SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/x/ Preliminary Proxy Statement /_/ Confidential, For Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MUTUAL FUND GROUP
_____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
_____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
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(5) Total fee paid:
_____________________________________________________________________________
/_/ Fee paid previously with preliminary materials:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the off-setting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
_____________________________________________________________________________
(2) Form, Schedule or Registration Statement no.:
_____________________________________________________________________________
(3) Filing Party:
_____________________________________________________________________________
(4) Date Filed:
_____________________________________________________________________________
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Mutual Fund Group
1211 Avenue of the Americas
41st Floor
New York, New York 10036
Dear Shareholder:
A special meeting of the Strategic Income Fund (the "Fund") of Mutual Fund
Group (the "Trust") will be held to determine important issues affecting your
investment, beginning at 12:00 p.m. on [March ___,] 2000, at 1211 Avenue of
the Americas, 41st Floor, New York, New York. I urge you to return the
enclosed proxy card to register your vote.
The cost and expenses associated with the proposal, including costs of
soliciting proxies, will be borne by Chase and not by the Fund (or
Shareholders of the Fund).
The proposal has been carefully reviewed by the Board of Trustees of Mutual
Fund Group, which has approved the proposal. Please read the enclosed
materials carefully. Your vote is important! Accordingly, please sign, date
and mail the proxy card promptly in the enclosed return envelope.
If you have any questions on voting of proxies and/or the meeting agenda,
please call us at 1-800-289-6554.
Thank you for your attention to these matters and we look forward to our
continued partnership and success.
Fergus M. Reid, III
Chairman, Mutual Fund Group
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 in
the return envelope provided.
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MUTUAL FUND GROUP
1211 Avenue of the Amercias
41st Floor
New York, New York 10036
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held [March ___,] 2000
A Special Meeting of Shareholders (the "Meeting") of Mutual Fund Group
will be held at 1211 Avenue of the Americas, New York, New York at 12:00
p.m., local time on [March ___,] 2000, for the following purposes:
1. To approve a sub-advisory agreement between The Chase
Manhattan Bank ("Chase") and Alliance Capital Management L.P.
("Alliance") with respect to the portion of the Strategic Income Fund
(the "Fund") that is allocated to debt securities of foreign issuers.
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Shareholders of record of Mutual Fund Group at the close of business on
February __, 2000 will be entitled to notice of and to vote at the Meeting or
any adjournment thereof. Each Shareholder is requested to sign, date and
return the enclosed proxy card without delay, even if the Shareholder will be
in attendance at the Meeting. A postage-paid envelope is enclosed for this
purpose. Prompt return of the enclosed proxy by Shareholders may save the
necessity and expense of further solicitation to ensure a quorum at the
Meeting. Any Shareholder present at the Meeting may vote personally on all
matters brought before the Meeting and in that event such Shareholder's proxy
will not be used.
By Order of the Board of Trustees
Lisa Hurley
Secretary
February ___, 2000
______________
YOUR VOTE IS IMPORTANT REGARDLESS OF HOW
MANY SHARES YOU OWNED ON THE RECORD DATE.
______________
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MUTUAL FUND GROUP
1211 Avenue of the Americas
41st Floor
New York, New York 10036
______________
PROXY STATEMENT
______________
INTRODUCTION
This Proxy Statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Trustees of Mutual Fund
Group for use at a Special Meeting of Shareholders to be held on [March ___,]
2000, at 12:00 p.m. local time at 1211 Avenue of the Americas, New York, New
York and any adjournment thereof, for the purposes set forth in the Notice of
Special Meeting of Shareholders. Mutual Fund Group's telephone number is
34-VISTA. This Proxy Statement and the enclosed form of proxy (the "Proxy")
were first mailed to Shareholders entitled to vote at the Meeting on or about
February ___, 2000.
The Meeting has been called for the principal purpose of approving a
sub-advisory agreement between The Chase Manhattan Bank (in such capacity,
the "Adviser") and Alliance Capital Management L.P. ("Alliance") with respect
to the portion of the Strategic Income Fund (the "Fund") that is allocated to
debt securities of foreign issuers. See Proposal 1.
Mutual Fund Group will furnish, without charge, a copy of the Fund's
most recent Annual Report to any Shareholder upon request. Requests should
be directed to the Secretary of Mutual Fund Group in writing at its address
above or by calling 1-800-34-VISTA.
Chase and not the Fund (or the Fund's Shareholders) will bear the cost of
the solicitation of proxies, including the cost of printing, preparing,
assembling and mailing the Notice of Meeting, Proxy Statement and form of
Proxy. In addition to solicitations by mail, proxies may also be solicited
by officers and regular employees of Chase by personal interview, by
telephone or by telegraph without additional remuneration therefor.
Professional solicitors may also be retained.
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SHARES AND VOTING
The presence in person or by proxy of Shareholders that own a majority
of the outstanding shares of the Fund (the "Shares") will constitute a quorum
for purposes of transacting business at the Meeting. If a quorum is not
present at the Meeting, sufficient votes in favor of the proposals set forth
in the Notice of Meeting are not received by the time scheduled for the
Meeting, or the holders of Shares present, in person or by proxy, determine
to adjourn the Meeting for any other reason, the Shareholders present (in
person or by 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 Shareholders holding a majority of the Shares
present, in person or by proxy, at the Meeting. The persons named in the
Proxy will vote in favor of such adjournment those Shares of Mutual Fund
Group which 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 Shares to reduce the number present to less
than a quorum.
Each Shareholder is entitled to one vote for each full Share and a
fractional vote for each fractional Share outstanding on the books of Mutual
Fund Group in the name of such Shareholder or its nominee on the record date.
The record date and time for determining those Shareholders entitled to
notice of and to vote at the Meeting has been fixed at the close of business
on February ___, 2000. At February ___, 2000, the Strategic Income Fund had
outstanding _________ Shares. At February ___, 2000 no person owned of
record and, to the best knowledge of Mutual Fund Group, no person owned
beneficially, as much as 5% of the outstanding Shares of the Fund, and, as a
group, the officers and Trustees of Mutual Fund Group beneficially owned less
than 1% of the outstanding Shares of the Fund.
All Shares represented by each properly signed Proxy received prior to
the Meeting will be voted at the Meeting. If a 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 Shareholder
returns its proxy but no direction is made on the Proxy, the Proxy will be
voted FOR each of the proposals described in this Proxy Statement.
Shareholders voting to ABSTAIN on a 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 a
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.
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As used herein, a "Majority Vote" of the Fund means the affirmative vote
of the lesser of (1) more than 50% of the outstanding shares of the Fund or
(2) 67% or more of the shares of the Fund present at the Meeting or
represented by proxy if more than 50% of the outstanding shares of the Fund
are represented at the Meeting in person or by proxy.
A Proxy may be revoked by a Shareholder at any time prior to its use by
written notice to Mutual Fund Group, 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.
BACKGROUND OF THE PROPOSAL
Mutual Fund Group is a business trust organized under Massachusetts law
and is registered with the Securities and Exchange Commission as an open-end
investment company.
The Chase Manhattan Bank ("Chase") serves as investment adviser for the
Fund pursuant to an investment advisory agreement (the "Advisory Agreement")
with Mutual Fund Group. Chase also serves as administrator for the Fund.
Chase's address is 270 Park Avenue, New York, New York 10017. Chase Asset
Management, Inc. ("CAM") currently serves as sub-investment adviser to the
Fund except that State Street Research & Management Company ("SSR") serves as
sub-investment adviser with respect to that portion of the Fund that is
allocated to lower-rated high yield securities of U.S. issuers (including
convertible securities and preferred stock). CAM's address is 1211 Avenue of
the Americas, New York, New York 10036. SSR's address is One Financial
Center, Boston, Massachusetts 02111. Vista Fund Distributors, Inc. ("VFD")
serves as distributor of the Fund's shares. VFD's address is 1211 Avenue of
the Americas, 41st Floor, New York, New York 10036.
APPROVAL OF SUB-ADVISORY AGREEMENT
At a telephonic meeting held January 28, 2000, a majority of the Board
of Trustees of Mutual Fund Group, including a majority of those Trustees who
are not "interested persons" (as that term is defined in the Investment
Company Act of 1940, as amended) of the Fund, Chase or Alliance, voted to
approve a sub-advisory agreement with Alliance (the "Alliance Sub-Advisory
Agreement") with respect to the portion of the Fund that is allocated to debt
securities of foreign issuers. Shareholders of the Strategic Income Fund are
now being asked to approve the Alliance Sub-Advisory Agreement.
Alliance is a leading global investment adviser supervising client
accounts with assets as of September 30, 1999 totaling $317.3 billion.
Alliance has eight offices in the United States. Subsidiaries of Alliance
operate out of offices in Bahrain, Bangalore, Calcutta, Chennai, Istanbul,
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Johannesburg, London, Luxembourg, Madrid, Mumbai, New Delhi, Paris, Pune,
Singapore, Sydney, Tokyo and Toronto, and affiliate offices are located in
Cairo, Hong Kong, Moscow, Sao Paulo, Seoul, Vienna and Warsaw. Alliance and
its subsidiaries employ over 2,000 persons worldwide.
Alliance's clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies, foundations and
endowment funds. There are 52 U.S.-registered investment companies managed
by Alliance, comprising 118 separate investment portfolios. There are also
105 non-U.S. investment companies, comprising 127 separate investment
portfolios, managed by Alliance and its affiliates. These investment
portfolios currently have over 4.5 million shareholder accounts, in
aggregate. As of September 30, 1999, Alliance was retained as an investment
manager of employee benefit fund assets for 28 of the Fortune 100 companies.
Alliance Capital Management Corporation ("ACMC") is the general partner
of Alliance and a wholly owned subsidiary of The Equitable Life Assurance
Society of the United States ("Equitable"). As of November 1, 1999,
Equitable and its subsidiaries were the beneficial owners of an
approximately 55.38% partnership interest in Alliance, and Alliance Capital
Management Holding L.P. ("Alliance Holding") owned an approximately 41.87%
partnership interest in Alliance. Equity interests in Alliance Holding are
traded on the New York Stock Exchange in the form of units. Approximately
98% of Alliance Holding's units are owned by the public and management or
employees of Alliance and approximately 2% are owned by Equitable. The
general partner of Alliance Holding is ACMC. Equitable, a New York life
insurance company, had total assets as at June 30, 1999 of approximately
US$93.9 billion and is a wholly owned subsidiary of AXA Financial, Inc. ("AXA
Financial"), a Delaware corporation whose shares are traded on the New York
Stock Exchange. As of June 30, 1999, AXA, a French insurance holding
company, owned approximately 58.2% of the issued and outstanding shares of
the common stock of AXA Financial.
For information on the principal executive officers and directors of
Alliance, see Exhibit A hereto.
Sub-Advisory Agreement
The following description of the Sub-Advisory Agreement is qualified in
its entirety by reference to the form of the Sub-Advisory Agreement attached
hereto as Exhibit B.
The Alliance Sub-Advisory Agreement is substantially similar to the
existing sub-advisory agreements with CAM and SSR.
The proposed investment advisory arrangement between Chase and Alliance
under the Alliance Sub-advisory Agreement permits Chase to delegate to
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Alliance portfolio management duties relating to transactions in the debt
securities of foreign issuers held by the Fund. With respect to the
day-to-day management of the portion of the Fund that is allocated to debt
securities of foreign issuers under the Sub-Advisory Agreement, Alliance
would make decisions concerning, and place all orders for, purchases and
sales of securities and help maintain the records relating to such purchases
and sales. Alliance may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that
are qualified to act as an investment adviser to the Fund under applicable
laws and are under the common control of ACMC; provided that (i) all persons,
when providing services under the Sub-Advisory 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 Alliance.
Chase and Alliance would bear all expenses in connection with the
performance of their respective services under the Alliance Sub-advisory
Agreement.
As investment adviser, Chase would oversee the management of the Fund
under the Alliance Sub-Advisory Agreement, and, subject to the general
supervision of the Board of Trustees, would make recommendations and provide
guidelines to Alliance based on general economic trends and macroeconomic
factors. Among the recommendations which may be provided by Chase to
Alliance would be guidelines and benchmarks against which the Fund would be
managed. From the fee paid by the Fund under the Advisory Agreement to
Chase, Chase will bear responsibility for payment of sub-advisory fees to
Alliance. Therefore, the Fund would not bear any increase in advisory fee
rates resulting from the Alliance Sub-advisory Agreement. The Alliance
Sub-Advisory Agreement provides that Alliance is entitled to receive from
Chase, out of its advisory fee, a monthly management fee as disclosed below
under "Subadvisory Fee".
The Board of Trustees of Mutual Fund Group, including a majority of the
Trustees who are not interested persons of the Fund, Chase or Alliance
unanimously approved the Alliance Sub-Advisory Agreement at a telephonic
meeting held on January 28, 2000. The Investment Company Act of 1940, as
amended (the "1940 Act") requires that any advisory agreement for a fund must
be approved by the fund's board at an in-person meeting. Therefore, the
Board of Trustees will meet in person on February 22, 2000, at which time it
is expected that the Board will approve the Alliance Sub-Advisory Agreement
in accordance with the 1940 Act. If approved by shareholders (and by the
Board at the February 22 in-person meeting), unless sooner terminated, the
Alliance Sub-Advisory Agreement will remain in effect for two years and will
thereafter continue for successive one-year periods, provided that such
continuation is specifically approved at least annually by the Board of
Trustees of Mutual Fund Group, or by a Majority Vote of the outstanding
voting securities of the Fund and, in either case, by a majority of the
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Trustees who are not interested persons of the Fund, Chase or Alliance, by
vote cast in person at a meeting called for such purposes. The Alliance
Sub-Advisory Agreement is terminable at any time, without penalty, by vote of
the Board of Trustees of Mutual Fund Group, by Chase by the Majority Vote of
the outstanding voting securities of the Fund, or by Alliance, upon 60 days'
written notice. The Alliance Sub-Advisory Agreement will terminate
automatically in the event of its assignment, as defined under the 1940 Act.
Subadvisory Fee
As compensation for its services, Alliance will receive a fee from
Chase. The fee is stated as an annual percentage of the current value of the
net assets of the Strategic Income Fund allocable to debt securities of
foreign issuers. 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 annual advisory fee percentage rate
prescribed for the portion of the assets of the Strategic Income Fund which
are allocable to debt securities of foreign issuers and multiplying this
product by the value of the net assets of the Strategic Income Fund which are
allocable to debt securities of foreign issuers at the close of business on
the previous business day of the Trust.
Chase currently is obligated to pay (i) SSR a management fee at the rate
of 0.35% of average daily net assets of the Fund which are allocated to
lower-rated high yield securities of U.S. issuers and (ii) CAM a management
fee at the rate of 0.15% of the Fund's average daily net assets which are not
invested in such high yield securities.
If the Alliance Sub-Advisory Agreement is approved by the Shareholders,
Chase would continue to pay SSR a management fee at the rate of 0.35% of
average daily net assets of the Fund which are allocated to lower-rated high
yield securities of U.S. issuers. However, under the proposed arrangement,
it would also pay (i) Alliance a monthly management fee at the rate of 0.60%
of the first $10 million of the Fund's average daily net assets which are
allocated to debt securities of foreign issuers, 0.50% of the portion of the
Fund's average daily net assets which are allocated to debt securities of
foreign issuers between $10 million and $20 million, 0.40% of the portion of
the Fund's average daily net assets which are allocated to debt securities of
foreign issuers between $20 million and $30 million, and 0.35% of the portion
of the Fund's average daily net assets which are allocated to debt securities
of foreign issuers in excess of $30 million and (ii) CAM a management fee at
the rate of 0.15% of the Fund's net assets which are not allocated to SSR or
Alliance (i.e., CAM's fee is based on those assets which are not invested in
either high yield securities or foreign debt securities).
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Subadvisory Fees Paid
For the fiscal year ended October 31, 1999, Chase paid $___________ in
sub-advisory fees to CAM and SSR for management of the Strategic Income Fund.
Chase would have paid $________ to CAM, SSR and Alliance if the Alliance
Sub-Advisory Agreement had been effective for such period. However, these
fees are paid by Chase out of the advisory fee it receives for the Fund and
are not additional charges to the Fund. As a result, this would not have
resulted in higher fees being paid by the Fund.
Brokerage Transactions
A description of the brokerage transactions for the Strategic Income
Fund is set forth under "Additional Information--Portfolio Brokerage" in
Appendix C.
Other Investment Companies Advised by Alliance
Alliance manages ____ funds (i) with objectives similar to the Strategic
Income Fund or (ii) which invest primarily in debt securities of foreign
issuers.
Net Assets
Fund Investment Objective Advisory Fee* (as of 12/31/99)
____ ____________________ _____________ ______________
Alliance Global A higher level of .75% $199,017,887
Dollar Government current income and
Fund secondary, capital
appreciation.
* [Discuss any fee waivers on such funds.]
Advisory Agreement
For more information on the advisory agreement between Mutual Fund Group
and Chase, see "Additional Information--Advisory Agreement"in Appendix C.
Shareholder and Board Approval of the Sub-Advisory Agreements
The Sub-Advisory Agreements with CAM and SSR for the Strategic Income
Fund were approved by the Board on October 28, 1998 and by the shareholders
of the Strategic Income Fund on October 29, 1998. Both approvals were
obtained in connection with the formation of the Fund.
The Alliance Sub-Advisory Agreement was approved by the Board, including
a majority of those Trustees who are not interested persons of the Fund,
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Chase or Alliance, at a telephonic meeting on January 28, 2000. It is
expected that the same approval will be obtained at an in-person meeting of
the Board to take place on February 22, 2000. If shareholders do not approve
the Alliance Sub-Advisory Agreement, the Board will take such action as it
deems advisable under the circumstances.
Board Considerations
The Board considered numerous factors in connection with approving the
Alliance Sub-Advisory Agreement, including: (i) the nature and quality of
the services to be provided by Alliance and the fees payable therefor, (ii)
performance information regarding the Strategic Income Fund relative to funds
with similar investment objectives and policies, (iii) performance
information regarding Alliance's management of portfolios with investment
objectives and policies similar to the Strategic Income Fund, particularly
portfolios investing primarily in debt securities of foreign issuers and (iv)
whether the proposed subadvisory fees and resultant expense ratio of the Fund
would be consistent with the fees and expense ratio of other comparable
portfolios. In light of these factors, the Board considered the proposed
subadvisory fee schedule to be fair and reasonable.
In evaluating the Alliance Sub-Advisory Agreement, the Board focused
primarily on the performance of similar funds managed by Alliance. The Board
also focused on the scope and quality of services to be provided by Alliance,
as well as comparative fee and expense data. In addition, the Board took
into account the fact that the Alliance Sub-Advisory Agreement will not
change the overall advisory fee or other expenses paid by the Strategic
Income Fund.
The Board also was provided with an analysis of its fiduciary
obligations. At the telephonic meeting held on January 28, 2000, the Board
reviewed its fiduciary duties and discussed the information provided
regarding Alliance. A representative of Alliance gave a presentation and
responded to questions from the Trustees. There was an extended discussion
of, and questioning about, Alliance's plans for the portion of the Strategic
Income Fund allocated to debt securities of foreign issuers. Throughout the
review process, those Trustees who are not interested persons of the Fund,
Chase or Alliance had the assistance of legal counsel.
Required Vote
Approval of the Alliance Sub-Advisory Agreement will require a Majority
Vote of shareholders of the Strategic Income Fund.
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THE BOARD, INCLUDING THE TRUSTEES WHO ARE NOT INTERESTED PERSONS OF THE FUND,
CHASE OR ALLIANCE, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE STRATEGIC
INCOME FUND VOTE "FOR" THE PROPOSAL.
NEXT MEETING OF SHAREHOLDERS
If a subsequent meeting of Shareholders is scheduled to be held, any
Shareholder wishing to submit a written proposal for consideration for
inclusion in the proxy statement and form of proxy (i) should send its
written proposal or proposals to: Mutual Fund Group, 1211 Avenue of the
Americas, 41st Floor New York, New York 10036, which proposal or proposals
must be received by Mutual Fund Group in reasonable time prior to the
meeting, as determined by the Board of Trustees, and (ii) must satisfy all
other legal requirements.
OTHER MATTERS
At the time of the preparation of this Proxy Statement, management has
not been informed of any matters that will be presented for action at the
Meeting other than the proposals specifically set forth in the Notice of
Meeting. If other matters are properly presented to the Meeting for action,
it is intended that the persons named in the Proxy will vote or refrain from
voting in accordance with their best judgment on such matters.
By Order of the Board of Trustees
Lisa Hurley
Secretary
February ___, 2000 Mutual Fund Group
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A-1
Appendix A
MANAGEMENT OF ALLIANCE
Certain information regarding the directors and the principal executive
officers of Alliance is set forth below. The address of each such person is
1345 Avenue of the Americas, New York, New York 10105.
Position with
Name Alliance Principal Occupation
____ _____________ ____________________
Dave Harrell Williams Chairman of the
Board of ACMC
Luis Javier Bastida Director of ACMC CFO & Member of the
Executive Committee
Banco Bilbao Vizcaya
Benjamin Duke Holloway Director of ACMC
Robert Bruce Zoellick Director of ACMC President & CEO
Center for Strategic &
International Studies
Donald Hood Brydon Director of ACMC Chairman & CEO
AXA Investment Managers S.A.
Henri de la Croix Director of ACMC Senior Executive Vice
President - Financial
Services
Kevin Claude Dolan Director of ACMC Senior Vice President
AXA Investment Managers S.A.
Denis Duverne Director of ACMC Senior Vice President
-International Life
AXA Investment Managers S.A.
Herve Hatt Director of ACMC Senior Vice President
AXA Investment Managers S.A.
Michael Hegarty Director of ACMC Director & COO
The Equitable Life Assurance
Society of the U.S.
Edward Daniel Miller Director of ACMC Director, President & CEO
The Equitable Life Assurance
Society of the U.S.
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Peter Dana Noris Director of ACMC Executive Vice President &
CIO
The Equitable Life Assurance
Society of the U.S.
Stanley Bernard Tulin Director of ACMC Vice Chairman & CFO
The Equitable Life Assurance
Society of the U.S.
Reba White Williams Director of ACMC
Frank Savage (NMN) Director of ACMC
Bruce William Calvert Vice Chairman, CEO
& Director of ACMC
John Carifa Donato President, COO &
Director of ACMC
Alfred Harrison (NMN) Vice Chairman &
Director of ACMC
Kathleen Ann Corbet Executive Vice
President & Chief
of Investment
Operations of ACMC
Robert Henry Joseph, Jr. Sr. Vice President
& CFO of ACMC
David Remson Brewer, Jr. Sr. Vice President
& General Counsel
Mark Randall Manley Compliance Officer
& Assistant
Secretary
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B-1
Appendix B
INVESTMENT SUBADVISORY AGREEMENT
between
THE CHASE MANHATTAN BANK and its Successor
and
ALLIANCE CAPITAL MANAGEMENT, L.P.
AGREEMENT made as of the __nd day of __________________, 2000, by
and between The Chase Manhattan Bank, a New York State chartered bank (the
"Adviser"), and Alliance Capital Management, L.P., a Delaware limited
partnership (the "Sub-Adviser").
WHEREAS, the Adviser provides investment advisory services to the series
of Mutual Fund Group, a Massachusetts business trust (the "Trust"), which is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), pursuant to an Investment
Advisory Agreement dated May 6, 1996 (the "Advisory Agreement"); and
WHEREAS, the Sub-Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services with respect to such portion of the assets of
each series of the Trust listed on Schedule A attached hereto (each, a "Fund"
and collectively, the "Funds") as the Adviser shall allocate (the "Designated
Portion"), and the Sub-Adviser represents that it is willing and possesses
legal authority to so furnish such services; and
WHEREAS, the Sub-Adviser agrees that it will manage the assets of the
Designated Portion of each Fund in a manner as agreed upon by the Adviser and
Sub-Adviser.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
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1. Appointment. The Adviser hereby appoints the Sub-Adviser to act as
investment sub-adviser with respect to the Designated Portion of the Funds for
the period and on the terms set forth in this Agreement. The Sub-Adviser
accepts such appointment and agrees to furnish the services herein set forth
for the compensation herein provided.
2. Delivery of Documents. The Adviser has delivered to the
Sub-Adviser copies of each of the following documents along with all
amendments thereto through the date hereof, and will promptly deliver to it
all future amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of the Advisory Agreement and this
Agreement;
(d) the most recent Post-Effective Amendment to the Trust's
Registration Statement under the Securities Act of 1933, as amended
(the "1933 Act"), and the 1940 Act, on Form N-1A as filed with the
Securities and Exchange Commission (the "Commission");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission;
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds; and
(g) the Procedures for the Funds.
3. Investment Advisory Services.
(a) Management of the Funds. The Sub-Adviser hereby undertakes to act
as investment Sub-Adviser to each Fund with respect to the
Designated Portion of such Fund. In connection with the services
so provided, the Adviser may from time to time refuse such advice
as the Sub-Adviser may render, or countermand such dealing
instructions as the Sub-Adviser may give and/or require the
Sub-Adviser to reverse any investment actions relating to the Funds
(save only that the cost, losses or any other liabilities or
obligations incurred as a result of such refusal, countermanding or
reversal of investment action shall be borne by the Adviser). The
Sub-Adviser shall regularly, with respect to the Designated
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<PAGE>
Portion, provide investment advice to the Funds and continuously
supervise the investment and reinvestment of the Designated
Portion of the Funds and, in furtherance thereof, shall:
(i) as the Sub-Adviser deems appropriate to fulfill its fiduciary
obligations under this Agreement, obtain and evaluate
pertinent economic, statistical and financial data, as well as
other significant events and developments, which affect the
economy generally, the Funds' investment programs, and the
issuers of securities included in the Designated Portion of
each Fund and the industries in which they engage, or which
may relate to securities or other investments which the
Sub-Adviser may deem desirable for inclusion in the Designated
Portion of each Fund;
(ii) determine which issuers and securities shall be included in
the Designated Portion of each Fund;
(iii) furnish a continuous investment program for the
Designated Portion of each Fund;
(iv) in its discretion, and without prior consultation, buy, sell,
lend and otherwise trade any bonds and other securities and
investment instruments on behalf of each Fund with respect to
its Designated Portion;
(v) keep confidential all documents, materials and other
information relating to the business of the Funds and the
Adviser and not disclose any of the aforesaid without the
prior consent of the Adviser, unless otherwise required by law
or authority having jurisdiction over the Sub-Adviser;
(vi) use its best efforts to keep the Adviser informed of all
material matters of which the Sub-Adviser is itself aware and
which in its opinion pertains to the Designated Portion of
each Fund;
(vii) take, on behalf the Designated Portion of each Fund, all
actions the Sub-Adviser believes may be reasonable and
necessary in order to carry into effect such investment
program and the Sub-Adviser's functions as provided
above, including the making of appropriate periodic
reports to the Adviser and the Trust's Board of Trustees; and
(viii) in its discretion on behalf of a Fund to enter into
trading agreements with securities brokers and futures
commission merchants to trade securities and commodities,
if any, as permitted, in the Prospectus or Statement of
Additional Information for the applicable Fund.
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<PAGE>
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in: (i)
each Fund's then current Prospectus, Profile and Statement of
Additional Information as revised and in effect from time to time;
(ii) the Trust's Declaration of Trust, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940 Act; (iv)
other applicable laws; and (v) such other investment policies,
procedures and/or limitations as may be adopted by the Trust or the
Adviser with respect to a Fund and provided to the Sub-Adviser in
writing. The Sub-Adviser agrees to use reasonable efforts to
manage the Designated Portion of each Fund so that it will qualify,
and continue to qualify, as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, and
regulations issued thereunder (the "Code"), except as may be
authorized to the contrary by the Adviser. The management of the
Designated Portion of each Fund by the Sub-Adviser shall at all
times be subject to the review of the Adviser and the Trust's Board
of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser
shall keep each Fund's books and records required to be maintained
by, or on behalf of, the Funds with respect to subadvisory services
rendered by it hereunder. The Sub-Adviser agrees that all records
which it maintains for a Fund are the property of the Fund and it
will promptly surrender any of such records to the Fund or the
Adviser upon the Fund's request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records of the Fund required to be preserved by such
Rule.
(d) Reports, Evaluations and other services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the
Adviser and the Trust with respect to the Designated Portion of
each Fund and in connection with the Sub-Adviser's services
hereunder as the Adviser and/or the Trust's Board of Trustees may
request from time to time or as the Sub-Adviser may otherwise deem
to be desirable. In connection therewith, the Sub-Adviser agrees
to attend each year at least one (1) meeting of the Trust's Board
of Trustees in person and at least one (1) meeting of the Trust's
Board of Trustees by telephone. The Adviser shall inform
Sub-Adviser of the dates for such in person and telephonic
meetings. The Sub-Adviser shall make recommendations to the
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<PAGE>
Adviser and the Trust's Board of Trustees with respect to the
Trust's policies, and shall carry out such policies as are adopted
by the Board of Trustees. The Sub-Adviser may, subject to review
by the Adviser, furnish such other services as the Sub-Adviser
shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for the
Designated Portion of each Fund with brokers or dealers selected by
the Sub-Adviser, which may include brokers or dealers affiliated
with the Adviser or the Sub-Adviser to the extent permitted by the
1940 Act and the Trust's policies and procedures applicable to the
Funds. The Sub-Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds or execution being
the most favorable to the Funds. In assessing the best overall
terms available for any transaction, the Sub-Adviser shall consider
all factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, research services
provided to the Sub-Adviser, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In no event shall the Sub-Adviser be under any
duty to obtain the lowest commission or the best net price for any
Fund on any particular transaction, nor shall the Sub-Adviser be
under any duty to execute any order in a fashion either
preferential to any Fund relative to other accounts managed by the
Sub-Adviser or otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers
may be selected who also provide brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Sub-Adviser, the Funds, and/or the
other accounts over which the Sub-Adviser exercises investment
discretion. The Sub-Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which
is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the
Sub-Adviser determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities
of the Sub-Adviser with respect to accounts over which it exercises
investment discretion. The Sub-Adviser shall report to the Board
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<PAGE>
of Trustees of the Trust regarding overall commissions paid with
respect to the Designated Portion of each Fund and their
reasonableness in relation to their benefits to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Sub-Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased with
those of other Funds or its other clients if, in the Sub-Adviser's
reasonable judgment, such aggregation (i) will result in an overall
economic benefit to the Fund, taking into consideration the
advantageous selling or purchase price, brokerage commission and
other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Trust's
registration statement and the Fund's Prospectus and Statement of
Additional Information. In such event, the Sub-Adviser will
allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in an equitable manner, consistent
with its fiduciary obligations to the Fund and such other clients.
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the State of Delaware and is fully
authorized to enter into this Agreement and carry out its
duties and obligations hereunder.
(ii) The Sub-Adviser is registered as an investment adviser with
the Commission under the Advisers Act, and is registered or
licensed as an investment adviser to the extent required under
the laws of all applicable jurisdictions. The Sub-Adviser
shall maintain such registrations or licenses in effect at all
times during the term of this Agreement.
(iii) The Sub-Adviser at all times shall provide its best
judgment and effort to the Adviser, or certain
Sub-Advisers or agents designated by the Adviser, in
carrying out the Sub-Adviser's obligations hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser as
follows:
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<PAGE>
(i) The Adviser is a banking corporation duly organized and in
good standing under the laws of the State of New York and is
fully authorized to enter into this Agreement and carry out
its duties and obligations hereunder.
(ii) The Trust has been duly organized as a business trust under
the laws of the Commonwealth of Massachusetts.
(iii) The Trust is registered as an investment company with the
Commission under the 1940 Act, and shares of each Fund
are registered for offer and sale to the public under the
1933 Act and all applicable state securities laws where
currently sold. Such registrations will be kept in
effect during the term of this Agreement.
5. Compensation. As compensation for the services which the
Sub-Adviser is to provide or cause to be provided pursuant to Paragraph 3,
with respect to each Fund, the Adviser shall pay to the Sub-Adviser (or cause
to be paid by the Trust directly to the Sub-Adviser) a fee set forth in
Schedule B attached hereto, which shall be accrued daily and paid in arrears
on the first business day of each month, at an annual rate to be determined
between the parties hereto from time to time, as a percentage of the average
daily net assets of the Designated Portion of the Fund during the preceding
month (computed in the manner set forth in the Fund's most recent Prospectus
and Statement of Additional Information set forth in Schedule B attached
hereto). Average daily net assets shall be based upon determinations of net
assets made as of the close of business on each business day throughout such
month. The fee for any partial month shall be calculated on a proportionate
basis, based upon average daily net assets for such partial month.
6. Interested Persons. It is understood that, to the extent
consistent with applicable laws, the Trustees, officers and shareholders of
the Trust or the Adviser are or may be or become interested in the
Sub-Adviser as directors, officers or otherwise and that directors, officers
and shareholders of the Sub-Adviser are or may be or become similarly
interested in the Trust or the Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the
Funds.
8. Non-Exclusive Services; Limitation of Liability. The services of
the Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
may render similar services to others and engage in other activities. The
Sub-Adviser may enter into other agreements with the Funds, the Trust or the
Adviser for providing additional services to the Funds, the Trust or the
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<PAGE>
Adviser which are not covered by this Agreement, and to receive additional
compensation for such services. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or a breach of fiduciary duty with
respect to receipt of compensation in violation of Section 36(b) of the 1940
Act, neither the Sub-Adviser nor any of its directors, officers,
shareholders, agents, or employees shall be liable or responsible to the
Adviser, the Trust, the Funds or to any shareholder of the Funds for any
error of judgment or mistake of law or for any act or omission in the course
of, or connected with, rendering services hereunder or for any loss suffered
by the Adviser, the Trust, a Fund, or any shareholder of a Fund in connection
with the performance of this Agreement. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of the Adviser, or a breach of fiduciary duty
with respect to receipt of compensation, neither the Funds, nor shareholders
to the Funds, Trusts, Adviser, any of its directors, officers, shareholders,
agents, or employees shall be liable or responsible to the Sub-Adviser, for
any error of judgment or mistake of law or for any act or omission in the
course of, or connected with, rendering services hereunder or for any loss
suffered by the Sub-Adviser, in connection with the performance of this
Agreement. In any event, the Adviser and the Sub-Adviser shall not be liable
for any special, consequential or incidental damages.
9. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date") provided that it
shall have been approved by a majority of the outstanding voting securities
of each Fund, in accordance with the requirements of the 1940 Act, or such
later date as may be agreed by the parties following such shareholder
approval.
(a) This Agreement shall continue in force for two years from the
Effective Date and shall continue in effect from year to year thereafter as
to each Fund for successive annual periods, provided such continuance is
specifically approved at least annually (i) by a vote of the majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such approval or as otherwise permitted by the Commission, and
(ii) by a vote of the Board of Trustees of the Trust or a majority of the
outstanding voting securities of the Fund.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those Trustees of the
Trust who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval or as
otherwise permitted by the Commission.
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<PAGE>
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement as to any Fund(s) at any
time on sixty (60) days' prior written notice to the other, without payment
of any penalty. A termination of the Sub-Adviser may be effected as to any
particular Fund by the Adviser, by a vote of the Trust's Board of Trustees,
or by vote of a majority of the outstanding voting securities of the Fund.
This Agreement shall terminate automatically in the event of its assignment
as defined under the 1940 Act.
10. Limitation of Liability of Trustees and Shareholders. The
Sub-Adviser acknowledges the following limitation of liability:
The terms "Mutual Fund Group" and "Trustees of Mutual Fund Group" refer,
respectively, to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, to which reference is hereby made and a copy of which is on file at
the office of the Secretary of State of the State of Massachusetts, such
reference being inclusive of any and all amendments thereto so filed or
hereafter filed. The obligations of "Mutual Fund Group" entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities and are not binding upon
any of the Trustees, shareholders or representatives of the Trust personally,
but bind only the assets of the Trust, and all persons dealing with the Trust
or a Fund must look solely to the assets of the Trust or Fund for the
enforcement of any claims against the Trust or Fund.
11. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons" when used herein, shall have the respective meanings specified in
the 1940 Act. References in this Agreement to the 1940 Act and the Advisers
Act shall be construed as references to such laws as now in effect or as
hereafter amended, and shall be understood as inclusive of any applicable
rules, interpretations and/or orders adopted or issued thereunder by the
Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent a Fund in any
way or otherwise be deemed an agent of a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering
into this Agreement with regard to the respective Funds severally and not
jointly. The responsibilities and benefits set forth in this Agreement shall
be deemed to be effective as between the Adviser and Sub-Adviser in
connection with each Fund severally and not jointly. This Agreement is
intended to govern only the relationships between the Adviser, on the one
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<PAGE>
hand, and the Sub-Adviser, on the other hand, and is not intended to and
shall not govern (i) the relationship between the Adviser or Sub-Adviser and
any Fund, or (ii) the relationships among the respective Funds.
14. Governing Law. This Agreement shall be governed by the laws of the
State of New York provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act and without regard to the
conflict of interest laws. The Sub-Adviser waives any right it may have to a
jury trial.
15. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
16. Notices. Notices of any kind to be given to the Adviser hereunder
by the Sub-Adviser shall be in writing and shall be duly given if mailed or
delivered to the Adviser at The Chase Manhattan Bank, 1211 Avenue of the
Americas, 41st Floor, New York, New York 10036, Attention: Mary B. Maguire
or at such other address or to such individual as shall be so specified by
the Adviser to the Sub-Adviser. Notices of any kind to be given to the
Sub-Adviser hereunder by the Adviser shall be in writing and shall be duly
given if mailed or delivered to the Sub-Adviser at
__________________________________________________, Attention:
_______________, or at such other address specified by the Adviser to the
Sub-Adviser in writing. Notices shall be effective upon delivery.
17. Confidentiality. The Sub-Adviser agrees that it will treat
confidentiality and as proprietary information of each Fund all records and
other information relative to the Fund and the Fund's prior, current or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld where
Sub-Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund or Adviser.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the
date written above.
ALLIANCE CAPITAL MANAGEMENT, L.P. THE CHASE MANHATTAN BANK
By:_____________________________ By:______________________
Name: Name: Mary B. Maguire
Title: Title: Managing Director
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<PAGE>
Schedule A
Fund:
1. Chase Vista Strategic Income Fund
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<PAGE>
Schedule B to the Investment Sub-Advisory Agreement
between The Chase Manhattan Bank
and its successors, and Alliance Capital Limited
Pursuant to Section 5(a) of this Agreement, with respect to each Fund
listed below, the Adviser agrees to pay (or cause to be paid) to the
Sub-Adviser a fee at an annual rate as set forth below opposite such Fund of
the Designated Portion of each Fund.
Fund: Fee:
Chase Vista Strategic Income Fund _____%
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<PAGE>
C-1
Appendix C
ADDITIONAL INFORMATION
Advisory Agreement
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 Fund. Chase's responsibilities under the
Advisory Agreement include supervising the Fund's investments and maintaining
a continuous investment program, placing purchase and sale orders and paying
costs of certain clerical and administrative services involved in managing
and servicing the Fund's investments and complying with regulatory reporting
requirements. Subject to shareholder approval of the Alliance Sub-Advisory
Agreement, Chase would delegate certain of these responsibilities with
respect to the portion of the Fund allocated to debt securities of foreign
issuers to Alliance. Under the Advisory Agreement, Chase is obligated to
furnish employees, office space and facilities required for operation of the
Fund.
Expenses and Advisory Fees. The Advisory Agreement provides that the
Fund will pay Chase a monthly advisory fee based upon the net assets of the
Fund, at the annual rate of .50% of net assets of the Fund. Chase may waive
fees from time to time to assist the Fund in maintaining competitive yields.
Under the Advisory Agreement, except as indicated above, the 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 fiscal year ended October 31, 1999, Chase accrued management
fees in an amount equal to $_________, of which it waived $_________.
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 Mutual Fund Group or the Fund,
and to be approved by the shareholders of 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
<PAGE>
C-2
or omission or loss suffered by Mutual Fund Group or the Fund 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 Agreement. Chase would be as fully responsible to Mutual Fund
Group or the Fund 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 the Fund only so long as such continuation
is approved at least annually by (i) the Board of Trustees of Mutual Fund
Group or the Majority Vote of the outstanding voting securities of the 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 Act. In addition, the Advisory
Agreement is terminable at any time as to the Fund without penalty by the
Board of Trustees of Mutual Fund Group or by vote of the Majority Vote of the
Fund's outstanding voting securities upon 60 days' written notice to Chase,
and by Chase on 60 days' written notice to Mutual Fund Group.
Portfolio Transactions and Brokerage Commissions
Chase, as the investment adviser to the Fund, has responsibilities with
respect to the Fund's portfolio transactions and brokerage arrangements
pursuant to the Fund's policies, subject to the overall authority of the
Board of Trustees of Mutual Fund Group. In addition, the Sub-Advisory
Agreements with CAM and SSR currently provide and the Alliance Sub-Advisory
Agreement will provide that each sub-adviser's responsibilities with respect
to the Fund's 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 Alliance's responsibilities under the Alliance
Sub-Advisory Agreement.
Under the Advisory Agreement, Chase, subject to the general supervision
of the Board of Trustees of Mutual Fund Group, is responsible for the
placement of orders for the purchase and sale of portfolio securities for the
Fund with brokers and dealers selected by Chase, which may include brokers or
dealers affiliated with Chase to the extent permitted by the 1940 Act and
Mutual Fund Group's policies and procedures applicable to the Fund. 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 the 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
<PAGE>
C-3
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 the Fund on any particular transaction,
nor shall Chase be under any duty to execute any order in a fashion either
preferential to the 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, the 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 the 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 Board of Trustees of Mutual Fund Group regarding
overall commissions paid by the Fund and their reasonableness in relation to
the benefits to the Fund.
In executing portfolio transactions for the 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 the Fund,
taking into consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading requirements, and (ii)
is not inconsistent with the policies set forth in Mutual Fund Group's
registration statement and the 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 the 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,
Mutual Fund Group or any of its portfolios, including the 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.
For the fiscal year ended October 31, 1999, the Fund paid no brokerage
commissions.
<PAGE>
C-4
Management of Chase
Certain information regarding the directors and the principal executive
officers of Chase is set forth below. The address of each such person is 270
Park Avenue, New York, New York 10017.
Name Position with Chase Principal Occupation
____ ___________________ ____________________
<PAGE>
[FORM OF PROXY]
[Preliminary Proxy Material]
MUTUAL FUND GROUP
Strategic Income Fund
This proxy is solicited on behalf of the Board of Trustees of Mutual Fund
Group for the Special Meeting of Shareholders to be held on March __, 2000.
The undersigned hereby appoints ________, ________ AND ________, and each of
them, attorneys and proxies for the undersigned, with full power of
substitution, and revocation to represent the undersigned and to vote on
behalf of the undersigned all shares of the Strategic Income Fund which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held at 1211 Avenue of the Americas, New York, New York on March ___, 2000,
at 12:00 p.m., and at any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of the Special Meeting of Shareholders and
hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Special Meeting of
Shareholders. A majority of the proxies present and acting at the Special
Meeting of Shareholders in person or by substitute (or, if only one shall be
so present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
NOTE: Please sign exactly as your name appears
on this proxy. If joint owners, EITHER may
sign this proxy. When signing as attorney,
executor, administrator, trustee, guardian or
corporate officer, please give your full title.
Date ________ __, ____
__________________________________
__________________________________
Signature(s), Title(s) (if applicable) PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
<PAGE>
MUTUAL FUND GROUP
Strategic Income Fund
Please indicate your vote by an "X" on the appropriate line below.
This proxy, if properly executed, will be voted in the manner directed by the
stockholder.
If no direction is made, this proxy will be voted FOR the Proposal.
Please refer to the Proxy Statement for a discussion of the Proposal.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL.
Proposal:
To approve or disapprove a Sub-Advisory Agreement between
Chase and Alliance Capital Management, L.P. with respect to
the portion of the Strategic Income Fund which is allocated to
debt securities of foreign issuers.
For _____ Against _____ Abstain _____
