MUTUAL FUND GROUP
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
Dear Valued Shareholder:
As you may be aware, The Chase Manhattan Corporation ("Chase") has entered
into 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"). Pursuant to the Investment Company Act of 1940, as
amended, consummation of the Holding Company Merger will result in the
automatic termination of the investment advisory agreements between the Funds
of Mutual Fund Group (the "Trust") and The Chase Manhattan Bank, N.A. (the
"Adviser"). 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 agreements between the Adviser and the Funds. In
anticipation of the completion of the Holding Company Merger and the Bank
Merger, and to provide continuity in investment advisory services to your
Fund, we urge you to review the enclosed proxy statement. In the proxy
statement you are asked to vote on the approval of an interim and a new
advisory agreement between your Fund and the Adviser in addition to other
items intended to rationalize the management of the Funds and each Fund's
objectives, policies and restrictions.
In connection with the merger of Chase and Chemical, it has also been
proposed that the series funds of The Hanover Investment Funds, Inc., an
open-end management investment company advised by affiliates of Chemical
Bank, be merged into certain series of the Trust, subject to approval by
shareholders of the Hanover Investment Funds, Inc. In an effort to provide
continuity of operations and management, certain Directors of The Hanover
Funds, Inc. and The Hanover Investment Funds, Inc. have been nominated to
serve as Trustees of the Trust.
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 advisory fee rates in the
proposed advisory agreements.
The information below is designed to answer your questions and help you cast
your proxy as a shareholder of the Funds, and is being provided as a
supplement to, not a substitute for, your proxy materials which we urge you
carefully review.
Q. Why are the Proposals being recommended?
A. The Holding Company Merger will affect the administration of the Funds in
two ways. First, mutual funds advised by affiliates of Chemical Bank, The
Hanover Investment Funds, Inc., will be merged into certain Vista Funds,
subject to approval by Hanover shareholders. Second, as required under the
Investment Company Act of 1940, consummation of the Holding Company Merger
causes the automatic termination of the advisory contracts between each
Fund and the Adviser. Therefore, in order to ensure continuity in the
management of the Funds, shareholders are being asked to approve new
advisory contracts between the Funds and the Adviser. Further, the
management of the Funds is also taking this opportunity to modernize,
clarify and standardize certain matters relating to the Funds operations
in an effort to improve efficiency in the delivery of investment
management services to shareholders of the Vista Funds.
Q. How will the fees and expenses of the Funds be affected?
A. The annual rate of the contractual investment advisory, administrative and
distribution fees applicable to each Vista Fund will not be increased. It
is also anticipated that the actual expenses of all Funds will not
increase or be reduced. Please be assured that there are no increases to
the contractual advisory fees in the proposed advisory agreements.
<PAGE>
Q. Will there be any change in the way the Funds are managed?
A. Vista has built a reputation as one of the mutual fund industry's most
consistent performers. The Funds have no current intention of altering
their investment strategies and the proposals which request approval of
modifications to the Funds' investment objectives, policies and/or
restrictions are not expected to have any immediate effect upon the
management of the Funds. Note, however, that the Vista U.S. Government
Income Fund shareholders are being asked to approve a modification which
would expand the universe of U.S. Government securities in which the Fund
may invest.
Q. As a shareholder, what do I need to do?
A. Please read the enclosed proxy statement and vote now by completing,
signing and returning the enclosed proxy ballot form(s) in the prepaid
envelope by March 19, 1996.
YOUR VOTE IS IMPORTANT. Please read the enclosed proxy statement and vote now
by completing, signing and returning the enclosed proxy ballot form(s) in the
pre-paid envelope. If you own shares in more than one Portfolio, you will
receive a proxy card for each of your Portfolios. Please vote and return EACH
proxy card you receive. EVERY VOTE COUNTS. If you have any questions, please
call the Vista Service Center at 800-34-VISTA.
Very truly yours,
/s/ Fergus Reid
Fergus Reid
Chairman
<PAGE>
MUTUAL FUND GROUP
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
Notice of Special Meeting of Shareholders
to be held April 2, 1996
A special meeting of the shareholders of the Funds (each, a "Fund" and
collectively, the "Funds") of MUTUAL FUND GROUP (the "Trust") will be held at
10:00 a.m. (Eastern time) at 101 Park Avenue, 17th Floor, New York, New York,
on April 2, 1996, for the purposes indicated below:
The following items apply to shareholders of each Fund:
1. To approve or disapprove an interim investment advisory agreement between
each of the Funds and The Chase Manhattan Bank, N.A. (and the successor
entity thereto) (the "Adviser"), which will take effect upon the merger of
The Chase Manhattan Corporation (the parent company of the Adviser) and
Chemical Banking Corporation (to be voted on separately by the
shareholders of each Fund). No fee increase is proposed.
2. To approve or disapprove a new investment advisory agreement between each
of the Funds and the Adviser, and a sub-advisory agreement between the
Adviser and Chase Asset Management, Inc. with respect to each of the Funds
to take effect as soon as practicable after approval by shareholders (to
be voted on separately by the shareholders of each Fund). No fee increase
is proposed.
3. To elect eleven trustees to serve as members of the Board of Trustees of
the Trust.
4. To ratify the selection of Price Waterhouse LLP as independent accountants
for the 1996 fiscal year of each of the Portfolios.
5. To approve or disapprove an amendment to the Trust's Declaration of Trust.
In addition, for shareholders of all Funds, to transact such other business
as may properly come before the Meeting or any adjournment thereof.
The remaining proposals apply only to the Fund or class of shares of a Fund
indicated in italics:
With respect to the Class A shares of each of the Vista Bond Fund, Vista
Equity Income Fund, Vista U.S. Government Income Fund, Vista Equity Fund,
Vista Balanced Fund, Vista Small Cap Equity Fund and Vista Short- Term Bond
Fund only:
6. To approve or disapprove an amendment to each Fund's Class A Rule 12b-1
Distribution Plan.
With respect to all Funds other than the Vista Capital Growth Fund, Vista
Equity Fund, Vista Equity Income Fund, Vista Growth and Income Fund and Vista
Bond Fund:
7. To consider the restatement of each Fund's fundamental investment
objectives.
With respect to all Funds (except as noted below):
8. To consider the following proposals pertaining primarily to each Fund's
fundamental investment restrictions:
a. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning borrowing;
b. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning investment for the purpose of
exercising control;
c. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning the making of loans;
d. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning purchases of securities on margin;
e. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning concentration of investment;
f. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning commodities and real estate;
g. To approve or disapprove an amendment to each Fund's fundamental
investment restriction regarding investments in restricted and illiquid
securities;
3
<PAGE>
h. To approve or disapprove of a reclassification, as nonfundamental, of
each Fund's fundamental restriction concerning the use of options;
i. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning senior securities;
j. To approve or disapprove an amendment to each Fund's fundamental
investment restriction regarding short sales of securities; and
Proposal 8k applies to Vista U.S. Government Income Fund only:
k. To approve or disapprove an amendment to a fundamental investment policy
of the Vista U.S. Government Income Fund concerning the Fund's
permissible investments in government securities.
Proposals 8l-s apply to Vista Southeast Asian Fund, Vista Japan Fund and
Vista European Fund only:
l. To approve or disapprove the elimination of each Fund's fundamental
investment restriction concerning investments in other investment
companies;
m. To approve or disapprove a reclassification, as nonfundamental, of each
Fund's fundamental investment restriction concerning the mortgaging,
pledging or hypothecation of a Fund's portfolio securities;
n. To approve or disapprove an amendment to each Fund's fundamental
investment restriction concerning underwriting securities;
o. To approve or disapprove a reclassification, as nonfundamental of each
Fund's fundamental investment restrictions concerning securities of the
government of any member state of the organization for Economic
Cooperation and Development ("OECD Country");
p. To approve or disapprove the elimination of each Fund's fundamental
investment restriction concerning physical commodities and futures
contracts;
q. To approve or disapprove a reclassification, as nonfundamental, of each
Fund's fundamental investment restriction concerning securities
transactions with affiliates;
r. To approve or disapprove a reclassification, as nonfundamental, of each
Fund's fundamental investment restriction concerning securities in which
affiliates have invested; and
s. To approve or disapprove a reclassification, as nonfundamental, of each
Fund's fundamental investment restriction concerning investment in
assets that involve assumption of liability.
Proposal 8t applies to each Fund except Vista Growth and Income Fund, Vista
Capital Growth Fund, Vista Global Fixed Income Fund and Vista International
Equity Fund:
t. To approve or disapprove a proposal to adopt a new investment policy
that authorizes each Fund to invest all of its investable assets in
another investment company having substantially the same investment
objective and policies as the Fund.
Shareholders of record as of the close of business on January 22, 1996 are
entitled to receive notice of, and to vote at, the Meeting and any and all
adjournments thereof. Your attention is called to the accompanying proxy
statement.
By Order of the Board
of Trustees
/s/ Ann Bergin
Ann Bergin
Secretary
February 12, 1996
You can help avoid the necessity and expense of sending follow-up letters to
ensure a quorum by promptly returning the enclosed proxy. If you are unable
to attend the Meeting, please mark, sign, date and return the enclosed proxy
so that the necessary quorum may be represented at the meeting. The enclosed
envelope requires no postage if mailed in the United States.
<PAGE>
MUTUAL FUND GROUP
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 34-VISTA
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of MUTUAL
FUND GROUP (the "Trust"). The proxy is revocable at any time before it is
voted by sending written notice of the revocation to the Trust or by
appearing personally at the April 2, 1996 special meeting of shareholders
(the "Meeting"). The cost of preparing and mailing the notice of meeting, the
proxy card, this proxy statement and any additional proxy material insofar as
it relates to the approval of various Advisory Agreements has been or is to
be borne by The Chase Manhattan Corporation, Chemical Banking Corporation
and/or their affiliates. Insofar as such expenses relate to those portions of
the Proxy Statement concerning the amendment to the Trust's Declaration of
Trust, election of Trustees, ratification of independent accountants, and the
proposed changes to each Fund's investment objectives and policies, it is
expected that the Trust or the relevant Fund will pay all or a portion of
such expenses.The Chase Manhattan Bank, N.A. (the ("Adviser") is currently
the investment adviser to each of the Funds. Proxy solicitations will be made
primarily by mail, but may also be made by telephone, telegraph, facsimile or
personal interview conducted by certain officers or employees of the Trust,
the Adviser or its affiliates, or, if necessary, a commercial firm retained
for this purpose. In the event that the shareholder signs and returns the
proxy ballot, but does not indicate a choice as to any of the items on the
proxy ballot, the proxy attorneys will vote those shares in favor of such
proposal(s), including for the election of each person nominated to the Board
of Trustees of the Trust.
On January 22, 1996 the record date for determining shareholders entitled to
receive notice of and vote at the Meeting (the "Record Date"), the Funds had
the number of shares of beneficial interest ("Shares") outstanding set forth
below, each Share being entitled to one vote:
<TABLE>
<CAPTION>
Class A
Shares Total Shares
Fund Outstanding(1) Outstanding
- --------------------------------------------------------------
<S> <C> <C>
Vista Balanced 2,821,738.247 3,382,484.561
Vista Equity Income 900,288.893 909,288.893
Vista Growth and Income 45,480,376.903 54,115,220.153
Vista Capital Growth 21,311,946.432 29,191,842.092
Vista Equity 5,011,076.217 5,011,076.217
Vista Bond 5,450,710.416 5,450,710.416
Vista Short-Term Bond 3,645,482.064 3,645,482.064
Vista U.S. Government Income 8,957,869.950 9,912,491.441
Vista Small Cap Equity 3,613,794.713 5,547,067.318
Vista International Equity 2,153,254.286 2,748,807.457
Vista Global Fixed Income 233,076.995 274,699.602
Vista Southeast Asian 490,022.083 498,475.204
Vista Japan 368,987.819 372,216.915
Vista European 447,350.515 447,926.819
</TABLE>
- --------------
(1)For purposes of this Proxy, shares of the Vista Equity Income Fund, Vista
Equity Fund, Vista Bond Fund and Vista Short Term Bond Fund which are not
designated as to class are considered Class A shares.
Shares which represent interests in a particular Fund of the Trust vote
separately on matters which pertain only to that Fund. Similarly, Shares
which represent interests in a particular class of a Fund vote separately on
matters which pertain only to that Class of such Fund. All of the proposals
(except the election of Trustees and the proposed amendment to the
Declaration of Trust) will be voted on separately by the shareholders of each
Fund. In addition, Class A shares of certain Funds will vote separately with
respect to the matter affecting only the arrangements relating to that
specific Class (Proposal 5). Any other business which may properly come
before the meeting will be voted separately by shares of each Fund. The
holders of each share of the Trust shall be entitled to one vote for each
full share and a fractional vote for each fractional share.
Vista Growth and Income Fund, Vista Capital Growth Fund, Vista Global Fixed
Income Fund and Vista International Equity Fund (collectively, the "Feeder
Funds"), unlike many other investment companies which directly acquire and
manage their own portfolio of securities, seek to achieve their investment
objectives by investing all of their investable assets in respectively,
Growth and Income Portfolio, Capital Growth Portfolio, Global Fixed Income
Portfolio, and International Equity Portfolio, open-end management investment
companies managed by the Adviser, with investment objectives that are
identical to those of the respective Feeder Fund (collectively, the "Master
Portfolios"). In addition, other entities may invest in each Master Portfolio
(e.g., other investment companies, insurance company separate accounts and
common and commingled trust funds). Whenever the Trust is requested to vote
on matters pertaining to a Master Portfolio, the Trust will hold a meeting of
the corresponding Feeder Fund's shareholders and will cast its vote as
instructed by Feeder Fund shareholders. At this time, each of the Feeder
Funds' shareholders are being asked to cast their votes on each proposal with
respect to the Feeder Funds and to each Master Portfolio. For purposes of
this proxy, the term "Fund" shall refer to the Master Portfolio to the extent
the context requires.
A copy of each Fund's Annual Report (which contains information pertaining to
the Fund) may be obtained, without charge, by calling the Vista Service
Center, at (800) 34-VISTA.
This proxy statement and the enclosed notice of meeting and proxy card are
first being mailed to shareholders on or about February 12, 1996.
INTRODUCTION
The Meeting is being called for the following purposes.
With respect to each of the Funds: (1) to approve or disapprove an interim
investment advisory agreement (the "Interim Agreement") between each of the
Funds and the Adviser which will take effect upon the merger of The Chase
Manhattan Corporation and Chemical Banking Corporation; (2) to approve or
disapprove a new investment advisory agreement (the "New Advisory Agreement")
between each of the Funds and the Adviser (and its
<PAGE>
successor in the Bank Merger) and a Sub-Advisory Agreement between the Adviser
and Chase Asset Management, Inc. to take effect as soon as practicable after
approval by shareholders; (3) to elect eleven trustees to serve as members of
the Board of Trustees of the Trust; (4) to ratify the selection of Price
Waterhouse LLP as independent accountants for the 1996 fiscal year of each of
the Funds; (5) to approve or disapprove an amendment to the Trust's
Declaration of Trust; and to transact such other business as may properly come
before the Meeting or any adjournment thereof.
Each of the following Proposals apply only to certain Funds or classes of
shares of a particular Fund (the Funds or classes of shares to which each of
the Proposals apply are specified below and on the charts set forth below; (6)
to approve or disapprove an amendment to each Fund's Class A Rule 12b-1
Distribution Plan (Class A shares of each of the Vista Balanced Fund, Vista
Small Cap Equity Fund, Vista Equity Fund, Vista U.S. Government Income Fund,
Vista Equity Income Fund, Vista Bond Fund and Vista Short-Term Bond Fund
only); (7) to approve or disapprove a restatement of each Fund's fundamental
investment objectives (all Funds other than the Vista Capital Growth Fund,
Vista Equity Fund, Vista Equity Income Fund, Vista Growth and Income Fund and
Vista Bond Fund); and (8) to approve or disapprove amendments to each Fund's
fundamental investment restrictions (each Fund except as noted).
PROPOSAL NUMBER
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
NAME OF FUND 1 2 3 4 5 6(2) 7 8(3)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vista Balanced Fund x x x x x x x x
- -------------------------------------------------------------------------------------
Vista Equity Income Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Growth and Income Fund x x x x x x
- -------------------------------------------------------------------------------------
Vista Capital Growth Fund x x x x x x
- -------------------------------------------------------------------------------------
Vista Equity Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Bond Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Short-Term Bond Fund x x x x x x x x
- -------------------------------------------------------------------------------------
Vista U.S. Government Income Fund x x x x x x x x
- -------------------------------------------------------------------------------------
Vista Small Cap Equity Fund x x x x x x x x
- -------------------------------------------------------------------------------------
Vista International Equity Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Global Fixed Income Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Southeast Asian Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista Japan Fund x x x x x x x
- -------------------------------------------------------------------------------------
Vista European Fund x x x x x x x
- -------------------------------------------------------------------------------------
</TABLE>
- ---------
(2) Class A shares only.
(3) See subchart on next page for Proposals 8a-t.
SUBCHART FOR PROPOSALS 8a-t
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NAME OF PORTFOLIO a b c d e f g h i j k l m n o p q r s t
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Vista Balanced Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Equity Income Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Growth and Income fund x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Capital Growth Fund x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Equity Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Bond Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Short-Term Bond Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista U.S.Government Income Fund x x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Small Cap Equity Fund x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista International Equity Fund x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Global Fixed Income Fund x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Southeast Asian Fund x x x x x x x x x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista Japan Fund x x x x x x x x x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
Vista European Fund x x x x x x x x x x x x x x x x x x x
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Approval of each one of the Proposals other than the election of trustees
(Proposal 3), the ratification of accountants (Proposal 4) and the amendment
to the Declaration of Trust (Proposal 5) requires the vote of a "majority of
the outstanding voting securities," within the meaning of the 1940 Act, of
each Fund to which the proposal is applicable. The term "majority of the
outstanding voting securities" is defined under the 1940 Act to mean: (a) 67%
or more of the outstanding Shares present at the Meeting, if the holders of
more than 50% of the outstanding Shares are present or represented by proxy,
or (b) more than 50% of the outstanding Shares of the Fund, whichever is less.
The election of each nominee for election as a trustee (Proposal 3) and the
approval of the proposed amendment to the Declaration of Trust (Proposal 5)
requires the affirmative vote of a majority of all Shares of the Trust voted
at the Meeting, and the ratification of accountants (Proposal 4) requires the
vote of a majority of the Shares of each Fund present at the Meeting.
For purposes of determining the presence of a quorum and counting votes on the
matters presented, Shares represented by abstentions and "broker non-votes"
will be counted as present, but not as votes cast, at the Meeting. Under the
Investment Company Act of 1940, as amended (the "1940 Act"), the affirmative
vote necessary to approve a matter under consideration may be determined with
reference to a percentage of votes present at the Meeting, which would have
the effect of treating abstentions and non-votes as if they were votes against
the proposal.
An election of Trustees under Proposal 3, an approval of accountants under
Proposal 4 and the amendment to the Declaration of Trust would be effective
immediately. If Proposal 1 is approved, it is anticipated that the Interim
Advisory Agreement will become effective upon the occurrence of the Holding
Company Merger (and remain effective after the Bank Merger). If Proposal 2 is
approved, it is anticipated that the New Advisory Agreement and CAM, Inc.
Agreement will become effective as soon as practicable after shareholder
approval (and remain effective after the Bank Merger). If Proposals 5, 6, 7
and 8 are approved, it is anticipated that the changes effected thereby will
become effective as soon as practicable after shareholder approval.
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF AN INTERIM INVESTMENT
ADVISORY AGREEMENT BETWEEN EACH FUND
AND THE CHASE MANHATTAN BANK, N.A. (AND THE
SUCCESSOR ENTITY THERETO)
INTRODUCTION
The Chase Manhattan Bank, N.A. currently serves as each Fund's investment
adviser pursuant to a separate Investment Advisory Agreement (the "Current
Advisory Agreement") for each Fund. The Chase Manhattan Bank, N.A. is a
wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank
holding company.
On August 27, 1995, The Chase Manhattan Corporation announced its entry into
an Agreement and Plan of Merger (the "Merger Agreement") with Chemical Banking
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 have approved the Holding Company Merger, which will create
the 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 to
the Funds, The Chase Manhattan Bank, N.A., will be merged with and into
Chemical Bank, a New York State chartered bank ("Chemical Bank") (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. As of December 31, 1995, through its direct or indirect subsidiaries,
Chemical managed more than $57 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 Investment Company Act of 1940, as amended (the "1940
Act"), the Current Advisory Agreement provides for its automatic termination
upon its "assignment" (as defined in the 1940 Act). Consummation of the
Holding Company Merger may be deemed to result in an assignment of the Current
Advisory Agreement and, consequently, to terminate the Current Advisory
Agreement in accordance with its terms. Similarly, the consummation of the
Bank Merger may also be deemed to result in 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 Interim
Advisory Agreement between the Trust, on behalf of each 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 Interim 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 Interim Advisory Agreement is
3
<PAGE>
deemed to terminate as a result of the Bank Merger. Approval of Proposal 1
will also be deemed approval of such continuation of the Interim Advisory
Agreement after the Bank Merger, if applicable. EACH INTERIM ADVISORY
AGREEMENT IS IDENTICAL TO THE CURRENT ADVISORY AGREEMENT, EXCEPT FOR ITS
EFFECTIVE AND TERMINATION DATES. FOR EACH FUND, THE AGGREGATE CONTRACTUAL RATE
CHARGEABLE FOR INVESTMENT ADVISORY SERVICES WILL REMAIN THE SAME.
In connection with each Fund's approval of the Interim Advisory Agreement, the
Board considered that the terms of the Mergers do not require any change in
the Adviser's investment management or operation of the Fund, the investment
personnel managing the Fund, the shareholder services or other business
activities of the Fund, or the investment objectives of the Funds. (Note that
the shareholders of the Vista U.S. Government Income Fund are being asked to
approve a modification to such Fund's investment policy which is not related
to the mergers (see Proposal 8k).) 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 in the manner in which the Adviser
renders investment advisory services to each. If, after the Mergers, changes
in the Adviser are proposed that might materially affect its services to a
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, 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.
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 to the
Funds pursuant to an investment advisory agreement between the Adviser and the
Trust on behalf of each Fund (the "Current Advisory Agreement"). The Adviser
will serve as investment adviser to the Funds after the Holding Company Merger
under an investment advisory agreement with the Trust on behalf of each Fund
(the "Interim Advisory Agreement") which is identical in all material respects
to the Current Advisory Agreement except for its effective and termination
dates. A copy of the form of the Interim Advisory Agreement is attached hereto
as Appendix A and should be read in conjunction with the following.
The Chase Manhattan Bank, N.A. The Chase Manhattan Bank, N.A., 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 $100.2 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 $121.2 billion. As of September
30, 1995, The Chase Manhattan Corporation through various subsidiaries
provided personal, corporate and institutional investment management services
for more than $55 billion in assets, of which Chase provided investment
management services to Vista portfolios containing approximately $10.4 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. Effective upon consummation of
the Holding Company Merger, The Chase Manhattan Bank, N.A. will be a
wholly-owned subsidiary of New Chase. Upon consummation of the Bank Merger,
The Chase Manhattan Bank, a New York State chartered bank (the successor
entity to The Chase Manhattan Bank, N.A.) will continue to be a wholly-owned
subsidiary of New Chase.
The other mutual funds for which the Adviser serves as investment adviser,
their assets as of December 31, 1995, and their annual advisory fees are:
<TABLE>
<CAPTION>
Total
Assets
Advisory as of 12/31/95
Mutual Fund Trust Fee (In Millions)
- --------------------------------------------------------
<S> <C> <C>
Vista California Tax Free
Money Market 0.10% $ 42.822
Vista New York Tax Free
Money Market 0.10 438.386
Vista Tax Free Money Market 0.10 430.000
Vista U.S. Government Money
Market 0.10 2263.872
Vista Global Money Market 0.10 1715.658
Vista Federal Money Market 0.10 496.456
Vista Treasury Plus Money
Market 0.10 195.22
Vista Prime Money Market 0.10 1198.243
Vista Tax Free Income 0.30 103.047
Vista New York Tax Free
Income 0.30 110.567
Vista California
Intermediate Tax Free
Income 0.30 32.191
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Total Assets
as of
Mutual Fund Variable Advisory 12/31/95
Annuity Trust Fee (In Millions)
- ----------------------------- ------- -------------
<S> <C> <C>
International Equity
Portfolio 0.80% $2.375
Capital Growth Portfolio 0.60 4.273
Growth and Income Portfolio 0.60 3.680
Asset Allocation Portfolio 0.55 2.566
U.S. Treasury Income
Portfolio 0.50 2.320
Money Market Portfolio 0.25 2.292
</TABLE>
The Adviser also serves as adviser to the IEEE Balanced Fund series of Mutual
Fund Group which is not subject to this proxy. As of December 31, 1995, the
IEEE Balanced Fund had total assets of $11,459,000 and the Adviser is
compensated at an annual rate of 0.65% of the fund's average daily net assets.
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.
The principal executive officers and Directors of the Adviser are as follows:
Thomas G. Labreque, Chairman of the Board, Chief Executive Officer and Director.
Richard J. Boyle, Vice Chairman of the Board and Director.
Donald L. Boudreau, Vice Chairman of the Board and Director.
E. Michel Kruse, Vice Chairman of the Board and Director.
Susan V. Berresford, Director. Ms. Berresford is also an Executive Vice
President of The Ford Foundation.
M. Anthony Burns, Director. Mr. Burns is also Chairman of the Board, President
and Chief Executive Officer of Ryder System, Inc.
James L. Ferguson, Director. Mr. Ferguson is also a retired Chairman and Chief
Executive Officer of General Foods Corporation.
H. Laurance Fuller, Director. Mr. Fuller is also Chairman and Chief Executive
Officer of Amoco Corporation.
William H. Gray, III, Director. Mr. Gray is also President and Chief Executive
Officer of the United Negro College Fund, Inc.
David T. Kearns, Director. Mr. Kearns is also a retired Chairman and Chief
Executive Officer of The Xerox Corporation.
Delano E. Lewis, Director. Mr. Lewis is also the President and Chief Executive
Officer of National Public Radio.
Paul W. MacAvoy, Director. Mr. MacAvoy is also the Williams Brothers Professor
of Management Studies at the Yale School of Management.
John H. McArthur, Director. Mr. McArthur is also a Professor of the Harvard
Graduate School of Business Administration.
David T. McLaughlin, Director. Mr. McLaughlin is also Chairman of the Board
and Chief Executive Officer of The Aspen Institute.
Edmund T. Pratt, Jr., Director. Mr. Pratt is also Chairman Emeritus of Pfizer
Inc.
Henry B. Schacht, Director. Mr. Schacht is also a Member of the Board of
Directors of Cummins Engine Company, Inc.
Donald H. Trautlein, Director. Mr. Trautlein is also a retired Chairman and
Chief Executive Officer of Bethlehem Steel Corporation.
The business address of the above persons is One Chase Manhattan Plaza, New
York, New York 10081.
CURRENT AND INTERIM ADVISORY AGREEMENTS
The Current and Interim Advisory Agreements for each Fund are identical,
except for their effective and termination dates. The Current and Interim
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 Current and Interim Advisory Agreements state that the
Adviser shall, at its expense, provide to the particular Fund all office space
and facilities, equipment and clerical personnel necessary to carry out its
duties under each Advisory Agreement.
Under each of the Current and Interim 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. Each 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 Current and
Interim Advisory Agreements all other expenses of the Fund not expressly
assumed by the Adviser are paid by the 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 each Current and Interim
Advisory Agreement, each 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 each Fund. The Adviser may voluntarily agree to
waive a portion of the fees payable to it.
The Current Advisory Agreements are currently in effect until August 19, 1996
(with respect to Vista U.S. Government Income Fund, Vista Growth and Income
Fund and Vista Capital Growth Fund); December 31, 1996 (with respect to Vista
Bond Fund, Vista Short Term Bond Fund and Vista Equity Fund); August 4, 1996
(with respect to Vista Balanced Fund); May 13, 1996 (with respect to Vista
Equity Income Fund); November 17, 1996 (with respect to Small Cap Equity) and
August 11, 1996 (with respect to the Vista Southeast Asian Fund, Vista
European Fund and Vista Japan Fund); and each of the Current Advisory
Agreements continues from year to year thereafter, provided that the Agreement
is specifically approved in a manner consistent with the 1940 Act. However,
the Current Advisory Agreements may be deemed to terminate upon consummation
of the Holding Company Merger. The 1940 Act requires approval at least
annually by the Board of Trustees, including the vote of a majority of the
Trustees who are
5
<PAGE>
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 Fund. The Interim
Agreement will terminate on May 30, 1996 with respect to each Fund, unless the
applicable Fund's shareholders approve the Interim Agreement prior to such
scheduled termination date (see "Additional Information").
The Trust, on behalf of each Fund, may terminate each of the Current and
Interim 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 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 each of the Current and Interim 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, each of the Current and Interim Advisory Agreements provides
that, in the event the operating expenses of the 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 Fund imposed by the
securities laws or regulations thereunder of any state in which the shares of
the 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 Fund its
share of such excess expenses no later than the last day of the first month of
the next succeeding fiscal year.
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 any of the Funds, including outstanding
loans to such issuers which may be repaid in whole or in part with the
proceeds of securities so purchased. The Adviser 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. The Adviser 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 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 Funds. 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 or in the possession of any affiliate of the
Adviser.
Both the Current and Interim 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 Interim 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 Interim Advisory Agreement, and (2) the identical nature
of the terms and conditions, including compensation payable, contained in the
Interim Advisory Agreement as compared to the Current Advisory Agreement.
Additionally, the Board considered the benefits that would be obtained by each
Fund in maintaining continuity in the advisory services provided to it, and
determined that continuity was advantageous to the 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.
ADDITIONAL INFORMATION
Chase also serves as each Fund's administrator pursuant to a separate
Administration Agreement. Under the Administration Agreement, Chase generally
assists in all aspects of the 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 the 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 each Fund pursuant to a
Sub-Administration Agreement between the Trust, on behalf of each Fund, 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 shareholder approval, of the Interim
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 applicable Fund's shareholders to approve
the
6
<PAGE>
relevant Interim Agreement or May 30, 1996 (the "Interim Period").
As a condition to the requested exemptive relief, the Trust has undertaken in
the Application that the advisory compensation payable by any Fund during the
Interim Period will be maintained in an interest-bearing escrow account and,
with respect to each Fund, amounts in the account will be paid to Chase only
upon approval by the shareholders of the Fund of the applicable Interim
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 to ensure 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 Interim 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 Interim 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 Current Advisory Agreement
and services would be provided in the same manner, (2) because of the
relatively short time frame necessary to complete the Holding Company Merger,
there was a possibility that some or all of the Funds would not obtain the
requisite number of votes to approve the Interim Advisory Agreement prior to
the Holding Company Merger, 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 each Fund under the Interim Advisory Agreements.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of its Interim Advisory Agreement will require the affirmative vote
of a "majority of the outstanding voting securities" of the relevant Fund,
which for this purpose means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of such Fund or (2) 67% or more of the
shares of such Fund present at the meeting if more than 50% of the outstanding
shares of such Fund are represented at the meeting in person or by proxy (a
"Majority Vote"). If the shareholders of a Fund do not approve the Interim
Advisory Agreement, the consumation of the Holding Company Merger will not be
affected, the Current Advisory Agreement for that Fund will have terminated or
will terminate upon the consummation of the Holding Company Merger and the
Interim Advisory Agreement for that Fund will terminate on May 30, 1996. In
that event, if the shareholders shall not have approved new advisory
arrangements in accordance with Proposal 2, the Board will take such further
action as it may deem to be in the best interests of the Fund's shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN EACH
OF THE FUNDS AND THE CHASE MANHATTAN BANK, N.A.
(AND THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK, N.A. (AND THE
SUCCESSOR ENTITY THERETO) AND CHASE ASSET MANAGEMENT, INC.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment adviser of the Funds
(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 Adviser to the
Funds) recommended to the Board that the Trust enter into a new Investment
Advisory Agreement, on behalf of each Fund, and the Adviser (the "New Advisory
Agreement") effective as soon as practicable after the approval of
shareholders. 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
Chase 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 each Fund approve, the New
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. Approval of Proposal 2 will be deemed approval of such continuation of
the Agreements after the Bank Merger. If approved, the Agreements will become
effective as soon as practicable after the approval of shareholders.
No increase is proposed to the contractual fee rates under the New Advisory
Agreement and the Adviser, and not the Funds, will compensate CAM Inc. for its
services as Sub-Adviser. Therefore, the Funds will not bear any increase in
the contractual advisory fee rates resulting from the New Advisory Agreement
or the CAM Inc. Agreement.
While the New Advisory Agreement is described below, the discussion is
qualified by the provisions of the complete agreement, a copy of which is
attached as Appendix B. If the shareholders of a Fund do not approve this
Proposal, then Chase will continue to act, commencing on the Holding Company
Merger, as the adviser to such Fund under the terms of the Interim
7
<PAGE>
Advisory Agreement, assuming Proposal 1 is approved. If the Interim Advisory
Agreement is not approved by shareholders, the Board will consider the
appropriate course of action for the affected Fund or Funds. 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 New 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 Funds 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 New Advisory Agreements:
The New Advisory Agreement is similar in many respects to the Current Advisory
Agreement and Interim Advisory Agreement. The New 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 each 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 New Advisory Agreements, each Fund is required to pay the
Adviser a monthly fee equal to a stated percentage per annum of its average
daily net assets. These amounts are set forth below under "Fees and Fee
Waivers." Although the Board of Trustees believes this fee to be comparable to
advisory fees paid by many funds having similar objectives and policies, the
total advisory fee payable by a Fund with an advisory fee of .75% or higher is
higher than the advisory fees paid by most mutual funds.
The following summarizes certain additional aspects of the Current and New
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 Funds or to any shareholder for any losses that may
be sustained by the Funds 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 Funds bear the expenses incurred in their
operations. Both agreements provide that 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 and that
the Trust shall be responsible for all of the Funds' expenses and liabilities.
Under the Agreement, if the aggregate expenses incurred by a 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 Funds' most recent fiscal period.
A Fund may terminate the Agreement as to that 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 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 New Advisory Agreements:
The following highlights summarize some of the additional provisions which are
included in the New Advisory Agreement:
After the Bank Merger, Chase Manhattan Bank, a New York state charted bank,
the successor entity to The Chase Manhattan Bank, N.A., will be the adviser to
the Funds 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 Funds. The Chase Manhattan Bank, N.A.
will be the Adviser to the Funds until the Bank Merger.
Details Regarding the Adviser's Duties. The New 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 Funds' investment programs, the
issuers of securities and the industries in which they engage, and furnish a
continuous investment program for each 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 New 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 New 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
its obligations under the New Advisory Agreement with respect to a particular
Fund. However, the Funds will not pay any additional compensation for any
Sub-Adviser, and the Adviser will be as fully responsible to
8
<PAGE>
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.
The proposed Sub-Advisory agreement is discussed below under "Consideration
and Proposal of the CAM Inc. Agreement."
Execution of Portfolio Transactions. The New 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 Funds. 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 New 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 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.
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 New 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 Funds severally and not jointly.
Consideration and Proposal of the CAM Inc. Agreement
It is being proposed that the Adviser be permitted to utilize the services of
CAM Inc. as a sub-adviser under a proposed Investment Sub-Advisory Agreement
(the "CAM Inc. Agreement") in order to enable the Adviser to more efficiently
render advisory services to each of the Funds.
The proposed form of the CAM Inc. Agreement is attached as Exhibit C and
should be read in conjunction with the following.
The Adviser's decision to utilize the services of CAM Inc. in a sub- advisory
capacity was based on various considerations, including the Adviser's desire
to consolidate its asset management responsibilities in one entity, that the
portfolio managers which currently manage the assets of the Funds for the
Adviser will also manage the Funds as employees of CAM Inc., that CAM Inc.
provides a wide range of investment management capabilities, including the
ability to discriminate among a wide range of potential investments as part of
an investment program for each of the Funds, that risk control is integral to
its methodology, and the attractiveness of the fee structure and estimated
transaction costs that would be incurred.
Based upon the foregoing, the Adviser recommended to the Board of Trustees
that, subject to approval by the Board and such Funds' shareholders of the New
Advisory Agreement and the CAM Inc. Agreement, the Adviser enter into the CAM
Inc. Agreement with CAM Inc. In considering whether to recommend that the CAM
Inc. Agreement be approved by shareholders, the Board requested and evaluated
various information from the Adviser and CAM Inc. relevant to the Adviser's
decision. In addition, the Board considered various other factors which it
deemed to be relevant, including, but not limited to, the fact that the
managers of each Fund will continue to manage the assets of the Funds as
employees of CAM Inc., capabilities to be provided by CAM Inc., the stability
of its investment staff, the trading systems to be utilized and the potential
to minimize transaction costs, the ability to customize portfolios for the
Funds, and the Adviser's access to the various investment and research
resources of CAM Inc.
Description of the Proposed CAM Inc. Agreement
The proposed arrangement between the Adviser and CAM Inc. under the CAM Inc.
Agreement would enable the Adviser to manage the investment activities of the
Funds covered in the CAM Inc. Agreement most effectively by delegating to CAM
Inc. portfolio management duties relating to transactions in the securities
held by such Funds. With respect to the day to day management of the Funds
under the CAM Inc. Agreement, CAM Inc. would make decisions concerning, and
place all orders for, purchases and sales of securities and help maintain the
records relating to such purchases and sales. CAM Inc. 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 common control of New
Chase; provided that (i) all persons, when providing services under the CAM
Inc. Agreement, are functioning as part of an organized group of persons, and
(ii) such organized group of persons is managed at all times by authorized
officers of CAM Inc.
The Adviser and CAM Inc. would bear all expenses in connection with the
performance of their respective services under the Agreements.
As investment adviser, the Adviser would oversee the management of the Funds
under the CAM Inc. Agreement, and, subject to the general supervision of the
Board of Trustees, would make recommendations and provide guidelines to CAM
Inc. based on general economic trends and macroeconomic factors. Among the
recommendations which may be provided by the Adviser to CAM Inc. would be
guidelines and benchmarks against which the Funds would be managed. From the
fee paid by the Funds under the New Advisory Agreement to the Adviser, the
Adviser will bear responsibility for payment of sub-advisory fees to CAM Inc.
Therefore, the Funds would not bear any increase in advisory fee
9
<PAGE>
rates resulting from the New Advisory Agreement and the CAM Inc. Agreement.
The Board of Trustees of the Trust, including a majority of the Trustees who
are not interested persons of the Funds, the Adviser or CAM Inc., unanimously
approved the CAM Inc. Agreement at a meeting held on December 14, 1995. If
approved by shareholders, unless sooner terminated, the CAM Inc. Agreement
will remain in effect for two years and will thereafter continue for
successive one-year periods, provided that such continuation is specifically
approved at least annually by the Board of Trustees, or by the vote of a
"majority of the outstanding voting securities" of the Funds under the CAM
Inc. Agreement as defined under the 1940 Act and, in either case, by a
majority of the Disinterested Trustees who are not interested persons of the
Adviser or CAM Inc., by vote cast in person at a meeting called for such
purpose. The CAM Inc. Agreement is terminable at any time, without penalty, by
vote of the Board of Trustees, by the Adviser, by the vote of "a majority of
the outstanding voting securities" of the Funds under the CAM Inc. Agreement,
or by CAM Inc., upon 60 days' written notice. The CAM Inc. Agreement will
terminate automatically in the event of its assignment, as defined under the
1940 Act.
In the event that both the New Advisory Agreement and the CAM Inc. Agreement
are not approved by shareholders of any Fund, neither the New Advisory
Agreement nor the CAM Inc. Agreement will be implemented for such Funds, and
the Interim Advisory Agreement between such Funds and the Adviser will remain
in effect. If the Interim Agreement is not approved by shareholders, the Board
will consider the appropriate course of action.
Information About Chase Asset Management, Inc.
Chase Asset Management, Inc. was organized as a Delaware corporation on
September 1, 1995, and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. CAM Inc. is a wholly owned
subsidiary of The Chase Manhattan Bank, N.A., which is a wholly owned
subsidiary of The Chase Manhattan Corporation. After the completion of the
mergers, CAM Inc. will continue to be a wholly-owned subsidiary of the Adviser
which will be a wholly-owned subsidiary of New Chase. CAM Inc. is registered
with the Commission as an investment adviser and was formed for the purpose of
providing discretionary investment advisory services to institutional clients
and to consolidate Chase's investment management function. Information about
the Adviser and its affiliates is set forth above.
The principal executive officers and directors of CAM Inc. are as follows:
James W. Zeigon, Director and Chairman of the Board. Mr. Zeigon is also an
Executive Vice President of the Chase Manhattan Bank, N.A.
Mark R. Richardson, Director, President and Chief Investment Officer. Mr.
Richardson is also a Managing Director of the Chase Manhattan Bank, N.A.
Stephen E. Prostano, Director, Executive Vice President and Chief Operating
Officer. Mr. Prostano is also a Managing Director of the Chase Manhattan Bank,
N.A.
The business address of each of the foregoing individuals is 1211 Avenue of
the Americas, New York, New York 10036.
BOARD CONSIDERATIONS
In considering whether to recommend that the New Advisory Agreement and CAM
Inc. Agreement be approved by shareholders, the Board considered the nature
and quality of services to be provided by the Adviser and CAM Inc. and
comparative data as to advisory fees and expenses, and the Board requested and
evaluated such other information from Chase and Chemical which the Board
deemed to be relevant, including, but not limited to, the Adviser's ability to
select and utilize portfolio managers from its affiliates; that the rate at
which advisory fees will initially be paid to the Adviser would be identical
to the rate at which fees are now paid; and that the New Advisory Agreement
would include certain provisions designed to modernize the terms of the
agreement and reflect regulatory developments, such as those concerning "soft
dollars" and aggregation of orders under regulations and releases recently
issued by the SEC.
The Board, including a majority of the Trustees who are not interested persons
of the Funds or the Adviser ("Disinterested Trustees"), unanimously approved
the New Advisory Agreement and CAM Inc. Agreement at a meeting held on
December 14, 1995.
FEES AND FEE WAIVERS
Under the Current Advisory Agreement each Fund pays the Adviser (and under the
Interim and New Advisory Agreements, each Fund would pay the Adviser) a fee,
computed daily and paid monthly, at the annual rates set forth below as a
percentage of average daily net assets:
<TABLE>
<CAPTION>
Date of Date last
Advisory Approved by
Name of Fund Fee Contract Shareholders
- --------------------------------------------------------
<S> <C> <C> <C>
Vista Balanced .50% 8/4/92 8/25/94
Vista Equity Income .40 5/13/93 8/25/94
Vista Growth and
Income* .40 11/15/93 11/18/93*
Vista Capital
Growth* .40 11/15/93 11/18/93*
Vista Equity .40 12/31/92 8/25/94
Vista Bond .30 12/31/92 8/25/94
Vista Short-Term
Bond .25 12/31/92 8/25/94
Vista U.S.
Government Income .30 8/19/87 8/25/94
Vista Small Cap
Equity .65 11/17/94 12/18/94
Vista International
Equity* 1.00 12/21/92* 12/31/92*
Vista Global Fixed
Income* .75 12/21/92* 12/31/92*
Vista Southeast
Asian 1.00 8/11/94 10/31/95
Vista Japan 1.00 8/11/94 10/31/95
Vista European 1.00 8/11/94 10/31/95
</TABLE>
- ----------
* The Vista Growth and Income Fund, Vista Capital Growth Fund, Vista
International Equity Fund and Vista Global Fixed Income Fund invest all of
their investable assets in the Master Portfolios which actively manage the
assets. The Advisory Fee is imposed at the Master Portfolio level and the
dates reflect information relevant to the Master Portfolio.
Under the Current Advisory Agreement, the Interim Advisory Agreement and New
Advisory Agreement, the Adviser may periodically reduce all or a portion of
its advisory fee with respect
10
<PAGE>
to any Fund (or Portfolio). In the fiscal period ended October 31, 1995, the
Adviser accrued aggregate investment advisory fees, and waived such fees with
respect to each Fund (or Portfolio), as follows:
<TABLE>
<CAPTION>
Name of Fund (or Portfolio) Fees Earned Fee Waiver*
- -----------------------------------------------------------
<S> <C> <C>
Vista Balanced $ 145,295 $145,295
Vista Equity Income 44,277 35,433
Vista Growth and Income 6,815,197 0
Vista Capital Growth 3,563,194 0
Vista Equity 250,452 250,452
Vista Bond 162,618 162,618
Vista Short-Term Bond 85,353 85,353
Vista U.S. Government Income 319,705 220,998
Vista Small Cap Equity 130,401 130,401
Vista International Equity 431,019 276,302
Vista Global Fixed Income 686,268 0
Vista Southeast Asian N/A N/A
Vista Japan N/A N/A
Vista European N/A N/A
</TABLE>
Chase also serves as the Administrator to each Fund (and Portfolio). For the
fiscal period ended October 31, 1995, Chase accrued aggregated administration
fees, and waived such fees with respect to each Fund (or Portfolio), as
follows:
<TABLE>
<CAPTION>
Name of Fund (or Portfolio) Fee Earned Fee Waiver*
- ---------------------------------------------------------------
<S> <C> <C>
Vista Balanced $ 29,053 $ 29,053
Vista Equity Income 11,069 8,855
Vista Growth and Income 830,077 252,586
Vista Capital Growth 435,668 116,282
Vista Equity 62,613 62,613
Vista Bond 54,206 54,206
Vista Short-Term Bond 34,141 34,141
Vista U.S. Government Income 106,569 76,094
Vista Small Cap Equity 20,040 20,040
Vista International Equity 18,799 18,799
Vista Global Fixed Income 916 916
Vista Southeast Asian N/A N/A
Vista Japan N/A N/A
Vista European N/A N/A
</TABLE>
* This voluntary waiver and/or limitation is currently in effect but may be
terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the Administrator and the
Sub-Administrator is set forth under "Additional Information" under Proposal 1.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement and CAM Inc. Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
relevant Fund, which for this purpose means the affirmative vote of the lesser
of (1) more than 50% of the outstanding shares of such Fund or (2) 67% or more
of the shares of such Fund present at the meeting if more than 50% of the
outstanding shares of such Fund are represented at the meeting in person or by
proxy (a "Majority Vote"). If the shareholders of a Fund do not approve the
Proposed Advisory Agreement and CAM Inc. Agreement, the Adviser will continue
to manage the Fund's investments under the Interim Advisory Agreement,
assuming Proposal 1 is approved. If the Interim Agreement is not approved by
shareholders, the Board will take such further action as it may deem to be in
the best interests of the Fund's shareholders.
PROPOSAL 3
ELECTION OF TRUSTEES
It is proposed that shareholders of the Funds 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 Trustee if elected.
In connection with the Mergers, it has been proposed, subject to shareholder
approval, that the series funds of The Hanover Investment Funds, Inc., an
open-end management investment company affiliated with Chemical Bank, be
merged into certain series of the Trust. In an effort to provide continuity of
operations and management, certain Directors of The Hanover Funds, Inc. and
The Hanover Investment Funds, Inc. (collectively, "Hanover") 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 Hanover Directors.
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.
11
<PAGE>
The following are the Nominees:
<TABLE>
<CAPTION>
Year First
Principal Occupations Became
Nominee Age for the Last Five Years A Trustee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fergus Reid 63 Chairman and Chief Executive Officer, Lumelite Corporation, since 1984
971 West Road September 1985; Trustee, Morgan Stanley Funds; from January 1985
New Canaan, CT 06840 through September 1985, Director of Corporate Finance, Noyes Partners
(investment advisory firm); from 1982 through 1984, Managing
Director, Bernhard Associates (venture capital firm).
Dr. Richard E. Ten Haken 61 Former District Superintendent of Schools, Monroe No. 2 and Orleans 1984
4 Barnfield Road Counties, New York; Chairman of the Finance and the Audit and Accounting
Pittsford, NY 14534 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, Ingersoll-Rand Company. 1987
49 Aspen Way
Upper Saddle River, NJ 07458
John R.H. Blum 66 Attorney in Private Practice; formerly, partner in the law firm 1984
322 Main Street of Richards, O'Neil & Allegaert; Commissioner of Agriculture-- State
Lakeville, CT 06039 of Connecticut, 1992-1995.
*Joseph J. Harkins 64 Retired; formerly Commercial Sector Executive and Executive Vice 1990
257 Plantation Circle South President of The Chase Manhattan Bank, N.A. from 1985 through 1989.
Ponte Vedra Beach, FL 32082 He had 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 New York; formerly, Senior Investment 1992
P.O. Box 296 Officer, Division Executive of the Investment Management Division of
Beach Road The Chase Manhattan Bank, N.A., 1980 through 1991.
Hendrick's Head
Southport, ME 04576
Stuart W. Cragin, Jr. 63 Retired; formerly President, Fairfield Testing Laboratory, Inc. 1992
108 Valley Road He has previously served in a variety of marketing, manufacturing
Cos Cob, CT 06807 and general management positions with Union Camp Corp., Trinity
Paper & Plastics Corp., and Conover Industries.
Irving L. Thode 64 Retired; formerly Vice President of Quotron Systems. He has previously 1992
80 Perkins Road served in a number of executive positions with Control Data Corp.,
Greenwich, CT 06830 including President of its Latin American Operations, and General
Manager of its Data Services business.
*W. Perry Neff 68 Independent Financial Consultant; Director of North America Life Proposed
RR 1 Box 102A Assurance Co., Petroleum & Resources Corp. and The Adams Express
Weston, VT 05181 Co.: Director and Chairman of The Hanover Funds, Inc.; Director,
Chairman and President of The Hanover Investment Funds, Inc.
Roland R. Eppley, Jr. 63 Retired: formerly President and Chief Executive Officer, Eastern
105 Coventry Place States Bankcard Association Inc, (1971-1988); Director, Janel
Palm Beach Gardens, Hydraulics, Inc. and The Hanover Funds, Inc.
FL 33418
W.D. MacCallan 68 Director of The Adams Express Co., Petroleum & Resources Corp., Proposed
624 East 45th Street The Hanover Funds, Inc. and The Hanover Investment Funds, Inc.;
Savannah, GA 31405 formerly Chairman of the Board and Chief Executive Officer of The
Adams Express Co. and Petroleum & Resources Corp.
</TABLE>
- ---------
*Interested Trustee as defined under the 1940 Act. It is anticipated that as
of the date of the Holding Company Merger, Mr. Harkins will no longer be
considered an Interested Trustee.
12
<PAGE>
The Board of Trustees met seven times during the twelve months ended December
31, 1995, and each of the Trustees attended at least 75% of the meetings.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum, Cragin,
Thode, Armstrong,* Harkins, Reid, and Vartabedian.* The function of the Audit
Committee is to recommend independent auditors and monitor accounting and
financial matters. The Audit Committee met two times during the fiscal year
ended October 31, 1995.
*Interested Trustee, see above.
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 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
Balanced Income Income Growth Equity Bond
Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $241.30 $96.13 $14,393.16 $7,594.67 $540.99 $468.64
Richard E. Ten Haken, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
William J. Armstrong, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
John R.H. Blum, Trustee 190.83 62.60 9,376.63 4,955.42 352.06 305.11
Joseph J. Harkins, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
H. Richard Vartabedian,
Trustee 169.60 67.79 10,159.13 5,376.61 330.18 330.18
Stuart W. Cragin, Jr., Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
Irving L. Thode, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41
</TABLE>
<TABLE>
<CAPTION>
Short Small Global
Term U.S. Cap International 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>
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation
Accrued from
as Fund "Fund Complex"
Expenses (1)
- ------------------------------ ------------- --------------
<S> <C> <C>
Fergus Reid, III, Trustee 0 $78,456.65
Richard E. Ten Haken, Trustee 0 52,304.39
William J. Armstrong, Trustee 0 52,304.39
John R.H. Blum, Trustee 0 51,304.37
Joseph J. Harkins, Trustee 0 52,304.39
H. Richard Vartabedian,
Trustee 0 74,804.44
Stuart W. Cragin, Jr., Trustee 0 52,304.39
Irving L. Thode, Trustee 0 52,304.39
</TABLE>
- ------------
(1) Data reflects total compensation earned during the period January 1, 1995
to December 31, 1995 for service as a Trustee to all thirty-two Funds advised
by the Adviser.
13
<PAGE>
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 in the table below are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1995, 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.
<TABLE>
<CAPTION>
Highest Annual Compenstaion
Paid by All Vista Funds
Years of $40,000 $45,000 $50,000 $55,000
Service Estimated Annual Benefit Upon Retirement
- -----------------------------------------------------
<S> <C> <C> <C> <C>
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 a Fund on
whose Board the Trustee sits subject to the Trustee's election. 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: Messrs. Ten Haken,
Thode and Vartabedian.
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 and Assistant Treasurer; Vice President, BISYS Funds
Group, Inc.; 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.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The election of each of the Nominees listed above requires the affirmative
vote of a majority of all 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 1996 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 accountants 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 the
relevant Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
14
<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. 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 any item
provided that such amendment, alteration, modification or repeal does not
adversely affect 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.
Section 9.3.(a) of the Trust's Declaration of Trust currently provides "This
Declaration may be amended by Majority Shareholder Vote of the Shareholders of
the Trust or by any instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less than a
majority of the Shares of the Trust. The Trustees may also amend this
Declaration without the vote or consent of Shareholders to designate series in
accordance with Section 6.9 hereof (or to modify any provision of this
Declaration to the extent deemed necessary or appropriate by the Trustees to
reflect such designation), to change the name of the Trust, to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they may deem it necessary or advisable
to conform this Declaration to the requirements of applicable federal laws or
regulations or the requirements of the regulated investment company provisions
of the Internal Revenue Code of 1986, as amended, but the Trustees shall not
be liable for failing to do so."
If this Proposal is approved, Section 9.3.(a) will be revised to read as
follows (revised text in brackets): "This Declaration may be amended by
Majority Shareholder Vote of the Shareholders of the Trust or by any
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than a majority of the Shares of
the Trust. The Trustees may also amend this Declaration without the vote or
consent of Shareholders to designate series in accordance with Section 6.9
hereof (or to modify any provision of this Declaration to the extent deemed
necessary or appropriate by the Trustees to reflect such designation), to
change the name of the Trust, [to amend, alter, modify or repeal any provision
of this Declaration with respect to any item provided that such amendment,
alteration, modification or repeal does not adversely affect the economic
value or legal rights of a Shareholder] or if they may deem it necessary or
advisable to conform this Declaration to the requirements of applicable
federal laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code of 1986, as amended, but the
Trustees shall not be liable for failing to do so."
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.
Introduction to Proposal 6:
Proposal 6 applies to the Class A shares of each of Vista Balanced Fund, Vista
Small Cap Equity Fund, Vista Equity Fund, Vista U.S. Government Income Fund,
Vista Bond Fund, Vista Equity Income Fund and Vista Short-Term Bond Fund only.
PROPOSAL 6
APPROVAL OR DISAPPROVAL OF AN
AMENDMENT TO EACH FUND'S CLASS A RULE 12b-1
DISTRIBUTION PLAN
Introduction
For purposes of this proxy and this proposal, shares of Vista Short- Term Bond
Fund, Vista Equity Fund, Vista Bond Fund and Vista Equity Income Fund which
are not designated as to class are considered Class A shares.
The Trustees of the Trust have adopted Distribution Plans for Class A shares
of each Fund (the "Class A Distribution Plans") in accordance with Rule 12b-1
under the 1940 Act, after having concluded that there is a reasonable
likelihood that the Distribution Plans will benefit each Fund's Class A and
its shareholders.
The Proposed Form of the Class A shares Rule 12b-1 Distribution Plan is
attached as Exhibit C and should be read in conjunction with the following.
The Trust has adopted separate plans of distribution pursuant to Rule 12b-1
under the 1940 Act (a "Distribution Plan") including several Distribution
Plans on behalf of Class A Shares of certain of the Funds, which provides that
each Fund 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
15
<PAGE>
literature and other such distribution-related expenses. The Fund 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.
Each Class A Distribution Plan provides that it will continue in effect
indefinitely if such continuance is specifically approved at least annually by
a vote of both a majority of the Trustees and a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the operation of the Class A
Distribution Plan or in any agreement related to such Plan ("Qualified
Trustees"). Each Class A Distribution Plan requires that the Trust shall
provide to the Board of Trustees, and the Board of Trustees shall review, at
least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Class A Distribution Plan. Each Class A Distribution Plan
further provides that the selection and nomination of Qualified Trustees shall
be committed to the discretion of the disinterested Trustees (as defined in
the 1940 Act) then in office. The Class A Distribution Plan may be terminated
at any time by a vote of a majority of the Qualified Trustees by vote of a
majority of the outstanding voting Shares of a Fund (as defined in the 1940
Act). Each Class A Distribution Plan may not be amended to increase materially
the amount of permitted expenses thereunder without the approval of
shareholders and may not be materially amended in any case without a vote of
the majority of both the Trustees and the Qualified Trustees.
Since the Basic Distribution Fee is not directly tied to actual expenses, the
amount of Basic Distribution Fee paid by each of the Shares during any year
may be more or less than actual expenses incurred pursuant to the Distribution
Plan. For this reason, this type of distribution fee arrangement is
characterized by the staff of the SEC as being of the "compensation variety"
(in contrast to "reimbursement" arrangements, such as those described above
with respect to expenses incurred in connection with print or electronic media
advertising, by which the Distributors compensation is directly linked to its
expenses). However, the Shares are not liable for any distribution expenses
incurred in excess of the Basic Distribution Fee paid.
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 Vista Balanced Fund, Vista Small Cap Equity
Fund, Vista Equity Fund, Vista U.S. Government Income Fund, Vista Bond Fund,
Vista Equity Income Fund and Vista Short-Term Bond Fund whereby the additional
.05% fee be changed to a "compensation" fee from a "reimbursement" fee.
The Adviser has studied the current distribution methods and believes that the
Basic Distribution Fees were low in comparison to other funds offered through
similar distribution channels. Therefore, the Adviser believes the Funds are
at a competitive disadvantage insofar as sales of Fund shares are concerned.
In addition, the Adviser has determined that amounts payable under the Class A
Distribution Plans in a given year may not fully reimburse the broker-dealer
for its actual distribution-related expenses during such year. The Adviser
therefore recommended to the Trustees that they approve this increase to the
Distribution Fee to encourage broker-dealers in the sale of Fund shares.
The table below sets forth the Distribution Plan fees paid for Class A Shares
of the relevant fund for the fiscal year ended October 31, 1995 pursuant to
the current Distribution Plan.
<TABLE>
<CAPTION>
Distribution
Fees Paid
As a % Of
Distribution Average
Fees Paid Net Assets
(After (After
Waiver) Waiver)
- ----------------------- ----------- -------------
<S> <C> <C>
Vista Balanced Fund $ 48,520 0.20%
Vista Small Cap Equity
Fund 26,285 0.19
Vista Short-Term Bond
Fund 7,571 0.02
Vista Equity Income
Fund 22,139 0.20
Vista Equity Fund 100,616 0.16
Vista Bond Fund 46,919 0.09
Vista U.S. Government
Income Fund 197,001 0.20
</TABLE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The approval of a modification to each Fund's Class A Distribution Plan
requires the affirmative vote of a "majority of the outstanding voting
securities" of the Class A shares of the relevant Fund, which for this purpose
means the affirmative vote of the lesser of (1) more than 50% of the
outstanding Class A shares of such Funds or (2) 67% or more of the Class A
shares of such Fund present at the meeting if more than 50% of the outstanding
Class A shares of such Fund are represented at the meeting in person or by
proxy. If the Class A shareholders of a Fund do not approve the modification
to its Class A Distribution Plan, such Fund will continue to make payments
under the current Class A Distribution Plan.
16
<PAGE>
Introduction to Proposal 7:
Proposal 7 is applicable to Vista Southeast Asian Fund, Vista Japan Fund,
Vista European Fund, Vista International Equity Fund, Vista Global Fixed
Income Fund, Vista Balanced Fund, Vista Short-Term Bond Fund, Vista U.S.
Government Income Fund, and Vista Small Cap Equity Fund only.
PROPOSAL 7
APPROVAL OR DISAPPROVAL OF CHANGES TO
THE FUNDAMENTAL INVESTMENT OBJECTIVES
OF THE FUNDS
At a Meeting of the Board of Trustees of the Trust held on December 14, 1995,
the Trustees, including each of the Disinterested Trustees (who are not
"interested persons," within the meaning of the 1940 Act, of the Trust or the
adviser), on the recommendation of the Adviser, considered and unanimously
approved a restatement of the investment objective of certain of the Funds and
changes to certain Funds' fundamental investment policies and restrictions
(see Proposal 8).
The Adviser has evaluated the various types of Funds that comprise the Trust
and recommended to the Trustees that it would be appropriate to clarify the
investment objectives, policies and restrictions, and implement certain
changes that would provide greater flexibility and uniformity in managing the
Funds. The Trustees determined that many of the Funds' investment objectives
should be restated so as to be less restrictive.
In addition, the Trustees, based on representations from the Adviser, believe
that the risks inherent in investing in each of the respective Funds should
not change from those inherent at the present time under each Fund's current
investment objective and policies, since the Adviser has represented that none
of the proposed changes is intended or anticipated to have an immediate impact
on the day to day investment program utilized by a Fund.
The significance of an investment policy or restriction being fundamental is
that it may be changed only with the approval of shareholders. Except for each
Fund's investment objective and any investment policies or restrictions which
are specifically identified as fundamental, each Fund's investment policies
and restrictions are nonfundamental.
In the table below, the current investment objective of each Fund is set forth
in quotations in the left hand column. In each case, it is proposed that the
investment objective be restated to read as indicated in quotations in the
right hand column. In many cases, it is proposed that certain investment
policies now included within the investment objective (and which are therefore
currently fundamental) be reclassified as nonfundamental investment policies.
In each such case, the proposed nonfundamental policies and the reason for the
proposed change are indicated in the right hand column. A description of each
of these reasons is set forth below following the table. To the extent that
certain investment styles or policies which are currently included in the
investment objective are removed from the investment objective and made
nonfundamental policies, they may be changed thereafter without the approval
of shareholders.
17
<PAGE>
OBJECTIVES
Current Investment Objective
Vista Southeast Asian Fund
"to provide its shareholders with a total return on assets from long- term
growth of capital principally through a broad portfolio of equity securities
of foreign companies located in countries located throughout the Pacific and
Far East Regions, with the exception of Japan."
Proposed Investment Objective
"to provide its shareholders with a total return on assets from long- term
growth of capital."
As a non-fundamental policy, the Fund will seek to achieve its objective
"principally through investment in a broad portfolio of equity securities of
foreign companies located in countries located throughout the Pacific and Far
East Regions, with the exception of Japan."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Japan Fund
"to provide its shareholders with a total return on assets from long- term
growth of capital principally through a portfolio of equity securities of
foreign companies located throughout the Pacific and Far East Regions."
Proposed Investment Objective
"to provide its shareholders with a total return on assets from long- term
growth of capital."
As a non-fundamental policy, the Fund will seek to achieve its objective
"principally through investment in a portfolio of equity securities of
foreign companies located throughout the Pacific and Far East Regions."
Reason for proposal: flexibility.
Current Investment Objective
Vista European Fund
"to provide its shareholders with a total return on assets from long- term
growth of capital principally through a portfolio of equity securities of
companies with principal business activities in countries located throughout
Western Europe."
Proposed Investment Objective
"to provide its shareholders with a total return on assets from long- term
growth of capital."
As a non-fundamental policy, the Fund will seek to achieve its objective
"principally through investment in a portfolio of equity securities of
companies with principal business activities in countries located throughout
Western Europe."
Reason for proposal: flexibility.
Current Investment Objective
Vista International Equity Fund
"to provide a total return on assets from long-term growth of capital and
income principally derived through a broad portfolio of marketable securities
of established foreign companies organized in countries other than the United
States, and companies participating in foreign economies with prospects for
growth."
Proposed Investment Objective
"to provide a total return on assets from long-term growth of capital and
income."
As a non-fundamental policy, the Fund will seek to achieve its objective
"principally through investment in a broad portfolio of marketable securities
of established foreign companies organized in countries other than the United
States, and companies participating in foreign economies with prospects for
growth."
Reason for the proposal: flexibility
Current Investment Objective
Vista Global Fixed Income Fund
"to provide a high total return, achieving such through current income and
capital appreciation, through investment in a portfolio of high quality fixed
income securities of U.S. and foreign issuers and through transactions in
foreign currencies."
Proposed Investment Objective
"to provide a high total return through current income and capital
appreciation."
As a non-fundamental policy, the Fund will seek to achieve its objective
through "investment in a portfolio of high quality fixed income securities of
U.S. and foreign issuers and through transactions in foreign currencies."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Balanced Fund
"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."
Proposed Investment Objective
"to provide its shareholders with maximum total return through a combination
of long-term growth and capital and current income."
As a non-fundamental policy, the Fund will seek to achieve its objective
through "investment in a diversified portfolio of equity and debt securities,
including common stocks, convertible securities and government and corporate
fixed-income obligations."
Reasons for the proposal: standardization/clarification, flexibility.
18
<PAGE>
Current Investment Objective
Vista Short-Term Bond Fund
"to provide a high level of current income, consistent with preservation of
capital by investing primarily in a broad range of short-term
investment-grade bonds and other fixed income securities."
Proposed Investment Objective
"to provide a high level of current income, consistent with preservation of
capital."
As a non-fundamental policy, the Fund will seek to achieve its objective
through investment "in a broad range of short-term investment-grade bonds and
other fixed income securities."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista U.S. Government Income Fund
"to provide its shareholders with monthly dividends as well as to protect the
value of its shareholders' investment (i.e., to preserve principal) by
investing in debt obligations that are backed by the "full faith and credit"
of the U.S. Government as well as by using futures contracts on fixed income
securities or indexes of fixed income securities and options on such futures
contracts for the purpose of protecting (i.e., "hedging") the value of its
portfolio."
Proposed Investment Objective
"to provide its shareholders with monthly dividends as well as to protect the
value of its shareholders' investment."
As a non-fundamental policy, the Fund will seek to achieve its objective
through "investment in debt obligations of the U.S. Government as well as by
using futures contracts on fixed income securities or indexes of fixed income
securities and options on such futures contracts for the purpose of protecting
(i.e., "hedging") the value of its portfolio."
Reason for the proposal: flexibility.
Current Investment Objective
Vista Small Cap Equity Fund
"to provide its shareholders with long-term capital growth primarily through a
broad portfolio (i.e., at least 80% of its assets in normal circumstances) in
common stocks."
Proposed Investment Objective
"to provide its shareholders with long-term capital growth."
As a non-fundamental policy, the Fund will seek to achieve its objective by
investing "at least 80% of its total assets in equity securities and at least
65% of its total assets in equity securities of smaller companies (i.e., those
with market capitalizations of $750 million or less at the time of purchase)."
Reason for the proposal: flexibility.
In addition, the Trustees have voted in favor of changing the nonfundamental
investment objectives of Vista Capital Growth Fund, Vista Equity Fund, Vista
Equity Income Fund, Vista Growth and Income Fund and Vista Bond Fund. These
changes do not require shareholder approval.
Current Investment Objective
Vista Capital Growth Fund
"to provide its shareholders with long-term capital growth primarily through
a broad portfolio (i.e., at least 80% of its assets under normal
circumstances) of common stocks."
Proposed Investment Objective
"to provide its shareholders with long-term capital growth."
As a non-fundamental policy, the Fund will seek to achieve its objective
"primarily through investment in a broad portfolio (i.e., at least 80% of its
assets under normal circumstances) of common stocks."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Equity Fund
To provide its shareholders with long-term capital growth "primarily through
investment in a diversified portfolio of common stocks of well-known and
established companies. Dividend income, if any, is a consideration incidental
to the Equity Fund's objective of growth of capital."
Proposed Investment Objective
"to provide its shareholders with long-term capital growth."
As a non-fundamental policy, the Fund will seek to achieve its objective by
investing "primarily in a diversified portfolio of equity securities of
established companies with substantial market capitalizations."
Reasons for the proposal: standardization/clarification, flexibility.
Current Investment Objective
Vista Equity Income Fund
"obtain income by investing at least 65% of the net assets of the Fund in
income-producing equity securities."
Proposed Investment Objective
"to obtain income."
As a non-fundamental policy, the Fund will seek to achieve its objective
through "investing at least 65% of the net assets of the Fund in
income-producing equity securities."
Reasons for the proposal: standardization/clarification, flexibility.
19
<PAGE>
Current Investment Objective
Vista Growth and Income Fund
"to provide its shareholders with long-term capital appreciation and to
provide dividend income primarily through a broad portfolio (i.e., at least
80% of its assets under normal circumstances) of common stocks."
Proposed Investment Objective
"to provide its shareholders with long-term capital appreciation and to
provide dividend income."
As a non-fundamental policy, the Fund will seek to achieve its objective
"primarily through investment in a broad portfolio (i.e., at least 80% of its
assets under normal circumstances) of common stock".
Reasons for the proposal: flexibility.
Current Investment Objective
Vista Bond Fund
"to provide as high a level of income as is consistent with reasonable risk
by investing primarily in a broad range of investment-grade corporate bonds
as well as other fixed- income securities."
Proposed Investment Objective
"to provide as high a level of income as is consistent with reasonable risk."
As a non-fundamental policy, the Fund will seek to achieve its objective
"primarily through investment in a broad range of investment-grade corporate
bonds as well as other fixed-income securities."
Reasons for the proposal: standardization/clarification, flexibility
Reasons for the Proposals Regarding the Investment Objectives
It is important to bear in mind that the proposed changes to the Funds'
investment objectives generally involve a judgment only as to what should make
up a Fund's fundamental investment objective, not a judgment as to what
investment strategies, policies or restrictions should be followed in pursuing
that objective. If this proposal is approved (and subject to approval by
shareholders, as necessary), the Adviser believes that the changes will have
no immediate material effect on the way in which each Fund is managed.
The reasons for the proposals set forth above, pertaining to the respective
investment objectives of the Funds, involve similar considerations. Each of
the proposals has been made for one or more of the following reasons:
flexibility or clarification/ standardization. The following discussion
provides greater detail as to what is meant, in each case, by flexibility or
clarification/ standardization.
Flexibility. If a Fund's stated investment objective contains details as to an
investment strategy to be pursued or an investment policy to be followed, or
is otherwise more restrictive than necessary, it may impose an unnecessarily
rigid restraint on management's ability to respond to certain regulatory
developments or changes in the financial markets. In order to make any changes
to a strategy or policy included as part of a Fund's investment objective, the
Fund may need shareholder approval, which is time consuming and potentially
costly to the Fund and its shareholders. In each case, the Fund's most basic
investment objective (such as to achieve capital appreciation or to achieve a
high level of income) will not change and will continue to be fundamental,
(with respect to those funds whose investment objective is currently
fundamental) but certain strategies or policies which need not be part of the
Fund's stated investment objective will be made non-fundamental so that the
Trustees may at a future date receive and act upon recommendations of the
Adviser to change these non-fundamental policies without the necessity of a
meeting of shareholders and associated costs. In all cases described in the
proposals above, the Adviser does not anticipate that the changes will have an
immediate effect on the Fund's investment strategy, since there is no current
intention of changing stated strategy or policy. However, the Funds will have
greater flexibility to respond to future regulatory and market developments.
If changes to non- fundamental policies or restrictions are adopted by the
Trustees in the future, the Fund's prospectus and statement of additional
information will be amended to reflect any such changes and notice thereof
will be provided to shareholders.
Clarification/standardization. Some of the Funds' investment objectives
contain descriptive terms that are superfluous or ambiguous. In addition, the
terms used in some of the Fund's investment objectives differ from the
description of the terms used in the stated investment objective of a similar
Fund. The Adviser has recommended the standardization, to the extent possible,
of the description of an investment objective, or an aspect thereof, as
between Funds for which the investment objective or aspect thereof is not
intended to differ. By doing so, potential investors may be expected to have a
clearer understanding of the similarities or differences in the investment
objectives of the respective Funds.
Risk Factors: Because each of the proposals involves only a change to the
stated investment objective and is not expected to alter the fundamental
character of any Fund or any of their operations for the foreseeable future,
for each Fund, the adoption of the proposal is not expected to have any effect
on the risk factors to be considered in making or continuing an investment in
the Fund. In the future, however, the Board of Trustees may, without
shareholder approval, change a nonfundamental investment policy or restriction
in a way that may create more risk. The Fund will notify shareholders of such
changes.
20
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The restatement of the fundamental investment objective of a fund requires the
approval of a "majority of the outstanding securities" of the relevant fund,
which, for this purpose means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares of the Fund present at the meeting if more than 50% of the outstanding
shares of the Fund are represented at the meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSALS 8a-t
APPROVAL OR DISAPPROVAL OF CERTAIN CHANGES TO
THE FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE FUNDS
Introduction to Proposals 8a-t
Proposals 8a-t concern proposed changes to the current fundamental investment
restrictions ("Restrictions") of the Funds. Each of these proposals relate to
Restrictions of a Fund which are presently classified as "fundamental," which
means that they can only be changed by a vote of the majority the relevant
Fund's shareholders.
The Adviser recommended to the Trustees that it be authorized to analyze each
Fund's current Restrictions and, where practical and appropriate for each
Fund's investment objective, recommend to the Trustees whether, subject to
shareholder approval, certain changes should be adopted. Based on the
Adviser's review and recommendations, the Trustees believe that certain
changes should be implemented for each Fund. These changes fall within the
following categories:
Modification. The proposal involves a modification of certain Restrictions for
reasons outlined below.
Elimination. The proposal involves an elimination of certain Restrictions, for
reasons outlined below.
Reclassification. The proposal involves a reclassification of certain
Restrictions as nonfundamental restrictions, which could thereafter be changed
with the approval of the Trust's Board of Trustees, without a shareholder
vote.
Based on the recommendations of the Adviser, the Trustees have approved the
proposed changes and believe that they are in the best interests of the Funds
and their shareholders for the following reasons:
Standardization. Some of the Funds' Restrictions differ in form and substance
from similar restrictions of similar mutual funds currently advised by the
Adviser. Increased standardized restrictions among all Chase mutual funds will
help promote operational efficiencies and facilitate the monitoring of
portfolio compliance. In all cases, the adoption of the new or revised
restriction is not expected to have any impact on the investment techniques
employed by a Fund at this time.
Modernization. The Funds' Restrictions are derived from restrictions which
have been in effect, without changes, for many years. In connection with the
Mergers, the Adviser has recommended to all advised funds (including the
Funds) that their investment restrictions be evaluated and amended as
necessary. The Trustees, acting on the Adviser's recommendation, recommend
that each Fund should modernize its Restrictions, where appropriate, to
conform to current regulation and authorize the use of currently available
financial instruments and investment techniques.
Clarification. Some of the Funds' Restrictions contain ambiguities that, if
interpreted in a narrow way, might prevent the Fund from following the
original intent of the Restriction. Accordingly, the Trustees, acting on the
Adviser's recommendation, recommend that the Fund change the Restriction,
where appropriate, to eliminate any ambiguities. Some of these proposals
include the proposed division of a Restriction which currently covers multiple
topics into two or more distinct restrictions.
Flexibility. Several of the Funds' Restrictions are proposed to be changed so
as to allow the Funds to respond to recent and future regulatory developments
and changes in the financial markets. In addition, restrictions prohibiting
certain transactions have been or may be changed or eliminated by a federal or
state securities regulator. In order to take advantage of such changes, the
Funds would need shareholder approval, which is time consuming and costly to
the Fund and its shareholders. The Adviser believes that in most cases, the
proposed changes are not expected to have any immediate effect on the Funds'
investment strategy, since the Funds may not have a current intention of
changing their investment strategy. However, in order to give the Fund more
flexibility in responding to regulatory and market developments, the Trustees,
acting on the Adviser's recommendations, recommend changing, reclassifying or
eliminating some of the Restrictions described below so that they can be
changed by the Trustees without a shareholder vote. In the future, when
changes to nonfundamental restrictions of a Fund are adopted, the Fund's
statement of additional information will be amended to reflect the changes and
shareholders will be notified thereof.
The proposals regarding the Restrictions are presented in the Proposals 8a-t,
below, categorized by topic (e.g., borrowing, concentration, etc.). In each
case, the current Restriction is set forth in the left hand column under
"Current" and, for the Fund(s) to which the current Restriction applies, it is
proposed that the Restriction be restated, eliminated, reclassified, or
otherwise changed as indicated in the right hand column under "Proposed". In
each case, the reason for, and an explanation of, the proposed change, is set
forth below the comparison.
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<PAGE>
Introduction to Proposals 8a-j.
Proposals 8a-j each apply to each of the Funds (except as noted):
PROPOSAL 8a
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING BORROWING
Current:
No Fund may borrow money or pledge, mortgage or hypothecate its assets
(except, with respect to Vista International Equity Fund and Vista Global
Fixed Income Fund, through lending portfolio securities) and, except that, as
a temporary measure for extraordinary or emergency purposes (with respect to
all the Funds), or, with respect to Vista U.S. Government Income Fund only, by
engaging in reverse repurchase transactions, it may borrow in an amount not to
exceed 1/3 (25% for the Vista Southeast Asian Fund, Vista Japan Fund and Vista
European Fund) of the current value of its net assets, including the amount
borrowed, and may pledge, mortgage or hypothecate not more than 1/3 (10% for
the Vista Southeast Asian Fund, Vista Japan Fund and Vista European Fund) of
such assets to secure such borrowings (it is intended that money would be
borrowed by a Fund only from banks and only to accommodate requests for the
repurchase of shares of the Fund while effecting an orderly liquidation of
portfolio securities), provided that collateral arrangements with respect to a
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; no Fund will purchase investment securities if its
outstanding borrowing, including repurchase agreements, exceeds 5% of the
value of the Fund's total assets.
Proposed:
Fundamental Restriction
No Fund may borrow money, except that each Fund may borrow money for temporary
or emergency purposes, or by engaging in reverse repurchase transactions, in
an amount not exceeding 33-1/3% of the value of its total assets at the time
when the loan is made and may pledge, mortgage or hypothecate no more than 1/3
of its net assets to secure such borrowings. Any borrowings representing more
than 5% of a Fund's total assets must be repaid before the Fund may make
additional investments.
Explanation of the proposed change: The proposed amendment clarifies and
modernizes the restriction on borrowing. The proposed restriction will treat
borrowings for temporary or emergency purposes separately from other
borrowings. Borrowing may be necessary to address excessive or unanticipated
liquidations of Fund shares that exceed available cash. The proposed amendment
also would allow each Fund to enter into reverse repurchase agreements,
subject to a limitation of 33-1/3% of a Fund's assets.
Reverse repurchase agreements involve the sale of securities by a Fund with an
agreement that the Fund will repurchase such securities at an agreed upon
price and date. A Fund may employ reverse repurchase agreements when necessary
to meet unanticipated net redemptions so as to avoid liquidating portfolio
investments during unfavorable market conditions. At the time it enters into a
reverse repurchase agreement, a Fund will place in a segregated custodial
account high-quality liquid debt securities having a dollar value equal to the
repurchase price.
PROPOSAL 8b
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING INVESTMENT
FOR THE PURPOSE OF EXERCISING CONTROL
With respect to each Fund except Vista Southeast Asia Fund, Vista Japan Fund
and Vista European Fund:
Current:
No Fund may purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of such issuer to
be held by the Fund.
With respect to Vista Southeast Asia Fund, Vista Japan Fund and Vista
European Fund only:
Current:
No Fund may make investments for the purpose of exercising control or
management.
Proposed:
Nonfundamental Restriction
No Fund may, with respect to 50% (75% with respect to Vista Bond Fund, Vista
Short Term Bond Fund, Vista Equity Fund and Vista Equity Income Fund) of its
assets, hold more than 10% of the outstanding voting securities of an issuer.
Explanation of the proposed change: The proposed amendment would clarify, for
all Funds, that the restriction involving a 10% limitation on investments in
an issuer is a limitation based upon the outstanding voting securities of the
issuer as provided for in Sub- chapter M of the Internal Revenue Code and
would not be applicable outside the diversification requirements which are
applicable only
22
<PAGE>
to 50% (75% with respect to the Vista Bond Fund, Vista Short Term Bond Fund,
Vista Equity Fund and Vista Equity Income Fund) of a Fund's assets. Although
the restrictions as restated would allow the non-diversified Funds to hold a
larger portion of each Fund's assets in the outstanding voting securities of
one issuer, there is no current intention for any of the Funds to do so. The
diversified Funds would still be required to meet the additional
diversification requirements of the 1940 Act. In addition, the
reclassification as nonfundamental and restatement of the restriction would
clarify and help standardize the restriction.
PROPOSAL 8c
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE MAKING OF LOANS
Current:
The Funds are not permitted to make loans to other persons, except (i) through
the lending of their portfolio securities and provided that any such loans not
exceed 30% (20% in the case of the Vista Bond Fund, Vista Short-Term Bond Fund
and Vista Equity Fund) of a 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 a Fund's total assets will
be invested in repurchase agreements maturing in more than seven days, or
(iii) by purchasing, subject to the limitation on illiquid and restricted
securities above, 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.
Proposed:
Fundamental Restriction
No Fund may make loans, except that each Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures or other
obligations and certificates of deposit, bankers' acceptances and fixed time
deposits) in accordance with its investment objectives and policies; (ii)
enter into repurchase agreements with respect to portfolio securities; and
(iii) lend portfolio securities with a value not in excess of one-third of the
value of its total assets.
Explanation of the proposed change: The proposed amendment is intended to
clarify the basic limitation on securities lending, and would also exclude
those transactions that current regulatory interpretations and policies allow.
The investment adviser will not make loans of a Fund's portfolio securities
(or enter into repurchase agreements) unless it receives collateral that is at
least 102% of the value of the loan, including accrued interest. During the
time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities, and the Fund may invest the
cash collateral and earn additional income, or it may receive an agreed-upon
amount of interest income from the borrower who has delivered equivalent
collateral or a letter of credit. As with other extensions of credit, there
are risks of delay in recovery or even loss of rights in the collateral should
the borrower of any loaned securities fail financially.
PROPOSAL 8d
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING PURCHASES OF SECURITIES ON MARGIN
Current:
No Fund may purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be obtained as may be necessary for
the clearance of purchases and sales of securities and except that, with
respect to a Fund's permissible options and futures transactions, deposits of
initial and variation margin may be made in connection with the purchase,
ownership, holding or sale of futures or options positions.
Proposed:
Nonfundamental Restriction
No Fund may make short sales of securities, other than short sales "against
the box," or purchase securities on margin except for short-term credits
necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of a Fund.
Explanation of the proposed change: The proposed change modernizes and
clarifies the circumstances under which a Fund may make purchases on margin.
The reclassification as nonfundamental could enable the Funds to respond more
quickly to changes in financial markets.
In a short sale, an investor sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. In an investment
technique known as a short sale "against the box", an investor sells
securities short while owning the same securities in the same amount, or
having the right to obtain equivalent securities. Certain state regulations
currently prohibit mutual funds from entering into any short sales, other than
short sales against the box. If the proposal is approved, however, the Board
of Trustees would be able to change the proposed non-fundamental restriction
in the future, without a vote of shareholders, if state regulations were to
change to permit other types of short sales, or if waivers from existing
requirements were available, subject to appropriate disclosure to investors.
Although elimination of the Funds' fundamental restriction on short selling
will not affect the Funds' investment techniques at this time, in the event of
a change in state regulatory requirements, a Fund may alter its investment
practices in the future.
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PROPOSAL 8e
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING CONCENTRATION OF INVESTMENT
Current:
No Fund may concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of a Fund's investment objective, up
to 25% of its assets at market value at the time of each investment, may be
invested in any one industry, except that this restriction does not apply to
U.S. Government securities (in addition, so long as a single foreign
government or supra-national organization is considered to be an "industry"
for purposes of this 25% limitation, each Fund will comply therewith), and
except that, with respect to a Fund's permissible futures and options
transactions, 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".
Proposed:
Fundamental Restriction
No Fund may purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a result,
more than 25% of the Fund's total assets would be invested in the securities
of companies whose principal business activities are in the same industry.
Notwithstanding the foregoing, with respect to a Fund's permissible futures
and options transactions in U.S. government securities, positions in such
options and futures shall not be subject to this restriction.
Explanation of the proposed change: The proposed amendment is intended to
clarify the basic limitation on concentration of investment and now would
specifically exclude government securities, repurchase agreements secured
thereby and positions in options and futures from the limitations imposed by
the restriction.
PROPOSAL 8f
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING COMMODITIES AND REAL ESTATE
Current:
No Fund may purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or commodity
contracts in the ordinary course of business, other than (i) with respect to a
Fund's permissible futures and options transactions, or (ii) with respect to
Vista Equity Fund, Vista Growth and Income Fund, Vista Capital Growth Fund,
Vista Global Fixed Income Fund, Vista International Equity Fund and Vista
Small Cap Equity Fund only, forward purchases and sales of foreign currencies
or securities (each Fund reserves the freedom of action to hold and to sell
real estate acquired as a result of its ownership of securities).
Proposed:
Fundamental Restriction
No Fund may purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments but this shall not prevent a
Fund from (i) purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities or
(ii) engaging in forward purchases or sales of foreign currencies or
securities.
Fundamental Restriction
No Fund may purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Fund from investing in securities or other instruments backed by real estate
or securities of companies engaged in the real estate business). Investments
by a Fund in securities backed by mortgages on real estate or in marketable
securities of companies engaged in such activities are not hereby precluded.
Nonfundamental Restriction
No Fund may purchase or sell interests in oil, gas or mineral leases.
Explanation of the proposed changes: The proposed changes conform the
application of the restrictions pertaining to commodities and real estate to
the current regulations of the 1940 Act by clarifying that certain real
estate-related financial instruments may be purchased by the Funds. To a large
extent, the proposed amendment would also standardize the restrictions
applicable to each of the respective Funds by allowing all the Funds to engage
in certain transactions such as forward purchases when it is consistent with
the Funds' investment objectives and policies.
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PROPOSAL 8g
AMENDMENT OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING INVESTMENTS
IN RESTRICTED AND ILLIQUID SECURITIES
Current:
No Fund may knowingly invest in securities which are subject to legal or
contractual restrictions on resale (including securities that are not readily
marketable, but not including repurchase agreements maturing in not more than
seven days) if, as a result thereof, more than 10% (15% with respect to Vista
Small Cap Equity Fund and Vista Balanced Fund) 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%).
Proposed:
Nonfundamental Restriction
No Fund may invest more than 15% of its net assets in illiquid securities.
Explanation of the proposed changes: The current fundamental restrictions
limit purchases of all securities that are subject to restrictions on resale,
including securities that are not readily marketable and repurchase agreements
maturing in more than seven days. These restrictions include securities
eligible for resale under Rule 144A and Section 4(2) commercial obligations.
The proposed non-fundamental restriction incorporates recent developments in
securities markets. Under the proposed restrictions, securities issued under
such exemptions from registration, although restricted, may still be
classified as liquid in accordance with procedures adopted by the Board of
Trustees. This investment practice could have the effect of increasing the
level of illiquidity in a Fund. Furthermore, to the extent that a market fails
to develop or ceases to exist with respect to these restricted securities,
illiquidity levels will increase.
When purchasing securities which could not be sold without registration under
the Securities Act of 1933, a Fund will endeavor to obtain the right to
registration at the expense of the issuer. Generally, there will be a lapse of
time between a Fund's decision to sell any such security and the registration
of the security permitting sale. During any such period, the price of the
securities will be subject to market fluctuations.
The proposed changes would standardize, among all Funds, the applicable
investment restriction, and would remove from all of the descriptions certain
interpretations of what may constitute illiquid securities. By doing this,
each Fund would be subject to the same current interpretations, from time to
time, of what constitutes an illiquid security, under SEC releases and other
relevant authority. The defundamentalization of this restriction would avoid
the delay and expense of a shareholder vote in the event that the permissible
guidelines for investments in illiquid securities changes at some time in the
future. This limitation may be subject to additional restrictions imposed by
jurisdictions in which a Fund's shares are offered for sale.
PROPOSAL 8h
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL
RESTRICTION CONCERNING THE USE OF OPTIONS
Current:
With respect to each fund except Vista International Equity Fund, Vista Global
Fixed Income Fund, Vista Southeast Asian Fund, Vista Japan Fund and Vista
European Fund, no Fund may write, purchase or sell any put or call option or
any combination thereof, provided that this shall not prevent (i) with respect
to Vista Growth and Income Fund, Vista Capital Growth Fund, Vista Equity Fund,
Vista Equity Income Fund and Vista Small Cap Equity only, the purchase,
ownership, holding or sale of warrants where the grantor of the warrants is
the issuer of the underlying securities, (ii) with respect to all of the
Funds, the writing, purchasing or selling of puts, calls or combinations
thereof with respect to U.S. government securities (or all securities in which
the Vista Small Cap Equity Fund may invest) or (iii) with respect to a Fund's
permissible futures and options transactions, the writing, purchasing,
ownership, holding or selling of futures and options positions or of puts,
calls or combinations thereof with respect to futures.
Proposed:
Nonfundamental Restriction
No Fund may write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) with respect to the Vista
Growth and Income Fund and the Vista Capital Growth Fund only, the purchase,
ownership, holding or sale of warrants where the grantor of the warrants is
the issuer of the underlying securities, (ii) with respect to all of the
Funds, the writing, purchasing or selling of puts, calls or combinations
thereof with respect to portfolio securities or (iii) with respect to a Fund's
permissible futures and options transactions, the writing, purchasing,
ownership, holding or selling of futures and options positions or of puts,
calls or combinations thereof with respect to futures.
Explanation of the proposed change: The proposed reclassification of this
Restriction as nonfundamental would avoid the delay and expense of a
shareholder vote in the event that the permissible guidelines for such
investments change at some time in the future. The terms of this Restriction
are consistent with general restrictions, including limitations on liquidity
and portfolio diversification. Therefore, no foreseeable impact on the Funds
is anticipated by the proposed reclassification.
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Proposal 8i
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING
SENIOR SECURITIES
Current:
No Fund may issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder, provided that collateral arrangements
with respect to a Fund's permissible options and futures transactions,
including deposits of initial and variation margin, are not considered to be
the issuance of a senior security for purposes of this restriction.
Proposed:
Fundamental Restriction
No Fund may issue any senior security (as defined in the 1940 Act), except
that (a) a Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) a Fund may acquire
other securities, the acquisition of which may result in the issuance of a
senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions set forth
above, a Fund may borrow money as authorized by the 1940 Act. For purposes of
this restriction, collateral arrangements with respect to a Fund's permissible
options and futures transactions, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security.
Explanation of proposed change: Under the 1940 Act, an open-end investment
company (such as the Trust) cannot issue senior securities except under
certain very limited conditions. The proposed amendment clarifies and
modernizes the language concerning senior securities to conform to provisions
of the 1940 Act. It is proposed that this restriction exclude those
transactions which are allowed by current regulatory interpretations and
policies, and which are consistent with current investment marketplace
practices. Therefore, the proposed fundamental restrictions will allow, for
example, the following investments even though they may result in the issuance
of senior securities: The Funds could, to the extent permitted by applicable
law or exemptive order (a) enter into commitments, including reverse
repurchase agreements and delayed delivery and when-issued securities; (b)
engage in transactions that may result in the issuance of a senior security;
(c) engage in short sales of securities; (d) purchase and sell futures
contracts and related options; (e) borrow money; and (f) issue multiple
classes of securities in each case subject to any other applicable
restrictions.
PROPOSAL 8j
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING SHORT SALES OF SECURITIES
Current:
No Fund may make short sales of securities or maintain a short position;
except that all Funds other than the Vista Small Cap Equity Fund, the Vista
Bond Fund, the Vista Short-Term Bond Fund and the Vista Equity Fund may only
make such short sales of securities or maintain a short position if when a
short position is open the Fund owns an equal amount of such securities 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).
Proposed:
It is proposed that this restriction be eliminated, as it has been combined
with a nonfundamental restriction concerning purchases of securities on
margin, (see Proposal 8d above).
Explanation of the proposed change: For an explanation of short sales see
Proposal 8d above.
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Introduction to Proposal 8K:
Proposal 8k relates to the Vista U.S. Government Income Fund only:
PROPOSAL 8k
APPROVAL OR DISAPPROVAL OF A MODIFICATION OF THE FUNDAMENTAL
INVESTMENT POLICY OF THE VISTA U.S. GOVERNMENT INCOME FUND
REGARDING PERMISSIBLE INVESTMENTS IN GOVERNMENT SECURITIES
At a meeting of the Board of Trustees of the Trust held on December 14, 1995,
the Trustees, including each of the Disinterested Trustees, considered and
unanimously approved the proposals of the Adviser to eliminate, subject to
shareholder approval, the fundamental investment policy of the Vista U.S.
Government Income Fund pertaining to permissible investment in U.S. government
securities and replace it with a modified, nonfundamental investment policy.
Contingent upon shareholder approval of this proposal, the Trustees have
approved the modification of the Fund's investment objective to reflect the
modified investment policy.
Current Fundamental Investment Policy. A current fundamental investment policy
of the Vista U.S. Government Income Fund provides that:
all of its assets will be invested in obligations that are backed by the full
faith and credit of the U.S. government or in repurchase agreements fully
collateralized by U.S. government obligations, except that up to 5% of the
Fund's assets may be invested in futures contracts (and related options
thereon) based on U.S. government obligations, including any index of
government obligations that may be available for trading.
This investment policy is fundamental, which means that it cannot be changed
without the approval of a majority of the outstanding voting securities of the
Vista U.S. Government Income Fund, as defined in the 1940 Act.
Proposed Nonfundamental Investment Policy. It is proposed that the Vista U.S.
Government Income Fund change the above fundamental investment policy to the
following nonfundamental policy:
Under normal circumstances, the Vista U.S. Government Income Fund will invest
all of its assets in obligations of the U.S. government or in repurchase
agreements fully collateralized by U.S. government obligations, except that up
to 5% of the Fund's assets may be invested in futures contracts (and related
options thereon) based on U.S. government obligations, including any index of
government obligations that may be available for trading.
Thus, under the proposed amendment, the Vista U.S. Government Income Fund
would no longer be required to invest primarily in debt obligations that are
backed by the "full faith and credit" of the U.S. government, unless
shareholders do not approve the proposal.
Reasons for the Proposal. The proposed changes are intended to increase the
flexibility available in managing the Vista U.S. Government Income Fund as
well as to maximize the ability to be responsive to market conditions, so that
higher yields may be obtained without undue risks. The defundamentalization of
this policy would avoid the delay and expense of a shareholder vote in the
event of the need to modify the Fund's permissible investments in government
securities at some time in the future.
The Vista U.S. Government Income Fund's current fundamental investment policy
requires the Vista U.S. Government Income Fund to invest 100% of its assets in
obligations that are backed by the full faith and credit of the U.S.
government or in repurchase agreements fully collateralized by U.S. government
obligations, except that up to 5% of the Vista U.S. Government Income Fund's
assets may be invested in futures contracts (and related options thereon)
based on U.S. government obligations, including any index of government
obligations that may be available for trading.
The Adviser believes that this fundamental policy, which requires the Vista
U.S. Government Income Fund to invest 100% in obligations that are backed by
the full faith and credit of the U.S. government, may limit the ability of the
Vista U.S. Government Income Fund to invest in other appropriate securities
that provide, in its judgment, a reasonable return consistent with reasonable
risk. The proposed investment objective would require the Vista U.S.
Government Income Fund to invest primarily in U.S. government obligations,
obligations issued or guaranteed by U.S. government agencies or
instrumentalities if such obligations are backed by the "full faith and
credit" of the U.S. government, and securities issued or guaranteed as to
principal and interest by the U.S. government or by agencies or
instrumentalities thereof. By requiring that at least 65% of the Vista U.S.
Government Income Fund's assets be invested in U.S. government obligations,
obligations issued or guaranteed by U.S. government agencies or
instrumentalities if such obligations are backed by the "full faith and
credit" of the U.S. Government, and securities issued or guaranteed as to
principal and interest by the U.S. government or by agencies or
instrumentalities thereof rather than U.S. Government obligations, the range
of available investments would be increased, and the Adviser believes that the
U.S. Government Income Fund could respond to changing market conditions and
obtain higher yields without unreasonable risk. Similarly, the Adviser
believes that the proposed nonfundamental investment policy requiring the
Vista U.S. Government Income Fund to invest at least 65% of its assets in U.S.
government obligations, obligations issued or guaranteed by U.S. government
agencies or instrumentalities and securities issued or guaranteed as to
principal and interest by the U.S. government or by agencies or
instrumentalities thereof would also provide added flexibility without
unreasonable risk, by permitting the Vista U.S. Government Income Fund's
principal investments to be in a wider range of debt obligations.
For the reasons indicated above, the Adviser believes that these changes will
provide added flexibility, will allow the Vista U.S. Government Income Fund to
take advantage of additional investment opportunities without undue risk, and
are in the best interests of the Vista U.S. Government Income Fund and its
shareholders. However, market conditions change and there can be no assurance
that adoption of the proposals will result in the Vista U.S. Government Income
Fund's realizing yields higher than it currently realizes.
Accordingly, based on the recommendation of the Adviser, the Trustees of the
Trust, including all of the Disinterested Trustees, unanimously approved the
foregoing changes to the Vista U.S. Government Income Fund's fundamental
investment policy, subject to the approval of the Vista U.S. Government Income
Fund's shareholders.
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Introduction to Proposals 8l-s: Proposals 8l-s are applicable to Vista
Southeast Asian Fund, Vista Japan Fund and Vista European Fund only.
PROPOSAL 8l
APPROVAL OR DISAPPROVAL OF A RECLASSIFICATION,
AS NONFUNDAMENTAL, OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING INVESTMENT IN
OTHER INVESTMENT COMPANIES
Current:
Except as may be permitted under the relevant regulatory authority, no Fund
may invest more than 10% of its net assets in other investment companies or
trusts, provided that as to such 10% of net assets:
(i) the investment policy of such other investment companies or trusts is not,
in the opinion of the Trustees, contrary to that of the Fund; and
(ii) to the extent such other investment companies or trusts are promoted or
sold or managed or advised by the Adviser or an affiliate of the Adviser,
duplication of placing or sales or redemption charges and management or
advisory fees shall be avoided
Proposed:
Nonfundamental Restriction
Each Fund may invest up to 5% of its total assets in the securities of any one
investment company, but may not own more than 3% of the securities of any one
investment company or invest more than 10% of its total assets in the
securities of other investment companies.
Explanation of the proposed change: The proposed amendment to restate this
policy and reclassify it as nonfundamental would modernize and clarify the
restriction on investments in other investment companies.
PROPOSAL 8m
APPROVAL OR DISAPPROVAL OF THE ELIMINATION OF
EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING THE MORTGAGING, PLEDGING OR
HYPOTHECATION OF A FUND'S PORTFOLIO SECURITIES
Current:
No Fund may mortgage, pledge, hypothecate or in any manner transfer as
security for indebtedness, any securities owned or held by the Fund, except as
may be necessary in connection with borrowings mentioned in item 8 above, and
then such mortgaging, pledging or hypothecating may not exceed 10% of the
Fund's total net assets.
Proposed:
It is proposed that this restriction be eliminated.
Explanation of the proposed change: The Funds have no current intention of
mortgaging, pledging or hypothecating their securities, except as may be
necessary in connection with borrowing. In the event that at some point in
time a Fund has an intention of mortgaging, pledging or hypothecating its
assets, the Fund's Prospectus and Statement of Additional Information will be
revised accordingly. The proposed elimination of this fundamental restriction
would give the Funds additional flexibility in taking, or adding to, certain
investment positions.
PROPOSAL 8n
APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO
EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING UNDERWRITING SECURITIES
Current:
No Fund may underwrite securities of other issuers.
Proposed:
Fundamental Restriction
No Fund may underwrite securities issued by other persons except insofar as
the Fund may technically be deemed an underwriter under the Securities Act of
1933 in selling a portfolio security.
Explanation of the proposed change: The proposed amendment is intended to
clarify the basic limitation on underwriting securities, and would also
include those transactions that current regulatory interpretations and
policies allow.
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PROPOSAL 8o
APPROVAL OR DISAPPROVAL OF A RECLASSIFICATION, AS
NONFUNDAMENTAL, OF A FUNDAMENTAL INVESTMENT POLICY
CONCERNING SECURITIES OF THE GOVERNMENT OF ANY MEMBER
STATE OF THE ORGANIZATION FOR ECONOMIC COOPERATION
AND DEVELOPMENT ("OECD COUNTRY")
Current:
The above restrictions do not apply to the following investments ("OECD
investments"):
(a) any security issued by or the payment of principal and interest on which
is guaranteed by the government of any member state of the OECD country;
(b) any fixed security issued in any OECD country by any public or local
authority or nationalized industry or undertaking of any OECD country or
anywhere in the world by the International Bank for Reconstruction and
Development, European Investment Bank, Asian Development Bank or any body
which is, in the Trustee's opinion, of similar standing.
However, no investment may be made in any OECD investment of any one issue if
that would result in the value of the Fund's holding of that issue exceeding
30% of the net asset value of the Fund and, if the Fund's portfolio consists
only of OECD investments, those OECD investments shall be of at least six
different issues.
Proposed:
It is proposed that this restriction be reclassified as non- fundamental.
Explanation of the proposed change: The reclassification as nonfundamental
could enable the Funds to respond more quickly to changes in financial
markets.
PROPOSAL 8p
APPROVAL OR DISAPPROVAL OF THE ELIMINATION
OF A FUNDAMENTAL INVESTMENT RESTRICTION
WITH RESPECT TO PHYSICAL COMMODITIES AND
FUTURES CONTRACTS
Current:
The value of the Fund's holdings of physical commodities (including precious
metals), futures contracts (other than financial contracts entered into for
hedging purposes), options on commodities and futures contracts and
commodity-based investments (other than shares of companies engaged in
producing, processing or trading in commodities) may not exceed 20% of the
total net asset value of the Fund.
Proposed:
It is proposed that this restriction be eliminated as these types of
instruments are addressed in other investment restrictions. (See Proposals 8f
and 8h.)
Explanation of proposed change: The Funds' investments in physical commodities
and futures contracts have been addressed in other restrictions.
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PROPOSAL 8q
APPROVAL OR DISAPPROVAL OF A RECLASSIFICATION,
AS NONFUNDAMENTAL, OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING SECURITIES
TRANSACTIONS WITH AFFILIATES
Current:
No Fund may sell, purchase or loan securities (excluding Shares in the Fund)
or grant or receive a loan or loans to or from the Adviser, corporate and
domiciliary agent, or paying agent, the distributors and the authorized agents
or any of their directors, officers or employees or any of their major
shareholders (meaning a shareholder who holds, in his own or other name (as
well as a nominee's name), more than 10% of the total issued and outstanding
shares of stock of such company) acting as principal, or for their own
account, unless the transaction is made within the other restrictions set
forth above and either:
(i) at a price determined by current publicly available quotations, or
(ii) at competitive prices or interest rates prevailing from time to time on
internationally recognized securities markets or internationally recognized
money markets.
Proposed:
It is proposed that this restriction be reclassified as non-fundamental.
Explanation of the proposed change: The reclassification as nonfundamental
could allow the Funds to respond more quickly to changes in financial markets.
PROPOSAL 8r
APPROVAL OR DISAPPROVAL OF A RECLASSIFICATION,
AS NONFUNDAMENTAL, OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING SECURITIES
IN WHICH AFFILIATES HAVE INVESTED
Current:
No Fund may invest in a security of any class in any company or body if any
director or officer of the Adviser owns more than 0.5% of the total nominal
amount of all the issued securities of that class or if the directors and
officers of the Adviser collectively own more than 5% of those securities.
Proposed:
Nonfundamental Restriction
No Fund may purchase or retain securities of any issuer if the Trustees of the
Company or the officers or directors of the Adviser owning beneficially more
than one-half of 1% of the securities of such issuer together own beneficially
more than 5% of such securities.
Explanation of the proposed change: The proposed reclassification of this
restriction as nonfundamental would give the Funds additional flexibility and
remove an impediment which would be detrimental to the Funds' ability to take
advantage of certain investments in which certain affiliated persons may have
invested, to the extent that the investment would not otherwise be prohibited
by applicable provisions of the 1940 Act.
PROPOSAL 8s
APPROVAL OR DISAPPROVAL OF A RECLASSIFICATION,
AS NONFUNDAMENTAL, OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING INVESTMENT
IN ASSETS THAT INVOLVE ASSUMPTION OF LIABILITY
Current:
No Fund may make any investment in assets that involve assumption of any
liability that is unlimited, or acquire any investments that are for the time
being nil paid or partly paid, unless according to the terms of the issue
thereof any call to be made thereon could be met in full out of cash by the
Fund's portfolio.
Proposed:
It is proposed that this restriction be reclassified as non-fundamental.
Explanation of the proposed change: The proposed reclassification of this
restriction as nonfundamental could enable the Funds to respond more quickly
to changes in financial markets.
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Introduction to Proposal 8t:
Proposal 8t applies to each Fund except Vista Growth and Income Fund, Vista
Capital Growth Fund, Vista Global Fixed Income Fund and Vista International
Equity Fund:
PROPOSAL 8t
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT
POLICY PERMITTING EACH
FUND TO INVEST ALL OF ITS INVESTABLE
ASSETS IN ANOTHER INVESTMENT COMPANY
Introduction: Master/Feeder Fund Structure
At a meeting held on December 14, 1995, the Board considered and approved,
subject to shareholder approval, the adoption of a new fundamental investment
policy with respect to each Fund which would allow each Fund to convert to a
Master/Feeder Structure. The Master/Feeder Fund Structure is an arrangement
that allows several investment companies with different shareholder-related
features or distribution channels, but having substantially the same
investment objective, policies and restrictions, to combine their investments
by investing all of their assets in the same portfolio instead of managing
them separately, which may result in economies of scale.
There is no present intention to convert any Fund to a Master/ Feeder Fund
structure. In adopting this new fundamental investment policy, a Fund would be
given the flexibility to convert to a Master/Feeder Fund Structure and pursue
investment opportunities consistent with its investment objective with the
approval of the Board, without the requirement of submitting such matter to a
vote of shareholders, which is a time-consuming and expensive process. The
Board will consider and evaluate specific proposals prior to the
implementation of any conversion to a Master/Feeder Fund Structure. A Fund's
prospectus and statement of additional information would be amended to reflect
the implementation of the Fund's conversion to a Master/Feeder Fund Structure
and its shareholders would be notified.
Under a Master/Feeder Fund Structure, a Fund will have the ability to invest
all of its investable assets in another investment company (the "Master
Portfolio") having substantially the same investment objectives and policies
as the Fund in exchange for shares of beneficial interest in the Master
Portfolio. This could mean that the only investment securities that will be
held by a Fund will be the Fund's interest in the Master Portfolio. Each
Master Portfolio will be a series of an investment company ("Master Trust"),
as each Fund is a series of the Trust.
Conversion to a Master/Feeder Fund Structure may serve to attract other
collective investment vehicles with different shareholder servicing or
distribution arrangements and with shareholders that would not have invested
in a Fund. In this event, additional assets may allow for operating expenses
to be spread over a larger asset base. In addition, a Master/Feeder Fund
Structure may serve as an alternative for large, institutional investors in a
Fund who may prefer to offer separate, proprietary investment vehicles and who
otherwise might establish such vehicles outside of a Fund's current
operational structure. Conversion to a Master/Feeder Fund Structure may allow
a Fund to stabilize its expenses and achieve certain operational efficiencies.
No assurance can be given, however, that the Master/Feeder Fund Structure will
result in a Fund stabilizing its expenses or achieving greater operational
efficiencies.
New Investment Policy
The Board has approved with respect to each Fund, subject to shareholder
approval, the adoption of a new fundamental investment policy that would
permit a Fund to convert to the Master/Feeder Fund Structure by investing all
or a part of its assets in another appropriate investment fund. As discussed
above under "Introduction: Master/Feeder Fund Structure," the purpose of this
Proposal is to allow a Fund to enhance its flexibility and permit it to take
advantage of potential efficiencies available through investment of all or a
part of its assets in another investment company. At present, certain of the
fundamental investment restrictions of each Fund, such as those limiting
investment in a single issuer or concentration in an industry, may prevent it
from investing all or a part of its assets in another registered investment
company. The Board proposes that these restrictions be modified by adding the
following fundamental investment policy:
Notwithstanding any other investment policy or restriction, a Fund may seek to
achieve its investment objective by investing all of its investable assets in
another investment company having substantially the same investment objective
and policies as the Fund.
A Fund's methods of operation and shareholder services would not be materially
affected by its investment in a corresponding Master Portfolio, except that
the assets of the Fund may be managed as part of a larger pool. If a Fund
invested all of its assets in a Master Portfolio, it would hold only
beneficial interests in the Master Portfolio; the Master Portfolio would
directly invest in individual securities of other issuers. The Fund would
otherwise continue its normal operation. The Board would retain the right to
withdraw a Fund's investment from its corresponding Master Portfolio at any
time it determines that it would be in the best interest of shareholders; the
Fund would then resume investing directly in individual securities of other
issuers or invest in another Master Portfolio.
Additional Information Regarding Each Master Portfolio
Each Master Portfolio would be a series of a Master Trust which, like the
Trust, would be an open-end management investment company under the 1940 Act.
It is expected that the Master Trust would have one series to correspond to
each series of the Trust that converts to the Master/Feeder Fund Structure.
The investment objective and policies of each Master Portfolio would be
substantially the same as those of the corresponding Fund; in seeking to
achieve the same objective as the Fund, the Master Portfolio would invest in
the same type of securities and engage in the same transactions permitted by
the investment policies and restrictions of the corresponding Fund.
The Adviser, or its successor in the Bank Merger would be the investment
adviser of each Fund's corresponding Master Portfolio. Similarly, CAM Inc.
would serve as Sub-Adviser to the Master
31
<PAGE>
Portfolio. See Proposal 2. Entities or their successors in the Bank Merger
that currently perform services with respect to each Fund, such as
administrative or custodial services, would perform substantially similar
services for each Master Portfolio.
Each Master Portfolio normally would not hold meetings of investors except as
required under the 1940 Act. As an investor in the Master Portfolio, a Fund
would be entitled to vote in proportion to its relative interest in the Master
Portfolio. As to any issue on which Fund shareholders vote, a Fund would vote
its interest in the Master Portfolio in proportion to the votes cast by its
shareholders. If there were other investors in the Master Portfolio, there
could be no assurance that any issue that receives a majority of the votes
cast by a Fund's shareholders would receive a majority of votes cast by all
Master Portfolio shareholders.
Changing a fundamental policy of a Master Portfolio would require approval of
the holders of a majority of interests in the Master Portfolio. The Board of
Trustees of the Master Trust would have the ability to change nonfundamental
policies without prior interestholder approval.
In addition to a vote to change a fundamental policy, examples of matters that
would require approval of shareholders of the Master Trust include, subject to
applicable statutory and regulatory requirements: the election of Trustees;
approval of an investment advisory contract; certain amendments to the Trust
Instrument of the Master Trust; a merger, consolidation or sale of
substantially all of a Master Portfolio's assets; or any additional matters
required or authorized by the Trust Instrument of the Master Trust or any
registration statement of the Master Trust, or as the Trustees may consider
desirable.
Generally, a Fund would hold a meeting of its shareholders to obtain
instructions on how to vote its interest in the Master Portfolio when the
Master Portfolio is conducting a meeting of its shareholders. However, subject
to applicable statutory and regulatory requirements, a Fund would not seek
instructions from its shareholders with respect to (i) any proposal relating
to the Master Portfolio which, if made with respect to a Fund, would not
require the vote of Fund shareholders, or (ii) any proposal relating to the
Master Portfolio that is identical in all material respects to a proposal
previously approved by the Fund's shareholders.
Examples of proposals with respect to a Master Portfolio that may not require
the approval of shareholders of its corresponding Fund would include the
following, subject to applicable statutory and regulatory requirements: (i)
approval of an Advisory Agreement with the Adviser, or its successor in the
Bank Merger (or a subsidiary or affiliate) on terms that do not differ in any
material respect from an Advisory Agreement currently in effect with respect
to that Fund; (ii) election of Trustees of the Master Trust who had previously
been elected as Trustees of the Trust; and (iii) selection, or ratification of
the selection of, a firm of independent certified public accountants that had
previously been approved by shareholders of that Fund. Examples of matters
that would be submitted to shareholders of a Master Portfolio's corresponding
Fund would include the following: (i) approval of an Advisory Agreement with
an investment adviser other than the Adviser, or its successor in the Bank
Merger (or a subsidiary or affiliate), or one that provided for compensation
in excess of the amount of compensation payable to the Adviser pursuant to the
Advisory Agreement in effect with respect to that Fund, (ii) election when
required by the 1940 Act of Trustees of the Master Trust who had not
previously been elected by shareholders as Trustees of the Trust; or (iii)
selection of, or the ratification of the selection of, a firm of independent
certified public accountants that had not previously been approved by the
shareholders of the Fund. Any proposal submitted to holders in a Master
Portfolio, and that is not required to be voted on by shareholders of that
Master Portfolio's corresponding Fund, would nonetheless be voted on by the
Trustees of the Trust.
The Master Trust's operations would be governed by its Trust Instrument and
applicable law. The operations of the Master Trust and the Master Portfolios,
like those of the Trust and the Funds, would be subject to the provisions of
the 1940 Act and the rules and regulations of the SEC thereunder and
applicable state securities laws.
Trustees and Officers of the Master Trust
The initial interestholders of the Master Trust would be expected to elect as
Trustees of the Master Trust, the individuals serving as members of the Board
of Trustees of the Trust. See Proposal 3. Subject to the provisions of its
Trust Instrument, the business of the Master Trust would be supervised by its
Trustees, who would serve indefinite terms and who would have all powers
necessary or convenient to carry out their responsibilities. The Trustees of
the Master Trust would elect officers of the Master Trust whom they deemed
appropriate.
Tax Consequences of Investment in a Master Portfolio
The Trust would apply for a ruling from the Internal Revenue Service ("IRS")
or would obtain an opinion of the tax counsel to the effect that its
contribution of assets of a Fund to its corresponding Master Portfolio in
exchange for an interest in that Master Portfolio would not result in the
recognition of gain or loss to that Fund for federal income tax purposes.
It is intended that each Fund would continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986. In
each taxable year that a Fund so qualified, the Fund (but not its
shareholders) would be relieved of Federal income tax on that part of its
investment company taxable income and net capital gain that is distributed to
its shareholders. Neither a Fund nor the Master Portfolio would be expected to
be required to pay any Federal income or excise taxes. Distributions from a
Fund, except for distributions from a Fund designated as long-term capital
gain distributions, would continue to be taxable to its shareholders as
ordinary income, whether received in cash or reinvested in Fund shares.
Additional Information Regarding Proposals 8a-t
Unless otherwise noted, whenever an amended or restated investment policy or
limitation states a maximum percentage of a Fund's assets that may be
invested, such percentage limitation will be determined immediately after and
as a result of the acquisition of such security or other asset, except in the
case of borrowing (or other activities that may be deemed to result in the
issuance of a "senior security" under the 1940 Act) or illiquid securities.
Any subsequent change in values, assets, or other circumstances will not be
considered when determining whether the investment complies with the Funds's
investment policies and limitations. If any of Proposals 8a-t are not approved
by shareholders, the current Restriction will remain unchanged.
32
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Each of the above proposals to change a Fund's restriction requires the
approval of a "majority of the outstanding voting securities" of the relevant
Fund, which for this purpose means the affirmative vote of the lesser of (1)
more than 50% of the outstanding shares of the Fund or (2) 67% or more of the
shares of the Fund present at the meeting if more than 50% of the outstanding
shares of such Fund are represented at the meeting in person or by proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSALS
In addition, for shareholders of all Funds, to transact such other business as
may properly come before the meeting or any adjournment thereof.
OTHER INFORMATION
The Fund's present Sub-Administrator is Vista Broker Dealer Services, Inc.
("VBDS"), a wholly-owned subsidiary of BISYS Funds Services, Inc. See
"Administrator" under Proposal 1. The following are officers of the Trust who
may be deemed to have an interest in VBDS by virtue of their status as
employees and/or executive officers of VBDS:
<TABLE>
<CAPTION>
Position
With Officer of the
Name the Trust Age Trust Since
- ---------------------------------------------------
<S> <C> <C> <C>
Ann Bergin Secretary 35 1995
and
Assistant
Treasurer
Martin R. Treasurer 31 1995
Dean and
Assistant
Secretary
</TABLE>
Substantial Shareholders. As of the Record Date, the Trust believed that the
following persons beneficially owned more than 5% of the Funds:
Vista U.S. Government Income Fund--Class A Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- --------------------------------------------------------------
<S> <C> <C>
Carrier IL Container 890,092.365 9%
Royalty Fund
One Evertrust Plaza
Jersey City, NJ 07302
Carriers ILA CFS 1,335,138.543 14%
Trust Fund
One Evertrust Plaza
Jersey City, NJ 07302
</TABLE>
Vista U.S. Government Income Fund--Class B Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- ------------------------------------------------------
<S> <C> <C>
Rosa Crespo 2,445.580 5%
2312 SW 128 Avenue
Miami, Florida 33175
</TABLE>
Vista European Fund--Class B Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- --------------------------------------------------------
<S> <C> <C>
Peter Quinn 247.166 42%
6667 Chester Avenue
Philadelphia, PA 19142
John Dowling 29.615 5%
2547 Beech Street
East Meadow, NY 11554
Joel A. Beck 100.143 7%
866 Hart Street
Brooklyn, NY 11237
Jason Stankowski 117.305 20%
1440 Chapin Avenue
Burlingame, CA 94010
Ann S. Dowling 59.055 10%
2547 Beech Street
East Meadow, NY 11554
</TABLE>
Vista Japan Fund--Class B Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- -------------------------------------------------------
<S> <C> <C>
Anh-Hoang Duong 494.16 12%
15-83 144th Street
Whitestone, NY 11357
</TABLE>
33
<PAGE>
Vista Global Fixed Income Fund--Class A Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- --------------------------------------------------------
<S> <C> <C>
Barbara M. Martin 23,085.978 9%
David G. Martin
JTWROS
7637 Chancellor Way
Springfield, VA 22153
</TABLE>
Vista Southeast Asian--Class B Shares
<TABLE>
<CAPTION>
Number of Percentage of
Shares Class
Name Owned Outstanding
- -------------------------------------------------------
<S> <C> <C>
Hung Fai NG 1893.939 20%
6430 211 Street
Bayside, NY 11364
Silvio D. 524.260 5%
Debenedetto
228 Ueland Road
Middletown, NJ 07701
Cynthia A. Kohn 1322.519 14%
3 Lynch Ct.
Voorhees, NJ 08043
Midatlantic Assoc. 1773.050 19%
of Building
Tradesmen Veba Trust
F/B/O Bob Gendelman
and Co. Inc.
63 Steele Way
Huntingdon, PA 19006
</TABLE>
Voting Information and Discretion of the Persons Named as Proxies. While the
Meeting is called to act upon any other business that may properly come before
it, at the date of this proxy statement the only business which the management
intends to present or knows that others will present is the business mentioned
in the Notice of Meeting. If any other matters lawfully come before the
Meeting, and in all procedural matters at the Meeting, it is the intention
that the enclosed proxy shall be voted in accordance with the best judgment of
the attorneys named therein, or their substitutes, present and acting at the
Meeting.
If at the time any session of the Meeting is called to order a quorum is not
present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In
the event that a quorum is present but sufficient votes in favor of one or
more of the proposals have not been received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies with respect to any such proposal. All such adjournments will
require the affirmative vote of a majority of the Shares present in person or
by proxy at the session of the Meeting to be adjourned. The persons named as
proxies will vote those proxies which they are entitled to vote in favor of
the proposal, in favor of such an adjournment, and will vote those proxies
required to be voted against the proposal, against any such adjournment. A
vote may be taken on one or more of the proposals in this proxy statement
prior to any such adjournment if sufficient votes for its approval have been
received and it is otherwise appropriate.
Submission of Proposals for the Next Annual Meeting of the Trust. Under the
Trust's Declaration of Trust and By-Laws, annual meetings of shareholders are
not required to be held unless necessary under the 1940 Act (for example, when
fewer than a majority of the Trustees have been elected by shareholders).
Therefore, the Trust does not hold shareholder meetings on an annual basis. A
shareholder proposal intended to be presented at any meeting hereafter called
should be sent to the Trust at 125 West 55th Street, New York, New York 10019,
and must be received by the Trust within a reasonable time before the
solicitation relating thereto is made in order to be included in the notice or
proxy statement related to such meeting. The submission by a shareholder of a
proposal for inclusion in a proxy statement does not guarantee that it will be
included. Shareholder proposals are subject to certain regulations under
federal securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS
NECESSARY.
February 12, 1996
BY ORDER OF THE BOARD OF
TRUSTEES OF MUTUAL FUND GROUP
/s/ Ann Bergin
Ann Bergin,
Secretary
34
<PAGE>
APPENDIX A
FORM OF INTERIM
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND GROUP
AND
THE CHASE MANHATTAN BANK, N.A.
AGREEMENT made this day of , by and between MUTUAL FUND GROUP (the
"Trust") on behalf of the series of the Trust (the "Fund") and THE CHASE
MANHATTAN BANK, N.A. (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:
(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 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.
<PAGE>
(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 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; (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 % [see attached Schedule] of the Fund's average daily net
assets. 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
2
<PAGE>
(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 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 until May 30, 1996, unless the
Fund's shareholders approve the Agreement prior to such date. Upon approval
by shareholders, this agreement shall, unless terminated as hereinafter
provided, continue in effect for two years from the date of such approval
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
ovisions 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.
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 GROUP
By:-----------------------------
Name:
Title:
ATTEST:
THE CHASE MANHATTAN BANK, N.A.
By:------------------------------
Name:
Title:
ATTEST:
3
<PAGE>
Schedule A
<TABLE>
<CAPTION>
Mutual Fund Group Fee
- ------------------ ----
<S> <C>
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund 0.40
Vista Balanced Fund 0.50
IEEE Balanced Fund 0.60
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 0.65
Vista Japan Fund 1.00
Vista European Fund 1.00
Master Portfolios:
- ------------------
Vista Capital Growth Portfolio 0.40%
Vista Growth and Income Portfolio 0.40
Vista International Equity
Portfolio 1.00
Vista Global Fixed Income
Portfolio 0.75
</TABLE>
4
<PAGE>
APPENDIX B
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND GROUP
AND
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AGREEMENT made this day of , 1996, by and between Mutual Fund Group, a
Massachusetts business trust which may issue one or more series of shares
(hereinafter the "Trust"), and The Chase Manhattan Bank, N.A., a national
banking association, and its successor, 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 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 most recent Post-Effective 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") (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.
<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;
(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.
(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
2
<PAGE>
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 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 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
3
<PAGE>
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 date
hereof and 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.
MUTUAL FUND GROUP THE CHASE MANHATTAN BANK, N.A.
By:---------------------------------- By:------------------------------
Name: Name:
Title: Title:
4
<PAGE>
Schedule A
<TABLE>
<CAPTION>
Mutual Fund Group Fee
- ------------------ -----
<S> <C>
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund 0.40
Vista Balanced Fund 0.50
IEEE Balanced Fund 0.60
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 1.00
Vista Japan Fund 1.00
Vista European Fund 1.00
Master Portfolios:
- -------------------
Vista Capital Growth Portfolio 0.40%
Vista Growth and Income Portfolio 0.40
Vista International Equity
Portfolio 1.00
Vista Global Fixed Income Portfolio 0.75
</TABLE>
5
<PAGE>
MFG 020796
<PAGE>
APPENDIX C
FORM OF PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AND
CHASE ASSET MANAGEMENT, INC.
AGREEMENT made as of the day of , 1996, by and between The Chase Manhattan
Bank, N.A., a national banking association, and its successor, The Chase
Manhattan Bank, a New York State chartered bank (the "Adviser"), and Chase
Asset Management, Inc., a Delaware 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 Group, a Massachusetts business trust (the "Trust"), an open-end,
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act") 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 "Fund" and collectively, the "Funds"), 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 Funds 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 Funds under applicable laws and are under the control of
New Chase, the parent of the 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 Sub-Adviser.
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 Funds.
3. Investment Advisory Services.
(a) Management of the Portfolios. The Sub-Adviser hereby undertakes to
act as investment subadviser to the Funds. The Sub-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 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 Funds' investment programs,
and the issuers of securities included in the portfolio of each Fund
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 Fund's portfolio;
(ii) determine which issuers and securities shall be included in the
portfolio of each Fund;
(iii) furnish a continuous investment program for each Fund;
<PAGE>
(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 Fund; and
(v) take, on behalf of each Fund, 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 Fund'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. (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 Fund and
provided to the Adviser in writing. The management of the Funds 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 Fund's books and records required to be maintained by, or on
behalf of, the Funds with respect to subadvisory services rendered hereunder.
The Sub-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 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 Funds 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 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 Fund 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 Funds. 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 Funds. 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 Fund on any particular transaction, nor shall the Sub-Adviser
be under any duty to execute any order in a fashion either preferential to
any Fund 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 Funds, 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 Fund 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 Funds and their
reasonableness in relation to their benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Sub-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 Sub-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 Trust's registration
statement and the Fund'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 Fund and such other clients.
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
2
<PAGE>
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the State of Delaware 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
Sub-Adviser 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 each Fund 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.
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 Fund,
the Adviser shall pay to the Sub-Adviser (or cause to be paid by the Trust
directly to the Sub- Adviser) 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 Fund during the preceding month (computed
in the manner set forth in the Fund'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 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 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 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 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 Fund were it not for the expense
limitation provisions of any investment advisory or administrative agreement
to which the Fund 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 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
Funds.
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 Funds, the Trust or the Adviser for providing additional
services to the Funds, 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 Funds or to any shareholder of the Funds 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 Fund, or any shareholder of a Fund in connection with the
performance of this Agreement.
3
<PAGE>
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 Fund 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 Fund.
(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 Fund(s) at any time on
sixty (60) 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 Fund by the Adviser, by a vote of the Trust's Board of Trustees,
by vote of a majority of the outstanding voting securities of the Fund. 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 Group"and "Trustees of Mutual Fund Group" 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 Group" 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 Fund must look solely to the assets of the Trust or Fund for the
enforcement of any claims against the Trust or Fund.
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 Fund in any way or
otherwise be deemed an agent of a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering into
this Agreement with regard to the respective Funds 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 Fund severally and not jointly. This Agreement is intended to govern
only the relationships between the Adviser, on the one hand, and the
Sub-Adviser, on the other hand, and is not intended to and shall not govern
(i) the relationship between the Adviser or Sub-Adviser and any Fund, or (ii)
the relationships among the respective Funds.
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
Sub-Adviser 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 Sub-Adviser. 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, N.A.
By:-------------------------- By:--------------------------
Name: Name:
Title: Title:
4
<PAGE>
Schedule A
Fund:
- -----
Vista Short Term Bond Fund
Vista U.S. Treasury Income Fund
Vista Bond Fund
Vista Equity Income Fund
Vista Equity Fund
Vista Balanced Fund
IEEE Balanced Fund
Vista Small Cap Equity Fund
Vista Southeast Asian Fund
Vista Japan Fund
Vista European Fund
Master Portfolio:
- -----------------
Vista Capital Growth Portfolio
Vista Growth and Income Portfolio
Vista International Equity Portfolio
Vista Global Fixed Income Portfolio
5
<PAGE>
APPENDIX D
MUTUAL FUND GROUP
FORM OF
CLASS A SHARES
PROPOSED PLAN FOR PAYMENT OF CERTAIN EXPENSES FOR
DISTRIBUTION OR SHAREHOLDER SERVICING ASSISTANCE
Distribution Plan (the "Plan") of MUTUAL FUND GROUP, 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 Class A Shares of
its Vista U.S. Government Income Fund, Vista Balanced Fund, Vista Equity
Income Fund, Vista Bond Fund, Vista Short Term Bond Fund, Vista Equity Fund
and Vista Small Cap Equity Fund Series, and the Class A Shares or 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.
(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.
<PAGE>
8. Miscellaneous.
(a) Any termination or noncontinuance of (i) a selected dealer agreement
between the Distrixibutor 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.
(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
2
<PAGE>
EXHIBIT A
Vista Broker-Dealer Services, Inc.
125 West 55th Street
New York, New York 10019
Re: Selected Dealer Agreement for
Mutual Fund Group
Gentlemen:
We understand that Mutual Fund Group (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 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 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,
<PAGE>
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.
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-2
<PAGE>
EXHIBIT B
Mutual Fund Group
125 West 55th Street
New York, New York 10019
Re: Shareholder Service Agreement for
Mutual Fund Group
Gentlemen:
We understand that Mutual Fund Group (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.
(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.
<PAGE>
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.
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 an
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
------------------------------------
(Firm Name)
------------------------------------
(Address)
------------------------------------
(City) (State) (Zip Code)
By ----------------------------------
Name:
Title:
Accepted:
MUTUAL FUND GROUP
By:---------------------------
Name:
Title:
Dated:
B-2
