IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 25, 1996
Dear Valued Shareholder:
As you may be aware, The Chase Manhattan Corporation ("Chase") has entered
an Agreement and Plan of Merger with Chemical Banking Corporation
("Chemical") pursuant to which Chase will merge with and into Chemical (the
"Holding Company Merger"). As required by the Investment Company Act of 1940,
as amended, consummation of the Holding Company Merger will result in the
automatic termination of the investment advisory agreement between the IEEE
Balanced Fund and The Chase Manhattan Bank, N.A. (the "Adviser") and the
sub-advisory agreement between the Adviser and Atlanta Capital Management
Company. In addition, subsequent to the Holding Company Merger, the Adviser
will be merged with and into Chemical Bank in a secondary merger of the
principal operating entities of Chase and Chemical (the "Bank Merger"). The
Bank Merger may also be deemed to result in the automatic termination of the
investment advisory agreement and sub-advisory agreement. In anticipation of
the completion of the Holding Company Merger and the Bank Merger, and to
provide continuity in investment advisory services to the IEEE Balanced Fund,
we urge you to review the enclosed proxy statement. In the proxy statement
you are asked to vote on the approval of new advisory agreements and
sub-advisory agreements in addition to other items.
You are also being asked to approve a Plan of Reorganization (the
"Reorganization Plan") whereby all of the assets of the IEEE Balanced Fund
will be transferred to the Vista Balanced Fund, another series of Mutual Fund
Group (the "Trust").
Currently, Atlanta Capital Management Company ("Atlanta Capital") serves
as sub-adviser to the IEEE Balanced Fund. If shareholders approve the
reorganization of IEEE Balanced Fund into Vista Balanced Fund, Atlanta
Capital will no longer serve as sub-adviser. This is being proposed as a
result of the Adviser's determination that portfolio management of the equity
and fixed income portfolios of the Vista Funds should be consolidated within
Chase and its affiliates.
Balanced Fund shareholders are being asked to vote upon an arrangement
whereby Chase Asset Management, Inc. ("CAM Inc."), a wholly-owned subsidiary
of Chase, will provide sub-advisory services to the Balanced Fund.
The Board of Trustees has voted unanimously in favor of each proposal and
recommends that you vote "FOR" them as well. You will find more information
on the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the contractual advisory
fee rate in the proposed advisory agreement.
PLEASE VOTE YOUR PROXIES AND RETURN THEM AS SOON AS POSSIBLE
IN THE POSTAGE PAID ENVELOPE PROVIDED. EVERY VOTE COUNTS.
Very truly yours,
/s/ Fergus Reid
Fergus Reid
Chairman
March 21, 1996
<PAGE>
IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 25, 1996
To the Shareholders of the IEEE Balanced Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of the
IEEE Balanced Fund (the "IEEE Fund") a series of Mutual Fund Group (the
"Trust") will be held at 101 Park Avenue, 17th Floor, New York, New York at
2:00 p.m., Eastern Time on April 25, 1996 for the following purposes:
1. To consider and act upon a Plan of Reorganization (the "Reorganization
Plan") and the transactions contemplated thereby providing for (a) the
transfer of all of the assets of the IEEE Fund to the Vista Balanced
Fund (the "Balanced Fund"), another series of the Trust, in exchange
for the assumption of the liabilities of the IEEE Fund by the Balanced
Fund and the delivery to the IEEE Fund of Class A shares of the
Balanced Fund; (b) the pro rata distribution of the Class A shares of
the Balanced Fund so received to the shareholders of the IEEE Fund in
liquidation of their interests in IEEE Fund; and (c) the termination of
IEEE Fund;
2. To approve or disapprove a new investment advisory agreement between
the IEEE Fund and The Chase Manhattan Bank, N.A. (and the successor
entity thereto) (the "Adviser") and a sub-advisory agreement between
the Adviser and Atlanta Capital Management Company to take effect upon
the merger of The Chase Manhattan Corporation (the parent company of
the Adviser) and Chemical Banking Corporation. No fee increase is
proposed;
3. To elect eleven trustees to serve as members of the Board of Trustees
of the Trust;
4. To ratify the selection of Price Waterhouse LLP as independent
accountants for the 1996 fiscal year of IEEE Fund; and
5. To approve or disapprove an amendment to the Trust's Declaration of
Trust.
To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
Shareholders of record as of the close of business on February 29, 1996,
are entitled to notice of, and to vote at, the Special Meeting and any
adjournment(s) thereof. The proposed Reorganization, including the actions
that will occur without the need for further shareholder consideration (if
shareholders approve the Reorganization), are described in the attached
Combined Proxy Statement/Prospectus. Appendix A to the Combined Proxy
Statement/ Prospectus is a copy of the Reorganization Plan.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST ON BEHALF OF IEEE FUND. THIS IS IMPORTANT TO ENSURE A
QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY SUBMITTING TO THE IEEE FUND A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY, OR BY ATTENDING THE MEETING AND VOTING IN
PERSON.
/s/ Ann Bergin
Ann Bergin
Secretary
March 21, 1996
<PAGE>
IEEE BALANCED FUND
125 West 55th Street
New York, New York 10019
800-348-4782
VISTA BALANCED FUND
125 West 55th Street
New York, New York 10019
800-348-4782
PROSPECTUS/PROXY STATEMENT
Dated March 21, 1996
This Combined Proxy Statement/Prospectus is furnished in connection with
the solicitation of proxies by the Board of Mutual Fund Group on behalf of
IEEE (the "IEEE Fund") in connection with a Special Meeting of Shareholders
(the "Meeting") to be held at 101 Park Avenue, 17th Floor, New York, New York
on April 25, 1996 at 2:00 p.m., Eastern Time, at which shareholders will be
asked to consider and approve a proposed Plan of Reorganization adopted
December 14, 1995 (the "Reorganization Plan"), by the Board of Trustees of
the Mutual Fund Group, a Massachusetts business trust (the "Trust"), with
respect to two of the Trust's existing investment portfolios: the Vista
Balanced Fund (the "Balanced Fund") and the IEEE Fund.
The Trust is an open-end management investment company; the Trust is
organized as a "series company" which means that separate investment
portfolios are organized under the common company with each portfolio having
separate assets and shareholders. The Balanced Fund and the IEEE Fund are
both such portfolios. The investment objective and policies of the Balanced
Fund are substantially similar to those of the IEEE Fund. Both seek to
provide their shareholders with maximum total return through a combination of
long-term growth of capital and current income by investing in a diversified
portfolio of equity and debt securities, including common stocks, convertible
securities and government and corporate fixed-income senior securities. The
Chase Manhattan Bank, N.A. serves as investment adviser to both the IEEE Fund
and the Balanced Fund, and if the Reorganization Plan is approved by
shareholders of the IEEE Fund, it will continue to serve as investment
adviser to the Balanced Fund.
The Reorganization Plan provides that all of the assets of the IEEE Fund
will be transferred to the Balanced Fund. In exchange for the transfer of
those assets, the Balanced Fund will assume all liabilities of the IEEE Fund
and issue Class A shares of the Balanced Fund to the IEEE Fund. The IEEE Fund
will then make a liquidating pro rata distribution of the Balanced Fund's
shares to the shareholders of the IEEE Fund, so that someone who is an IEEE
Fund shareholder at the time of the reorganization will receive full and
fractional Class A shares of the Balanced Fund with an aggregate net asset
value equal to the aggregate net asset value of the shares of the IEEE Fund
held by the shareholder immediately before the reorganization.
The above described transfer of assets, assumption of all liabilities,
delivery of shares of the Balanced Fund, and pro rata distribution of such
shares to the shareholders of the IEEE Fund are collectively referred to as a
"Reorganization" with respect to the IEEE Fund. Following the Reorganization
of the IEEE Fund, it will be terminated.
No commissions, sales loads or similar charges will be incurred by
shareholders of the IEEE Fund in connection with the Reorganization. In
addition, all ordinary and reasonable expenses incurred in connection with
the Reorganization will be borne by Chase or its affiliates.
As a result of the Reorganization, an account will be established for the
Shareholders of the IEEE Fund, which will be credited with full and
fractional Class A shares of the Balanced Fund equal in value to the value of
the shares of the IEEE Fund held by its shareholders immediately prior to the
Reorganization.
As you may be aware, The Chase Manhattan Corporation ("Chase") has entered
an Agreement and Plan of Merger with Chemical Banking Corporation
("Chemical") pursuant to which Chase will merge with and into Chemical (the
"Holding Company Merger"). As required by the Investment Company Act of 1940,
as amended, consummation of the Holding Company Merger will result in the
automatic termination of the investment advisory agreement between the IEEE
Fund and The Chase Manhattan Bank, N.A. (the "Adviser") and the sub-advisory
agreement between the Adviser and Atlanta Capital Management Company
("Atlanta Capital"). In addition, subsequent to the Holding Company Merger,
the Adviser will be merged with and into Chemical Bank in a secondary merger
of the principal operating entities of Chase and Chemical (the "Bank
Merger"). The Bank Merger may also be deemed to result in the automatic
termination of the investment advisory agreement and sub-advisory agreement.
<PAGE>
Balanced Fund shareholders are being asked to vote upon the investment
advisory agreements. In anticipation of the completion of the Holding Company
Merger and the Bank Merger, and to provide continuity in investment advisory
services to the IEEE Fund, we urge you to review the enclosed proxy
statement. In the proxy statement you are asked to vote on the approval of a
new advisory agreement between the IEEE Fund and the Adviser and a
sub-advisory agreement between the Adviser and Atlanta Capital in addition to
other items. As used herein, the term "Adviser" refers to The Chase Manhattan
Bank, N.A., including its successor in the Bank Merger.
The Board of Trustees has voted unanimously in favor of each proposal and
recommends that you vote "FOR" them as well. You will find more information
on the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the contractual advisory
fee rates in the proposed advisory agreements.
This Combined Prospectus/Proxy Statement sets forth concisely the
information that a shareholder should know before voting, and should be
retained for future reference. A Statement of Additional Information dated
March 21, 1996, has been filed with the Securities and Exchange Commission
"the SEC" and is hereby incorporated by reference. This Combined Proxy
Statement/Prospectus is expected to first be sent to Shareholders on or about
March 29, 1996. The current Prospectus and Statement of Additional
Information for the IEEE Fund, dated March 1, 1996, have been filed with the
Securities and Exchange Commission (the "SEC") and are incorporated by
reference into this Combined Prospectus/Proxy Statement. A copy of the
Prospectus for the Vista Balanced Fund, dated March 1, 1996, is provided for
your review and is incorporated by reference into this Combined
Prospectus/Proxy Statement. The current Statement of Additional Information
for the Vista Balanced Fund, dated March 1, 1996, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
combined Prospectus/ Proxy Statement. Copies of the IEEE Prospectus and each
Statement of Additional Information are available without charge upon oral or
written request by writing or calling the IEEE Fund at the address or
telephone number indicated on the previous page.
THE SECURITIES OF THE VISTA BALANCED FUND HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS COMBINED PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY
STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED
HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY IEEE BALANCED FUND OR THE
VISTA BALANCED FUND.
2
<PAGE>
TABLE OF CONTENTS
Page
-------
1. Proposal 1--Approval or Disapproval of a Reorganization of IEEE
Balanced Fund Into Vista Balanced Fund 5
Summary 5
Proposed Reorganization 5
Reasons for Reorganization 5
Voting Information 5
Federal Income Tax Consequences 6
Organizational Structure 6
Risk Factors 6
Information Relating to the Proposed Reorganization 6
Description of the Reorganization Plan 6
Board Consideration 7
Federal Income Tax Consequences 7
Comparison of the Balanced Fund and the IEEE Fund 8
Investment Objectives, Policies and Restrictions 8
Investment Advisory Fees and Other Expenses 13
Shareholder Service Agreements 14
Distribution and Purchase Procedures 14
Plan of Distribution 14
Redemption and Exchange Procedures 14
Income Dividends, Capital Gain Distributions and Taxes 15
Governance and Shareholders' Rights 15
Information About the Balanced and IEEE Funds' Investment Adviser,
Sub-Adviser, Administrator, Distributor and Sub-Administrator,
Distribution Plan, Shareholder Servicing Agents, Transfer Agent,
Custodian, Independent Accountants and Counsel 15
The Investment Adviser 15
The Sub-Adviser 16
The Administrator 18
The Glass-Steagall Act 18
The Distributor and Sub-Administrator 19
The Distribution Plans 19
Shareholder Servicing Agents 19
Transfer Agent and Custodian 20
Independent Accountants 20
Counsel 20
Information about the IEEE Fund's Sub-Adviser and Other
Relationships 20
The IEEE Fund's Sub-Adviser 20
The IEEE Fund's Other Relationships 21
Information Relating To Voting Matters 21
General Information 21
Quorum 21
Shareholder Approvals 21
Appraisal Rights 21
Additional Information About the Trust 21
Trustees 22
2. Proposal 2--Approval or Disapproval of an Interim Advisory
Agreement Between the Fund 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 Atlanta Capital Management
Company 22
3. Proposal 3--Election of Trustees 26
4. Proposal 4--Ratification of Price Waterhouse LLP as Independent
Public Accountant 29
3
<PAGE>
5. Proposal 5--Approval or Disapproval of an Amendment to the
Trust's Declaration of Trust 30
Additional Information About the IEEE Fund 30
Financial Statements 30
Shareholder Inquiries 31
Appendix A--Form of Plan of Reorganization A-1
Appendix B--Form of Interim Investment Advisory Agreement B-1
Appendix C--Form of Interim Sub-Advisory Agreement C-1
4
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF A
REORGANIZATION OF IEEE BALANCED FUND INTO VISTA
BALANCED FUND
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization, the parties thereto and the related transactions, and is
qualified in its entirety by the more detailed information appearing
elsewhere in this Combined Prospectus/Proxy Statement, the Reorganization
Plan, and the prospectuses and statements of additional information of the
IEEE Fund and the Balanced Fund.
Proposed Reorganization
Based upon their evaluation of the relevant information presented to them,
and in light of their fiduciary duties under federal and state law, the Board
of Trustees of the Trust including its members who are not "interested
persons" of the Trust, as defined by the Investment Company Act of 1940, as
amended (the "1940 Act"), have unanimously determined that the proposed
Reorganization is in the best interests of the IEEE Fund and the Balanced
Fund and their respective shareholders.
Subject to shareholder approval, the Reorganization Plan provides for: (a)
the acquisition by the Balanced Fund of all of the assets of the IEEE Fund in
exchange for the assumption of all of the liabilities of the IEEE Fund by the
Balanced Fund and the delivery to the IEEE Fund of Class A shares of the
Balanced Fund; (b) the pro rata distribution by the IEEE Fund of Balanced
Fund shares to the shareholders of the IEEE Fund in liquidation of the IEEE
Fund; and (c) the termination of the IEEE Fund following the Reorganization.
Consummation of the Reorganization with respect to the IEEE Fund is
contingent on the Reorganization Plan being approved by shareholders of the
IEEE Fund.
If the proposed Reorganization is consummated, each shareholder of the
IEEE Fund will become a shareholder of the Balanced Fund and will hold,
immediately after the time the Reorganization becomes effective (the
"Effective Time of Reorganization"), full and fractional Class A shares of
the Balanced Fund with an aggregate net asset value equal to the aggregate
net asset value of the shares of the IEEE Fund held by the shareholder
immediately before the Effective Time of Reorganization.
Reasons for Reorganization
At a meeting of the Board of Trustees (the "Trustees" or the "Board") of the
Trust held on December 14, 1995, the Trustees, including all of the Trustees
who are not "interested persons," as defined in the 1940 Act, of the Trust,
Chase, or Atlanta Capital Management Company, unanimously approved the
proposed Reorganization and Reorganization Plan as in the best interest of
the IEEE Fund, the Balanced Fund and their respective shareholders. The
Trustees considered all factors they considered relevant, including, among
other factors, (i) the fact that (A) Chase will continue to serve as
Investment Adviser, Administrator, Shareholder Servicing Agent, and Custodian
to the Balanced Fund (and CAM, Inc. will serve as Sub-Adviser) and (B) Vista
Broker-Dealer Services, Inc., a wholly-owned subsidiary of The BISYS Group,
Inc., will continue to serve as Distributor; (ii) the experience, reputation
and financial resources of Chase; (iii) the experience, reputation and
financial resources of Vista Broker-Dealer Services, Inc.; (iv) the expenses
and expense ratio proposed for the Balanced Fund, compared with those of the
IEEE Fund; and (v) the fact that the various shareholder services available
to shareholders of the IEEE Fund are substantially identical to those
currently available to Balanced Fund shareholders. The Trustees also
determined that the opportunity to continue to exchange shares of the
Balanced Fund for shares of the other funds of the Trust would be beneficial
to IEEE Fund shareholders. For more detailed information, see "Information
Relating to the Proposed Reorganization--Board Consideration." If for any
reason the Reorganization of the IEEE Fund is not approved or consummated,
then the IEEE Fund will continue to operate with its then-current advisory
and distribution arrangements.
The Board of Trustees recommends that shareholders vote FOR the proposed
Reorganization.
Voting Information
Only shareholders of the IEEE Fund of record at the close of business on
February 29, 1996 (the "Record Date"), will be entitled to notice of and to
vote at the meeting, including any adjournments thereof. The votes of
shareholders of the Balanced Fund are not being solicited in connection with
the Reorganization because their approval or consent is not necessary for the
Reorganization. Any proxy which is properly executed and returned in time to
be voted at the Meeting will be counted in determining whether a quorum is
present and will be voted in accordance with the instructions marked thereon,
or in the absence of any instructions, such proxy will be voted to approve
the Reorganization Plan and the transactions contemplated thereby. A
Shareholder may revoke his or her proxy at any time prior to its exercise by
delivering written notice of revocation or by executing and delivering a
later dated proxy to the address of the IEEE Fund set forth on the cover page
of this combined Prospectus/Proxy Statement, or by attending and voting at
the Meeting.
As of February 29, 1996, the following shareholders of record owned 5% or
more of the outstanding shares of the IEEE Fund:
Percentage
of Shares
Name and Address Shares Outstanding
IEEE/ECI
445 Hoes Lane
Piscataway, N.J. 08854.................... 63,949.664 6%
Institute of Electrical and
Electronic
Engineers, Inc.
445 Hoes Lane
Piscataway, N.J. 08854.................... 531,761.721 51%
5
<PAGE>
Federal Income Tax Consequences
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Trust, is
expected to issue an opinion as of the Effective Time of Reorganization
stating that the Reorganization will not give rise to the recognition of
income, gain or loss for Federal income tax purposes to the IEEE Fund, the
Balanced Fund, or their respective shareholders. See "Information Relating to
the Proposed Reorganization--Federal Income Tax Consequences."
Organizational Structure
The Trust is an open-end, management investment company organized as a
Massachusetts business trust with 17 existing investment portfolios (of which
15 are currently offered) and aggregate assets, as of February 29, 1996, of
approximately $3.7 billion. Assuming that the IEEE Fund obtains the necessary
shareholder approval and is reorganized with the Balanced Fund, the Trust
will have 16 separate investment portfolios: Vista U.S. Government Income
Fund, Vista Balanced Fund, Vista Equity Income Fund, Vista Bond Fund, Vista
Short Term Bond Fund, Vista Equity Fund, Vista Growth and Income Fund, Vista
Capital Growth Fund, Vista International Equity Fund, Vista Global Fixed
Income Fund, Vista Small Cap Equity Fund, Vista Southeast Asia Fund, Vista
Japan Fund, Vista European Fund, Vista U.S. Government Securities Fund and
Vista American Value Fund. Certain of the series, including the Balanced
Fund, are authorized to issue multiple classes of shares. Chase, one of the
largest commercial banks in the United States, serves as investment adviser
to the Vista Funds. The investment objectives, restrictions and policies of
the IEEE Fund are similar to those of the Balanced Fund. See "Comparison of
the Balanced Fund and the IEEE Fund" for a more complete description.
Risk Factors
Because of the similarities of the investment objectives, restrictions and
policies of the IEEE Fund and the Balanced Fund, the Adviser believes that an
investment in the Balanced Fund involves investment risks that are
substantially similar to those of the IEEE Fund. There are differences,
however, between the IEEE Fund and the Balanced Fund with respect to some
features. See "Comparison of the Balanced Fund and the IEEE Fund" for a
discussion of these differences.
INFORMATION RELATING TO THE
PROPOSED REORGANIZATION
The terms and conditions under which the Reorganization may be consummated
are set forth in the Reorganization Plan. Significant provisions of the
Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Proxy Statement/Prospectus.
Description of the Reorganization Plan
The Reorganization Plan provides that at the Effective Time of
Reorganization, all of the assets of the IEEE Fund will be transferred to the
Balanced Fund.
In exchange for the transfer of the assets of the IEEE Fund, the Balanced
Fund will assume all of the liabilities and obligations of the IEEE Fund and
simultaneously will issue to the IEEE Fund at the Effective Time of
Reorganization full and fractional Class A shares in the Balanced Fund. The
aggregate net asset value of the Class A shares issued by the Balanced Fund
will be equal to the aggregate net asset value of the shares of the IEEE
Balanced Fund that will be outstanding immediately prior to the Effective
Time of the Reorganization.
Following the transfer of the assets and assumption of the liabilities and
obligations existing at the Effective Time of Reorganization, the IEEE Fund
will distribute the Balanced Fund shares so received to the IEEE Fund's
shareholders in liquidation of the IEEE Fund. Each shareholder owning shares
of the IEEE Fund at the Effective Time of Reorganization will receive the
same dollar amount in Balanced Fund shares as the shareholder had in the IEEE
Fund, plus the right to receive any unpaid dividends or distributions which
were declared before the Effective Time of Reorganization on shares of the
IEEE Fund. If the Reorganization of the IEEE Fund is approved and
consummated, the IEEE Fund will be terminated.
The share transfer books of the IEEE Fund will be permanently closed as of
the close of business immediately preceding the Effective Time of
Reorganization. Redemption requests received thereafter by the IEEE Fund will
be deemed to be redemption requests for shares of the Balanced Fund to be
distributed to the former IEEE Fund shareholders. If any IEEE Fund shares
held by a former IEEE Fund shareholder are represented by a share
certificate, the certificate must be surrendered to the Balanced Fund's
transfer agent for cancellation before the Balanced Fund shares issued to the
shareholder in the Reorganization will be redeemed.
The current fundamental policies (changeable only by shareholder vote) of
the IEEE Fund might be deemed to prevent it from taking the actions necessary
to effectuate the Reorganization as described in this Combined Proxy
Statement/ Prospectus. In general, these policies prohibit the IEEE Fund from
purchasing more than a stated percentage of another company, including the
Balanced Fund, such as would occur in connection with this Reorganization. By
approving the Reorganization Plan, shareholders of the IEEE Fund will be
deemed to have agreed to waive the application of the fundamental policies to
the extent necessary to consummate the Reorganization.
The Reorganization is subject to a number of other conditions, including
the receipt of certain legal opinions described in the Reorganization Plan;
certain regulatory approvals; and the parties' performance in all material
respects of their respective agreements and undertakings in the
Reorganization Plan. Assuming satisfaction of the conditions in the
Reorganization Plan, the Effective Time of Reorganization will be on May 15,
1996 or such other date as is agreed to by the parties.
The Reorganization Plan provides that the Board of Trustees of the Trust
may terminate the Reorganization Plan and abandon the Reorganization
contemplated thereby at any time prior to the Effective Time of
Reorganization, notwithstanding approval thereof by the shareholders of the
IEEE Fund, if, in the
6
<PAGE>
judgment of the Board, proceeding with the Reorganization would be
inadvisable. The Board of Trustees of the Trust may terminate the
Reorganization Plan and abandon the Reorganization contemplated thereby if
any of the conditions set forth in the Reorganization Plan have not been
satisfied or the Reorganization has not occurred by the mutually agreed upon
date of closing of the Reorganization. In the event of any such termination,
there will be no liability for damages on the part of either party to the
other.
Chase or its affiliates shall pay the costs and expenses of the
Reorganization and all transactions contemplated therein.
Board Consideration
On December 14, 1995, the Board of Trustees of the Trust approved the
proposed Reorganization Plan and the transactions contemplated therein,
subject to shareholder approval. The Board of Trustees voted to approve the
Reorganization because the Board believed that the opportunity for
shareholders of the IEEE Fund to become shareholders of the Balanced Fund
would provide them with substantial advantages.
In determining to recommend approval of the Reorganization to the
shareholders, the Board of Trustees inquired into a number of matters and
considered the following factors, among others:
(1) the terms and conditions of the Reorganization Plan, including the
fact that the IEEE Fund would not bear the expense of the
reorganization transactions;
(2) the current and anticipated size of the IEEE Fund and the Balanced
Fund, including recent sales and redemptions, and the potential for
greater economies of scale and diversification that would be achieved
for shareholders of the IEEE Fund as investors in a larger portfolio;
(3) the substantial similarity of the investment objectives and policies
of the IEEE Fund and the Balanced Fund;
(4) the fact that Chase will continue to serve as Investment Adviser,
Administrator, shareholder Servicing Agent, and custodian of the
Balanced Fund, and its experience, capabilities and resources;
(5) the fact that Vista Broker-Dealer Services, Inc. ("VBDS") will
continue to serve as Distributor, and its experience, capabilities and
resources;
(6) the federal tax consequences to the IEEE Fund, the Balanced Fund and
their shareholders resulting from the proposed Reorganization, and the
likelihood that no recognition of income, gain or loss for federal
income tax purposes to the IEEE Fund, the Balanced Fund or their
shareholders will occur as a result thereof; and
(7) the alternative options to the proposed Reorganization.
In considering these factors and reaching the decision to recommend that
the shareholders of the IEEE Fund vote to approve the Reorganization and the
Reorganization Plan, the Board concluded that the Reorganization is in the
best interests of the shareholders of the IEEE Fund.
Federal Income Tax Consequences
Consummation of the Reorganization is subject to the condition that the Trust
receives an opinion from Kramer, Levin, Naftalis, Nessen, Kamin & Frankel,
counsel to the Trust, stating that for Federal income tax purposes: (i) the
transfer of all of the assets of the IEEE Fund to the Balanced Fund in
exchange for the assumption of all the liabilities of the IEEE Fund by the
Balanced Fund and the delivery to the IEEE Fund of shares of the Balanced
Fund, and the distribution by the IEEE Fund pro rata to its shareholders of
such shares of the Balanced Fund and the termination of the IEEE Fund, as
described in the Reorganization Plan, will constitute a reorganization within
the meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended; (ii) no gain or loss will be recognized by the IEEE Fund as a result
of such transactions; (iii) no gain or loss will be recognized by the
Balanced Fund as a result of such transactions; (iv) no gain or loss will be
recognized by the shareholders of the IEEE Fund on the distribution to them
by the IEEE Fund of shares of the Balanced Fund in exchange for their shares
of the IEEE Fund; (v) the basis of Balanced Fund shares received by a
shareholder of the IEEE Fund will be the same as the basis of the
shareholder's IEEE Fund shares immediately prior to the transactions; (vi)
the basis to the Balanced Fund of the assets of the IEEE Fund received
pursuant to such transactions will be the same as the basis of the assets in
the hands of the IEEE Fund immediately before such transactions; (vii) a
shareholder's holding period for Balanced Fund shares will be determined by
including the period for which the shareholder held IEEE Fund shares
exchanged therefor, provided that the shareholder held IEEE Fund shares as a
capital asset; and (viii) the Balanced Fund's holding period with respect to
the assets received in the transactions will include the period for which
such assets were held by the IEEE Fund.
The IEEE Fund and the Balanced Fund have not sought a tax ruling from the
Internal Revenue Service (the "IRS") with respect to the tax aspects of the
Reorganization, but will act in reliance upon the opinion of counsel
discussed in the previous paragraph. Such opinion is not binding on the IRS
and does not preclude the IRS from adopting a contrary position. If for any
reason the Reorganization did not qualify as a tax-free Reorganization for
Federal income tax purposes, then the Reorganization would be treated as a
taxable asset sale and purchase. In such event, the IEEE Fund would recognize
gain or loss on the transaction measured by the difference between the
consideration received by the IEEE Fund and the tax basis of the IEEE Fund
assets; the tax basis of the assets acquired by the Balanced Fund would equal
the purchase price plus the amount of any liabilities transferred to the
Balanced Fund; and upon distribution of the shares of the Balanced Fund in
dissolution of the IEEE Fund, the shareholders of the IEEE Fund would
recognize gain or loss on the disposition of their IEEE Fund shares measured
by the difference between the fair market value of the Balanced Fund shares
received by them and the basis of the IEEE Fund shares held by them.
Shareholders should consult their
7
<PAGE>
own advisers concerning the potential tax consequences of the Reorganization
to them, including state and local income tax consequences.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSED REORGANIZATION
COMPARISON OF THE BALANCED
FUND AND THE IEEE FUND
Investment Objectives, Policies and Restrictions
1. Investment Objectives and Policies
The investment objectives and policies of the Balanced Fund are similar but
not identical to those of the IEEE Fund. The discussion below summarizes the
material differences between the investment objectives and policies of the
Funds and is qualified in its entirety by the discussion elsewhere herein and
in the prospectuses and statements of additional information of the Balanced
Fund and the IEEE Fund.
The investment objective of the IEEE Fund is to provide shareholders with
a maximum total return through a combination of long-term growth of capital
and current income. The current fundamental investment objective of the
Balanced Fund is 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. Subject to shareholder approval, the Balanced
Fund's fundamental objective will be changed prior to the consummation of the
Reorganization so as to be "to provide shareholders with a maximum total
return through a combination of long-term growth of capital and current
income" and the remainder of its present fundamental objective will become
nonfundamental policy.
Both the IEEE Fund and the Balanced Fund seek to achieve their investment
objective through a policy of diversified investments in equity and debt
securities, including common stocks, convertible securities, and government
and corporate fixed-income senior securities. Under normal market conditions,
between 40%-70% of the IEEE Fund's total assets are invested in common
stocks and other equity investments (including preferred stocks, convertible
debt, warrants and other securities convertible into or exchangeable for
common stocks). Similarly, the Balanced Fund normally invests between 35%-70%
of its assets in such instruments. The majority of both Funds' common stock
and other equity investments are invested in companies with a market
capitalization of at least $200 million. In addition, the IEEE Fund and the
Balanced Fund invest at least 30% and 25%, respectively, of their assets in
fixed-income senior securities, defined for this purpose to include
non-convertible corporate debt securities and government obligations.
Non-convertible corporate debt obligations held in both Funds' portfolios are
rated, at the time of purchase, BBB or higher by Standard & Poor's
Corporation ("S&P") or Baa or higher by Moody's Investor Service, Inc.
("Moody's"), or if unrated, determined to be of comparable quality by the
Adviser or the Fund under criteria approved by the Adviser and the Board of
Trustees. Both Funds may also purchase obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, and may invest in
high quality short-term debt securities such as commercial paper rated A-1 by
S&P or P-1 by Moody's.
2. Investment Restrictions
In general, the investment restrictions of the Balanced Fund are, in
substantial respects, similar to those of the IEEE Fund. There are, however,
differences. The following discussion summarizes some of the significant
differences in the investment restrictions of the Balanced Fund and the IEEE
Fund, and is qualified in its entirety by the discussion elsewhere herein and
in the prospectuses and statements of additional information of the Balanced
Fund and the IEEE Fund.
The significance of any investment restriction being fundamental is that
it may not be changed without the approval of a "majority of outstanding
voting securities" (within the meaning of the 1940 Act) of the Balanced Fund
or the IEEE Fund, as the case may be.
One distinction between the Balanced Fund and the IEEE Fund derives from
the circumstances under which each fund is allowed to make loans to other
persons. The Balanced Fund is not permitted to make loans to other persons,
except (i) through the lending of its portfolio securities and provided that
any such loans not exceed 30% of the Fund's total assets (taken at market
value), (ii) through the use of repurchase agreements or the purchase of
short-term obligations and provided that not more than 10% of the Fund's
total assets will be invested in repurchase agreements maturing in more than
seven days, or (iii) by purchasing a portion of an issue of debt securities
of types commonly distributed privately to financial institutions, for which
purposes the purchase of short-term commercial paper or a portion of an issue
of debt securities which are part of an issue to the public shall not be
considered the making of a loan. The IEEE Fund is subject to a restriction
which is identical in all respects except that with regard to the use of
repurchase agreements or the purchase of short-term obligations it requires
that not more that 15% of the Fund's total assets be invested in repurchase
agreements maturing in more than seven days.
The Balanced Fund has a fundamental investment restriction prohibiting the
writing, purchasing or selling of any put or call option or any combination
thereof. The IEEE Fund, for the purpose of hedging its portfolio, will
"write" or sell covered call and put option contracts on its portfolio
securities in an amount not to exceed 25% of its net assets.
Currently, the fundamental investment restrictions of IEEE Fund and
Balanced Fund are substantially identical.
At this time, Balanced Fund shareholders are being asked to consider the
approval of amendments to, defundamentalization of and/or elimination of
certain fundamental investment restrictions for purposes of clarification,
modernization or adding flexibility to the Balanced Fund's investment
program. In each case, the current Restriction is set forth in the left hand
column under "Current" and it is proposed that the Restriction be restated,
eliminated, reclassified, or otherwise changed as indicated in the right hand
column under "Proposed".
8
<PAGE>
Current: Proposed:
The Fund may not borrow money or Fundamental Restriction
pledge, mortgage or hypothecate its The Fund may not borrow money,
assets and, except that, as a except that the Fund may borrow
temporary measure for extraordinary money for temporary or emergency
or emergency purposes it may borrow purposes, or by engaging in reverse
in an amount not to exceed 1/3 of repurchase transactions, in an
the current value of its net amount not exceeding 33-1/3% of the
assets, including the amount value of its total assets at the
borrowed, and may pledge, mortgage time when the loan is made and may
or hypothecate not more than 1/3 of pledge, mortgage or hypothecate no
such assets to secure such more than 1/3 of its net assets to
borrowings (it is intended that secure such borrowings. Any
money would be borrowed by the Fund borrowings representing more than
only from banks and only to 5% of the Fund's total assets must
accommodate requests for the be repaid before the Fund may make
repurchase of shares of the Fund additional investments.
while effecting an orderly
liquidation of portfolio
securities), provided that
collateral arrangements with
respect to the Fund's permissible
futures and options transactions,
including initial and variation
margin, are not considered to be a
pledge of assets for purposes of
this restriction; the Fund will not
purchase investment securities if
its outstanding borrowing,
including repurchase agreements,
exceeds 5% of the value of the
Fund's total assets.
Current: Proposed:
The Fund may not purchase Nonfundamental Restriction
securities of any issuer if such The Fund may not, with respect to
purchase at the time thereof would 50% of its assets, hold more than
cause more than 10% of the voting 10% of the outstanding voting
securities of such issuer to be securities of an issuer.
held by the Fund.
Current: Proposed:
The Fund is not permitted to make Fundamental Restriction
loans to other persons, except (i) The Fund may make loans, except
through the lending of its that the Fund may: (i) purchase and
portfolio securities and provided hold debt instruments (including
that any such loans not exceed 30% without limitation, bonds, notes,
of the Fund's total assets (taken debentures or other obligations and
at market value), (ii) through the certificates of deposit, bankers'
use of repurchase agreements or the acceptances and fixed time
purchase of short-term obligations deposits) in accordance with its
and provided that not more than 10% investment objectives and policies;
of the Fund's total assets will be (ii) enter into repurchase
invested in repurchase agreements agreements with respect to
maturing in more than seven days, portfolio securities; and (iii)
or (iii) by purchasing, subject to lend portfolio securities with a
the limitation on illiquid and value not in excess of one-third
restricted securities above, a of the value of its total assets.
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.
Current: Proposed:
The Fund may not purchase any Nonfundamental Restriction
security or evidence of interest The Fund may not make short sales
therein on margin, except that such of securities, other than short
short-term credit as may be sales "against the box," or
obtained as may be necessary for purchase securities on margin
the clearance of purchases and except for short-term credits
sales of securities and except necessary for clearance of
that, with respect to the Fund's portfolio transactions, provided
permissible options and futures that this restriction will not be
transactions, deposits of initial applied to limit the use of
and variation margin may be made in options, futures contracts and
connection with the purchase, related options, in the manner
ownership, holding or sale of otherwise permitted by the
futures or options positions. investment restrictions, policies
and investment program of the Fund.
9
<PAGE>
Current: Proposed:
The Fund may not concentrate its Fundamental Restriction
investments in any particular The Fund may not purchase the
industry, but if it is deemed securities of any issuer (other
appropriate for the achievement of than securities issued or
the Fund's investment objective, up guaranteed by the U.S. government
to 25% of its assets at market or any of its agencies or
value at the time of each instrumentalities, or repurchase
investment, may be invested in any agreements secured thereby) if, as
one industry, except that this a result, more than 25% of the
restriction does not apply to U.S. Fund's total assets would be
Government securities (in addition, invested in the securities of
so long as a single foreign companies whose principal business
government or supra-national activities are in the same
organization is considered to be an industry. Notwithstanding the
"industry" for purposes of this 25% foregoing, with respect to the
limitation, the Fund will comply Fund's permissible futures and
therewith), and except that, with options transactions, positions in
respect to the Fund's permissible options and futures shall not be
futures and options transactions, subject to this restriction.
positions in options and futures
shall not be subject to this
restriction.
For purposes of this restriction,
industrial development bonds, where
the payment of principal and
interest is the ultimate
responsibility of companies within
the same industry, are grouped
together as an "industry".
Current: Proposed:
The Fund may not purchase or sell Fundamental Restriction
real estate (including limited The Fund may not purchase or sell
partnership interests but excluding physical commodities unless
securities secured by real estate acquired as a result of ownership
or interests therein), interests in of securities or other instruments
oil, gas or mineral leases, (but this shall not prevent the
commodities or commodity contracts Fund from (i) purchasing or selling
in the ordinary course of business, options and futures contracts or
other than with respect to the from investing in securities or
Fund's permissible futures and other instruments backed by
options transactions (the Fund physical commodities or (ii)
reserves the freedom of action to engaging in forward purchases or
hold and to sell real estate sales of foreign currencies or
acquired as a result of its securities).
ownership of securities). Fundamental Restriction
The Fund may not purchase or sell
real estate unless acquired as a
result of ownership of securities
or other instruments (but this
shall not prevent the Fund from
investing in securities or other
instruments backed by real estate
or securities of companies engaged
in the real estate business).
Investments by the Fund in
securities backed by mortgages on
real estate or in marketable
securities of companies engaged in
such activities are not hereby
precluded.
Nonfundamental Restriction
The Fund may not purchase or sell
interests in oil, gas or mineral
leases.
Current: Proposed:
The Fund may not knowingly invest Nonfundamental Restriction
in securities which are subject to The Fund may not invest more than
legal or contractual restrictions 15% of its net assets in illiquid
on resale (including securities securities. This limitation may be
that are not readily marketable, subject to additional restrictions
but not including repurchase imposed by jurisdictions in which
agreements maturing in not more the Fund's shares are offered for
than seven days) if, as a result sale.
thereof, more than 15% of the
Fund's total assets (taken at
market value) would be so invested
(including repurchase agreements
maturing in more than seven days).
This limitation may be subject to
additional restrictions imposed by
jurisdictions in which the Fund's
shares are offered for sale
(currently 10%).
10
<PAGE>
Current: Proposed:
The Fund may not write, purchase or It is proposed that this
sell any put or call option or any restriction be reclassified as
combination thereof, provided that nonfundamental.
this shall not prevent the writing,
purchasing or selling of puts,
calls or combinations thereof with
respect to U.S. government
securities or with respect to the
Fund's permissible futures and
options transactions, the writing,
purchasing, ownership, holding or
selling of futures and options
positions or of puts, calls or
combinations thereof with respect
to futures.
Current: Proposed:
The Fund may not issue any senior Fundamental Restriction
security (as that term is defined The Fund may not issue any senior
in the 1940 Act) if such issuance security (as defined in the 1940
is specifically prohibited by the Act), except that (a) the Fund may
1940 Act or the rules and engage in transactions that may
regulations promulgated thereunder, result in the issuance of senior
provided that collateral securities to the extent permitted
arrangements with respect to the under applicable regulations and
Fund's permissible options and interpretations of the 1940 Act or
futures transactions, including an exemptive order; (b) the Fund
deposits of initial and variation may acquire other securities, the
margin, are not considered to be acquisition of which may result in
the issuance of a senior security the issuance of a senior security,
for purposes of this restriction. to the extent permitted under
applicable regulations or
interpretations of the 1940 Act;
(c) subject to the restrictions set
forth below, the Fund may borrow
money as authorized by the 1940
Act. For purposes of this
restriction, collateral
arrangements with respect to the
Fund's permissible options and
futures transactions, including
deposits of initial and variation
margin, are not considered to be
the issuance of a senior security.
Current: Proposed:
The Fund may not make short sales It is proposed that this
of securities or maintain a short restriction be eliminated, as it
position; except combined with a has been combined with a
that the Fund may only make such nonfundamental restriction
short sales of securities or concerning purchases of securities
maintain a short position if when a on margin discussed above.
short position is open the Fund
owns an equal amount of such or
securities convertible into or
exchangeable, without payment of
any further consideration, for
securities of the same issue as,
and equal in amount to, the
securities sold short, and not more
than 10% of the Fund's net assets
(taken at market value) is held as
collateral for such sales at any
one time (it is the present
intention of management to make
such sales only for the purpose of
deferring realization of gain or
loss for federal income tax
purposes; such sales would not be
made of securities subject to
outstanding options).
The Balanced Fund's shareholders are also being asked to approve a new
fundamental investment policy which would allow the Balanced 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. The Board of Trustees has considered and approved such a structure
and has unanimously recommended to the shareholders of the Balanced Fund that
they adopt such a policy.
There is no present intention to convert the Balanced Fund to a
Master/Feeder Structure. In adopting this new fundamental investment policy,
the Balanced 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. The Balanced Fund's prospectus and statement of
additional information would be amended to reflect the implementation of the
Balanced Fund's conversion to a Master/Feeder Fund Structure and its
shareholders would be notified.
Under a Master/Feeder Fund Structure, the Balanced Fund will have the
ability to invest all of its investable assets in another investment company
(the "Master Portfolio") having
11
<PAGE>
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 the
Balanced 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 the Balanced 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 the Balanced 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 the Balanced 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 the
Balanced Fund stabilizing its expenses or achieving greater operational
efficiencies.
At present, certain of the fundamental investment restrictions of the
Balanced 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.
The Balanced Fund's methods of operation and shareholder services would
not be materially affected by its investment in the corresponding Master
Portfolio, except that the assets of the Fund may be managed as part of a
larger pool. If the Balanced 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 Balanced Fund would otherwise continue its normal operation. The
Board would retain the right to withdraw the 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.
The Adviser, or its successor in the Bank Merger would be the investment
adviser of the Balanced Fund's corresponding Master Portfolio. Similarly, CAM
Inc. would serve as Sub-Adviser to the Master Portfolio. See Proposal 1.
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.
The Master Portfolio normally would not hold meetings of investors except
as required under the 1940 Act. As an investor in the Master Portfolio, the
Balanced 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, the Balanced 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 the Balanced 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, the Balanced 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, the Balanced
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 Balanced Fund's shareholders.
Examples of proposals with respect to a Master Portfolio that may not
require the approval of shareholders of the Balanced 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 the Balanced 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 the Balanced
Fund. Examples of matters that would be submitted to shareholders would
include the following: (i) approval of an
12
<PAGE>
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 Balanced Fund. Any proposal submitted to
holders in a Master Portfolio, and that is not required to be voted on by
shareholders of the Balanced 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 the Balanced 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 the Balanced 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 the Balanced 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 the Balanced Fund nor the Master
Portfolio would be expected to be required to pay any Federal income or
excise taxes. Distributions from the Balanced Fund, except for distributions
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 shares of the Balanced Fund.
Investment Advisory Fees and Other Expenses
The purpose of the expense summary provided below is to assist investors in
understanding the various costs and expenses that an investor will indirectly
incur as a beneficial owner of shares in the Vista Balanced Fund as of the
date of the Reorganization.
Vista
Balanced IEEE
Fund Balanced
Class A Fund
-------- ----------
Shareholder Transaction Expenses
Maximum Initial Sales Charge Imposed on Purchases
(as a percentage of offering price)* 4.50% None
Maximum Sales Charge Imposed on Reinvested
Dividends None None
Exchange Fee None None
Annual Fund Operating Expenses (as a percentage of
net assets)
Investment Advisory Fee (After estimated waiver
where indicated) .15%** .60%
Rule 12b-1 Distribution Plan Fee+ .25% .25%
Other Expenses
-- Shareholder Servicing Fee (After estimated
waiver where indicated) .00%** .25%
-- Other Operating Expenses+++ .85% .15%
------ --------
Total Fund Operating Expenses (After waiver of
fees where indicated) 1.25%** 1.25%
* No commission, sales load, or other similar charge will be incurred by
shareholders of the IEEE Fund in connection with the Reorganization. The
rules of the Securities and Exchange Commission require that the Fund's
maximum sales charge be reflected in the expense summary.
** Reflects waiver agreements expected to be in effect as of the date of the
Reorganization to maintain total fund operating expenses of Class A
shares of the Balanced Fund at the level indicated in the table above.
Absent such waivers, the annual investment advisory fee, shareholder
servicing fee and total fund operating expenses for Class A shares of the
Balanced Fund would be 0.50%, 0.25% and 1.85% respectively.
+ As a result of distribution fees, a long-term shareholder in the Fund may
pay more than the economic equivalent of the maximum front-end sales
charges permitted by the rules of the National Association of Securities
Dealers, Inc.
+++ A shareholder may incur a $10.00 charge for certain wire redemptions.
13
<PAGE>
Chase serves as Administrator, Shareholder Servicing Agent, and Custodian
to both the IEEE Fund and the Balanced Fund. VBDS serves as Distributor to
both the IEEE Fund and the Balanced Fund. DST Systems, Inc. ("DST") acts as
transfer agent and dividend disbursing agent (the "Transfer Agent") for the
Balanced Fund and the IEEE Fund.
For further information about the advisory and administrative arrangements
for the Balanced Fund and the IEEE Fund, see "Information About the IEEE and
Balanced Funds' Investment Adviser, Administrator, Distributor and
Sub-Administrator, Distribution Plans, Shareholder Servicing Agents,
Independent Accountants, Counsel, Transfer Agent and Custodian" and
"Information About The IEEE Fund's Sub-Adviser and Other Relationships"
below.
Shareholder Service Agreements
The Trust, on behalf of the Balanced Fund and the IEEE Fund, has entered
into shareholder servicing agreements with each Shareholder Servicing
Agent to provide certain services for a fee which will not exceed, an on
annualized basis, 0.25% of each Fund's average daily net assets represented
by shares owned during the period for which payment is being made by
investors with whom such Shareholder Servicing Agent maintains a servicing
relationship. Services to be provided include, among others, account
maintenance, including responding to shareholder inquiries, directing
shareholder communications, account balances, and dividend policy. Each
Shareholder Servicing Agent may, from time to time, voluntarily waive all or
a portion of the fees payable to it.
Distribution and Purchase Procedures
No sales charge is imposed by the IEEE Fund on the purchase of shares or on
the reinvestment of dividends or capital gains distributions. Balanced Fund
Class A shares however, are sold at net asset value plus an initial sales
charge of up to a maximum of 4.50% of the public offering price.
The IEEE Fund and the Balanced Fund have identical minimum initial and
additional investments for the purchase of shares. The minimums detailed
below vary by the type of account being established:
Minimum
Initial
Account Type Investment
- ----------------------------------- ----------------
Individual $2,500(1)
Individual Retirement Account (IRA) $1,000(2)
Spousal IRA $ 250
SEP-IRA $1,000(2)
Purchase Accumulation Plan $ 250(3)
Payroll Deduction Program
(401K, 403B, Keogh) $ 100(4)
(1) Employees of the Adviser and its affiliates, and Qualified Persons are
eligible for a $1,000 minimum initial investment.
(2) A $250 minimum initial investment is allowed if the new account is
established with a $100 minimum monthly Systematic Investment Plan as
described below.
(3) Account must be established with a $200 minimum monthly Systematic
Investment Plan as described below.
(4) A $25 minimum monthly investment must be established through an automated
payroll cycle.
The minimum additional investment is $100 for all types of accounts.
Shares of the IEEE Fund and the Balanced Fund may be purchased through
selected financial service firms such as broker-dealer firms and banks, who
have entered into a selected dealer agreement with VBDS, at net asset value
which is computed once daily as of the close of trading on the New York Stock
Exchange (the "Exchange") (normally 4:00 p.m. Eastern time) on each business
day during which the Exchange is open for trading. The net asset value
becomes effective at the New York Stock Exchange closing time. The public
offering price of Class A shares is the next determined net asset value, plus
applicable initial sales charge.
Plan of Distribution
The Balanced Fund has adopted a Distribution Plan (the "Class A Distribution
Plan") for Class A shares in accordance with Rule 12b-1 under the 1940 Act
which provides that Class A shares shall pay a distribution fee (the "Basic
Distribution Fee"), including payments to the Distributor, brokers and
shareholder servicing agents, at an annual rate not to exceed 0.20% of its
Shares' average daily net assets for distribution services (exclusive of any
expenses incurred by the Distributor in connection with print or electronic
media advertising). The Distributor may use all or any portion of such Basic
Distribution Fee to pay for Fund expenses of printing prospectuses and
reports used for sales purposes, expenses of the preparation and printing of
sales literature and other such distribution-related expenses. The Balanced
Fund Class A is also permitted to pay an additional fee not to exceed 0.05%
per annum of its Shares' average daily net assets in anticipation of, or as
reimbursement for, expenses incurred in connection with print or electronic
media advertising for its shares.
Management has proposed, and the Board of Trustees, including a majority
of the disinterested Trustees, has unanimously approved, a modification to
the Class A Distribution Plan of the Balanced Fund whereby the additional
.05% fee be changed to a "compensation" fee from a "reimbursement" fee. Class
A shareholders of the Balanced Fund are being asked to approve this proposed
modification.
The IEEE Fund has adopted a plan of distribution pursuant to Rule 12b-1
under the 1940 Act which provides that the IEEE Fund shall pay a distribution
fee to the Distributor at an annual rate not to exceed 0.25% of the average
daily net assets for distribution.
Redemption and Exchange Procedures
The Balanced Fund, except for having different procedures for Class A and
Class B shares, has substantially the same exchange rights and redemption
procedures as the IEEE Fund. Shares of the IEEE Fund and the Balanced Fund
may be redeemed through an authorized broker, by mail, wire or telephone.
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Shares of the IEEE Fund may be redeemed, in whole or in part, on any
business day at the net asset value as next determined after receipt of a
redemption request in good order. Shareholders may exchange, at respective
net asset value, shares of the IEEE Fund for shares of the other Vista Funds,
in accordance with the terms of the other current prospectus of the Fund
being acquired.
Class A shares of the Balanced Fund may also be redeemed, in whole or in
part, on any business day at the net asset value as next determined after
receipt of a redemption request in good order. Balanced Fund shareholders may
exchange, at respective net asset value, Class A shares of the Fund for Class
A shares of the other Vista Funds which has a similar class of shares in
accordance with the terms of the then current prospectus of the Funds being
acquired. No initial shares charge is imposed on the Class A shares being
acquired.
Both the IEEE Fund and the Balanced Fund may redeem shares in an account
that has been reduced below $500, unless the Shareholder makes an additional
investment within 60 days to bring the value of the account to $500.
The Balanced Fund has substantially the same special investor services as
those provided by the IEEE Fund, including the Systematic Investment Plan,
the Systematic Redemption Plan, and the ability to invest through certain
retirement plans.
Income Dividends, Capital Gain Distributions and Taxes
The IEEE Fund and the Balanced Fund have substantially the same policies with
respect to dividends, distributions and taxes. The IEEE Fund and the Balanced
Fund distribute substantially all net capital gains, if any, to shareholders
each year, to the extent necessary to qualify for favorable federal tax
treatment. Both funds distribute net realized short-term and long-term
capital gains, if any, to shareholders annually after the close of the fiscal
year. The IEEE Fund distributes substantially all of its net income from
dividends and interest (if any) to shareholders quarterly, while the Balanced
Fund does so monthly. It is the intention of both the IEEE Fund and the
Balanced Fund to qualify as regulated investment companies under Subchapter M
of the Internal Revenue Code of 1986, as amended.
Governance and Shareholders' Rights
The Trust is organized as a business trust under the laws of the Commonwealth
of Massachusetts. The Board of Trustees oversees all aspects of the
operations of the Trust. Because the Balanced Fund is a separate series of
the Trust, its operations will be governed by the Trust's Declaration of
Trust and By-laws, and applicable Massachusetts law. The Trust's Declaration
of Trust permits the issuance of an unlimited number of shares of beneficial
interest in each of the Vista Funds, and the creation of an unlimited number
of series. Shares of each of the Vista Funds are entitled to one vote per
share (including a fractional vote for fractional shares) and are voted in
the aggregate and not by series except as otherwise required by law and when
the matter to be voted upon affects only the interests of shareholders of a
particular fund. Voting rights are non-cumulative. None of the shares of any
of the Vista Funds has preemptive or conversion rights. The Trust does not
intend to hold annual meetings of shareholders. Such meetings may be called,
however, at the discretion of the Board of Trustees or upon demand of the
holders of at least 10% of the outstanding shares of any Fund. In the event
of such demand by the shareholders of at least 10% of the outstanding
securities, the Trust will call a meeting and assist in communicating with
other shareholders as required under the Section 16(c) of the 1940 Act.
INFORMATION ABOUT THE BALANCED AND
IEEE FUNDS' INVESTMENT ADVISER,
SUB-ADVISER, ADMINISTRATOR, DISTRIBUTOR
AND SUB-ADMINISTRATOR, DISTRIBUTION PLANS,
SHAREHOLDER SERVICING AGENTS,
TRANSFER AGENT, CUSTODIAN,
INDEPENDENT ACCOUNTANTS AND COUNSEL.
The Balanced Fund and the IEEE Fund, as two series of the same trust, share
many of the same service providers. For example, the Adviser, Administrator,
Distributor, Transfer Agent, Custodian, Independent Accountants and Counsel
are the same for both of the Funds. The form of relationship with each of
these service providers is substantially similar for both of the Funds and is
described below. Significant distinctions in the arrangements are also
discussed below. The IEEE Fund has certain relationships with service
providers in addition to those described below. For further information
concerning the IEEE Fund's other relationships, see "Information About The
IEEE Fund's Sub-Adviser and Other Relationships" below.
The Investment Adviser
The Chase Manhattan Bank, N.A. acts as investment adviser to both the
Balanced Fund and the IEEE Fund. Subject to such policies as the Board of
Trustees may determine, the Adviser makes investment decisions for each Fund.
For its services under the Current Advisory Agreement, Chase is entitled to
receive an annual fee computed daily and paid monthly based at an annual rate
equal to 0.50% and 0.65% of the average daily net assets of the Balanced Fund
and the IEEE Fund, respectively. The Adviser may, from time to time,
voluntarily waive all or a portion of its fees payable under the Current
Advisory Agreement. With respect to the IEEE Fund only, the Adviser has
retained a "Sub-Adviser" to provide portfolio advisory services. For
information concerning this relationship, see "Information About the IEEE
Fund's Sub-Adviser and Other Relationships" below.
Under the Current Advisory Agreement the Adviser may periodically reduce
all or a portion of its advisory fee with respect to the IEEE Fund. In the
fiscal year ended October 31, 1995, the IEEE Fund paid to the Adviser
aggregate investment advisory fees of $62,347, of which $4,796 was waived by
the Adviser.
The Adviser, a wholly-owned subsidiary of The Chase Manhattan Corporation,
a registered bank holding company, is a commercial bank offering a wide range
of banking and investment services to customers throughout the United States
and
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around the world. Its headquarters is at One Chase Manhattan Plaza, New York,
NY 10081. The Adviser, including its predecessor organizations, has over 100
years of money management experience and renders investment advisory services
to others. Also included among the Adviser's accounts are commingled trust
funds and a broad spectrum of individual trust and investment management
portfolios. These accounts have varying investment objectives.
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 has approved the Holding Company Merger, which will
create the second largest bank holding company in the United States based on
assets. The consummation of the Holding Company Merger is subject to certain
closing conditions. The Holding Company Merger is expected to be completed on
or about March 31, 1996.
Subsequent to the Holding Company Merger, it is expected that the Adviser
will be merged with and into Chemical Bank, a New York State chartered bank
("Chemical Bank") and one of the two principal operating subsidiaries of
Chemical (the "Bank Merger" and together with the Holding Company Merger, the
"Mergers"). The surviving bank will continue operations under the name The
Chase Manhattan Bank (as used herein, the term "Chase" refers to The Chase
Manhattan Bank, N.A. and its successor in the Bank Merger, and the term
"Adviser" means Chase (including its successor in the Bank Merger) in its
capacity as investment Adviser to the Funds). The consummation of the Bank
Merger is subject to certain closing conditions, including the receipt of
certain regulatory approvals. The Bank Merger is expected to be completed on
or about July 31, 1996.
In accordance with the Investment Company Act of 1940, as amended,
consummation of the Holding Company Merger may be deemed to result in the
automatic termination of the investment advisory agreement between the
Balanced Fund and 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 may also be deemed to result in the automatic termination of the
investment advisory agreement. As a result, Balanced Fund shareholders are
being asked to vote upon an interim investment advisory agreement between the
Balanced Fund and the Adviser (the form of such interim agreement is
substantially similar to the Interim Agreement considered under Proposal 2).
The Adviser also recommended that Balanced Fund shareholders approve a new
form of investment advisory agreement (the "Proposed Agreement") which
clarifies the relationship between the Adviser and the Fund.
The Sub-Adviser
The Adviser also recommended to the Board that the Adviser be permitted to
utilize the services of its wholly-owned subsidiary, Chase Asset Management,
Inc. ("CAM Inc."), to render advisory services to the Funds. CAM Inc. is a
registered investment adviser which was recently incorporated for the purpose
of rationalizing the delivery of investment advisory services by The Chase
Manhattan Bank to its institutional clients. CAM Inc. will be retained
pursuant to a proposed Sub-Advisory Agreement (the "CAM Inc. Agreement").
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.
The Board has approved, and recommends that the shareholders of the
Balanced Fund approve, the Proposed Agreement and CAM Inc. Agreement
(collectively, the "Agreements"). In addition, the Board of Trustees approved
the continuation of the Agreements after the Bank Merger, on the same terms
and conditions as in effect immediately prior to the merger (except for
effective and termination dates) in the event the Agreements are deemed to
terminate as a result of the Bank Merger. Shareholder approval of the
Agreements will also be deemed to approve such continuation of the Agreements
after the Bank Merger, if applicable. In the event shareholder approval of
the Agreements is not obtained, the Trust's Board of Trustees will then
decide on the appropriate course of action for the Balanced Fund.
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No increase is proposed to the contractual fee rate to the Balanced Fund
under the Proposed Agreement and the Adviser, and not the Balanced Fund, will
compensate CAM Inc. for its services as Sub-Adviser. Therefore, the Balanced
Fund will not bear any increase in the contractual advisory fee rates
resulting from the Proposed Agreement or the CAM Inc. Agreement.
Background. In connection with the Mergers, New Chase intends to
rationalize its corporate wide investment management operations in order to
more fully take advantage of portfolio management skills that will exist
within the various corporate entities controlled by New Chase. As part of
this structuring, New Chase would like to consolidate its mutual fund
supervisory functions within one entity (Chase), and its portfolio management
responsibilities within another entity (CAM Inc.). The Adviser also seeks to
retain the ability to utilize portfolio managers employed by the various
investment management entities affiliated with the Adviser through common
ownership by New Chase.
Thus, the Proposed Advisory Agreement would provide the Adviser with the
ability to utilize the specialized portfolio skills of employees of all its
various affiliates, thereby providing the Balanced Fund with greater
opportunities and flexibility in accessing investment expertise. For the
foreseeable future, the Adviser would employ certain members of the Adviser's
senior management.
Similarities Between the Current and Proposed Advisory Agreements:
The Proposed Advisory Agreement is similar in many respects to the Current
Advisory Agreement. The Proposed Advisory Agreement contains the material
terms of the Current Advisory Agreement, but reflects the proposed change of
the investment adviser from The Chase Manhattan Bank, N.A. to its successor
entity, and incorporates additional provisions designed to clarify and
supplement the rights and obligations of the parties.
Most importantly, the contractual rate at which fees are required to be
paid by the Balanced Fund for investment advisory services, as a percentage
of average daily net assets, will remain the same. Under the provisions of
both the Current and the Proposed Advisory Agreements, the Balanced Fund is
required to pay the Adviser a monthly fee equal to a stated percentage per
annum of its average daily net assets. These amounts are set forth below
under "Fees and Fee Waivers."
The following summarizes certain additional aspects of the Current and
Proposed Advisory Agreements which are materially the same in both
Agreements:
In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties of the Adviser, the Adviser
shall not be liable to the Balanced Fund or to any shareholder for any losses
that may be sustained by the Balanced Fund in connection with its performance
of each Agreement.
The Adviser bears all expenses in connection with the performance of its
services under each Agreement. The Balanced Fund bears the expenses incurred
in its operations. Both agreements provide that the Adviser shall, at its
expense, provide the Balanced Fund with office space, furnishings and
equipment and personnel required by it to perform the services to be provided
by the Adviser and that the Trust shall be responsible for all of the
Balanced Fund expenses and liabilities.
Under each Agreement, if the aggregate expenses incurred by the Balanced
Fund in any fiscal year is in excess of the lowest applicable expense
limitation imposed by state securities laws or regulations thereunder, the
Adviser shall reduce its investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided, however, that certain
provided expenses are specifically excluded from such calculation. No such
reimbursement was required during the Balanced Fund's most recent fiscal
period.
The Balanced Fund may terminate each Agreement as to the Balanced Fund
without penalty on not more than 60 days' written notice when authorized by
either a vote of shareholders holding a "majority of the outstanding voting
securities" (within the meaning of the 1940 Act) of the Balanced Fund or by a
vote of a majority of the Trust's Board of Trustees. The Adviser may
terminate each Agreement on 60 days' written notice to the Trust. Each
Agreement terminates in the event of its assignment (as defined in the 1940
Act).
Differences Between the Current and Proposed Advisory Agreements:
The following highlights summarize some of the additional provisions which
are included in the Proposed Advisory Agreement:
After the Bank Merger, The Chase Manhattan Bank, a New York state
chartered bank, the successor entity to The Chase Manhattan Bank, N.A., will
be the adviser to the Balanced Fund rather than The Chase Manhattan Bank,
N.A., and will continuously supervise the investment and reinvestment of
cash, securities and other property comprising the assets of the Balanced
Fund. The Chase Manhattan Bank, N.A. will be the adviser to the Balanced Fund
until the Bank Merger.
Details Regarding the Adviser's Duties. The Proposed Advisory Agreement
clearly specifies the duties of the Adviser. For example, the Adviser will be
required to obtain and evaluate pertinent data and other significant events
and developments which affect the economy, the Balanced Fund's investment
program, the issuers of securities and the industries in which they engage,
and furnish a continuous investment program for the Balanced Fund. The
Adviser will be obligated to furnish such reports, evaluations, information
or analyses to the Trust as the Board may request, make recommendations to
the Board with respect to Trust policies, and carry out such policies as are
adopted by the Board.
Use of Affiliated Entities. The Proposed Advisory Agreement clarifies that
the Adviser may render services through its
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own employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under applicable laws
and are under the common control of New Chase as long as all such persons are
functioning as part of an organized group of persons, and such organized
group of persons is managed at all times by authorized officers of the
Adviser. The Adviser will be as fully responsible to the Trust for the acts
and omissions of such persons as it is for its own acts and omissions.
Use of a Sub-Adviser. The Proposed Advisory Agreement clarifies that the
Adviser may from time to time employ or associate with such other entities or
persons (a "Sub-Adviser") as it believes appropriate to assist in the
performance of the Proposed Advisory Agreement with respect to the Balanced
Fund. However, the Balanced Fund will not pay any additional compensation for
any Sub-Adviser, and the Adviser will be as fully responsible to the Trust
for the acts and omissions of the Sub-Adviser as it is for its own acts and
omissions, and the Adviser must review, monitor and report to the Board
regarding the performance and investment procedures of any Sub-Adviser.
Execution of Portfolio Transactions. The Proposed Advisory Agreement sets
forth specific terms as to brokerage transactions and the Adviser's use of
broker-dealers. For example, the Adviser will be obligated to use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the most favorable to
the Balanced Fund. In assessing the best overall terms available for any
transaction, the Adviser will consider all factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, research services provided and the reasonableness of the commission,
if any, both for the specific transaction and on a continuing basis.
"Soft Dollars." A provision of the Proposed Advisory Agreement explicitly
allows the Adviser to select brokers or dealers who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Adviser, the funds and/or the other
accounts over which the Adviser exercises investment discretion, and provides
that, notwithstanding the above, the Adviser may pay a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Balanced Fund which is in excess of the amount
of commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that the total commission
is reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Adviser with respect to
accounts over which it exercises investment discretion.
Aggregation of Orders. There is also a clarification of the authority of
the Adviser to aggregate the securities to be sold or purchased with those of
other funds or its other clients if, in the Adviser's reasonable judgment,
such aggregation will result in an overall benefit to a fund, taking into
consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements.
Other Clarifications. The Proposed Advisory Agreement contains certain
additional provisions which are intended to clarify the status, rights or
obligations of the parties. For example, the Adviser is deemed to be an
independent contractor and the provisions of the Proposed Advisory Agreement
are deemed to apply to the Balanced Fund severally and not jointly.
The Current Agreement for each Fund were approved by the full Board and by
those Trustees who were not interested persons of any party to the
agreements, as defined by the 1940 Act (the "Disinterested Trustees"), and by
the shareholders of each of the Funds. After its initial term, each Agreement
continues in effect from year to year thereafter, provided that each
Agreement is approved at least annually by the Board of Trustees, including
the vote of a majority of the Disinterested Trustees cast in person at a
meeting called for the purpose of voting on approval, or by the vote of the
holders of a "majority" of the outstanding voting securities of the Fund.
The Trust, on behalf of each Fund, may terminate each Agreement without
penalty on not more than 60 days' nor less than 30 days' written notice when
authorized by either a vote of the shareholders of a Fund or by a vote of a
majority of the Board of Trustees, including the vote of a majority of the
Disinterested Trustees. The investment adviser may terminate an Advisory
Agreement on not more than 60 days' nor less than 30 days' written notice.
Each Agreement terminates in the event of their assignment (as defined in the
1940 Act).
The Administrator
Pursuant to an Administration Agreement, Chase serves as administrator of
each of the Balanced and IEEE Funds. The Administrator provides certain
administrative services, including, among other responsibilities,
coordinating relationships with independent contractors and agents; preparing
for signature by officers and filing of certain documents required for
compliance with applicable laws and regulations excluding those of the
securities laws of the various states; preparing financial statements;
arranging for the maintenance of books and records; and providing office
facilities necessary to carry out the duties thereunder. The Administrator is
entitled to receive from each Fund a fee computed daily and paid monthly at
an annual rate equal to 0.10% of each Fund's average daily net assets. The
Administrator may, from time to time, voluntarily waive all or a portion of
its fees payable to it under the Administration Agreement. The Administrator
does not have any responsibility or authority for the Fund's investments, the
determination of investment policy, or for any matter pertaining to the
distribution of Fund shares.
Regulatory Matters. Banking laws and regulations, including the
Glass-Steagall Act as currently interpreted by the Board of Governors of the
Federal Reserve System, prohibit a bank holding company registered under the
Bank Holding Company Act of 1956, as amended, or any affiliate thereof from
sponsoring, organizing, controlling, or distributing the shares of
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a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from issuing,
underwriting, selling or distributing securities, but do not prohibit such a
bank holding company or affiliate from acting as investment adviser,
administrator, transfer agent, or custodian to such an investment company or
from purchasing shares of such a company as agent for and upon the order of a
customer. Chase and the Fund believe that Chase, CAM, or any other affiliate
of Chase, may perform the investment advisory, administrative, custody and
transfer agency services for the Balanced Fund, as the case may be, described
in this Prospectus/Proxy Statement, and that Chase, CAM or any other
affiliate of Chase, subject to such banking laws and regulations, may perform
the shareholder services contemplated by this Prospectus/Proxy Statement,
without violation of such banking laws or regulations. However, future
changes in legal requirements relating to the permissible activities of banks
and their affiliates, as well as future interpretations of present
requirements, could prevent Chase, CAM or any other affiliate of Chase from
continuing to perform investment advisory, administrative or custody services
for the Balanced Fund, as the case may be, or require Chase, CAM or any other
affiliate of Chase to alter or discontinue the services provided by it to
shareholders of the Balanced Fund.
If Chase, CAM or any other affiliate of Chase were prohibited from
performing investment advisory, administrative, custody or transfer agency
services for the Balanced Fund, as the case may be, it is expected that the
Board of Trustees of the Trust would recommend to shareholders that they
approve new agreements with another entity or entities qualified to perform
such services and selected by the Board. If Chase, CAM or any other affiliate
of Chase were required to discontinue all or part of its shareholder
servicing activities, its customers would be permitted to remain the
beneficial owners of shares and alternative means for continuing the
servicing of such customers would be sought. The Fund does not anticipate
that investors would suffer any adverse financial consequences as a result of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state laws.
The Distributor and Sub-Administrator
Vista Broker-Dealer Services, Inc. (the "Distributor") serves as the
principal underwriter of each of the IEEE and Balanced Funds' shares pursuant
to a Distribution and Sub-Administration Agreement (the "Distribution
Agreement") The Distribution Agreement provides that the Distributor shall
bear the expenses of printing, distributing and filing prospectuses and
statements of additional information and reports used for sales purposes, and
of preparing and printing sales literature and advertisements not paid for by
the Distribution Plan. In addition, the Distributor will provide certain
sub-administration services, including providing officers, clerical staff and
office space. The Distributor currently receives a fee for sub-administration
from each Fund at an annual rate equal to 0.05% of each Fund's average daily
net assets, on an annualized basis for the Fund's then-current fiscal year.
The Distributor may, from time to time, waive all or a portion of the fees
payable to it under the Distribution Agreement.
The Distribution Plans
The Balanced Fund Distribution Plan. The Trustees have adopted a Distribution
Plan for the Class A shares of the Balanced Fund (the "Balanced Fund
Distribution Plan") in accordance with Rule 12b-1 under the 1940 Act, after
having concluded that there is a reasonable likelihood that the Distribution
Plan will benefit that class and its respective shareholders. The Class A
Distribution Plan provides that the Fund shall pay distribution fees
including payments to the Distributor, at an annual rate not to exceed 0.20%
of its average daily net assets for distribution services. Some payments
under the Distribution Plan may be used to compensate broker-dealers with
trail or maintenance commissions in amounts not to exceed 0.20% annualized of
the average net asset value of Class A shares. The distribution fees are not
directly tied to expenses; therefore, the amount of distribution fees paid by
the Fund during any year may be more or less than actual expenses incurred
pursuant to the Distribution Plan. Under its Distribution Plan, the Class A
shares are also permitted to pay an additional fee at an annual rate not to
exceed 0.05% of its average daily net assets in anticipation of, or as
reimbursement for, expenses incurred in connection with print or electronic
media advertising in connection with the sale of Fund shares.
Management has proposed, and the Board of Trustees, including a majority
of the disinterested Trustees, has unanimously approved, a modification to
the Class A Distribution Plans of the Balanced Fund whereby the additional
.05% fee be changed to a "compensation" fee from a "reimbursement" fee. Class
A shareholders of the Balanced Fund are being asked to approve this proposed
modification.
The IEEE Fund Distribution Plan. The Trustees have adopted a Distribution
Plan on behalf of the IEEE Fund (the "IEEE Distribution Plan") in accordance
with Rule 12b-1 under the 1940 Act, after having concluded that there is a
reasonable likelihood that the Distribution Plan will benefit the IEEE Fund
and its shareholders. The IEEE Distribution Plan provides that the IEEE Fund
shall pay distribution fees (the "Distribution Fee"), including payments to
the Distributor, at an annual rate not to exceed 0.25% of its average daily
net assets for distribution services. Some payments under the Plan may be
used to compensate broker-dealers with trail or maintenance commissions in an
amount not to exceed 0.25% annualized, of the assets maintained in the Fund
by such broker-dealers' customers. However, the IEEE Fund is not liable for
any distribution expenses incurred in excess of the Distribution Fee paid.
The Shareholder Servicing Agents
The Trust, on behalf of the IEEE Fund and the Balanced Fund, has adopted a
Shareholder Servicing Agreement to compensate various shareholder Servicing
Agents for services per
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formed on behalf of each Fund. The shareholder servicing agreement with each
Shareholder Servicing Agent provides that such Shareholder Servicing Agent
will, as agent for its customers perform various services, including but not
limited to the following: answer customer inquiries regarding account status
and history, the manner in which purchases and redemptions of shares may be
effected for each Fund as to which the Shareholder Servicing Agent is so
acting and certain other matters pertaining to the Fund; assist shareholders
in designating and changing dividend options, account designations and
addresses; provide necessary personnel and facilities to establish and
maintain shareholder accounts and records; assist in processing purchase and
redemption transactions; arrange for the wiring of funds; transmit and
receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated
accounts; furnish (either separately or on an integrated basis with other
reports sent to a shareholder by a Shareholder Servicing Agent) quarterly and
year-end statements and confirmations of purchases and redemptions; transmit,
on behalf of each Fund, proxy statements, annual reports, updated
prospectuses and other communications to shareholders of the Fund; receive,
tabulate and transmit to each Fund proxies executed by shareholders with
respect to meetings of shareholders of the Fund; and provide such other
related services as each Fund or a shareholder may request. For performing
these services, each Shareholder Servicing Agent receives certain fees, which
may be paid periodically, determined by a formula based upon the number of
accounts serviced by such Shareholder Servicing Agent during the period for
which payment is being made, the level of activity in accounts serviced by
such Shareholder Servicing Agent during such period, and the expenses
incurred by such Shareholder Servicing Agent. The fees relating to acting as
liaison to shareholders and providing personal services to shareholders will
not exceed, on an annual basis, 0.25% of the average daily net assets of each
class of each Fund represented by shares owned during the period for which
payment is being made by investors for whom such Shareholder Servicing Agent
maintains a servicing relationship. Each Shareholder Servicing Agent may,
from time to time, voluntarily waive all or a portion of the fees payable to
it. In addition, Chase may provide other related services to each Fund, for
which it may receive compensation.
The Shareholder Servicing Agent, and its affiliates, agents and
representatives acting as Shareholder Servicing Agents, may establish
custodial investment accounts ("Accounts"), known as Chase Investment
Accounts or by any other name designated by a Shareholder Servicing Agent.
Through such Accounts, customers can purchase, exchange and redeem shares,
receive dividends and distributions on Fund investments, and take advantage
of any services related to an Account offered by such Shareholder Servicing
Agent from time to time. All Accounts and any related privileges or services
shall be governed by the laws of the State of New York, without regard to its
conflicts of laws provisions.
Transfer Agent and Custodian
DST Systems, Inc. ("DST") acts as transfer agent and dividend disbursing
agent (the "Transfer Agent") for both Funds. In this capacity, DST maintains
the account records of all shareholders in the Funds, including statement
preparation and mailing. DST is also responsible for disbursing dividend and
capital gain distributions to shareholders, whether taken in cash or
additional shares. From time to time, DST and/or the Fund may contract with
other entities to perform certain services for the Transfer Agent. For its
services as Transfer Agent, DST receives such compensation as is from time to
time agreed upon by the Trust and DST. DST's address is 127 W. 10th Street,
Kansas City, MO 64105.
Pursuant to a Custodian Agreement, Chase acts as the custodian of the
assets of the IEEE Fund and the Balanced Fund for which Chase receives
compensation as is from time to time agreed upon by the Trust and Chase. The
Custodian's responsibilities include safeguarding and controlling the Funds'
cash and securities, handling the receipt and delivery of securities,
determining income and collecting interest on the Funds' investments,
maintaining books or original entry for portfolio and fund accounting and
other required books and accounts, and calculating the daily net asset value
of shares of the Funds. Portfolio securities and cash may be held by
sub-custodian banks if such arrangements are reviewed and approved by the
Trustees. The internal division of Chase which serves as the Funds' Custodian
does not determine the investment policies of the Funds or decide which
securities will be bought or sold on behalf of the Funds or otherwise have
access to or share material inside information with the internal division
that performs advisory services for the Funds.
Independent Accountants
Price Waterhouse, LLP, 1177 Avenue of the Americas, New York, New York 10036,
is the independent accountant of the Trust. Price Waterhouse provides the
Trust with audit services, preparation and signing of tax returns, and
assistance and consultation with respect to the preparation of filings with
the SEC.
Counsel
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New York,
New York 10022, acts as counsel to the Trust.
INFORMATION ABOUT THE IEEE FUND'S
SUB-ADVISER AND OTHER RELATIONSHIPS
The IEEE Fund's Sub-Adviser
With respect to the IEEE Fund only, the Adviser has retained a "Sub-Adviser"
to provide portfolio advisory services. The Sub-Adviser is Atlanta Capital
Management Company, an investment advisory firm in operation since 1969. The
Sub-Adviser currently manages over $2.5 billion and has 25 years experience
in equity management. The Sub-Adviser is registered as an investment adviser
with the Securities and Exchange Commission.
The Adviser retained the Sub-Adviser to provide portfolio management
services pursuant to a Sub-Advisory Agreement ("Agreement") dated July 26,
1993. Pursuant to this Agreement
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the Adviser agreed to pay the Sub-Adviser a monthly fee at the annual rate of
.65% of the average daily net assets of the Fund less any amount of the
advisory fee waived by the Adviser.
Under the terms of the Agreement, the Sub-Adviser has discretion to
purchase and sell securities for the Fund, except as limited by the Fund's
investment objective, policies and restrictions. Although the Sub-Adviser's
activities are subject to general oversight by the Adviser and the Fund's
trustees, specific portfolio securities decisions are made by the
Sub-Adviser.
Atlanta Capital, founded in 1969, manages institutional funds for a
limited number of corporate sponsors, governments and foundations. The firm
was acquired in April 1990 by London-based Hill Samuel Investment Management
Group Limited, but operates as an independent subsidiary.
IEEE Fund's Other Arrangements
The Sub-Adviser has entered into a Fixed Income Management Agreement with the
Institute of Electrical and Electronics Engineers, Inc. ("IEEE"), dated as of
August 30, 1993, pursuant to which IEEE will provide advice and
recommendations with respect to fixed income instruments, futures contracts
and options on fixed income instruments for the Fund's portfolio. In
compensation for IEEE's services to the Fund, IEEE will receive from the
Sub-Adviser 50% of the sub-advisory fee (after waivers, if any). IEEE is a
professional organization and is registered as an investment adviser with the
Securities and Exchange Commission.
INFORMATION RELATING TO VOTING MATTERS
General Information
This Combined Proxy Statement/Prospectus is being furnished in connection
with the solicitation of proxies by the Board of Trustees in connection with
the Meeting. It is expected that the solicitation of proxies will be
primarily by mail. The IEEE Fund's officers and service contractors may also
solicit proxies by telephone, telegraph or personal interview. Chase or its
affiliates will bear the cost of solicitation of proxies. It is anticipated
that banks, brokerage houses and other institutions, nominees and fiduciaries
will be requested to forward proxy materials to beneficial owners and to
obtain authorization for the execution of proxies. Chase or its affiliates
may, upon request, reimburse banks, brokerage houses and other institutions,
nominees and fiduciaries for their expenses in forwarding proxy materials to
beneficial owners.
Only shareholders of record at the close of business on February 29, 1996
(the "Record Date"), will be entitled to vote at the Meeting. As of the
Record Date, the IEEE Fund had 1,026,492.943 shares outstanding and entitled
to vote. Each share or fraction thereof is entitled to one vote or fraction
thereof.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the
instructions thereon. Any shareholder giving a proxy may revoke it at any
time before it is exercised by submitting to the IEEE Fund a written notice
of revocation or a subsequently executed proxy, or by attending the Meeting
and voting in person.
Quorum
A quorum is constituted with respect to the IEEE Fund by the presence in
person or by proxy of the holders of a majority of the total number of
outstanding shares of the IEEE Fund entitled to vote at the Meeting. In the
event that a quorum is not present at the Meeting, or in the event that a
quorum is present at the Meeting but sufficient votes to approve the
Reorganization Plan and the transactions contemplated thereby are not
received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies, without notice
other than announcement at the Meeting. Any such adjournment will require the
affirmative vote of a majority of those shares affected by the adjournment
that are represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the Reorganization Plan, in favor of such adjournment,
and will vote those proxies required to be voted AGAINST or to abstain from
voting on such proposal against any adjournment.
Shareholder Approvals
Pursuant to applicable provisions of the Declaration of Trust, approval of
the Reorganization Plan and the transactions contemplated thereby requires
approval by the holders of at least two thirds of the outstanding shares of
the IEEE Fund.
The Board of Trustees of the Trust may terminate the Reorganization Plan
and abandon the Reorganization at any time prior to the Closing,
notwithstanding approval of the Reorganization Plan by the shareholders of
the IEEE Fund if, in the judgment of such Board, proceeding with the
Reorganization would be inadvisable.
Appraisal Rights
The Declaration of Trust and Bylaws of the Trust do not grant shareholders
any rights of appraisal. A shareholder intending to dissent from the
Reorganization and demand payment for the shares may do so by notifying the
IEEE Fund, in writing, of the shareholders's intent to demand payment, if the
Reorganization is effected, and by not voting in favor of the Reorganization.
The exercise of any appraisal rights existing under the laws of the
Commonwealth of Massachusetts are subject to the "forward pricing"
requirements of Rule 22c-1 under the 1940 Act, which supersedes any contrary
provision of state law. Under such requirements, shareholders have the right
to redeem their shares from the IEEE Fund at net asset value at any time
until the Effective Time of Reorganization and, thereafter, shareholders may
redeem from the Balanced Fund the shares acquired by them in the
Reorganization at net asset value.
ADDITIONAL INFORMATION ABOUT THE TRUST
This Combined Proxy Statement/Prospectus constitutes the Proxy Statement of
the IEEE Fund for the meeting of its shareholders. This Combined Proxy
Statement/Prospectus does not contain all of the information set forth in the
registration statement and the exhibits related thereto filed by the Trust
with the SEC under the Securities Act of 1933 and the 1940 Act to
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which reference is hereby made. Information about other portfolios of the
Vista Funds is contained in prospectuses and statements of additional
information dated March 1, 1996, copies of which may be obtained without
charge by writing to or calling the Vista Funds at the address or telephone
number shown on the cover page of this Combined Proxy Statement/Prospectus.
The Trust is subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act, as applicable, and, in accordance with
such requirements, files proxy materials, reports and other information with
the SEC. These materials can be inspected and copied at the Public Reference
Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Trustees. The current Trustees of the Trust will continue as Trustees
following the Reorganization. The name of each Trustee as well as information
concerning his principal occupation during the past five years are set forth
below. Their titles may have varied during that period. Asterisks indicate
those Trustees and officers that are "interested persons" (as defined in the
1940 Act).
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF AN INTERIM INVESTMENT ADVISORY AGREEMENT BETWEEN
THE FUND AND THE CHASE MANHATTAN BANK, N.A. (AND THE SUCCESSOR ENTITY
THERETO) AND AN INTERIM SUB-ADVISORY AGREEMENT BETWEEN THE CHASE MANHATTAN
BANK, N.A. (AND THE SUCCESSOR THERETO) AND ATLANTA CAPITAL MANAGEMENT COMPANY
INTRODUCTION
The Chase Manhattan Bank, N.A. (the "Adviser") currently serves as the
IEEE Fund's investment adviser pursuant to a separate Investment Advisory
Agreement (the "Current Advisory Agreement"). The Adviser is a wholly-owned
subsidiary of The Chase Manhattan Corporation, a registered bank holding
company. Atlanta Capital Management Company ("Atlanta Capital") currently
serves as sub-adviser to the IEEE Fund pursuant to an investment sub-advisory
agreement between the Adviser and Atlanta Capital (the "Current Sub-Advisory
Agreement" and, together with the Current Advisory Agreement, the "Current
Agreements").
As discussed above in connection with Proposal 1, The Chase Manhattan
Corporation has entered into a Merger Agreement with Chemical pursuant to
which The Chase Manhattan Corporation will merge in the Holding Company
Merger. Under the terms of the Merger Agreement, Chemical will be the
surviving corporation and will continue as New Chase. The Holding Company
Merger is expected to be completed during the first quarter of 1996.
Subsequent to the Holding Company Merger, it is expected that the Adviser
will be merged with and into Chemical Bank, in the Bank Merger. The Bank
Merger is expected to be completed on or about July 31, 1996.
Chemical is a publicly owned bank holding company incorporated under
Delaware law and registered under the Federal Bank Holding Company Act of
1956, as amended. Through its subsidiaries, Chemical managed as of December
31, 1995, more than $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 1940 Act, the Current Agreements provide for their
automatic termination upon their "assignment." Consummation of the Holding
Company Merger may be deemed to be an assignment (as defined in the 1940 Act)
of the Current Agreements and, consequently, to terminate the Current
Agreements in accordance with their terms. Similarly, the consummation of the
Bank Merger may also be deemed to be an assignment and consequently,
terminate the then-existing investment advisory contracts. 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 the IEEE Fund, and the
Adviser, and an Interim Sub-Advisory Agreement between the Adviser and
Atlanta Capital (together, the "Interim Agreements"), each to take effect
upon the consummation of the Holding Company Merger. The Board also directed
that the agreements be submitted to shareholders for approval at this
meeting. In addition, the Board of Trustees approved the continuation of the
Interim 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 Interim Agreements are deemed to
terminate as a result of the Bank Merger. Approval of Proposal 2 will also be
deemed approval of such continuation of the Interim Agreements after the Bank
Merger, if applicable.
Subject to shareholder approval of Proposal 1 and this Proposal 2, the
Interim Agreements will be effective from the consummation of the Holding
Company Merger until the Reorganization. EACH INTERIM AGREEMENT IS IDENTICAL
TO THE CURRENT AGREEMENT, EXCEPT FOR ITS EFFECTIVE DATE. THE AGGREGATE
CONTRACTUAL RATE CHARGEABLE FOR INVESTMENT ADVISORY SERVICES WILL REMAIN THE
SAME.
In connection with the IEEE Fund's approval of the Interim Agreements, the
Board considered that the terms of the Mergers do not require any change in
IEEE Fund's investment objective or policies, the Adviser's and Atlanta
Capital's investment management or operation of the IEEE Fund, or the
shareholder services or other business activities of the IEEE Fund. Chemical,
the Adviser and Atlanta Capital have informed the Board of Trustees that the
Mergers will not at this time result in any such
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change, although no assurance can be given that such a change will not occur.
Each also has advised that, at present, neither plans nor proposes to make
any material changes in the business, corporate structure or composition of
senior management or personnel of the Adviser (or the successor entity
thereto) or Atlanta Capital, or in the manner in which the Adviser (or the
successor entity thereto) or Atlanta Capital renders investment advisory
services to each. If, after the Mergers, changes in the Adviser (or the
successor entity thereto) or Atlanta Capital are proposed that might
materially affect its services to the IEEE Fund, the Board will consider the
effect of those changes and take such action as it deems advisable under the
circumstances.
The Adviser has informed the Trust that it proposes to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for
an investment adviser or any of its affiliated persons to receive any amount
or benefit in connection with a change in control of the investment adviser
as long as two conditions are met. First, for a period of three years after
the transaction, at least 75% of the Board members of the investment company
must not be interested persons of such investment adviser. Second, an "unfair
burden" must not be imposed on the investment company as a result of such
transaction or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in Section 15(f) to
include any arrangement during the two-year period after the transaction
whereby the investment adviser, or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services) or, with certain exceptions, from
any person in connection with the purchase or sale of securities or other
property to, from or on behalf of the investment company. The Adviser, after
due inquiry, is not aware of any express or implied term, condition,
arrangement or understanding which would impose an "unfair burden" on the
Trust as a result of the Mergers. New Chase, 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 and Sub-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 IEEE Fund pursuant to the Current Advisory Agreement. Atlanta Capital
serves as Sub-Adviser to the IEEE Fund pursuant to the Current Sub-Advisory
Agreement. The Adviser (or the successor entity thereto) and Atlanta Capital
will serve as investment adviser and Sub-Adviser, respectively, to the IEEE
Fund after the Holding Company Merger (and prior to the Reorganization into
the Balanced Fund, subject to approval of Proposal 1 above) under the Interim
Agreements which are identical in all material respects to the respective
Current Agreement except for its effective date. A copy of the form of the
Interim Advisory Agreement and Interim Sub-Advisory Agreement is attached
hereto as Appendix B and C, respectively and should be read in conjunction
with the following.
CURRENT AND INTERIM ADVISORY AGREEMENTS
The Current and Interim Advisory Agreements are identical, except for their
effective 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 IEEE Fund all office space and facilities, equipment
and clerical personnel necessary to carry out its duties under each Advisory
Agreement and keep the accounting records of the IEEE Fund, including the
computation of net asset values per share and dividends.
Under the 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. The IEEE Fund bears the cost of
the preparation and setting in type of its prospectuses and reports to
shareholders and the costs of printing and distributing those copies of such
prospectuses and reports as are sent to shareholders. Under the Current and
Interim Advisory Agreements all other expenses of the IEEE Fund not expressly
assumed by the Adviser are paid by the IEEE Fund. Each Agreement lists
examples of such expenses; the major categories of such expenses relate to
interest, taxes, legal and audit expenses, custodian and transfer agent or
shareholder servicing agency expenses, stock issuance and redemption costs,
certain printing costs, registration costs of the Trust and its shares under
federal and state securities laws, and non-recurring expenses, including
litigation.
For the services it provides under the terms of the Current and Interim
Advisory Agreements, the IEEE Fund pays the Adviser a monthly fee equal to a
specified percentage per annum of its average daily net assets computed at
the close of each business day. See "Fees and Fee Waivers" below which sets
forth the applicable percentage for the IEEE Fund. The Adviser may
voluntarily agree to waive a portion of the fees payable to it.
The Current Advisory Agreement is currently in effect until August 4, 1996
and continues from year to year thereafter, provided that the Agreement is
specifically approved in a manner consistent with the 1940 Act. The Current
Advisory Agreement was approved by shareholders on August 25, 1994. The 1940
Act requires approval at least annually by the Board of Trustees, including
the vote of a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of any party to the Agreement cast in person at a
meeting called for the purpose of voting on approval, or by the vote of the
holders of a "majority" of the outstanding voting securities (as defined in
the 1940 Act) of the IEEE Fund.
The Trust, on behalf of the IEEE Fund, may terminate the Current and Interim
Advisory Agreements without penalty on not
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more than 60 days' nor less than 30 days' written notice when authorized by
either a vote of the shareholders of the IEEE Fund or by a vote of a majority
of the Trust's Board of Trustees, including the vote of a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the Agreement. The Adviser may terminate the Current and Interim
Advisory Agreements on not more than 60 days' nor less than 30 days' written
notice. Both Agreements will automatically terminate in the event of their
assignment (as defined in the 1940 Act).
In addition, the Current and Interim Advisory Agreements provide that, in the
event the operating expenses of the IEEE Fund, including all investment
advisory and administration fees, but excluding brokerage commissions and
fees, distribution fees, taxes, interest and extraordinary expenses such as
litigation expenses, for any fiscal year exceed the most restrictive expense
limitation applicable to the IEEE Fund imposed by the securities laws or
regulations thereunder of any state in which the shares of the IEEE Fund are
qualified for a sale, as such limitations may be raised or lowered from time
to time, the Adviser shall reduce its advisory fee described above to the
extent of its share of such excess expenses. The amount of any such reduction
to be borne by the Adviser will be deducted from the monthly fee otherwise
payable to the Adviser during such fiscal year; and if such amounts should
exceed the monthly fee, the Adviser will pay to the IEEE Fund its share of
such excess expenses no later than the last day of the first month of the
next succeeding fiscal year.
The Chase Manhattan Bank, N.A. Chase, a wholly-owned subsidiary of The Chase
Manhattan Corporation, a registered bank holding company, is a commercial
bank offering a wide range of banking and investment services to customers
throughout the United States and around the world. Its headquarters are at
One Chase Manhattan Plaza, New York, New York 10081. As of December 31, 1995,
Chase was one of the largest commercial banks in the United States, with
assets of $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 also serves as investment
adviser, their assets as of December 31, 1995, and their advisory fees are:
Total Assets
Advisory as of 12/31/95
Mutual Fund Trust Fee (In Millions)
- -------------------------- ----------- ----------------
Vista California Tax Free
Money Market Fund 0.10% $ 42.822
Vista New York Tax Free
Money Market Fund 0.10 438.386
Vista Tax Free Money
Market Fund 0.10 430.000
Vista U.S. Government
Money Market Fund 0.10 2263.872
Vista Global Money Market
Fund 0.10 1715.658
Vista Federal Money Market
Fund 0.10 496.456
Vista Treasury Plus Money
Market Fund 0.10 195.22
Vista Prime Money Market
Fund 0.10 1198.243
Vista Tax Free Income Fund 0.30 103.047
Vista New York Tax Free
Income Fund 0.30 110.567
Vista California
Intermediate Tax Free
Income Fund 0.30 32.191
Total Assets
Mutual Fund Variable as of 12/31/95
Annuity Trust Fee (In Millions)
- -------------------------- --------- ---------------
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
Treasury Portfolio 0.50 2.320
Money Market Portfolio 0.25 2.292
Total Assets
as of 12/31/95
Mutual Fund Group Fee (In Millions)
- -------------------------- --------- ---------------
Vista Short Term Bond Fund 0.25% $ 36.493
Vista U.S. Treasury Income
Fund 0.30 114.170
Vista Bond Fund 0.30 59.191
Vista Equity Income Fund 0.40 11.564
Vista Equity Fund 0.40 49.847
Vista Small Cap Equity
Fund 0.65 80.898
Vista Southeast Asian Fund 1.00 4.724
Vista Japan Fund 1.00 3.620
Vista European Fund 1.00 4.518
Certain Relationships and Activities. Chase and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of the IEEE Fund, including outstanding loans
to such issuers which may be repaid in whole or in part with the proceeds of
securities so purchased. Chase and its affiliates deal, trade and invest for
their own accounts in U.S. Government obligations and municipal obligations
and are among the leading dealers of various types of U.S. Government
obligations and municipal obligations. Chase and its affiliates may sell U.S.
Government obligations and municipal obligations to and purchase them from
other investment companies distributed by Vista Broker Dealer Services. The
Adviser will not invest any IEEE Fund assets in any U.S. Government
obligations or municipal obligations purchased from itself or any affiliate,
although under cer-
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tain circumstances such securities may be purchased from other members of an
underwriting syndicate in which the Adviser or an affiliate is a
non-principal member. This restriction may limit the amount or type of U.S.
Government obligations or municipal obligations available to be purchased on
behalf of the IEEE Fund. The Adviser has informed the IEEE Fund that in
making its investment decisions it does not obtain or use material inside
information in the possession of any other division or department of the
Adviser or in the possession of any affiliate of the Adviser.
Both the 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.
CURRENT AND INTERIM SUB-ADVISORY AGREEMENTS
The Current and Interim Sub-Advisory Agreements are also identical, except
for their effective and termination dates. Both Agreements require Atlanta
Capital to act as the portfolio adviser to the IEEE Fund, to supervise the
investment and reinvestment of cash, securities, or other properties
comprising the IEEE Fund's portfolio, subject at all times to the direction
of the Adviser and the policies and control of the Board of Trustees.
The Current and Interim Sub-Advisory Agreements both require that the
Sub-Adviser to furnish, at its expense, all necessary services, facilities
and personnel in connection with the carrying out of its responsibilities
under the Agreement.
For the services the Sub-Adviser provides under each Agreement, the
Adviser pays to the Sub-Adviser monthly compensation at the annual rate of
0.65% of the IEEE Fund's average daily net assets (reduced by the same amount
by which the Adviser has waived its fee).
The Current Agreement is in effect until August 4, 1996 and continues from
year to year thereafter, provided that the Agreement is specifically approved
in a manner consistent with the 1940 Act. The Current Sub-Advisory Agreement
was last approved by shareholders on August 25, 1994.
Both the Current and Interim Agreements may be terminated at any time,
without the payment of any penalty, by vote of the Board of Trustees or by a
majority vote of the IEEE Fund's outstanding voting securities or by the
Adviser or Sub-Adviser on 60 days written notice to the other party. Both
Agreements automatically terminate in the event of their assignment (as
defined in the 1940 Act) or in the event of the termination of the Advisory
Agreement.
Atlanta Capital, founded in 1969, manages institutional funds for a
limited number of corporate sponsors, governments and foundations. The firm
was acquired in 1990 by London-based Hill Samuel Investment Management Group
Limited, but operates as a separate subsidiary. Atlanta Capital currently
manages over $2.5 billion and has over 25 years of equity management
experience. Atlanta Capital is registered as an investment adviser with the
Securities and Exchange Commission. Atlanta Capital does not provide Advisory
services to other mutual funds.
BOARD CONSIDERATION
In considering whether to approve the Interim Agreements and to submit
them 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 sub-advisory and other
services provided by the Adviser and Sub-Adviser, respectfully under the
Interim Agreements, and (2) the identical nature of the terms and conditions
contained in the Interim Agreements, as compared to the Current Agreements.
Additionally, the Board considered the benefits that would be obtained by the
IEEE Fund in maintaining continuity in the services provided to it, and
determined that continuity was advantageous to the IEEE Fund as it would
serve to minimize uncertainty and confusion, provide for the continued
utilization of the demonstrated skills and capability of the staff of the
Adviser and Sub-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 separate
Administration Agreements. Under the Administration Agreement, Chase
generally assists in all aspects of each Fund's operations, other than
providing investment advice, subject to the overall authority of the Board of
Trustees in accordance with applicable state law. Under the terms of the
relevant Administration Agreement, Chase receives a monthly fee at the annual
rate of .10% of the value of each Fund's average daily net assets. For each
Fund, the administration fee payable, the amount by which such fee was
reduced pursuant to a waiver by Chase, and the net administration fees paid
by each Fund under the Administration Agreement for the indicated period are
set forth below under "Fees and Fee Waivers."
The Funds have engaged Vista Broker-Dealer Services, Inc. (the
"Sub-Administrator"), a wholly-owned subsidiary of BISYS Fund Services, Inc.,
located at 125 West 55th Street, New York, New York 10019, to assist it in
providing certain administrative services for the Funds pursuant to a Sub-
Administration Agreement between the Trust, on behalf of the Funds, and the
Sub-Administrator. The Sub-Administrator receives an annual fee, payable
monthly, of .05% of the average daily net assets of each Fund.
On November 6, 1995, the Trust, other investment companies advised by Chase,
and Chase filed an application (the "Application") with the Securities and
Exchange Commission (the "Commission") requesting an order of the Commission
permitting implementation, without prior stockholder approval, of
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the Interim Agreements during the interim period commencing on the date of
the closing on the Holding Company Merger and ending at the earlier of such
time as sufficient votes are cast by the IEEE Fund's shareholders to approve
the Interim Agreements 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 the IEEE Fund
during the Interim Period will be maintained in an interest-bearing escrow
account and amounts in the account will be paid to Chase and Atlanta Capital
only upon approval by the shareholders of the IEEE Fund of the respective
Interim Agreements and the compensation payable thereunder. In addition, the
Application contains representations that Chase (and its successor, if
applicable), will take all appropriate steps so that the scope and quality of
its advisory and other services provided to the IEEE Fund 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 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 compensations
under the Interim Agreements, during the Interim Period would be appropriate
and fair considering that (1) the fee would be paid at the same rates as was
previously in effect under the Current Agreements and services would be
provided in the same manner, (2) because of the relatively short time frame
necessary to complete the Mergers, there was a possibility that the IEEE Fund
would not obtain the requisite number of votes to approve the Interim
Agreements prior to the Mergers, and (3) the non-payment of fees during the
Interim Period would be an unduly harsh result in view of the services
provided to IEEE Fund under the Interim Agreements.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the Interim Advisory Agreement and Interim Sub-Advisory Agreement
will require the affirmative vote of a "majority of the outstanding voting
securities" of the IEEE Fund, which for this purpose means the affirmative
vote of the lesser of (1) more than 50% of the outstanding shares of the IEEE
Fund or (2) 67% or more of the shares of the IEEE Fund present at the meeting
if more than 50% of the outstanding shares of the IEEE Fund are represented
at the meeting in person or by proxy (a "Majority Vote"). If the shareholders
of the IEEE Fund do not approve the Interim Agreements, Chase and Chemical
nevertheless intend to proceed with the Holding Company Merger and, in such
case, the Current Agreements will terminate automatically. In that event, the
Board will take such further action as it may deem to be in the best
interests of the IEEE Fund's shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 3
ELECTION OF TRUSTEES
It is proposed that shareholders of the IEEE Fund consider the election of
the individuals listed below (the "Nominees") to the Board of Trustees of the
Trust, which is currently organized as a Massachusetts business trust.
Biographical information about the Nominees and other relevant information is
set forth below. Each Nominee has consented to being named in this Proxy
Statement and has agreed to serve as a Board member if elected.
Certain Directors of The Hanover Funds, Inc. and The Hanover Investment
Funds, Inc. have been nominated to serve as Trustees of the Trust. The
Hanover Funds are advised by affiliates of Chemical and it has been proposed,
subject to approval by Hanover shareholders, that they be merged into certain
series of the Vista Funds. Therefore, the Nominees consist of all current
Trustees of the Trust and three other individuals who are presently Directors
of the Hanover funds.
The persons named in the accompanying form of proxy intend to vote each such
proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for
elections to office. It is not contemplated that any Nominee will be unable
to serve as a Board member for any reason, but if that should occur prior to
the Meeting, the proxy holders reserve the right to substitute another person
or persons of their choice as nominee or nominees.
The following are the Nominees:
Year First
Principal Occupations Became a
Nominee Age for the Last Five Years Trustee
----------------- -- --------------------------------- ----------
Fergus Reid, III 63 Chairman and Chief Executive 1984
971 West Road Officer, Lumelite Corporation,
New Canaan, CT since September 1985; Trustee,
06840 Morgan Stanley Funds, from 1982
through 1984, Managing Director,
Bernhard Associates (venture
capital firm).
Richard E. Ten 61 Former District Superintendent 1984
Haken of Schools, Monroe No. 2 and
4 Barnfield Road Orleans Counties, New York;
Pittsford, NY Chairman of the Finance and the
14534 Audit and Accounting Committees,
Member of the Executive
Committee; Chairman of the Board
and President, New York State
Teachers' Retirement System.
26
<PAGE>
William J.Armstrong 54 Vice President and Treasurer, 1987
49 Aspen Way Ingersoll-Rand Company.
Upper Saddle
River, NJ 07458
John R.H. Blum 66 Attorney in Private Practice; 1984
322 Main Street formerly, partner in the law
Lakeville, CT firm of Richards, O'Neil &
06039 Allegaert; Commissioner of
Agriculture State of
Connecticut, 1992-1995
*Joseph J. 64 Retired; Commercial Sector 1990
Harkins Executive and Executive Vice
257 Plantation President of The Chase Manhattan
Circle Sth. Bank, N.A. from 1985 through
Ponte Vedra 1989. He has been employed by
Beach, FL 32082 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 60 Consultant, Republic Bank of New 1992
Vartabedian York; formerly, Senior
P.O. Box 296 Investment Officer, Division
Beach Road Executive of the Investment
Hendrick's Head Management Division of The Chase
Southport, ME Manhattan Bank, N.A., 1980
04576 through 1991.
Stuart W. Cragin, 63 Retired; formerly President, 1992
Jr. Fairfield Testing Laboratory,
108 Valley Road Inc. He has previously served in
Cos Cob, CT a variety of marketing,
06807 manufacturing and general
management positions with Union
Camp Corp., Trinity Paper &
Plastics Corp., and Conover
Industries.
Irving L. Thode 64 Retired; Vice President of 1992
80 Perkins Road Quotron Systems. He has
Greenwich, CT previously served in a number of
06830 executive positions with Control
Data Corp., including President
of its Latin American
Operations, and General Manager
of its Data Services business.
*W. Perry Neff 68 Independent Financial Proposed
RR 1 Box 102A Consultant; Director of North
Weston, VT 05181 American Life Assurance Co.,
Petroleum & Resources Corp. and
The Adams Express Co.; Director
and Chairman of The Hanover
Funds, Inc.; Director, Chairman
and President of The Hanover
Investment Funds, Inc.
Roland R. Eppley, Jr. 63 Retired; formerly President and Proposed
105 Coventry Chief Executive Officer, Eastern
Place States Bankcard Association
Palm Beach Inc., (1971-1988); Director,
Gardens, FL Janel Hydraulics, Inc. and The
33418 Hanover Funds, Inc.
W.D. MacCallan 68 Director of The Adams Express Proposed
624 East 45th Co., Petroleum & Resources
Street Corp., The Hanover Funds, Inc.
Savannah, GA and The Hanover Investment
31405 Funds, Inc.; formerly Chairman
of the Board and Chief Executive
Officer of The Adams Express Co.
and Petroleum & Resources Corp.
*Interested Trustee as defined under the 1940 Act. It is anticipated that
as of the date of the reorganization of certain mutual funds affiliated with
Chemical into certain funds advised by the Adviser, Mr. Harkins will no
longer be considered an Interested Trustee.
The Board of Trustees of the Trust presently has an Audit Committee. The
members of the Audit Committee are Messrs. Ten Haken (Chairman), Blum,
Armstrong, Harkins*, Reid, and Vartabedian*. 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.
27
<PAGE>
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 IEEE
Balanced Income Income Growth Equity Bond Balanced
Fund Fund Fund Fund Fund Fund Fund
------ ----- --------- -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fergus Reid, III,
Trustee $241.30 $96.13 $14,393.16 $7,594.67 $540.99 $468.64 $62.24
Richard E. Ten Haken,
Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
William J. Armstrong,
Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
John R.H. Blum, Trustee 190.83 62.60 9,376.63 4,955.42 352.06 305.11 41.48
Joseph J. Harkins,
Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
H. Richard Vartabedian,
Trustee 169.60 67.79 10,159.13 5,376.61 330.18 330.18 41.48
Stuart W. Cragin, Jr.,
Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
Irving L. Thode, Trustee 160.88 64.07 9,595.45 5,063.12 360.67 312.41 41.48
</TABLE>
<TABLE>
<CAPTION>
Short Small 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>
Pension or
Retirement Total
Benefits Compensation
Accrued from
as Fund "Fund Complex"
Expenses (1)
------------- --------------
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
(1) Data reflect total compensation earned during the period January 1, 1995
to December 31, 1995 for service as Trustee to all thirty-two Funds
advised by the Adviser.
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
28
<PAGE>
age 65 and has completed at least five years of continuous service with one
or more of the investment companies advised by the Adviser (collectively, the
"Covered Funds"). Each Eligible Trustee is entitled to receive from the
Covered Funds an annual benefit commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 10% of
the highest annual compensation received from the Covered Funds multiplied by
the number of such Trustee's years of service (not in excess of 10 years)
completed with respect to any of the Covered Funds. Such benefit is payable
to each eligible Trustee in monthly installments for the life of the Trustee.
Set forth below in the table below are the estimated annual benefits
payable to an eligible Trustee upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
for Messrs. Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian, Cragin,
and Thode are 11, 11, 8, 11, 5, 3, 3 and 3 respectively.
Years of $40,000 $45,000 $50,000 $55,000
Highest Annual Compensation Paid by
Service All Vista Funds
- ---------- --------------------------------------
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
Effective August 21, 1995, the Trustees instituted a Deferred Compensation
Plan for Eligible Trustees (the "Deferred Compensation Plan") pursuant to
which each Trustee (who is not an employee of any of the Funds, the Adviser,
Administrator or Distributor or any of their affiliates) may enter into
agreements with the Funds whereby payment of the Trustees' fees are deferred
until the payment date elected by the Trustee (or the Trustee's termination
of service). The deferred amounts are deemed invested in shares of the Fund
on whose Board the Trustee sits. The deferred amounts are paid out in a lump
sum or over a period of several years as elected by the Trustee at the time
of deferral. If a deferring Trustee dies prior to the distribution of amounts
held in the deferral account, the balance of the deferral account will be
distributed to the Trustee's designated beneficiary in a single lump sum
payment as soon as practicable after such deferring Trustee's death. The
following Eligible Trustees have executed a deferred compensation agreement
for the 1996 calendar year: 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 plurality of the votes entitled to be cast at the Meeting by all
shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 4
RATIFICATION OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board, including a majority of the trustees who are not interested
persons of the Trust, is recommending Price Waterhouse LLP to serve as
independent public accountants of each Fund for each Fund's next fiscal year,
subject to the right of the Fund to terminate such employment immediately
without penalty by vote of a majority of the outstanding voting securities of
the Fund at any meeting called for such purpose. The Board's selection is
hereby submitted to the shareholders for ratification.
Price Waterhouse LLP served as the independent auditors for each of the
Funds during its most recent fiscal period ended October 31, 1995. Services
performed by Price Waterhouse LLP during such time have included the audit of
the financial statements of the Trust and services related to filings of the
Trust with the Commission. Price Waterhouse LLP has informed each Fund that
neither Price Waterhouse LLP nor any of its partners has any direct or
material indirect financial interest in the Trust. Representatives of Price
Waterhouse LLP are not expected to be present at the Meeting but have been
given the opportunity to make a statement if they so desire, and will be
available should any matter arise requiring their participation.
29
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The ratification of the selection of Price Waterhouse LLP as the independent
public accountants of a Fund requires the affirmative vote of a majority of
the votes entitled to be cast at the Meeting by the shareholders of such
Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
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
Additional Information About the IEEE Fund
Information about the IEEE Fund is incorporated herein by reference from the
IEEE Fund's prospectus dated March 1, 1995. Additional information about the
IEEE Fund is included in the IEEE Fund's statement of additional information
dated March 1, 1995. Copies of such prospectus and statement of additional
information may be obtained without charge by writing or calling the IEEE
Fund at the address or telephone number shown on the cover page of this
Combined Proxy Statement/ Prospectus. Reports and other information filed by
the IEEE Fund can be inspected and copied at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of such material can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
Financial Statements
The financial statements and selected per share data and ratios for shares of
the IEEE Fund for the fiscal year ended October 31, 1995, are contained in
the IEEE Fund's Annual Report to Shareholders which was mailed to
shareholders on or about December 30, 1995 (the "Annual Report").
The financial statements and selected per share data and ratios for the
IEEE Fund, incorporated by reference or included in its prospectus and
statement of additional information are incorporated by reference herein for
the year ended October 30, 1995, and have been so included or incorporated by
reference in reliance on the report of Price Waterhouse LLP, independent
30
<PAGE>
accountants, given on the authority of said firm as experts in accounting and
auditing.
Capitalization. The following tables show the capitalization (unaudited)
of IEEE Balanced Fund and Vista Balanced Fund as of October 31, 1995, and on
a pro forma combined basis as of that date for the Reorganization giving
effect to the proposed acquisition of assets at net asset value.
Capitalization Tables for the Vista Balanced and IEEE
Merger as of October 31, 1995
Vista Balanced IEEE Balanced Pro Forma
Fund Fund Reorganization
---------------- --------------- -------------
Net Assets
A Shares $33,732,838 $10,771,888 $44,504,727
B Shares $ 6,335,693 -- $ 6,335,693
Net Asset Value per
Share--A $ 12.45 $ 10.98 $ 12.45
Net Asset Value per
Share--B $ 12.36 -- $ 12.36
Shares Outstanding--A 2,710,359 980,997 3,575,857
Shares Outstanding--B 512,572 -- 512,572
Shareholder Inquiries
Shareholder inquiries may be addressed to the IEEE Fund at the address or
telephone number on the cover page of this Combined Proxy
Statement/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
31
<PAGE>
APPENDIX A
FORM OF
MUTUAL FUND GROUP
IEEE BALANCED FUND AND VISTA BALANCED FUND
PLAN OF REORGANIZATION
The Plan of Reorganization ("the Plan") set forth below has been adopted
by the Board of Trustees of Mutual Fund Group (the "Trust") for the purpose
of effecting the transfer of the assets of the Trust's IEEE Balanced Fund
Series (the "IEEE Fund") to the Trust's Vista Balanced Fund Series (the
"Balanced Fund") in exchange for Class A shares of beneficial interest of the
Balanced Fund and the distribution of such shares to the stockholders of the
IEEE Fund (the "Reorganization"). The Plan will become effective upon its
approval by the shareholders of the IEEE Fund.
THE PLAN
1. Approval by Shareholders.
A meeting of the shareholders of the IEEE Fund shall be called and held for
the purpose of acting upon this Plan and the transactions contemplated
hereby. The Trust shall furnish to the shareholders of the IEEE Fund a
prospectus/proxy statement containing certain data and information relating
to the Balanced Fund and this Plan in connection with the meeting for the
purpose of acting upon this Plan and the transactions contemplated hereby.
Approval by the shareholders of the IEEE Fund of this Plan shall, to the
extent necessary to permit the consummation of the transactions contemplated
hereby without violating any investment objective, policy or restriction of
the IEEE Fund, be deemed to constitute approval by such shareholders of an
amendment of any such investment objective, policy or restriction that would
otherwise be inconsistent with or violated upon the consummation of such
transactions, and this Plan shall be deemed to effect any such amendment or
amendments.
2. Reorganization.
a. Subject to the terms and conditions set forth in this Plan, the IEEE Fund
will convey, transfer and deliver to the Balanced Fund at the closing
provided for in Section 3 (hereinafter called the "Closing") all of the
then-existing assets of the IEEE Fund. In consideration thereof, and subject
to the terms and conditions set forth in this Plan, Balanced Fund agrees at
the Closing (1) to assume and pay, to the extent that they exist on or after
the Effective Time of the Reorganization (as defined in Section 3 hereof),
all of the IEEE Fund's obligations and liabilities, of whatever kind or
nature, whether absolute, accrued, contingent or otherwise, whether or not
determinable as of the Effective Time of the Reorganization, and (2) in order
to accomplish the reclassification of shares as described in Section 2b
hereof, deliver to the Trust for distribution to the shareholders of the IEEE
Fund a number of full and fractional Class A shares (the "Shares") of
beneficial interest of the Balanced Fund, no par value determined by dividing
the Net Asset Value ("NAV") of the IEEE Fund at the Effective Time of the
Reorganization (as determined in accordance with the Investment Company Act
of 1940, as amended (the "1940 Act") and the IEEE Fund's current prospectus)
by the net asset value of one Class A share of the Balanced Fund at the
Effective Time of the Reorganization (as determined in accordance with the
Balanced Fund's most recent Registration Statement on Form N-1A).
b. Upon consummation of the transactions described in Section 2(a) above,
the IEEE Fund will distribute pro rata to the shareholders of record of the
IEEE Fund as of the Effective Time of the Reorganization the Shares received
by the IEEE Fund pursuant to this Section 2. Such distribution will be
accomplished by the establishment of an open account on the stock records of
the Balanced Fund in the name of each such shareholder of the IEEE Fund and
representing the number of Shares due such shareholder based upon their
ownership of shares of the IEEE Fund. Fractional Shares will be carried to
the third decimal place. Certificates representing Shares will not be issued.
c. As soon as reasonably practicable after the Effective Time of the
Reorganization, the Trust will take all necessary steps under its Declaration
of Trust and Massachusetts law to effect a complete liquidation and
dissolution of the IEEE Fund.
d. The transactions contemplated herein are referred to as the
"Reorganization."
3. Closing and Effective Time of the Reorganization.
The closing of the Reorganization (the "Closing") shall take place at such
time and on such date (the "Effective Time of the Reorganization") as the
Trust may determine, provided that the Closing shall occur after the close of
regular trading on the New York Stock Exchange on a date that is no earlier
than the date of the final adjournment of the meeting of the stockholders of
the IEEE Fund at which this Plan is approved.
A-1
<PAGE>
4. Conditions to the Closing.
The consummation of the Reorganization shall be subject to the satisfaction
of each of the following conditions:
a. Organization, Existence, etc. The Trust shall be duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and shall have the power to carry on its business as it is now
being conducted. The Trust has all necessary Federal, state and local
authorization to own all of its properties and assets and to carry on its
business as now being conducted.
b. Shareholder Approval. This Agreement and the transactions contemplated
by the Reorganization, including, when necessary, a temporary amendment of
the investment restrictions that might otherwise preclude the consummation of
the Reorganization, shall have been approved by the holders of the requisite
number of shares of beneficial interest of the IEEE Fund entitled to vote on
the matter under the Declaration of Trust.
c. Registration as Investment Company. The Trust shall be registered under
the Investment Company Act of 1940 (the "Act") as an open-end investment
company of the management type and such registration shall not have been
revoked or rescinded and shall be in full force and effect.
d. Registration Statement. The Trust shall have filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement (the
"Registration Statement") under the Securities Act of 1933 ("Securities Act")
relating to the Shares issuable hereunder. At the time the Registration
Statement becomes effective, the Registration Statement (i) will comply in
all material respects with the provisions of the Securities Act and the rules
and regulations of the Commission thereunder and (ii) will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes effective, at
the time of the Shareholders' meeting referred to in Section 1, and at the
Effective Time of the Reorganization, the prospectus for the Balanced Fund
and statement of additional information included therein, as amended or
supplemented by any amendments or supplements filed by the Trust, will not
contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
e. Shares to be Issued Upon Reorganization. The shares of the Balanced
Fund to be issued in connection with the Reorganization shall have been duly
authorized and upon consummation of the Reorganization shall be validly
issued, fully paid and nonassessable.
f. Taxes. The Federal income tax returns of the Trust shall have been
filed for all taxable year to and including October 31, 1994, and all taxes
payable pursuant to such returns shall have been paid. Each Fund shall be
qualified as a regulated investment company under the Internal Revenue Code
in respect of each taxable year of the Fund since commencement of its
operations.
g. Regulatory Authority. Such authority, including "no-action" letters and
orders from the Securities and Exchange Commission (the "Commission") and
state securities commissions, as may be necessary to permit the parties to
carry out the transactions contemplated by this Agreement shall have been
received.
h. No Enjoinder. On the Closing Date, (a) the SEC shall not have issued an
unfavorable advisory report under Section 25(b) of the 1940 Act nor
instituted nor threatened to institute any proceeding seeking to enjoin
consummation of the Reorganization contemplated hereby under Section 25(c) of
the 1940 Act and (b) no other action, suit or other proceeding shall be
threatened or pending before any court or governmental agency which seeks to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.
i. Opinion of Counsel. The Trust shall have received the opinion of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel to the Trust, dated
the Effective Time of the Reorganization addressed to the Trust, to the
effect that: (1) the Trust is established as a Massachusetts business trust
under Declaration of Trust dated May 11, 1987 and is validly existing under
the laws of the Commonwealth of Massachusetts, (2) the Trust is an open-end
investment company of the management type registered under the 1940 Act, and
the Balanced Fund is a duly established series of the Trust, (3) this Plan
and the Reorganization provided for herein have been duly authorized and
approved by all requisite trust action of the Trust, (4) this Plan and the
Reorganization provided for herein does not result in any violation of the
Declaration of Trust or By-laws of the Trust and (5) the Shares to be issued
in the Reorganization will be duly authorized and upon issuance thereof in
accordance with this Plan will be validly issued, fully paid and
non-assessable Shares (recognizing that, under Massachusetts law,
shareholders of the Balanced Fund could, under certain circumstances, be held
personally liable for obligations of the IEEE Fund). In rendering such
opinion, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel may rely on an
opinion of Massachusetts counsel reasonably acceptable to the Trust with
respect to matters of Massachusetts law.
j. Tax Opinion. The Trust shall have received an opinion of Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, counsel to the Trust, dated the Effective
Time of the Reorganization, addressed to and in form and substance
satisfactory to the Trust to the effect that:
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(i) the transfer of all of the assets of the IEEE Fund (except for cash
reserve in an amount necessary for the discharge of all known and reasonably
anticipated liabilities of the IEEE Fund, if any) to the Balanced Fund in
exchange for the assumption of all the liabilities of the IEEE Fund by the
Balanced Fund and the delivery to the IEEE Fund of shares of the Balanced
Fund, and the distribution by the IEEE Fund pro rata to its shareholders of
such shares of the Balanced Fund and the termination of the IEEE Fund, as
described in the Reorganization Plan, will constitute a reorganization within
the meaning of Section 368 of the Internal Revenue Code of 1986, as amended;
(ii) no gain or loss will be recognized by the IEEE Fund as a result of such
transactions; (iii) no gain or loss will be recognized by the Balanced Fund
as a result of such transactions; (iv) no gain or loss will be recognized by
the shareholders of the IEEE Fund on the distribution to them by the IEEE
Fund of shares of the Balanced Fund in exchange for their shares of the IEEE
Fund; (v) the basis of Balanced Fund shares received by a shareholder of the
IEEE Fund will be the same as the basis of the shareholder's IEEE Fund shares
immediately prior to the transactions; (vi) the basis to the Balanced Fund of
the assets of the IEEE Fund received pursuant to such transactions will be
the same as the basis of the assets in the hands of the IEEE Fund immediately
before such transactions; (vii) a shareholder's holding period for Balanced
Fund shares will be determined by including the period for which the
shareholder held IEEE Fund shares exchanged therefor, provided that the
shareholder held IEEE Fund shares as a capital asset; and (viii) the Balanced
Fund's holding period with respect to the assets received in the transactions
will include the period for which such assets were held by the IEEE Fund.
5. Amendment.
This Plan may be amended by the Board of Trustees of the Trust at any time
before or after the approval hereof by the shareholders of the IEEE Fund, but
after such approval, no amendment shall be made which substantially changes
the terms hereof.
6. Termination.
The Board of Trustees of the Trust may terminate this Plan and abandon the
Reorganization contemplated hereby at any time prior to the Closing,
notwithstanding approval thereof by the shareholders of the IEEE Fund if, in
the judgment of such Board proceeding with the Reorganization would be
inadvisable.
Adopted: December 14, 1995
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APPENDIX B
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 IEEE Balanced Fund 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.
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(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 0.65% 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
B-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
provisions of the Act, including specifically, the provisions of the
Act and the rules and regulations thereunder regarding series votes by
shareholders of the Fund.
(c) This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at
any time without penalty upon giving the Adviser sixty (60) days'
written notice (which notice may be waived by the Adviser), provided
that such termination by the Fund shall be approved by the vote of a
majority of all the Trustees in office at the time or by the vote of
the holders of a majority (as defined in the Act) of the voting
securities of the Fund at the time outstanding and entitled to vote.
This Agreement may only be terminated in accordance with the provisions
of the Act, and shall automatically terminate in the event of its
assignment (as defined in the Act).
7. Board of Trustees Meeting. The Fund agrees that notice of each meeting
of the Board of Trustees of the Trust will be sent to the Adviser and that
the Fund will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may
designate.
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:
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<PAGE>
APPENDIX C
FORM OF INTERIM SUB-ADVISORY AGREEMENT
BETWEEN THE CHASE MANHATTAN BANK, N.A. (AND ITS SUCCESSOR)
AND ATLANTA CAPITAL MANAGEMENT COMPANY
THIS AGREEMENT is made this day of , 1996, by and between THE CHASE
MANHATTAN BANK, N.A., a national banking association (and its successor)
("Chase" or the "Adviser"), and ATLANTA CAPITAL MANAGEMENT COMPANY (the
"Sub-Adviser") with respect to the following recital of fact:
R E C I T A L
WHEREAS, Mutual Fund Group (the "TRUST") is registered as an open-end
non-diversified management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act") and the rules and regulations
promulgated thereunder;
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
Agreement (the "Advisory Agreement") to provide for management services for
the IEEE Balanced Fund, a series of the Trust (the "Fund"), on the terms and
conditions set forth in the Advisory Agreement dated even date hereof;
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
provides investment advisory services;
WHEREAS, the Sub-Adviser proposes to render investment advisory services to
the Fund in connection with the Adviser's responsibilities to the Fund on the
terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Adviser may enter into arrangements with one or more
investment advisers other than Chase (the "Other Advisers") for the provision
of additional advisory services to the Fund.
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Investment Management. The Sub-Adviser shall act as the portfolio
adviser for the Fund and shall, in such capacity, and in conjunction with any
Other Adviser, supervise the investment and reinvestment of the cash,
securities or other properties comprising the Fund's portfolio, subject at
all times to the direction of the Adviser and the policies and control of the
Trust's Board of Trustees. The Sub-Adviser shall give the Fund the benefit of
its best judgment, efforts and facilities in rendering its services as
portfolio adviser.
2. Investment Analysis and Implementation. In carrying out its obligation
under Section 1 hereof, the Sub-Adviser shall ensure that it and any Other
Adviser:
(a) at all times adhere to the Fund's investment objectives, restrictions
and limitations as contained in its then current Prospectus and
Statement of Additional Information;
(b) use the same skill and care in providing such service as are used in
providing investment services to other fiduciary accounts;
(c) obtain and evaluate pertinent information about significant
developments and economics, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund's portfolio and whether concerning the individual issuers whose
securities are included in the Fund's portfolio or the activities in
which the issuers engage, or with respect to securities which the
Sub-Adviser considers desirable for inclusion in the Fund's portfolio;
(d) determine which issuers and securities shall be represented in the
Fund's portfolio and report thereon to the Adviser at such intervals
as the Adviser any instruct;
(e) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and report thereon to the
Adviser at such intervals as the Adviser may instruct; and
(f) take, on behalf of the Fund, all actions which appear to the Fund and
the Adviser necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the placing
of orders for the purchase and sale of securities for the Fund and the
reporting to the Adviser of such purchases and sales as promptly as
practicable.
The Sub-Adviser shall be authorized to give instructions to the custodian
of the Fund as to deliveries of securities, transfers of currencies and
payments of cash for the account of the Fund, in relation to the matters
contemplated by this Agreement. The Sub-Adviser shall also be authorized to
establish policies and procedures pursuant to which an Other Adviser, subject
to the overall oversight of the Sub-Adviser, may give instructions to the
custodian of the Fund as to deliveries of securities, transfers of currencies
and payments of cash for the account of the Fund in relation to the matters
contemplated by this Agreement.
3. Broker-Dealer Relationships. The Sub-Adviser is responsible for
decisions to buy and sell securities for the Fund's portfolio, broker-dealer
selection, and negotiation of brokerage commission rates. The primary
consideration in effecting a security transaction will be execution at the
most favorable price. In selecting a broker-dealer to execute each particular
transaction, the Sub-Adviser will take the following into consideration: the
best net price available, the reliability, integrity and financial condition
of the broker-dealer; the size of and difficulty in executing the order;
research services provided by such broker-dealer; and the value of the
expected contribution of the broker-dealer to the investment performance of
the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is
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<PAGE>
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Trustees may determine, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker-dealer for effecting a portfolio
investment transaction in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction, if the
Sub-Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Sub-Adviser's overall responsibilities with respect to the
Fund and to its other clients as to which it exercises investment discretion.
Subject to the foregoing, the Sub-Adviser is authorized to allocate the
orders placed by it on behalf of the Fund to brokers and dealers who also
provide research or statistical material, or other services to the Fund or
the Sub-Adviser. Such allocation shall be in such amounts and proportions as
the Sub-Adviser shall determine and the Sub-Adviser will report on said
allocations quarterly to the Adviser indicating the brokers to whom such
allocations have been made.
4. Control by Trustees. Any investment program undertaken by the
Sub-Adviser or any Other Adviser pursuant to this Agreement, as well as any
other activities undertaken by the Sub-Adviser or any Other Adviser on behalf
of the Fund pursuant thereto, shall at all times be subject to any directives
of the Board of Trustees of the Trust. The Adviser shall provide the
Sub-Adviser with written notice of all such directives, so long as this
Agreement remains in effect.
5. Compliance with Applicable Requirements. In carrying-out its
obligations under this Agreement, the Sub-Adviser shall ensure that it and
any Other Adviser at all times conform to:
(a) all applicable provisions of the 1940 Act;
(b) all applicable provisions of the Advisers Act;
(c) the provisions of the Registration Statement of the Trust, as amended
from time to time, under the Securities Act of 1933 and the 1940 Act;
and
(d) any other applicable provisions of state and federal law.
6. Expenses. The Sub-Adviser shall furnish at its own expense all
necessary services, facilities and personnel in connection with its
responsibilities under Sections 1 and 2 above. The Sub-Adviser shall also
maintain, at its expense and without cost to the Adviser or the Fund, a
trading function in order to carry out its obligations under subparagraph (f)
of Section 2 hereof to place orders for the purchase and sale of portfolio
securities for the Fund.
7. Delegation of Responsibilities. Upon request of the Adviser and with
the approval of the Trust's Board of Trustees, the Sub-Adviser may perform
services on behalf of the Fund which are not required by this Agreement. Such
services will be performed on behalf of the Fund and the Sub-Adviser's costs
in rendering such services may be billed monthly to the Adviser, subject to
examination by the Adviser's independent accountants. Payment or assumption
by the Sub-Adviser of any Fund expense that the Sub-Adviser is not required
to pay or assume under this Agreement shall not relieve the Adviser or the
Sub-Adviser of any of their obligations to the Fund or obligate the
Sub-Adviser to pay or assume any similar Fund expense on any subsequent
occasions.
8. Compensation. For the services to be rendered and the facilities
furnished hereunder, the Adviser shall pay the Sub-Adviser monthly
compensation at the annual rate of .65% of the Fund's average daily net
assets (reduced by the same amount by which the Adviser's advisory fee with
the Fund has been waived). Compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be
paid on a monthly basis. If this Agreement becomes effective subsequent to
the first day of a month or shall terminate before the last day of a month,
compensation for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Sub-Adviser's compensation for the preceding month
shall be made as promptly as possible after the end of each month.
9. Covenants of the Sub-Adviser. The Sub-Adviser agrees that it will not
deal with itself, or with the directors of the Fund or the Fund's principal
underwriter or distributor, as principal in making purchases or sales of
securities or other property for the account of the Fund, except as permitted
by the 1940 Act, will not take a long or short position in shares of the Fund
except as permitted by the Trust's Declaration of Trust and will comply with
all other provisions of the Trust's Declaration of Trust and By-Laws and the
then-current Prospectus and Statement of Additional Information applicable to
the Fund relative to the Sub-Adviser and its directors and officers.
10. Expense Limitation. If, for any fiscal year, the total of all ordinary
business expenses of the Fund, including all investment advisory fees but
excluding brokerage commissions, distribution fees, taxes, interest and
extraordinary expenses and certain other excludable expenses, would exceed
the most restrictive expense limits imposed by any statute or regulatory
authority of any jurisdiction in which shares of the Fund are offered for
sale, the management fee which the Adviser would otherwise receive from the
Fund shall be reduced in order to reduce such excess expenses; however, the
Adviser will not be required to reimburse the Fund for any ordinary business
expenses which exceed the amount of its management fee for such fiscal year.
In the event the Adviser's management fee is reduced as a result of such
expense limitations, the fee which the Sub-Adviser is entitled to receive
from the Adviser pursuant to Section 8 of this Agreement shall also be
reduced by the same amount. For the purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the current fiscal year which
shall have elapsed prior to the date hereof and shall include the portion of
the then current fiscal year which shall have elapsed at the date of
termination of this Agreement.
11. Non-Exclusivity. The services of the Sub-Adviser to the Adviser are
not deemed to be exclusive, and the Sub-Adviser shall be free to render
investment advisory or other services to others (including investment
companies or investment trusts) and to engage in other activities so long as
its services under this Agreement are not impaired thereby.
C-2
<PAGE>
12. Term. This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to Section
13 hereof, until May 30, 1996, unless the Fund's shareholders approve the
Agreement prior to such date.
13. Renewal. Upon approval of shareholders, following the expiration of
its initial two-year term, the Agreement shall continue in force and effect
from year to year, provided that such continuance is specifically approved at
least annually:
(a) (i) by the Trust's Trustees or (ii) by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act), and
(b) by the affirmative vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of a party to this
Agreement (other than as a Trustee of the Trust), by votes cast in
person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Trust's Trustees or by vote of a
majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Adviser or the Sub-Adviser, on sixty
(60) days' written notice to the other party. This Agreement shall
automatically terminate: (a) in the event of its assignment, the term
"assignment" having the meaning defined in Section 2(a)(4) of the 1940 Act,
or (b) in the event that the Advisory Agreement shall terminate.
15. Liability of Sub-Adviser. In the performance of its duties hereunder,
the Sub-Adviser shall be obligated to exercise care and diligence and to act
in good faith and use its best efforts to ensure the accuracy of all services
provided to the Fund by the Sub-Adviser or the Other Adviser. Except for
violations of applicable laws by either the Sub-Adviser or any Other Adviser,
the Sub-Adviser shall not be liable to the Fund or Adviser for errors of
judgment, mistakes, acts or omissions in providing services to the Fund,
except for willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties.
16. Liabilities of Trustees and Shareholders. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees and
not individually and that the obligations of this instrument are not binding
upon any of the Trustees or shareholders individually but are binding only
upon the assets and property of the Fund.
17. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Adviser for this purpose shall be The Chase Manhattan Bank, N.A., Two Chase
Manhattan Plaza, 18th Floor, New York, New York 10081, Attn: Paul Klug, and
the address of the Sub-Adviser for this purpose shall be Atlanta Capital
Management Company, 2 Midtown Plaza, 1360 Peachtree St., Atlanta, GA 30309,
Attn: Frederick L. Muller.
18. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretations
thereof, if any, by the United States Courts or in the absence of a
controlling decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected in the
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above
written.
THE CHASE MANHATTAN BANK, N.A.
Attest:
By:
______________________________
Name:
Title
______________________________
Title:
ATLANTA CAPITAL MANAGEMENT
COMPANY
Attest:
By:
______________________________
Name:
Title
______________________________
Title:
C-3
<PAGE>
IEEE BALANCED FUND
Proxy for Special Meeting of Shareholders to be Held April 25, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST
The undersigned, revoking all Proxies heretofore given, hereby appoints Richard
A. De May and Vincent R. Di Costa or any one of them as Proxies of the
undersigned, with full power of substitution, to vote on behalf of the
undersigned all shares of the IEEE Balanced Fund Series of Mutual Fund Group, a
Massachusetts business trust, which the undersigned is entitled to vote at the
Special Meeting of Shareholders of Mutual Fund Group to be held on April 25,
1995 at 2:00 p.m. Eastern Time at 101 Park Avenue, New York, New York 10178 and
at all adjournments or postponements thereof, as fully as the undersigned would
be entitled to vote if personally present, as follows on the reverse side.
VISTA THE SHARES REPRESENTED HEREBY WILL BE VOTED
AS INDICATED ON THE REVERSE SIDE OR FOR THE
PROPOSAL IF NO CHOICE IS INDICATED.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S)
APPEAR ON THIS CARD. When signing as
attorney, executor, administrator, trustee,
guardian or as custodian for a minor, please
sign your name and give your full titles as
such. If signing on behalf of a corporation,
please sign full corporate name and your name
and indicate your title. If you are a partner
signing for a partnership, please sign the
partnership name and your name.
<PAGE>
- ---
[ X ] PLEASE MARK VOTES
- --- AS IN THIS EXAMPLE
For Against Abstain For Against Abstain
Proposal 1 [ ] [ ] [ ] Proposal 4 [ ] [ ] [ ]
Proposal 2 [ ] [ ] [ ] Proposal 5 [ ] [ ] [ ]
For With- For All
hold Except
Proposal 3 [ ] [ ] [ ]
Election of Trustees:
Fergus Reid, III, Richard E. Ten Haken, William J. Armstrong,
John R.H. Blum, Joseph J. Harkins, H. Richard Vartabedian,
Stuart W. Cragin, Jr., Irving L. Thode, W. Perry Neff,
Roland R. Epply, Jr., W.D. MacCallan
If you wish to withhold your vote from any individual nominee, mark the "For All
Except" box and strike a line through the name of the nominee.
------------------------
Please be sure to sign and date this Proxy. | Date |
- --------------------------------------------------------------------------
| |
| |
| |
|----Shareholder sign here----------------------Co-owner sign here--------|
**SEE BELOW FOR PROPOSALS**
FUND PROPOSALS
1. To approve or disapprove the Reorganization Plan whereby the IEEE Balanced
Fund will be reorganized into the Vista Balanced Fund.
2. To approve or disapprove a new investment advisory agreement between the Fund
and the Chase Manhattan Bank, N.A. (and the successor entity thereto) and a
sub-advisory agreement between the Advisor and the Atlanta Capital Management
Company which will take effect upon the merger of The Chase Manhattan
Corporation (the parent company of the Advisor) and Chemical Banking
Corporation. No fee increase is proposed.
3. To elect 11 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 the Fund.
5. To approve or disapprove an amendment to the Trust's Declaration of Trust.
CHV14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MUTUAL FUND GROUP
IEEE Balanced Fund
Vista Balanced Fund
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement, dated March 21, 1996 may be obtained by writing or
calling Mutual Fund Group at 125 W. 55th Street, New York, New York 10022
(1-800-34-VISTA). Further information about IEEE Balanced Fund and Vista
Balanced Fund is contained in and incorporated by reference into Statement of
Additional Information relating to IEEE Balanced Fund and Vista Balanced Fund,
each dated March 1, 1996, which are incorporated herein by reference. Also
incorporated herein by reference are the audited financial statements of Mutual
Fund Group relating to IEEE Balanced Fund and Vista Balanced Fund included in
the Annual Report to Shareholders of Mutual Fund Group for the fiscal year ended
October 31, 1995.
March 21, 1996
<PAGE>
- -------------------------------
Financial Statements
The financial statements and selected per share data and ratios for shares of
the IEEE Fund for the fiscal year ended October 31, 1995, are contained in the
IEEE Fund's Annual Report to Shareholders which was mailed to shareholders on or
about December 30, 1995 (the "Annual Report").
The financial statements and selected per share data and ratios for the IEEE
Fund, incorporated by reference or included in its prospectus and statement of
additional information are incorporated by reference herein for the year ended
October 30, 1995, and have been so included or incorporated by reference in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing.
Capitalization. The following tables show the capitalization (unaudited) of
IEEE Balanced Fund and Vista Balanced Fund as of October 31, 1995, and on a pro
forma combined basis as of that date for the Reorganization giving effect to the
proposed acquisition of assets at net asset value.
<TABLE>
<CAPTION>
Capitalization Tables for the Vista Balanced and
IEEE Merger as of October 31, 1995
Pro Forma
Vista Balanced Fund IEEE Balanced Fund Reorganization
<S> <C> <C> <C>
Net Assets
A Shares $33,732,838 $10,771,888 $44,504,727
B Shares $8,335,693 - $ 5,335,893
Net Asset Value per Share - A $12.45 $10.98 $12.45
Net Asset Value per Share - B $12.36 - $12.36
Shares Outstanding - A 2,710,839 980,997 3,576,094
Shares Outstanding - B 512,572 - 512,572
</TABLE>
-47-
<PAGE>
VISTA BALANCED FUND
PROFORMA PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
UNAUDITED
<TABLE>
<CAPTION>
Vista Balanced Fund IEEE Balanced Fund Combined
Portfolio of Investments Portfolio of Investments Portfolio of Investments
October 31, 1995 October 31, 1995 October 31, 1995
Issuer Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C> <C>
Long-Term Investments -
Common Stock -
Aerospace -
AlliedSignal, Inc. ............................. 3,900 $ 165,750 -- -- 3,900 $ 165,750
Boeing Co. ..................................... -- -- 2,900 $ 190,312 2,900 190,312
Lockheed Martin Corp. .......................... 1,300 88,562 -- -- 1,300 88,562
Loral Corp. .................................... -- -- 6,400 189,600 6,400 189,600
OEA, Inc. ...................................... -- -- 400 10,900 400 10,900
Sundstrand Corp. ............................... 1,200 73,500 -- -- 1,200 73,500
United Technologies, Corp. ..................... 1,800 159,750 -- -- 1,800 159,750
---------- ---------- ---------- ---------- ---------- ----------
487,562 390,812 878,374
---------- ---------- ---------- ---------- ---------- ----------
Agriculture -
Case Corp. ..................................... 6,000 228,750 -- 6,000 228,750
---------- ---------- ---------- ---------- ---------- ----------
Airlines -
AMR Corp. * .................................... 1,100 72,600 -- 1,100 72,600
---------- ---------- ---------- ---------- ---------- ----------
Apparel / Textiles -
Kellwood Co. ................................... -- -- 650 12,188 650 12,188
Phillips-Van Heusen ............................ -- -- 600 6,075 600 6,075
Springs Industries, Inc., Class A .............. 1,900 81,463 -- -- 1,900 81,463
V.F. Corp. ..................................... 1,000 47,875 -- -- 1,000 47,875
---------- ---------- ---------- ---------- ---------- ----------
129,338 18,263 147,601
---------- ---------- ---------- ---------- ---------- ----------
Appliances & Household Durables -
La-Z-Boy Chair Co. ............................. -- -- 400 11,900 400 11,900
---------- ---------- ---------- ---------- ---------- ----------
Automotive -
Chrysler Corp. ................................. 1,825 94,216 -- -- 1,825 94,216
Echlin, Inc. ................................... 6,500 232,375 -- -- 6,500 232,375
TRW Inc. ....................................... 1,100 72,325 -- -- 1,100 72,325
---------- ---------- ---------- ---------- ---------- ----------
398,916 398,916
---------- ---------- ---------- ---------- ---------- ----------
Banking -
Bank of New York Company, Inc. ................. 3,800 159,600 -- -- 3,800 159,600
Citicorp ....................................... 3,500 227,062 -- -- 3,500 227,062
Deposit Guaranty Corp. ......................... -- -- 300 13,350 300 13,350
First Bank System Inc. ......................... 2,600 129,350 -- -- 2,600 129,350
First Commercial Corp. ......................... -- -- 400 12,000 400 12,000
First Financial Corp. of Wisconsin ............. -- -- 700 14,962 700 14,962
FirstMerit Corp. ............................... -- -- 400 10,800 400 10,800
Mark Twain Bancshares, Inc. .................... -- -- 300 10,575 300 10,575
NationsBank Corp. .............................. 2,400 157,800 -- -- 2,400 157,800
Norwest Corp. .................................. 3,300 97,350 -- -- 3,300 97,350
U.S. Trust Corp. ............................... -- -- 200 9,700 200 9,700
Washington Federal, Inc. ....................... -- -- 600 13,725 600 13,725
Standard Federal Bancorporation ................ 2,100 74,550 -- -- 2,100 74,550
Zions Bancorporation ........................... 1,400 96,950 -- -- 1,400 96,950
---------- ---------- ---------- ---------- ---------- ----------
942,662 85,112 1,027,774
---------- ---------- ---------- ---------- ---------- ----------
Business Products -
Pitney-Bowes, Inc. ............................. -- -- 3,400 148,325 3,400 148,325
---------- ---------- ---------- ---------- ---------- ----------
Business Services -
American Business Products, Inc. ............... -- -- 750 16,406 750 16,406
Equifax, Inc. .................................. -- -- 3,900 152,100 3,900 152,100
National Computer Systems, Inc. ................ -- -- 700 13,300 700 13,300
Standard Register Co. .......................... -- -- 600 13,500 600 13,500
---------- ---------- ---------- ---------- ---------- ----------
-- 195,306 195,306
---------- ---------- ---------- ---------- ---------- ----------
Chemicals -
Air Products & Chemicals, Inc., ................ 4,400 227,150 -- -- 4,400 227,150
Applied Extrusion Technologies, Inc. * ......... 6,000 92,250 -- -- 6,000 92,250
Arcadian Corp. * ............................... 8,200 169,125 -- -- 8,200 169,125
Cabot Corp. .................................... 1,200 57,000 -- -- 1,200 57,000
duPont (EI) deNemours .......................... 2,800 174,650 -- -- 2,800 174,650
Eastman Chemical Co. ........................... 1,200 71,400 -- -- 1,200 71,400
Fuller (H.B.) Co. .............................. -- -- 300 9,450 300 9,450
IMC Global, Inc. ............................... 1,100 77,000 -- -- 1,100 77,000
Lilly Industries, Inc., Class A ................ -- -- 900 11,475 900 11,475
Millipore Corp. ................................ -- -- 3,200 113,200 3,200 113,200
Nalco Chemical Co. ............................. -- -- 3,600 108,000 3,600 108,000
Prazair, Inc. .................................. 2,700 72,900 -- -- 2,700 72,900
---------- ---------- ---------- ---------- ---------- ----------
941,475 242,125 1,183,600
---------- ---------- ---------- ---------- ---------- ----------
Computer Software -
Computer Associates International .............. 2,250 123,750 1,500 82,500 3,750 206,250
General Motors Corp., Class E .................. 2,700 127,237 -- -- 2,700 127,237
Harbinger Corp. * .............................. 5,000 70,000 -- -- 5,000 70,000
Maxis, Inc. * .................................. 3,000 132,750 -- -- 3,000 132,750
Microsoft Corp. * .............................. -- -- 2,300 230,000 2,300 230,000
Reynolds & Reynolds, Inc., Class A ............. 2,000 71,250 -- -- 2,000 71,250
---------- ---------- ---------- ---------- ---------- ----------
524,987 312,500 837,487
---------- ---------- ---------- ---------- ---------- ----------
Computers/Computer Hardware -
Comdisco, Inc. ................................. 2,100 64,050 -- -- 2,100 64,050
Compaq Computer * .............................. 4,500 250,875 -- -- 4,500 250,875
Fair Issac & Company, Inc. ..................... -- -- 400 10,800 400 10,800
International Business Machines Corp. .......... 800 77,800 -- -- 800 77,800
SCI Systems, Inc. * ............................ 2,500 87,813 500 17,563 3,000 105,376
Stratus Computer, Inc. * ....................... -- -- 400 12,450 400 12,450
Sun Microsystems, Inc. * ....................... 3,200 249,600 -- -- 3,200 249,600
---------- ---------- ---------- ---------- ---------- ----------
730,138 40,813 770,951
---------- ---------- ---------- ---------- ---------- ----------
Construction Machinery -
Caterpillar Inc. ............................... 3,000 168,375 -- -- 3,000 168,375
---------- ---------- ---------- ---------- ---------- ----------
Construction Materials -
Carlisle Companies, Inc. ....................... -- -- 300 12,337 300 12,337
Justin Industries .............................. -- -- 1,100 11,000 1,100 11,000
Manville Corp. * ............................... 3,500 40,688 -- -- 3,500 40,688
Ply Gem Industries, Inc. ....................... -- -- 700 12,075 700 12,075
Texas Industries Inc. .......................... 1,700 89,462 -- -- 1,700 89,462
---------- ---------- ---------- ---------- ---------- ----------
130,150 35,412 165,562
---------- ---------- ---------- ---------- ---------- ----------
Consumer Products -
BIC Corp. ...................................... -- -- 300 12,075 300 12,075
Black & Decker Corp. ........................... 4,000 135,500 -- -- 4,000 135,500
Danaher Corp. .................................. 2,300 71,300 -- -- 2,300 71,300
Gillette Co. ................................... -- -- 2,500 120,937 2,500 120,937
Philip Morris Companies, Inc. .................. 2,400 202,800 2,400 202,800
Rubbermaid, Inc. ............................... -- -- 4,200 109,725 4,200 109,725
USA Detergents, Inc. * ......................... 3,000 76,500 -- -- 3,000 76,500
Whirlpool Corp. ................................ 1,500 79,500 -- -- 1,500 79,500
---------- ---------- ---------- ---------- ---------- ----------
565,600 242,737 808,337
---------- ---------- ---------- ---------- ---------- ----------
Diversified -
AMCOL International Corp. ...................... -- -- 800 13,500 800 13,500
Dover Corp. .................................... -- -- 3,400 134,300 3,400 134,300
Lawson Products, Inc. .......................... -- -- 400 9,600 400 9,600
Textron, Inc. .................................. 2,200 151,250 -- -- 2,200 151,250
Tyco International Ltd. ........................ -- -- 1,400 85,050 1,400 85,050
---------- ---------- ---------- ---------- ---------- ----------
151,250 242,450 393,700
---------- ---------- ---------- ---------- ---------- ----------
Electronics / Electrical Equipment -
AMP, Inc. ...................................... -- -- 2,400 94,200 2,400 94,200
Dionex Corp. * ................................. -- -- 300 16,200 300 16,200
Eaton Corp. .................................... 2,500 128,125 -- -- 2,500 128,125
General Electric Co. ........................... -- -- 2,700 170,775 2,700 170,775
General Motors Corp., Class H .................. 3,300 138,600 3,300 138,600
Grainger (W.W.), Inc. .......................... -- -- 1,400 87,500 1,400 87,500
Hewlett-Packard Co. ............................ -- -- 2,600 240,825 2,600 240,825
Integrated Device Technology, Inc. * ........... 3,000 57,000 -- -- 3,000 57,000
Logicon, Inc. .................................. -- -- 600 13,725 600 13,725
Molex, Inc. .................................... -- -- 1,718 56,694 1,718 56,694
Motorola, Inc. ................................. -- -- 1,300 85,313 1,300 85,313
MTS Systems Corp. .............................. -- -- 400 11,300 400 11,300
Park Electrochemical Corp. ..................... -- -- 400 12,500 400 12,500
Pioneer Standard Electronics, Inc. ............. 4,650 64,519 750 10,406 5,400 74,925
Recoton Corp. * ................................ 2,400 53,400 -- -- 2,400 53,400
Scientific-Atlanta, Inc. ....................... -- -- 2,700 33,412 2,700 33,412
Teleflex, Inc. ................................. -- -- 300 12,713 300 12,713
Texas Instruments .............................. 2,800 191,100 -- -- 2,800 191,100
Wyle Electronics ............................... -- -- 400 17,050 400 17,050
Xilinx, Inc. * ................................. 2,400 110,400 -- -- 2,400 110,400
X-Rite, Inc. ................................... -- -- 600 9,375 600 9,375
---------- ---------- ---------- ---------- ---------- ----------
743,144 871,988 1,615,132
---------- ---------- ---------- ---------- ---------- ----------
Engineering Services -
Foster Wheeler Corp. ........................... -- -- 1,500 56,250 1,500 56,250
---------- ---------- ---------- ---------- ---------- ----------
Entertainment -
Carnival Corp., Class A ........................ -- -- 4,000 93,000 4,000 93,000
Showboat, Inc. ................................. 2,000 48,000 -- -- 2,000 48,000
Time Warner, Inc. .............................. 1,500 54,750 -- -- 1,500 54,750
---------- ---------- ---------- ---------- ---------- ----------
102,750 93,000 195,750
---------- ---------- ---------- ---------- ---------- ----------
Environmental Services -
Browning-Ferris Industries, Inc. ............... 1,500 43,687 -- -- 1,500 43,687
WMX Technologies, Inc. ......................... -- -- 4,700 132,188 4,700 132,188
---------- ---------- ---------- ---------- ---------- ----------
43,687 132,188 175,875
---------- ---------- ---------- ---------- ---------- ----------
Financial Services -
American General Delaware ...................... 4,800 157,800 -- -- 4,800 157,800
Dean Witter, Discover & Co. .................... 3,500 174,125 -- -- 3,500 174,125
Donaldson Lufkin & Jenrette * .................. 8,000 238,000 -- -- 8,000 238,000
Eaton Vance Corp. .............................. -- -- 300 10,950 300 10,950
Federal National Mortgage Assoc ................ 1,500 157,313 -- -- 1,500 157,313
Household International, Inc. .................. 1,100 61,875 -- -- 1,100 61,875
Legg Mason, Inc. ............................... -- -- 400 11,500 400 11,500
Quick & Reilly Group, Inc. ..................... -- -- 450 10,688 450 10,688
Raymond James Financial, Inc. .................. -- -- 700 15,050 700 15,050
---------- ---------- ---------- ---------- ---------- ----------
789,113 48,188 837,301
---------- ---------- ---------- ---------- ---------- ----------
Food/Beverage Products -
Coca-Cola Enterprises, Inc. .................... 8,000 213,000 2,500 179,688 10,500 392,688
ConAgra, Inc. .................................. 2,500 96,563 -- -- 2,500 96,563
CPC International, Inc. ........................ 1,500 99,562 1,300 86,288 2,800 185,850
IBP, Inc. ...................................... 1,400 83,825 -- -- 1,400 83,825
International Multifoods Corp. ................. -- -- 600 12,300 600 12,300
J.M. Smucker Co., Class A ...................... -- -- 500 9,813 500 9,813
PepsiCo., Inc. ................................. 2,100 110,775 -- -- 2,100 110,775
RJR Nabisco Holdings Corp. ..................... 3,000 92,250 -- -- 3,000 92,250
---------- ---------- ---------- ---------- ---------- ----------
695,975 288,089 984,064
---------- ---------- ---------- ---------- ---------- ----------
Health Care -
American Oncology Resources, Inc. * ............ 1,900 66,500 -- -- 1,900 66,500
Apria Healthcare Group, Inc. * ................. 3,400 73,525 -- -- 3,400 73,525
Baxter International Inc. ...................... 3,000 115,875 -- -- 3,000 115,875
Beverly Enterprises * .......................... 4,500 52,875 -- -- 4,500 52,875
Biomet, Inc. * ................................. -- -- 6,700 111,388 6,700 111,388
Columbia/HCA Healthcare Corp. .................. 3,000 147,375 -- -- 3,000 147,375
Diagnostic Products Corp. ...................... -- -- 300 11,100 300 11,100
FHP International Corp. * ...................... 2,000 48,500 -- -- 2,000 48,500
Gelman Sciences, Inc. * ........................ 2,500 53,437 -- -- 2,500 53,437
Humana, Inc. * ................................. 4,000 84,500 4,900 103,513 8,900 188,013
Life Technologies, Inc. ........................ -- -- 600 14,700 600 14,700
Manor Care, Inc. ............................... 1,800 58,950 -- -- 1,800 58,950
OrNda Healthcorp * ............................. 3,500 61,688 -- -- 3,500 61,688
Owens & Minor, Inc. ............................ -- -- 600 7,125 600 7,125
Physician Corp. of America* .................... 1,500 23,062 -- -- 1,500 23,062
Rotech Medical Corp. ........................... -- -- 400 9,100 400 9,100
Tenet Healthcare Corp. * ....................... 3,900 69,713 -- -- 3,900 69,713
U.S. HealthCare, Inc. .......................... -- -- 2,900 111,650 2,900 111,650
---------- ---------- ---------- ---------- ---------- ----------
856,000 368,576 1,224,576
---------- ---------- ---------- ---------- ---------- ----------
Hotels/Other Lodging -
Renaissance Hotel Group N.V. * ................. 7,000 136,500 -- -- 7,000 136,500
---------- ---------- ---------- ---------- ---------- ----------
Industrial Services -
Unifirst Corp. ................................. -- -- 800 11,200 800 11,200
---------- ---------- ---------- ---------- ---------- ----------
Insurance -
American Bankers Insurance Group, Inc. ......... -- -- 350 12,556 350 12,556
American International Group ................... 1,950 164,531 1,950 164,531 3,900 329,062
Chubb Corp. .................................... 1,100 98,863 -- -- 1,100 98,863
Crawford & Company, Class B .................... -- -- 700 10,850 700 10,850
Frontier Insurance Group, Inc. ................. -- -- 500 14,313 500 14,313
Gainsco, Inc. .................................. -- -- 1,323 11,410 1,323 11,410
General Re Corp. ............................... -- -- 1,000 144,875 1,000 144,875
Liberty Corp. .................................. -- -- 400 13,400 400 13,400
Mid Ocean Ltd. ................................. 1,100 38,912 -- -- 1,100 38,912
Progressive Corp. .............................. -- -- 2,000 83,000 2,000 83,000
Prudential Reinsurance Holdings, Inc.* ......... 5,000 101,875 -- -- 5,000 101,875
St. Paul Companies, Inc. ....................... 2,900 147,175 -- -- 2,900 147,175
Transatlantic Holdings, Inc. ................... 1,200 80,850 -- -- 1,200 80,850
---------- ---------- ---------- ---------- ---------- ----------
632,206 454,935 1,087,141
---------- ---------- ---------- ---------- ---------- ----------
Leasing -
Rollins Truck Leasing Corp. .................... -- -- 1,100 10,588 1,100 10,588
---------- ---------- ---------- ---------- ---------- ----------
Machinery & Engineering Equipment -
AGCO Corp. ..................................... 2,500 111,875 -- -- 2,500 111,875
Precision Castparts Corp. ...................... -- -- 400 14,300 400 14,300
---------- ---------- ---------- ---------- ---------- ----------
111,875 14,300 126,175
---------- ---------- ---------- ---------- ---------- ----------
Manufacturing -
CLARCOR Inc. ................................... -- -- 500 11,375 500 11,375
Commercial Intertech Corp. ..................... -- -- 700 11,812 700 11,812
Furon Co. ...................................... -- -- 500 7,750 500 7,750
Graco, Inc. .................................... -- -- 500 16,812 500 16,812
Ingersoll-Rand Co. ............................. -- -- 1,300 45,987 1,300 45,987
Johnson Controls ............................... 3,600 209,700 -- -- 3,600 209,700
Kennametal Inc. ................................ 2,200 68,475 -- -- 2,200 68,475
Mark IV Industries ............................. 2,100 40,950 -- -- 2,100 40,950
Modine Manufacturing Co. ....................... 2,000 55,000 -- -- 2,000 55,000
Oakley, Inc. * ................................. 3,500 120,750 -- -- 3,500 120,750
Tennant Co. .................................... -- -- 400 9,900 400 9,900
Trinity Industries, Inc. ....................... -- -- 1,600 47,400 1,600 47,400
Varity Corp.* .................................. 5,200 188,500 -- -- 5,200 188,500
---------- ---------- ---------- ---------- ---------- ----------
683,375 151,036 834,411
---------- ---------- ---------- ---------- ---------- ----------
Metals / Mining -
Aluminum Co. of America (ALCOA) ................ 3,000 153,000 -- -- 3,000 153,000
Inco, Ltd. ..................................... 7,300 250,938 -- -- 7,300 250,938
---------- ---------- ---------- ---------- ---------- ----------
403,938 -- 403,938
---------- ---------- ---------- ---------- ---------- ----------
Office/Business Euqipment -
Xerox Corp. .................................... 500 64,875 -- -- 500 64,875
---------- ---------- ---------- ---------- ---------- ----------
Oil & Gas -
Amoco Corp. .................................... 1,400 89,425 -- -- 1,400 89,425
Ashland Inc. ................................... 2,700 85,387 -- -- 2,700 85,387
Halliburton Company ............................ 5,200 215,800 -- -- 5,200 215,800
Mobil Corp. .................................... 2,000 201,500 -- -- 2,000 201,500
NGC Corp. ...................................... 15,000 135,000 -- -- 15,000 135,000
Panhandle Eastern Corp. ........................ 8,200 207,050 -- -- 8,200 207,050
Phillips Petroleum Co. ......................... 3,500 112,875 -- -- 3,500 112,875
Production Operators Corp. ..................... -- -- 400 12,000 400 12,000
Smith International * .......................... 4,800 76,800 -- -- 4,800 76,800
Triton Energy Corp. ............................ 1,300 60,613 -- -- 1,300 60,613
Union Texas Petroleum Holdings ................. 2,500 45,000 -- -- 2,500 45,000
Unocal Corp. ................................... 3,500 91,875 -- -- 3,500 91,875
Williams Companies, Inc. ....................... 1,800 69,525 -- -- 1,800 69,525
---------- ---------- ---------- ---------- ---------- ----------
1,390,850 12,000 1,402,850
---------- ---------- ---------- ---------- ---------- ----------
Packaging -
Sealright Company, Inc. ........................ -- -- 600 6,750 600 6,750
---------- ---------- ---------- ---------- ---------- ----------
Paper/Forest Products -
Boise Cascade Corp. ............................ 2,100 76,125 -- -- 2,100 76,125
Champion International Corp. ................... 3,900 208,650 -- -- 3,900 208,650
Mead Corp. ..................................... 1,500 86,437 -- -- 1,500 86,437
Willamette Industries .......................... 2,500 145,000 -- -- 2,500 145,000
---------- ---------- ---------- ---------- ---------- ----------
516,212 -- 516,212
---------- ---------- ---------- ---------- ---------- ----------
Pharmaceuticals -
Abbot Laboratories ............................. -- -- 2,900 115,275 2,900 115,275
Allergan, Inc. ................................. 4,500 132,188 -- -- 4,500 132,188
Alpharma, Inc., Class A ........................ -- -- 600 14,400 600 14,400
American Home Products Corp. ................... 2,000 177,250 -- -- 2,000 177,250
Johnson & Johnson .............................. -- -- 1,600 130,400 1,600 130,400
Medtronic, Inc. ................................ -- -- 3,600 207,900 3,600 207,900
Merck & Company, Inc. .......................... -- -- 2,200 126,500 2,200 126,500
Mylan Laboratories ............................. -- -- 5,300 100,700 5,300 100,700
Schering-Plough Corp. .......................... 2,000 107,250 2,800 150,150 4,800 257,400
---------- ---------- ---------- ---------- ---------- ----------
416,688 845,325 1,262,013
---------- ---------- ---------- ---------- ---------- ----------
Printing & Publishing -
Bowne & Co., Inc. .............................. -- -- 600 11,175 600 11,175
Harcourt General, Inc. ......................... 3,200 126,800 -- -- 3,200 126,800
Houghton Mifflin Co. ........................... -- -- 200 8,200 200 8,200
Readers Digest Association, Inc., Class A ...... -- -- 3,100 155,775 3,100 155,775
Tribune Co. .................................... 1,000 63,125 -- -- 1,000 63,125
---------- ---------- ---------- ---------- ---------- ----------
189,925 175,150 365,075
---------- ---------- ---------- ---------- ---------- ----------
Real Estate Investment Trust -
Bay Apartment Communities, Inc. ................ 4,000 82,500 -- -- 4,000 82,500
---------- ---------- ---------- ---------- ---------- ----------
Restaurants/Food Services -
Wendy's International, Inc. .................... 5,500 109,312 -- -- 5,500 109,312
---------- ---------- ---------- ---------- ---------- ----------
Retailing -
Albertson's, Inc. .............................. -- -- 3,100 103,075 3,100 103,075
American Stores Co. ............................ 3,600 107,550 -- -- 3,600 107,550
Arbor Drugs, Inc. .............................. -- -- 750 13,875 750 13,875
Burlington Coat Factory Warehouse * ............ -- -- 900 10,012 900 10,012
Baker J., Inc. ................................. 2,900 16,675 -- -- 2,900 16,675
Casey's General Stores, Inc. ................... -- -- 800 18,400 800 18,400
Circuit City Stores, Inc. ...................... 7,500 250,313 7,500 250,313
Claire's Stores, Inc. .......................... -- -- 600 11,775 600 11,775
Dayton-Hudson Corp. ............................ 2,400 165,000 -- -- 2,400 165,000
Eckerd Corp. * ................................. 3,400 134,725 -- -- 3,400 134,725
Ethan Allen Interiors, Inc.* ................... 3,100 61,225 -- -- 3,100 61,225
K-Mart Corp. ................................... 6,500 52,812 -- -- 6,500 52,812
Kroger Co. * ................................... 6,300 210,263 -- -- 6,300 210,263
May Department Stores .......................... 4,400 172,700 -- -- 4,400 172,700
Nordstrom, Inc. ................................ 1,200 44,475 -- -- 1,200 44,475
Sbarro, Inc. ................................... -- -- 500 10,438 500 10,438
Wal-Mart Stores, Inc. .......................... -- -- 5,600 121,100 5,600 121,100
---------- ---------- ---------- ---------- ---------- ----------
1,215,738 288,675 1,504,413
---------- ---------- ---------- ---------- ---------- ----------
Shipping / Transportation -
Arnold Industries, Inc. ........................ -- -- 700 11,375 700 11,375
Consolidated Railway, Inc. ..................... 1,000 68,750 -- -- 1,000 68,750
Pittston Services Group ........................ 2,000 55,000 -- -- 2,000 55,000
CSX Corp. ...................................... 2,400 201,000 -- -- 2,400 201,000
Ryder System ................................... 3,100 74,787 -- -- 3,100 74,787
---------- ---------- ---------- ---------- ---------- ----------
399,537 11,375 410,912
---------- ---------- ---------- ---------- ---------- ----------
Steel -
Commercial Metals Co. .......................... -- -- 400 10,300 400 10,300
USX-US Steel Group, Inc. ....................... 3,600 107,550 -- -- 3,600 107,550
---------- ---------- ---------- ---------- ---------- ----------
107,550 10,300 117,850
---------- ---------- ---------- ---------- ---------- ----------
Telecommunications -
A T & T Corp., ................................. 2,600 166,400 2,900 185,600 5,500 352,000
GTE Corp. ...................................... 4,200 173,250 -- -- 4,200 173,250
Liberty Media Group, Class A * ................. 500 12,312 -- -- 500 12,312
NYNEX Corp. .................................... 1,400 65,800 -- -- 1,400 65,800
Sprint Corp. ................................... 1,484 57,134 -- -- 1,484 57,134
Tele-Communications, Class A * ................. 2,000 34,000 -- -- 2,000 34,000
U S West, Inc. ................................. 2,000 95,250 -- -- 2,000 95,250
---------- ---------- ---------- ---------- ---------- ----------
604,146 185,600 789,746
---------- ---------- ---------- ---------- ---------- ----------
Textiles -
Interface, Inc. ................................ -- -- 900 13,613 900 13,613
---------- ---------- ---------- ---------- ---------- ----------
Tire & Rubber -
Bandag, Inc. ................................... -- -- 1,100 56,375 1,100 56,375
---------- ---------- ---------- ---------- ---------- ----------
Toys & Games -
Mattel, Inc. ................................... 2,500 71,875 -- -- 2,500 71,875
---------- ---------- ---------- ---------- ---------- ----------
Utilities -
Bay State Gas Co. .............................. -- -- 500 12,500 500 12,500
CMS Energy Corp. ............................... 4,600 127,075 -- -- 4,600 127,075
DQE, Inc. ...................................... 2,750 75,625 -- -- 2,750 75,625
Eastern Enterprises ............................ -- -- 400 11,950 400 11,950
Florida Progress Corp. ......................... 2,900 96,062 -- -- 2,900 96,062
FPL Group Inc. ................................. 4,200 175,875 -- -- 4,200 175,875
Nipsco Industries Inc., ........................ 4,600 167,900 -- -- 4,600 167,900
Northwest Natural Gas Co. ...................... -- -- 400 12,800 400 12,800
Pacific Enterprises ............................ 1,800 44,550 -- -- 1,800 44,550
PECO Energy Co. ................................ 3,000 87,750 -- -- 3,000 87,750
Piedmont Natural Gas Company, Inc. ............. -- -- 500 11,000 500 11,000
Pinnacle West Capital Corp. .................... 6,600 181,500 -- -- 6,600 181,500
Portland General Corp. ......................... 3,200 86,800 -- -- 3,200 86,800
Public Service Co. of Colorado ................. 2,000 68,250 -- -- 2,000 68,250
Southwestern Energy Co. ........................ -- -- 800 10,000 800 10,000
United Water Resources, Inc. ................... -- -- 800 10,100 800 10,100
---------- ---------- ---------- ---------- ---------- ----------
1,111,387 68,350 1,179,737
---------- ---------- ---------- ---------- ---------- ----------
Wholesaling -
Handleman Co. .................................. -- -- 12,000 9,300 12,000 9,300
---------- ---------- ---------- ---------- ---------- ----------
Total Common Stock ............................. 16,950,961 6,148,906 23,099,867
---------- ---------- ---------- ---------- ---------- ----------
Convertible Preferred Stock -
Financial Services -
American General Delaware, $3.00, Ser. A ....... 2,000 103,500 -- -- 2,000 103,500
St. Paul Capital Corp., 6.00% .................. 5,000 270,000 -- -- 5,000 270,000
Food/Beverage Products -
RJR Nabisco Holdings Corp., $0.6012, Ser. C .... 20,000 125,000 -- -- 20,000 125,000
---------- ---------- ---------- ---------- ---------- ----------
Total Convertible Preferred Stock .............. 498,500 -- 498,500
---------- ---------- ---------- ---------- ---------- ----------
Preferred Stock -
Banking -
National Westminster Bank, 7.875%, Ser. A ...... -- -- 5,000 121,875 5,000 121,875
Financial Services -
Morgan Stanley Financial Placing Corp., 7.8% ... -- -- 5,000 122,500 5,000 122,500
---------- ---------- ---------- ---------- ---------- ----------
Total Preferred Stock .......................... -- 244,375 244,375
---------- ---------- ---------- ---------- ---------- ----------
Convertible Corporate Notes -
Consumer Products -
Grand Metropoliton Placing, 6.500%, due 01/30/00 # 150,000 169,283 -- -- 150,000 169,283
Health Care -
Assisted Living Concepts, 7.000% , due 08/15/05 # 150,000 164,500 -- -- 150,000 164,500
Insurance -
American Travellers Corp.,6.500% due 10/01/05 . 200,000 237,500 -- -- 200,000 237,500
Manufacturing -
3 Com Corp.,10.250%, due 11/01/01 # ............ 100,000 163,511 -- -- 100,000 163,511
---------- ---------- ---------- ---------- ---------- ----------
Total Convertible Corporate Notes .............. 734,794 -- 734,794
---------- ---------- ---------- ---------- ---------- ----------
Non-Convertible Corporate Bonds & Notes -
Banking -
BankAmerica Corp.,7.200%, due 4/15/06 .......... -- -- 250,000 258,065 250,000 258,065
Security Pacific Corp., 10.300% , due 05/15/01 . 550,000 650,425 -- -- 550,000 650,425
Consumer Products -
Colgate Palmolive Co.,6.020%, due 08/15/03 ..... -- -- 200,000 195,308 200,000 195,308
Electronics/ Electrical Equipment -
Motorola, Inc.,0.076%, due 01/01/07 ............ -- -- 250,000 271,850 250,000 271,850
Entertainment -
Walt Disney, Inc., 0.08 %, due 10/27/06 ........ -- -- 200,000 223,244 200,000 223,244
Financial Services -
Ford Capital BV, 9.000%, due 08/15/98 .......... 400,000 428,564 -- -- 400,000 428,564
General Electric Capital Corp., 9.180%, due 12/30/08 500,000 603,220 -- -- 500,000 603,220
General Motors Acceptance Corp., 8.625%, due 06/15/9 650,000 697,586 -- -- 650,000 697,586
Goldman Sachs Group, 6.200%, due 02/15/01 # .... 700,000 687,043 -- -- 700,000 687,043
Household Finance Co., 7.750%, due 06/15/97 .... 500,000 512,845 -- -- 500,000 512,845
IBM Credit Corp., 0.085%, due 01/26/00 ......... -- -- 50,000 50,267 50,000 50,267
Norwest Financial, Inc., 0.06875%, due 12/15/99 -- -- 120,000 122,640 120,000 122,640
Retailing -
Wal-Mart Strores, Inc., 0.075% due 05/15/04 .... 100,000 106,659 100,000 106,659
Telecommunications - ........................... -- -- 100,000 96,581 100,000 96,581
---------- ---------- ---------- ---------- ---------- ----------
Northern Telecom, Inc., 0.06%, due 09/01/03
Total Non-Convertible Corporate Bonds & Notes . 3,579,683 1,324,614 4,904,297
---------- ---------- ---------- ---------- ---------- ----------
Collateralized Mortgage Obligations -
Federal Home Loan Mortgage Corp., Ser. 1661, Class PG, -- -- 250,000 244,140 250,000 244,140
Government National Mortgage Association, II, Pool 8315, -- -- 225,527 226,549 225,527 226,549
---------- ---------- ---------- ---------- ---------- ----------
Total Collateralized Mortgage Obligations ...... -- 470,689 470,689
---------- ---------- ---------- ---------- ---------- ----------
U.S. Government Obligations -
U.S. Treasury Bonds,
7.500%, due 11/15/24 ........................... 900,000 1,028,250 -- -- 900,000 1,028,250
8.500%, due 02/15/20 ........................... 1,400,000 1,750,224 -- -- 1,400,000 1,750,224
0.625%, due 08/15/23 ........................... -- -- 300,000 293,202 300,000 293,202
---------- ---------- ---------- ---------- ---------- ----------
2,778,474 293,202 3,071,676
---------- ---------- ---------- ---------- ---------- ----------
U.S. Treasury Notes,
6.500%, due 08/15/05 ........................... 1,480,000 1,532,718 -- -- 1,480,000 1,532,718
0.0425%, due 11/30/95 .......................... -- -- 100,000 99,891 100,000 99,891
0.04375,% due 11/15/96 ......................... -- -- 150,000 148,171 150,000 148,171
0.05125%, due 11/30/98 ......................... -- -- 150,000 147,516 150,000 147,516
0.055%, due 04/15/00 ........................... -- -- 100,000 98,984 100,000 98,984
0.0575% due 08/15/03 ........................... -- -- 300,000 295,923 300,000 295,923
0.06% due 06/30/96 ............................. -- -- 250,000 250,625 250,000 250,625
0.0675%, due 6/30/99 ........................... -- -- 250,000 257,930 250,000 257,930
0.0775%, due 01/31/00 .......................... -- -- 100,000 107,172 100,000 107,172
---------- ---------- ---------- ---------- ---------- ----------
Total U.S. Teasury Notes ....................... 1,532,718 1,406,212 2,938,930
---------- ---------- ---------- ---------- ---------- ----------
Total U.S. Government Obligations .............. 4,311,192 1,699,414 6,010,606
---------- ---------- ---------- ---------- ---------- ----------
U.S. Government Agency -
Federal National Mortgage Assoc.,4.680% due 01/25/96 1,000,000 997,490 -- -- 1,000,000 997,490
---------- ---------- ---------- ---------- ---------- ----------
Floating Rate Note -
Financial Services -
Goldman Sachs & Co., 5.630% due 7/22/96 # ...... 1,000,000 1,000,000 -- -- 1,000,000 1,000,000
---------- ---------- ---------- ---------- ---------- ----------
Total Long-Term Investments .................... 28,072,620 9,887,998 37,960,618
---------- ---------- ---------- ---------- ---------- ----------
Short-Term Investments -
Commercial Paper -
Financial Services -
Broadway Capital Corp., 5.750%, due11/15/95 # .. 2,000,000 1,995,529 -- -- 2,000,000 1,995,529
Household Finance Corp., 5.800%, due 11/01/95 .. 7,796,000 7,796,000 -- -- 7,796,000 7,796,000
Receivables Capital Corp., 5.730%, due 12/05/95 # 2,000,000 1,989,176 -- -- 2,000,000 1,989,176
U.S. Government Obligation -
U.S. Treasury Bill, 0.0527%, due11/30/95 @ ..... -- -- 10,000 9,957 10,000 9,957
U.S. Government Sponsored Agency Obligations -
Federal Home Loan Mortgage Corp., Discount Notes -
0.0562%, due 11/08/95 .......................... -- -- 65,000 64,929 65,000 64,929
0.0562% due 11/08/95 ........................... -- -- 75,000 74,918 75,000 74,918
0.0562%, due 11/09/95 .......................... -- -- 380,000 379,525 380,000 379,525
0.0565%, due 11/06/95 .......................... -- -- 150,000 149,882 150,000 149,882
---------- ---------- ---------- ---------- ---------- ----------
Total Short-Term Investments ................... 11,780,705 679,211 12,459,916
---------- ---------- ---------- ---------- ---------- ----------
Total Investments .............................. $39,853,325 $10,567,209 $50,420,534
---------- ---------- ---------- ---------- ---------- ----------
Written Option Outstanding
Number of Strike Unrealized
U.S. Treasury Bond Futures, due November 18, 1995 Contracts Price (Depreciation)
(Premium received $2,596) 2 $114 ($3,841)
Original Nominal
Purchased Index Futures Outstanding Expiration Number of Nominal Value at Unrealized
Date Contracts Value 10/31/95 Appreciation
U.S. Long Bond 12/19/95 2 $225,187 $234,125 $8,938
<FN>
# = Security may only be sold to qualified institutional investors.
* = Non Income producing.
Note: Rates indicated for floating rate investments are rates in effect at October 31, 1995.
@ = Security is pledged to cover written options on futures contracts.
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
VISTA BALANCED FUND
PROFORMA STATEMENT OF ASSETS AND LIABILITIES
10/31/95
UNAUDITED
<TABLE>
<CAPTION>
VISTA BALANCED FUND
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
10/31/95
UNAUDITED
VISTA IEEE PRO FORMA PRO FORMA
BALANCED FUND BALANCED FUND ADJUSTMENTS COMBINED
--------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value ............... $39,853,325 $10,567,209 0 $50,420,534
Cash .......................................... -- 21,076 0 21,076
Receivables
Investment securities sold ................. 149,845 76,188 0 226,033
Interest ................................... 173,417 51,947 0 225,364
Dividends .................................. 17,240 4,136 0 21,376
Trust shares sold .......................... 71,645 49,500 0 121,145
Variation margin receivable ................ -- 562 0 562
Expense reimbursement from distributor ..... 11,087 41,957 0 53,044
----------- ----------- ----------- -----------
Total Assets ............................ 40,276,559 10,812,575 0 51,089,134
----------- ----------- ----------- -----------
LIABILITIES:
Payable for Trust shares redeemed ............. 36,873 -- 0 36,873
Payable to custodian .......................... 61,386 -- 0 61,386
Options Written ............................... -- 2,596 0 2,596
Depreciation on Options Written ............... -- 3,841 0 3,841
Accrued liabilities:
Administration fee ......................... -- 905 0 905
Custodian fees ............................. 14,605 9,740 0 24,345
Distribution fee ........................... 8,900 2,261 0 11,161
Investment advisory fee .................... -- 5,429 0 5,429
Shareholder servicing fees ................. 2,557 2,261 0 4,818
Sub-administration fee ..................... -- 452 0 452
Other ...................................... 83,706 13,202 0 96,908
----------- ----------- ----------- -----------
Total liabilities .................... 208,027 40,687 0 248,714
----------- ----------- ----------- -----------
NET ASSETS
Paid in capital ............................... 36,517,465 9,742,985 0 46,260,450
Accumulated undistributed net investment income 5,576 0 5,576
Accumulated undistributed net realized
gain (loss)on investement transactions .... 995,554 -294,959 0 700,595
Net unrealized appreciation of investments .... 2,555,513 1,318,286 0 3,873,799
----------- ----------- ----------- -----------
Net assets .......................... $40,068,532 $10,771,888 0 $50,840,420
=========== =========== =========== ===========
Net assets by class
A .......................................... $33,732,839 $10,771,888 $ 0 $44,504,727
----------- ----------- ----------- -----------
B .......................................... 6,335,693 0 0 6,335,693
----------- ----------- ----------- -----------
Total combined net assets by class ..... $40,068,532 $ 0 $10,771,888 $50,840,420
=========== =========== =========== ===========
Shares of beneficial interest outstanding (no par value; unlimited number of
shares authorized):
A .......................................... 2,710,539 980,997 -116,859 (6) 3,574,677
=========== =========== =========== ===========
B .......................................... 512,572 0 512,572
=========== =========== =========== ===========
Net asset value and redemption price per
share Class A (net assets/shares outstanding) ... $ 12.45 $ 10.98 0.00 $ 12.45
=========== =========== =========== ===========
Maximum offering price per share
(net asset value per
share/95.5%; 95.25% for SCE) .................... 13.04
===========
Net asset value and redemption price per
share Class B (net assets/shares outstanding) ... $ 12.36 $ 0.00 0.00 $ 12.36
=========== =========== =========== ===========
Cost of Investments .............................. $37,297,812 $ 9,254,020 $ 0 $46,551,832
=========== =========== =========== ===========
<PAGE>
VISTA BALANCED FUND
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED 10/31/95
UNAUDITED
UNAUDITED
VISTA IEEE PRO FORMA PRO FORMA
BALANCED FUND BALANCED FUND ADJUSTMENTS COMBINED
--------------------------------------------------------
INVESTMENT INCOME:
Interest ....................................... $ 1,027,055 $ 233,600 $ 0 $ 1,260,655
Dividend ....................................... 291,935 114,251 0 406,186
----------- ----------- ----------- -----------
Total Investment Income .................... 1,318,990 347,851 0 1,666,841
----------- ----------- ----------- -----------
EXPENSES
Distribution fees
A .......................................... 60,657 23,980 0 84,637
B .......................................... 35,952 0 0 35,952
Shareholder Servicing fees
A .......................................... 60,657 23,980 0 84,637
B .......................................... 11,984 0 0 11,984
Administration fees ........................... 29,053 9,592 0 38,645
Advisory fees ................................. 145,295 62,347 -14,388 (1) 193,254
Sub-Administration fees ....................... 14,527 4,796 0 19,323
Professional fees ............................. 46,462 32,678 -32,678 (3) 46,462
Custodian fees ................................ 53,483 8,980 21,221 83,684
Printing and postage .......................... 6,001 13,001 0 19,002
Registration costs ............................ 28,048 18,369 0 46,417
Transfer agent fees ........................... 147,704 19,959 -59,663 (2) 108,000
Trustee fees .................................. 1,582 524 429 2,535
Other ......................................... 24,044 8,007 0 32,051
----------- ----------- ----------- -----------
Total expenses .................... 665,449 226,213 -85,079 806,583
----------- ----------- ----------- -----------
Less amounts waived by the Administrator,
Shareholder Servicing Agents, Adviser and
Distributor ......................... 249,525 4,796 4,252 258,573
Less expenses borne by Distributor ..... 71,666 101,519 -144,210 (5) 28,975
----------- ----------- ----------- -----------
Net expenses ......................... 344,258 119,898 54,879 519,035
----------- ----------- ----------- -----------
Net investment income ............ 974,732 227,953 -54,879 1,147,806
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/
(LOSS) ON INVESTMENTS
Realized gain (loss) on investment transactions 1,024,866 -88,623 0 936,243
----------- ----------- ----------- -----------
Net realized gain (loss) ...................... 1,024,866 -88,623 0 936,243
----------- ----------- ----------- -----------
Change in net unrealized appreciation/depreciation on:
Investments ................................. 2,769,570 1,610,625 0 4,380,195
Options contracts and futures ............... 0 5,097 0 5,097
----------- ----------- ----------- -----------
Change in net unrealized appreciation/depreciation 2,769,570 1,615,722 0 4,385,292
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) ....... 3,794,436 1,527,099 0 5,321,535
----------- ----------- ----------- -----------
Net increase in net assets from operations .... $ 4,769,168 $ 1,755,052 ($ 54,879) $ 6,469,341
=========== =========== =========== ===========
</TABLE>
-48-
<PAGE>
Vista Balanced & IEEE Reorganization
Explanation of Note References:
(1) Reflects adjustment of additional IEEE assets at the Balanced
contractual rate.
(2) Reflects adjustment to the fees based on the newly contracted fees
plus out of pocket expenses.
(3) Reflects elimination of duplicative services/fees.
(4) Reflects the new structure of the board of the surviving fund, the
elimination of duplicative expenses and the allocation of complex-wide
fees based on the relative net assets of the newly combined fund.
(5) Adjustment to reflect the expenses expected to be incurred by the Fund.
(6) Adjustment to reflect number of shares for the IEEE net assets, based
upon the Vista Balanced Fund's 10/31/95 ending NAV.
-49-
<PAGE>
Balanced & IEEE Reorganization
Notes to the Pro-forma financial statements
1. Basis of Combination
The Pro Forma Combining Portfolio of Investments, Statement of Assets
and Liabilities and Statement of Operations ("Pro Forma Statements"),
reflect the accounts of the Vista Balanced Fund and the IEEE Balanced
("IEEE") Fund at October 31, 1995 and for the year then ended.
The Pro Forma Statements give effect to the proposed transfer of all
assets and liabilities of IEEE to Vista Balanced Fund in exchange for
shares of Vista Balanced Fund.
The Pro Forma Statements should be read in conjunction with the
historical financial statements of each Fund.
2. Shares of Beneficial Interest - The pro forma net asset value per share
and shares outstanding assume the issuance of additional shares of the
Vista Balanced Fund that would have occurred on October 31, 1995 in
connection with the proposed reorganization. The additional shares to
be issued for the Vista Balanced Fund were based on the October 31,
1995 net assets of the IEEE Fund and the net asset value per share of
the Vista Balanced Fund and are as follows:
IEEE Net Assets Nav per share of Additional Vista
at October 31, 1995 Vista Balanced Fund Balanced Fund Shares
$10,771,888 $12.45 865,555
3. Pro Forma Operating Expenses
The Pro Forma Combining Statement of Operations assumes similar rates
of gross investment income for the investments of each Fund.
Accordingly, the combined gross investment income is equal to the sum
of each Fund's gross investment income. Certain expenses have been
adjusted to reflect the expected expenses of the combined entity more
closely. Pro forma operating expenses include the actual expenses of
the Vista Balanced and IEEE Funds and the combined Fund adjusted for
certain items which are factually supportable. For the combined Fund
certain expenses are expected to be waived by the Shareholder Servicing
Agent, the Distributor, the Advisor, the Administrator and the
Sub-Administrator and the expenses are adjusted to reflect expected
waivers.
-50-
