assets at the Balanced
contractual rate.
(2) Reflects adjustment to the fees based on the newly contracted fees
plus out of pocket expenses.
(3) Reflects elimination of duplicative services/fees.
(4) Reflects the new structure of the board of the surviving fund, the
elimination of duplicative expenses and the allocation of complex-wide
fees based on the relative net assets of the newly combined fund.
(5) Adjustment to reflect the expenses expected to be incurred by the Fund.
(6) Adjustment to reflect number of shares for the IEEE net assets, based
upon the Vista Balanced Fund's 10/31/95 ending NAV.
-49-
<PAGE>
Balanced & IEEE Reorganization
Notes to the Pro-forma financial statements
1. Basis of Combination
The Pro Forma Combining Portfolio of Investments, Statement of Assets
and Liabilities and Statement of Operations ("Pro Forma Statements"),
reflect the accounts of the Vista Balanced Fund and the IEEE Balanced
("IEEE") Fund at October 31, 1995 and for the year then ended.
The Pro Forma Statements give effect to the proposed transfer of all
assets and liabilities of IEEE to Vista Balanced Fund in exchange for
shares of Vista Balanced Fund. The reorganization will be accounted for
by Vista Balanced Fund as a pooling of interests without restatement of
pre-reorganization accounts.
The Pro Forma Statements should be read in conjunction with the
historical financial statements of each Fund.
2. Shares of Beneficial Interest - The pro forma net asset value per share
and shares outstanding assume the issuance of additional shares of the
Vista Balanced Fund that would have occurred on October 31, 1995 in
connection with the proposed reorganization. The additional shares to
be issued for the Vista Balanced Fund were based on the October 31,
1995 net assets of the IEEE Fund and the net asset value per share of
the Vista Balanced Fund and are as follows:
IEEE Net Assets Nav per share of Additional Vista
at October 31, 1995 Vista Balanced Fund Balanced Fund Shares
$10,771,888 $12.45 865,555
3. Pro Forma Operating Expenses
The Pro Forma Combining Statement of Operations assumes similar rates
of gross investment income for the investments of each Fund.
Accordingly, the combined gross investment income is equal to the sum
of each Fund's gross investment income. Certain expenses have been
adjusted to reflect the expected expenses of the combined entity more
closely. Pro forma operating expenses include the actual expenses of
the Vista Balanced and IEEE Funds and the combined Fund adjusted for
certain items which are factually supportable. For the combined Fund
certain expenses are expected to be waived by the Shareholder Servicing
Agent, the Distributor, the Advisor, the Administrator and the
Sub-Administrator and the expenses are adjusted to reflect expected
waivers.
-50-
<PAGE>
Shareholder Inquiries
Shareholder inquiries may be addressed to the IEEE Fund at the address
or telephone number on the cover page of this Combined Proxy
Statement/Prospectus.
* * *
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
-51-
<PAGE>
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
-5-
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION
<PAGE>
FORM OF
MUTUAL FUND GROUP
IEEE BALANCED FUND AND VISTA BALANCED FUND
PLAN OF REORGANIZATION
The Plan of Reorganization ("the Plan") set forth below has been
adopted by the Board of Trustees of Mutual Fund Group (the "Trust") for the
purpose of effecting the transfer of the assets of the Trust's IEEE Balanced
Fund Series (the "IEEE Fund") to the Trust's Vista Balanced Fund Series (the
"Balanced Fund") in exchange for Class A shares of beneficial interest of the
Balanced Fund and the distribution of such shares to the stockholders of the
IEEE Fund (the "Reorganization"). The Plan will become effective upon its
approval by the shareholders of the IEEE Fund.
THE PLAN
1. Approval by Shareholders.
A meeting of the shareholders of the IEEE Fund shall be called and
held for the purpose of acting upon this Plan and the transactions contemplated
hereby. The Trust shall furnish to the shareholders of the IEEE Fund a
prospectus/proxy statement containing certain data and information relating to
the Balanced Fund and this Plan in connection with the meeting for the purpose
of acting upon this Plan and the transactions contemplated hereby. Approval by
the shareholders of the IEEE Fund of this Plan shall, to the extent necessary to
permit the consummation of the transactions contemplated hereby without
violating any investment objective, policy or restriction of the IEEE Fund, be
deemed to constitute approval by such shareholders of an amendment of any such
investment objective, policy or restriction that would otherwise be inconsistent
with or violated upon the consummation of such transactions, and this Plan shall
be deemed to effect any such amendment or amendments.
2. Reorganization.
a. Subject to the terms and conditions set forth in this Plan, the
IEEE Fund will convey, transfer and deliver to the Balanced Fund at the closing
provided for in Section 3 (hereinafter called the "Closing") all of the
then-existing assets of the IEEE Fund. In consideration thereof, and subject to
the terms and conditions set forth in this Plan, Balanced Fund agrees at the
Closing (1) to assume and pay, to the extent that they exist on or after the
Effective Time of the Reorganization (as defined in Section 3 hereof), all of
the
<PAGE>
IEEE Fund's obligations and liabilities, of whatever kind or nature, whether
absolute, accrued, contingent or otherwise, whether or not determinable as of
the Effective Time of the Reorganization, and (2) in order to accomplish the
reclassification of shares as described in Section __ hereof, deliver to the
Trust for distribution to the shareholders of the IEEE Fund a number of full and
fractional Class A shares (the "Shares") of beneficial interest of the Balanced
Fund, no par value determined by dividing the Net Asset Value ("NAV") of the
IEEE Fund at the Effective Time of the Reorganization (as determined in
accordance with the Investment Company Act of 1940, as amended (the "1940 Act")
and the IEEE Funds current properties) by the net asset value of one Class A
share of the Balanced Fund at the Effective Time of the Reorganization (as
determined in accordance with the Balance Fund's most recent Registration
Statement on Form N-1A).
b. Upon consummation of the transactions described in Section 2(a)
above, the IEEE Fund will distribute pro rata to the shareholders of record of
the IEEE Fund as of the Effective Time of the Reorganization the Shares received
by the IEEE Fund pursuant to this Section 2. Such distribution will be
accomplished by the establishment of an open account on the stock records of the
Balanced Fund in the name of each such shareholder of the IEEE Fund and
representing the number of Shares due such shareholder based upon their
ownership of shares of the IEEE Fund. Fractional Shares will be carried to the
third decimal place. Certificates representing Shares will not be issued.
c. As soon as reasonably practicable after the Effective Time of the
Reorganization, the Trust will take all necessary steps under its Declaration of
Trust and Massachusetts law to effect a complete liquidation and dissolution of
the IEEE Fund.
d. The transactions contemplated herein are referred to as the
"Reorganization."
3. Closing and Effective Time of the Reorganization.
The closing of the Reorganization (the "Closing") shall take place at
such time and on such date (the "Effective Time of the Reorganization") as the
Trust may determine, provided that the Closing shall occur after the close of
regular trading on the New York Stock Exchange on a date that is no earlier than
the date of the final adjournment of the meeting of the stockholders of the IEEE
Fund at which this Plan is approved.
4. Conditions to the Closing.
The consummation of the Reorganization shall be subject to the
satisfaction of each of the following conditions:
a. Organization, Existence, etc. The Trust shall be duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and shall have the power to carry on its business as it is now
being conducted. The Trust
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<PAGE>
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. Shareholder Approval. This Agreement and the transactions
contemplated by the Reorganization, including, when necessary, a temporary
amendment of the investment restrictions that might otherwise preclude the
consummation of the Reorganization, shall have been approved by the holders of
the requisite number of shares of beneficial interest of the IEEE Fund entitled
to vote on the matter under the Declaration of Trust.
c. Registration as Investment Company. The Trust shall be registered
under the Investment Company Act of 1940 (the "Act") as an open-end investment
company of the management type and such registration shall not have been revoked
or rescinded and shall be in full force and effect.
d. Registration Statement. The Trust shall have filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
(the "Registration Statement") under the Securities Act of 1933 ("Securities
Act") relating to the Shares issuable hereunder. 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 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
Shareholders' meeting referred to in Section 1, and at the Effective Time of the
Reorganization, the prospectus for the Balanced Fund and 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 the light of the circumstances under which they were made, not
misleading.
e. Shares to be Issued Upon Reorganization. The shares of the Balanced
Fund to be issued in connection with the Reorganization shall have been duly
authorized and upon consummation of the Reorganization shall be validly issued,
fully paid and nonassessable.
f. Taxes. The Federal income tax returns of the Trust shall have been
filed for all taxable year to and including October 31, 1994, and all taxes
payable pursuant to such returns shall have been paid. Each Fund shall be
qualified as a regulated investment company under the Internal Revenue Code in
respect of each taxable year of the Fund since commencement of its operations.
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<PAGE>
g. Regulatory Authority. Such authority, including "no-action" letters
and orders from the Securities and Exchange Commission (the "Commission") and
state securities commissions, as may be necessary to permit the parties to carry
out the transactions contemplated by this Agreement shall have been received.
h. No Enjoinder. On the Closing Date, (a) the SEC shall not have
issued an unfavorable advisory report under Section 25(b) of the 1940 Act nor
instituted nor threatened to institute any proceeding seeking to enjoin
consummation of the Reorganization contemplated hereby under Section 25(c) of
the 1940 Act and (b) no other action, suit or other proceeding shall be
threatened or pending before any court or governmental agency which seeks to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
i. Opinion of Counsel. The Trust shall have received the opinion of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Trust, dated
the Effective Time of the Reorganization addressed to the Trust, to the effect
that: (1) the Trust is established as a Massachusetts business trust under
Declaration of Trust dated May 11, 1987 and is validly existing under the laws
of the Commonwealth of Massachusetts, (2) the Trust is an open-end investment
company of the management type registered under the 1940 Act, and the Balanced
Fund is a duly established series of the Trust, (3) this Plan and the
Reorganization provided for herein have been duly authorized and approved by all
requisite trust action of the Trust, (4) this Plan and the Reorganization
provided for herein does not result in any violation of the Declaration of Trust
or By-laws of the Trust and (5) the Shares to be issued in the Reorganization
will be duly authorized and upon issuance thereof in accordance with this Plan
will be validly issued, fully paid and non-assessable Shares (recognizing that,
under Massachusetts law, shareholders of the Balanced Fund could, under certain
circumstances, be held personally liable for obligations of the IEEE Fund). In
rendering such opinion, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel may
rely on an opinion of Massachusetts counsel reasonably acceptable to the Trust
with respect to matters of Massachusetts law.
j. Tax Opinion. The Trust shall have received an opinion of Kramer,
Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Trust, dated the
Effective Time of the Reorganization, addressed to and in form and substance
satisfactory to the Trust to the effect that: (i) the transfer of all of the
assets of the IEEE Fund (except for cash reserve in an amount necessary for the
discharge of all known and reasonably anticipated liabilities of the IEEE Fund,
if any) to the Balanced Fund in exchange for the assumption of all the
liabilities of the IEEE Fund by the Balanced Fund and the delivery to the IEEE
Fund of shares of the Balanced Fund, and the distribution by the IEEE Fund pro
rata to its shareholders of such shares of the Balanced Fund and the termination
of the IEEE Fund, as described in the Reorganization Plan, will constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended; (ii) no gain or loss will be recognized by the IEEE Fund as a
result of such transactions; (iii) no gain or loss will be recognized by the
Balanced Fund as a result of such transactions; (iv) no gain or loss will be
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<PAGE>
recognized by the shareholders of the IEEE Fund on the distribution to them by
the IEEE Fund of shares of the Balanced Fund in exchange for their shares of the
IEEE Fund; (v) the basis of Balanced Fund shares received by a shareholder of
the IEEE Fund will be the same as the basis of the shareholder's IEEE Fund
shares immediately prior to the transactions; (vi) the basis to the Balanced
Fund of the assets of the IEEE Fund received pursuant to such transactions will
be the same as the basis of the assets in the hands of the IEEE Fund immediately
before such transactions; (vii) a shareholder's holding period for Balanced Fund
shares will be determined by including the period for which the shareholder held
IEEE Fund shares exchanged therefor, provided that the shareholder held IEEE
Fund shares as a capital asset; and (viii) the Balanced Fund's holding period
with respect to the assets received in the transactions will include the period
for which such assets were held by the IEEE Fund.
5. Amendment.
This Plan may be amended by the Board of Trustees of the Trust at any
time before or after the approval hereof by the shareholders of the IEEE Fund,
but after such approval, no amendment shall be made which substantially changes
the terms hereof.
6. Termination.
The Board of Trustees of the Trust may terminate this Plan and abandon
the Reorganization contemplated hereby at any time prior to the Closing,
notwithstanding approval thereof by the shareholders of the IEEE Fund if, in the
judgment of such Board proceeding with the Reorganization would be inadvisable.
Adopted: _________________, 1995
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<PAGE>
APPENDIX B
FORM OF INTERIM
INVESTMENT ADVISORY AGREEMENT
<PAGE>
FORM OF INTERIM
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , by and between MUTUAL FUND ________ (the
"Trust") on behalf of the series of the Trust (the "Fund") and THE CHASE
MANHATTAN BANK, a New York State chartered banking corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide advisory services for the Fund on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed by and between the parties hereto as
follows:
1. Appointment. The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund with respect to the
investment of its assets and to supervise and arrange the purchase of
securities for and the sale of securities held in the portfolio of the
Fund.
2. Duties and Obligations of the Adviser With Respect to Investments
of Assets of the Fund.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the
Trust, the Adviser shall:
(i) supervise continuously the investment program of the
Fund and the composition of its portfolio;
(ii) determine what securities shall be purchased or sold by
the Fund; and
(iii) arrange for the purchase and the sale of securities
held in the portfolio of the Fund.
(b) Any investment program furnished by the Adviser under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by:
<PAGE>
(i) the provisions of the Act and of any rules or
regulations in force thereunder;
(ii) any other applicable provisions of state and federal
law;
(iii) the provisions of the Declaration of Trust and By-Laws
of the Trust, as amended from time to time;
(iv) any policies and determinations of the Board of
Trustees of the Trust; and
(v) the fundamental policies of the Fund, as reflected in
its Registration Statement under the Act, as amended from time to
time.
(c) In making recommendations for the Fund, Trust Division
personnel of the Adviser will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the
Fund's account are customers of the Commercial Division of the
Adviser. In dealing with commercial customers, the Commercial Division
will not inquire or take into consideration whether securities of
those customers are held by the Fund.
(d) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, but the Adviser
shall not be liable for any loss sustained by the Fund in connection
with the matters to which this Agreement relates, including
specifically but not limited to, the calculation of net asset value
and the adoption of any investment policy or the purchase, sale or
retention of any security, whether or not such purchase, sale or
retention shall have been based upon its own investigation and
research or upon investigation and research made by any other
individual, firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or corporation
shall have been selected in good faith. Nothing herein contained
shall, however, be construed to protect the Adviser against any
liability to the Fund or its security holders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting
as investment adviser or manager for any other person, firm or
corporation (including other investment companies) and shall not in
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<PAGE>
any way limit or restrict the Adviser or any such affiliated person
from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or they may be
acting; provided, however, that the Adviser expressly represents that
it will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Fund under this
Agreement.
(f) The Fund will supply the Adviser with certified copies of the
following documents: (i) the Trust's Declaration of Trust and By-Laws,
as amended; (ii) resolutions of the Trust's Board of Trustees and
shareholders authorizing the appointment of the Adviser and approving
this Agreement; (iii) the Trust's Registration Statement, as filed
with the SEC; and (iv) the Fund's most recent prospectus and statement
of additional information. The Fund will furnish the Adviser from time
to time with copies of all amendments or supplements to the foregoing,
if any, and all documents, notices and reports filed with the SEC.
(g) The Fund will supply, or cause its custodian bank to supply,
to the Adviser such financial information as is necessary or desirable
for the functions of the Adviser hereunder.
3. Broker-Dealer Relationships. The Adviser is responsible for
decisions to buy and sell securities for the Fund, broker-dealer selection
and negotiation of its brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be execution at the
most favorable price. The Fund understands that a substantial majority of
the Fund's portfolio transactions will be transacted with primary market
makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result in
a profit to the market makers. In certain instances the Adviser may make
purchases of underwritten issues at prices which include underwriting fees.
In selecting a broker or dealer to execute each particular transaction, the
Adviser will take the following into consideration; the best price
available; the reliability, integrity and financial condition of the broker
or dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker or dealer to the investment
performance of the Fund on a continuing basis. Accordingly, the price to
the Fund in any transaction may be less favorable than that available from
another broker or dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such
policies as the Board of Trustees may determine, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty
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<PAGE>
created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and
research services to the Adviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Adviser determines in good faith that such amount of commission was
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 Adviser's overall responsibilities with
respect to the Fund. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers and dealers who
also provide research or statistical material, or other services to the
Fund (which material or services may also assist the Adviser in rendering
services to other clients). Such allocation shall be in such amounts and
proportions as the Adviser shall determine and the Adviser will report on
said allocations regularly to the Board of Trustees indicating the brokers
to whom such allocations have been made and the basis therefor.
4. Allocation of Expenses. The Adviser agrees that it will furnish the
Fund, at its expense, all office space and facilities, equipment and
clerical personnel necessary for carrying out its duties under this
Agreement and the keeping of certain accounting records of the Fund. The
Adviser agrees that it will supply to any sub-adviser or administrator (the
"Administrator") of the Fund all necessary financial information in
connection with the Administrator's duties under any Agreement between the
Administrator and the Trust. The Adviser will also pay all compensation of
all Trustees, officers and employees of the Fund who are "affiliated
persons" of the Adviser as defined in the Act. All costs and expenses not
expressly assumed by the Adviser under this Agreement or by the
Administrator under the administration agreement between it and the Trust
shall be paid by the Fund, including, but not limited to (i) fees paid to
the Adviser and the Administrator; (ii) interest and taxes; (iii) brokerage
commissions; (iv) insurance premiums; (v) compensation and expenses of its
Trustees other than those affiliated with the Adviser or the Administrator;
(vi) legal, accounting and audit expenses; (vii) custodian and transfer
agent, or shareholder servicing agent, fees and expenses; (viii) expenses,
including clerical expenses, incident to the issuance, redemption or
repurchase of shares, including issuance on the payment of, or reinvestment
of, dividends; (ix) fees and expenses incident to the registration under
Federal or state securities laws of the Fund or its shares; (x) expenses of
preparing, setting in type, printing and mailing prospectuses, statements
of additional information, reports and notices and proxy material to
shareholders of the Fund;
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<PAGE>
(xi) all other expenses incidental to holding meetings of the Fund's
shareholders; and (xii) such extraordinary expenses as may arise, including
litigation affecting the Fund and the legal obligations which the Trust may
have to indemnify its officers and Trustees with respect thereto.
5. Compensation of the Adviser. (a) For the services to be rendered
and the expenses assumed by the Adviser, the Fund shall pay to the Adviser
monthly compensation at an annual rate, of % of the Fund's average daily
net assets, as set forth in Schedule A. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily and
the amounts of the daily accruals shall be paid monthly. If the Agreement
becomes effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for that part of the month
this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Subject to the provisions
of subsection (b) hereof, payment of the Adviser's compensation for the
preceding month shall be made as promptly as possible after completion of
the computations contemplated by subsection (b) hereof.
(b) In the event the operating expenses of the Fund including all
investment advisory, sub-advisory and administration fees, for any
fiscal year ending on a date on which this Agreement is in effect
exceed the expense limitations applicable to the Fund imposed by the
securities laws or regulations thereunder of any state in which the
Fund's shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the Adviser shall reduce its
investment advisory fee, but not below zero, to the extent of its
share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be
settled on a monthly basis and shall be based upon the expense
limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more of such expense limitations be
applicable as at the end of the last business day of the month, that
expense limitation which results in the largest reduction in the
Adviser's fee shall be applicable. For the purposes of this paragraph,
the Adviser's share of any excess expenses shall be computed by
multiplying such excess expenses by a fraction, the numerator of which
is the amount of the investment advisory fee which would otherwise be
payable to the Adviser for such fiscal year were it not
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<PAGE>
for this subsection 5(b) and the denominator of which is the sum of
all investment advisory and administrative fees which would otherwise
be payable by the Fund were it not for the expense limitation
provisions of any investment advisory or administrative agreement to
which the Fund is a party.
6. Duration, Amendment and Termination. (a) This Agreement shall
go into effect as to the Fund on the date set forth above (the
"Effective Date") and shall, unless terminated as hereinafter
provided, continue in effect for two years from the Effective Date and
shall continue from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of
Trustees of the Trust, including the vote of a majority of the
Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of
the holders of a "majority" (as so defined) of the outstanding voting
securities of the Fund and by such a vote of the Trustees.
(b) This Agreement may not be amended except in accordance
with the provisions of the Act, including specifically, the
provisions of the Act and the rules and regulations thereunder
regarding series votes by shareholders of the Fund.
(c) This Agreement may be terminated by the Adviser at any
time without penalty upon giving the Fund sixty (60) days'
written notice (which notice may be waived by the Fund) and may
be terminated by the Fund at any time without penalty upon giving
the Adviser sixty (60) days' written notice (which notice may be
waived by the Adviser), provided that such termination by the
Fund shall be approved by the vote of a majority of all the
Trustees in office at the time or by the vote of the holders of a
majority (as defined in the Act) of the voting securities of the
Fund at the time outstanding and entitled to vote. This Agreement
may only be terminated in accordance with the provisions of the
Act, and shall automatically terminate in the event of its
assignment (as defined in the Act).
7. Board of Trustees Meeting. The Fund agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the
Adviser and that the Fund will make appropriate arrangements for the
attendance (as persons present by invitation) of such person or
persons as the Adviser may designate.
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<PAGE>
8. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other
party at such address as such other party may designate for the receipt
of such notice. Until further notice to the other party, it is agreed
that the address of the Fund for this purpose shall be 125 West 55th
Street, New York, New York 10019, and that of the Adviser shall be One
Chase Manhattan Plaza, New York, New York 10081.
9. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act, as amended,
shall be resolved by reference to such term or provision of the Act and
to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of
the Act, reflected in any provision of this Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunder affixed, all as of the day and year first above written.
MUTUAL FUND _______________
Name:
Title:
ATTEST:
THE CHASE MANHATTAN BANK
Name:
Title:
ATTEST:
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<PAGE>
APPENDIX C
NEW INVESTMENT ADVISORY AGREEMENT
<PAGE>
NEW INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND ___________
AND
THE CHASE MANHATTAN BANK
AGREEMENT made this day of , 1996, by and between Mutual Fund ________, a
Massachusetts business trust which may issue one or more series of shares
(hereinafter the "Trust"), and The Chase Manhattan Bank, a New York state
chartered bank (hereinafter the "Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services in connection with the series of the Trust listed on Schedule
A (each, a "Fund" and collectively, the "Funds"), and the Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Structure of Agreement. The Trust is entering into this Agreement
on behalf of the Funds severally and not jointly. The responsibilities and
benefits set forth in this Agreement shall refer to each Fund severally and not
jointly. No individual Fund shall have any responsibility for any obligation
with respect to any other Fund arising out of this Agreement. Without otherwise
limiting the generality of the foregoing,
(a) any breach of any term of this Agreement regarding the Trust
with respect to any one Fund shall not create a right or
obligation with respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set
off claims relating to a Fund by applying property of any
other Fund; and
(c) the business and contractual relationships created by this
Agreement, the consideration for entering into this Agreement,
and the consequences of such
<PAGE>
relationships and consideration relate solely to the Trust and
the particular Fund to which such relationship and
consideration applies.
2. Delivery of Documents. The Trust has delivered to the Adviser
copies of each of the following documents and will deliver to it all future
amendments and supplements thereto, if any:
(a) The Trust's Declaration of Trust;
(b) The By-Laws of the Trust;
(c) Resolutions of the Board of Trustees of the Trust authorizing
the execution and delivery of this Agreement;
(d) The Trust's Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), on Form N-1A as
filed with the Securities and Exchange Commission (the
"Commission") on July 18, 1994 and all subsequent amendments
thereto relating to the Funds (the "Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of the
Funds (collectively, the "Prospectuses").
3. Appointment.
(a) General. The Trust hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the
terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the
employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under
applicable laws and are under the control of The Chase
Manhattan Corporation, the parent of the Adviser; provided
that (i) all persons, when providing services hereunder, are
functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by
authorized officers of the Adviser.
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<PAGE>
(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities
or persons as the Adviser believes appropriate to assist in
the performance of this Agreement with respect to a particular
Fund or Funds (each a "Sub-Adviser"), and that any such
Sub-Adviser shall have all of the rights and powers of the
Adviser set forth in this Agreement; provided that a Fund
shall not pay any additional compensation for any Sub-Adviser
and the Adviser shall be as fully responsible to the Trust for
the acts and omissions of the Sub-Adviser as it is for its own
acts and omissions; and provided further that the retention of
any Sub-Adviser shall be approved in advance by (i) the Board
of Trustees of the Trust and (ii) the shareholders of the
relevant Fund if required under any applicable provisions of
the 1940 Act. The Adviser will review, monitor and report to
the Trust's Board of Trustees regarding the performance and
investment procedures of any Sub-Adviser. In the event that
the services of any Sub-Adviser are terminated, the Adviser
may provide investment advisory services pursuant to this
Agreement to the Fund without a Sub-Adviser and without
further shareholder approval, to the extent consistent with
the 1940 Act. A Sub-Adviser may be an affiliate of the
Adviser.
4. Investment Advisory Services.
(a) Management of the Funds. The Adviser hereby undertakes to act
as investment adviser to the Funds. The Adviser shall
regularly provide investment advice to the Funds and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Trust
and each Fund;
(ii) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Funds' investment programs, and the
issuers of securities included in the Funds'
portfolios and the industries in which they engage,
or which may relate to securities or other
investments which the Adviser may deem desirable for
inclusion in a Fund's portfolio;
(iii) determine which issuers and securities shall be
included in the portfolio of each Fund; (iv) furnish
a continuous investment program for each Fund;
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<PAGE>
(v) in its discretion and without prior consultation with
the Trust, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser
may deem necessary in order to carry into effect such
investment program and the Adviser's functions as
provided above, including the making of appropriate
periodic reports to the Trust's Board of Trustees.
(b) Covenants. The Adviser shall carry out its investment
advisory and supervisory responsibilities in a manner
consistent with the investment objectives, policies, and
restrictions provided in: (i) each Fund's Prospectus and
Statement of Additional Information as revised and in effect
from time to time; (ii) the Company's Trust Instrument,
By-Laws or other governing instruments, as amended from time
to time; (iii) the 1940 Act; (iv) other applicable laws; and
(v) such other investment policies, procedures and/or
limitations as may be adopted by the Company with respect to a
Fund and provided to the Adviser in writing. The Adviser
agrees to use reasonable efforts to manage each Fund so that
it will qualify, and continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended, and regulations issued thereunder
(the "Code"), except as may be authorized to the contrary by
the Company's Board of Trustees. The management of the Funds
by the Adviser shall at all times be subject to the review of
the Company's Board of Trustees.
(c) Books and Records. The Adviser shall keep each Fund's books
and records required by applicable law to be maintained by the
Funds with respect to advisory services. The Adviser agrees
that all records which it maintains for a Fund are the
property of the Fund and it will promptly surrender any of
such records to the Fund upon the Fund's request. The Adviser
further agrees to preserve for the periods prescribed by the
1940 Act any such records of the Fund required to be preserved
by such Rule.
(d) Reports, Evaluations and other services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Trust with respect to the Funds and in connection with the
Adviser's services hereunder as the Trust's Board of Trustees
may request from time to time or as the Adviser may otherwise
deem to be desirable. The Adviser shall make recommendations
to the Trust's Board of Trustees with respect to Trust
policies, and shall carry out such policies as are adopted by
the Board of Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the
Adviser shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement.
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<PAGE>
(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for
each Fund with brokers or dealers selected by the Adviser,
which may include brokers or dealers affiliated with the
Adviser to the extent permitted by the 1940 Act and the
Trust's policies and procedures applicable to the Funds. The
Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the
most favorable to the Funds. In assessing the best overall
terms available for any transaction, the Adviser 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 the Adviser, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no event
shall the Adviser be under any duty to obtain the lowest
commission or the best net price for any Fund on any
particular transaction, nor shall the Adviser be under any
duty to execute any order in a fashion either preferential to
any Fund relative to other accounts managed by the Adviser or
otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. 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 the Adviser, the
Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser 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 the Adviser 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 the
Adviser with respect to accounts over which it exercises
investment discretion. The Adviser shall report to the Board
of Trustees of the Trust regarding overall commissions paid by
the Funds and their reasonableness in relation to the benefits
to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other Funds or its other clients if, in the
Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to the Fund, taking into
consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies
set forth in the
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<PAGE>
Trust's registration statement and the Fund's Prospectus and
Statement of Additional Information. In such event, the
Adviser will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable
manner, consistent with its fiduciary obligations to the Fund
and such other clients.
5. Expenses. (a) The Adviser shall, at its expense, provide the Funds
with office space, furnishings and equipment and personnel required by it to
perform the services to be provided by the Adviser pursuant to this Agreement.
The Adviser also hereby agrees that it will supply to any sub-adviser or
administrator (the "Administrator") of a Fund all necessary financial
information in connection with the Administrator's duties under any Agreement
between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the Trust shall be
responsible for all of the Funds' expenses and liabilities, including, but not
limited to, taxes; interest; fees (including fees paid to its trustees who are
not affiliated with the Adviser or any of its affiliates); fees payable to the
Securities and Exchange Commission; state securities qualification fees;
association membership dues; costs of preparing and printing Prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory and
administration fees; charges of the custodian and transfer agent; insurance
premiums; auditing and legal expenses; costs of shareholders' reports and
shareholders' meetings; any extraordinary expenses; and brokerage fees and
commissions, if any, in connection with the purchase or sale of portfolio
securities.
6. Compensation. (a) In consideration of the services to be rendered by
the Adviser under this Agreement, the Trust shall pay the Adviser monthly fees
on the first Business Day (as defined in the Prospectuses) of each month based
upon the average daily net assets of each Fund during the preceding month (as
determined on the days and at the time set forth in the Prospectuses for
determining net asset value per share) at the annual rate set forth opposite the
Fund's name on Schedule A attached hereto. If the fees payable to the Adviser
pursuant to this paragraph begin to accrue before the end of any month or if
this Agreement terminates before the end of any month, the fees for the period
from such date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Funds' net assets shall be computed in the manner specified in the
Prospectuses and the Articles for the computation of the value of the Funds' net
assets in connection with the determination of the net asset value of shares of
the Funds' capital stock.
(b) If the aggregate expenses incurred by, or allocated to, each Fund
in any fiscal year shall exceed the lowest expense limitation, if applicable to
such Fund, imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Adviser shall reduce
its investment advisory fee, but not below zero, to the
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<PAGE>
extent of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more of such expense limitations be applicable
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Adviser's fee shall be applicable. For
the purposes of this paragraph, the Adviser's share of any excess expenses shall
be computed by multiplying such excess expenses by a fraction, the numerator of
which is the amount of the investment advisory fee which would otherwise be
payable to the Adviser for such fiscal year were it not for this subsection 6(b)
and the denominator of which is the sum of all investment advisory and
administrative fees which would otherwise be payable by the Fund were it not for
the expense limitation provisions of any investment advisory or administrative
agreement to which the Fund is a party.
(c) In consideration of the Adviser's undertaking to render the
services described in this Agreement, the Trust agrees that the Adviser shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any act or omission or loss suffered by the Trust in connection with the
performance of this Agreement, provided that nothing in this Agreement shall be
deemed to protect or purport to protect the Investment Adviser against any
liability to the Trust or its stockholders to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's duties under this Agreement or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder or breach
of fiduciary duty with respect to receipt of compensation.
7. Non-Exclusive Services. Except to the extent necessary to perform
the Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of the
Adviser, including any employee of the Adviser, to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
8. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date"), provided that it
shall have been approved by a majority of the outstanding voting securities of
each Fund, in accordance with the requirements of the 1940 Act, or such later
date as may be agreed by the parties following such shareholder approval.
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph, this Agreement shall continue in force for two years from the
Effective Date and
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<PAGE>
shall continue in effect from year to year thereafter, but only so long as the
continuance after such date shall be specifically approved at least annually by
vote of the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Fund.
(b) This Agreement may be modified by mutual consent, such consent on
the part of the Trust to be authorized by vote of a majority of the outstanding
voting securities of each Fund.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days prior
written notice to the other, terminate this Agreement, without payment of any
penalty, by action of its Trustees or Board of Trustees, as the case may be, or
by action of its authorized officers or, with respect to a Fund, by vote of a
majority of the outstanding voting securities of that Fund. This Agreement may
remain in effect with respect to a Fund even if it has been terminated in
accordance with this paragraph with respect to the other Funds. This Agreement
shall terminate automatically in the event of its assignment as that term is
defined under the 1940 Act..
9. Board of Trustees Meetings. The Trust agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the Adviser and
that the Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
THE CHASE MANHATTAN BANK MUTUAL FUND __________________
By: _________________________ By:_______________________
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<PAGE>
APPENDIX D
PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
between
THE CHASE MANHATTAN BANK
and
CHASE ASSET MANAGEMENT, INC.
<PAGE>
PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
between
THE CHASE MANHATTAN BANK
and
CHASE ASSET MANAGEMENT, INC.
AGREEMENT made as of the ______ day of _______________, 1996, by and between The
Chase Manhattan Bank, a New York State chartered bank (the "Adviser"), and Chase
Asset Management, Inc., a [New York] corporation (the "Sub-Adviser").
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser provides investment advisory services to the
series of Mutual Fund ________________________, a Massachusetts business trust
(the "Trust"), an open-end, management investment company registered under the
Investment Trust Act of 1940, as amended (the "1940 Act") which serves as the
underlying investment for certain variable annuity contracts issued by insurance
company separate accounts, pursuant to an Investment Advisory Agreement dated
________, 1996 (the "Advisory Agreement"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with the series of the Trust
listed on Schedule A (each, a "Portfolio" and collectively, the "Portfolios"),
and the Sub-Adviser represents that it is willing and possesses legal authority
to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Portfolios for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth
for the compensation herein provided.
(b) Employees of Affiliates. The Sub-Adviser may, in its discretion,
provide such services through its own employees or the employees
of one or more affiliated companies that are qualified to act as
an investment subadviser to the Portfolios under applicable laws
and are under the control of New Chase, the parent of the
<PAGE>
Sub-Adviser; provided that (i) all persons, when providing
services hereunder, are functioning as part of an organized group
of persons, and (ii) such organized group of persons is managed
at all times by authorized officers of the SubAdviser.
2. Delivery of Documents. The Adviser has delivered to the Sub-Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future amendments
and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of the Advisory Agreement and this
Agreement;
(d) the most recent Post-Effective Amendment to the Trust's
Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, on Form N-1A as filed
with the Securities and Exchange Commission (the "Commission");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of Additional
Information of the Portfolios.
3. Investment Advisory Services.
(a) Management of the Portfolios. The Sub-Adviser hereby undertakes
to act as investment subadviser to the Portfolios. The
Sub-Adviser shall regularly provide investment advice to the
Portfolios and continuously supervise the investment and
reinvestment of cash, securities and other property composing the
assets of the Portfolios and, in furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical and
financial data, as well as other significant events and
developments, which affect the economy generally, the
Portfolios' investment programs, and the issuers of
securities included in the portfolio of each Portfolio and
the industries in which they engage, or which may relate to
securities or other investments which the Sub-Adviser may
deem desirable for inclusion in a Portfolio's portfolio;
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<PAGE>
(ii) determine which issuers and securities shall be included in
the portfolio of each Portfolio;
(iii) furnish a continuous investment program for each Portfolio;
(iv) in its discretion, and without prior consultation, buy,
sell, lend and otherwise trade any stocks, bonds and other
securities and investment instruments on behalf of each
Portfolio; and
(v) take, on behalf of each Portfolio, all actions the
Sub-Adviser may deem necessary in order to carry into
effect such investment program and the Sub-Adviser's
functions as provided above, including the making of
appropriate periodic reports to the Adviser and the Trust's
Board of Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in:
(i) each Portfolio's Prospectus and Statement of Additional
Information as revised and in effect from time to time; (ii) the
Trust's Declaration of Trust, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940 Act;
(iv) the provisions of the Internal Revenue Code of 1986, as
amended, including Subchapters L and M, relating to Variable
Contracts and regulated investment companies, respectively, (v)
other applicable laws; and (vi) such other investment policies,
procedures and/or limitations as may be adopted by the Trust with
respect to a Portfolio and provided to the Adviser in writing.
The management of the Portfolios by the Adviser shall at all
times be subject to the review of the Trust's Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser
shall keep each Portfolio's books and records required to be
maintained by, or on behalf of, the Portfolios with respect to
subadvisory services rendered hereunder. The Sub- Adviser agrees
that all records which it maintains for a Portfolio are the
property of the Portfolio and it will promptly surrender any of
such records to the Portfolio upon the Portfolio's request. The
Sub-Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any such records of the
Portfolio required to be preserved by such Rule.
(d) Reports, Evaluations and other services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the
Adviser and the Trust with respect to the Portfolios and in
connection with the Sub-Adviser's services hereunder as the
Adviser and/or the Trust's Board of Trustees may request from
time to time or as the Sub-Adviser may otherwise deem to be
desirable. The Sub-Adviser shall make recommendations to the
Adviser and the Trust's Board of Trustees with
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<PAGE>
respect to the Trust's policies, and shall carry out such
policies as are adopted by the Board of Trustees. The Sub-Adviser
may, subject to review by the Adviser, furnish such other
services as the Sub-Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this
Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for each
Portfolio with brokers or dealers selected by the Sub-Adviser,
which may include brokers or dealers affiliated with the Adviser
or the Sub-Adviser to the extent permitted by the 1940 Act and
the Trust's policies and procedures applicable to the Portfolios.
The Sub-Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the
Portfolios. In assessing the best overall terms available for any
transaction, the Sub-Adviser 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
the Sub- Adviser, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis.
In no event shall the Sub-Adviser be under any duty to obtain the
lowest commission or the best net price for any Portfolio on any
particular transaction, nor shall the Sub-Adviser be under any
duty to execute any order in a fashion either preferential to any
Portfolio relative to other accounts managed by the Sub-Adviser
or otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. 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 the Sub-Adviser, the Portfolios, and/or
the other accounts over which the Sub-Adviser exercises
investment discretion. The Sub-Adviser is authorized to pay a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for a
Portfolio which is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if the Sub- Adviser 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 the Sub-Adviser with respect to
accounts over which it exercises investment discretion. The
Sub-Adviser shall report to the Board of Trustees of the Trust
regarding overall commissions paid by the Portfolios and their
reasonableness in relation to their benefits to the Portfolios.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Portfolio, the Sub-Adviser may, to the extent
permitted by applicable laws and
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<PAGE>
regulations, but shall not be obligated to, aggregate the
securities to be sold or purchased with those of other Portfolios
or its other clients if, in the Sub-Adviser's reasonable
judgment, such aggregation (i) will result in an overall economic
benefit to the Portfolio, taking into consideration the
advantageous selling or purchase price, brokerage commission and
other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Trust's
registration statement and the Portfolio's Prospectus and
Statement of Additional Information. In such event, the
Sub-Adviser will allocate the securities so purchased or sold,
and the expenses incurred in the transaction, in an equitable
manner, consistent with its fiduciary obligations to the
Portfolio and such other clients.
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the State of [New York] and is
fully authorized to enter into this Agreement and carry out
its duties and obligations hereunder.
(ii) The Sub-Adviser is registered as an investment adviser with
the Commission under the Advisers Act, and is registered or
licensed as an investment adviser under the laws of all
applicable jurisdictions. The SubAdviser shall maintain
such registrations or licenses in effect at all times
during the term of this Agreement.
(iii) The Sub-Adviser at all times shall provide its best
judgment and effort to the Adviser in carrying out the
Sub-Adviser's obligations hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser as
follows:
(i) The Adviser is a state chartered bank duly organized and in
good standing under the laws of the State of New York and
is fully authorized to enter into this Agreement and carry
out its duties and obligations hereunder.
(ii) The Trust has been duly organized as a business trust under
the laws of the State of Massachusetts.
(iii) The Trust is registered as an investment company with the
Commission under the 1940 Act, and shares of the each
Portfolio are registered for offer and sale to the public
under the 1933 Act and all applicable state securities laws
where currently sold. Such registrations will be kept in
effect during the term of this Agreement.
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<PAGE>
5. Compensation. (a) As compensation for the services which the
Sub-Adviser is to provide or cause to be provided pursuant to Paragraph 3, with
respect to each Portfolio, the Adviser shall pay to the Sub-Adviser (or cause to
be paid by the Trust directly to the SubAdviser) a fee, which shall be accrued
daily and paid in arrears on the first business day of each month, at an annual
rate to be determined between the parties hereto from time to time, as a
percentage of the average daily net assets of the Portfolio during the preceding
month (computed in the manner set forth in the Portfolio's most recent
Prospectus and Statement of Additional Information). Average daily net assets
shall be based upon determinations of net assets made as of the close of
business on each business day throughout such month. The fee for any partial
month shall be calculated on a proportionate basis, based upon average daily net
assets for such partial month. As a percentage of average daily net assets.
(b) The Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to time. Any
such voluntary waiver will be irrevocable and determined in advance of rendering
sub-investment advisory services by the Sub-Adviser, and shall be in writing and
signed by the parties hereto.
(c) If the aggregate expenses incurred by, or allocated to, each
Portfolio in any fiscal year shall exceed the lowest expense limitation, if
applicable to such Portfolio, imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Sub-Adviser shall reduce its investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Portfolio. Such reduction, if any, shall be
computed and accrued daily, shall be settled on a monthly basis and shall be
based upon the expense limitation applicable to the Portfolio as at the end of
the last business day of the month. Should two or more of such expense
limitations be applicable at the end of the last business day of the month, that
expense limitation which results in the largest reduction in the Sub-Adviser's
fee shall be applicable. For the purposes of this paragraph, the Sub-Adviser's
share of any excess expenses shall be computed by multiplying such excess
expenses by a fraction, the numerator of which is the amount of the investment
advisory fee which would otherwise be payable to the Sub-Adviser for such fiscal
year were it not for this subsection 5(b) and the denominator of which is the
sum of all investment advisory and administrative fees which would otherwise be
payable by the Portfolio were it not for the expense limitation provisions of
any investment advisory or administrative agreement to which the Portfolio is a
party.
6. Interested Persons. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and shareholders of the Trust or
the Adviser are or may be or become interested in the Sub-Adviser as directors,
officers or otherwise and that directors, officers and
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<PAGE>
shareholders of the Sub-Adviser are or may be or become similarly interested in
the Trust or the Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the
Portfolios.
8. Non-Exclusive Services; Limitation of Sub-Adviser's Liability. The
services of the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser may render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter into other agreements
with the Portfolios, the Trust or the Adviser for providing additional services
to the Portfolios, the Trust or the Adviser which are not covered by this
Agreement, and to receive additional compensation for such services. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Sub-Adviser, or
a breach of fiduciary duty with respect to receipt of compensation, neither the
Sub-Adviser nor any of its directors, officers, shareholders, agents, or
employees shall be liable or responsible to the Adviser, the Trust, the
Portfolios or to any shareholder of the Portfolios for any error of judgment or
mistake of law or for any act or omission in the course of, or connected with,
rendering services hereunder or for any loss suffered by the Adviser, the Trust,
a Portfolio, or any shareholder of a Portfolio in connection with the
performance of this Agreement.
9. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date") provided that it
shall have been approved by a majority of the outstanding voting securities of
each Portfolio, in accordance with the requirements of the 1940 Act, or such
later date as may be agreed by the parties following such shareholder approval.
(a) This Agreement shall continue in force for two years from the
Effective Date. Thereafter, this Agreement shall continue in
effect as to each Portfolio for successive annual periods,
provided such continuance is specifically approved at least
annually (i) by a vote of the majority of the Trustees of the
Trust who are not parties to this Agreement or interested persons
of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by a vote of the
Board of Trustees of the Trust or a majority of the outstanding
voting securities of the Portfolio.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement as to any
Portfolio(s) at any time on sixty (60)
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days' prior written notice to the other, without payment of any
penalty. A termination of the Sub-Adviser may be effected as to
any particular Portfolio by the Adviser, by a vote of the Trust's
Board of Trustees, or by vote of a majority of the outstanding
voting securities of the Portfolio. This Agreement shall
terminate automatically in the event of its assignment.
10. Limitation of Liability of Trustees and Shareholders. The
Sub-Adviser acknowledges the following limitation of liability:
The terms "Mutual Fund Variable Annuity Trust" and "Trustees of Mutual
Fund Variable Annuity Trust" refer, respectively, to the trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under the Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of the State of
Massachusetts, such reference being inclusive of any and all amendments thereto
so filed or hereafter filed. The obligations of "Mutual Fund Variable Annuity
Trust" entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with the Trust or a Portfolio must look solely to the assets of the Trust or
Portfolio for the enforcement of any claims against the Trust or Portfolio.
11. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent a Portfolio in any
way or otherwise be deemed an agent of a Portfolio.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering
into this Agreement with regard to the respective Portfolios severally and not
jointly. The responsibilities and benefits set forth in this Agreement shall be
deemed to be effective as between the Adviser and Sub-Adviser in connection with
each Portfolio severally and not jointly. This Agreement is intended to govern
only the relationships between the Adviser, on the one hand, and the SubAdviser,
on the other hand, and is not intended to and shall not govern (i) the
relationship between the Adviser or Sub-Adviser and any Portfolio, or (ii) the
relationships among the respective Portfolios.
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<PAGE>
14. Governing Law. This Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act.
15. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
16. Notices. Notices of any kind to be given to the Adviser hereunder
by the SubAdviser shall be in writing and shall be duly given if mailed or
delivered to the Adviser at ________________________________________________ or
at such other address or to such individual as shall be so specified by the
Adviser to the SubAdviser. Notices of any kind to be given to the Sub-Adviser
hereunder by the Adviser shall be in writing and shall be duly given if mailed
or delivered to the Sub-Adviser at ___________________________________________
or at such other address or to such individual as shall be so specified by the
Sub-Adviser to the Adviser. Notices shall be effective upon delivery.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
CHASE ASSET MANAGEMENT, INC. THE CHASE MANHATTAN BANK
By:____________________________ By:________________________________
Name: Name:
Title: Title:
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<PAGE>
APPENDIX E
PROPOSED ATLANTA CAPITAL MANAGEMENT COMPANY
SUB-ADVISORY AGREEMENT
<PAGE>
PROPOSED ATLANTA CAPITAL MANAGEMENT COMPANY
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made this ______ day of ____________, 1996, by and
between THE CHASE MANHATTAN BANK, N.A., a national banking association ("Chase"
or the "Adviser"), and ATLANTA CAPITAL MANAGEMENT COMPANY (the "Sub-Adviser")
with respect to the following recital of fact:
R E C I T A L
WHEREAS, Mutual Fund Group (the "Trust") is registered as an open-end
non-diversified management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act") and the rules and regulations promulgated
thereunder;
WHEREAS, the Trust and the Adviser have entered into an Investment
Advisory Agreement (the "Advisory Agreement") to provide for management services
for the IEEE Balanced Fund, a series of the Trust (the "Fund"), on the terms and
conditions set forth in the Advisory Agreement dated _________, 1996;
WHEREAS, the Sub-Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
provides investment advisory services;
WHEREAS, the Sub-Adviser proposes to render investment advisory
services to the Fund in connection with the Adviser's responsibilities to the
Fund on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Adviser may enter into arrangements with one or more
investment advisers other than Chase (the "Other Advisers") for the provision of
additional advisory services to the Fund.
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Investment Management. The Sub-Adviser shall act as the portfolio
adviser for the Fund and shall, in such capacity, and in conjunction with any
Other Adviser, supervise the investment and reinvestment of the cash, securities
or other properties comprising the Fund's portfolio, subject at all times to the
direction of the Adviser and the policies and control of the Trust's Board of
Trustees. The Sub-Adviser shall give the Fund the benefit of its best judgment,
efforts and facilities in rendering its services as portfolio adviser.
2. Investment Analysis and Implementation. In carrying out its
obligation under Section 1 hereof, the Sub-Adviser shall ensure that it and any
Other Adviser:
(a) at all times adhere to the Fund's investment objectives,
restrictions and limitations as contained in its than current Prospectus and
Statement of Additional Information;
(b) use the same skill and care in providing such services as are used
in providing investment services to other fiduciary accounts;
(c) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Fund's portfolio and
whether concerning the individual issuers whose securities are included in the
Fund's portfolio or the activities in which the issuers engage, or with respect
to securities which the Sub-Adviser considers desirable for inclusion in the
Fund's portfolio;
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(d) determine which issuers and securities shall be represented in the
Fund's portfolio and report thereon to the Adviser at such intervals as the
Adviser may instruct;
(e) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and report thereon to the Adviser at
such intervals as the Adviser may instruct; and
(f) take, on behalf of the Fund, all actions which appear to the Fund
and the Adviser necessary to carry into effect such purchase and sales programs
and supervisory functions as aforesaid, including the placing of orders for the
purchase and sale of securities for the Fund and the reporting to the Adviser of
such purchases and sales as promptly as practicable.
The Sub-Adviser shall be authorized to give instructions to the
custodian of the Fund as to deliveries of securities, transfers of currencies
and payments of cash for the account of the Fund, in relation to the matters
contemplated by this Agreement. The Sub-Adviser shall also be authorized to
establish policies and procedures pursuant to which an Other Adviser, subject to
the overall oversight of the Sub-Adviser, may give instructions to the custodian
of the Fund as to deliveries of securities, transfers of currencies and payments
of cash for the account of the Fund in relation to the matters contemplated by
this Agreement.
3. Broker-Dealer Relationships. The Sub-Adviser is responsible for
decisions to buy and sell securities for the Fund's portfolio, broker-dealer
selection, and negotiation of brokerage commission rates. The primary
consideration in affecting a security transaction will be execution at the most
favorable price. In selecting a broker-dealer to execute each particular
transaction, the Sub-Adviser will take the following into consideration: the
best net price available, the reliability, integrity and financial condition of
the broker-dealer; the size of and difficulty in executing the order; research
services provided by such broker-dealer;
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<PAGE>
and the value of the expected contribution of the broker-dealer to the
investment performance of the Fund on a continuing basis. Accordingly, the price
to the Fund in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by other aspects
of the portfolio execution services offered. Subject to such policies as the
Trustees may determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker-dealer for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission was 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 Sub-Adviser's overall responsibilities with
respect to the Fund and to its other clients as to which it exercises investment
discretion. Subject to the foregoing, the Sub-Adviser is authorized to allocate
the orders placed by it on behalf of the Fund to brokers and dealers who also
provide research or statistical material, or other services to the Fund or the
Sub-Adviser. Such allocation shall be in such amounts and proportions as the
SubAdviser shall determine and the Sub-Adviser will report on said allocations
quarterly to the Adviser indicating the brokers to whom such allocations have
been made.
4. Control by Trustees. Any investment program undertaken by the
Sub-Adviser or any Other Adviser pursuant to this Agreement, as well as any
other activities undertaken by the Sub-Adviser or any Other Adviser on behalf of
the Fund pursuant thereto, shall at all times be subject to any directives of
the Board of Trustees of the Trust. The Adviser shall
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<PAGE>
provide the Sub-Adviser with written notice of all such directives, so long as
this Agreement remains in effect.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall ensure that it and any
Other Adviser at all times conform to:
(a) all applicable provisions of the 1940 Act;
(b) all applicable provisions of the Advisers Act;
(c) the provisions of the Registration Statement of the Trust, as
amended from time to time, under the Securities Act of 1933 and the 1940 Act;
and
(d) any other applicable provisions of state and federal law.
6. Expenses. The Sub-Adviser shall furnish at its own expense all
necessary services, facilities and personnel in connection with its
responsibilities under Sections 1 and 2 above. The Sub-Adviser shall also
maintain, at its expense and without cost to the Adviser or the Fund, a trading
function in order to carry out its obligations under subparagraph (f) of Section
2 hereof to place orders for the purchase and sale of portfolio securities for
the Fund.
7. Delegation of Responsibilities. Upon request of the Adviser and
with the approval of the Trust's Board of Trustees, the Sub-Adviser may perform
services on behalf of the Fund which are not required by this Agreement. Such
services will be performed on behalf of the Fund and the Sub-Adviser's costs in
rendering such services may be billed monthly to the Adviser, subject to
examination by the Adviser's independent accountants. Payment or assumption by
the Sub-Adviser of any Fund expense that the Sub-Adviser is not required to pay
or assume under this Agreement shall not relieve the Adviser or the Sub-
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<PAGE>
Adviser of any of their obligations to the Fund or obligate the Sub-Adviser to
pay or assume any similar Fund expense on any subsequent occasions.
8. Compensation. For the services to be rendered and the facilities
furnished hereunder, the Adviser shall pay the Sub-Adviser monthly compensation
at the annual rate of .65% of the Fund's average daily net assets (reduced by
the same amount by which the Adviser's advisory fee with the Fund has been
waived). Compensation under this Agreement shall be calculated and accrued daily
and the amounts of the daily accruals shall be paid on a monthly basis. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Payment of the Sub-Adviser's
compensation for the preceding month shall be made as promptly as possible after
the end of each month.
9. Covenants of the Sub-Adviser. The Sub-Adviser agrees that it will
not deal with itself, or with the trustees of the Fund or the Fund's principal
underwriter or distributor, as principal in making purchases or sales of
securities or other property for the account of the Fund, except as permitted by
the 1940 Act, will not take a long or short position in shares of the Fund
except as permitted by the Trust's Declaration of Trust and will comply with all
other provisions of the Trust's Declaration of Trust and By-Laws and the
then-current Prospectus and Statement of Additional Information applicable to
the Fund relative to the Sub-Adviser and its directors and officers. 10. Expense
Limitation. If, for any fiscal year, the total of all ordinary business expenses
of the Fund, including all investment advisory fees but excluding brokerage
commissions, distribution fees, taxes, interest, and extraordinary expenses and
certain other
-6-
<PAGE>
excludable expenses, would exceed the most restrictive expense limits imposed by
any statute or regulatory authority of any jurisdiction in which shares of the
Fund are offered for sale, the management fee which the Adviser would otherwise
receive from the Fund shall be reduced in order to reduce such excess expenses;
however, the Adviser will not be required to reimburse the Fund for any ordinary
business expenses which exceed the amount of its management fee for such fiscal
year. In the event the Adviser's management fee is reduced as a result of such
expense limitations, the fee which the Sub-Adviser is entitled to receive from
the Adviser pursuant to Section 8 of this Agreement shall also be reduced by the
same amount. For the purposes of this paragraph, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed prior to
the date hereof and shall include the portion of the then-current fiscal year
which shall have elapsed at the date of the termination of this Agreement.
11. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
are not deemed to be exclusive, and the Sub-Adviser shall be free to render
investment advisory or other services to others (including investment companies
or investment trusts) and to engage in other activities so long as it services
under this Agreement are not impaired thereby.
12. Term. This Agreement shall become effective at the close of
business on the date hereof and shall remain in force and effect, subject to
Section 13 hereof and approval at the first or special meeting of the Fund's
shareholders in accordance with subsection (a)(ii) of Section 13 hereof, for two
years from the date hereof.
13. Renewal. Following the expiration of its initial two-year term,
the Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
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<PAGE>
(a) (i) by the Trust's Trustees or (ii) by the vote of a majority of
the Fund's outstanding voting securities (as defined in Section 2(a)(42) of the
1940 Act), and
(b) by the affirmative vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of a party to this Agreement
(other than as a Trustee of the Trust), by votes cast in person at a meeting
specifically called for such purpose.
14. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trust's Trustees or by vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Adviser or the Sub-Adviser, on sixty (60)
days' written notice to the other party. This Agreement shall automatically
terminate: (a) in the event of its assignment, the term "assignment" having the
meaning defined in Section 2(a)(4) of the 1940 Act, or (b) in the event that the
Advisory Agreement shall terminate.
15. Liability of Sub-Adviser. In the performance of its duties
hereunder, the SubAdviser shall be obligated to exercise care and diligence and
to act in good faith and use its best judgment efforts to ensure the accuracy of
all services provided to the Fund by the SubAdviser or the Other Adviser. Except
for violations of applicable laws by either the SubAdviser or any Other Adviser,
the Sub-Adviser shall not be liable to the Fund or the Adviser for errors of
judgment, mistakes, acts or omissions in providing services to the Fund, except
for willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties.
16. Liability of Trustees and Shareholders. A copy of the Agreement
and Declaration of Trust of the Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this
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<PAGE>
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
17. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Adviser
for this purpose shall be The Chase Manhattan Bank, N.A., Two Chase Manhattan
Plaza, 18th Floor, New York, New York 10081, Attn: Paul Klug, and the address of
the Sub-Adviser for this purpose shall be Atlanta Capital Management Company, 2
Midtown Plaza, 1360 Peachtree Street, Atlanta, Georgia 30309, Attn: Frederick L.
Muller.
18. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of a controlling decision of any such
court, by rules, regulations or order of the Securities and Exchange Commission
issued pursuant to the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in the provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers on the day and year first above
written.
THE CHASE MANHATTAN BANK, N.A.
Attest:
By:__________________________________
Name:
Title
__________________________________
Title:
ATLANTA CAPITAL MANAGEMENT COMPANY
Attest:
By:_________________________________
Name:
Title
___________________________________
Title:
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<PAGE>
APPENDIX F
PROPOSED CLASS A RULE 12B-1
DISTRIBUTION PLAN
<PAGE>
MUTUAL FUND _______
SHARES
PROPOSED
PLAN FOR PAYMENT OF CERTAIN EXPENSES FOR
DISTRIBUTION OR SHAREHOLDER SERVICING ASSISTANCE
Distribution Plan (the "Plan") of MUTUAL FUND _____, a Massachusetts
business trust (the "Trust"), an open-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"), on behalf of the class of shares designated as the ______ Shares and the
_____ Shares of any series of the Trust which may be created in the future,
adopted pursuant to Section 12(b) of the Act and Rule 12b-1 promulgated
thereunder ("Rule 12b-1").
1. Principal Underwriter. Vista Broker-Dealer Services, Inc., a
Delaware corporation ("the Distributor"), acts as the principal underwriter of
the shares of each series of the Trust pursuant to a Distribution and
Sub-Administration Agreement.
2. Distribution Payments. (a) The Trust may make payments periodically
(i) to the Distributor or to any broker-dealer (a "Broker") who is registered
under the Securities Exchange Act of 1934 and a member in good standing of the
National Association of Securities Dealers, Inc. and who has entered into a
selected dealer agreement with the Distributor in a form similar to the one
annexed hereto as Exhibit A or (ii) to other persons or organizations
("Servicing Agents") who have entered into shareholder processing and service
agreements with the Trust or with the Distributor, in a form similar to the one
annexed hereto as Exhibit B, with respect to Trust shares owned by shareholders
for which such broker is the dealer or holder of record or such Servicing Agent
has a servicing relationship.
(b) Payments may be made pursuant to the Plan for any advertising and
promotional expenses relating to selling efforts of the shares of each series of
the Trust, including but not limited to the incremental costs of printing
(excluding typesetting) of prospectuses, statements of additional information,
annual reports and other periodic reports for distribution to persons who are
not shareholders of the Trust; the costs of preparing and distributing any other
supplemental sales literature; expenses of certain personnel engaged in the
distribution of shares; costs of travel, office expenses (including rent and
overhead), equipment, printing, delivery and mailing costs incurred in the
distribution of shares.
<PAGE>
(c) The aggregate amount of payments by the Trust in a fiscal year, to
brokers, servicing agents, or the Distributor pursuant to paragraphs (a) and (b)
shall not exceed .25% of the average daily net assets of each series of the
Trust.
(d) The schedule of such fees and the basis upon which such fees will
be paid shall be determined from time to time by the Board of Trustees of the
Trust.
3. Reports. Quarterly, in each year that this Plan remains in effect,
the Trust and the Distributor shall prepare and furnish to the Board of Trustees
of the Trust a written report, complying with the requirements of Rule 12b-1,
setting forth the amounts expended by the Trust under the Plan and purposes for
which such expenditures were made.
4. Approval of Plan. This Plan shall become effective upon approval of
the Plan, the form of Selected Dealer Agreement and the form of Shareholder
Service Agreement, by the majority votes of both (a) the Trust's Board of
Trustees and the Qualified Trustees (as defined in Section 6), cast in person at
a meeting called for the purpose of voting on the Plan and (b) the outstanding
voting securities of each series of the Trust, as defined in Section 2(a)(42) of
the Act.
5. Term. This Plan shall remain in effect for one year from its
adoption date and may be continued thereafter if this Plan and all related
agreements are approved at least annually by a majority vote of the Trustees of
the Trust, including a majority of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on such Plan and agreements. This Plan
may not be amended in order to increase materially the amount to be spent for
distribution assistance without shareholder approval in accordance with Section
4 hereof. All material amendments to this Plan must be approved by a vote of the
Board of Trustees of the Trust, and of the Qualified Trustees (as hereinafter
defined), cast in person at a meeting called for the purpose of voting thereon.
6. Termination. This Plan may be terminated as to any series at any
time by a majority vote of the Trustees who are not interested persons (as
defined in Section 2(a)(19) of the Act) of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan (the "Qualified Trustees") or by vote of a majority of the
outstanding voting securities of the Trust, as defined in Section 2(a)(42) of
the Act.
7. Nomination of "Disinterested" Trustees. While this Plan shall be in
effect, the selection and nomination of the "disinterested" trustees of the
Trust shall be committed to the discretion of the Qualified Trustees then in
office.
8. Miscellaneous. (a) Any termination or noncontinuance of (i) a
selected dealer agreement between the Distributor and a particular broker or
(ii) a shareholder service agreement between the Distributor or the Trust and a
particular person or organization, shall have no effect on any similar
agreements between brokers or other persons and the Distributor of the Trust
pursuant to this Plan.
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<PAGE>
(b) Neither the Distributor nor the Trust shall be under any obligation
because of this Plan to execute any selected dealer agreement with any broker or
any shareholder service agreement with any person or organization.
(c) All agreements with any person or organization relating to the
implementation of this Plan shall be in writing and any agreement related to
this Plan shall be subject to termination, without penalty, pursuant to the
provisions of Section 6 hereof.
Dated: __________, 1996
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<PAGE>
EXHIBIT A
Vista Broker-Dealer Services, Inc.
125 West 55th Street
New York, New York 10019
Re: Selected Dealer Agreement for
Mutual Fund ________
Gentlemen:
We understand that Mutual Fund ______(the "Trust") has adopted plans
(the "Plans") pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "Act") for making payments to selected brokers for Trust
distribution assistance.
We desire to enter into an Agreement with you for the sale and
distribution of the shares of the Premier Funds of the Trust (the "shares") for
which you are Distributor and whose shares are offered to the public at net
asset value. Upon acceptance of this Agreement by you, we understand that we may
offer and sell the shares, subject, however, to all of the terms and conditions
hereof and to your right to suspend or terminate the sale of such securities.
1. We understand that the shares covered by this Agreement will be
offered and sold at net asset value without a sales charge. We further
understand that all purchase requests and applications submitted by us are
subject to acceptance or rejection in the Trust's discretion.
2. We certify that we are members of the National Association of
Securities Dealers, Inc. ("NASD") and agree to maintain membership in said
Association, or in the alternative, that we are foreign brokers not eligible for
membership in said Association. In either case, we agree to abide by all the
rules and regulations of the NASD which are binding upon underwriters and
brokers in the distribution of the shares of open-end investment companies,
including without limitation, Section 26 of Article III of the Rules of Fair
Practice, all of which are incorporated herein" as if set forth in full. We
further agree to comply with all applicable state and Federal laws and the rules
and regulations of authorized regulatory agencies. We agree that we will not
sell or offer for sale, the shares in any state or jurisdiction where they are
not exempt from or have not been qualified for sale.
3. We will offer and sell the Shares covered by this Agreement only in
accordance with the terms and conditions of its then current Prospectus, and we
will make no representations not included in said Prospectus or in any
authorized supplemental material supplied by you. We will use our best efforts
in the development and promotion of sales of the shares covered by this
Agreement and agree to be responsible for the proper instruction and training of
all sales personnel employed by us, in order that the shares will be offered in
accordance with the terms and conditions of this Agreement and all applicable
laws, rules and regulations. We agree to hold you harmless and indemnify you in
the event that we, or any of our sales representatives, should violate any law,
rule or regulation, or any provisions of this Agreement, which may result in
liability to you; and in the event you determine to refund any amount paid by
any investor by reason of any such violation on our part, we shall return to you
any distribution assistance payments previously paid or allowed by you to us
with respect to the transaction for which the refund is made. All expenses which
we incur in connection with our activities under this Agreement shall be borne
by us.
4. For purposes of this Agreement "Qualified Accounts" shall mean:
accounts of customers of ours who have purchased shares and who use our
facilities to communicate with the Trust or to effect redemptions or additional
purchases of shares and with respect to which we provide shareholder and
administration services, which services may include, without limitation:
answering inquiries regarding the Trust; assistance to customers in changing
dividend options, account designations and addresses; performance of
sub-accounting; establishment and
A-1
<PAGE>
maintenance of shareholder accounts and records; processing purchase and
redemption transactions; automatic investment in Trust shares of customer
account cash balances; providing periodic statements showing a customer's
account balance and the integration of such statements with those of other
transactions and balances in the customer's other accounts serviced by us;
arranging for bank wires; and such other shareholder services as you reasonably
may request, to the extent we are permitted by applicable statute, rule or
regulation.
5. In consideration of the services and facilities described herein, we
shall be entitled to receive from you such fees as are set forth in the Plans
for Payment of Certain Expenses for Distribution or Shareholder Servicing
Assistance. We understand that the payment of such fees has been authorized
pursuant to Plans approved by the Board of Trustees and shareholders of certain
of the Funds comprising the Trust and shall be paid only so long as this
Agreement is in effect.
6. The frequency of payment, the terms of any right to sell in a
territory, and any other supplemental terms, conditions or qualifications for us
to receive such payments are subject to change by you from time to time, upon 30
days' written notice. Any orders placed after the effective date of such change
shall be subject to the fee rates in effect at the time of receipt of the
payment by the Trust or you. Such 30-day period may be waived at your sole
option in the event such change increases the distribution assistance payments
due us.
7. Payment for shares shall be made to the Trust and shall be received
by the Trust promptly after the acceptance of our order. If such payment is not
received by the Trust, we understand that the Trust reserves the right without
notice, forthwith to cancel the sale, or, at the Trust's option, to sell the
shares ordered by us back to the Trust in which latter case we may be held
responsible for any loss, including loss of profit, suffered by the Trust
resulting from our failure to make payments aforesaid.
8. Your obligations to us under this Agreement are subject to all the
provisions of any underwriting agreements you have or may enter into with the
Trust provided copies thereof have been provided to us. We understand and agree
that in performing our services covered by this Agreement we are acting as
principal, and you are in no way responsible for the manner of our performance
or for any of our acts or omissions in connection therewith. Nothing in this
Agreement or in the Plans shall be construed to constitute us or any of our
agents, employees or representatives as your agent, partner or employee, or the
agent, partner or employee of the Trust.
9. This Agreement shall terminate automatically (i) in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Act or (ii) in the event the Plans are terminated.
10. This Agreement may be terminated at any time (without payment of
any penalty) by a majority of the "Qualified Trustees" as defined in the Plans
or by a vote of a majority of the outstanding voting securities of the Trust as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to you at
your principal place of business, may terminate this Agreement. You may also
terminate this Agreement for cause on violation by us of any of the provisions
of this Agreement, said termination to become effective on the date of mailing
notice to us of such termination. Without limiting the generality of the
foregoing, any provision hereof to the contrary notwithstanding, our expulsion
from the NASD will automatically terminate this Agreement without notice; our
suspension from the NASD or violation of applicable state or Federal laws or
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon date of mailing notice to us of such termination. Your
failure to terminate for any cause shall not constitute a waiver of your right
to terminate at a later date for any such cause.
11. All communications to you shall be sent to you at your offices at
156 West 56th Street, New York, New York 10019. Any notice to us shall be duly
given if mailed or telegraphed to us at the address shown on this Agreement.
A-2
<PAGE>
12. This Agreement shall become effective as of the date when it is
executed and dated by you below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
(Broker/Dealer)
By
Name:
Title:
(Address)
(City) (State) (Zip Code)
Accepted:
VISTA BROKER-DEALER SERVICES, INC.
Distributor
By:
Name:
Title:
Dated:
A-3
<PAGE>
EXHIBIT B
Mutual Fund Group
125 West 55th Street
New York, New York 10019
Re: Shareholder Service Agreement for
Mutual Fund _______
Gentlemen:
We understand that Mutual Fund _____ (the "Trust") has adopted plans
(the "Plans"), on behalf of the existing series (the "Funds") of the Trust,
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended (the
"Act"), for making payments to certain persons for distribution assistance and
shareholder servicing.
We desire to enter into an Agreement with the Trust for the servicing
of shareholders of, and the administration of shareholder accounts in, certain
Funds comprising the Trust. Subject to the Trust's acceptance of this Agreement,
the terms and conditions of this Agreement, shall be as follows:
1. We shall provide shareholder and administration services for certain
shareholders of the Funds who purchase shares of the Funds as a result of their
relationship to us, as further designated in Exhibit A hereto ("Qualified
Accounts"). Such services may include, without limitation, some or all of the
following: answering inquiries regarding the Funds; assistance in changing
dividend options, account designations and addresses; performance of
sub-accounting; establishment and maintenance of shareholder accounts and
records; assistance in processing purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by us, if any; and such other
information and services as the Trust reasonably may request, to the extent we
are permitted by applicable statute, rule or regulation to provide such
information or services.
2. If Fund shares are to be purchased or held by us on behalf of our
clients:
(i) Such shares will be registered in our name or in the name
of our nominee. The client will be the beneficial owner of the shares
of each Fund purchased and held by us in accordance with the client's
instructions and the client may exercise all rights of a shareholder of
a Fund. We agree to transmit to the Trust's transfer agent in a timely
manner, all purchase orders and redemption requests of our clients and
to forward to each client all proxy statements, periodic shareholder
reports and other communications received from the Trust by us on
behalf of our clients.
(ii) We agree to transfer to the Trust's transfer agent, on
the date such purchase orders are effective, federal funds in an amount
equal to the amount of all purchase orders placed by us on behalf of
our clients and accepted by the Trust (net of any redemption orders
placed by us on behalf of our clients). In the event that the Trust
fails to receive such federal funds on such date (other than through
the fault of the Trust or its transfer agent), we shall indemnify the
Trust against any expense (including overdraft charges) incurred by the
Trust as a result of its failure to receive such federal funds.
(iii) We agree to make available to the Trust, upon the
Trust's request, such information relating to our clients who are
beneficial owners of Fund shares and their transactions in Fund shares
as may be required by applicable laws and regulations or as may be
reasonably requested by the Trust.
B-1
<PAGE>
(iv) We agree to transfer record ownership of a client's
shares of a Fund to the client promptly upon the request of the client.
In addition, record ownership will be promptly transferred to the
client in the event that the person or entity ceases to be our client.
3. We shall provide to the Trust copies of the lists of members of our
organization, if any, and make available to the Trust any publications and other
facilities of our organization for the placement of advertisements or
promotional materials and sending information regarding the Funds, to enable the
Trust to solicit for sale and to sell shares to such members.
4. We shall provide such facilities and personnel (which may be all or
any part of the facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to shareholders maintaining Qualified Accounts with the
Trust, and to assist the Trust in servicing accounts of such shareholders.
5 Neither we nor any of our employees or agents are authorized to make
any representation concerning Fund shares except those contained in the then
current Prospectus for the applicable Fund, copies of which will be supplied by
the Trust to us; and we shall have no authority to act as agent for the Trust.
6. In consideration of the services and facilities described herein, we
shall be entitled to receive from each Fund such fees as are set forth in
Exhibit A hereto. We understand that the payment of such fees has been
authorized pursuant to the Plans approved by the Trustees and shareholders of
the Trust and shall be paid only so long as the Plans and this Agreement are in
effect.
7. The Trust reserves the right, at the Trust's discretion and without
notice, to suspend the sale of shares or withdraw the sale of shares of each
Fund.
8. This Agreement shall terminate automatically (i) in the event of
its assignment, the term "assignment" for this purpose having the meaning
defined in Section 2(a)(4) of the Act or (ii) in the event that the Plans
terminate.
9. This Agreement may be terminated at any time (without payment of any
penalty) by a majority of the "Qualified Trustees" as defined in the Plans or by
a vote of a majority of the outstanding voting securities of each Fund as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to the
Trust at its principal place of business, may terminate this Agreement. The
Trust may also terminate this Agreement for cause on violation by us of any of
the provisions of this Agreement or in the event that the Plans shall terminate,
said termination to become effective on the date of mailing notice to us of such
termination. The Trust's failure to terminate for any cause shall not constitute
a waiver of its right to terminate at a later date for any such cause.
10. All communications to the Trust shall be sent to the Trust at the
address set forth above. Any notice to us shall be duly given if mailed or
telegraphed to us at the address set forth below.
B-2
<PAGE>
11. This Agreement shall become effective as of the date when it is
executed and dated by the Trust below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
(Firm Name)
(Address)
(Firm Name)
(City) (State) (Zip Code)
By:
Name:
Title:
Accepted:
MUTUAL FUND ___________
By:
Name:
Title:
Dated:
B-3
<PAGE>
Form of Proxy Card
<PAGE>
PRELIMINARY PROXY SOLICITATION MATERIAL
for the Information of the Securities and Exchange Commission
IEEE BALANCED FUND
Proxy for Special Meeting of Shareholders
to be Held _________, 1996
The undersigned, revoking all Proxies heretofore given, hereby
appoints ___________________, and ___________________________ or any one of them
as Proxies of the undersigned, with full power of substitution, to vote on
behalf of the undersigned all shares of IEEE Balanced Fund (the "Fund"), a
series portfolio of Mutual Fund Group, a Massachusetts business trust (the
"Trust"), which the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Fund to be held on __________, 1996 at _____ a.m. Eastern
time at 125 W. 55th Street, New York, New York 10019, and at all adjournments or
postponements thereof, as fully as the undersigned would be entitled to vote if
personally present, as follows:
1. Proposal to approve a Plan of Reorganization and the
transactions contemplated therein, including (a) the transfer
of all the assets of the Fund to the Vista Balanced Fund,
another series portfolio of the Trust (the "Balanced Fund"),
in exchange for the assumption of all the liabilities of The
Fund and the delivery to the Fund of shares of the Balanced
Fund; (b) the distribution by the Fund pro rata to its
shareholders of such shares of the Portfolio; and (c) the
termination of the Fund.
FOR ___ AGAINST ____ ABSTAIN ___
2. To approve or disapprove a new investment advisory agreement
between the IEEE Fund and The Chase Manhattan Bank, N.A. (or
the successor entity thereto) (the "Adviser") and a
sub-advisory agreement between the Adviser and Atlanta Capital
Management Company to take effect after the merger of The
Chase Manhattan Corporation (the parent company of the
Adviser) and Chemical Banking Corporation. No fee increase is
proposed; and
FOR ___ AGAINST ____ ABSTAIN ___
<PAGE>
3. To elect eleven trustees to serve as members of the Board of
Trustees of the Trust.
FOR ___ AGAINST ____ ABSTAIN ___
4. To ratify the selection of Price Waterhouse LLP as independent
accountants for the 1996 fiscal year of IEEE Fund.
FOR ___ AGAINST ____ ABSTAIN ___
5. To approve or disapprove an amendment to the Trust's
Declaration of Trust.
FOR ___ AGAINST ____ ABSTAIN ___
(continued and to be signed on the reverse side)
<PAGE>
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MUTUAL FUND GROUP
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE PROPOSAL
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED ON
THE REVERSE SIDE OR FOR THE PROPOSAL IF NO CHOICE IS INDICATED.
Dated:__________________ 1996
------------------------------
Signature
------------------------------
Signature
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR ON THIS CARD. When signing as
attorney, executor, administrator,
trustee, guardian or as custodian for a
minor, please sign your name and give your
full title as such. If signing on behalf
of a corporation, please sign full
corporate name and your name and indicate
your title. If you are a partner signing
for a partnership, please sign the
partnership name and your name.
PLEASE SIGN, DATE AND RETURN
<PAGE>
PROSPECTUS
VISTAS(M) BALANCED FUND March 1, 1995
VISTA BALANCED FUND (the "Fund") seeks to provide its shareholders with
maximum total return through a combination of long-term growth of capital and
current income by investing in a diversified portfolio of equity and debt
securities, including common stocks, convertible securities and government and
corporate fixed-income obligations. Under normal market conditions, between
35%-70% of the Fund's total assets will be invested in common stocks and other
equity investments and at least 25% of the Fund's assets will be invested in
fixed-income senior securities, defined for this purpose to include
non-convertible corporate debt securities and preferred stock, and government
obligations. The Adviser considers both the opportunity for gain and the risk of
loss in making investments, and may alter the relative percentages of assets
invested in equity and fixed income securities from time to time, depending on
the judgment of the Adviser as to general market and economic conditions, trends
and yields and interest rates and changes in fiscal monetary policies. The Fund
is a diversified series of Mutual Fund Group (the "Trust"), an open-end
management investment company organized as a business trust under the laws of
the Commonwealth of Massachusetts on May 11, 1987, presently consisting of 15
separate series (the "Funds").
Of course, there can be no assurance that the Fund will achieve its
investment objective. Prospective investors should carefully consider the risks
associated with an investment in the Fund. For a further discussion on the risks
associated with an investment in the Fund, see "Investment Objective, Policies
and Risk Consideration" in this Prospectus. Investors should also refer to
"Additional Information on Investment Policies and Techniques" on page 7.
The Chase Manhattan Bank, N.A. (the "Adviser") is the Fund's investment
adviser, custodian (the "Custodian") and administrator (the "Administrator").
Vista Broker-Dealer Services, Inc. ("VBDS") is the Fund's distributor and is
unaffiliated with Chase. Investments in the Fund are subject to risk--including
possible loss of principal--and will fluctuate in value. Shares of the Fund are
not bank deposits or obligations of, or guaranteed or endorsed by, The Chase
Manhattan Bank, N.A. or any of its affiliates and are not 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.
Shares of the Fund are continuously offered for sale through VBDS, the
Fund's distributor (the "Distributor"). An investor should obtain from his or
her Shareholder Servicing Agent, if appropriate, and should read in conjunction
with this Prospectus, the materials provided by the Shareholder Servicing Agent
describing the procedures under which the shares of the Fund may be purchased
and redeemed through such Shareholder Servicing Agent. Investors may select
Class A or Class B shares, each with a public offering price that reflects
different sales charges and expense levels. Class A shares are offered at net
asset value plus the applicable sales charge (maximum of 4.50% of public
offering price). Class B shares are offered at net asset value without an
initial sales charge, with a maximum contingent deferred sales charge of 5% of
redemption proceeds imposed on certain redemptions made within six years of the
date of purchase. This charge will decline to zero for redemptions more than six
years after initial purchase. Class B shares have higher ongoing expenses than
Class A shares, but automatically convert into Class A shares in the eighth year
after purchase. Salespersons and any other person entitled to receive
compensation for selling or servicing shares of the Fund may receive different
compensation with respect to one particular class of shares over another in the
Fund.
For more information on the differences in these classes, see "Variable
Distribution Method," "Purchases and Redemptions of Shares" and "Conversion of
Class B Shares."
This Prospectus sets forth concisely the information concerning the Fund
that a prospective investor should know before investing. A Statement of
<PAGE>
Additional Information for the Fund, dated March 1, 1995, which contains more
detailed information concerning the Fund, has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. An
investor may obtain a copy of the Statement of Additional Information without
charge by contacting his or her Shareholder Servicing Agent, the Distributor, or
the Fund.
Investors should read this Prospectus and retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
For information about the Fund, simply call the Vista Service Center at the
following toll-free number: 1-800-34-VISTA.
-2-
<PAGE>
TABLE OF CONTENTS
Expense Summary......................................................... 3
Financial Highlights.................................................... 4
Investment Objective, Policies and Risk Consideration................... 6
Additional Information on Investment Policies and Techniques............ 7
Variable Distribution Method............................................ 10
Management of the Fund.................................................. 11
Purchases and Redemptions of Shares..................................... 13
Tax Matters............................................................. 23
Other Information Concerning Shares of the Fund......................... 24
Shareholder Servicing Agents, Transfer Agent and Custodian.............. 28
Yield and Performance Information....................................... 29
Appendix A--Description of Futures Contracts and Options Thereon........ A-1
Appendix B--Description of Ratings...................................... B-1
-3-
<PAGE>
EXPENSE SUMMARY
Class A Class B
---------- ----------
Shareholder Transaction Expenses
Maximum Initial Sales Charge Imposed on Purchases
(as a percentage of offering price)*................. 4.50% None
Maximum Sales Charge Imposed on Reinvested Dividends... None None
Exchange Fee........................................... None None
Maximum Contingent Deferred Sales Charge
(as a percentage of redemption proceeds)+........... None 5.00%
As a percentage of
Annual Fund Operating Expenses net assets
- ------------------------------ ------------------
Investment Advisory Fee (After waivers of fees).......... .00% .00%
Rule 12b-1 Distribution Plan Fee
(After waivers of fees)++.............................. .20% .75%
Administration Fee (After waiver of fees)................ .00% .00%
Other Expenses (After waiver of fees and
reimbursement of expenses)
--Sub-administration Fee............................... .00% .00%
--Shareholder Servicing Fee............................ .05% .25%
--Other Operating Expenses+++.......................... .85% .85%
Total Fund Operating Expenses........................... 1.10% 1.85%
Example:
You would pay the following expenses on a $1,000 invested in the Fund,
assuming a 5% annual rate of return:
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
Class A Shares(1)......................... $56 $78 $103 $173
Class B Shares:
Assuming complete redemption at end of
period(2)(3)............................ 70 91 123 188
Assuming no redemption(3).................. 19 58 100 188
- ---------------
* The rules of the Securities and Exchange Commission require that the Fund's
maximum sales charge be reflected in the expense summary.
+ The maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter (except in the fourth year), reaching
zero after six years. See "Purchases."
++ As a result of distribution fees, a long-term shareholder in the Fund may
pay more than the economic equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers,
Inc.
+++ A shareholder may incur a $10.00 charge for certain wire redemptions.
-4-
<PAGE>
(1) Assumes deduction at the time of purchase of the maximum 4.50% intitial
sales charge, as applicable.
(2) Assumes deduction at the time of redemption of the maximum applicable
contingent deferred sales charge.
(3) Ten-year figures assume conversion of Class B shares to Class A shares at
the beginning of eighth year.
The purpose of the expense summary provided above is to assist investors in
understanding the various costs and expenses that a shareholder in the Fund will
bear directly or indirectly. The expense summary shows the investment advisory
fee, distribution plan fee, administrative fee, sub-administrative fee,
shareholder servicing fee and other operating expenses expected to be incurred
by the Fund after waiver of fees. Absent such waivers, the annual investment
advisory fee, distribution plans fee, administrative fee, sub-administrative fee
and shareholder servicing fee for the Fund would be 0.50%, 0.25% (0.75% for
Class B shares), 0.10%, 0.05% and 0.25%. A more complete description of the
Fund's expenses, including any potential fee waivers, is set forth herein.
The "Example" set forth above assumes all dividends and other distributions
are reinvested and that the percentages under "Annual Fund Operating Expenses"
remain the same in the years shown. The "Example" should not be considered a
representation of past or future expenses of the Fund; actual expenses may be
greater or less than shown. The actual expenses incurred and attributable to
each class of shares will depend on several factors, including the level of
average net assets and the extent to which a class incurs variable expenses,
such as transfer agency costs.
FINANCIAL HIGHLIGHTS
The table set forth below provides selected per share data and ratios for
one Class A share outstanding throughout the period shown. This information is
supplemented by financial statements and accompanying notes appearing in the
Fund's Annual Report to Shareholders for the fiscal year ended October 31, 1994,
which is incorporated by reference into the Statement of Additional Information.
Shareholders can obtain a copy of this annual report by contacting the Fund or
their Shareholder Servicing Agent. The financial statements and notes, as well
as the financial information, set forth in the table below has been audited by
Price Waterhouse LLP, independent accountants, whose report thereon is also
included in the Annual Report to Shareholders. Financial information is not
presented for Class B shares because no shares of that class were outstanding
during the period indicated.
-5-
<PAGE>
11/1/93 11/4/92* 11/4/93**
through thru through
10/31/94 10/31/93 10/31/94
Class A Shares Class A Shares Class B Shares
-------------- -------------- --------------
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning
of Period........................ $ 11.38 $ 10.00 $ 11.22
Income from Investment Operations
Net Investment Income.......... 0.356 0.410 0.345
Net Gains or Losses in
Securities (both realized
and unrealized)............... (0.187) 1.344 (0.117)
Total from Investment
Operations.................... 0.169 1.754 0.228
Less Distributions
Dividends from net
investment income............ 0.359 0.375 0.318
Distributions from
capital gains................ 0.100 0.000 0.100
Total Distributions............ 0.459 0.375 0.418
Net Asset Value, End of Period...... $ 11.09 $ 11.38 $ 11.03
Total Return(1)..................... 1.56% 17.74% 2.17%
Ratios/Supplemental Data*
Net Assets, End of Period
(000 omitted)................ $ 21,705 $ 13,920 $ 3,543
Ratio of Expenses to
Average Net Assets#......... 0.58% 0.00% 1.50%
Ratio of Net Income to
Average Net Assets#......... 3.21% 3.87% 2.46%
Ratio of expenses without
waivers and assumption
of expenses#................ 2.20% 3.07% 2.69%
Ratio of net investment
income without waivers
and assumption of expenses#. 1.59% 0.80% 1.24%
Portfolio Turnover Rate......... 77% 65% 77%
- ---------------
# Annualized.
* Commencement of operations.
** Commencement of offering of shares.
(1) Total return figures do not include the effect of any sales load on Class A
shares or any contingent deferred sale charges on Class B shares.
-6-
<PAGE>
Management's Discussion of Fund Performance
The Vista Balanced Fund seeks to maximize total return by combining
long-term capital growth and current income. During the fiscal year ended
October 31, 1994, the Fund had a total return of 1.56%. This occurred in a
volatile year for both the U.S. stock and bond markets. Stocks were mired in a
tight but highly volatile range due to higher interest rates, concerns about
inflation, a stronger dollar and growth in the economy. The bond markets reacted
primarily to the Federal Reserve's decision to raise interest rates a number of
times throughout the period.
[INSERT GRAPH]
This chart illustrates comparative performance of $10,000 invested in Vista
Balanced Fund Class A shares and the Lipper Balanced Fund Index from November
30, 1992 to October 31, 1994. The Fund's performance includes a 4.50% sales
charge and assumes reinvestment of all dividends and capital gains. The Lipper
Balanced Fund Index tracks the performance of 30 balanced mutual funds. The
Index's performance does not include a sales charge and has been adjusted to
reflect reinvestment of all dividends and capital gains for funds included in
the Index.
-6-
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATION
Investment Objectives -- The primary investment objective of the Fund is to
maximize total return through a combination of long-term growth of capital and
current income.
Investment Policies -- The Fund seeks to achieve this objective through a
policy of diversified investments in equity and debt securities, including
common stocks, convertible securities and government and corporate fixed-income
obligations. The Adviser considers both the opportunity for gain and the risk of
loss in making investments, and may alter the relative percentages of assets
invested in equity and fixed income senior securities from time to time,
depending on the judgment of the Adviser as to general market and economic
conditions, trends and yields and interest rates and changes in fiscal monetary
policies.
Under normal market conditions, between 35%-70% of the Fund's total assets
will be invested in common stocks and other equity investments (which consists
of preferred stocks, convertible debt, warrants and other securities convertible
into or exchangeable for common stocks). The majority of the Fund's common
stocks and other equity investments will be invested in well-known and
established companies with a market capitalization of at least $200 million and
be traded on established securities markets or over-the-counter.
In addition, at least 25% of the Fund's assets will be invested in
fixed-income senior securities, defined for this purpose to include
non-convertible corporate debt securities and preferred stock, and government
obligations. The average maturity of these investments will vary from time to
time depending on the Adviser's assessment of the relative yields available on
securities of different maturities. It is currently anticipated that the average
maturity of the fixed income securities in the Fund's portfolio will be between
two and fifteen years under normal market conditions. Non-convertible corporate
debt obligations held in the Fund's portfolio will be rated, at the time of
purchase, BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or
higher by Moody's Investor Service, Inc. ("Moody's") or, if unrated, determined
to be of comparable quality by the Adviser under criteria approved by the Board
of Trustees. Bonds rated BBB by S&P or Baa by Moody's may possess speculative
characteristics and may be sensitive to changes in the economy and the financial
condition of issuers.
The Fund may also purchase obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and may invest in high quality
short-term debt securities such as commercial paper rated A-1 by S&P or P-1 by
Moody's.
The net asset value of the Fund will fluctuate based on the value of the
securities in its portfolio.
The Fund normally will be substantially fully invested. However, the Fund
reserves the right to invest up to 100% of its assets in cash, cash equivalents,
high quality short-term money market instruments, and in bills, notes or bonds
issued by the U.S. Treasury Department or by other agencies of the U.S.
Government for temporary defensive purposes during periods that the Adviser
considers to be unsuitable for the Fund's normal investment strategies.
The Fund may write covered call options on its equity securities for the
purpose of hedging its portfolio. "Additional Information on Investment Policies
and Techniques" and Appendix A contain a more complete description of option
contracts, as well as further information concerning the investment policies and
techniques of the Fund. In addition, the Statement of Additional Information
includes a further discussion of option contracts to be entered into by the
Fund. Although the Fund will enter into option contracts for hedging purposes
only, the use of such instruments does involve transaction costs and certain
risks, which are discussed in the Statement of Additional Information.
-7-
<PAGE>
Shareholder approval is required to change the Fund's investment objectives
which are considered to be fundamental. However, shareholder approval is not
required to change any of the investment policies described above or in
"Additional Information on Investment Policies and Techniques".
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND TECHNIQUES
To the extent the assets of the Fund are not invested in common stocks,
they will consist of or be invested in cash, cash equivalents, high quality
short-term money market instruments, and in bills, notes or bonds issued by the
U.S. Treasury Department or by other agencies of the U.S. Government, as
described under "Investment Objective, Policies and Restrictions" in the
Statement of Additional Information, and in repurchase agreements, as described
below and in greater detail under "Investment Objective, Policies and
Restrictions" in the Statement of Additional Information.
The Fund may invest up to 20% of its assets in sponsored American
Depositary Receipts, which are U.S. exchange listed interests in securities of
foreign companies, and in debt and equity securities issued by foreign corporate
and government issuers when the Adviser believes that such investments provide
good opportunities for achieving income and capital gains without undue risk.
These securities may represent a greater degree of risk (e.g., risk related to
exchange rate fluctuation, tax provisions, war or expropriation) than do
securities of domestic issuers.
Because the value of securities and the income derived therefrom may
fluctuate according to the earnings of the issuers and changes in economic and
money market conditions, there can be no assurance that the investment
objectives of the Fund will be achieved.
Repurchase Agreements. The Fund may, when appropriate, enter into
repurchase agreements (a purchase of and simultaneous commitment to resell a
security at an agreed-upon price and date which is usually not more than seven
days from the date of purchase) only with member banks of the Federal Reserve
System and security dealers believed creditworthy and only if fully
collateralized by U.S. Government obligations or other securities in which the
Fund is permitted to invest. In the event the seller fails to pay the agreed-to
sum on the agreed-upon delivery date, the underlying security could be sold by
the Fund, but the Fund might incur a loss in doing so, and in certain cases may
not be permitted to sell the security. As an operating policy, the Fund, through
its custodian bank, takes constructive possession of the collateral underlying
repurchase agreements. Additionally, procedures have been established for the
Fund to monitor, on a daily basis, the market value of the collateral underlying
all repurchase agreements to ensure that the collateral is at least 100% of the
value of the repurchase agreements. Not more than 15% of the total assets of the
Fund will be invested in securities which are subject to legal or contractual
restrictions on resale, including securities that are not readily marketable and
repurchase agreements maturing in more than seven days. The purchase by the Fund
of securities subject to legal or contractual restrictions on resale may involve
additional risks and costs otherwise not incurred in connection with purchases
of securities without such restrictions. This limitation may be subject to
additional restrictions imposed by jurisdictions in which the Fund's shares are
offered for sale. See "Investment Restrictions" in the Statement of Additional
Information.
Portfolio Management and Turnover. It is not intended that the assets of
the Fund will be invested in securities for the purpose of short-term profits.
However, the Fund will dispose of portfolio securities whenever the Adviser
believes that changes are appropriate. Generally, the primary consideration in
placing portfolio securities transactions with broker-dealers for execution is
to obtain, and maintain the availability of, execution at the most favorable
prices and in the most effective manner possible. It is anticipated that the
annual portfolio turnover rate for both the equity and fixed-income portions of
the Fund's portfolio will be approximately 100%. For a complete discussion of
portfolio transactions and brokerage allocation, including the Fund's overall
portfolio turnover rate, the turnover rate for the portion of the Fund's
portfolio consisting of common stock and the turnover rate for the portion of
the Fund's portfolio consisting of non-equity investments, see "Investment
Objectives, Policies
-8-
<PAGE>
and Restrictions--Investment Policies: Portfolio Transactions and Brokerage
Allocation" in the Statement of Additional Information.
Portfolio Securities Lending. Although the Fund would not intend to engage
in such activity in the ordinary course of business, the Fund is permitted to
lend its securities to broker-dealers and other institutional investors in order
to generate additional income. Such loans of portfolio securities may not exceed
30% of the value of the Fund's total assets. In connection with such loans, the
Fund will receive collateral consisting of cash, cash equivalents, U.S.
Government securities or irrevocable letters of credit issued by financial
institutions. Such collateral will be maintained at all times in an amount equal
to at least 100% of the current market value of the securities loaned. The Fund
can increase its income through the investment of such collateral. The Fund
continues to be entitled to the interest payable or any dividend-equivalent
payments received on a loaned security and, in addition, receive interest on the
amount of the loan. However, the receipt of any dividend-equivalent payments by
the Fund on a loaned security from the borrower will not qualify for the
dividends-received deduction. Such loans will be terminable at any time upon
specified notice. The Fund might experience risk of loss if the institutions
with which it has engaged in portfolio loan transactions breach their agreements
with the Fund. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower experience financial difficulty. Loans will
be made only to firms deemed by the Adviser to be of good standing and will not
be made unless, in the judgment of the Adviser, the consideration to be earned
from such loans justifies the risk.
Options on Portfolio Securities. The Fund, for the purpose of hedging its
portfolio, will "write", or sell, only covered call option contracts on its
portfolio securities in an amount not to exceed 10% of its net assets.
Currently, the principal exchanges on which such options may be written are the
Chicago Board Option Exchange and the American, Philadelphia, and Pacific Stock
Exchanges. In addition, and in certain instances, the Fund may write covered
call options in the over-the-counter market ("OTC Options").
A call option gives the purchaser of the option the right, but not the
obligation, to buy the underlying security from the writer at the exercise price
at any time prior to the expiration of the contract, regardless of the market
price of the security during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
The writer foregoes the opportunity to profit from an increase in the market
price of the underlying security above the exercise price so long as the option
remains open and covered, except insofar as the premium represents such a
profit.
The Fund may purchase exchange traded or OTC options only to close out a
position, or offset, an existing call option that it has written. In order to
close out a position, the Fund will make a "closing purchase transaction"--the
purchase of a call option on the same security with the same exercise price and
expiration date as the call option which it has previously written on any
particular security. The Fund will effect a closing purchase transaction so as
to close out any existing call option on a security that it intends to sell. The
Fund will realize a profit or loss from a closing purchase transaction if the
amount paid to execute a closing purchase transaction is less or more than the
amount received from the sale thereof. In determining the term of any option
written, the Fund will attempt to comply with the limitations of the Code on the
sale or disposition of securities held for less than three months in order to
maintain its status as a regulated investment company.
The staff of the SEC has taken the position that purchased over-the-counter
options and the assets used as cover for written over-the-counter options are
illiquid securities. The Fund will write OTC Options only with primary U.S.
Government Securities dealers recognized by the Board of Governors of the
Federal Reserve System or member banks of the Federal Reserve System ("primary
dealers"). In connection with these special arrangements, the Fund intends to
establish standards for the creditworthiness of the primary dealers with which
it may enter into OTC Option contracts and those standards, as modified from
time to time, will be implemented and monitored by
-9-
<PAGE>
the Adviser. Under these special arrangements, the Fund will enter into
contracts with primary dealers which provide that the Fund has the absolute
right to repurchase an option it writes at any time at a repurchase price which
represents the fair market value, as determined in good faith through
negotiation between the parties, but which in no event will exceed a price
determined pursuant to a formula contained in the contract. Although the
specific details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a multiple of the
premium received by the Fund for writing the option, plus the amount, if any, by
which the option is "in-the-money". The formula will also include a factor to
account for the difference between the price of the security and the strike
price of the option if the option is written "out-of-the-money". Under such
circumstances, the Fund will treat as illiquid that amount of the "cover" assets
equal to the amount by which the formula price for the repurchase of the option
is greater than the amount by which the market value of the security subject to
the option exceeds the exercise price of the option (the amount by which the
option is "in-the-money"). Although each agreement will provide that the Fund's
repurchase price shall be determined in good faith (and that it shall not exceed
the maximum determined pursuant to the formula) the formula price will not
necessarily reflect the market value of the option written, therefore, the Fund
might pay more to repurchase the OTC Option contract than the Fund would pay to
close out a similar exchange traded option.
In determining the Fund's net asset value, the current market value of any
option written by the Fund is subtracted from net asset value. If the current
market value of the option exceeds the premium received by the Fund, the excess
represents an unrealized loss, and, conversely, if the premium exceeds the
current market value of the option, such excess would be unrealized gain.
For additional information concerning the use and risks involved in the
acquisition, ownership or sale of options contracts, including certain
percentage limitations on the use of such instruments, see "Investment
Objective, Policies and Restrictions--Investment Policies: Additional Policies
Regarding Options Transactions, Risk Factors Associated with Options
Transactions, and Restrictions on the Use of Options Contracts" in the Statement
of Additional Information.
VARIABLE DISTRIBUTION METHOD
The primary differences between the classes lie in their sales charge
structures, and ongoing expenses, as summarized below. Each class has distinct
advantages and disadvantages depending on the investor. Investors should
carefully consider the attributes of a class before investing.
<TABLE>
<CAPTION>
Initial Contingent
Sales Deferred Distribution and
Charge Sales Charge Service Fees Other Information
-------- ------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Class A..... Maximum of None Distribution Fee Initial Sales Charge
4.50% of of 0.25%; reduced in certain
public Service Fee of circumstances
offering price 0.25%
Class B..... None Maximum contingent Distribution Fee Shares convert to
deferred sales of 0.75%; Service Class A shares, and
charge of Fee of 0.25% thus pay lower
5% of redemption Service Fee of distribution fees,
proceeds declines 0.25% in the eighth year after
after 6 years issuance
</TABLE>
-10-
<PAGE>
Factors to Consider
The classes of shares have several different attributes relating to sales
charges and expenses. These attributes are discussed more fully below. In
choosing a class of shares to purchase, investors should consider the sales
charges and ongoing expenses of each class.
Sales Charges -- Class A shares are sold at net asset value plus an initial
sales charge of up to a maximum of 4.50% of the public offering price.
Class B shares have no initial sales charge; however, a contingent deferred
sales charge will be imposed on redemptions made within six years of purchase.
The amount of this contingent deferred sales charge will be 5% of the redemption
proceeds on redemptions in the first year after purchase, declining to zero for
redemptions made more than six years after purchase. However, this contingent
deferred sales charge will not apply to redemptions of shares representing
capital appreciation on Fund assets and reinvestment of dividends or capital
gains distributions. In almost all cases, investors planning to purchase
$250,000 or more of the Fund's shares will pay lower aggregate charges and
expenses by purchasing Class A shares.
Reductions of Class A Sales Charges -- As explained more fully in
"Purchases and Redemptions of Shares," certain purchases of Class A shares in
amounts exceeding $100,000 are eligible for reduced initial sales charges. In
determining which classes to purchase, investors should consider any reductions
in initial sales charges on Class A shares for which they may be eligible.
Ongoing Annual Expenses -- Class A and Class B each have an annual
shareholder servicing fee of 0.25% of average daily net assets. Class A has an
annual distribution fee under Rule 12b-1 of 0.25% of its average daily net
assets, while Class B has an annual distribution fee under Rule 12b-1 of 0.75%
of its average daily net assets. Moreover, expenses borne by each class may
differ slightly because of the allocation of other class-specific expenses. For
example, a higher transfer agency fee may be imposed on Class B shares than on
Class A shares.
Investors should carefully consider these ongoing annual expenses, along
with initial or contingent deferred sales charges in choosing between classes.
The relative impact of initial sales charges, contingent deferred sales charges,
and ongoing annual expenses will depend on the length of time a share is held.
Other Information
Selected dealers and financial consultants may receive different levels of
compensation for selling one particular class of Fund shares rather than
another.
MANAGEMENT OF THE FUND
The Adviser
The Chase Manhattan Bank, N.A. ("Chase" or the "Adviser") manages the
assets of the Fund pursuant to an Investment Advisory Agreement dated August 4,
1992. Subject to such policies as the Board of Trustees may determine, the
Adviser makes investment decisions for the Fund. Tom Nelson and Greg Adams, Vice
Presidents of the Adviser, are responsible for the day-to-day management of the
Fund's portfolio. Mr. Nelson, who joined Chase in April 1987, oversees all fixed
income trading for the Chase Private Bank. In 1989, he started managing
individual accounts and in 1991 became a fund manager. Mr. Adams joined Chase in
1987 and oversees the equity trading of the Fund, as well as a number of Chase's
pooled equity Funds. For its services under the Investment Advisory Agreement,
the Adviser is entitled to receive an annual fee computed daily and paid monthly
based at an
-11-
<PAGE>
annual rate equal to 0.50% of the Fund's average daily net assets. The Adviser
may, from time to time, voluntarily waive all or a portion of its fees payable
under the Advisory Agreement.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan Corporation,
a registered bank holding company, is a commercial bank offering a wide range of
banking and investment services to customers throughout the United States and
around the world. Its headquarters is at One Chase Manhattan Plaza, New York, NY
10081. The Adviser, including its predecessor organizations, has over 100 years
of money management experience and renders investment advisory services to
others. Also included among the Adviser's accounts are commingled trust funds
and a broad spectrum of individual trust and investment management portfolios.
These accounts have varying investment objectives.
Certain Relationships and Activities. The Adviser and its affiliates may
have deposit, loan and other commercial banking relationships with the issuers
of securities purchased on behalf of the Fund, including outstanding loans to
such issuers which may be repaid in whole or in part with the proceeds of
securities so purchased. The Adviser and its affiliates deal, trade and invest
for their own accounts in U.S. Government obligations, municipal obligations and
commercial paper and are among the leading dealers of various types of U.S.
Government obligations and municipal obligations. The Adviser and its affiliates
may sell U.S. Government obligations and municipal obligations to, and purchase
them from, other investment companies sponsored by the Distributor or affiliates
of the Distributor. The Adviser will not invest the Fund's assets in any U.S.
Government obligations, municipal obligations or commercial paper purchased from
itself or any affiliate, although under certain circumstances such securities
may be purchased from other members of an underwriting syndicate in which the
Adviser or an affiliate is a non-principal member. This restriction may limit
the amount or type of U.S. Government obligations, municipal obligations or
commercial paper available to be purchased by the Fund. The Adviser has informed
the Fund that in making its investment decisions, it does not obtain or use
material inside information in the possession of any other division or
department of the Adviser, including the division that performs services for the
Fund as Custodian, or in the possession of any affiliate of the Adviser.
Shareholders of the Fund are notified that Chase and its affiliates may exchange
among themselves certain information about the shareholder and his account.
The Administrator
Pursuant to an Administration Agreement, dated as of January 1, 1989, as
amended September 30, 1993 (the "Administration Agreement"), Chase serves as
administrator of the Fund. The Administrator provides certain administrative
services, including, among other responsibilities, coordinating relationships
with independent contractors and agents; preparing for signature by officers and
filing of certain documents required for compliance with applicable laws and
regulations excluding those of the securities laws of the various states;
preparing financial statements; arranging for the maintenance of books and
records; and providing office facilities necessary to carry out the duties
thereunder. The Administrator is entitled to receive from the Fund a fee
computed daily and paid monthly at an annual rate equal to 0.10% of the Fund's
average daily net assets. The Administrator may, from time to time, voluntarily
waive all or a portion of its fees payable to it under the Administration
Agreement. The Administrator shall not have any responsibility or authority for
the Fund's investments, the determination of investment policy, or for any
matter pertaining to the distribution of Fund shares.
Glass-Steagall Act. Chase has received the opinion of its legal counsel
that it may provide the services described in the Investment Advisory and the
Administration Agreements, as described above, and the Shareholder Servicing
Agreements and Custodian Agreement with the Fund, as described below, without
violating the federal banking law commonly known as the Glass-Steagall Act. The
Act generally bars banks from publicly underwriting or distributing certain
securities.
-12-
<PAGE>
The U.S. Supreme Court in its 1981 decision in Board of Governors of the
Federal Reserve System v. Investment Company Institute determined that,
consistent with the requirements of the Act, a bank may serve as an investment
adviser to a registered, closed-end investment company. Other decisions of
banking regulators have supported the position that a bank may act as investment
adviser to a registered, open-end investment company. Based on the advice of its
counsel, the Adviser believes that the Court's decision other decisions of
federal banking regulators permit it to serve as investment adviser to a
registered, open-end investment company.
Regarding the performance of shareholder servicing and custodial
activities, the staff of the Office of the Comptroller of the Currency, which
supervises national banks, has issued opinion letters stating that national
banks may engage in shareholder servicing and custodial activities. Therefore,
the Adviser believes, based on advice of counsel, that it may serve as
Shareholder Servicing Agent and/or Custodian to the Fund and render the services
described below and as set forth in the shareholder servicing agreement and
Custodian Agreement, as an appropriate, incidental national banking function and
as a proper adjunct to it, serving as investment adviser and administrator to
the Fund.
Industry practice and regulatory decisions also support a bank's authority
to act as administrator for a registered investment company. Chase, on the
advice of its counsel, believes that it may render the services described in its
Administration Agreement without violating the Glass-Steagall Act or other
applicable banking laws.
Possible future changes in federal law or administrative or judicial
interpretations of current or future law, however, could prevent the Adviser
from continuing to perform investment advisory, shareholder servicing, custodial
or other administrative services for the Fund. If that occurred, the Fund's
Board of Trustees promptly would seek to obtain for the Fund the services of
another qualified adviser, shareholder servicing agent, custodian or
administrator, as necessary. Although no assurances can be given, the Fund
believes that, if necessary, the transfer to a new adviser, shareholder
servicing agent, custodian or administrator could be accomplished without undue
disruption to the Fund's operations.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
PURCHASES AND REDEMPTIONS OF SHARES
Purchases
Class A shares are sold to investors subject to an initial sales charge.
Class B shares of the Fund are sold without an initial sales charge but are
subject to higher ongoing expenses than Class A shares and a contingent deferred
sales charge payable upon certain redemptions. Class B shares automatically
convert to Class A shares in the eighth year after issuance. See "Variable
Distribution Method."
Both classes of shares of the Fund may be purchased through selected
financial service firms, such as broker-dealer firms and banks ("Dealers") who
have entered into a selected dealer agreement with Vista Broker-Dealer Services,
Inc., at the public offering price which is computed once daily as of the close
of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) on
each business day during which the Exchange is open for trading ("Fund Business
Day"). (See "Other Information Concerning Shares of the Fund-Net Asset Value").
The public offering price of Class A shares is the next determined net assset
value, plus applicable initial sales charge. Orders received by Dealers prior to
the New York Stock Exchange closing time are confirmed at the offering price
effective at the close of such Exchange, provided the order is received by the
Transfer Agent prior to its close of business. Dealers are responsible for
forwarding orders for the purchase of shares on a timely basis.
-13-
<PAGE>
Fund shares normally will be maintained in book entry form and only Class A
share certificates will be issued upon request. Management reserves the right to
refuse to sell shares of the Fund to any person.
Shareholder Servicing Agents may offer additional services to their
customers, including specialized procedures for the purchase and redemption of
Fund shares, such as pre-authorized or systematic purchase and redemption plans.
Each Shareholder Servicing Agent may establish its own terms and conditions,
including reduced minimum initial purchase amounts and limitations on the
amounts of subsequent transactions, with respect to such services. Certain
Shareholder Servicing Agents may (although they are not required by the Trust to
do so) credit to the accounts of their customers from whom they are already
receiving other fees an amount not exceeding the fees for their services as
Shareholder Servicing Agents (see "Shareholder Servicing Agents, Transfer Agent
and Custodian -- Shareholder Servicing Agents"), which will have the effect of
increasing the net return on the investment of customers of that Shareholder
Servicing Agent.
When placing orders, investors should specify whether the order is for
Class A or Class B shares. All share purchases that fail to specify a class will
automatically be invested in Class A shares.
Minimum Investments
The Fund has established minimum initial and additional investments for the
purchase of Fund Shares. The minimums detailed below vary by the type of account
being established:
Account Type Minimum Initial Investment
- -------------------- --------------------------
Individual................................. $ 2,500(1)
Individual Retirement Account (IRA)........ $ 1,000(2)
Spousal IRA................................ $ 250
SEP-IRA.................................... $ 1,000(2)
Purchase Accumulation Plan................. $ 250(3)
Payroll Deduction Program.................. $ 100(4)
(401K, 403B, Keogh)
- ---------------
(1) Employees of the Adviser and its affiliates, and Qualified Persons as
defined in "Purchases of Class A Shares at Net Asset Value", are eligible
for a $1,000 minimum initial investment.
(2) A $250 minimum initial investment is allowed if the new account is
established with a $100 minimum monthly Systematic Investment Plan as
described below.
(3) Account must be established with a $200 minimum monthly Systematic
Investment Plan as described below.
(4) A $25 minimum monthly investment must be established through an automated
payroll cycle.
The minimum additional investment is $100 for all types of accounts
Systematic Investment Plan. A shareholder may establish a monthly
investment plan by which investments are automatically made to his/her Vista
Fund account through Automatic Clearing House (ACH) deductions from a checking
account. The minimum monthly investment through this plan is $100. Shareholders
may choose either to have these investments made during the first or third week
each month. Please note that your initial ACH transactions may take up to 10
days from the receipt of your request to be established.
-14-
<PAGE>
Shareholders electing to start this Sstematic Investment Plan when opening
an account should complete Section 8 of the account application. Current
shareholders may begin a Systematic Investment Plan at any time by sending a
signed letter with signature guarantee to the Vista Service Center, P.O. Box
419392, Kansas City, MO 64141-6392. The letter should contain your Vista Fund
account number, the desired amount and cycle of the systematic investment, and
must include a voided check from the checking account from which debits are to
be made. A signature guarantee may be obtained from a bank, trust company,
broker-dealer or other member of the national securities exchange. Please note
that a notary public cannot provide signature guarantees.
Initial Sales Charges--Class A Shares
The public offering price of Class A shares is the next determined net
asset value, plus any applicable initial sales charge, which will vary with the
size of the purchase as shown in the following table:
Concession
Sales Charge to Dealers
------------------------ ----------
% of % of Net % of
Offering Amount Offering
Amount of Purchase Price Invested Price
- ------------------ --------- --------- ---------
Less than $100,000................ 4.50% 4.71 4.00
$100,000 to $249,999.............. 3.75 3.90 3.25
$250,000 to $499,999.............. 2.50 2.56 2.25
$500,000 to $999,999.............. 2.00 2.04 1.75
$1,000,000 and over............... -- -- --
The initial sales charge on Class A shares varies with the size of the
purchase as shown above. The reduced charges apply to the aggregate of purchases
of Class A shares of the Fund made at one time by "any person", which term
includes, among others, an individual, spouse and children under the age of 21,
or a Trustee or other fiduciary of a Trust estate or fiduciary account.
There is no initial sales charge on purchases of Class A Shares of
$1,000,000 or more. However, the Distributor will pay a fee or commission to the
dealer of record on such purchases at the rates shown in the table below.
% Commission
Amount of purchase at Paid to Dealers
Offering Price of Record
--------------------- -----------------
$1,000,000 to $2,499,999............... 0.75%
$2,500,000 to $9,999,999............... 0.50%
$10,000,000 to $49,999,999............. 0.25%
$50,000,000 and over................... 0.15%
Upon notice to Dealers with whom it has sales agreements, VBDS may reallow
up to the full applicable initial sales charge on Class A shares and such Dealer
may therefore be deemed an "underwriter" under the Securities Act of 1933, as
amended, during such periods. For the three-year period commencing July 19,
1993, for activities in maintaining and servicing accounts of customers invested
in the Fund, Associated Securities Corp. ("Associated Securities") may receive
payments from the Adviser based, in part, on the amount of the aggregate asset
values of the Fund (and other Vista funds) in the accounts of shareholders
attributable to Associated Securities
-15-
<PAGE>
and the length of time such assets are in such accounts. In addition, under an
arrangement between Associated Securities and the Distributor, Associated
Securities will be entitled to receive either 50% or 70% of the difference
between the total front-end sales load, or in the case of Class B shares 4.00%,
and that portion paid to selling group member broker-dealers.
The Distributor may, from time to time, provide promotional incentives to
certain Dealers whose representatives have sold or are expected to sell
significant amounts of the Fund or other Funds in the Trust. At various times
the Distributor may implement programs under which a Dealer's sales force may be
eligible to win cash or awards for certain sales efforts or under which the
Distributor will reallow an amount not exceeding the total applicable initial
sales charges on the sales of Class A shares or the Maximum Contingent Deferred
Sales Charge of Class B shares generated by the Dealer during such programs to
any Dealer that sponsors sales contests or recognition programs conforming to
criteria established by the Distributor or participates in sales programs
sponsored by the Distributor. The Distributor may provide marketing services to
Dealers with whom it has sales agreements, consisting of written informational
material relating to sales incentive campaigns conducted by such Dealers for
their representatives.
Purchases of Class A Shares at Net Asset Value
Shareholders As of November 30, 1990
Shareholders of record of any Vista Fund as of November 30, 1990, may
purchase shares of the Fund at Net Asset Value without an initial sales charge
for as long as they continue to own shares of any Vista Fund, provided there is
no change in account registration. However, once a shareholder closes his or her
account by redeeming all shares, he or she will lose this privilege after 30
days. This provision applies to accounts registered in the name of the
shareholder and his or her spouse and children under 21 and for IRAs in their
names.
Shareholders Who Are Eligible Persons
There is no initial sales charge on Class A Shares purchased by the
following "Eligible Persons:"
a) Active or retired Trustees, Directors, officers, partners or
employees (including their spouses, children, siblings and parents) of the
Adviser, Distributor, Transfer Agency or any affiliates or subsidiaries
thereof.
b) Employees (including their spouses and children under 21) of
Dealers having a selected dealers agreement with the distributor.
c) Any qualified retirement plan or IRA established for the benefit of
a person in (a) or (b).
Qualified and Other Retirement Plans
No initial sales charge will apply to the purchase of Class A Shares of the
Fund by:
a) An investor seeking to invest the proceeds of a qualified
retirement plan, where a portion of the plan was invested in Vista.
b) Any qualified retirement plan with 250 or more participants.
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<PAGE>
c) An individual participant in a tax-qualified plan making a tax-free
rollover or transfer of assets from the plan in which the adviser of the
Fund serves as Trustee or custodian of the plan or manages some portion of
the plan's assets.
Purchases Through Investment Advisers, Brokers or Financial Planners
Purchases of Class A Shares of the Fund may be made with no initial sales
charge through an investment adviser, broker, or financial planner who charges a
fee for their services. Purchases of Class A Shares of the Fund may be made with
no intial sales charge by an investment adviser, broker or financial planner,
provides such purchases are preapproved and are placed through an omnibus
account with the Fund.
Purchases Through A Bank as Fiduciary
Purchases of Class A Shares of the Fund may be made with no initial sales
charge in accounts opened by a bank, trust company or thrift institution which
is acting as a fiduciary (i.e., exercises investment authority with respect to
such accounts, provided that appropriate notification of such fiduciary
relationship is reported at the time of the investment to the Fund, the
distributor or the Transfer Agent.
The Fund reserves the right to change any of these policies on purchases
without an initial sales charge at any time and may reject any such purchase
request.
The Fund reserves the right to cease offering Class A shares for sale at
any time or to reject any order for the purchase of Class A shares and to cease
offering any services provided by a Shareholder Servicing Agent.
Reduced Initial Sales Charges On Class A Shares
Cumulative Quantity Discount. Class A shares of the Fund may be purchased
by any person at a reduced sales charge which is determined by (a) aggregating
the dollar amount of the new purchase and the greater of the purchaser's total
(i) net asset value or (ii) cost of any shares acquired and still held in the
Fund, or any other Vista Fund, including any Vista money market Fund acquired by
exchange for which a sales charge had been incurred and (b) applying the initial
sales charge applicable to such aggregate dollar value. The privilege of the
cumulative quantity discount is subject to modification or discontinuance at any
time with respect to all Class A shares purchased thereafter.
Group Purchases. An individual who is a member of a qualified group (as
hereinafter defined) may also purchase Class A shares of the Fund at the reduced
sales charge applicable to the group taken as a whole. The reduced initial sales
charge is based upon the aggregate dollar value of Class A shares previously
purchased and still owned by the group plus the securities currently being
purchased and is determined as stated above under "Cumulative Quantity
Discount". For example, if members of the group had previously invested and
still held $90,000 of Class A shares and now were investing $15,000, the initial
sales charge would be 3.75% on the $15,000 purchase. In order to obtain such
discount, the purchaser or investment dealer must provide the Transfer Agent
with sufficient information, including the purchaser's total cost, at the time
of purchase to permit verification that the purchaser qualifies for a cumulative
quantity discount, and confirmation of the order is subject to such
verification. Information concerning the current initial sales charge applicable
to a group may be obtained by contacting the Transfer Agent.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Class A shares at a discount
and (iii) satisfies uniform criteria which enables the Distributor to realize
economies of scale in its costs of distributing Class A shares. A qualified
group must have more than 10 members, must be available to arrange for group
meetings between representatives of the Fund and the members,
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must agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to the Distributor,
and must seek to arrange for payroll deduction or other bulk transmission of
investments of the Fund. This privilege is subject to modification or
discontinuance at any time with respect to all Class A shares purchased
thereafter.
Statement of Intention. Investors in Class A shares may also qualify for
reduced initial sales charges by signing a Statement of Intention (the
"Statement"). This enables the investor to aggregate purchases of Class A shares
in the Fund with purchases of Class A shares of any other Vista Fund (or if a
fund has only one class, shares of such fund), including shares of any Vista
money market Fund acquired by exchange from a Fund which charge an initial sales
charge, during a 13-month period. The sales charge is based on the total amount
invested in Class A shares during the 13-month period. All Class A or other
qualifying shares of these Funds currently owned by the investor will be
credited as purchases (at their current offering prices on the date the
Statement is signed) toward completion of the Statement. A 90-day back-dating
period can be used to include earlier purchases at the investor's cost. The
13-month period would then begin on the date of the first purchase during the
90-day period. No retroactive adjustment will be made if purchases exceed the
amount indicated in the Statement. A shareholder must notify the Transfer Agent
or Distributor whenever a purchase is being made pursuant to a Statement.
The Statement is not a binding obligation on the investor to purchase the
full amount indicated; however, on the initial purchase, if required (or
subsequent purchases if necessary), 5% of the dollar amount specified in the
Statement will be held in escrow by the Transfer Agent in Class A shares
registered in the shareholder's name in order to assure payment of the proper
sales charge. If total purchases pursuant to the Statement (less any
dispositions and exclusive of any distributions on such shares automatically
reinvested) are less than the amount specified, the investor will be requested
to remit to the Transfer Agent an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereunder. Reinvested dividend and
capital gain distributions are not counted toward satisfying the Statement.
Reinstatement Privilege. Class A shareholders have a one time privilege of
reinstating their investment in the Fund, subject to the terms of exchange (see
"Exchange Privilege") at net asset value next determined. A written request for
reinstatement must be received by the Transfer Agent within 30 calendar days of
the redemption, accompanied by payment for the shares (not in excess of the
redemption). This privilege is subject to modification or discontinuance at any
time with respect to all shares purchased thereafter.
Exchanges for Class A shares of other Vista Funds. Class A shares of the
Fund may be obtained without an initial sales charge through exchanges for Class
A shares of other Vista Funds. See "Exchange Privilege." In addition, Class B
shareholders who have redeemed Class B shares and paid a contingent deferred
sales charge in connection with such redemption may purchase Class A shares with
no initial sales charge (in an amount not exceeding the redemption proceeds) if
the purchase occurs within 30 days of the redemption of the Class B shares.
Contingent Deferred Sales Charges--Class B Shares
The public offering price of Class B shares is the next determined net
asset value, and no initial sales charge is imposed. However, a contingent
deferred sales charge is imposed upon certain redemptions of Class B shares.
The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the net asset value of such shares at the time of
redemption by the applicable percentage shown in the table below:
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Contingent Deferred Sales
Charge as a Percentage of Net
Redemption During Asset Value at Redemption
- ------------------- -----------------------------
1st Year Since Purchase....................... 5%
2nd Year Since Purchase....................... 4%
3rd Year Since Purchase....................... 3%
4th Year Since Purchase....................... 3%
5th Year Since Purchase....................... 2%
6th Year Since Purchase....................... 1%
7th Year Since Purchase....................... 0%
Redemptions of Class B shares are not subject to a contingent deferred
sales charge to the extent that the value of such shares represents: (i) capital
appreciation of Fund assets; (ii) reinvestment of dividends or capital gain
distributions; or (iii) shares redeemed more than six years after their
purchase. In determining the applicability and rate of any contingent deferred
sales charge, it will be assumed that a redemption is made first of Class B
shares representing capital appreciation, next of shares representing the
reinvestment of dividends and capital gains distributions and finally of other
shares held by the shareholder for the longest period of time.
The holding period of Class B shares acquired through an exchange with
another Vista Fund will be calculated from the date that the Class B shares were
initially acquired in one of the other Vista Funds and those Class B shares
being redeemed will be considered to represent capital appreciation or dividend
and capital gain distribution reinvestments in other funds to the extent
applicable and then of shares held for the longest period of time. As a result,
the contingent deferred sales charge imposed should be at the lowest possible
rate. The amount of any contingent deferred sales charge imposed will reduce the
gain or increase the loss on the amount realized on redemption for purposes of
federal income taxes.
The amount of any contingent deferred sales charge will be paid to VBDS.
Sales Charge Waivers -- Class B Shares. The contingent deferred sales
charge for Class B shares will be waived for certain exchanges and for
redemptions in connection with the Fund's systematic redemption plan. In
addition, subject to confirmation of a shareholder's status, the contingent
deferred sales charge will be waived for: (i) a total or partial redemption made
within one year of the death of the shareholder; (ii) a redemption in connection
with a Minimum Required Distribution from an IRA, Keogh or custodial account
under section 403(b) of the Internal Revenue Code, (iii) redemptions made from
an IRA, Keogh or custodial account under section 403(b) of the Internal Revenue
Code through an established Systematic Redemption Plan, as discussed on page 20;
(iv) distributions from a qualified plan upon retirement; (v) a redemption
resulting from an over-contribution to an IRA; and (vi) a redemption of an
account balance under $500, as described on page 21.
Conversion of Class B Shares. A shareholder's Class B shares will
automatically convert to Class A shares (and thus be subject to the lower
expenses borne by Class A shares) in the eighth year after the date of purchase,
together with the pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares. The conversion will
be effected at the relative net asset values per share of the two classes on the
first business day of the month following the seventh anniversary of the
original purchase occurs. If any exchanges of Class B shares during the
eight-year period occurred, the holding period for the shares exchanged will be
counted toward the eight-year period. At the time of the conversion the net
asset value per share of the Class A shares may be higher or lower than the net
asset value per share of the Class B shares; as a result, depending on the
relative net asset values per share, a shareholder may receive fewer or more
Class A shares than the number of Class B shares converted.
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For further information as to how to direct a Shareholder Servicing Agent
to purchase shares of the Fund, an investor should contact his Shareholder
Servicing Agent.
The Fund reserves the right to cease offering Class B shares for sale at
any time or reject any order for the purchase of Class B shares and to cease
offering any services provided by a Servicing Agent.
Due to the conversion feature of Class B shares, certificates will not be
issued and all shares will be held in book entry form.
Redemptions
Shareholders may redeem all or any portion of the shares in their account
at any time at the net asset value next determined after a redemption request in
proper form is furnished by the shareholder to his Shareholder Servicing Agent
or Dealer and transmitted to and received by the Transfer Agent subject to any
applicable contingent deferred sales charge for Class B shares. The proceeds of
a redemption normally will be paid on the next Fund Business Day after a
redemption request has been received by the Fund, but in any event within seven
days. The forwarding of proceeds from redemption of shares which were recently
purchased by check may be delayed up to 15 days. A shareholder may redeem his
Fund shares by authorizing his Shareholder Servicing Agent, Dealer or its agent
to redeem such shares, which the Shareholder Servicing Agent, Dealer or its
agent must do on a timely basis. The signature of both shareholders is required
for any written redemption requests from a joint account. In addition, a
redemption request may be deferred for up to 15 calendar days if the Transfer
Agent has been notified of a change in either the address or the bank account
registration previously listed in the Fund's records.
Class B shares are sold without an initial sales charge but are subject to
a contingent deferred sales charge if shares are redeemed within six years of
purchase. Class B shares are redeemed in the following order: (i) shares
representing capital appreciation; (ii) shares acquired by reinvestment of
dividends and capital gains distributions; and (iii) shares purchased and held
on a first-in/first-out basis. As a result, the amount of the charge is
determined as a percentage of the lesser of the current market value or the cost
of the shares being redeemed.
If a redeeming shareholder owns shares of both Class A and Class B, unless
the shareholder specifically requests otherwise, the Class A shares will be
redeemed before any Class B shares.
The value of shares of the Fund redeemed may be more or less than the
shareholder's cost, depending on portfolio performance during the period the
shareholder owned his shares. Redemptions of shares are taxable events on which
the shareholder may recognize a gain or a loss. Although the Fund generally
retains the right to pay the redemption price of shares in kind with securities
(instead of cash), the Trust has filed an election under Rule 18f-1 under the
Investment Company Act of 1940, as amended (the "1940 Act") committing it to pay
in cash all redemptions by a shareholder of record up to the amounts specified
by the rule (approximately $250,000).
The payment of redemption requests may be wired directly to a previously
designated domestic commercial bank account or mailed to the shareholder's
address of record. For the protection of shareholders, all telephone redemption
requests in excess of $25,000 will be wired directly to such previously
designated bank account. Normally, redemption payments will be transmitted on
the next business day following receipt of the request (provided it is made
prior to 4:00 p.m. Eastern time on any day redemptions may be made). Redemption
payments requested by telephone may not be available in a previously designated
bank account for up to four days. There is a $10.00 charge for each federal
funds wire transaction. If no share certificates have been issued, a wire
redemption may be requested by telephone or wire to the Vista Service Center.
For telephone redemptions, call the Vista Service Center at (800) 34-VISTA.
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<PAGE>
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the redemption proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on such Exchange is restricted or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
Systematic Redemption Plan--Class A shares. A shareholder owning $10,000 or
more of the Class A shares of the Fund as determined by the then current net
asset value may provide for the payment monthly or quarterly of at least $100
from his account. A sufficient number of full and fractional Class A shares will
be redeemed so that the designated payment is received on approximately the 1st
day of the month following the end of the selected payment period.
Systematic Redemption Plan--Class B shares. A shareholder owning $20,000 or
more of the Class B shares of the Fund as determined by the then current net
asset value may also provide for the payment monthly or quarterly of amounts
from his account, subject to limits described below.
No contingent deferred sales charge will be imposed on such withdrawals for
Class B shares. The minimum monthly or quarterly withdrawal amounts will be $200
and $400 for Class B shares. In addition, a Class B shareholder may not withdraw
an amount exceeding 12% annually of his or her "Initial Account Value" for Class
B shares--i.e., the value of the Fund account at the time the shareholder elects
to participate in the systematic redemption plan. A Class B shareholder's
participation in the systematic redemption plan will terminate automatically if
the shareholder's Initial Account Value (adjusted upward for the net asset value
of Class B shares acquired after the election to participate in the systematic
redemption plan) less aggregate redemptions other than under the systematic
redemption plan falls below $20,000.
Redemption of Accounts at Less than $500. The Fund may redeem the shares of
any shareholder, if at such time, the aggregate net asset value of the shares in
such shareholder's account is less than $500. In the event of any such
redemption, a shareholder will receive at least 60 days notice prior to the
redemption. In the event the Fund redeems Class B shares pursuant to this
provision, no contingent deferred sales charge will be imposed.
Exchange Privilege
Shareholders may exchange, at respective net asset value, Class A and Class
B shares of the Fund for Class A and Class B shares of the other Vista Funds
which has a similar class of shares, respectively, in accordance with the terms
of the then current prospectus of the Fund being acquired. No initial sales
charge is imposed on the Class A shares being acquired, and no contingent
deferred sales charge is imposed on the Class B shares being redeemed, through
an exchange. However, contingent deferred sales charges may apply to redemptions
of Class B shares acquired through an exchange. The prospectus of the other
Vista Fund into which shares are being exchanged should be read carefully prior
to any exchange and retained for future reference. Under the Exchange Privilege,
shares of the Fund also may be exchanged for shares of such other Vista Funds
only if those Funds and their shares are registered in the states where the
exchange may legally be made. Shares of the Fund may only be exchanged into the
same class of another Vista Fund and only if the account registrations are
identical.
With respect to exchanges from any Vista money market Fund, shareholders
must have acquired their shares in such Vista money market Fund by exchange from
one of the other Funds in the Trust, or any exchange directly from one of such
money market funds will be done at relative net asset value plus the appropriate
sales charge. An exchange of Class B shares into any of the Vista money market
funds other than the Class B shares of the Prime Money Market Fund will be
treated as a redemption--and therefore subject to the conditions of the
contingent deferred sales charge--and a subsequent purchase. Class B shares of
any Vista non-money market Fund may be exchanged into the Class B shares of the
Prime Money Market Fund in order to continue the aging of the initial purchase
of such shares while maintaining a stable net asset value. This exchange will
not be subject to a
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Contigent Deferred Sales Charge unless those shares are later redeemed. The
Class B shares of the Prime Money Market Fund carry the same Distribution and
Sub-Administration Fee, and Shareholder and Fund Servicing Fee as the Class B
shares of the non-money market Funds. Redemptions of shares acquired through an
exchange will be subject to the applicable contingent deferred sales charge.
Any such exchange may create a gain or loss to be recognized for federal
income tax purposes. Normally, shares of the Fund to be acquired through an
exchange transaction are purchased on the Redemption Date, but such purchase may
be delayed by either Fund up to five business days if the Fund determines that
it would be disadvantaged by an immediate transfer of the proceeds. This
privilege may be amended or terminated at any time without notice. Arrangements
have been made for the acceptance of instructions by telephone to exchange
shares if certain preauthorizations or indemnifications are accepted and on
file. Further information and telephone exchange forms are available from the
Transfer Agent.
Market Timing. The exchange privilege is not intended as a vehicle for
short-term trading. Excessive exchange activity may interfere with portfolio
management and have an adverse effect on all shareholders. In order to limit
excessive exchange activity and other circumstances where the Trustees, or
Adviser believes doing so would be in the best interest of the Fund, the Fund
reserves the right to revise or terminate the exchange privilege, limit the
amount or number of exchanges or reject any exchange. In addition, any
shareholder who makes more than ten exchanges of shares involving a Fund in a
year or three in a calendar quarter will be charged $5.00 administration fee per
each such exchange.
General
The Fund has established certain procedures and restrictions, subject to
change from time to time, for purchase, redemption, and exchange orders,
including procedures for accepting telephone instructions and effecting
automatic investments and redemptions. The Fund's Transfer Agent may defer
acting on a shareholder's instructions until it has received them in proper
form. In addition, the privileges described in this Prospectus are not available
until a completed and signed account application has been received by the
Transfer Agent. Telephonic transaction privileges are made available to
shareholders automatically upon opening an account unless the privilege is
declined in section 6 of the Account Application. To provide evidence of
telephone instructions, the Transfer Agent will record telephone conversations
with shareholders. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. In the event the Fund does
not employ such reasonable procedures, it may be liable for losses due to
unauthorized or fraudulent instructions.
Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, the Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest account
application or other written request for services, including purchasing,
exchanging, or redeeming shares of the Fund and depositing and withdrawing
monies from the bank account specified in the Bank Account Registration section
of the shareholder's latest account application or as otherwise properly
specified to the Fund in writing. Shareholders agree to release and hold
harmless the Fund, the Adviser, the Administrator, any Shareholder Servicing
Agent or sub-agent and broker-dealer, and the officers, directors, employees and
agents thereof against any claim, liability, loss, damage and expense for any
act or failure to act in connection with Fund shares, any related investment
account, any privileges or services selected in connection with such investment
account, or any written or oral instructions or requests with respect thereto,
or any written or oral instructions or requests from someone claiming to be a
shareholder if the Fund or any of the above-described parties follow
instructions which they reasonably believe to be genuine and act in good faith
by complying with the procedures that have been established for Fund accounts
and services.
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<PAGE>
Shareholders purchasing their shares through a Shareholder Servicing Agent
may not assign, transfer or pledge any rights or interest in any Fund shares or
any investment account established with a Shareholder Servicing Agent to any
other person without the prior written consent of such Shareholder Servicing
Agent, and any attempted assignment, transfer or pledge without such consent may
be disregarded.
The Fund may require signature guarantees for changes that shareholders
request be made in Fund records with respect to their accounts, including but
not limited to changes in the bank account specified in the Bank Account
Registration, or for any written requests for additional account services made
after a shareholder has submitted an initial account application to the Fund.
The Fund may also refuse to accept or carry out any transaction that does not
satisfy any restrictions then in effect.
TAX MATTERS
The following discussion is addressed primarily to noncorporate investors
and is for general information only. A prospective investor, including a
corporate investor, should also review the more detailed discussion of federal
income tax considerations relevant to the Fund that is contained in the
Statement of Additional Information. In addition, each prospective investor
should consult with his own tax advisers as to the tax consequences of an
investment in the Fund, including the status of distributions from the Fund in
his own state and locality.
The Fund intends to qualify each year and elect to be treated as a separate
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). If the Fund is treated as a "regulated
investment company" and all of its taxable income is distributed to its
shareholders in accordance with the timing requirements imposed by the Code, it
will not be subject to federal income tax on the amounts so distributed. If for
any taxable year the Fund does not qualify for the treatment as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to its shareholders, and
such distributions will be taxable to shareholders to the extent of the Fund's
current and accumulated earnings and profits.
The Trust is organized as a Massachusetts business trust and, under current
law, is not liable for any income or franchise tax in the Commonwealth of
Massachusetts as long as the Fund (and each other series of the Trust) qualifies
as a regulated investment company under the Code.
Distributions by the Fund of its taxable ordinary income (net of expenses)
and the excess, if any, of its net short-term capital gain over its net
long-term capital loss are generally taxable to shareholders as ordinary income.
Such distributions are treated as dividends for federal income tax purposes. A
portion of the ordinary income dividends paid by the Fund with respect to a year
(which cannot exceed the aggregate amount of qualifying dividends received by
the Fund from domestic corporations during the year) may qualify for the 70%
dividends-received deductions for corporate shareholders, but any such
dividends-received deduction will not be allowed in computing a corporate
shareholder's adjusted current earnings, upon which is based a corporate
preference item which may be subject to an alternative minimum tax or to the
environmental superfund tax. Distributions by a Fund of the excess, if any, of
its net long-term capital gain over its net short-term capital loss are
designated as capital gain dividends and are taxable to shareholders as
long-term capital gains, regardless of the length of time a shareholder has held
his shares. Ordinary income dividends and capital gain dividends from the Fund
may also be subject to state and local taxes.
Investors should be careful to consider the tax implications of purchasing
shares just prior to the next dividend date of any ordinary income dividend or
capital gain dividend. Those investors purchasing shares just prior to an
ordinary income dividend or capital gain dividend will be taxed on the entire
amount of the dividend received, even though the net asset value per share on
the date of such purchase reflected the amount of such dividend.
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<PAGE>
Distributions to shareholders will be treated in the same manner for
federal income tax purposes whether received in cash or reinvested in additional
shares of the Fund. In general, distributions by the Fund are taken into account
by shareholders in the year in which they are made. However, certain
distributions made during January will be treated as having been paid by the
Fund and received by the shareholders on December 31 of the preceding year. A
statement setting forth the federal income tax status of all distributions made
(or deemed made) during the fiscal year, including any portions which constitute
ordinary income dividends (and any portion thereof which qualify for the
dividends-received deduction for corporations) and capital gain dividends, will
be sent to the Fund's shareholders promptly after the end of each year.
Any loss realized upon a taxable disposition of shares within six months
from the date of their purchase will be treated as a long-term capital loss to
the extent of any capital gain dividends received on such shares. All or a
portion of any loss realized upon a taxable disposition of shares of the Fund
may be disallowed if other shares of the Fund are purchased within 30 days
before or after such disposition.
Under the backup withholding rules of the Code, certain shareholders may be
subject to 31% withholding of federal income tax on distributions and redemption
payments made by the Fund. Generally, shareholders are subject to backup
withholding if they have not provided the Fund with a correct taxpayer
identification number and certain required certifications.
No gain or loss will be recognized by a shareholder as a result of a
conversion from Class B shares to Class A shares.
OTHER INFORMATION CONCERNING SHARES OF THE FUND
Net Asset Value
The net asset value of a class of shares of the Fund is determined as of
the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern
time) on each Fund Business Day, by dividing the net assets attributable to that
class by the number of its shares outstanding in that class. Values of assets in
the Fund's portfolio are determined on the basis of their market or other fair
value, as described in the Statement of Additional Information. A share's net
asset value is effective for orders received by a Shareholder Servicing Agent
prior to its calculation and received by the Distributor prior to the close of
business, usually 4:00 p.m. Eastern time, on the Fund Business Day on which such
net asset value is determined.
The per share net asset value of Class B shares of the Fund will generally
be lower than that of the Class A shares because of the higher expenses borne by
the Class B shares; however these net asset values will tend to converge
immediately after the payment of dividends.
Net Income, Dividends and Capital Gain Distributions
Substantially all of the net income from dividends and interest (if any) of
the Fund is paid to its shareholders quarterly (in the months of March, June,
September and December) as a dividend. The net investment income attributable to
a class of shares consists of the allocated dividends and interest income earned
on its portfolio, less allocated expenses. The Fund will distribute its net
realized short-term and long-term capital gains, if any, to its shareholders
annually after the close of its fiscal year. Dividends paid on Class A and Class
B shares are calculated at the same time and in the same manner. In general,
dividends on Class B shares are expected to be lower than those on Class A
shares due to the higher distribution expenses, and certain other expenses borne
by the Class B shares. Dividends may also differ between classes as a result of
differences in other class specific expenses.
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<PAGE>
The Fund will also make additional distributions to the extent necessary to
avoid application of the 4% nondeductible excise tax on certain undistributed
income and net capital gains imposed by Section 4982 of the Code.
Subject to the policies of the shareholder's Shareholder Servicing Agent, a
shareholder of either class may elect to receive dividends and capital gains
distributions from the Fund in either cash or additional shares of that class.
Distribution Plans and Distribution and Sub-Administration Agreement
The Trustees have adopted Distribution Plans (the "Distribution Plans") for
both Class A and Class B shares in accordance with Rule 12b-1 under the 1940
Act, after having concluded that there is a reasonable likelihood that the
Distribution Plans for each class will benefit that class and its respective
shareholders.
The Class A Distribution Plan provides that the Fund shall pay distribution
fees including payments to the Distributor, at an annual rate not to exceed
0.20% of its average daily net assets for distribution services. The Class B
Distribution Plan provides that the Fund shall pay distribution fees including
payments to the Distributor, at an annual rate not to exceed 0.75% of its averge
annual net assets for distribution services. Some payments under the
Distribution Plans may be used to compensate broker-dealers with trail or
maintenance commissions in amounts not to exceed 0.20% annualized of the average
net asset value of Class A shares, or 0.25% of the annualized average net asset
value of the Class B shares maintained in the Fund by such broker-dealers'
customers. Trail or maintenance commissions on Class B shares will be paid to
Broker-Dealers beginning in the 13th month following the purchase of such Class
B shares. The distribution fees are not directly tied to expenses; therefore,
the amount of distribution fees paid by the Fund during any year may be more or
less than actual expenses incurred pursuant to the Distribution Plans. For this
reason, this type of distribution fee arrangement is characterized by the staff
of the Securities and Exchange Commission as being of the "compensation variety"
(in contrast to "reimbursement" arrangements such as those described in the next
paragraph, by which a distributor's compensation is directly linked to its
expenses). With respect to Class B shares, because of the 0.75% annual
limitation on the compensation paid to the Distributor during a fiscal year,
compensation relating to a large portion of the commissions attributable to
sales of Class B shares in any one year will be paid by the Fund to the
distributor in fiscal years subsequent thereto. In determining whether to
purchase Class B shares, investors should consider that daily compensation
payments could continue until the Distributor has been reimbursed for the
commissions paid on sales of Class B shares.
Each class of shares is entitled to exclusive voting rights with respect to
matters concerning its Distribution Plan.
Under its Distribution Plan, the Class A shares are also permitted to pay
an additional fee at an annual rate not to exceed 0.05% of its average daily net
assets in anticipation of, or as reimbursement for, expenses incurred in
connection with print or electronic media advertising in connection with the
sale of Fund shares. As of the date of this Prospectus, no such expenses have
been incurred and no amounts have been paid by the Fund pursuant to this
provision. However, if such expenses are incurred in the future, the maximum
compensation paid by the Class A shares under the Class A Distribution Plan
would be at an annual rate of 0.25% of its average daily net assets.
The Distribution and Sub-Administration Agreement dated April 2, 1990, as
amended June 1, 1990 and September 30, 1993 (the "Distribution Agreement"),
provides that the Distributor will act as the principal underwriter of the
Fund's shares and bear the expenses of printing, distributing and filing
prospectuses and statements of additional information and reports used for sales
purposes, and of preparing and printing sales literature and advertisements not
paid for by the Distribution Plans. In addition, the Distributor will provide
certain sub-administration services, including providing officers, clerical
staff and office space. The Distributor currently receives a fee for
sub-administration from the Fund at an annual rate equal to 0.05% of the Fund's
average daily net assets, on an annualized basis for the Fund's then-current
fiscal year. Other funds which have investment
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objectives similar to those of the Fund, but which do not pay some or all of
such fees from their assets, may offer a higher return, although investors
would, in some cases, be required to pay a sales charge or a redemption fee.
The Distributor has agreed to use a portion of its distribution and
sub-administration fee to pay for certain expenses of the Fund incurred in
connection with organizing new series of the Trust and certain other ongoing
expenses of the Trust. The Distributor may, from time to time, waive all or a
portion of the fees payable to it under the Distribution Agreement.
Expenses
The expenses of each of the Funds of the Trust include the compensation of
its Trustees; registration fees; interest charges; taxes; fees and expenses of
independent accountants, of legal counsel and of any transfer agent, custodian,
registrar or dividend disbursing agent of the Trust; insurance premiums; and
expenses of calculating the net asset value of, and the net income on, the
shares of the Fund.
The Fund will pay all of its pro rata share of the foregoing expenses of
the Trust, including membership dues in the Investment Company Institute,
administrative fees payable under the Fund's Administration Agreement, and
sub-administration fees payable under the Distribution and Sub-Administration
Agreement. In addition, each class will pay those expenses allocable to the
class, including: shareholder servicing fees and expenses; expenses of
preparing, printing and mailing prospectuses, reports, notices, and proxy
statements to shareholders and government offices or agencies; expenses of
shareholder meetings; expenses relating to the registration and qualification of
shares of the particular class and the preparation, printing and mailing of
prospectuses for such purposes (except that the Distribution and
Sub-Administration Agreement requires the Distributor to pay for prospectuses
which are to be used for sales to prospective investors).
Description of Shares, Voting Rights and Liabilities
Mutual Fund Group is an open-end management investment company organized as
a Massachusetts business trust under the laws of the Commonwealth of
Massachusetts in 1987. The Trust has reserved the right to create and issue
additional series and classes. Each share of a series or class, including Class
A and Class B, represents an equal proportionate interest in that series or
class with each other share of that series or class. The shares of each series
or class participate equally in the earnings, dividends and assets of the
particular series or class. Shares have no pre-emptive or conversion rights.
Shares when issued are fully paid and non-assessable, except as set forth below.
Shareholders are entitled to one vote for each whole share held, and each
fractional share shall be entitled to a proportionate fractional vote, except
that Trust shares held in the treasury of the Trust shall not be voted. Shares
of Class A and Class B generally vote separately, for example to approve
distribution plans but vote together, to the extent required under the 1940 Act,
in the election or selection of Trustees and independent accountants. With
respect to shares purchased through a Shareholder Servicing Agent and, in the
event written proxy instructions are not received by the Fund or its designated
agent prior to a shareholder meeting at which a proxy is to be voted and the
shareholder does not attend the meting in person, the Shareholder Servicing
Agent for such shareholder will be authorized pursuant to an applicable
agreement with the shareholder to vote the shareholder's outstanding shares in
the same proportion as the votes cast by other Fund shareholders represented at
the meeting in person or by proxy.
The Trust is not required to hold annual meetings of shareholders but will
hold special meetings of shareholders of Class A or Class B or of all series or
classes when in the judgment of the Trustees it is necessary or desirable to
submit matters for a shareholder vote. A Trustee of the Trust may, in accordance
with certain rules of the Securities and Exchange Commission, be removed from
office when the holders of record of not less than two-thirds of the outstanding
shares either present a written declaration to the Funds' Custodian or vote in
person or by proxy at a meeting called for this purpose. In addition, the
Trustees will promptly call a meeting of
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<PAGE>
shareholders to remove a trustee(s) when requested to do so in writing by record
holders of not less than 10% of all outstanding shares of the Trust. Finally,
the Trustees shall, in certain circumstances, give such shareholders access to a
list of the names and addresses of all other shareholders or inform them of the
number of shareholders and the cost of mailing their request. The Trust's
Declaration of Trust provides that, at any meeting of shareholders, a
Shareholder Servicing Agent may vote any shares as to which such Shareholder
Servicing Agent is the agent of record and which are otherwise not represented
in person or by proxy at the meeting, proportionately in accordance with the
votes cast by holders of all shares of the same portfolio otherwise represented
at the meeting in person or by proxy as to which such Shareholder Servicing
Agent is the agent of record. Any shares so voted by a Shareholder Servicing
Agent will be deemed represented at the meeting for purposes of quorum
requirements. Shareholders of each series or class, including Class A and Class
B would be entitled to share pro rata in the net assets of that series or class
available for distribution to shareholders upon liquidation of the Fund or that
series or class.
The Trust reserves the right to create and issue a number of series of
shares, in which case the shares of each series would participate equally in the
earnings, dividends and assets of the particular series (except for differences
among any classes of shares of any series).
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
SHAREHOLDER SERVICING AGENTS, TRANSFER AGENT AND CUSTODIAN
Shareholder Servicing Agents
The shareholder servicing agreement with each Shareholder Servicing Agent
provides that such Shareholder Servicing Agent will, as agent for its customers
perform various services, including but not limited to the following: answer
customer inquiries regarding account status and history, the manner in which
purchases and redemptions of shares may be effected for the Fund as to which the
Shareholder Servicing Agent is so acting and certain other matters pertaining to
the Fund; assist shareholders in designating and changing dividend options,
account designations and addresses; provide necessary personnel and facilities
to establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by a Shareholder Servicing Agent) quarterly and year-end
statements and confirmations of purchases and redemptions; transmit, on behalf
of the Fund, proxy statements, annual reports, updated prospectuses and other
communications to shareholders of the Fund; receive, tabulate and transmit to
the Fund proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as the Fund or
a shareholder may request. For performing these services, each Shareholder
Servicing Agent receives certain fees, which may be paid periodically,
determined by a formula based upon the number of accounts serviced by such
Shareholder Servicing Agent during the period for which payment is being made,
the level of activity in accounts serviced by such Shareholder Servicing Agent
during such period, and the expenses incurred by such Shareholder Servicing
Agent. The fees relating to acting as liaison to shareholders and providing
personal services to shareholders will not exceed, on an annual basis, 0.25% of
the average daily net assets of each class of the Fund represented by shares
owned during the period for which payment is being made by investors for whom
such Shareholder Servicing Agent maintains a servicing relationship. Each
Shareholder Servicing Agent may, from time to time, voluntarily waive all or a
portion of the fees payable to it. In addition, Chase may provide other related
services to the Fund for which it may receive compensation.
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<PAGE>
The Shareholder Servicing Agent, and its affiliates, agents and
representatives acting as Shareholder Servicing Agents, may establish custodial
investment accounts ("Accounts"), known as Chase Investment Accounts or by any
other name designated by a Shareholder Servicing Agent. Through such Accounts,
customers can purchase, exchange and redeem Class A or Class B shares, receive
dividends and distributions on Fund investments, and take advantage of any
services related to an Account offered by such Shareholder Servicing Agent from
time to time. All Accounts and any related privileges or services shall be
governed by the laws of the State of New York, without regard to its conflicts
of laws provisions.
The Glass-Steagall Act and other applicable laws generally prohibit
federally chartered or supervised banks from publicly underwriting or
distributing certain securities, such as the Fund's shares. The Trust, on behalf
of the Fund, will engage banks, including the Adviser, as Shareholder Servicing
Agents, only to perform advisory, custodial, administrative and shareholder
servicing functions as described above. While the matter is not free from doubt,
Trust management believes that such laws should not preclude a bank, including a
bank which acts as investment adviser, custodian or administrator, or in all
such capacities, for the Fund, from acting as a Shareholder Servicing Agent.
However, possible future changes in federal law or administrative or judicial
interpretations of current or future law, could prevent a bank from continuing
to perform all or part of its servicing activities. If that occurred, the bank's
shareholder clients would be permitted to remain Fund shareholders and
alternative means for continuing the servicing of such shareholders would be
sought. In such event, changes in the operation of the Fund might occur and a
shareholder serviced by such bank might no longer be able to avail himself of
any automatic investment or other services then being provided by such bank. The
Fund does not expect that shareholders would suffer any adverse financial
consequences as a result of these occurrences.
Transfer Agent and Custodian
DST Systems, Inc. ("DST") acts as transfer agent and dividend disbursing
agent (the "Transfer Agent") for the Fund. In this capacity, DST maintains the
account records of all shareholders in the Funds, including statement
preparation and mailing. DST is also responsible for disbursing dividend and
capital gain distributions to shareholders, whether taken in cash or additional
shares. From time to time, DST and/or the Fund may contract with other entities
to perform certain services for the Transfer Agent. For its services as Transfer
Agent, DST receives such compensation as is from time to time agreed upon by the
Trust and DST. DST's address is 127 W. 10th Street, Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the Fund for which Chase receives compensation as is from time to time
agreed upon by the Trust and Chase. The Custodian's responsibilities include
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, determining income and collecting interest
on the Fund's investments, maintaining books of original entry for portfolio and
Fund accounting and other required books and accounts, and calculating the daily
net asset value of shares of the Fund. Portfolio securities and cash may be held
by sub-custodian banks if such arrangements are reviewed and approved by the
Trustees. The internal division of Chase which serves as the Fund's Custodian
does not determine the investment policies of the Fund or decide which
securities will be bought or sold on behalf of the Fund or otherwise have access
to or share material inside information with the internal division that performs
advisory services for the Fund.
Tax-Sheltered Retirement Plans
Shares of the Fund are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, Profit-Sharing, and
Money Purchase Pension Plans which can be adopted by self-employed persons
("Keogh") and by corporations, 401(k) and 403(b) Retirement Plans. Call or write
the Vista Service Center for more information.
-28-
<PAGE>
YIELD AND PERFORMANCE INFORMATION
From time to time, the Fund may use hypothetical investment examples and
performance information in advertisements, shareholder reports or other
communications to shareholders. Because such performance information is based on
historical earnings, it should not be considered as an indication or
representation of the performance of any classes of the Fund in the future. From
time to time, the performance and yield of classes of the Fund may be quoted and
compared to those of other mutual funds with similar investment objectives,
unmanaged investment accounts, including savings accounts, or other similar
products and to stock or other relevant indices or to rankings prepared by
independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, the performance of the Fund or its
classes may be compared to data prepared by Lipper Analytical Services, Inc. or
Morningstar Mutual Funds on Disc, widely recognized independent services which
monitor the performance of mutual funds. Performance and yield data as reported
in national financial publications including, but not limited to, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in local or regional publications, may also be used in comparing the performance
and yield of the Fund or its classes. Additionally, the Fund may, with proper
authorization, reprint articles written about the Fund and provide them to
prospective shareholders.
The Fund may provide period and average annualized "total rates of return."
The "total rate of return" refers to the change in the value of an investment in
the Fund over a period (which period shall be stated in any advertisement or
communication with a shareholder) based on any change in net asset value per
share including the value of any shares purchased through the reinvestment of
any dividends or capital gains distributions declared during such period. Period
total rates of return may be annualized. An annualized total rate of return
assumes that the period total rate of return is generated over a 52-week period,
and that all dividends and capital gains distributions are reinvested;
annualized total rates of return will be slightly higher than period total rates
of return (if the periods are shorter than one year) because of the compounding
effect of the assumed reinvestment. For Class A shares the annual total rate of
return and yield figures will assume payment of the maximum initial sales load
at the time of purchase. For Class B shares, the average annual total rate of
return figures will assume deduction of the applicable contingent deferred sales
charge imposed on a total redemption of shares held for the period. One-,
fiveand ten- year periods will be shown, unless the class has been in existence
for a shorter period.
The Fund may provide annualized "yield" quotations in addition to total
rate of return quotations. The annualized "yield" quotations of the Fund will be
based on net investment income and refer to the income generated by an
investment in the Fund over a stated period (which period shall be stated in any
advertisement or communication with a shareholder). The "yield" is then
"annualized" by assuming that the income generated over the period will be
generated over a 52-week period. A "yield" quotation, unlike a total rate of
return quotation, does not reflect changes in net asset value.
Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the yield and the net asset value of classes of shares
of the Fund will vary based on interest rates, the current market value of the
securities held in the Fund's portfolio and changes in the Fund's expenses. The
Adviser, the Shareholder Servicing Agent, the Administrator or the Distributor
have all voluntarily agreed to waive a portion of their fees on a month-to-month
basis. In addition, the Distributor may assume a portion of the Fund's operating
expenses on a month-to-month basis. These actions have the effect of increasing
the net income (and therefore the yield and total rate of return) of the Fund
classes of shares during the period such waivers are in effect. These factors
and possible differences in the methods used to calculate the yields and total
rates of return should be considered when comparing the yields or total rates of
return of the classes of shares of the Fund to yields and total rates of return
published for other investment companies and other investment vehicles
(including different classes of shares). The Fund is advised that certain
Shareholder Servicing Agents may credit to the accounts of their customers from
whom they are already receiving other fees amounts not exceeding the Shareholder
Servicing Agent fees received (see "Purchases and Redemptions of Shares --
Purchases"), which will have the effect of increasing
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<PAGE>
the net return on the investment of customers of those Shareholder Servicing
Agents. Such customers may be able to obtain through their Shareholder Servicing
Agents quotations reflecting such increased return. See the Statement of
Additional Information for further information concerning the calculation of the
yields or total rates of return quotations for the classes of shares of the
Fund.
The Fund generally will include performance data for both classes of Fund
shares in any advertisements or promotional materials including Fund performance
data.
Other Information
The Statement of Additional Information contains more detailed information
about the Trust and the Fund, including information related to (i) the Fund's
investment policies and restrictions, (ii) risk factors associated with Fund's
policies and investments, (iii) the Trust's Trustees, officers and the
Administrator and the Adviser, (iv) portfolio transactions, (v) the Funds'
shares, including rights and liabilities of shareholders, and (vi) additional
performance information, including the method used to calculate yield or total
rate of return quotations of the Fund. The audited financial statements of the
Fund are incorporated by reference in the Statement of Additional Information:
Portfolio of Investments at October 31, 1994, Statement of Assets and
Liabilities at October 31, 1994, Statement of Operations for the year ended
October 31, 1994, Statement of Changes for each of the 2 periods ended October
31, 1994 and Per Share Data and Ratios for each of the 2 periods ended October
31, 1994.
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<PAGE>
APPENDIX A
Description of Futures Contracts and Options Thereon
Futures Contracts. A futures contract is a bilateral agreement providing
for the purchase and sale of a specified type and amount of a financial
instrument, or, in the case of futures contracts on indexes of securities, for
the making and acceptance of a cash settlement, at a stated time in the future
for a fixed price. By its terms, a futures contract provides for a specified
settlement date on which, in the case of the majority of interest rate futures
contracts, the fixed income securities underlying a contract are delivered by
the seller and paid for by the purchaser, or on which, in the case of a stock
index futures contract, an amount equal to a dollar amount multiplied by the
difference between the value of a stock index at the close of the last trading
day of the contract and the value of such index at the time the futures contract
was originally entered into is settled between the purchaser and seller in cash.
The purchase or sale of a futures contract differs from the purchase or sale of
a security in that no purchase price is paid or received at the time the
contract is entered into. Instead, an amount of cash or cash equivalents, the
value of which may vary but is generally equal to 2% or less of the value of the
contract, must be deposited with the broker as initial deposit or "margin".
Subsequent payments to and from the broker, referred to as "variation margin",
are made on a daily basis as the value of the index underlying the futures
contract fluctuates, making positions in the futures contract more or less
valuable, a process known as "marking to the market".
At any time prior to the expiration of a futures contract, a trader may
elect to close out its position by taking an opposite position, subject to the
availability of a secondary market, which will operate to terminate the initial
position. At that time, a final determination of variation margin is made and
any loss experienced by a party is required to be paid to the exchange clearing
corporation, while any profit due to a party must be delivered to it.
Futures contracts differ from options (which are described below) in that
they are bilateral agreements, with both the purchaser and the seller equally
obligated to complete the transaction. Futures contracts call for settlement
only on the expiration date, and cannot be "exercised" at any other time during
their term.
Options on Futures Contracts. An option on a futures contract gives the
purchaser (the "holder") the right, but not the obligation, to enter into a
"long" position in the underlying futures contract (i.e., a purchase of such
futures contract) in the case of an option to purchase (a "call" option), or a
"short" position in the underlying futures contract (i.e., a sale of such
futures contract) in the case of an option to sell (a "put" option), at a fixed
price (the "strike price") up to a stated expiration date. The holder pays a
non-refundable purchase price for the option, known as the "premium". The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although this entire amount may be lost.
Upon exercise of the option by the holder, the exchange clearing corporation
establishes a corresponding short position for the seller (the "writer") of the
option in the case of a call option, or a corresponding long position in the
case of a put option. In the event that an option is exercised, the parties will
be subject to all the risks associated with the trading of futures contracts,
such as payment of variation margin deposits. In addition, the writer of an
option on a futures contract, unlike the holder, is subject to initial and
variation margin requirements on the option position.
An option, whether based on a futures contract, a stock index or an equity
security, becomes worthless to the holder when it expires. A position in an
option may be terminated by the purchaser or seller prior to expiration by
effecting a closing purchase or sale transaction subject to the availability of
a secondary market, which is the purchase or sale of an option of the same
series (i.e., the same exercise price and expiration date) as the option
previously purchased or sold. The difference between the premiums paid and
received represents the party's profit or loss on the transaction.
A-1
<PAGE>
APPENDIX B
Description of Ratings*
The ratings of Moody's and Standard & Poor's represent their opinions as to
the quality of various debt securities. It should be emphasized, however, that
ratings are not absolute standards of quality. Consequently, debt securities
with the same maturity, coupon and rating may have different yields while debt
securities of the same maturity and coupon with different ratings may have the
same yield.
Description of Moody's four highest debt securities ratings:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal and security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Description of Standard & Poor's four highest debt securities ratings:
AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing
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* As described by the rating agencies. Ratings are generally given to
securities at the time of issuance. While the rating agencies may from time
to time revise such ratings, they undertake no obligation to do so.
B-1
<PAGE>
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
B-2
<PAGE>
MUTUAL FUND GROUP
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The response to this item is incorporated by reference to Item 27 of
Part C of PostEffective Amendment No. 32, filed December 28, 1995 ("Amendment
No. 32"), to the Registrant's Registration Statement on Form N-1A, filed May 11,
1987, Registration Statement No. 33-14196 (the "Registration Statement").
ITEM 16. EXHIBITS
Exhibit No.
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EX-99.1(a) Declaration of Trust, as amended. (1)
EX-99.1(b) Certificate of Amendment to Declaration of Trust dated December
14, 1995. (12)
EX-99.1(c) Certificate of Amendment to Declaration of Trust dated October
19, 1995. (12)
EX-99.1(d) Certificate of Amendment to Declaration of Trust dated July 25,
1993. (12)
EX-99.2 By-laws, as amended. (1)
EX-99.3 None
EX-99.4 Form of Mutual Fund Group IEEE Balanced Fund and Vista Balanced
Fund Plan of Reorganization (filed herewith as Exhibit A to the
Prospectus/Proxy Statement).
EX-99.5 Specimen share certificate. (1)
EX-99.6(a) Investment Advisory Agreements and Sub-Advisory Agreements (6)
EX-99.6(b) Form of Investment Advisory Agreement for Vista Small Cap Equity
Fund. (9)
EX-99.6(c) Form of Interim Investment Advisory Agreement. (12)
EX-99.6(d) Form of Proposed Investment Advisory Agreement. (12)
5
<PAGE>
Exhibit No.
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EX-99.6(e) Form of Proposed Investment Sub-Advisory Agreement between The
Chase Manhattan Bank and Chase Asset Management, Inc. (12)
EX-99.7(a) Distribution and Sub-Administration Agreement. (6)
EX-99.7(b) Distribution and Sub-Administration Agreement dated August 21,
1995. (12)
EX-99.8(a) Retirement Plan for Eligible Trustees. (12)
EX-99.8(b) Deferred Compensation Plan for Eligible Trustees. (12)
EX-99.9(a) Custodian Agreement. (1)
EX-99.9(b) Sub-Custodian Agreement. (1)
EX-99.10(a) Rule 12b-1 Distribution Plan of Vista Mutual Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
EX-99.10(b) Rule 12b-1 Distribution Plan of Vista Premier Funds including
Selected Dealer Agreement and Shareholder Service Agreement. (1)
EX-99.10(c) Rule 12b-1 Distribution Plan for each of Vista Bond Fund, Vista
Short-Term Bond Fund, Vista Equity Fund and Vista U.S. Government
Money Market Fund including Selected Dealer Agreement and
Shareholder Service Agreement. (3)
EX-99.10(d) Form of Rule 12b-1 Distribution Plan for Class B shares of the
Vista Prime Money Market Fund. (8)
EX-99.10(e) Form of Rule 12b-1 Distribution Plan for Vista Asian Oceanic
Shares Fund, Vista Japan Pacific Shares Fund, Vista U.S.
Government Securities Fund and Vista European Shares Fund. (8)
EX-99.10(f) Form of Rule 12b-1 Distribution Plan for Vista Small Cap Equity
Fund. (9)
EX-99.10(g) Proposed Rule 12b-1 Distribution Plan -- Class A Shares -- Vista
American Value Fund (including forms of Selected Dealer Agreement
and Shareholder Servicing Agreement). (12)
EX-99.10(h) Rule 12b-1 Distribution Plan -- Class B Shares (including forms
of Selected Dealer Agreement and Shareholder Servicing
Agreement). (12)
EX-99.10(i) Form of Rule 18f-3 Multi-Class Plan. (12)
6
<PAGE>
Exhibit No.
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EX-99.11 Opinion of Counsel regarding legality of issuance of shares and
other matters. (13)
EX-99.12 Opinion of Counsel on tax matters. (13)
EX-99.13(a) Transfer Agency Agreement. (1)
EX-99.13(b) Administrative Services Plan. (1)
EX-99.13(c) Shareholder Servicing Agreement of Vista Mutual Funds. (1)
EX-99.13(d) Form of Shareholder Servicing Agreement of Vista Premier Funds.
(1)
EX-99.13(e) Form of Shareholder Servicing Agreement. (12)
EX-99.13(f) Administration Agreement. (6)
EX-99.13(g) Form of Administration Agreement. (12)
EX-99.14(a) Consent of Price Waterhouse, Independent Accountants. (13)
EX-99.14(b) Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
(included in Exhibit 11 hereto).
EX-99.15 Inapplicable.
EX-99.16 Inapplicable.
EX-99.17(a) Form of Proxy. (13)
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(1) Filed as an exhibit to Amendment No. 6 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) as
filed with the Securities and Exchange Commission on March 23,
1990.
(2) Filed as an exhibit to Amendment No. 11 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) as
filed with the Securities and Exchange Commission on June 8, 1992
to register shares of the Vista Balanced Fund and IEEE Spectrum
Funds series of the Trust.
7
<PAGE>
(3) Filed as an exhibit to Amendment No. 15 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) as
filed with the Securities and Exchange Commission on October 30,
1992.
(4) Filed as an exhibit to Amendment No. 16 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
December 28, 1992.
(5) Filed as an exhibit to Amendment No. 19 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
June 30, 1993.
(6) Filed as an exhibit to Amendment No. 23 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
December 30, 1993.
(7) Filed as an exhibit to Amendment No. 24 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
February 10, 1994.
(8) Filed as an exhibit to Amendment No. 26 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
June 30, 1994.
(9) Filed as an exhibit to Amendment No. 27 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
October 3, 1994.
(10) Filed as an exhibit to Amendment No. 30 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
July 19, 1995.
(11) Filed as an exhibit to Amendment No. 31 to the Registration
Statement on Form N-1A of the Registrant (File No. 33-14196) on
November 13, 1995.
(12) Filed as an exhibit to Amendment No. 32.
(13) Filed as an exhibit to N-14 (File No. 33-_______) on January 23,
1996.
(14) Filed herewith.
Item 17. Undertakings.
(a) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of
a prospectus which is a part of this Registration
Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the
information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other
items of the applicable form.
8
<PAGE>
(b) The undersigned Registrant agrees that every prospectus
that is filed under paragraph (a) above will be filed as
part of an amendment to the Registration Statement and
will not be used until the amendment is effective, and
that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein,
and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Pre-Effective Amendment to the Registration Statement on Form
N-14 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York and the State of New York on the 8th day of March, 1996.
MUTUAL FUND GROUP
By:/s/ H. Richard Vartabedian
--------------------------
H. Richard Vartabedian
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacities and on the dates indicated.
/s/Fergus Reid,III Chairman March 8, 1996
Fergus Reid, III and Trustee
/s/William J. Armstrong Trustee March 8, 1996
William J. Armstrong
/s/John R. H. Blum Trustee March 8, 1996
John R.H. Blum
/s/Joseph J. Harkins Trustee March 8, 1996
Joseph J. Harkins
/s/Richard E. Ten Haken Trustee March 8, 1996
Richard E. Ten Haken
/s/Stuart W. Cragin, Jr. Trustee March 8, 1996
Stuart W. Cragin, Jr.
/s/Irv Thode Trustee March 8, 1996
Irv Thode
/s/H. Richard Vartabedian President March 8, 1996
H. Richard Vartabedian and Trustee
/s/Martin R. Dean Treasurer and March 8, 1996
Martin R. Dean Principal
Financial Officer
10
<PAGE>
INDEX TO EXHIBITS
Exhibit Number
- --------------
99.14(a) Consent of Price Waterhouse, LLP, Independent
Accountants.
11
EXHIBIT 99.14(a)
Consent of Price Waterhouse LLP, Independent Accountants.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information and Combined Proxy Statement/Prospectus constituting
parts of Pre-Effective Amendment No. 1 to this registration statement on Form
N-14 (the "N-14 Registration Statement") of our report dated December 11, 1995,
relating to the financial statements of Vista Balanced Fund (one of the
portfolios constituting Mutual Fund Group), appearing in the Annual Report to
Shareholders for the fiscal year ended October 31, 1995, which financial
statements are incorporated by reference in the Statement of Additional
Information constituting part of Post Effective Amendment No. 32 to the
registration statement on Form N-1A of Mutual Fund Group (the "N-1A Registration
Statement"), which is incorporated by reference in the Combined Proxy
Statement/Prospectus of the N-14 Registration Statement. We also consent to the
incorporation by reference of our report in the Prospectus and Statement of
Additional Information of the N-1A Registration Statement, the Prospectus of
which is included, and Statement of Additional Information incorporated by
reference, in the N- 14 Registration Statement.
We also consent to the incorporation by reference in the Statement of Additional
Information and Combined Proxy Statement/Prospectus constituting parts of this
N-14 Registration Statement of our report dated December 11, 1995, relating to
the financial statements of IEEE Balanced Fund (one of the portfolios
constituting Mutual Fund Group), appearing in the Annual Report to Shareholders
for the fiscal year ended October 31, 1995, which financial statements are
incorporated by reference in the Statement of Additional Information of the N-1A
Registration Statement and are incorporated by reference in the Combined Proxy
Statement/Prospectus of the N-14 Registration Statement. We also consent to the
incorporation by reference of our report in the Prospectus and Statement of
Additional Information of the N-1A Registration Statement, which Prospectus and
Statement of Additional Information are incorporated by reference in the N-14
Registration Statement.
We also consent to the references to us under the headings "Independent
Accountants" and "Financial Statements" in the N-14 Registration Statement, and
under the headings "Condensed Financial Information - Per Share Data and Capital
Changes" in the Prospectuses and "Independent Accountants" in the Statement of
Additional Information of the N-1A Registration Statement.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 8, 1996
