<PAGE>
CHASE VISTA U.S. GOVERNMENT SECURITIES FUND
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
December 1, 2000
Dear Shareholder:
A special meeting of the shareholders of Chase Vista U.S. Government
Securities Fund, a series of Mutual Fund Group ("MFG"), will be held on
January 26, 2001 at 9:00 a.m., Eastern time. Formal notice of the meeting
appears on the next page, followed by materials regarding the meeting.
At the special meeting (the "Meeting"), shareholders will be asked to
consider and vote upon the proposed reorganization of Chase Vista U.S.
Government Securities Fund into Chase Vista U.S. Treasury Income Fund, a series
of Mutual Fund Group ("MFG") (the "Reorganization"). After the Reorganization,
shareholders will hold an interest in Chase Vista U.S. Treasury Income Fund,
which is also advised by The Chase Manhattan Bank ("Chase"). The investment
objective and policies for Chase Vista U.S. Treasury Income Fund are similar to
those of Chase Vista U.S. Government Securities Fund. However, there are certain
important differences, and accordingly, the Reorganization will have an impact
on your investment. MFG is comprised of 20 portfolios, each managed by Chase,
consisting of income and equity funds.
After the proposed Reorganization, your investment would be in a larger
combined fund with similar investment policies, allowing the resulting fund to
take advantage of the operational and administrative efficiencies that size
offers.
Chase Vista U.S. Treasury Income Fund has also entered into a plan of
reorganization with Chase U.S. Government Securities Fund, a series of Mutual
Fund Investment Trust with substantially similar investment objectives and
policies to Chase Vista U.S. Government Securities Fund. If that reorganization
(the "Chase Reorganization") is approved by the shareholders of Chase U.S.
Government Securities Fund and certain other conditions are met, Chase U.S.
Government Securities Fund will be reorganized into Chase Vista U.S. Treasury
Income Fund. The terms of the Chase Reorganization are similar to the terms of
the Reorganization you are being asked to consider. If both reorganizations are
approved, your investment would be in a larger combined fund containing the
assets of all three funds.
The current investment adviser for both Chase Vista U.S. Government
Securities Fund and Chase Vista U.S. Treasury Income Fund is Chase. The
sub-adviser for both funds is Chase Fleming Asset Management (USA) Inc.
("CFAM"). In addition, the two Funds are managed by the same portfolio
management team. After the Reorganization, this team will continue to be
responsible for the day-to-day investment decisions for your portfolio.
Please see the enclosed Combined Prospectus/Proxy Statement for detailed
information regarding the proposed Reorganization, the Chase Reorganization and
a comparison of Chase Vista U.S. Treasury Income Fund to Chase Vista U.S.
Government Securities Fund. The cost and expenses associated with the
Reorganization, including costs of soliciting proxies, will be borne by Chase
and not by Chase Vista U.S. Government Securities Fund, Chase Vista U.S.
Treasury Income Fund, MFG or their shareholders.
If approval of the Reorganization is obtained, you will automatically
receive shares of Chase Vista U.S. Treasury Income Fund.
The Proposal has been carefully reviewed by the Board of Trustees of MFG,
which has approved the Proposal.
THE BOARD OF TRUSTEES OF MFG UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSED REORGANIZATION.
Attached to this letter is a list of commonly asked questions. If you have
any additional questions on voting of proxies and/or the meeting agenda, please
call us at 1-800-34-VISTA.
A proxy card is enclosed for your use in the shareholder meeting. This card
represents shares you held as of the record date, November 10, 2000. IT IS
IMPORTANT THAT YOU COMPLETE, SIGN, AND RETURN YOUR PROXY CARD IN THE ENVELOPE
PROVIDED AS SOON AS POSSIBLE. This will ensure that your shares will be
represented at the Meeting to be held on January 26, 2001.
PX7A-1100
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Please read the enclosed materials carefully. You may, of course, attend the
meeting in person if you wish, in which case the proxy can be revoked by you at
the Meeting.
Sincerely,
/s/ Fergus Reid
Fergus Reid
Chairman
SPECIAL NOTE: You may receive a telephone call from us to answer any
questions you may have or to provide assistance in voting. Remember, your vote
is important! Please sign, date and promptly mail your proxy card(s) in the
return envelope provided.
<PAGE>
WHY IS THE REORGANIZATION BEING PROPOSED?
The Reorganization is being proposed to increase operational and
administrative efficiencies by combining two funds which have similar investment
policies and which are managed by the same portfolio management team.
IF THE REORGANIZATION IS APPROVED, WHAT WILL HAPPEN?
Under the Reorganization, Chase Vista U.S. Government Securities Fund would
transfer all of its assets and liabilities to Chase Vista U.S. Treasury Income
Fund and would receive, in exchange, shares of Chase Vista U.S. Treasury Income
Fund. Chase Vista U.S. Government Securities Fund would then be liquidated and
the shares of Chase Vista U.S. Treasury Income Fund would be distributed to
shareholders such as you. After the Reorganization, you would own shares in
Chase Vista U.S. Treasury Income Fund rather than Chase Vista U.S. Government
Securities Fund. Holders of Class A Shares would receive Class A Shares in Chase
Vista U.S. Treasury Income Fund (but will not pay a sales load) and holders of
Institutional Class Shares would receive Institutional Class Shares in Chase
Vista U.S. Treasury Income Fund.
WHAT WILL BE THE EFFECT ON THE INVESTMENT STRATEGIES ASSOCIATED WITH MY
INVESTMENT IF THE PROPOSED CHANGES ARE APPROVED?
Chase Vista U.S. Treasury Income Fund has similar investment objectives and
policies to those of Chase Vista U.S. Government Securities Fund. However, the
Chase Vista U.S. Treasury Income Fund is required to invest at least 65% of its
total assets in debt securities issued by the U.S. Treasury, and repurchase
agreements in which the Fund receives these securities as collateral whereas the
Chase Vista U.S. Government Securities Fund is required to invest at least 65%
of its total assets in debt securities issued or guaranteed by the U.S.
Government and its agencies or authorities and in repurchase agreements in which
the Fund receives these securities as collateral. In addition, Chase Vista U.S.
Treasury Income Fund is not permitted to invest in certain instruments which
Chase Vista U.S. Government Securities Fund may hold. These include
principal-only and interest-only stripped mortgage-backed securities and
stripped obligations which are not backed by the full faith and credit of the
U.S. Treasury. Therefore, the Reorganization will have an impact on the
investment strategy implemented in respect of your investment.
HOW WILL THE FEES AND EXPENSES ASSOCIATED WITH MY INVESTMENT BE AFFECTED?
The contractual (or pre-waiver) and actual (or post-waiver) total expense
ratios are expected to be the same or less for Chase Vista U.S. Treasury Income
Fund than they are for Chase Vista U.S. Government Securities Fund. If an
increase does arise, Chase has contractually agreed waive fees payable to it and
reimburse expenses so that the total expense ratio will remain the same for at
least one year after the Reorganization.
It is important to note that because of the differences in investment
policies, Chase Vista U.S. Government Securities Fund expects to dispose of a
significant portion of its portfolio investments prior to the Reorganization.
This would result in additional trading costs.
WILL THERE BE ANY CHANGE IN WHO MANAGES MY INVESTMENT?
The same portfolio management team which manages the day-to-day investment
activities of Chase Vista U.S. Government Securities Fund also manages Chase
Vista U.S. Treasury Income Fund.
WHO WILL PAY FOR THE REORGANIZATION?
The cost and expenses associated with the Reorganization, including costs of
soliciting proxies, will be borne by Chase and not by either Chase Vista U.S.
Government Securities Fund or Chase Vista U.S. Treasury Income Fund (or
shareholders of either fund).
HOW WILL SHAREHOLDER SERVICES CHANGE?
Substantially similar services are available to shareholders of both Chase
Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury Income Fund.
You would continue to be able to purchase or redeem your investment on a daily
basis.
WHAT IF I DO NOT VOTE OR VOTE AGAINST THE REORGANIZATION, YET APPROVAL OF THE
REORGANIZATION IS OBTAINED?
You will automatically receive shares in Chase Vista U.S. Treasury Income
Fund.
<PAGE>
HOW WOULD THE PROPOSED CHASE REORGANIZATION AFFECT MY INVESTMENT IF IT IS
APPROVED BY THE SHAREHOLDERS OF CHASE VISTA U.S. GOVERNMENT SECURITIES FUND?
If the Chase Reorganization is approved and certain other conditions are
met, the assets and liabilities of Chase U.S. Government Securities Fund would
become the assets of Chase Vista U.S. Treasury Income Fund, and the shareholders
of Chase U.S. Government Securities Fund would receive shares of Chase Vista
U.S. Treasury Income Fund. Therefore, if both reorganizations are approved, your
investment would be in a larger fund that contains the assets of all three
funds. There can be no assurance that the Chase Reorganization will be
consummated.
AS A HOLDER OF SHARES OF CHASE VISTA U.S. GOVERNMENT SECURITIES FUND, WHAT DO I
NEED TO DO?
Please read the enclosed Combined Prospectus/Proxy Statement and vote. Your
vote is important! Accordingly, please sign, date and mail the proxy
card(s) promptly in the enclosed return envelope as soon as possible after
reviewing the enclosed Combined Prospectus/Proxy Statement.
MAY I ATTEND THE MEETING IN PERSON?
Yes, you may attend the Meeting in person. If you complete a proxy card and
subsequently attend the Meeting, your proxy can be revoked. Therefore, to ensure
that your vote is counted, we strongly urge you to mail us your signed, dated
and completed proxy card(s) even if you plan to attend the Meeting.
<PAGE>
CHASE VISTA U.S. GOVERNMENT SECURITIES FUND,
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 26, 2001
To the Shareholders of Chase Vista U.S. Government Securities Fund:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the shareholders
("Shareholders") of Chase Vista U.S. Government Securities Fund ("Chase Vista
U.S. Government Securities Fund"), a series of Mutual Fund Group ("MFG"), will
be held at the offices of The Chase Manhattan Bank, One Chase Square, Third
Floor Garden Room, Rochester, New York 14643, on January 26, 2001 at 9:00 a.m.,
Eastern time, for the following purposes:
ITEM 1. To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization (the "Reorganization Plan") by MFG, on behalf of
Chase Vista U.S. Government Securities Fund and on behalf of Chase
Vista U.S. Treasury Income Fund, and the transactions contemplated
thereby, including (a) the transfer of all of the assets and
liabilities of Chase Vista U.S. Government Securities Fund to Chase
Vista U.S. Treasury Income Fund, a series of MFG ("Chase Vista U.S.
Treasury Income Fund") in exchange for (i) Class A Shares of Chase
Vista U.S. Treasury Income Fund (the "Class A Shares") and
(ii) Institutional Class Shares of Chase Vista U.S. Treasury Income
Fund ("Institutional Class Shares" and together with the Class A
Shares, the "Chase Vista U.S. Treasury Income Fund Shares"), as
applicable; and (b) the distribution of such Chase Vista U.S. Treasury
Income Fund Shares to the Shareholders of Chase Vista U.S. Government
Securities Fund in connection with its liquidation.
ITEM 2. To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
YOUR FUND TRUSTEES RECOMMEND THAT YOU VOTE IN FAVOR OF ITEM 1.
The proposal is described in the attached Combined Prospectus/Proxy
Statement. Attached as Appendix A to the Combined Prospectus/Proxy Statement is
a copy of the Reorganization Plan.
Shareholders of record as of the close of business on November 10, 2000 are
entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF MFG. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO
CHASE VISTA U.S. GOVERNMENT SECURITIES FUND A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN
PERSON.
/s/ Lisa Hurley
Lisa M. Hurley
Secretary
December 1, 2000
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
DATED DECEMBER 1, 2000
ACQUISITION OF THE ASSETS AND LIABILITIES OF
CHASE VISTA U.S. GOVERNMENT SECURITIES FUND,
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 34-VISTA
BY AND IN EXCHANGE FOR SHARES OF
CHASE VISTA U.S. TREASURY INCOME FUND,
A SERIES OF MUTUAL FUND GROUP
1211 AVENUE OF THE AMERICAS
41ST FLOOR
NEW YORK, NEW YORK 10036
(800) 34-VISTA
This Combined Prospectus/Proxy Statement relates to the proposed
reorganization of Chase Vista U.S. Government Securities Fund ("Chase Vista U.S.
Government Securities Fund"), a series of Mutual Fund Group ("MFG"), into Chase
Vista U.S. Treasury Income Fund ("Chase Vista U.S. Treasury Income Fund"),
another series of MFG. If approved by Shareholders, the proposed reorganization
would be effected by transferring all of the assets and liabilities of Chase
Vista U.S. Government Securities Fund, which is a series of MFG, to Chase Vista
U.S. Treasury Income Fund, another series of MFG having similar investment
objectives and policies as Chase Vista U.S. Government Securities Fund, in
exchange for shares of Chase Vista U.S. Treasury Income Fund (the
"Reorganization"). MFG is an open-end management investment company offering
shares in several portfolios, and, in most cases, multiple classes of shares in
each such portfolio.
Under the proposed Reorganization, each shareholder of Chase Vista U.S.
Government Securities Fund (the "Chase Vista U.S. Government Securities Fund
Shareholders") would receive Shares (the "Chase Vista U.S. Treasury Income Fund
Shares") of Chase Vista U.S. Treasury Income Fund with a value equal to such
Chase Vista U.S. Government Securities Fund Shareholder's holdings in Chase
Vista U.S. Government Securities Fund. Holders of Class A Shares would receive
Class A Shares (the "Class A Shares") in Chase Vista U.S. Treasury Income Fund
and holders of the Institutional Class Shares would receive Institutional
Class Shares (the "Institutional Class Shares") in Chase Vista U.S. Treasury
Income Fund. Therefore, as a result of the proposed Reorganization, current
Shareholders of Chase Vista U.S. Government Securities Fund will become
shareholders of Chase Vista U.S. Treasury Income Fund ("Chase Vista U.S.
Treasury Income Fund Shareholders"). In connection with the Reorganization,
Chase Vista U.S. Treasury Income will implement a new multi-class structure
under which it will offer Class A, Class B and Institutional Class Shares.
Chase Vista U.S. Treasury Income Fund has also entered into a plan of
reorganization with Chase U.S. Government Securities Fund, a series of Mutual
Fund Investment Trust with substantially similar investment objectives and
policies to Chase Vista U.S. Government Securities Fund. If that reorganization
(the "Chase Reorganization") is approved by the shareholders of Chase U.S.
Government Securities Fund and certain other conditions are met, Chase Vista
U.S. Treasury Income Fund would also acquire the assets and liabilities of Chase
U.S. Government Securities Fund in exchange for Chase Vista U.S. Treasury Income
Fund Shares. The terms of the Chase Reorganization are similar to the terms of
the Reorganization you are being asked to consider. If both reorganizations are
approved, your investment would be in a larger combined fund containing the
assets of all three funds. There can be no assurance that the Chase
Reorganization will be consummated.
MFG is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act") and currently has 20
series of mutual fund portfolios. The Chase Manhattan Bank ("Chase") currently
serves as investment adviser for both Chase Vista U.S. Government Securities
Fund and Chase Vista U.S. Treasury Income Fund. Chase Fleming Asset Management
(USA) Inc. ("CFAM") serves as sub-adviser for both Funds. In addition, the two
Funds are managed by the same
<PAGE>
portfolio management team. After the Reorganization, this team will continue to
be responsible for the day-to-day investment decisions for your portfolio.
The terms and conditions of these transactions are more fully described in
this Combined Prospectus/ Proxy Statement and in the Agreement and Plan of
Reorganization (the "Reorganization Plan") by MFG, on behalf of Chase Vista U.S.
Government Securities Fund and on behalf of Chase Vista U.S. Treasury Income
Fund, attached to this Combined Prospectus/Proxy Statement as Appendix A.
The Board of Trustees of MFG is soliciting proxies in connection with a
Special Meeting (the "Meeting") of Shareholders to be held on January 26, 2001
at 9:00 a.m., Eastern time, at the offices of The Chase Manhattan Bank, One
Chase Square, Third Floor Garden Room, Rochester, New York 14643, at which
meeting shareholders in Chase Vista U.S. Government Securities Fund will be
asked to consider and approve the proposed Reorganization Plan and certain
transactions contemplated by the Reorganization Plan. This Combined
Prospectus/Proxy Statement constitutes the proxy statement of Chase Vista U.S.
Government Securities Fund for the meeting of its Shareholders and also
constitutes MFG's prospectus for Chase Vista U.S. Treasury Income Fund Shares
that have been registered with the Securities and Exchange Commission (the
"Commission") and are to be issued in connection with the Reorganization.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about MFG that a
prospective investor should know before voting on the Proposal. The current
prospectuses for Chase Vista U.S. Government Securities Fund and Chase Vista
U.S. Treasury Income Fund are incorporated herein by reference and the
prospectus for Chase Vista U.S. Treasury Income Fund is enclosed with this
Combined Prospectus/Proxy Statement. A statement of additional information
relating to this Combined Prospectus/Proxy Statement dated December 1, 2000 (the
"Statement of Additional Information") containing additional information about
MFG has been filed with the Commission and is incorporated by reference into
this Combined Prospectus/Proxy Statement. A copy of the Statement of Additional
Information may be obtained without charge by writing to MFG at its address
noted above or by calling 1-800-34-VISTA.
This Combined Prospectus/Proxy Statement is expected to first be sent to
shareholders on or about December 1, 2000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY STATEMENT/
PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MFG.
INVESTMENTS IN CHASE VISTA U.S. TREASURY INCOME FUND ARE SUBJECT TO RISK--
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NO SHARES IN CHASE VISTA U.S. TREASURY
INCOME FUND ARE BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
THE CHASE MANHATTAN BANK OR ANY OF ITS AFFILIATES AND ARE NOT FEDERALLY INSURED
BY, OBLIGATIONS OF, OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
INTRODUCTION...................................... 1
SUMMARY........................................... 1
RISK FACTORS...................................... 7
INFORMATION RELATING TO THE PROPOSED
REORGANIZATION................................... 8
INVESTMENT POLICIES............................... 11
PURCHASES, REDEMPTIONS AND EXCHANGES.............. 13
DISTRIBUTIONS AND TAXES........................... 16
COMPARISON OF CHASE VISTA U.S. GOVERNMENT
SECURITIES FUND'S AND CHASE VISTA U.S. TREASURY
INCOME FUND'S ORGANIZATION STRUCTURES............ 17
INFORMATION RELATING TO THE ADVISORY CONTRACTS.... 18
BOARD OF TRUSTEES................................. 22
INFORMATION RELATING TO VOTING MATTERS............ 23
ADDITIONAL INFORMATION ABOUT MFG.................. 26
FINANCIAL STATEMENTS AND EXPERTS.................. 26
OTHER BUSINESS.................................... 26
LITIGATION........................................ 26
SHAREHOLDER INQUIRIES............................. 26
APPENDIX A--AGREEMENT AND PLAN OF
REORGANIZATION................................... A-1
</TABLE>
<PAGE>
INTRODUCTION
This Combined Prospectus/Proxy Statement is being furnished to the
shareholders of Chase Vista U.S. Government Securities Fund, a portfolio of
Mutual Fund Group ("MFG"), an open-end management investment company, in
connection with the solicitation by the Board of Trustees of MFG ("MFG Board")
of proxies to be used at a Special Meeting of Shareholders of Chase Vista U.S.
Government Securities Fund to be held on January 26, 2001 at 9:00 a.m., Eastern
time, at the offices of The Chase Manhattan Bank, One Chase Square, Third Floor
Garden Room, Rochester, New York 14643 (together with any adjournments thereof,
the "Meeting"). It is expected that the mailing of this Combined
Prospectus/Proxy Statement will be made on or about December 1, 2000.
At the Meeting, Chase Vista U.S. Government Securities Fund shareholders
(the "Chase Vista U.S. Government Securities Fund Shareholders") will consider
and vote upon the Agreement and Plan of Reorganization (the "Reorganization
Plan") dated October 31, 2000 by MFG, on behalf of Chase Vista U.S. Government
Securities Fund and on behalf of Chase Vista U.S. Treasury Income Fund ("Chase
Vista U.S. Treasury Income Fund," together with Chase Vista U.S. Government
Securities Fund, the "Funds"), pursuant to which all of the assets and
liabilities of Chase Vista U.S. Government Securities Fund will be transferred
to Chase Vista U.S. Treasury Income Fund in exchange for shares (the "Chase
Vista U.S. Treasury Income Fund Shares") of Chase Vista U.S. Treasury Income
Fund. As a result of this transaction (the "Reorganization"), Chase Vista U.S.
Government Securities Fund Shareholders will become shareholders of Chase Vista
U.S. Treasury Income Fund and will receive Chase Vista U.S. Treasury Income Fund
Shares equal in value to their holdings in Chase Vista U.S. Government
Securities Fund on the date of the Reorganization. Holders of Class A Shares in
Chase Vista U.S. Government Securities Fund would receive Class A Shares
("Class A Shares") in Chase Vista U.S. Treasury Income Fund and holders of
Institutional Class Shares in Chase Vista U.S. Government Securities Fund would
receive Institutional Class Shares ("Institutional Class Shares") in Chase Vista
U.S. Treasury Income Fund. Further information relating to Chase Vista U.S.
Treasury Income Fund is set forth herein. The proposed Reorganization is
occasionally referred to herein as the "Proposal."
THE MFG BOARD HAS RECOMMENDED THAT SHAREHOLDERS
VOTE "FOR" THE PROPOSAL
Approval of the Reorganization Plan by Chase Vista U.S. Government
Securities Fund requires the affirmative vote of the lesser of (i) 67% or more
of the Chase Vista U.S. Government Securities Fund Shares present at the Meeting
and (ii) more than 50% of all outstanding Chase Vista U.S. Government Securities
Fund Shares. If the Reorganization Plan is not approved by Chase Vista U.S.
Government Securities Fund Shareholders, the MFG Board will consider other
appropriate courses of action.
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization, the parties thereto and the transactions contemplated thereby,
and is qualified by reference to the more complete information contained
elsewhere in this Combined Prospectus/Proxy Statement, the Prospectus and
Statement of Additional Information in respect of the Chase Vista U.S. Treasury
Income Fund Shares, and the Reorganization Plan attached to this Combined
Prospectus/Proxy Statement as Appendix A. Chase Vista U.S. Treasury Income
Fund's Semi-Annual Report to Shareholders and Annual Report to Shareholders are
enclosed with this Combined Prospectus/Proxy Statement.
PROPOSED TRANSACTION
Pursuant to the proposed Reorganization Plan, Chase Vista U.S. Government
Securities Fund, an existing series of MFG, will transfer all of its assets and
liabilities to Chase Vista U.S. Treasury Income Fund in exchange for shares of
Chase Vista U.S. Treasury Income Fund, another series of MFG.
Under the proposed Reorganization, each Chase Vista U.S. Government
Securities Fund Shareholder will receive a number of Chase Vista U.S. Treasury
Income Fund Shares with an aggregate net asset value equal on the date of the
exchange to the aggregate net asset value of such shareholder's Chase Vista U.S.
Government Securities Fund Shares on such date. Therefore, following the
proposed Reorganization, Chase Vista U.S. Government Securities Fund
Shareholders will be Chase Vista U.S. Treasury Income Fund Shareholders. Chase
Vista U.S. Government Securities Fund Shareholders holding Class A Shares will
receive Class A Shares in the Reorganization, but will not have to pay a sales
charge. However, such Shareholders will have to pay a sales charge if they buy
additional Class A Shares in the future.
1
<PAGE>
The contractual (or pre-waiver) and actual (or post-waiver) total expense
ratios are expected to be the same or less for Chase Vista U.S. Treasury Income
Fund than they are for Chase Vista U.S. Government Securities Fund.
Based upon their evaluation of the relevant information presented to them,
including an analysis of the operation of Chase Vista U.S. Treasury Income Fund
both before and after the Reorganization, and in consideration of the fact that
the Reorganization will be tax-free, and in light of their fiduciary duties
under federal and state law, the MFG Board, including a majority of the Board's
members who are not "interested persons" within the meaning of the 1940 Act,
have determined that the proposed Reorganization is in the best interests of
each Fund's respective shareholders and that the interests of such shareholders
will not be diluted as a result of such Reorganization.
INVESTMENT ADVISERS
The investment adviser to both Chase Vista U.S. Government Securities Fund
and Chase Vista U.S. Treasury Income Fund is The Chase Manhattan Bank ("Chase").
Chase is a wholly-owned subsidiary of The Chase Manhattan Corporation. In
addition, Chase Fleming Asset Management (USA) Inc. ("CFAM"), a wholly-owned
subsidiary of Chase, serves as the sub-adviser to both Funds pursuant to
agreements with Chase and manages both Funds on a day-to-day basis. The same
portfolio management team which manages Chase Vista U.S. Government Securities
Fund manages and will continue to manage Chase Vista U.S. Treasury Income Fund.
It is anticipated that during the first quarter of 2001, Chase will transfer its
investment advisory business to CFAM and, thereafter, CFAM will be the sole
investment adviser to Chase Vista U.S. Treasury Income Fund and Chase Vista U.S.
Government Securities Fund.
REASONS FOR THE REORGANIZATION
The MFG Board decided to reorganize Chase Vista U.S. Government Securities
Fund into Chase Vista U.S. Treasury Income Fund to increase operational and
administrative efficiencies, since the two funds have similar investment
objectives and policies and are managed by the same portfolio management team.
CHASE REORGANIZATION
Chase Vista U.S. Treasury Income Fund has also entered into a plan of
reorganization with Chase U.S. Government Securities Fund, a series of Mutual
Fund Investment Trust. If that reorganization (the "Chase Reorganization") is
approved by the shareholders of Chase U.S. Government Securities Fund and
certain other conditions are met, Chase Vista U.S. Treasury Income Fund would
also acquire the assets and liabilities of Chase U.S. Government Securities Fund
in exchange for Chase Vista U.S. Treasury Income Fund Shares. The terms of the
Chase Reorganization are similar to the terms of the Reorganization you are
being asked to consider. If both reorganizations are approved, your investment
would be in a larger combined fund containing the assets of all three funds.
There can be no assurance that the Chase Reorganization will be consummated.
FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett, counsel to MFG, will issue an opinion (based on
certain assumptions) as of the effective time of the Reorganization to the
effect that the transaction will not give rise to the recognition of income,
gain or loss for federal income tax purposes to Chase Vista U.S. Government
Securities Fund, Chase Vista U.S. Treasury Income Fund or their respective
shareholders. The holding period and tax basis of Chase Vista U.S. Treasury
Income Fund Shares will be the same as the holding period and tax cost basis of
the shareholder's shares of Chase Vista U.S. Government Securities Fund. In
addition, the holding period and tax basis of those assets owned by Chase Vista
U.S. Government Securities Fund transferred to Chase Vista U.S. Treasury Income
Fund will be identical for Chase Vista U.S. Government Securities Fund. See
"Information Relating to the Proposed Reorganization--Federal Income Tax
Consequences."
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of Chase Vista U.S. Government Securities Fund is
to provide as high a level of total return as possible while still protecting
the value of its investment. Total return consists of current income and capital
growth, whereas the investment objective of Chase Vista U.S. Treasury Income
Fund seeks to provide investors with monthly dividends while still protecting
the value of their investment.
The investment policies of Chase Vista U.S. Government Securities Fund and
Chase Vista U.S. Treasury Income Fund are similar. However, Chase Vista U.S.
Treasury Income Fund is required to invest at least 65% of its total assets in
debt securities issued by the U.S. Treasury, and repurchase agreements in which
the Fund receives these securities as collateral whereas Chase Vista U.S.
Government Securities Fund is required
2
<PAGE>
to invest at least 65% of its total assets in debt securities issued or
guaranteed by the U.S. Government and its agencies or authorities and in
repurchase agreements in which the Fund receives these securities as collateral.
In addition, Chase Vista U.S. Treasury Income Fund is not permitted to invest in
certain instruments which Chase Vista U.S. Government Securities Fund may hold.
Therefore, the Reorganization will have an impact on the investment strategy
implemented in respect of your investment.
ADDITIONAL TRUST PORTFOLIOS
In addition to Chase Vista U.S. Government Securities Fund and Chase Vista
U.S. Treasury Income Fund, MFG currently offers 18 additional portfolios:
<TABLE>
<S> <C>
Growth and Income Fund H&Q Technology Fund
Balanced Fund International Equity Fund
Bond Fund Japan Fund
Capital Growth Fund Large Cap Equity Fund
Core Equity Fund Select Growth and Income Fund
Equity Growth Fund Short-Term Bond Fund
Equity Income Fund Small Cap Equity Fund
European Fund Small Cap Opportunities Fund
Focus Fund Strategic Income Fund
</TABLE>
Detailed descriptions of each MFG portfolio can be found in the MFG
prospectuses and Statement of Additional Information. MFG may add or subtract
portfolios from time to time in the future. However, in connection with other
concurrent reorganizations, it is anticipated that some of these portfolios will
be liquidated.
PRINCIPAL RISKS OF INVESTING IN CHASE VISTA U.S. TREASURY INCOME FUND
The following discussion highlights the principal risk factors associated
with an investment in Chase Vista U.S. Treasury Income Fund. These investment
risks, in general, are those typically associated with investing in a managed
portfolio of securities of fixed income securities. In particular, the value of
fixed income investments tends to fall when prevailing interest rates rise. This
drop in value could be worse if a fund is investing in debt securities with
longer maturities. In addition, investments in mortgage-related securities could
lead the value of a fund to change more often and to a greater degree than if
the fund did not buy mortgage-related securities.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS
ADVISORY SERVICES
The investment adviser for both Chase Vista U.S. Government Securities Fund
and Chase Vista U.S. Treasury Income Fund is Chase. Chase oversees the asset
management and administration of both Chase Vista U.S. Government Securities
Fund and Chase Vista U.S. Treasury Income Fund. As compensation for its
services, Chase receives a management fee from each of Chase Vista U.S.
Government Securities Fund and Chase Vista U.S. Treasury Income Fund at an
annual rate of 0.30% of their respective average daily net assets. A portion of
the fee generated with respect to each Fund is used to pay CFAM, each Fund's
sub-adviser.
Pursuant to the terms of an advisory agreement between Chase and MFG (the
"Advisory Agreement"), Chase is responsible for making decisions with respect
to, and placing orders for, all purchases and sales of the portfolio securities
of Chase Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury
Income Fund, subject to the general supervision of the MFG Board. Pursuant to an
investment sub-advisory agreement between Chase and CFAM (the "Subadvisory
Agreement"), Chase delegates certain of these responsibilities to CFAM with
respect to each Fund. For the investment sub-advisory services rendered to each
Fund and Chase, CFAM is entitled to receive from Chase an annual fee of 0.15% of
each Fund's average net assets.
It is anticipated that during the first quarter of 2001, Chase will transfer
its investment advisory business to CFAM and, thereafter, CFAM will be the sole
investment adviser to Chase Vista U.S. Treasury Income Fund and Chase Vista U.S.
Government Securities Fund.
3
<PAGE>
OTHER SERVICES
Vista Fund Distributors, Inc. ("VFD"), a wholly-owned, indirect subsidiary
of BISYS Fund Services, Inc. ("BISYS") is the distributor for each of Chase
Vista U.S. Treasury Income Fund and Chase Vista U.S. Government Securities Fund.
VFD is unaffiliated with Chase.
Chase serves as administrator, fund accountant and custodian for both Chase
Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury Income Fund.
The services provided by Chase include day-to-day maintenance of certain books
and records, calculation of the offering price of the shares and preparation of
reports. In its role as custodian, Chase is responsible for the daily
safekeeping of securities and cash held by both Chase Vista U.S. Government
Securities Fund and Chase Vista U.S. Treasury Income Fund.
PricewaterhouseCoopers LLP ("PwC") serves as both Chase Vista U.S.
Government Securities Fund's and Chase Vista U.S. Treasury Income Fund's
independent accountants, auditing and reporting on the annual financial
statements of each Fund and preparing each Fund's federal income tax returns.
PwC also performs other professional accounting, auditing, tax and advisory
services when MFG engages it to do so.
ORGANIZATION
MFG is organized as a Massachusetts business trust. Chase Vista U.S.
Government Securities Fund and Chase Vista U.S. Treasury Income Fund are both
organized as series of MFG.
PURCHASES, REDEMPTIONS AND EXCHANGES
The procedures for making purchases, redemptions and exchanges of shares of
Chase Vista U.S. Treasury Income Fund are identical to those with respect to
shares of Chase Vista U.S. Government Securities Fund.
COMPARATIVE FEE AND EXPENSE TABLES
The table below shows (i) information regarding the fees and expenses paid
by each of Chase Vista U.S. Government Securities Fund and Chase Vista U.S.
Treasury Income Fund that reflect current expense arrangements, (ii) estimated
fees and expenses on a pro forma basis for Chase Vista U.S. Treasury Income Fund
after giving effect to the proposed Reorganization but without giving effect to
the proposed Chase Reorganization and (iii) estimated fees and expenses on a pro
forma basis for Chase Vista U.S. Treasury Income Fund after giving effect to the
proposed Reorganization and the proposed Chase Reorganization. Under the
proposed Reorganization, holders of Class A Shares in Chase Vista
U.S. Government Securities Fund would receive Class A Shares in Chase Vista
U.S. Treasury Income Fund, and holders of Institutional Class Shares in Chase
Vista U.S. Government Securities Fund would receive Institutional Class Shares
in Chase Vista U.S. Treasury Income Fund. SHAREHOLDERS RECEIVING CLASS A SHARES
WILL NOT PAY A SALES LOAD ON SHARES RECEIVED IN THE REORGANIZATION BUT WILL HAVE
TO PAY A LOAD ON ADDITIONAL CLASS A SHARES THEY BUY IN THE FUTURE. Please note
that Chase Vista U.S. Treasury Income Fund currently has only two classes of
shares, Class A and Class B Shares. In connection with the Reorganization,
Institutional Class Shares will be introduced.
The table indicates that both contractual (pre-waiver) and actual
(post-waiver) total expense ratios for current holders of Chase Vista U.S.
Government Securities Fund are anticipated to be the same or less
4
<PAGE>
following the Reorganization. In addition, Chase has agreed to waive certain
fees and/or reimburse certain expenses to ensure that actual total operating
expenses do not increase for at least one year.
<TABLE>
<CAPTION>
Chase Vista
U.S. Treasury
CHASE VISTA U.S. GOVERNMENT Income
SECURITIES FUND(a) Fund(b)
---------------------------- -------------
CLASS A INSTITUTIONAL CLASS A
SHARES CLASS SHARES SHARES
------------- ------------- -------------
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (Load) When
You Buy Shares, Shown As % Of The
Offering Price. 4.50% None 4.50%
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
Management Fees 0.30% 0.30% 0.30%
Distribution (12b-1) Fees 0.25% None 0.25%
Other Expenses 1.15% 0.75% 0.74%
---- ---- ----
Total Annual Fund Operating
Expenses 1.70% 1.05% 1.29%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
CHASE VISTA U.S. TREASURY INCOME FUND (COMBINED)(c)
--------------------------------------------------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA
CLASS A INSTITUTIONAL CLASS A INSTITUTIONAL
SHARES WITHOUT CLASS SHARES SHARES WITH CLASS SHARES
CHASE WITHOUT CHASE CHASE WITH CHASE
REORGANIZATION REORGANIZATION REORGANIZATION REORGANIZATION
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum Sales Charge (Load)
When You Buy Shares, Shown
As % Of The Offering Price. 4.50% None 4.50% None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees 0.30% 0.30% 0.30% 0.30%
Distribution (12b-1) Fees 0.25% None 0.25% None
Other Expenses 0.72% 0.59% 0.72% 0.59%
---- ---- ---- ----
Total Annual Fund Operating
Expenses 1.27% 0.89% 1.27% 0.89%
Contractual Fee Waivers and
Expense Reimbursements 0.52% 0.34% 0.52% 0.34%
---- ---- ---- ----
Net Expenses 0.75% 0.55% 0.75% 0.55%
==== ==== ==== ====
</TABLE>
-------------------
(a) The actual Management Fees for Chase Vista U.S. Government Securities Fund
are expected to be 0.00%, the actual Distribution Fees for Class A shares
are expected to be 0.00%, the actual Other Expenses for Class A and
Institutional Class shares are expected to be 0.75% and 0.55%,
respectively, and Total Annual Fund Operating Expenses for Class A and
Institutional Class shares are not expected to exceed 0.75% and 0.55%,
respectively. That is because Chase and some of the other service providers
have volunteered not to collect a portion of their fees and to reimburse
others. Chase and these other service providers may terminate this
arrangement at any time.
5
<PAGE>
(b) The actual Management Fees for Chase Vista U.S. Treasury Income Fund, prior
to the Reorganization, are expected to be 0.15%, the actual Distribution
Fees for Class A shares are expected to be 0.00%, the actual Other Expenses
for Class A shares are expected to be 0.60% and Total Annual Fund Operating
Expenses for Class A shares are not expected to exceed 0.75%. That is
because Chase and some of the other service providers have volunteered not
to collect a portion of their fees and to reimburse others. Chase and these
other service providers may terminate this arrangement at any time.
(c) The actual Management Fees for Chase Vista U.S. Treasury Income Fund,
subsequent to the Reorganization (both with and without the Chase
Reorganization), are expected to be 0.15%, the actual Distribution fees for
Class A shares are expected to be 0.03%, the actual Other Expenses for
Class A and Institutional Class shares are expected to be 0.57% and 0.40%,
respectively, and Total Annual Fund Operating Expenses for Class A and
Institutional Class shares are not expected to exceed 0.75% and 0.55%,
respectively. That is because Chase and some of the other service providers
have contractually agreed not to collect a portion of their fees and to
reimburse others for one year after the Reorganization. Chase and these
other service providers may terminate this arrangement after the one-year
period expires.
The table does not reflect charges or credits which investors might incur if
they invest through a financial institution.
EXAMPLE: This example helps investors compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example assumes:
- you invest $10,000;
- you sell all of your shares at the end of the period;
- your investment has a 5% return each year; and
- each Fund's operating expenses are not waived and remain the same as shown
above.
Although actual costs may be higher or lower, based upon these assumptions
your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CHASE VISTA U.S. GOVERNMENT
SECURITIES FUND
CLASS A SHARES * $ 615 $ 962 $ 1,331 $ 2,368
INSTITUTIONAL CLASS SHARES $ 107 $ 334 $ 579 $ 1,283
CHASE VISTA U.S. TREASURY
INCOME FUND
CLASS A SHARES* $ 575 $ 841 $ 1,126 $ 1,936
PRO FORMA CHASE VISTA U.S.
TREASURY INCOME FUND WITHOUT
CHASE REORGANIZATION
CLASS A SHARES* $ 574 $ 835 $ 1,116 $ 1,915
CLASS A SHARES (WITHOUT
SALES CHARGE) $ 129 $ 403 $ 697 $ 1,534
INSTITUTIONAL CLASS SHARES $ 91 $ 284 $ 493 $ 1,096
PRO FORMA CHASE VISTA U.S.
TREASURY INCOME FUND WITH
CHASE REORGANIZATION
CLASS A SHARES* $ 574 $ 835 $ 1,116 $ 1,915
CLASS A SHARES (WITHOUT
SALES CHARGE) $ 129 $ 403 $ 697 $ 1,534
INSTITUTIONAL CLASS SHARES $ 91 $ 284 $ 493 $ 1,096
</TABLE>
-------------------
* Assumes sales charge is deducted when shares are purchased. Shareholders
who received Class A Shares as a result of the proposed reorganization will
not be charged a sales load.
6
<PAGE>
RISK FACTORS
The following discussion highlights the principal risk factors associated
with an investment in Chase Vista U.S. Treasury Income Fund. Chase Vista U.S.
Treasury Income Fund has investment policies and investment restrictions similar
to Chase Vista U.S. Government Securities Fund. Therefore, there should be
similarities between the risk factors associated with Chase Vista U.S.
Government Securities Fund and Chase Vista U.S. Treasury Income Fund. This
discussion is qualified in its entirety by the more extensive discussion of risk
factors set forth in the Prospectus and Statement of Additional Information of
Chase Vista U.S. Treasury Income Fund, which are incorporated herein by
reference.
All mutual funds carry a certain amount of risk. You may lose money on your
investment in the Fund. Here are some specific risks of investing in Chase Vista
U.S. Treasury Income Fund.
The Fund may not achieve its objective if the advisers' expectations
regarding particular securities or markets are not met.
The value of fixed income investments such as bonds tends to fall when
prevailing interest rates rise. Such a drop in value could be worse if the Fund
invests a larger portion of its assets in debt securities with longer
maturities. That's because long-term debt securities are more sensitive to
interest rate changes than other fixed-income securities. Note that conversely
the value of fixed income investments tends to increase when prevailing interest
rates fall.
When the Fund invests in mortgage-related securities, the value of the Fund
could change more often and to a greater degree than if it did not buy
mortgage-backed securities. That's because the prepayment features on some
mortgage-related securities make them more sensitive to interest rate changes.
Mortgage-related securities are subject to scheduled and unscheduled principal
payments as property owners pay down or prepay their mortgages. As these
payments are received, they must be reinvested when interest rates may be lower
than on the original mortgage security. When interest rates are rising, the
value of fixed-income securities with prepayment features are likely to decrease
as much or more than securities without prepayment features. In addition, the
value of mortgage-related securities with prepayment features may not increase
as much as other fixed-income securities when interest rates fall.
Collateral mortgage obligations are issued in multiple classes, and each
class may have its own interest rate and/or final payment date. A class with an
earlier final payment date may have certain preferences in receiving principal
payments or earning interest. As a result, the value of some classes in which
the Fund invests may be more volatile and may be subject to higher risk of
nonpayment.
While the principal and payments on certain of the Fund's portfolio
securities may be guaranteed, this does not mean that the market value of the
security, or the value of Fund shares, is guaranteed.
Repurchase agreements involve some risk to the Fund if the other party does
not live up to its part of the agreement.
There are a number of instruments in which Chase U.S. Government Securities
Fund may invest and Chase Vista U.S. Treasury Income Fund may not. These include
interest-only and principal-only mortgage-backed securities and stripped
obligations which are not backed by the full faith and credit of the U.S.
Treasury. While these instruments do entail certain risks, they also provide an
opportunity to enhance return. As a result, shareholders may receive a lower
return on their investment in Chase Vista U.S. Treasury Income Fund than they
would receive on an investment in Chase Vista U.S. Government Securities Fund.
Derivatives may be more risky than other types of investments because they
may respond more to changes in economic conditions than other types of
investments. If they are used for non-hedging purposes, they could cause losses
that exceed the Fund's original investment.
Unlike Chase Vista U.S. Government Securities Fund, Chase Vista U.S.
Treasury Income Fund is not diversified. It may invest a greater percentage of
its assets in a particular issuer or group of issuers than a diversified fund
would. That makes the value of its shares more sensitive to economic problems
among those issuing the securities.
7
<PAGE>
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
GENERAL
The terms and conditions under which the Reorganization may be consummated
are set forth in the Reorganization Plan. Significant provisions of the
Reorganization Plan are summarized below; however, this summary is qualified in
its entirety by reference to the Reorganization Plan, a copy of which is
attached as Appendix A to this Combined Prospectus/Proxy Statement and which is
incorporated herein by reference.
DESCRIPTION OF THE REORGANIZATION PLAN
The Reorganization Plan provides that at the Effective Time (as defined in
the Reorganization Plan) of the Reorganization, the assets and liabilities of
Chase Vista U.S. Government Securities Fund will be transferred to and assumed
by Chase Vista U.S. Treasury Income Fund. In exchange for the transfer of the
assets, and the assumption of the liabilities, of Chase Vista U.S. Government
Securities Fund, MFG will issue at the Effective Time of the Reorganization full
and fractional (a) Class A Shares of Chase Vista U.S. Treasury Income Fund equal
in aggregate dollar value to the aggregate net asset value of full and
fractional outstanding Class A Shares of Chase Vista U.S. Government Securities
Fund and (b) Institutional Class Shares of Chase Vista U.S. Treasury Income Fund
equal in aggregate dollar value to the aggregate net asset value of full and
fractional outstanding Institutional Class Shares of Chase Vista U.S. Government
Securities Fund, in each case as determined at the valuation time specified in
the Reorganization Plan. The Reorganization Plan provides that Chase Vista U.S.
Government Securities Fund will declare a dividend or dividends prior to the
Effective Time of the Reorganization which, together with all previous
dividends, will have the effect of distributing to the Chase Vista U.S.
Government Securities Fund Shareholders all undistributed net investment income
earned and net capital gains realized up to and including the Effective Time of
the Reorganization.
Following the transfer of assets to, and the assumption of the liabilities
of Chase Vista U.S. Government Securities Fund by Chase Vista U.S. Treasury
Income Fund, Chase Vista U.S. Government Securities Fund will distribute Chase
Vista U.S. Treasury Income Fund Shares received from MFG to the Chase Vista U.S.
Government Securities Fund Shareholders in liquidation of Chase Vista U.S.
Government Securities Fund. Each Chase Vista U.S. Government Securities Fund
Shareholder at the Effective Time of the Reorganization will receive an amount
of Class A Shares or Institutional Class Shares, as the case may be, with a
total net asset value equal to the net asset value of their Chase Vista U.S.
Government Securities Fund Shares plus the right to receive any dividends or
distributions which were declared before the Effective Time of the
Reorganization but that remained unpaid at that time with respect to the shares
of Chase Vista U.S. Government Securities Fund.
Because of the differences in the investment policies of Chase Vista U.S.
Treasury Income Fund and Chase Vista U.S. Government Securities Fund, Chase
Vista U.S. Government Securities Fund expects to dispose of a significant
portion of its portfolio investments prior to the Reorganization.
After the Reorganization, all of the issued and outstanding shares of Chase
Vista U.S. Government Securities Fund Shares will be canceled on the books of
Chase Vista U.S. Government Securities Fund and the stock transfer books of
Chase Vista U.S. Government Securities Fund will be permanently closed.
The Reorganization is subject to a number of conditions, including without
limitation: approval of the Reorganization Plan and the transactions
contemplated thereby described in this Combined Prospectus/Proxy Statement by
the Chase Vista U.S. Government Securities Fund Shareholders; the receipt of a
legal opinion from Simpson Thacher & Bartlett with respect to certain tax
issues, as more fully described in "Federal Income Tax Consequences" below; and
the parties' performance in all material respects of their respective agreements
and undertakings in the Reorganization Plan. Assuming satisfaction of the
conditions in the Reorganization Plan, the Effective Time of the Reorganization
will be on February [19], 2001 or such other date as is agreed to by the
parties.
The expenses of Chase Vista U.S. Government Securities Fund and Chase Vista
U.S. Treasury Income Fund in connection with the Reorganization will be borne by
Chase.
The Reorganization Plan and the Reorganization described herein may be
abandoned at any time prior to the Effective Time of the Reorganization by
either party if a material condition to the performance of such party under the
Reorganization Plan or a material covenant of the other party is not fulfilled
by the date specified in the Reorganization Plan or if there is a material
default or material breach of the Reorganization Plan by the other party. In
addition, either party may terminate the Reorganization Plan if its
8
<PAGE>
trustees determine that proceeding with the Reorganization Plan is not in the
best interests of their fund's shareholders.
BOARD CONSIDERATIONS
In its consideration and approval of the Reorganization at meetings held on
September 19, 2000 and October 24, 2000, the MFG Board considered and discussed
the future of Chase Vista U.S. Government Securities Fund and how to best serve
the Chase Vista U.S. Government Securities Fund Shareholders' interests. The
Trustees discussed the size of Chase Vista U.S. Government Securities Fund's
investment portfolio (approximately $47 million as of August 31, 2000) and the
increasing advantages of reorganizing Chase Vista U.S. Government Securities
Fund into Chase Vista U.S. Treasury Income Fund. The Trustees reviewed the
Proposal. After discussions, it was decided to pursue the Reorganization with
Chase Vista U.S. Treasury Income Fund.
In considering the Reorganization, the Trustees noted that all Chase Vista
U.S. Treasury Income Fund Shareholders wishing to invest in other types of funds
would be able to exchange into other Chase Vista funds without being charged a
front-end sales charge. In its consideration and approval of the Reorganization,
the MFG Board considered, among other things: the terms of the Reorganization
Plan; a comparison of each fund's historical and projected expense ratios; the
comparative investment performance of Chase Vista U.S. Government Securities
Fund and Chase Vista U.S. Treasury Income Fund; the effect of such
Reorganization on Chase Vista U.S. Government Securities Fund and its
shareholders; the fact that the day-to-day portfolio management would be
unchanged by the Reorganization; the investment advisory services supplied by
Chase and its affiliates; the management and other fees payable by Chase Vista
U.S. Treasury Income Fund; the similarities and differences in the investment
objective and policies of the Funds; the opportunity to combine Chase Vista U.S.
Government Securities Fund with Chase Vista U.S. Treasury Income Fund in an
effort to realize operational and administrative efficiencies; the
recommendations of Chase with respect to the proposed Reorganization; the fact
that all costs and expenses of the Reorganization will be borne by Chase; and
the fact that the Reorganization would constitute a tax-free reorganization.
After considering the foregoing factors, together with such information as
they believed to be relevant, the MFG Board determined that the proposed
Reorganization is in the best interests of Chase Vista U.S. Government
Securities Fund and that the interests of the Chase Vista U.S. Government
Securities Fund Shareholders would not be diluted as a result of the
Reorganization and approved the Reorganization Plan and directed that the
Reorganization Plan be submitted to the Chase Vista U.S. Government Securities
Fund Shareholders for approval.
The MFG Board considered the proposed Reorganization from the perspective of
Chase Vista U.S. Treasury Income Fund. The MFG Board considered, among other
things: the terms of the Reorganization Plan; the opportunity to combine the two
Funds in an effort to realize operational and administrative efficiencies; the
fact that all costs and expenses of the Reorganization will be borne by Chase;
and the fact that the Reorganization would constitute a tax-free reorganization.
Based upon its evaluation of the relevant information provided to it, and in
light of its fiduciary duties under federal and state law, the MFG Board
determined that the proposed Reorganization is in the best interests of the
shareholders of Chase Vista U.S. Treasury Income Fund and the interests of Chase
Vista U.S. Treasury Income Fund's Shareholders would not be diluted as a result
of the Reorganization.
After considering the foregoing factors, together with such other
information as it believed to be relevant, the MFG Board approved the
Reorganization Plan.
THE MFG BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL.
The MFG Board has not determined what action Chase Vista U.S. Government
Securities Fund will take in the event shareholders fail to approve the
Reorganization Plan or for any reason the Reorganization is not consummated. In
either such event, the Board will consider other appropriate courses of action.
FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Reorganization is subject to the condition that MFG
receive an opinion from Simpson Thacher & Bartlett to the effect that for
federal income tax purposes: (i) the transfer of all of the assets and
liabilities of Chase Vista U.S. Government Securities Fund to Chase Vista U.S.
Treasury Income Fund in exchange for Chase Vista U.S. Treasury Income Fund
Shares and the liquidating distributions to Shareholders of Chase Vista U.S.
Treasury Income Fund Shares so received, as described in the Reorganization
Plan, will constitute a reorganization within the meaning of Section 368(a) of
the Internal
9
<PAGE>
Revenue Code of 1986, as amended (the "Code"), and with respect to the
Reorganization, Chase Vista U.S. Government Securities Fund and Chase Vista U.S.
Treasury Income Fund will each be considered "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by Chase Vista U.S. Government Securities Fund as a result of such
transaction; (iii) no gain or loss will be recognized by Chase Vista U.S.
Treasury Income Fund as a result of such transaction; (iv) no gain or loss will
be recognized by the Chase Vista U.S. Government Securities Fund Shareholders on
the distribution to Chase Vista U.S. Government Securities Fund Shareholders of
the Chase Vista U.S. Treasury Income Fund Shares in exchange for their Chase
Vista U.S. Government Securities Fund Shares; (v) the aggregate basis of Shares
of Chase Vista U.S. Treasury Income Fund received by a Shareholder of Chase
Vista U.S. Government Securities Fund will be the same as the aggregate basis of
such Chase Vista U.S. Government Securities Fund Shareholder's Chase Vista U.S.
Government Securities Fund Shares immediately prior to the Reorganization;
(vi) the basis of Chase Vista U.S. Treasury Income Fund in the assets of Chase
Vista U.S. Government Securities Fund received pursuant to such transaction will
be the same as the basis of such assets in the hands of Chase Vista U.S.
Government Securities Fund immediately before such transaction; (vii) a Chase
Vista U.S. Government Securities Fund Shareholder's holding period for Chase
Vista U.S. Treasury Income Fund Shares will be determined by including the
period for which each Chase Vista U.S. Government Securities Fund Shareholder
held Chase Vista U.S. Government Securities Fund Shares exchanged therefor,
provided that the Shareholder held such Shares in Chase Vista U.S. Government
Securities Fund Shares as a capital asset; and (viii) Chase Vista U.S. Treasury
Income Fund's holding period with respect to the assets received in the
Reorganization will include the period for which such assets were held by Chase
Vista U.S. Government Securities Fund.
MFG has not sought a tax ruling from the Internal Revenue Service (the
"IRS"), but is acting in reliance upon the opinion of counsel discussed in the
previous paragraph. That opinion is not binding on the IRS and does not preclude
the IRS from adopting a contrary position. Shareholders should consult their own
advisers concerning the potential tax consequences to them, including state and
local income taxes.
CAPITALIZATION
Because Chase Vista U.S. Government Securities Fund will be combined with
Chase Vista U.S. Treasury Income Fund in the Reorganization, the total
capitalization of Chase Vista U.S. Treasury Income Fund after the Reorganization
is expected to be greater than the current capitalization of Chase Vista U.S.
Government Securities Fund. Also, if the Chase Reorganization is approved, the
total capitalization of Chase Vista U.S. Treasury Income Fund will be even
greater. The following table sets forth as of August 31, 2000: (i) the
capitalization of Chase Vista U.S. Government Securities Fund; (ii) the
capitalization of Chase Vista U.S. Treasury Income Fund; (iii) the pro forma
capitalization of Chase Vista U.S. Treasury Income Fund as adjusted to give
effect to the proposed Reorganization but not the proposed Chase Reorganization;
and (iv) the pro forma capitalization of Chase Vista U.S. Treasury Income Fund
as adjusted to give effect to both the proposed Reorganization and the proposed
Chase Reorganization. There is, of course, no assurance that the Reorganization
and/or the Chase Reorganization will be consummated. Moreover, if consummated,
the capitalizations of Chase Vista U.S. Treasury Income Fund, Chase Vista U.S.
Government Securities Fund and Chase U.S. Government Securities Fund are likely
to be different at the Effective Time of the Reorganization as a result of
fluctuations in the value of portfolio securities of each Fund and daily share
purchase and redemption activity in each fund. Please note that Chase Vista U.S.
Treasury Income Fund
10
<PAGE>
currently has only two classes of shares, Class A and Class B Shares. In
connection with the Reorganization, Institutional Class Shares will be
introduced.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
CHASE VISTA CHASE VISTA COMBINED COMBINED WITH
U.S. GOVERNMENT U.S. TREASURY WITHOUT CHASE CHASE
SECURITIES FUND INCOME FUND REORGANIZATION REORGANIZATION
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Total Net Assets
Class A Shares $ 2,905,298 $57,580,940 $60,486,238 $60,520,502
Class B Shares -- 15,406,856 15,406,856 15,406,856
Institutional Class Shares 44,228,762 -- 44,228,762 50,553,468
----------- ----------- ------------ ------------
Total $47,134,060 $72,987,796 $120,121,856 $126,480,826
=========== =========== ============ ============
Shares Outstanding
Class A Shares 298,668 5,344,888 5,614,646 5,617,827
Class B Shares -- 1,432,856 1,432,856 1,432,856
Institutional Class Shares 4,555,561 -- 4,106,663 4,693,915
----------- ----------- ------------ ------------
Total 4,854,229 6,777,744 11,154,165 11,744,598
=========== =========== ============ ============
Net Asset Value Per Share
Class A Shares $ 9.73 $ 10.77 $10.77 $10.77
Class B Shares -- $ 10.75 $10.75 $10.75
Institutional Class Shares $ 9.71 -- $10.77 $10.77
</TABLE>
INFORMATION RELATING TO CHASE REORGANIZATION
The terms and conditions under which the Chase Reorganization may be
consummated are set forth in the Chase Reorganization Plan, which is similar to
the Reorganization Plan you are considering. Under the Chase Reorganization,
holders of Investor Class Shares of Chase U.S. Government Securities Fund will
receive Class A Shares of Chase Vista U.S. Treasury Income Fund, and holders of
Premier Class Shares of Chase U.S. Government Securities Fund will receive
Institutional Class Shares of Chase Vista U.S. Treasury Income Fund.
INVESTMENT POLICIES
The following discussion summarizes some of the investment policies of Chase
Vista U.S. Treasury Income Fund. Chase Vista U.S. Treasury Income Fund has
similar investment policies to Chase Vista U.S. Government Securities Fund;
however, certain important differences are described below. This section is
qualified in its entirety by the discussion in the Prospectus and Statement of
Additional Information of Chase Vista U.S. Treasury Income Fund, which are
incorporated herein by reference.
OBJECTIVE
Chase Vista U.S. Treasury Income Fund seeks to provide investors with
monthly dividends while still protecting the value of their investment. THE
INVESTMENT OBJECTIVE FOR CHASE VISTA U.S. GOVERNMENT SECURITIES FUND IS TO
PROVIDE AS HIGH A LEVEL OF TOTAL RETURN AS POSSIBLE WHILE STILL PROTECTING THE
VALUE OF ITS INVESTMENT. TOTAL RETURN CONSISTS OF CURRENT INCOME AND CAPITAL
GROWTH.
MAIN INVESTMENT STRATEGY
Under normal circumstances, Chase Vista U.S. Treasury Income Fund will
invest at least 65% of its total assets in debt securities issued by the U.S.
Treasury, and repurchase agreements in which the Fund receives these securities
as collateral. UNDER NORMAL MARKET CONDITIONS, CHASE VISTA U.S. GOVERNMENT
SECURITIES FUND WILL INVEST AT LEAST 65% OF ITS TOTAL ASSETS IN DEBT SECURITIES
ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT AND ITS AGENCIES OR AUTHORITIES AND
IN REPURCHASE AGREEMENTS IN WHICH THE FUND RECEIVES THESE SECURITIES AS
COLLATERAL.
Chase Vista U.S. Treasury Income Fund may also invest in debt securities
issued or guaranteed by U.S. government agencies or authorities. These
securities may include investments in collateralized mortgage obligations and
other mortgage-related securities. CHASE VISTA U.S. GOVERNMENT SECURITIES FUND
IS ALSO PERMITTED TO INVEST IN PRINCIPAL-ONLY AND INTEREST-ONLY STRIPPED
MORTGAGE-BACKED SECURITIES.
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<PAGE>
There is no restriction on the maturity of the Chase Vista U.S. Treasury
Income Fund's portfolio or on any individual security in the portfolio. The
advisers will change the actual maturities according to changes in the market.
Chase Vista U.S. Treasury Income Fund develops an appropriate portfolio
strategy based on a forecast for the level and direction of interest rates. When
making this forecast, the advisers also determine an outlook for the interest
rate horizon, an expectation of market volatility levels and the outlook for
yield curve shifts.
In determining whether to sell a debt security, the advisers will use the
same type of analysis that they use in buying debt securities in order to
determine whether the debt security is still undervalued. This may include
selling those securities which have appreciated to meet their target valuations.
The frequency of yield curve shifts over the last few years has made yield
curve strategies an important dimension of Chase Vista U.S. Treasury Income
Fund's overall investment strategy. Yield curves show the relationship between
yields on similar debt securities with different maturities. The Fund may seek
gains by investing in anticipation of yield curve movements.
Chase Vista U. S. Treasury Income Fund may also invest in high-quality,
short-term money market instruments, repurchase agreements and derivatives,
which are financial instruments whose value is based on another security, index
or exchange rate. Chase Vista U.S. Treasury Income Fund may use derivatives to
hedge various market risks or to increase its income or gain. TO TEMPORARILY
DEFEND ITS ASSETS, CHASE VISTA U.S. GOVERNMENT SECURITIES FUND MAY INVEST ANY
PORTION OF ITS ASSETS IN HIGH QUALITY MONEY MARKET INSTRUMENTS AND REPURCHASE
AGREEMENTS.
Chase Vista U.S. Treasury Income Fund may change any of these investment
policies (but not its investment objective) without shareholder approval.
INVESTMENT RESTRICTIONS
Chase Vista U.S. Treasury Income Fund and Chase Vista U.S. Government
Securities Fund have each adopted the following investment restrictions which
may not be changed without approval by a "majority of the outstanding shares" of
a Fund which means the vote of the lesser of (i) 67% or more of the shares of a
Fund present at a meeting, if the holders of more than 50% of the outstanding
shares of a Fund are present or represented by proxy, or (ii) more than 50% of
the outstanding shares of a Fund.
Neither Fund may:
(1) borrow money, except that each Fund may borrow money for temporary or
emergency purposes, or by engaging in reverse repurchase transactions, in an
amount not exceeding 33 1/3% of the value of its total assets at the time
when the loan is made and may pledge, mortgage or hypothecate no more than
1/3 of its net assets to secure such borrowings. Any borrowings representing
more than 5% of a Fund's total assets must be repaid before the Fund may
make additional investments;
(2) make loans, except that each Fund may: (i) purchase and hold debt
instruments (including without limitation, bonds, notes, debentures or other
obligations and certificates of deposit, bankers' acceptances and fixed time
deposits) in accordance with its investment objectives and policies;
(ii) enter into repurchase agreements with respect to portfolio securities;
and (iii) lend portfolio securities with a value not in excess of one-third
of the value of its total assets;
(3) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or repurchase agreements secured thereby) if, as a
result, more than 25% of a Fund's total assets would be invested in the
securities of companies whose principal business activities are in the same
industry;
(4) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments but this shall not prevent
either Fund from (i) purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities or (ii) engaging in forward purchases or sales of foreign
currencies or securities;
(5) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Fund from
investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business). Investments by
either Fund in securities backed by mortgages on real estate or in
marketable securities of companies engaged in such activities are not hereby
precluded;
12
<PAGE>
(6) issue any senior security (as defined in the 1940 Act), except that
(a) each Fund may engage in transactions that may result in the issuance of
senior securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) each Fund may
acquire other securities, the acquisition of which may result in the
issuance of a senior security, to the extent permitted under applicable
regulations or interpretations of the 1940 Act; and (c) subject to the
restrictions set forth above, each Fund may borrow money as authorized by
the 1940 Act; and
(7) underwrite securities issued by other persons except insofar as a Fund may
technically be deemed to be an underwriter under the Securities Act of 1933
in selling a portfolio security.
In addition, as a matter of fundamental policy, notwithstanding any other
investment policy or restriction, each Fund may seek to achieve its investment
objective by investing all of its investable assets in another investment
company having substantially the same investment objective and policies as that
Fund. For purposes of investment restriction (5) above, real estate includes
real estate limited partnerships. For purposes of investment restriction
(3) above, industrial development bonds, where the payment of principal and
interest is the ultimate responsibility of companies within the same industry,
are grouped together as an "industry." Investment restriction (3) above,
however, is not applicable to investments by either Fund in municipal
obligations where the issuer is regarded as a state, city, municipality or other
public authority since such entities are not members of any "industry."
Supranational organizations are collectively considered to be members of a
single "industry" for purposes of restriction (3) above.
In addition, each Fund is subject to the following nonfundamental investment
restrictions which may be changed without shareholder approval:
(1) The Chase Vista U.S. Treasury Income Fund may not, with respect to 50% of
its assets, hold more than 10% of the outstanding voting securities of any
issuer or invest more than 5% of its assets in the securities of any one
issuer (other than obligations of the U.S. Government, its agencies and
instrumentalities). THE CHASE VISTA U.S. GOVERNMENT SECURITIES FUND HAS THE
SAME RESTRICTIONS BUT WITH RESPECT TO 75% OF ITS ASSETS.
(2) Each Fund may not make short sales of securities, other than short sales
"against the box," or purchase securities on margin except for short-term
credits necessary for clearance of portfolio transactions, provided that
this restriction will not be applied to limit the use of options, futures
contracts and related options, in the manner otherwise permitted by the
investment restrictions, policies and investment program of a Fund. The
Funds have no current intention of making short sales against the box.
(3) Each Fund may not purchase or sell interests in oil, gas or mineral leases.
(4) Each Fund may not invest more than 15% of its net assets in illiquid
securities.
(5) Each Fund may not write, purchase or sell any put or call option or any
combination thereof.
(6) Each Fund may invest up to 5% of its total assets in the securities of any
one investment company, but may not own more than 3% of the securities of
any one investment company or invest more than 10% of its total assets in
the securities of other investment companies.
For purposes of investment restriction (4) above, illiquid securities
includes securities restricted as to resale unless they are determined to be
readily marketable in accordance with procedures established by the Board of
Trustees.
PURCHASES, REDEMPTIONS AND EXCHANGES
The procedures for purchases, redemptions and exchanges of shares of Chase
Vista U.S. Treasury Income Fund are identical to those of Chase Vista U.S.
Government Securities Fund. Please note that Chase Vista U.S. Treasury Income
Fund currently has only two classes of shares, Class A and Class B Shares. In
connection with the Reorganization, Institutional Class Shares will be
introduced. The following discussion reflects the new class structure.
SALES CHARGES
There is normally a sales charge (sometimes called a "load") to buy Class A
Shares of Chase Vista U.S. Treasury Income Fund. There are also ongoing charges
that holders of Class A Shares pay as long as they own their shares, as more
fully explained below. There is no sales charge to buy Institutional
Class Shares.
13
<PAGE>
Chase Vista U.S. Government Securities Fund Shareholders holding Class A
Shares will receive Class A Shares in the Reorganization but will not have to
pay a sales charge. However, such Shareholders will have to pay a sales charge
if they buy additional Class A Shares in the future.
CLASS A SHARES
Class A Shares have an initial sales charge that is deducted directly from
the money you invest. As the table shows, the charge is lower the more you
invest. The public offering price of Class A Shares is the net asset value plus
the initial sales charge. Net asset value is the value of everything the Fund
owns, minus everything it owes, divided by the number of shares held by
investors. The Fund receives the net asset value.
The following chart shows the sales charges for Class A Shares.
<TABLE>
<CAPTION>
TOTAL SALES CHARGE
--------------------------------
AS % OF THE AS % OF NET
OFFERING PRICE AMOUNT
AMOUNT OF INVESTMENT PER SHARE INVESTED
-------------------- -------------- -----------
<S> <C> <C>
LESS THAN $100,000 4.50% 4.71%
$100,000 BUT UNDER $250,000 3.75% 3.90%
$250,000 BUT UNDER $500,000 2.50% 2.56%
$500,000 BUT UNDER $1 MILLION 2.00% 2.04%
</TABLE>
There is no sales charge for investments of $1 million or more.
12b-1 Fees
VFD is the distributor for Chase Vista U.S. Treasury Income Fund and Chase
Vista U.S. Government Securities Fund. Chase Vista U.S. Treasury Income Fund has
adopted a Rule 12b-1 distribution plan for Class A Shares under which it pays
annual distribution fees of up to 0.25% of the average daily net assets
attributable to Class A Shares. A similar 12b-1 distribution plan (with annual
distribution fees of up to 0.25%) is currently in effect for Class A Shares of
Chase Vista U.S. Government Securities Fund.
This payment covers such things as compensation for services provided by
broker-dealers and expenses connected with the sale of shares. Payments are not
tied to actual expenses incurred.
Because 12b-1 expenses are paid out of Chase Vista U.S. Treasury Income
Fund's assets on an ongoing basis, over time these fees will increase the cost
of a shareholder's investment and may cost more than other types of sales
charges, used by other mutual funds.
There is no Rule 12b-1 distribution plan for Institutional Class Shares of
Chase Vista U.S. Treasury Income Fund or Chase Vista U.S. Government Securities
Fund.
BUYING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO PURCHASES OF CHASE VISTA U.S. TREASURY
INCOME FUND SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE
NEW CLASS STRUCTURE.
The price shareholders pay for their shares is based on the net asset value
per share ("NAV"). NAV is the value of everything the Fund owns, minus
everything it owes, divided by the number of shares held by investors. The Fund
generally values its assets at fair market values but may use fair value if
market prices are unavailable.
The NAV of each class of the Fund's shares is generally calculated once each
day at the close of regular trading on the New York Stock Exchange each day the
Fund is accepting purchase orders. A shareholder will pay the public offering
price which is based on the next NAV calculated after the Chase Vista Funds
Service Center (the "Center") receives that shareholder's order in proper form.
An order is in proper form only after funds are converted into federal funds.
The Center accepts purchase orders on any business day that the New York
Stock Exchange is open. If an order is received in proper form by the close of
regular trading on the New York Stock Exchange, it will be processed at that
day's price and the purchaser will be entitled to all dividends declared on that
day. If an order is received after the close of regular trading on the New York
Stock Exchange, it will generally be processed at the next day's price. If a
purchaser pays by check for Fund shares before the close of regular trading on
the New York Stock Exchange, it will generally be processed the next day the
Fund is open for business.
14
<PAGE>
If a shareholder buys through an agent and not directly from the Center, the
agent could set earlier cut-off times. Each shareholder must provide a Social
Security Number or Taxpayer Identification Number when opening an account.
The Fund has the right to reject any purchase order.
All purchases of Institutional Class Shares of the Fund must be paid for by
federal funds wire. They may be purchased only through financial service firms,
such as broker-dealers and banks that have an agreement with the Fund.
For Class A Shares, checks should be made out to Chase Vista Funds in U.S.
dollars. Credit cards, cash, or checks from a third party will not be accepted.
Shares bought by check may not be sold for 15 calendar days. Shares bought
through an Automated Clearing House cannot be sold until the payment clears.
This could take more than seven business days. Purchase orders will be canceled
if a check does not clear and the investor will be responsible for any expenses
and losses to the Fund. Orders by wire will be canceled if the Center does not
receive payment by 4:00 p.m., Eastern time, on the day the shareholder buys.
Shareholders seeking to buy Class A Shares through an investment
representative should instruct their representative to contact the Fund. Such
representatives may charge investors a fee and may offer additional services,
such as special purchase and redemption programs, "sweep" programs, cash
advances and redemption checks. Such representative may set different minimum
investments and earlier cut-off times.
A systematic investment plan is available for Class A Shares.
SELLING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO SALES OF CHASE VISTA U.S. TREASURY
INCOME SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION AND REFLECTS THE NEW
CLASS STRUCTURE.
Shares of the Fund may be sold on any day the Center is open for trading,
either directly to the Fund or through an investment representative.
Shareholders of the Fund will receive the next NAV calculated after the Center
accepts his or her sale order, less any applicable sales charges.
Under normal circumstances, if a request is received before the close of
regular trading on the New York Stock Exchange, the Fund will send the proceeds
the same business day. An order to sell shares will not be accepted if the Fund
has not collected payment for the shares. The Fund may stop accepting orders to
sell and may postpone payments for more than seven days, as federal securities
laws permit.
Generally, proceeds are sent by electronic transfer or wire for Class A
Shares and by wire only for Institutional Class Shares. However, for Class A, if
a shareholder's address of record has changed within the 30 days prior to the
sale request or if more than $25,000 of shares is sold by phone, proceeds will
be sent only to the bank account on the Fund's records.
For Class A Shares, a shareholder will need to have his or her signature
guaranteed if he or she wants payment to be sent to an address other than the
one in the Fund's records. Additional documents or a letter from a surviving
joint owner may also be needed.
A shareholder who purchased through an investment representative, or in the
case of Institutional Class Shares, through a financial service firm, should
contact that representative, who will send the necessary documents to the
Center. The representative might charge a fee for this service.
Shareholders may also sell their shares by contacting the Center directly.
Class A shareholders may contact 1-800-34-VISTA while Institutional
Class shareholders may contact 1-800-62-CHASE.
A systematic withdrawal plan is available for Class A Shares.
EXCHANGING FUND SHARES
THE FOLLOWING DISCUSSION APPLIES TO EXCHANGES OF CHASE VISTA U.S. TREASURY
INCOME FUND SHARES THAT YOU MIGHT MAKE AFTER THE REORGANIZATION.
Shares of the Fund may be exchanged for shares in certain other Chase Vista
Funds.
For tax purposes, an exchange is treated as a sale of those shares.
Shareholders should carefully read the prospectus of the fund into which they
want to exchange. Shareholders who exchange must meet any minimum investment
requirements and may have to pay a sales commission.
15
<PAGE>
The exchange privilege is not a means of short-term trading as this could
increase management cost and affect all shareholders of MFG. The Fund reserves
the right to limit the number of exchanges or refuse an exchange. Each exchange
privilege may also be terminated. The Fund charges an administration fee of $5
for each exchange if an investor makes more than 10 exchanges in a year or three
in a quarter.
OTHER INFORMATION CONCERNING CHASE VISTA U.S. TREASURY INCOME FUND
For Class A Shares, Chase Vista U.S. Treasury Income Fund may close an
account if the balance falls below $500. Chase Vista U.S. Treasury Income Fund
may also close the account if an investor is in the Systematic Investment Plan
and fails to meet investment minimums over a 12-month period. For Institutional
Class Shares, Chase Vista U.S. Treasury Income Fund may close an account if the
balance falls below $1,000,000 because the investor has sold Shares. At least 60
days' notice will be given before closing the account.
Unless a shareholder indicates otherwise on his or her account application,
the Fund is authorized to act on redemption and transfer instructions received
by phone. If someone trades on an account by phone, the Fund will ask that
person to confirm the account registration and address to make sure they match
those in the Fund records. If they do correspond, the Fund is generally
authorized to follow that person's instructions. The Fund will take all
reasonable precautions to confirm that the instructions are genuine. Investors
agree that they will not hold the Fund liable for any loss or expenses from any
sales request, if the Fund takes reasonable precautions. The Fund will be liable
for any losses to a shareholder from an unauthorized sale or fraud against such
shareholder if the Fund does not follow reasonable procedures.
It may not always be possible to reach the Center by telephone. This may be
true at times of unusual market changes and shareholder activity. In that event,
shareholders can mail instructions to the Fund or contact their investment
representative or agent. The Fund may modify or cancel the sale of shares by
phone without notice.
MFG has agreements with certain shareholder servicing agents (including
Chase) under which the shareholder servicing agents have agreed to provide
certain support services to their customers. For performing these services, each
shareholder servicing agent receives an annual fee of up to 0.25% of the average
daily net assets of the Class A Shares and Institutional Class Shares held by
investors serviced by the shareholder servicing agent.
Chase and/or VFD may, at their own expense, make additional payments to
certain selected dealers or other shareholder servicing agents for performing
administrative services for their customers. The amount may be up to an
additional 0.10% annually of the average net assets of the fund attributable to
shares of the Fund held by customers of those shareholder servicing agents.
Chase Vista U.S. Treasury Income Fund issues multiple classes of shares.
Each class may have different requirements for who may invest, and may have
different sales charges and expense levels. A person who gets compensated for
selling Fund shares may receive a different amount for each class.
Chase and its affiliates and the Funds and their affiliates, agents and
subagents may share information about shareholders and their accounts with each
other and with others unless this sharing is prohibited by contract. This
information can be used for a variety of purposes, including offering investment
and insurance products to shareholders.
VFD is the distributor for Chase Vista U.S. Treasury Income Fund and Chase
U.S. Government Securities Fund.
DISTRIBUTIONS AND TAXES
Each Fund can earn income and realize capital gain. Each Fund will deduct
from these earnings any expenses and then pay to shareholders the distributions.
Each Fund declares dividends on a daily basis and distributes any net
investment income at least monthly. Net capital gain is distributed annually.
You have three options for your distributions. You may:
- reinvest all of them in additional Fund shares without a sales charge;
- take distributions of net investment income in cash or as a deposit in a
pre-assigned bank account and reinvest distributions of net capital gain
in additional shares; or
- take all distributions in cash or as a deposit in a pre-assigned bank
account.
16
<PAGE>
If you don't select an option when you open your account, we'll reinvest all
distributions. If your distributions are reinvested, they will be in the form of
shares of the same class. The taxation of dividends won't be affected by the
form in which you receive them.
Dividends of net investment income are usually taxable as ordinary income at
the federal, state and local levels. The state or municipality where you live
may not charge you state and local taxes on tax-exempt interest earned on
certain bonds.
Dividends earned on bonds issued by the U.S. government and its agencies may
also be exempt from some types of state and local taxes.
If you receive distributions of net capital gain, the tax rate will be based
on how long a Fund held a particular asset, not on how long you have owned your
shares. If you buy shares just before a distribution, you will pay tax on the
entire amount of the taxable distribution you receive, even though the NAV will
be higher on that date because it includes the distribution amount.
Each Fund expects that its distributions will consist primarily of ordinary
income.
Early in each calendar year, each Fund will send its shareholders a notice
showing the amount of distributions received in the preceding year and the tax
status of those distributions.
The above is only a general summary of tax implications of investing in
these Funds. Shareholders should consult their tax advisors to see how investing
in the Funds will affect their own tax situation.
COMPARISON OF CHASE VISTA U.S. GOVERNMENT SECURITIES FUND'S AND CHASE VISTA
U.S. TREASURY INCOME FUND'S ORGANIZATION STRUCTURES
There are no differences in the organizational structure of Chase Vista U.S.
Government Securities Fund and Chase Vista U.S. Treasury Income Fund. Set forth
below are descriptions of the structure, voting rights, shareholder liability
and the liability of Trustees.
STRUCTURE OF THE CHASE VISTA U.S. GOVERNMENT SECURITIES FUND
Chase Vista U.S. Government Securities Fund is organized as a series of MFG,
which is organized under the law of the Commonwealth of Massachusetts. As a
Massachusetts business trust, MFG's operations are governed by MFG's Declaration
of Trust and By-Laws (the "MFG Trust Documents") and applicable Massachusetts
law. The operations of Chase Vista U.S. Government Securities Fund are also
subject to the provisions of the 1940 Act and the rules and regulations
thereunder.
STRUCTURE OF THE CHASE VISTA U.S. TREASURY INCOME FUND
Chase Vista U.S. Treasury Income Fund is also organized as a series of MFG.
The operations of Chase Vista U.S. Treasury Income Fund are also subject to the
provisions of the 1940 Act and the rules and regulations thereunder.
TRUSTEES AND OFFICERS
Subject to the provisions of the Trust Documents, the business of each of
Chase Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury Income
Fund is managed by MFG's Trustees, who serve indefinite terms and have all
powers necessary or convenient to carry out their responsibilities. The Trustees
and officers of MFIT and MFG are identical.
Information concerning the current Trustees of the MFG Board is set forth
later in this document.
SHARES OF FUNDS
MFG is a trust with an unlimited number of authorized shares of beneficial
interest, par value $0.001 per share, which may be divided into portfolios or
series and classes thereof. Each Fund is one portfolio of a trust, and may issue
multiple classes of shares. Each share of a portfolio or class of a trust
represents an equal proportionate interest in that portfolio or class with each
other share of that portfolio or class. The shares of each portfolio or class of
MFG participate equally in the earnings, dividends and assets of the particular
portfolio or class. Fractional shares have proportionate rights to full shares.
Expenses of MFG that are not attributable to a specific portfolio or class will
be allocated to all the portfolios of that trust in a manner believed by its
management to be fair and equitable. Generally, shares of each portfolio will be
voted separately, for example, to approve an investment advisory agreement and
shares of each class of each portfolio will be voted separately, for example, to
approve a distribution plan, but shares of all series and classes vote together,
to the extent required by the 1940 Act, including the election or selection of
Trustees
17
<PAGE>
and independent accountants. MFG is not required to hold regular annual meetings
of shareholders, but may hold special meetings from time to time. There are no
conversion or preemptive rights in connection with shares of MFG.
SHAREHOLDER VOTING RIGHTS
A vacancy in the Board of MFG resulting from the resignation of a Trustee or
otherwise may be filled similarly by a vote of a majority of the remaining
Trustees then in office, subject to the 1940 Act. In addition, Trustees may be
removed from office by a vote of holders of shares representing two-thirds of
the outstanding shares of each portfolio of that trust at a meeting duly called
for the purpose. A meeting of shareholders shall be held upon the written
request of the holders of shares representing not less than 10% of the
outstanding shares entitled to vote on the matters specified in the written
request. Upon written request by the holders of shares representing at least
$25,000 or 1% of the outstanding shares of that trust stating that such
shareholders wish to communicate with the other shareholders for the purpose of
obtaining the signatures necessary to demand a meeting to consider removal of a
Trustee, the Trustees will, within five business days after receipt of such
request, either provide a list of shareholders or inform such applicants as to
the approximate number of shareholders and the approximate costs of mailing the
request to them. If the second option is chosen by the Trustees, then the
Trustees are generally obligated, upon written request of the applicants, to
mail the requested materials to all shareholders of record (at the expense of
the requesting shareholders). Except as set forth above, the Trustees may
continue to hold office and may appoint successor Trustees.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of MFG could, under certain
circumstances, be held personally liable as partners for the obligations of that
trust. However, the Declaration of Trust of MFG disclaims shareholder liability
for acts or obligations of that trust and provides for indemnification and
reimbursement of expenses out of trust property for any shareholder held
personally liable for the obligations of that trust. The Declaration of Trust of
MFG also provides that the trust shall maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the protection
of that trust, its shareholders, Trustees, officers, employees and agents
covering possible tort and other liabilities. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which both inadequate insurance existed and the trust itself
was unable to meet its obligations.
LIABILITY OF DIRECTORS AND TRUSTEES
Under the Declaration of Trust of MFG, the Trustees of that trust are
personally liable only for bad faith, willful misfeasance, gross negligence or
reckless disregard of their duties as Trustees. Under the Declaration of Trust
of MFG, a Trustee or officer will generally be indemnified against all liability
and against all expenses reasonably incurred or paid by such person in
connection with any claim, action, suit or proceeding in which such person
becomes involved as a party or otherwise by virtue of such person being or
having been a Trustee or officer and against amounts paid or incurred by such
person in the settlement thereof.
The foregoing is only a summary of certain organizational and governing
documents and Massachusetts business trust law. It is not a complete
description. Shareholders should refer to the provisions of these documents and
state law directly for a more thorough comparison. Copies of the Declaration of
Trust and Bylaws of MFG are available without charge upon written request to
that trust.
INFORMATION RELATING TO THE ADVISORY CONTRACTS
GENERAL INFORMATION
As noted above, Chase Vista U.S. Government Securities Fund and Chase Vista
U.S. Treasury Income Fund are both managed by Chase pursuant to the Advisory
Agreement. Chase has delegated most of its responsibilities with respect to each
Fund to CFAM pursuant to a Subadvisory Agreement between Chase and CFAM. As a
result, CFAM is responsible for most of the day-to-day management functions for
each Fund. In addition, the same portfolio management team is responsible for
the day-to-day management functions for both Chase Vista U.S. Government
Securities Fund and Chase Vista U.S. Treasury Income Fund. It is anticipated
that during the first quarter of 2001, Chase will transfer its investment
advisory business to CFAM and, thereafter, CFAM will be the sole investment
adviser to Chase Vista U.S. Treasury Income Fund and Chase Vista U.S. Government
Securities Fund.
18
<PAGE>
DESCRIPTION OF CHASE
Chase is an indirect wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company ("CMC"). Chase's principal
executive offices are located at 270 Park Avenue, New York, New York 10017.
Chase is a New York State chartered bank that provides commercial banking and
trust services. As of June 30, 2000, Chase and certain of its affiliates
provided investment management services with respect to assets of approximately
$250 billion. CMC's principal executive offices are located at 270 Park Avenue,
New York, New York 10017. On September 13, 2000, CMC and J.P. Morgan & Co.
Incorporated announced that they have agreed to merge. The transaction is
expected to close in the first quarter of 2001 and is subject to approval by
shareholders of both companies, as well as by U.S. Federal and state and foreign
regulatory authorities.
Under the Advisory Agreement, Chase is responsible for making decisions with
respect to, and placing orders for, all purchases and sales of the portfolio
securities of the Funds. Chase's responsibilities under the Advisory Agreement
including supervising the Funds' investments and maintaining a continuous
investment program, placing purchase and sale orders and paying costs of certain
clerical and administrative services involved in managing and servicing the
Funds' investments and complying with regulatory reporting requirements. Chase
delegates certain of these responsibilities with respect to each Fund to CFAM.
Under the Advisory Agreement, Chase is obligated to furnish employees, office
space and facilities required for operation of the Funds.
EXPENSES AND ADVISORY FEES. The Advisory Agreement provides that each of
Chase Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury Income
Fund, as the case may be, will pay Chase a monthly advisory fee based upon the
average daily net assets of such Fund. The annual rate of the advisory fee is
0.30% for the Chase Vista U.S. Government Securities Fund and 0.30% for the
Chase Vista U.S. Treasury Income Fund. Chase may waive fees from time to time to
assist the Funds in maintaining competitive yields.
Under the Advisory Agreement, except as indicated above, each Fund is
responsible for its operating expenses including, but not limited to, taxes;
interest; fees (including fees paid to its Trustees who are not affiliated with
Chase or any of their affiliates); fees payable to the SEC; state securities
qualification fees; association membership dues; costs of preparing and printing
prospectuses for regulatory purposes and for distribution to existing
shareholders; advisory and administrative fees; charges of the custodian and
transfer agent; insurance premiums; auditing and legal expenses; costs of
shareholders' reports and shareholder meetings; any extraordinary expenses; and
brokerage fees and commissions, if any, in connection with the purchase or sale
of portfolio securities.
For the twelve months ended April 30, 2000, Chase accrued management fees
and management fee waivers of approximately $155,000 and $155,000, respectively,
for Chase Vista U.S. Government Securities Fund. For the twelve months ended
April 30, 2000, Chase accrued management fees and management fee waivers of
approximately $249,000 and $130,000, respectively, for Chase Vista U.S. Treasury
Income Fund.
SUBCONTRACTING. Chase is authorized by the Advisory Agreement to employ or
associate with such other persons or entities as it believes to be appropriate
to assist it in the performance of its duties. Any such person is required to be
compensated by Chase, not by the Trust or the relevant Fund, and to be approved
by the shareholders of that Fund as required by the 1940 Act.
LIMITATION ON LIABILITY. The Advisory Agreement provides that Chase will not
be liable for any error of judgment or mistake of law or for any act or omission
or loss suffered by MFG or either Fund, as the case may be, in connection with
the performance of the Advisory Agreement except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services or
from willful misfeasance, bad faith, or gross negligence in the performance of
its duties or reckless disregard of its obligations and duties under the
Advisory Agreement. Chase would be as fully responsible to MFG or either Fund,
as the case may be, for the acts of any sub-adviser as it is for its own acts.
DURATION AND TERMINATION. The Advisory Agreement continues in effect from
year to year with respect to Chase Vista U.S. Government Securities Fund or
Chase Vista U.S. Treasury Income Fund, as the case may be, only so long as such
continuation is approved at least annually by (i) the Board of Trustees of MFG,
or the majority vote of the outstanding voting securities of such Fund, and
(ii) a majority of those Trustees who are neither parties to the Advisory
Agreement nor "interested persons," as defined in the 1940 Act, of any such
party, acting in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement will terminate automatically in the event of
its "assignment," as defined in the 1940
19
<PAGE>
Act. In addition, the Advisory Agreement is terminable at any time as to either
Fund without penalty by the MFG Board or by vote of the majority vote of such
Fund's outstanding voting securities upon 60 days' written notice to Chase, and
by Chase on 60 days' written notice to MFG.
DESCRIPTION OF CFAM
CFAM is a wholly-owned subsidiary of Chase. CFAM is located at 1211 Avenue
of the Americas, 41st Floor, New York, New York 10036.
DESCRIPTION OF THE SUBADVISORY AGREEMENT
Pursuant to the Subadvisory Agreement, Chase delegates to CFAM portfolio
management duties. With respect to the day-to-day management of each Fund, CFAM
makes decisions concerning, and places all orders for, purchases and sales of
securities and helps maintain the records relating to such purchases and sales.
CFAM may, in its discretion, provide such services through its own employees or
the employees of one or more affiliated companies that are qualified to act as
an investment adviser to Chase Vista U.S. Government Securities Fund or Chase
Vista U.S. Treasury Income Fund under applicable laws and are under the common
control of Chase; PROVIDED that (i) all persons, when providing services under
the Subadvisory Agreement, are functioning as part of an organized group of
persons, and (ii) such organized group of persons is managed at all times by
authorized officers of CFAM.
Chase and CFAM bear all expenses in connection with the performance of their
respective services under the Subadvisory Agreement.
As investment adviser, Chase oversees the management of each Fund under the
Subadvisory Agreement, and, subject to the general supervision of the MFG Board,
makes recommendations and provides guidelines to CFAM based on general economic
trends and macroeconomic factors. Among the recommendations that may be provided
by Chase to CFAM are guidelines and benchmarks against which each Fund would be
managed. From the fee paid by each Fund under the Advisory Agreement to Chase,
Chase bears responsibility for payment of subadvisory fees to CFAM. Therefore,
neither Fund bears any increase in advisory fee rates resulting from the
Subadvisory Agreement. The Subadvisory Agreement provides that CFAM is entitled
to receive from Chase, out of its advisory fee, a monthly management fee as
disclosed below under "Subadvisory Fee."
DURATION AND TERMINATION. The Subadvisory Agreement will continue for
successive one-year periods, provided that such continuation is specifically
approved at least annually (i) by the MFG Board, or by a majority of the
outstanding voting securities of the relevant Fund and, in each case, (ii) by a
majority of the Trustees who are not interested persons of the Fund, Chase or
CFAM, by vote cast in person at a meeting called for such purposes. The
Subadvisory Agreement is terminable at any time, without penalty, by vote of the
MFG Board, by Chase by the majority of the outstanding voting securities of
Chase Vista U.S. Government Securities Fund or Chase Vista U.S. Treasury Income
Fund, or by CFAM upon 60 days' written notice. The Subadvisory Agreement will
terminate automatically in the event of its assignment, as defined under the
1940 Act.
SUBADVISORY FEE. As compensation for its services, CFAM receives a fee from
Chase. The fee is at the annual rate of 0.15% of the average daily net assets of
Chase Vista U.S. Government Securities Fund or Chase Vista U.S. Treasury Income
Fund, as the case may be. The fee, which is accrued daily and payable monthly,
is calculated for each day by multiplying the fraction of one over the number of
calendar days in the year by the 0.15% annual subadvisory fee percentage rate
and multiplying this product by the value of the net assets of Chase Vista U.S.
Government Securities Fund or Chase Vista U.S. Treasury Income Fund at the close
of business on the previous business day of MFG.
For the twelve months ended April 30, 2000, Chase paid approximately $0 and
$119,000 in subadvisory fees to CFAM with respect to Chase Vista U.S. Government
Securities Fund and Chase Vista U.S. Treasury Income Fund, respectively. THESE
FEES WERE PAID BY CHASE OUT OF THE ADVISORY FEES IT RECEIVED AND WERE NOT
ADDITIONAL CHARGES TO THE FUNDS.
PORTFOLIO MANAGER
Timothy Neumann, Head of Taxable Core Investment Group at Chase, and Michael
Bennis, a Vice President and Senior Portfolio Manager at Chase are responsible
for the management of Chase Vista U.S. Treasury Income Fund and Chase Vista U.S.
Government Securities Fund.
20
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
Chase, as the investment adviser to both Chase Vista U.S. Government
Securities Fund and Chase Vista U.S. Treasury Income Fund, has responsibilities
with respect to each Fund's portfolio transactions and brokerage arrangements
pursuant to the Fund's policies, subject to the overall authority of the MFG
Board. In addition, the Subadvisory Agreement with CFAM currently provides that
CFAM's responsibilities with respect to portfolio transactions and brokerage
arrangements will be equivalent to those of Chase under the Advisory Agreement.
Accordingly, the description below of Chase's responsibilities under the
Advisory Agreement would also apply to the subadviser's responsibilities under
the Subadvisory Agreement.
Under the Advisory Agreement, Chase, subject to the general supervision of
the applicable Board, is responsible for the placement of orders for the
purchase and sale of portfolio securities for each of Chase Vista U.S.
Government Securities Fund and Chase Vista U.S. Treasury Income Fund with
brokers and dealers selected by Chase. These brokers and dealers may include
brokers or dealers affiliated with Chase to the extent permitted by the 1940 Act
and that trust's policies and procedures applicable to the Funds. Chase shall
use its best efforts to seek to execute portfolio transactions at prices which,
under the circumstances, result in total costs or proceeds being the most
favorable to such Fund. In assessing the best overall terms available for any
transaction, Chase shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, research services
provided to Chase, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In no event shall Chase be
under any duty to obtain the lowest commission or the best net price for a Fund
on any particular transaction, nor shall Chase be under any duty to execute any
order in a fashion either preferential to such Fund relative to other accounts
managed by Chase or otherwise materially adverse to such other accounts.
In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to Chase, a Fund and/or the other accounts over which
Chase exercises investment discretion. Chase is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if Chase determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the overall responsibilities of Chase with respect to accounts
over which it exercises investment discretion. Chase shall report to the MFG
Board regarding overall commissions paid by a Fund and their reasonableness in
relation to the benefits to such Fund.
In executing portfolio transactions for Chase Vista U.S. Government
Securities Fund or Chase Vista U.S. Treasury Income Fund, Chase may, to the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be sold or purchased with those of other funds
or its other clients if, in Chase's reasonable judgment, such aggregation
(i) will result in an overall economic benefit to such fund, taking into
consideration the advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements, and (ii) is not inconsistent with
the policies set forth in MFG's registration statement and such Fund's
Prospectus and Statement of Additional Information. In such event, Chase will
allocate the securities so purchased or sold, and the expenses incurred in the
transaction, in an equitable manner, consistent with its fiduciary obligations
to such Fund and such other clients.
It is possible that certain of the brokerage and research services received
will primarily benefit one or more other investment companies or other accounts
for which Chase exercises investment discretion. Conversely, MFG or any of its
portfolios, including Chase Vista U.S. Government Securities Fund and Chase
Vista U.S. Treasury Income Fund, may be the primary beneficiary of the brokerage
or research services received as a result of portfolio transactions effected for
such other accounts or investment companies.
21
<PAGE>
BOARD OF TRUSTEES
Set forth below are the current members of the MFG Board.
<TABLE>
<CAPTION>
NAME AND POSITION PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------- ------------------------------------------
<S> <C>
Fergus Reid, III Chairman of the Trust. Chairman and Chief
Executive Officer, Lumelite Corporation, since
September 1985; Trustee, Morgan Stanley Funds.
Age: 67. Address: 202 June Road, Stamford, CT
06903.
*H. Richard Vartabedian Trustee and President of the Trust. Investment
Management Consultant, formerly, Senior Investment
Officer, Division Executive of the Investment
Management Division of The Chase Manhattan Bank,
N.A., 1980 through 1991. Age: 64. Address:
P.O. Box 296, Beach Road, Hendrick's Head,
Southport, ME 04576.
William J. Armstrong Trustee. Consultant, Eduneering, Inc.; formerly
Vice President and Treasurer, Ingersoll-Rand
Company. Age: 58. Address: 287 Hampshire Ridge,
Park Ridge, NJ 07656.
John R.H. Blum Trustee. Attorney in private practice; formerly,
partner in the law firm of Richards, O'Neil &
Allegaert; Commissioner of Agriculture -- State of
Connecticut, 1992-1995. Age: 70. Address: 322 Main
Street, Lakeville, CT 06039.
Roland R. Eppley, Jr. Trustee. Retired; formerly President and Chief
Executive Officer, Eastern States Bankcard
Association Inc., (1971-1988); Director, Janel
Hydraulics, Inc.; Director of The Hanover
Funds, Inc. Age: 67. Address: 105 Coventry Place,
Palm Beach Gardens, FL 33418.
Stuart W. Cragin, Jr. Trustee. Retired; formerly President, Fairfield
Testing Laboratory, Inc. He has previously served
in a variety of marketing, manufacturing and
general management positions with Union Camp
Corp., Trinity Paper & Plastics Corp., and Conover
Industries. Age: 66. Address: 108 Valley Road, Cos
Cob, CT 06807.
Joseph J. Harkins Trustee. Retired; formerly Commercial Sector
Executive and Executive Vice President of The
Chase Manhattan Bank, N.A. from 1985 through 1990.
He had been employed by Chase in numerous
capacities and offices from 1954 through 1990.
Director of Jefferson Insurance Company of New
York and Monticello Insurance Company. Age: 69.
Address: 257 Plantation Circle South, Ponte Vedra
Beach, FL 32082.
*Sarah E. Jones Trustee. President and Chief Operating Officer of
Chase Mutual Funds Corp.; formerly Managing
Director for the Global Asset Management and
Private Banking Division of The Chase Manhattan
Bank. Age: 47. Address: Chase Mutual Funds Corp.,
1211 Avenue of the Americas, 41st Floor, New York,
New York 10081.
W.D. MacCallan Trustee. Director of The Adams Express Co. and
Petroleum & Resources Corp. Retired; formerly
Chairman of the Board and Chief Executive Officer
of The Adams Express Co. and Petroleum & Resources
Corp.; Director of The Hanover Funds, Inc. and The
Hanover Investment Funds, Inc. Age: 72. Address:
624 East 45th Street, Savannah, GA 31405.
George E. McDavid Trustee. President, Houston Chronicle Publishing
Company. Age: 69. Address: P.O. Box 2558,
Houston, TX 77252.
W. Perry Neff Trustee. Retired; Independent Financial
Consultant;Director of Petroleum & Resources Corp.
and The Adams Express Co. Age: 73. Address: RR 1
Box 102, Weston, VT 05181.
*Leonard M. Spalding, Jr. Trustee. Retired; formerly Chief Executive Officer
of Chase Mutual Funds Corp.; formerly President
and Chief Executive Officer of Vista Capital
Management; Chief Investment Executive of The
Chase Manhattan Bank. Age: 64. Address: 2025
Lincoln Park Road, Springfield, KY 40069.
Richard E. Ten Haken Trustee. Chairman of the Audit Committee. Formerly
District Superintendent of Schools, Monroe No. 2
and Orleans Counties, New York; Chairman of the
Board and President, New York State Teachers'
Retirement System. Age: 65. Address: 4 Barnfield
Road, Pittsford, NY 14534.
Irving L. Thode Trustee. Retired; formerly Vice President of
Quotron Systems. He has previously served in a
number of executive positions with Control Data
Corp., including President of its Latin American
Operations, and General Manager of its Data
Services business. Age: 69. Address: 80 Perkins
Road, Greenwich, CT 06830.
</TABLE>
------------------------
* Asterisks indicate those Trustees that are "Interested Persons" (as defined
in the 1940 Act). Mr. Reid is not an interested person of the Trust's
investment advisers or principal underwriter, but may be deemed an
interested person of either Trust solely by reason of being an officer of
either Trust.
22
<PAGE>
Set forth below as to each executive officer of MFG is his or her name, age,
principal occupation during the past five years and other directorships held in
public companies.
<TABLE>
<CAPTION>
NAME AND POSITION AGE PRINCIPAL OCCUPATION AND OTHER INFORMATION
----------------- --- ------------------------------------------
<S> <C> <C>
Martin R. Dean 37 Treasurer and Assistant Secretary. Vice
President, Administration Services, BISYS
Fund Services, Inc.; formerly Senior
Manager, KPMG Peat Marwick (1987-1994).
Address: 3435 Stelzer Road, Columbus, OH
43219.
Lisa Hurley 45 Secretary. Senior Vice President and
General Counsel, BISYS Fund
Services, Inc.; formerly Counsel to Moore
Capital Management and General Counsel to
Global Asset Management and Northstar
Investments Management. Address: 90 Park
Avenue, New York, NY 10016.
Vicky M. Hayes 37 Assistant Secretary. Vice President and
Global Marketing Manager, Vista Fund
Distributors, Inc.; formerly Assistant
Vice President, Alliance Capital
Management and held various positions with
J. & W. Seligman & Co. Address: 1211
Avenue of the Americas, 41st Floor, New
York, NY 10081.
Alaina Metz 33 Assistant Secretary. Chief Administrative
Officer, BISYS Fund Services, Inc.;
formerly Supervisor, Blue Sky Department,
Alliance Capital Management L.P. Address:
3435 Stelzer Road, Columbus, OH 43219.
</TABLE>
The Trustees and officers of MFG appearing in the tables above also serve in
the same capacities with respect to Mutual Fund Trust, Mutual Fund Variable
Annuity Trust, Mutual Fund Select Group, Mutual Fund Select Trust, Mutual Fund
Investment Trust, Capital Growth Portfolio, Growth and Income Portfolio and
International Equity Portfolio (these entities, together with MFG, are referred
to as the "Chase Vista Funds").
TRANSACTIONS WITH AND REMUNERATION OF TRUSTEES AND OFFICERS
No compensation, direct or otherwise, other than through fees paid to Chase
or CFAM, is payable by MFG to any of its officers or Trustees who are affiliated
with Chase or CFAM (or any of their affiliates). Those Trustees who are not
affiliated with Chase or its affiliates will be paid an annual fee plus a fee
for each meeting of the Board of Trustees or any committee thereof that such
Trustee attends, together with reimbursement for reasonable expenses incurred in
attending such meetings. Chase, CFAM and their affiliates have had, and expect
in the future to have, banking and other business transactions in the ordinary
course of business with corporations of which those Trustees who are not
"interested persons" of Chase or CFAM are directors or officers. Any such
transactions are made on substantially the same terms as those prevailing at the
time for comparable transactions with other persons, including, where
applicable, interest rates, collateral, fees and other charges, and do not
involve more than the normal risk of collectibility (in the case of loans) or
present other unfavorable features.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This Combined Prospectus/Proxy Statement is being furnished in connection
with the solicitation of proxies by the MFG Board for use at the Meeting. It is
expected that the solicitation of proxies will be primarily by mail. MFG's
officers and service providers may also solicit proxies by telephone, facsimile
machine, telegraph, the Internet or personal interview. In addition, MFG may
retain the services of professional solicitors to aid in the solicitation of
proxies for a fee. It is anticipated that banks, brokerage houses and other
custodians will be requested on behalf of MFG to forward solicitation materials
to their principals to obtain authorizations for the execution of proxies. Any
Chase Vista U.S. Government Securities Fund Shareholder giving a proxy may
revoke it at any time before it is exercised by submitting to MFG a written
notice of revocation or a subsequently executed proxy or by attending the
Meeting and electing to vote in person.
Only Chase Vista U.S. Government Securities Fund Shareholders of record at
the close of business on November 10, 2000 will be entitled to vote at the
Meeting. On that date, there were outstanding and entitled to be voted
5,016,180.94 Chase Vista U.S. Government Securities Fund Shares. Each share or
fraction thereof is entitled to one vote or fraction thereof.
The presence in person or by proxy of Shareholders that own a majority of
the outstanding Chase Vista U.S. Government Securities Fund Shares will
constitute a quorum for purposes of transacting all business at the Meeting. If
a quorum is not present at the Meeting, sufficient votes in favor of the
proposals are not received by the time scheduled for the Meeting, or the Chase
Vista U.S. Government Securities Fund
23
<PAGE>
Shareholders determine to adjourn the Meeting for any other reason, the Chase
Vista U.S. Government Securities Fund Shareholders present (in person or proxy)
may adjourn the Meeting from time to time, without notice other than
announcement at the Meeting. Any such adjournment will require the affirmative
vote of Chase Vista U.S. Government Securities Fund Shareholders holding a
majority of the Chase Vista U.S. Government Securities Fund Shares present, in
person or by proxy, at the Meeting. The persons named in the Proxy will vote in
favor of such adjournment those Chase Vista U.S. Government Securities Fund
Shares that they are entitled to vote if such adjournment is necessary to obtain
a quorum or if they determine such an adjournment is desirable for any other
reason. Business may be conducted once a quorum is present and may continue
until adjournment of the Meeting notwithstanding the withdrawal or temporary
absence of sufficient Chase Vista U.S. Government Securities Fund Shares to
reduce the number present to less than a quorum. If the accompanying proxy is
executed and returned in time for the Meeting, the shares covered thereby will
be voted in accordance with the proxy on all matters that may properly come
before the meeting (or any adjournment thereof).
PROXIES
All Chase Vista U.S. Government Securities Fund Shares represented by each
properly signed proxy received prior to the Meeting will be voted at the
Meeting. If a Chase Vista U.S. Government Securities Fund Shareholder specifies
how the proxy is to be voted on any of the business to come before the Meeting,
it will be voted in accordance with such specifications. If a Chase Vista U.S.
Government Securities Fund Shareholder returns its proxy but no direction is
made on the proxy, the proxy will be voted FOR the Proposal described in this
Combined Prospectus/Proxy Statement. Chase Vista U.S. Government Securities Fund
Shareholders voting to ABSTAIN on the Proposal will be treated as present for
purposes of achieving a quorum and in determining the votes cast on the
Proposal, but not as having voted FOR the Proposal. A properly signed proxy on
which a broker has indicated that it has no authority to vote on the Proposal on
behalf of the beneficial owner (a "broker non-vote") will be treated as present
for purposes of achieving a quorum but will not be counted in determining the
votes cast on the Proposal.
A proxy granted by any Chase Vista U.S. Government Securities Fund
Shareholder may be revoked by such Chase Vista U.S. Government Securities Fund
Shareholder at any time prior to its use by written notice to MFG, by submission
of a later dated Proxy or by voting in person at the Meeting. If any other
matters come before the Meeting, Proxies will be voted by the persons named as
proxies in accordance with their best judgment.
EXPENSES OF PROXY SOLICITATION
Chase, and not Chase Vista U.S. Government Securities Fund or Chase Vista
U.S. Treasury Income Fund (or shareholders of either fund), will bear the cost
of solicitation of proxies, including the cost of printing, preparing,
assembling and mailing the Notice of Meeting, Combined Prospectus/Proxy
Statement and form of proxy. In addition to solicitations by mail, proxies may
also be solicited by officers and regular employees of MFG by personal
interview, by telephone or by telegraph without additional remuneration thereof.
Professional solicitors may also be retained.
SHAREHOLDER APPROVALS
Approval of the Reorganization Plan (and the transactions contemplated
thereby) requires the affirmative vote of the lesser of (i) 67% or more of the
Chase Vista U.S. Government Securities Fund Shares present at the Meeting and
(ii) more than 50% of all outstanding Chase Vista U.S. Government Securities
Fund Shares. In tallying Chase Vista U.S. Government Securities Fund Shareholder
votes, abstentions and broker non-votes (i.e., proxies sent in by brokers and
other nominees that cannot be voted on a proposal because instructions have not
been received from the beneficial owners) will be counted for purposes of
determining whether or not a quorum is present for purposes of convening the
Meeting. Abstentions and broker non-votes will be considered to be a vote
against each proposal.
INTERESTED PARTIES
On the Record Date, the Trustees and officers of Chase Vista U.S. Government
Securities Fund as a group owned less than 1% of the outstanding shares of Chase
Vista U.S. Government Securities Fund. On the Record Date, the name, address and
percentage ownership of the persons who owned of record more than 5% of the
shares of Chase Vista U.S. Government Securities Fund and the percentage of
shares of
24
<PAGE>
Chase Vista U.S. Treasury Income Fund that would be owned by such persons upon
consummation of the Reorganization based upon their holdings at November 10,
2000 are as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF CHASE
VISTA U.S. PERCENTAGE OF CHASE
GOVERNMENT VISTA U.S. TREASURY
AMOUNT OF SECURITIES FUND INCOME FUND SHARES
SHARES SHARES OWNED ON OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
----------------------------------- ---------- ------------------- --------------------
<S> <C> <C> <C>
ALLEGHANY CORP EXEC 530,738.82 10.58% 4.89%
NONQUALIFIED
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
ASCOM HASLER MAILING SYS. 468,640.00 9.34% 4.31%
PEN
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
RBS PLASTICS CO. INC.- 317,404.69 6.33% 2.92%
RET. FND.
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
ADIRONDACK CHAIR PROFIT 310,020.58 6.18% 2.85%
SH. TR
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
ERIE TOOL LKVW HRLY EMP 290,339.93 5.79% 2.67%
TR DTC
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
Stephen Masciate 285,858.00 5.70% 2.63%
Kulite Semiconductor for Products.
Inc.
One Willow Tree Road
Leonia, NJ 07605
OCI PENSION PLAN FOR 268,322.60 5.35% 2.47%
SALARIED EE
Balsa & Co
Mutual Fund Unit 16-HCB-340
P.O. Box 2558
Houston, TX 77252-2558
</TABLE>
25
<PAGE>
At November 10, 2000, the Trustees and officers of MFG as a group owned less
than 1% of the outstanding shares of Chase Vista U.S. Treasury Income Fund. At
November 10, 2000, the name, address and share ownership of the persons who
owned of record more than 5% of the shares of Chase Vista U.S. Treasury Income
Fund and the percentage of shares that would be owned by such person upon
consummation of the Reorganization based upon their holdings at November 10,
2000 were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
AMOUNT FUND SHARES FUND SHARES
OF SHARES OWNED ON OWNED UPON
NAME AND ADDRESS OWNED RECORD DATE CONSUMMATION
----------------------------------- --------- --------------- --------------
<S> <C> <C> <C>
None None None None
</TABLE>
ADDITIONAL INFORMATION ABOUT MFG
Information about Chase Vista U.S. Government Securities Fund and Chase
Vista U.S. Treasury Income Fund is included in the Prospectus dated February 28,
2000, which is incorporated by reference and enclosed herein. Additional
information about Chase Vista U.S. Government Securities Fund and Chase Vista
U.S. Treasury Income Fund is also included in MFG's Statement of Additional
Information dated February 28, 2000, which has been filed with the SEC and which
is incorporated herein by reference. Copies of the Statement of Additional
Information may be obtained without charge by calling 1-800-34-VISTA. MFG is
subject to the requirements of the 1940 Act and, in accordance with such
requirements, files reports and other information with the SEC. These materials
can be inspected and copied at the Public Reference Facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates, and are also available on the SEC's
web site at http://www.sec.gov.
FINANCIAL STATEMENTS AND EXPERTS
The unaudited financial statements and financial highlights and notes
thereto of Chase Vista U.S. Government Securities Fund and Chase Vista U.S.
Treasury Income Fund for the six-month period ended April 30, 2000 and the
audited financial statements and financial highlights and notes thereto of Chase
Vista U.S. Government Securities Fund and Chase Vista U.S. Treasury Income Fund
for the fiscal year ended October 31, 1999, are incorporated by reference herein
and into the Statement of Additional Information related to this Combined
Prospectus/Proxy Statement. The audited financial statements and financial
highlights for Chase Vista U.S. Government Securities Fund and Chase Vista U.S.
Treasury Income Fund have been incorporated herein by reference in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on
their authority as experts in auditing and accounting.
OTHER BUSINESS
The MFG Board knows of no other business to be brought before the Meeting.
However, if any other matters come before the Meeting, it is the intention of
the MFG Board that proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LITIGATION
MFG is not involved in any litigation that would have any material adverse
effect upon either Chase Vista U.S. Government Securities Fund or Chase Vista
U.S. Treasury Income Fund.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to MFG in writing at the address on
the cover page of this Combined Prospectus/Proxy Statement or by telephoning
1-800-34-VISTA.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan") made this 31st day of
October, 2000 by and between Mutual Fund Group (the "Transferor Trust"), a
Massachusetts business trust, on behalf of the Chase Vista U.S. Government
Securities Fund (the "Transferor Portfolio") and Mutual Fund Group (the
"Acquiring Trust") and the Chase Vista U.S. Treasury Income Fund (the "Acquiring
Portfolio").
WHEREAS, the Board of Trustees of each of the Transferor Trust and the
Acquiring Trust has determined that the transfer of all of the assets and
liabilities of the Transferor Portfolio to the Acquiring Portfolio is in the
best interests of the Transferor Portfolio and the Acquiring Portfolio, as well
as the best interests of shareholders of the Transferor Portfolio and the
Acquiring Portfolio, and that the interests of existing shareholders would not
be diluted as a result of this transaction;
WHEREAS, each of the Transferor Trust and the Acquiring Trust intends to
provide for the reorganization of the Transferor Portfolio (the
"Reorganization") through the acquisition by the Acquiring Portfolio of all of
the assets, subject to all of the liabilities, of the Transferor Portfolio in
exchange for shares of beneficial interest, par value $.001 per share, of the
Acquiring Portfolio (the "Acquiring Portfolio Shares"), the liquidation of the
Transferor Portfolio and the distribution to Transferor Portfolio shareholders
of such Acquiring Portfolio Shares, all pursuant to the provisions of
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. TRANSFER OF ASSETS OF THE TRANSFEROR PORTFOLIO IN EXCHANGE FOR THE ACQUIRING
PORTFOLIO SHARES AND LIQUIDATION OF THE TRANSFEROR PORTFOLIO
(a) PLAN OF REORGANIZATION.
(i) The Transferor Trust on behalf of the Transferor Portfolio listed
above, will convey, transfer and deliver to the Acquiring Portfolio all of the
then existing assets of the Transferor Portfolio (consisting, without
limitation, of portfolio securities and instruments, dividend and interest
receivables, cash and other assets). In consideration thereof, the Acquiring
Trust on behalf of the Acquiring Portfolio will (A) assume and pay, to the
extent that they exist on or after the Effective Time of the Reorganization (as
defined in Section 1(b)(i) hereof), all of the obligations and liabilities of
the Transferor Portfolio and (B) issue and deliver to the Transferor Portfolio
full and fractional shares of beneficial interest of the Acquiring Portfolio,
with respect to the Acquiring Portfolio equal to that number of full and
fractional Acquiring Portfolio Shares as determined in Section 1(c) hereof. The
Acquiring Portfolio Shares issued and delivered to the Transferor Portfolio
shall be of the Institutional Class share class, in exchange for Institutional
Class Shares of the Transferor Portfolio, and the Class A share class, in
exchange for Class A Shares of the Transferor Portfolio, with the amounts of
shares of each class to be determined by the parties. Any shares of capital
stock (if any), par value $.001 per share, of the Transferor Portfolio
("Transferor Portfolio Shares") held in the treasury of the Transferor Trust at
the Effective Time of the Reorganization shall thereupon be retired. Such
transactions shall take place on the date provided for in Section 1(b) hereof
(the "Exchange Date"). All computations for the Transferor Portfolio and the
Acquiring Portfolio shall be performed by The Chase Manhattan Bank (the
"Custodian"), as custodian and pricing agent for the Transferor Portfolio and
the Acquiring Portfolio. The determination of said Custodian shall be conclusive
and binding on all parties in interest.
(ii) As of the Effective Time of the Reorganization, the Transferor Trust
will liquidate and distribute pro rata to its shareholders of record
("Transferor Portfolio Shareholders") as of the Effective Time of the
Reorganization the Acquiring Portfolio Shares received by such Transferor
Portfolio pursuant to Section 1(a)(i) in actual or constructive exchange for the
shares of the Transferor Portfolio held by the Transferor Portfolio
shareholders. Such liquidation and distribution will be accomplished by the
transfer of the Acquiring Portfolio Shares then credited to the account of each
Transferor Portfolio on the books of the Acquiring Portfolio, to open accounts
on the share records of the Acquiring Portfolio in the names of the Transferor
Portfolio shareholders and representing the respective pro rata number of the
Acquiring Portfolio Shares due such shareholders. The Acquiring Portfolio will
not issue certificates representing the Acquiring Portfolio Shares in connection
with such exchange.
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(iii) As soon as practicable after the Effective Time of the
Reorganization, the Transferor Trust shall take all the necessary steps under
Massachusetts law, the Transferor Trust's Declaration of Trust and any other
applicable law to effect a complete dissolution of the Transferor Portfolio.
(b) EXCHANGE DATE AND EFFECTIVE TIME OF THE REORGANIZATION.
(i) Subject to the satisfaction of the conditions to the Reorganization
specified in this Plan, the Reorganization shall occur as of the close of
regularly scheduled trading on the New York Stock Exchange (the "Effective Time
of the Reorganization") on February 19, 2001, or such later date as may be
agreed upon by the parties (the "Exchange Date").
(ii) All acts taking place on the Exchange Date shall be deemed to take
place simultaneously as of the Effective Time of the Reorganization unless
otherwise provided.
(iii) In the event that on the proposed Exchange Date (A) the New York
Stock Exchange shall be closed to trading or trading thereon shall be
restricted, or (B) trading or the reporting of trading on said Exchange or
elsewhere shall be disrupted so that accurate valuation of the net assets of the
Acquiring Portfolio or the Transferor Portfolio is impracticable, the Exchange
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
(iv) On the Exchange Date, portfolio securities of the Transferor
Portfolio shall be transferred by the Custodian to the accounts of the Acquiring
Portfolio duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof.
(c) VALUATION.
(i) The net asset value of the shares of the Acquiring Portfolio and the
net value of the assets of the Transferor Portfolio to be transferred in
exchange therefore shall be determined as of the Effective Time of the
Reorganization. The net asset value of the Acquiring Portfolio Shares shall be
computed by the Custodian in the manner set forth in the Acquiring Trust's
Declaration of Trust or By-laws and then current prospectus and statement of
additional information and shall be computed to not less than two decimal
places. The net value of the assets of the Transferor Portfolio to be
transferred shall be computed by the Custodian by calculating the value of the
assets transferred by the Transferor Portfolio and by subtracting therefrom the
amount of the liabilities assigned and transferred to the Acquiring Portfolio,
said assets and liabilities to be valued in the manner set forth in the
Transferor Trust's Declaration of Trust or By-laws and then current prospectus
and statement of additional information.
(ii) The number of Institutional Class shares of the Acquiring Portfolio
Shares to be issued (including fractional shares, if any) by the Acquiring
Portfolio in exchange for the Transferor Portfolio's assets attributable to the
Transferor Portfolio's Institutional Class shares shall be determined by an
exchange ratio computed by dividing the net value of the Transferor Portfolio's
assets attributable to Institutional Class shares by the net asset value per
share of the Institutional Class shares of the Acquiring Portfolio, both as
determined in accordance with Section 1(c)(i). The number of Class A shares of
the Acquiring Portfolio Shares to be issued (including fractional shares, if
any) by the Acquiring Portfolio in exchange for the Transferor Portfolio's
assets attributable to the Transferor Portfolio's Class A shares shall be
determined by an exchange ratio computed by dividing the net value of the
Transferor Portfolio's assets attributable to Class A shares by the net asset
value per share of the Class A shares of the Acquiring Portfolio, both as
determined in accordance with Section 1(c)(i).
(iii) All computations of value shall be made by the Custodian in
accordance with its regular practice as pricing agent for the Acquiring
Portfolio and the Transferor Portfolio.
2. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING TRUST
The Acquiring Portfolio represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Acquiring Trust is a business trust
that is duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts and has the power to carry on its business as
it is now being conducted. The Acquiring Portfolio is a validly existing series
of shares of such business trust representing interests therein under the laws
of Massachusetts. Each of the
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Acquiring Portfolio and the Acquiring Trust have all necessary federal, state
and local authorization to own all of its properties and assets and to carry on
its business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Acquiring Trust is registered
under the Investment Company Act of 1940, as amended (the "Act") as an open-end
investment company of the management type; such registration has not been
revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of
additional information of the Acquiring Trust, as amended, included in the
Acquiring Trust's registration statement on Form N-1A filed with the Securities
and Exchange Commission, comply in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the Act and
do not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Acquiring Trust has an unlimited number of
authorized shares of beneficial interest, par value $.001 per share, of which as
of August 31, 2000 there were outstanding 5,344,888 Class A shares and 1,432,856
Class B Shares of the Acquiring Portfolio, and no shares of such Portfolio were
held in the treasury of the Acquiring Trust. All of the outstanding shares of
the Acquiring Trust have been duly authorized and are validly issued, fully paid
and nonassessable (except as disclosed in the Acquiring Trust's prospectus and
recognizing that under Massachusetts law, shareholders of an Acquiring Trust
portfolio could, under certain circumstances, be held personally liable for the
obligations of such Acquiring Trust portfolio). Because the Acquiring Trust is
an open-end investment company engaged in the continuous offering and redemption
of its shares, the number of outstanding shares may change prior to the
Effective Time of the Reorganization. All of the issued and outstanding shares
of the Acquiring Portfolio have been offered and sold in compliance in all
material respects with applicable registration requirements of the Securities
Act and applicable state securities laws.
(e) FINANCIAL STATEMENTS. The financial statements of the Acquiring Trust
with respect to the Acquiring Portfolio for the fiscal year ended October 31,
1999, which have been audited by PricewaterhouseCoopers LLP, the financial
statements of the Acquiring Trust with respect to the Acquiring Portfolio for
the fiscal year ended October 31, 2000, when such statements are available, and
the unaudited financial statements of the Acquiring Trust with respect to the
Acquiring Portfolio for the six months ended April 30, 2000 fairly present the
financial position of the Acquiring Portfolio as of the dates thereof and the
respective results of operations and changes in net assets for each of the
periods indicated in accordance with generally accepted accounting principles
("GAAP").
(f) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Portfolio Shares
to be issued in connection with the Reorganization will be duly authorized and
upon consummation of the Reorganization will be validly issued, fully paid and
nonassessable (except as disclosed in the Trust's prospectus and recognizing
that under Massachusetts law, shareholders of an Acquiring Trust portfolio
could, under certain circumstances, be held personally liable for the
obligations of such portfolio).
(g) AUTHORITY RELATIVE TO THIS PLAN. The Acquiring Trust, on behalf of the
Acquiring Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Acquiring Trust's Board of Trustees and no other proceedings by the
Acquiring Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Acquiring Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(h) LIABILITIES. There are no liabilities of the Acquiring Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Acquiring Trust's
financial statements with respect to the Acquiring Portfolio and liabilities
incurred in the ordinary course of business subsequent to April 30, 2000 or
otherwise previously disclosed to the Acquiring Trust with respect to the
Acquiring Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Acquiring Portfolio.
(i) NO MATERIAL ADVERSE CHANGE. Since October 31, 1999, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Acquiring Portfolio, other
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than those occurring in the ordinary course of business (for these purposes, a
decline in net asset value and a decline in net assets due to redemptions do not
constitute a material adverse change).
(j) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Acquiring Trust, threatened which would adversely
affect the Acquiring Trust or the Acquiring Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Acquiring Trust or the Acquiring
Portfolio and, to the knowledge of the Acquiring Trust, there are no regulatory
investigations of the Acquiring Trust or the Acquiring Portfolio, pending or
threatened, other than routine inspections and audits.
(k) CONTRACTS. No default exists under any material contract or other
commitment to which the Acquiring Trust, on behalf of the Acquiring Portfolio,
is subject.
(l) TAXES. The federal income tax returns of the Acquiring Trust with
respect to the Acquiring Portfolio, and all other income tax returns required to
be filed by the Acquiring Trust with respect to the Acquiring Portfolio, have
been filed for all taxable years to and including October 31, 1999, and all
taxes payable pursuant to such returns have been paid. To the knowledge of the
Acquiring Trust, no such return is under audit and no assessment has been
asserted in respect of any such return. All federal and other taxes owed by the
Acquiring Trust with respect to the Acquiring Portfolio have been paid so far as
due.
(m) NO APPROVALS REQUIRED. Except for the Registration Statement (as defined
in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders (referred to in Section 6(a) hereof), no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the consummation by the Acquiring Trust of the Reorganization,
except such as have been obtained as of the date hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR TRUST
The Transferor Trust represents and warrants as follows:
(a) ORGANIZATION, EXISTENCE, ETC. The Transferor Trust is a business trust
that is duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts and has the power to carry on its business as
it is now being conducted. The Transferor Portfolio is a validly existing series
of shares of such business trust representing interests therein under the laws
of Massachusetts. Each of Transferor Portfolio and the Transferor Trust has all
necessary federal, state and local authorization to own all of its properties
and assets and to carry on its business as now being conducted.
(b) REGISTRATION AS INVESTMENT COMPANY. The Transferor Trust is registered
under the Act as an open-end investment company of the management type; such
registration has not been revoked or rescinded and is in full force and effect.
(c) CURRENT OFFERING DOCUMENTS. The current prospectus and statement of
additional information of the Transferor Trust, as amended, included in the
Transferor Trust's registration statement on Form N-1A filed with the
Commission, comply in all material respects with the requirements of the
Securities Act and the Act and do not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) CAPITALIZATION. The Transferor Trust has an unlimited number of
authorized shares of beneficial interest, par value $.001 per share, of which as
of August 31, 2000 there were outstanding 298,668 Class A shares and 4,555,561
Institutional Class shares of the Transferor Portfolio, and no shares of such
Portfolio were held in the treasury of the Transferor Trust. All of the
outstanding shares of the Transferor Trust have been duly authorized and are
validly issued, fully paid and nonassessable (except as disclosed in the
Transferor Trust's prospectus and recognizing that under Massachusetts law,
shareholders of a Trust portfolio could, under certain circumstances, be held
personally liable for the obligations of such Trust portfolio). Because the
Transferor Trust is an open-end investment company engaged in the continuous
offering and redemption of its shares, the number of outstanding shares may
change prior to the Effective Time of the Reorganization. All such shares will,
at the Exchange Date, be held by the shareholders of record of the Transferor
Portfolio as set forth on the books and records of the Transferor Trust in the
amounts set forth therein, and as set forth in any list of shareholders of
record provided to the Acquiring Portfolio for purposes of the Reorganization,
and no such shareholders of record will have any preemptive rights to purchase
any Transferor Portfolio shares, and the Transferor Portfolio does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any Transferor Portfolio shares (other than any existing
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dividend reinvestment plans of the Transferor Portfolio or as set forth in this
Plan), nor are there outstanding any securities convertible into any shares of
the Transferor Portfolio (except pursuant to any existing exchange privileges
described in the current prospectus and statement of additional information of
the Transferor Trust). All of the Transferor Portfolio's issued and outstanding
shares have been offered and sold in compliance in all material respects with
applicable registration requirements of the Securities Act and applicable state
securities laws.
(e) FINANCIAL STATEMENTS. The financial statements for the Transferor Trust
with respect to the Transferor Portfolio for the fiscal year ended October 31,
1999, which have been audited by PricewaterhouseCoopers LLP, the financial
statements for the Transferor Trust with respect to the Transferor Portfolio for
the fiscal year ended October 31, 2000, when such statements are available, and
the unaudited financial statements for the Trust with respect to the Transferor
Portfolio for the six months ended April 30, 2000 fairly present the financial
position of the Transferor Portfolio as of the dates thereof and the respective
results of operations and changes in net assets for each of the periods
indicated in accordance with GAAP.
(f) AUTHORITY RELATIVE TO THIS PLAN. The Transferor Trust, on behalf of the
Transferor Portfolio, has the power to enter into this Plan and to carry out its
obligations hereunder. The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been duly authorized
by the Transferor Trust's Board of Trustees and no other proceedings by the
Transferor Trust other than those contemplated under this Plan are necessary to
authorize its officers to effectuate this Plan and the transactions contemplated
hereby. The Transferor Trust is not a party to or obligated under any provision
of its Declaration of Trust or By-laws, or under any indenture or contract
provision or any other commitment or obligation, or subject to any order or
decree, which would be violated by or which would prevent its execution and
performance of this Plan in accordance with its terms.
(g) LIABILITIES. There are no liabilities of the Transferor Portfolio,
whether actual or contingent and whether or not determined or determinable,
other than liabilities disclosed or provided for in the Transferor Trust's
Financial Statements with respect to the Transferor Portfolio and liabilities
incurred in the ordinary course of business subsequent to April 30, 2000 or
otherwise previously disclosed to the Transferor Trust with respect to the
Transferor Portfolio, none of which has been materially adverse to the business,
assets or results of operations of the Transferor Portfolio.
(h) NO MATERIAL ADVERSE CHANGE. Since October 31, 1999, there has been no
material adverse change in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio, other than those
occurring in the ordinary course of business (for these purposes, a decline in
net asset value and a decline in net assets due to redemptions do not constitute
a material adverse change).
(i) LITIGATION. There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Transferor Trust, threatened which would adversely
affect the Transferor Trust or the Transferor Portfolio's assets or business or
which would prevent or hinder consummation of the transactions contemplated
hereby, there are no facts which would form the basis for the institution of
administrative proceedings against the Transferor Trust or the Transferor
Portfolio and, to the knowledge of the Transferor Trust, there are no regulatory
investigations of the Transferor Trust or the Transferor Portfolio, pending or
threatened, other than routine inspections and audits.
(j) CONTRACTS. The Transferor Trust, on behalf of the Transferor Portfolio,
is not subject to any contracts or other commitments (other than this Plan)
which will not be terminated with respect to the Transferor Portfolio without
liability to the Transferor Trust or the Transferor Portfolio as of or prior to
the Effective Time of the Reorganization.
(k) TAXES. The federal income tax returns of the Transferor Trust with
respect to the Transferor Portfolio, and all other income tax returns required
to be filed by the Transferor Trust with respect to each Transferor Portfolio,
have been filed for all taxable years to and including October 31, 1999, and all
taxes payable pursuant to such returns have been paid. To the knowledge of the
Transferor Trust, no such return is under audit and no assessment has been
asserted in respect of any such return. All federal and other taxes owed by the
Transferor Trust with respect to the Transferor Portfolio have been paid so far
as due.
(l) NO APPROVALS REQUIRED. Except for the Registration Statement (as
defined in Section 4(a) hereof) and the approval of the Transferor Portfolio's
shareholders referred to in Section 6(a) hereof, no consents, approvals,
authorizations, registrations or exemptions under federal or state laws are
necessary for the
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consummation by the Transferor Trust of the Reorganization, except such as have
been obtained as of the date hereof.
4. COVENANTS OF THE ACQUIRING TRUST
The Acquiring Trust covenants to the following:
(a) REGISTRATION STATEMENT. On behalf of the Acquiring Portfolio, the
Acquiring Trust shall file with the Commission a Registration Statement on Form
N-14 (the "Registration Statement") under the Securities Act relating to the
Acquiring Portfolio Shares issuable hereunder and the proxy statement of the
Transferor Portfolio relating to the meeting of the Transferor Portfolio's
shareholders referred to in Section 5(a) herein. At the time the Registration
Statement becomes effective, the Registration Statement (i) will comply in all
material respects with the provisions of the Securities Act and the rules and
regulations of the Commission thereunder (the "Regulations") and (ii) will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at the time the Registration Statement becomes effective, at the
time of the Transferor Portfolio shareholders' meeting referred to in
Section 5(a) hereof, and at the Effective Time of the Reorganization, the
prospectus/proxy statement (the "Prospectus") and statement of additional
information (the "Statement of Additional Information") included therein, as
amended or supplemented by any amendments or supplements filed by the Trust,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) COOPERATION IN EFFECTING REORGANIZATION. The Acquiring Trust agrees to
use all reasonable efforts to effectuate the Reorganization, to continue in
operation thereafter, and to obtain any necessary regulatory approvals for the
Reorganization. The Acquiring Trust shall furnish such data and information
relating to the Acquiring Trust as shall be reasonably requested for inclusion
in the information to be furnished to the Transferor Portfolio shareholders in
connection with the meeting of the Transferor Portfolio's shareholders for the
purpose of acting upon this Plan and the transactions contemplated herein.
(c) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Acquiring Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
5. COVENANTS OF THE TRANSFEROR TRUST
The Transferor Trust covenants to the following:
(a) MEETING OF THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Trust shall call and hold a meeting of the shareholders of the Transferor
Portfolio for the purpose of acting upon this Plan and the transactions
contemplated herein.
(b) PORTFOLIO SECURITIES. With respect to the assets to be transferred in
accordance with Section 1(a), the Transferor Portfolio's assets shall consist of
all property and assets of any nature whatsoever, including, without limitation,
all cash, cash equivalents, securities, claims and receivables (including
dividend and interest receivables) owned, and any deferred or prepaid expenses
shown as an asset on the Trust's books. At least five (5) business days prior to
the Exchange Date, the Transferor Portfolio will provide the Trust, for the
benefit of the Acquiring Portfolio, with a list of its assets and a list of its
stated liabilities. The Transferor Portfolio shall have the right to sell any of
the securities or other assets shown on the list of assets prior to the Exchange
Date but will not, without the prior approval of the Trust, on behalf of the
Acquiring Portfolio, acquire any additional securities other than securities
which the Acquiring Portfolio is permitted to purchase, pursuant to its
investment objective and policies or otherwise (taking into consideration its
own portfolio composition as of such date). In the event that the Transferor
Portfolio holds any investments that the Acquiring Portfolio would not be
permitted to hold, the Transferor Portfolio will dispose of such securities
prior to the Exchange Date to the extent practicable, to the extent permitted by
its investment objective and policies and to the extent that its shareholders
would not be materially affected in an adverse manner by such a disposition. In
addition, the Trust will prepare and deliver immediately prior to the Effective
Time of the Reorganization, a Statement of Assets and Liabilities of the
Transferor Portfolio, prepared in accordance with GAAP (each, a "Schedule"). All
securities to be listed in the Schedule for the Transferor Portfolio as of the
Effective Time of the Reorganization will be owned by the Transferor Portfolio
free and clear of any liens, claims, charges, options and encumbrances, except
as indicated in such Schedule, and, except as so indicated, none of such
securities is or, after the Reorganization as contemplated hereby, will be
subject to
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any restrictions, legal or contractual, on the disposition thereof (including
restrictions as to the public offering or sale thereof under the Securities Act)
and, except as so indicated, all such securities are or will be readily
marketable.
(c) REGISTRATION STATEMENT. In connection with the preparation of the
Registration Statement, the Transferor Trust will cooperate with the Acquiring
Trust and will furnish to the Acquiring Trust the information relating to the
Transferor Portfolio required by the Securities Act and the Regulations to be
set forth in the Registration Statement (including the Prospectus and Statement
of Additional Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to the Transferor
Portfolio, (i) will comply in all material respects with the provisions of the
Securities Act and the Regulations and (ii) will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at the
time the Registration Statement becomes effective, at the time of the Transferor
Portfolio's shareholders' meeting referred to in Section 5(a) and at the
Effective Time of the Reorganization, the Prospectus and Statement of Additional
Information, as amended or supplemented by any amendments or supplements filed
by the Transferor Trust, insofar as they relate to the Transferor Portfolio,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall apply only to
statements in or omissions from the Registration Statement, Prospectus or
Statement of Additional Information made in reliance upon and in conformity with
information furnished by the Transferor Portfolio for use in the registration
statement, prospectus or statement of additional information as provided in this
Section 5(c).
(d) COOPERATION IN EFFECTING REORGANIZATION. The Transferor Trust agrees to
use all reasonable efforts to effectuate the Reorganization and to obtain any
necessary regulatory approvals for the Reorganization.
(e) OPERATIONS IN THE ORDINARY COURSE. Except as otherwise contemplated by
this Plan, the Transferor Trust shall conduct the business of the Transferor
Portfolio in the ordinary course until the consummation of the Reorganization,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions.
(f) STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within 60 days after the Exchange Date, the Transferor Trust on behalf
of the Transferor Portfolio, shall prepare a statement of the earnings and
profits of the Transferor Portfolio for federal income tax purposes, and of any
capital loss carryovers and other items that the Acquiring Portfolio will
succeed to and take into account as a result of Section 381 of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFEROR TRUST
The obligations of the Transferor Portfolio with respect to the consummation of
the Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. This Plan and the
transactions contemplated by the Reorganization shall have been approved by the
requisite vote of the shares of the Transferor Portfolio entitled to vote on the
matter ("Transferor Shareholder Approval").
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Acquiring Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 2(i)) in the financial condition, results of operations,
business, properties or assets of each of the Acquiring Portfolio since
October 31, 1999.
(c) REGULATORY APPROVAL. The Registration Statement shall have been
declared effective by the Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued, and all other approvals,
registrations, and exemptions under federal and state laws considered to be
necessary shall have been obtained (collectively, the "Regulatory Approvals").
(d) TAX OPINION. The Transferor Trust shall have received the opinion of
Simpson Thacher & Bartlett, dated on or before the Exchange Date, addressed to
and in form and substance satisfactory to the Transferor Trust, as to certain of
the federal income tax consequences under the Code of the Reorganization,
insofar as it relates to the Transferor Portfolio and the Acquiring Portfolio,
and to shareholders of each Transferor Portfolio (the "Tax Opinion"). For
purposes of rendering the Tax Opinion, Simpson Thacher & Bartlett may
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rely exclusively and without independent verification, as to factual matters,
upon the statements made in this Plan, the Prospectus and Statement of
Additional Information, and upon such other written representations as the
President or Treasurer of the Transferor Trust will have verified as of the
Effective Time of the Reorganization. The Tax Opinion will be to the effect
that, based on the facts and assumptions stated therein, for federal income tax
purposes: (i) the Reorganization will constitute a reorganization within the
meaning of section 368(a)(1) of the Code with respect to the Transferor
Portfolio and the Acquiring Portfolio; (ii) no gain or loss will be recognized
by any of the Transferor Portfolio or the Acquiring Portfolio upon the transfer
of all the assets and liabilities, if any, of the Transferor Portfolio to the
Acquiring Portfolio solely in exchange for shares of the Acquiring Portfolio or
upon the distribution of the shares of the Acquiring Portfolio to the holders of
the shares of the Transferor Portfolio solely in exchange for all of the shares
of the Transferor Portfolio; (iii) no gain or loss will be recognized by
shareholders of the Transferor Portfolio upon the exchange of shares of such
Transferor Portfolio solely for shares of the Acquiring Portfolio; (iv) the
holding period and tax basis of the shares of the Acquiring Portfolio received
by each holder of shares of the Transferor Portfolio pursuant to the
Reorganization will be the same as the holding period and tax basis of shares of
the Transferor Portfolio held by the shareholder (provided the shares of the
Transferor Portfolio were held as a capital asset on the date of the
Reorganization) immediately prior to the Reorganization; and (v) the holding
period and tax basis of the assets of the Transferor Portfolio acquired by the
Acquiring Portfolio will be the same as the holding period and tax basis of
those assets to the Transferor Portfolio immediately prior to the
Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING TRUST
The obligations of the Acquiring Trust with respect to the consummation of the
Reorganization are subject to the satisfaction of the following conditions:
(a) APPROVAL BY THE TRANSFEROR PORTFOLIO'S SHAREHOLDERS. The Transferor
Shareholder Approval shall have been obtained.
(b) COVENANTS, WARRANTIES AND REPRESENTATIONS. The Transferor Trust shall
have complied with each of its covenants contained herein, each of the
representations and warranties contained herein shall be true in all material
respects as of the Effective Time of the Reorganization (except as otherwise
contemplated herein), and there shall have been no material adverse change (as
described in Section 3(h)) in the financial condition, results of operations,
business, properties or assets of the Transferor Portfolio since October 31,
1999.
(c) PORTFOLIO SECURITIES. All securities to be acquired by the Acquiring
Portfolio in the Reorganization shall have been approved for acquisition by The
Chase Manhattan Bank, in its capacity as investment adviser to the Acquiring
Portfolio, as consistent with the investment policies of the Acquiring
Portfolio.
(d) REGULATORY APPROVAL. The Regulatory Approvals shall have been obtained.
(e) DISTRIBUTION OF INCOME AND GAINS. The Transferor Trust on behalf of the
Transferor Portfolio shall have distributed to the shareholders of the
Transferor Portfolio all of the Transferor Portfolio's investment company
taxable income (without regard to the deductions for dividends paid) as defined
in Section 852(b)(2) of the Code for its taxable year ending on the Exchange
Date and all of its net capital gain as such term is used in
Section 852(b)(3) of the Code, after reduction by any capital loss carry
forward, for its taxable year ending on the Exchange Date.
(f) TAX OPINION. The Acquiring Trust shall have received the Tax Opinion.
8. AMENDMENTS; TERMINATIONS; NO SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS
(a) AMENDMENTS. The parties hereto may, by agreement in writing authorized
by the Board of Trustees amend this Plan at any time before or after approval
hereof by the shareholders of the Transferor Portfolio, but after such approval,
no amendment shall be made which substantially changes the terms hereof.
(b) WAIVERS. At any time prior to the Effective Time of the Reorganization,
either the Transferor Trust or the Acquiring Trust may by written instrument
signed by it (i) waive any inaccuracies in the representations and warranties
made to it contained herein and (ii) waive compliance with any of the covenants
or conditions made for its benefit contained herein, except that conditions set
forth in Sections 6(c) and 7(d) may not be waived.
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(c) TERMINATION BY THE TRANSFEROR TRUST. The Transferor Trust, on behalf of
the Transferor Portfolio, may terminate this Plan with respect to the Transferor
Portfolio at any time prior to the Effective Time of the Reorganization by
notice to the Acquiring Portfolio and The Chase Manhattan Bank if (i) a material
condition to the performance of the Transferor Trust hereunder or a material
covenant of the Acquiring Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Acquiring Trust.
(d) TERMINATION BY THE ACQUIRING TRUST. The Acquiring Trust, on behalf of
the Acquiring Portfolio, may terminate this Plan with respect to the Acquiring
Portfolio at any time prior to the Effective Time of the Reorganization by
notice to the Transferor Trust and The Chase Manhattan Bank if (i) a material
condition to the performance of the Acquiring Trust hereunder or a material
covenant of the Transferor Trust contained herein shall not be fulfilled on or
before the date specified for the fulfillment thereof or (ii) a material default
or material breach of this Plan shall be made by the Transferor Trust.
(e) TERMINATION BY THE TRANSFEROR TRUST. This Plan may be terminated by the
Transferor Trust at any time prior to the Effective Time of the Reorganization,
whether before or after approval of this Plan by the shareholders of the
Transferor Portfolio, without liability on the part of any party hereto, its
Trustees, officers or shareholders or The Chase Manhattan Bank on notice to the
other parties in the event that the Board of Trustees determines that proceeding
with this Plan is not in the best interests of the shareholders of the
Transferor Portfolio.
(g) TERMINATION BY THE ACQUIRING TRUST. This Plan may be terminated by the
Acquiring Trust at any time prior to the Effective Time of the Reorganization,
whether before or after approval of this Plan by the shareholders of the
Transferor Portfolio, without liability on the part of any party hereto, its
Trustees, officers or shareholders or The Chase Manhattan Bank on notice to the
other parties in the event that the Board of Trustees determines that proceeding
with this Plan is not in the best interests of the shareholders of the Acquiring
Portfolio.
(g) SURVIVAL. No representations, warranties or covenants in or pursuant to
this Plan, except for the provisions of Section 5(f) and Section 9 of this Plan,
shall survive the Reorganization.
9. EXPENSES
The expenses of the Reorganization will be borne by The Chase Manhattan
Bank. Such expenses include, without limitation, (i) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Plan; (ii) expenses associated with the preparation and filing of the
Registration Statement; (iii) fees and expenses of preparing and filing such
forms as are necessary under any applicable state securities laws in connection
with the Reorganization; (iv) postage; (v) printing; (vi) accounting fees;
(vii) legal fees; and (viii) solicitation costs relating to the Reorganization.
In addition, Chase will waive fees payable to it or reimburse expenses to the
extent necessary such that the actual (post-waiver) total expense ratios of the
Acquiring Portfolio are not higher than those of the Transferor Portfolio as set
forth in the Registration Statement for a period of one year after the Exchange
Date.
10. NOTICES
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by hand, certified
mail or by facsimile transmission, shall be deemed given when received and shall
be addressed to the parties hereto at their respective addresses listed below or
to such other persons or addresses as the relevant party shall designate as to
itself from time to time in writing delivered in like manner:
if to the Transferor Trust (for itself or on behalf of the Transferor Portfolio)
or the Acquiring Trust (for itself or on behalf of the Acquiring Portfolio):
1211 Avenue of the Americas
41st Floor
New York, New York 10036
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Cynthia G. Cobden, Esq.
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11. RELIANCE
All covenants and agreements made under this Plan shall be deemed to have
been material and relied upon by the Transferor Trust and the Acquiring Trust
notwithstanding any investigation made by such party or on its behalf.
12. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
(a) The section and paragraph headings contained in this Plan are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Plan.
(b) This Plan may be executed in any number of counterparts, each of which
shall be deemed an original.
(c) This Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts.
(d) This Plan shall bind and inure to the benefit of the Transferor Trust, the
Transferor Portfolio, the Acquiring Trust and the Acquiring Portfolio and their
respective successors and assigns, but no assignment or transfer hereof or of
any rights or obligations hereunder shall be made by any party without the
written consent of the other parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Plan.
(e) The name "Mutual Fund Group" is the designation of its Trustees under a
Declaration of Trust dated May 11, 1987, as amended, and all persons dealing
with the Transferor Trust must look solely to the Transferor Trust's property
for the enforcement of any claims against the Transferor Trust, as neither the
Transferor Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Transferor Trust. No
series of the Transferor Trust shall be liable for claims against any other
series of the Transferor Trust.
IN WITNESS WHEREOF, the undersigned have executed this Plan as of the date first
above written.
MUTUAL FUND GROUP
on behalf of Chase Vista U.S.
Government Securities Fund
By:
________________________________________
Name:
Title:
MUTUAL FUND GROUP
on behalf of Chase Vista U.S. Treasury
Income Fund
By:
________________________________________
Name:
Title:
Agreed and acknowledged with respect to Section 9:
THE CHASE MANHATTAN BANK
By: ________________________________________
Name:
Title:
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