Schedule 14A 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
[ ] Preliminary Additional Materials
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or
Section 240.14a-12
Mutual Fund Trust
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Joanne Doldo
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check appropriate box:
[x] $125 per Exchange Act Rule 20a-1(c)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(j) (3) [ ] Fee computed on table below per Exchange Act Rules 14a-6(j)(4)
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:
- - - --------------------------------------------------------------------------------
4. Proposed maximum value of transaction
<PAGE>
Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ] 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 offsetting 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:
- - - --------------------------------------------------------------------------------
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE COMMISSION ONLY
MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 90-VISTA
Dear Valued Shareholder:
As you may be aware, The Chase Manhattan Corporation ("Chase") has entered into
an Agreement and Plan of Merger with Chemical Banking Corporation ("Chemical")
pursuant to which Chase will merge with and into Chemical (the "Holding Company
Merger"). Pursuant to the Investment Company Act of 1940, as amended,
consummation of the Holding Company Merger will result in the automatic
termination of the investment advisory agreements between the Funds of Mutual
Fund Trust (the "Trust") and The Chase Manhattan Bank, N.A. (the "Adviser"). In
addition, subsequent to the Holding Company Merger, the Adviser will be merged
with and into Chemical Bank in a secondary merger of the principal operating
entities of Chase and Chemical (the "Bank Merger"). The Bank Merger may also be
deemed to result in the automatic termination of the investment advisory
agreements between the Adviser and the Funds. In anticipation of the completion
of the Holding Company Merger and the Bank Merger, and to provide continuity in
investment advisory services to your Fund, we urge you to review the enclosed
proxy statement. In the proxy statement you are asked to vote on the approval of
an interim and a new advisory agreement between your Fund and the Adviser in
addition to other items intended to rationalize the management of the Funds and
each Fund's objectives, policies and restrictions.
In connection with the merger of Chase and Chemical, it has also been proposed,
subject to shareholder approval, that the series funds of The Hanover Funds,
Inc., an open-end management investment company affiliated with Chemical Bank
(the "Hanover Funds"), be merged into certain series of the Trust. In an effort
to provide continuity of operations and management, certain Directors of the
Hanover Funds and The Hanover Investment Funds, Inc. have been nominated to
serve as Trustees of the Trust.
The Board of Trustees has voted unanimously in favor of each proposal and
recommends that you vote "FOR" them as well. You will find more information on
the proposals in the enclosed proxy statement.
Please be assured that there is no increase to the advisory fee rates in the
proposed advisory agreements.
<PAGE>
The information below is designed to answer your questions and help you cast
your proxy as a shareholder of the Funds, and is being provided as a supplement
to, not a substitute for, your proxy materials which we urge you carefully
review.
Q. IF SHAREHOLDERS APPROVE THIS PLAN, WHAT WILL HAPPEN?
A. In March, the Vista Funds and the Hanover Funds will be merged into one
combined fund family with approximately $18 billion in assets under management.
This family will employ the name "Vista Funds." In some cases, current Vista and
Hanover funds with overlapping objectives will be merged together into a single
fund. All shareholders in existing Hanover or Vista funds will own shares in the
merged funds, without paying additional charges.
Q. AS A SHAREHOLDER, WHAT DO I NEED TO DO?
A. Just make sure you cast your proxy vote when you receive your ballot in
February. The Trustees of each fund are working to make sure this merger goes
smoothly. Shortly after the anticipated shareholder approval of the merger,
listings of daily fund prices and performance for most funds will appear under
the Vista heading in the business section of your local newspaper and business
periodicals. Your quarterly fund statements and your annual reports will reflect
that you are part of a larger Vista family with more investment choices.
<PAGE>
Q. WHICH FUNDS ARE BEING COMBINED AND WHAT DO I DO IF I OWN ONE
OF THEM?
A. The following consolidation of funds will occur, upon
shareholder approval:
o Hanover Treasury Money Market Fund will be combined with
Vista Treasury Plus Money Market Fund. The resulting fund
will be called Vista Treasury Plus Money Market Fund.
o Hanover Cash Management Fund will be combined with Vista
Global Money Market Fund. The resulting fund will be called
the Vista Cash Management Money Market Fund.
o Hanover US Government Money Market Fund will be combined
with Vista U.S. Government Money Market Fund. The resulting
fund will be called Vista U.S. Government Money Market Fund.
o Hanover Tax-Free Money Market Fund will be combined with
Vista Tax-Free Money Market Fund. The resulting fund will
be called Vista Tax-Free Money Market Fund.
o Hanover Short-Term Government Bond Fund will be combined
with Vista Short-Term Bond Fund. The resulting fund will be
called Vista Short-Term Bond Fund.
o ___________________________________ Vista Small Cap Equity
Fund. The resulting fund will be called Vista Small Cap
Equity Fund.
<PAGE>
o Hanover Blue-Chip Growth Fund will be combined with Vista
Equity Fund. The resulting fund will be called Vista
_______ Cap Equity Fund.
The decisions as to which funds should be appropriately merged was based upon a
review of each fund's fundamental investment objectives and the selection of
funds which were substantially similar. If you own any of the above funds, upon
shareholder approval you will automatically become a shareholder in the merged
fund. You don't need to do anything to continue your current investment program.
The complete details are contained in the proxy materials.
Q. WILL THERE BE ANY CHANGE IN HOW THE FUNDS ARE MANAGED?
A. Under the plan, current shareholders of Hanover Funds will gain the
investment expertise and discipline of Chase Manhattan. Chase has more than 100
years of experience providing money management services to individuals and
institutions. Vista has built a reputation as one of the most consistent
performers among stock mutual funds through Chase's proprietary 5-Step
StockSelection Model. Vista Growth & Income and Vista Capital Growth Fund
currently receive a 4-star rating from the prestigious Morningstar rating
service.
Q. WHAT RESEARCH SERVICES WILL THE FUNDS RELY UPON?
<PAGE>
A. The expanded group will have access to the research and analysis which has
helped Vista achieve recognition for outstanding performance. These include
Chase's global presence through research professionals in strategic markets
throughout the world and also the independent mutual fund consulting group Chase
hires to audit the portfolio management practices of each Vista fund.
Q. WHAT ABOUT SHAREHOLDER SERVICES?
A. Current Hanover shareholders will be able to obtain fund information 24 hours
per day via Tele-Vista, Vista's Voice Response Unit available at 1-800-34VISTA.
Current Hanover shareholders who have already paid a sales charge will be
allowed to exchange into other funds of the larger Vista family without paying
an additional charge.
a
Q. HOW DO I CAST A PROXY VOTE?
A. In mid-February, you will receive a proxy card and statement in the mail for
each fund in which you are a shareholder. Several shareholder election items
will appear on this card, and after you have reviewed the accompanying proxy
material carefully, you should cast your vote in each of them. Then, return the
postage-paid reply card in the mail prior to March 10, 1996. That's all.
<PAGE>
If you have any further questions, please call our customer service center,
between 8:00 AM and 6:00 PM EST, at 1-800-34VISTA (84782).
<PAGE>
YOUR VOTE IS IMPORTANT. Please read the enclosed proxy statement and vote now by
completing, signing and returning the enclosed proxy ballot form(s) in the
pre-paid envelope. If you own shares in more than one Fund, you will receive a
proxy card for each of your Funds. Please vote and return EACH proxy card you
receive. EVERY VOTE COUNTS. If you have any questions, please call
__________________ at 800-_____ -_______ .
Very truly yours,
Fergus Reid
President
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE COMMISSION ONLY
MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 90-VISTA
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 15, 1996
A special meeting of the shareholders of the Funds (each, a "Fund" and
collectively, the "Funds") of MUTUAL FUND TRUST (the "Trust") will be held at
11:00 a.m. (Eastern time) at 101 Park Avenue, 17th Floor, New York, New York on
March 15, 1996, for the purposes indicated below:
The following items apply to shareholders of EACH FUND:
1. To approve or disapprove an interim investment advisory agreement
between each of the Funds and The Chase Manhattan Bank, N.A. (or
the successor entity thereto) (the "Adviser") to take effect
after the merger of The Chase Manhattan Corporation (the parent
company of the Adviser) and Chemical Banking Corporation (to be
voted on separately by the Shareholders of each Fund). No fee
increase is proposed.
2. To elect eleven trustees to serve as members of the Board of
Trustees of the Trust.
3. To ratify the selection of Price Waterhouse LLP as independent
accountants for the 1996 fiscal year of each of the Funds.
4. To approve or disapprove an amendment to the Trust's Declaration
of Trust.
In addition, for shareholders of all Funds, to transact such other business as
may properly come before the meeting or any adjournment thereof.
The remaining Proposals apply only to the Class of Shares or Fund indicated in
italics:
5. To consider the following proposals pertaining primarily to EACH
FUND'S fundamental investment restrictions:
a. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning borrowing;
b. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning investment for
the purpose of exercising control;
<PAGE>
c. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning the making of
loans;
d. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning purchases of
securities on margin;
e. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning concentration
of investment;
f. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning commodities
and real estate;
g. To approve or disapprove an amendment of each Fund's
fundamental investment restriction regarding investments in
restricted and illiquid securities;
h. To approve or disapprove of a reclassification, as
nonfundamental, of each Fund's fundamental restriction
concerning the use of options;
i. To approve or disapprove an amendment to each Fund's
fundamental investment restriction concerning senior
securities;
j. To approve or disapprove an amendment to each Fund's
fundamental investment restriction regarding short sales of
securities.
k. To approve or disapprove a proposal to adopt a new
investment policy that authorizes each Fund to invest all or
a part of its investment assets in a corresponding portfolio
of an open-end investment company having substantially the
same investment objective and policies as the Fund; and
Proposal 5k relates to the VISTA CALIFORNIA INTERMEDIATE TAX FREE FUND ONLY:
l. To approve or disapprove a change in the status of the Fund
from a diversified fund to a nondiversified fund.
With respect to ALL FUNDS OTHER THAN VISTA CALIFORNIA INTERMEDIATE TAX FREE
FUND, VISTA NEW YORK TAX FREE INCOME FUND AND VISTA TAX FREE INCOME FUND:
6. To approve or disapprove a restatement of the investment
objectives of certain Funds.
With respect to the VISTA SHARES CLASS OR CLASS A SHARES OF EACH FUND (OTHER
THAN VISTA PRIME MONEY MARKET FUND, VISTA TREASURY PLUS MONEY MARKET FUND, VISTA
U.S. GOVERNMENT MONEY MARKET FUND, VISTA GLOBAL MONEY MARKET FUND, VISTA
CALIFORNIA TAX FREE MONEY MARKET FUND, VISTA NEW YORK TAX FREE MONEY MARKET FUND
AND VISTA TAX FREE MONEY MARKET FUND):
7. To approve or disapprove an amendment to the Class A Shares Rule
12b-1 Distribution Plan or Vista Shares Rule 12b-1 Distribution
Plan (as applicable).
<PAGE>
With respect to ALL FUNDS OTHER THAN VISTA TAX FREE MONEY MARKET FUND AND VISTA
GLOBAL MONEY MARKET FUND:
8. To approve or disapprove a new investment advisory agreement
between each of the Funds and the Adviser, and a sub-advisory
agreement between the Adviser and Chase Asset Management, Inc.
with respect to each of the above-referenced Funds, to take
effect as soon as practicable after approval by shareholders (to
be voted on separately by shareholders of each Fund). No fee
increase is proposed.
With respect to the VISTA TAX FREE MONEY MARKET FUND AND VISTA GLOBAL MONEY
MARKET FUND ONLY:
9. To approve or disapprove a new investment advisory agreement
between each of the Funds and the Adviser, and a sub-advisory
agreement between the Adviser and Texas Commerce Bank, National
Association with respect to each of the above-referenced Funds to
take effect as soon as practicable after approval by shareholders
(to be voted on separately by shareholders of each Fund). No fee
increase is proposed.
Shareholders of record as of the close of business on January 22, 1996 are
entitled to receive notice of, and to vote at, the Meeting and any and all
adjournments thereof. Your attention is called to the accompanying proxy
statement.
By Order of the Board of Trustees
Ann Bergin
Secretary
February 5, 1996
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PRELIMINARY PROXY MATERIALS
FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE COMMISSION ONLY
MUTUAL FUND TRUST
125 WEST 55TH STREET
NEW YORK, NEW YORK 10019
(800) 90-VISTA
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of MUTUAL
FUND TRUST (the "Trust") and pertains, to the extent set forth below, to each of
its underlying investment funds (each, a "Fund" and collectively, the "Funds").
The Trust is a registered open-end investment company having its executive
offices at 125 West 55th Street, New York, New York 10019. The proxy is
revocable at any time before it is voted by sending written notice of the
revocation to the Trust or by appearing personally at the March 15, 1996 special
meeting of shareholders (the "Meeting"). The cost of preparing and mailing the
notice of meeting, the proxy card, this proxy statement and any additional proxy
material insofar as it relates to the approval of various Advisory Agreements
has been or is to be borne by The Chase Manhattan Corporation, Chemical Banking
Corporation and/or their affiliates. The Chase Manhattan Bank, N.A. (the
"Adviser") is currently the investment adviser to each of the Funds. Proxy
solicitations will be made primarily by mail, but may also be made by telephone,
telegraph, facsimile or personal interview conducted by certain officers or
employees of the Trust, the Adviser or its affiliates, or, if necessary, a
commercial firm retained for this purpose. In the event that the shareholder
signs and returns the proxy ballot, but does not indicate a choice as to any of
the items on the proxy ballot, the proxy attorneys will vote those shares in
favor of such proposal(s), including for the election of each person nominated
to the Board of Trustees of the Trust.
On January 22, 1996, the record date for determining shareholders entitled to
receive notice of and vote at the Meeting (the "Record Date"), the Funds had the
number of shares of beneficial interest ("Shares") outstanding set forth below,
each Share being entitled to one vote:
<TABLE>
<CAPTION>
TOTAL VISTA TOTAL CLASS A TOTAL
CLASS SHARES SHARES SHARES
FUND OUTSTANDING OUTSTANDING1 OUTSTANDING
<S> <C> <C> <C>
Vista Treasury Plus Money Market Fund
Vista Federal Money Market Fund
Vista New York Tax Free Money Market Fund
Vista Tax Free Money Market Fund
- - - --------
1 For purposes of this proxy, shares of Vista Tax Free Income Fund, Vista New
York Tax Free Income Fund and Vista California Intermediate Tax Free Fund not
otherwise designated will be considered Class A shares.
<PAGE>
Vista California Tax Free Money Market Fund
Vista U.S. Government Money Market Fund
Vista Global Money Market Fund
Vista Prime Money Market Fund
Vista California Intermediate Tax Free Fund
Vista New York Tax Free Income Fund
Vista Tax Free Income Fund
</TABLE>
Shares which represent interests in a particular Fund of the Trust vote
separately on matters which pertain only to that Fund. Similarly, shares which
represent interests in a particular class of a Fund vote separately on matters
which pertain only to that class of such Fund. All of the proposals (except the
election of Trustees and the amendment to the Declaration of Trust) will be
voted on separately by the shareholders of each Fund. In addition, specific
classes of shares of a Fund will vote separately as a class with respect to any
matter affecting only the arrangements relating to that specific class (Proposal
7). Any other business which may properly come before the meeting will be voted
separately by shares of each Fund (or class of each Fund, as necessary). The
holders of each share of the Trust shall be entitled to one vote for each full
share and a fractional vote for each fractional share.
For purposes of determining the presence of a quorum and counting votes on the
matters presented, Shares represented by abstentions and "broker non-votes" will
be counted as present, but not as votes cast, at the Meeting. Under the
Investment Company Act of 1940, as amended (the "1940 Act"), the affirmative
vote necessary to approve a matter under consideration may be determined with
reference to a percentage of votes present at the Meeting, which would have the
effect of treating abstentions and non-votes as if they were votes against the
proposal.
A copy of each Fund's Annual Report (which contains information pertaining to
the Fund) may be obtained, without charge, by calling , at (800) .
This proxy statement and the enclosed notice of meeting and proxy card are first
being mailed to shareholders on or about February 5, 1996.
INTRODUCTION
The Meeting is being called for the following purposes.
With respect to each of the Funds: (1) to approve or disapprove an interim
investment advisory agreement (the "Interim Agreement") between each of the
Funds and the Adviser to take effect after the merger of The Chase Manhattan
Corporation and Chemical Banking Corporation; (2) to elect eleven trustees to
serve as members of the Board of Trustees of the Trust; (3) to ratify the
selection of Price Waterhouse LLP as independent accountants for the 1996 fiscal
year of each
2
<PAGE>
of the Funds; and (4) to approve or disapprove an amendment to the Trust's
Declaration of Trust; and to transact such other business as may properly come
before the Meeting or any adjournment thereof.
Each of the following Proposals apply only to certain Funds or Classes of Shares
of a particular Fund (the Funds or Classes of Shares to which each of the
Proposals apply are specified below and on the charts set forth on the next two
pages); (5) to approve or disapprove amendments to each Fund's fundamental
investment restrictions (all Funds except as noted); (6) to approve or
disapprove a restatement of the investment objectives of certain Funds (all
Funds other than Vista California Intermediate Tax Free Fund, Vista New York Tax
Free Income Fund and Vista Tax Free Income Fund); (7) to approve or disapprove
an amendment to the Class A Shares Rule 12b- 1 Distribution Plan or Vista Shares
Rule 12b-1 Distribution Plan (as applicable) (all Funds except as noted); (8) to
approve or disapprove a new investment advisory agreement (the "Proposed
Agreement") between each of the Funds and the Adviser (and its successor in the
Bank Merger) to take effect as soon as practicable after approval by
shareholders (all Funds other than Vista Tax Free Money Market Fund and Vista
Global Money Market Fund); and (9) to approve or disapprove a new investment
advisory agreement between each of the Funds and the Adviser, and a sub-advisory
agreement between the Adviser and Texas Commerce Bank, National Association to
take effect as soon as practicable after approval by shareholders (Vista Tax
Free Money Market Fund and Vista Global Money Market Fund only).
<TABLE>
<CAPTION>
PROPOSAL NUMBER
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NAME OF FUND 1 2 3 4 52 6 73 8 9
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Treasury Plus Money Market Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Federal Money Market Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista New York Tax Free Money Market Fund x x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Tax Free Money Market Fund x x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista California Tax Free Money Market Fund x x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista U.S. Government Money Market Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Global Money Market Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Prime Money Market Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista California Immediate Tax Free Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista New York Tax Free Income Fund x x x x x x x
- - - ---------------------------------------------------------------------------------------------------------------------------------
Vista Tax Free Income Fund x x x x x x x
=================================================================================================================================
</TABLE>
2 See subchart on next page for Proposals 5a-k.
3 Vista shares or Class A shares only, as applicable.
3
<PAGE>
<TABLE>
<CAPTION>
SUBCHART FOR PROPOSALS 5A-K
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NAME OF FUND a b c d e f g h i j k
- - - ----------------------------------------------------------------------------------------------------------------
Vista Treasury Plus Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista Federal Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista New York Tax Free Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista Tax Free Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista California Tax Free Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista U.S. Government Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista Global Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista Prime Money Market Fund X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
Vista California Immediate Tax Free Fund X X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
VISTA NEW YORK TAX FREE INCOME FUND X X X X X X X X X X
- - - ----------------------------------------------------------------------------------------------------------------
VISTA TAX FREE INCOME FUND X X X X X X X X X X
================================================================================================================
</TABLE>
Approval of each one of the Proposals other than the election of trustees
(Proposal 2), the ratification of auditors (Proposal 3) and the approval of an
amendment to the Declaration of Trust (Proposal 4) requires the vote of a
"majority of the outstanding voting securities," within the meaning of the 1940
Act, of each Fund to which the proposal is applicable. The term "majority of the
outstanding voting securities" is defined under the 1940 Act to mean: (a) 67% or
more of the outstanding Shares present at the Meeting, if the holders of more
than 50% of the outstanding Shares are present or represented by proxy, or (b)
more than 50% of the outstanding Shares of the Fund, whichever is less. The
election of each nominee for election as a trustee (Proposal 2) and the approval
of an amendment to the Declaration of Trust (Proposal 4) requires the
affirmative vote of a majority of all Shares of the Trust voted at the Meeting,
and the ratification of auditors (Proposal 4) requires the vote of a majority of
the Shares of each Fund present at the Meeting.
An election of Trustees under Proposal 2, an approval of auditors under Proposal
3 and the approval of an amendment to the Declaration of Trust (Proposal 4)
would be effective immediately. If Proposal 1 is approved, it is anticipated
that it will become effective upon the occurrence of the Holding Company Merger
(and the Bank Merger as necessary). If Proposals 5, 6, 7, 8 and 9 are approved,
it is anticipated that they will become effective as soon as practical after
shareholder approval (and after the Bank Merger, as necessary).
4
<PAGE>
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF AN INTERIM INVESTMENT
ADVISORY AGREEMENT BETWEEN EACH FUND
AND THE CHASE MANHATTAN BANK, N.A. (OR THE
SUCCESSOR ENTITY THERETO)
INTRODUCTION
The Chase Manhattan Bank, N.A. currently serves as each Fund's investment
adviser pursuant to a separate Investment Advisory Agreement (the "Current
Advisory Agreement") for each Fund. The Chase Manhattan Bank, N.A. is a
wholly-owned subsidiary of The Chase Manhattan Corporation, a registered bank
holding company.
On August 27, 1995, The Chase Manhattan Corporation announced its entry into an
Agreement and Plan of Merger (the "Merger Agreement") with Chemical Banking
Corporation ("Chemical"), a bank holding company, pursuant to which The Chase
Manhattan Corporation will merge with and into Chemical (the "Holding Company
Merger"). Under the terms of the Merger Agreement, Chemical will be the
surviving corporation in the Holding Company Merger and will continue its
corporate existence under Delaware law under the name "The Chase Manhattan
Corporation" ("New Chase"). The board of trustees and shareholders of each
holding company have approved the Holding Company Merger, which will create the
largest bank holding company in the United States based on assets. The
consummation of the Holding Company Merger is subject to certain closing
conditions. The Holding Company Merger is expected to be completed during the
first quarter of 1996.
Subsequent to the Holding Company Merger, it is expected that the adviser to the
Funds, The Chase Manhattan Bank, N.A., will be merged with and into Chemical
Bank, a New York State chartered bank ("Chemical Bank") (the "Bank Merger" and
together with the Holding Company Merger, the "Mergers"). The surviving bank
will continue operations under the name The Chase Manhattan Bank (as used
herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and its
successor in the Bank Merger, and the term "Adviser" means Chase (including its
successor in the Bank Merger) in its capacity as investment adviser to the
Funds). The consummation of the Bank Merger is subject to certain closing
conditions, including the receipt of certain regulatory approvals. The Bank
Merger is expected to be completed on or about July 31, 1996.
Chemical is a publicly owned bank holding company incorporated under Delaware
law and registered under the Federal Bank Holding Company Act of 1956, as
amended. As of December 31, 1995, through its direct or indirect subsidiaries,
Chemical managed more than $__ billion in assets, including approximately $6.9
billion in mutual fund assets in 11 mutual fund portfolios. Chemical Bank is a
wholly-owned subsidiary of Chemical and is a New York State chartered bank.
As required by the 1940 Act, the Current Advisory Agreement provides for its
automatic termination upon its "assignment" (as defined in the 1940 Act).
Consummation of the Holding Company Merger may be deemed to result in an
assignment of the Current Advisory Agreement
5
<PAGE>
and, consequently, to terminate the Current Advisory Agreement in accordance
with its terms. Similarly, the consummation of the Bank Merger may also be
deemed to result in an assignment and consequently, terminate the then-existing
investment advisory contract. In anticipation of the consummation of the Mergers
and to provide continuity in investment advisory services, at a meeting held on
December 14, 1995, the Trust's Board, including a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act) of the Investment
Company, approved the Interim Advisory Agreement between the Trust, on behalf of
each Fund, and the Adviser to take effect upon the consummation of the Holding
Company Merger. The Board also directed that such agreement be submitted to
shareholders for approval at this meeting. In addition, the Board of Trustees
approved the continuation of such agreement after the Bank Merger, on the same
terms and conditions as in effect immediately prior to the merger (except for
effective and termination dates) in the event the Interim Advisory Agreement is
deemed to terminate as a result of the Bank Merger. Approval of Proposal 1 will
also be deemed approval of such continuation of the Interim Advisory Agreement
after the Bank Merger, if applicable. EACH INTERIM ADVISORY AGREEMENT IS
IDENTICAL TO THE CURRENT ADVISORY AGREEMENT, EXCEPT FOR ITS EFFECTIVE DATE. FOR
EACH FUND, THE AGGREGATE CONTRACTUAL RATE CHARGEABLE FOR INVESTMENT ADVISORY
SERVICES WILL REMAIN THE SAME.
In connection with each Fund's approval of the Interim Advisory Agreement, the
Board considered that the terms of the Mergers do not require any change in the
Adviser's investment management or operation of the Funds, or the shareholder
services or other business activities of the Funds. Chemical and the Adviser
have informed the Board of Trustees that the Mergers will not at this time
result in any such change, although no assurance can be given that such a change
will not occur. Each also has advised that, at present, neither plans nor
proposes to make any material changes in the business, corporate structure or
composition of senior management or personnel of the Adviser, or in the manner
in which the Adviser renders investment advisory services to each. If, after the
Mergers, changes in the Adviser are proposed that might materially affect its
services to a Fund, the Board will consider the effect of those changes and take
such action as it deems advisable under the circumstances.
The Adviser has informed the Trust that it proposes to comply with Section 15(f)
of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser or any of its affiliated persons to receive any amount or
benefit in connection with a change in control of the investment adviser as long
as two conditions are met. First, for a period of three years after the
transaction, at least 75% of the Board members of the investment company must
not be interested persons of such investment adviser. Second, an "unfair burden"
must not be imposed on the investment company as a result of such transaction or
any express or implied terms, conditions or understandings applicable thereto.
The term "unfair burden" is defined in Section 15(f) to include any arrangement
during the two-year period after the transaction whereby the investment adviser,
or any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or, with certain exceptions, from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
investment company. The Adviser, after due inquiry, is not aware of any express
or implied term, condition, arrangement or understanding which would
6
<PAGE>
impose an "unfair burden" on the Trust as a result of the Mergers. New Chase,
the Adviser and their affiliates have agreed to take no action that would have
the effect of imposing an "unfair burden" on the Trust as a result of the
Mergers. Chase, Chemical and/or one or more of their affiliates have undertaken
to pay all costs relating to the Mergers, including the costs of the
shareholders' meetings.
THE INVESTMENT ADVISER
THE ADVISORY AGREEMENTS. The Chase Manhattan Bank, N.A., One Chase Manhattan
Plaza, New York, New York 10081, currently serves as investment adviser to the
Funds pursuant to an investment advisory agreement between the Adviser and the
Trust on behalf of each Fund (the "Current Advisory Agreement"). The Adviser
will serve as investment adviser to the Funds after the Holding Company Merger
under an investment advisory agreement with the Trust on behalf of each Fund
(the "Interim Advisory Agreement") which is identical in all material respects
to the Current Advisory Agreement except for its effective date. A copy of the
form of the Interim Advisory Agreement is attached hereto as Appendix A and
should be read in conjunction with the following.
THE CHASE MANHATTAN BANK, N.A. The Chase Manhattan Bank, N.A., a wholly-owned
subsidiary of The Chase Manhattan Corporation, a registered bank holding
company, is a commercial bank offering a wide range of banking and investment
services to customers throughout the United States and around the world. Its
headquarters are at One Chase Manhattan Plaza, New York, New York 10081. As of
December 31, 1995, Chase was one of the largest commercial banks in the United
States, with assets of $____ billion. As of such date, The Chase Manhattan
Corporation was one of the largest bank holding companies in the United States,
having total assets of approximately $___ billion. As of December 31, 1995, The
Chase Manhattan Corporation through various subsidiaries provided personal,
corporate and institutional investment management services for approximately
$___ billion in assets, of which Chase provided investment management services
to portfolios containing approximately $9.4 billion in assets. Included among
Chase's accounts are commingled trust funds and a broad spectrum of individual
trust and investment management portfolios. These accounts have varying
investment objectives. Effective upon consummation of the Holding Company
Merger, The Chase Manhattan Bank, N.A. will be a wholly-owned subsidiary of New
Chase. Upon consummation of the Bank Merger, The Chase Manhattan Bank, a New
York State chartered bank (the successor entity to The Chase Manhattan Bank,
N.A.) will continue to be a wholly-owned subsidiary of New Chase.
The other mutual funds for which the Adviser also serves as investment adviser,
their assets as of December 31, 1995, and their advisory fees are:
7
<PAGE>
<TABLE>
<CAPTION>
Total Assets
Mutual Fund Group Fee as of 12/31/95
<S> <C> <C>
Vista Short Term Bond Fund 0.25%
Vista U.S. Treasury Income Fund 0.30
Vista Bond Fund 0.30
Vista U.S. Government Securities Fund 0.30
Vista Equity Income Fund 0.40
Vista Equity Fund 0.40
Vista Balanced Fund 0.50
IEEE Balanced Fund 0.60
Vista Small Cap Equity Fund 0.65
Vista Southeast Asian Fund 1.00
Vista Japan Fund 1.00
Vista European Fund 1.00
[Vista Global Fixed Income Fund] 0.00
Total Assets
Mutual Fund Variable Annuity Trust Fee as of 12/31/95
International Equity Portfolio 0.80%
Capital Growth Portfolio 0.60%
Growth and Income Portfolio 0.60%
Asset Allocation Portfolio 0.55%
Treasury Portfolio 0.50%
Money Market Portfolio 0.25%
</TABLE>
The Adviser is currently a wholly-owned subsidiary of The Chase Manhattan
Corporation, a registered bank holding company, and is a commercial bank
offering a wide range of banking and investment services to customers throughout
the U.S. and around the world. Effective upon consummation of the Holding
Company Merger, the Adviser will be a wholly-owned subsidiary of New Chase. Upon
consummation of the Bank Merger, the Adviser will continue to be a wholly-owned
subsidiary of New Chase.
CURRENT AND INTERIM ADVISORY AGREEMENTS
The Current and Interim Advisory Agreements for each Fund are identical, except
for their effective dates. The Current and Interim Advisory Agreements provide
for the Adviser to render investment, supervisory and certain corporate
administrative services subject to the control of the Board of Trustees. The
Current and Interim Advisory Agreements state that the Adviser shall, at its
expense, provide to the particular Fund all office space and facilities,
equipment and clerical personnel necessary to carry out its duties under each
Advisory Agreement.
8
<PAGE>
Under each of the Current and Interim Advisory Agreements, the Adviser pays all
compensation of those officers and employees of the Trust and of those Trustees
who are affiliated with the Adviser. Each Fund bears the cost of the preparation
and setting in type of its prospectuses and reports to shareholders and the
costs of printing and distributing those copies of such prospectuses and reports
as are sent to shareholders. Under the Current and Interim Advisory Agreements
all other expenses of the Fund not expressly assumed by the Adviser are paid by
the Fund. Each Advisory Agreement lists examples of such expenses; the major
categories of such expenses relate to interest, taxes, legal and audit expenses,
custodian and transfer agent or shareholder servicing agency expenses, stock
issuance and redemption costs, certain printing costs, registration costs of the
Trust and its shares under federal and state securities laws, and non-recurring
expenses, including litigation.
For the services it provides under the terms of each Current and Interim
Advisory Agreement, each Fund pays the Adviser a monthly fee equal to a
specified percentage per annum of its average daily net assets computed at the
close of each business day. See "Fees and Fee Waivers" below which sets forth
the applicable percentage for each Fund. The Adviser may voluntarily agree to
waive a portion of the fees payable to it.
The Current Advisory Agreements are currently in effect until April 15, 1996
with respect to Vista Treasury Plus Money Market Fund and Vista Federal Money
Market Fund and August 23, 1996 with respect to all other Funds and the Current
Advisory Agreements continue from year to year thereafter, provided that the
Agreement is specifically approved in a manner consistent with the 1940 Act.
However, the Current Advisory Agreements may be deemed to terminate upon
consummation of the Holding Company Merger. The 1940 Act requires approval at
least annually by the Board of Trustees, including the vote of a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the Agreement cast in person at a meeting called for the purpose of
voting on approval, or by the vote of the holders of a "majority" of the
outstanding voting securities (as defined in the 1940 Act) of the Fund. The
Interim Agreement will terminate 120 days after January 31, 1996 (see
"Additional Information").
The Trust, on behalf of each Fund, may terminate each of the Current and Interim
Advisory Agreements without penalty on not more than 60 days' nor less than 30
days' written notice when authorized by either a vote of the shareholders of the
Fund or by a vote of a majority of the Trust's Board of Trustees, including the
vote of a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) of any party to the Agreement. The Adviser may terminate each
of the Current and Interim Advisory Agreements on not more than 60 days' nor
less than 30 days' written notice. Both Advisory Agreements will automatically
terminate in the event of their assignment (as defined in the 1940 Act).
In addition, each of the Current and Interim Advisory Agreements provides that,
in the event the operating expenses of the Fund, including all investment
advisory and administration fees, but excluding brokerage commissions and fees,
distribution fees, taxes, interest and extraordinary expenses such as litigation
expenses, for any fiscal year exceed the most restrictive expense limitation
applicable to the Fund imposed by the securities laws or regulations thereunder
of any state in which the shares of the Fund are qualified for a sale, as such
9
<PAGE>
limitations may be raised or lowered from time to time, the Adviser shall reduce
its advisory fee described above to the extent of its share of such excess
expenses. The amount of any such reduction to be borne by the Adviser will be
deducted from the monthly fee otherwise payable to the Adviser during such
fiscal year; and if such amounts should exceed the monthly fee, the Adviser will
pay to the Fund its share of such excess expenses no later than the last day of
the first month of the next succeeding fiscal year.
CERTAIN RELATIONSHIPS AND ACTIVITIES. The Adviser and its affiliates may have
deposit, loan and other commercial banking relationships with the issuers of
securities purchased on behalf of any of the Funds, including outstanding loans
to such issuers which may be repaid in whole or in part with the proceeds of
securities so purchased. The Adviser and its affiliates deal, trade and invest
for their own accounts in U.S. Government obligations and municipal obligations
and are among the leading dealers of various types of U.S. Government
obligations and municipal obligations. The Adviser and its affiliates may sell
U.S. Government obligations and municipal obligations to and purchase them from
other investment companies distributed by Vista Broker Dealer Services. The
Adviser will not invest any Fund assets in any U.S. Government obligations or
municipal obligations purchased from itself or any affiliate, although under
certain circumstances such securities may be purchased from other members of an
underwriting syndicate in which the Adviser or an affiliate is a non-principal
member. This restriction may limit the amount or type of U.S. Government
obligations or municipal obligations available to be purchased on behalf of the
Funds. The Adviser has informed the Fund that in making its investment decisions
it does not obtain or use material inside information in the possession of any
other division or department of the Adviser or in the possession of any
affiliate of the Adviser.
Both the Current and Interim Advisory Agreements provide that, in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder, the Adviser shall not be liable for any act or omission
in the course of or in connection with the rendering of its services thereunder.
BOARD CONSIDERATION
In considering whether to approve the Interim Advisory Agreement and to submit
it to the shareholders for their approval, the Board of Trustees considered the
following factors: (1) the representation that there would be no diminution in
the scope and quality of advisory and other services provided by the Adviser
under the Interim Advisory Agreement, and (2) the identical nature of the terms
and conditions, including compensation payable, contained in the Interim
Advisory Agreement as compared to the Current Advisory Agreement. Additionally,
the Board considered the benefits that would be obtained by each Fund in
maintaining continuity in the advisory services provided to it, and determined
that continuity was advantageous to the Fund as it would serve to minimize
uncertainty and confusion, provide for the continued utilization of the
demonstrated skills and capability of the staff of the Adviser and its
familiarity with the operations of the Trust, and avoid the possibility of
disruptive effects on the Trust that might otherwise result from a change in the
management and operations of the Trust.
10
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of its Interim Advisory Agreement will require the affirmative vote of
a "majority of the outstanding voting securities" of the relevant Fund, which
for this purpose means the affirmative vote of the lesser of (1) more than 50%
of the outstanding shares of such Fund or (2) 67% or more of the shares of such
Fund present at the meeting if more than 50% of the outstanding shares of such
Fund are represented at the meeting in person or by proxy (a "Majority Vote").
If the shareholders of a Fund do not approve the Interim Advisory Agreement, The
Chase Manhattan Corporation and Chemical Banking Corporation nevertheless intend
to proceed with the Holding Company Merger and, in such case, the affected
Current Advisory Agreement will terminate automatically. In that event, the
Board will take such further action as it may deem to be in the best interests
of the Fund's shareholders.
ADDITIONAL INFORMATION
Chase also serves as each Fund's administrator pursuant to a separate
Administration Agreement. Under the Administration Agreement, Chase generally
assists in all aspects of the Fund's operations, other than providing investment
advice, subject to the overall authority of the Board of Trustees in accordance
with applicable state law. Under the terms of the relevant Administration
Agreement, Chase receives a monthly fee at the annual rate of .05% of the value
of each Fund's average daily net assets. For each Fund, the administration fee
payable, the amount by which such fee was reduced pursuant to a waiver by Chase,
and the net administration fees paid by the Fund under the Administration
Agreement for the indicated period are set forth below under "Fees and Fee
Waivers."
The Funds have engaged Vista Broker-Dealer Services, Inc. (the
"Sub-Administrator"), a wholly-owned subsidiary of BISYS Fund Services, Inc.,
located at 125 West 55th Street, New York, New York 10019, to assist it in
providing certain administrative services for each Fund pursuant to a
Sub-Administration Agreement between the Trust, on behalf of each Fund, and the
Sub-Administrator. The Sub-Administrator receives an annual fee, payable
monthly, of .__% of the average daily net assets of each Fund.
On November 6, 1995, the Trust, other investment companies advised by Chase, and
Chase filed an application (the "Application") with the Securities and Exchange
Commission (the "Commission") requesting an order of the Commission permitting
implementation, without prior shareholder approval, of the Interim Advisory
Agreements during the interim period commencing on the date of the closing on
the Holding Company Merger and ending at the earlier of such time as sufficient
votes are cast by the applicable Fund's shareholders to approve the relevant
Interim Agreement orApril __, 1996 (the "Interim Period").
As a condition to the requested exemptive relief, the Trust has undertaken in
the Application that the advisory compensation payable by any Fund during the
Interim Period will be maintained in an interest-bearing escrow account and,
with respect to each Fund, amounts in the account will be paid to Chase only
upon approval by the shareholders of the Fund of the Interim Advisory Agreement
and the compensation payable thereunder. In addition, the Application
11
<PAGE>
contains representations that Chase (and its successor, if applicable), will
take all appropriate steps to ensure that the scope and quality of its advisory
and other services provided to the Funds during the Interim Period will be at
least equivalent to the scope and quality of the services previously provided;
and that, in the event of any material change in the personnel providing
services pursuant to the Interim Advisory Agreements during the Interim Period,
Board will be apprised and consulted to assure that they are satisfied that the
services provided will not be diminished in scope or quality.
The Trust's Board of Trustees concluded that payment of the investment advisory
fee under the Interim Advisory Agreement, during the Interim Period would be
appropriate and fair considering that (1) the fee would be paid at the same rate
as was previously in effect under the Current Advisory Agreement and services
would be provided in the same manner, (2) because of the relatively short time
frame necessary to complete the Holding Company Merger, there was a possibility
that some or all of the Funds would not obtain the requisite number of votes to
approve the Interim Advisory Agreement prior to the Holding Company Merger, and
(3) the non-payment of advisory fees during the Interim Period would be an
unduly harsh result in view of the services provided to each Fund under the
Interim Advisory Agreements.
PROPOSAL 2
ELECTION OF TRUSTEES
It is proposed that shareholders of the Funds consider the election of the
individuals listed below (the "Nominees") to the Board of Trustees of the Trust,
which is currently organized as a Massachusetts business trust. Biographical
information about the Nominees and other relevant information is set forth
below. Each Nominee has consented to being named in this Proxy Statement and has
agreed to serve as a Board member if elected.
In connection with the Mergers, it has been proposed, subject to shareholder
approval, that the series funds of The Hanover Funds, Inc., an open-end
management investment company affiliated with Chemical Bank (the "Hanover
Funds"), be merged into certain series of the Trust. In an effort to provide
continuity of operations and management, certain Directors of the Hanover Funds
and The Hanover Investment Funds, Inc. have been nominated to serve as Trustees
of the Trust. Therefore, the Nominees consist of all current Trustees of the
Trust and three other individuals who are presently Directors of the Hanover
Funds.
The persons named in the accompanying form of proxy intend to vote each such
proxy "FOR" the election of the Nominees, unless shareholders specifically
indicate on their proxies the desire to withhold authority to vote for elections
to office. It is not contemplated that any Nominee will be unable to serve as a
Board member for any reason, but if that should occur prior to the Meeting, the
proxy holders reserve the right to substitute another person or persons of their
choice as nominee or nominees.
12
<PAGE>
The following are the Nominees:
<TABLE>
<CAPTION>
Principal Occupations Year First Became
NOMINEE Age for the Last Five Years a Trustee
<S> <C> <C> <C>
Fergus Reid, III 63 Chairman and Chief Executive 1984
971 West Road Officer, Lumelite Corporation,
New Canaan, CT 06840 since September 1985; Trustee,
Morgan Stanley Funds; from
January 1985 through September
1985, Director of Corporate
Finance, Noyes Partners
(investment advisory firm); from
1982 through 1984, Managing
Director, Bernhard Associates
(venture capital firm).
Richard E. Ten Haken 61 Former District Superintendent 1984
4 Barnfield Road of Schools, Monroe No. 2 and
Pittsford, NY 14534 Orleans Counties, New York;
Chairman of the Finance and the
Audit and Accounting Committees,
Member of the Executive Committee;
Chairman of the Board and
President, New York State
Teachers' Retirement System.
William J. Armstrong 54 Vice President and Treasurer, 1987
49 Aspen Way Ingersoll-Rand Company.
Upper Saddle River, NJ 07458
John R.H. Blum 66 Attorney in private practice; 1984
322 Main Street formerly partner in the law firm
Lakeville, CT 06039 of Richards, O'Neil & Allegaert
(19__-1994); Commissioner of
Agriculture State of Connecticut,
1992-1995.
13
<PAGE>
Joseph J. Harkins 64 Retired; Commercial Sector 1990
257 Plantation Circle South Executive and Executive Vice
Ponte Vedra Beach, FL 32082 President of The Chase
Manhattan Bank, N.A. from
1985 through 1989. He has
been employed by Chase in
numerous capacities and offices
since 1954. Director of
Blessings Corporation,
Jefferson Insurance Company
of New York, Monticello
Insurance Company and
Nationar.
*H. Richard Vartabedian 60 Consultant, Republic Bank of 1992
P.O. Box 296 New York; formerly, Senior
Beach Road Investment Officer, Division
Hendrick's Head Executive of the Investment
Southport, ME 04576 Management Division of The
Chase Manhattan Bank,
N.A., 1980 through
1991.
Stuart W. Cragin, Jr. 63 Retired; formerly President, 1992
108 Valley Road Fairfield Testing Laboratory,
Cos Cob, CT 06807 inc. He has previously served
in a variety of marketing,
manufacturing and general
management positions with Union
Camp Corp., Trinity Paper &
Plastics Corp., and Conover
Industries.
Irving L. Thode 64 Retired; Vice President of 1992
80 Perkins Road Quotron Systems. He has
Greenwich, CT 06830 previously served in a number
of executive positions with
Control Data Corp., including
President of its Latin American
Operations, and General Manager of
its Data Services business.
14
<PAGE>
*W. Perry Neff 67 Independent Financial Proposed
RR 1 Box 102A Consultant; Director of North
Weston, VT 05181 America Life Assurance Co.,
Petroleum & Resources Corp.
and The Adams Express Co.:
Director and Chairman of The
Hanover Funds, Inc.; Director,
Chairman and President of The
Hanover Investment Funds,
Inc.
Roland R. Eppley, Jr. 62 Retired: formerly President and Proposed
105 Ceventry Place Chief Executive Officer,
Palm Beach Gardens, Eastern States Bankcard
FL 33418 Association Inc, (1971-1988);
Director, Janel Hydraulics, Inc.
and The Hanover Funds, Inc.
W.D. MacCallan 67 Director of The Adams Express Proposed
624 East 45th Street Co., The Hanover Investment
Savannah, GA 31405 Funds, Inc., The Hanover
Investment Funds, Inc. and
Petroleum & Resources Corp.;
formerly Chairman of the
Board and Chief Executive
Officer of The Adams Express
Co. and Petroleum &
Resources Corp.
</TABLE>
* Interested Trustee as defined under the 1940 Act.
The Board of Trustees of the Trust presently has an Audit Committee. The members
of the Audit Committee are Messrs. Ten Haken (Chairman), Blum, Cragin, Thode,
Armstrong, Harkins, Reid, and Vartabedian. The function of the Audit Committee
is to recommend independent auditors and monitor accounting and financial
matters.
The Audit Committee met two times during the fiscal year ended August 31, 1995.
REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS:
Each Trustee is reimbursed for expenses incurred in attending each meeting of
the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the Adviser is compensated for his or her services according to a
fee schedule which recognizes the fact that
15
<PAGE>
each Trustee also serves as a Trustee of other investment companies advised by
the Adviser. Each Trustee receives a fee, allocated among all investment
companies for which the Trustee serves, which consists of an annual retainer
component and a meeting fee component. Effective August 21, 1995, each Trustee
of the Vista Funds receives a quarterly retainer of $12,000 and an additional
per meeting fee of $1,500. Prior to August 21, 1995, the quarterly retainer was
$9,000 and the per-meeting fee was $1,000. The Chairman of the Trustees and the
Chairman of the Investment Committee each receive a 50% increment over regular
Trustee total compensation for serving in such capacities for all the investment
companies advised by the Adviser.
Set forth below is information regarding compensation paid or accrued during the
fiscal year ended August 31, 1995 for each Trustee of the Trust:
<TABLE>
<CAPTION>
U.S. New York California
Government Global Tax Fee Prime Tax Free Tax Free
Money Money Money Money Money Money
Market Market Market Market Market Market
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $12,789.94 $10,079.61 $4,097.69 $2,974.65 $3,453.60 $531.54
Richard E. Ten Haken, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
William J. Armstrong, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
John R.H. Blum, Trustee 8,306.57 6,575.89 2,687.12 1,948.80 2,303.73 347.07
Joseph J. Harkins, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
H. Richard Vartabedian, Trustee 8,526.62 6,713.78 2,731.79 1,983.08 2,362.41 354.38
Stuart W. Cragin, Jr., Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
Irving L. Thode, Trustee 8,536.29 6,521.36 2,655.31 1,942.65 2,302.01 344.80
</TABLE>
<TABLE>
<CAPTION>
Federal Treasury Plus New York Tax Free California
Money Money Tax Free Income Intermediate
Market Fund Market Fund Income Fund Fund Tax Free Fund
----------- ----------- ----------- ---- -------------
<S> <C> <C> <C> <C> <C>
Fergus Reid, III, Trustee $3,377.47 $489.54 $1,052.32 $971.82 $314.23
Richard E. Ten Haken, Trustee 2,251.63 326.37 701.55 647.85 209.49
William J. Armstrong, Trustee 2,251.63 326.37 701.55 647.85 209.49
John R.H. Blum, Trustee 2,187.37 323.30 685.48 633.77 204.80
Joseph J. Harkins, Trustee 2,251.63 326.37 701.55 647.85 209.49
H. Richard Vartabedian, Trustee 2,251.63 326.37 701.55 647.85 209.49
Stuart W. Cragin, Jr., Trustee 2,243.38 323.47 683.69 629.99 209.49
Irving L. Thode, Trustee 2,243.38 323.47 683.69 629.99 209.49
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits Accrued from
as Fund Expenses "Fund Complex"(1)
<S> <C> <C>
Fergus Reid, III, Trustee 0 $78,456.65
Richard E. Ten Haken, 0 52,304.39
Trustee
William J. Armstrong, 0 46,632.34
Trustee
John R.H. Blum, Trustee 0 51,304.37
Joseph J. Harkins, 0 52,304.39
Trustee
H. Richard Vartabedian, 0 74,804.44
Trustee
Stuart W. Cragin, Jr., 0 52,304.39
Trustee
Irving L. Thode, Trustee 0 52,304.39
</TABLE>
(1) Data reflects total compensation earned during the period January 1,
1995 to December 31, 1995 for service as a Trustee to all Funds
advised by the Adviser.
VISTA FUNDS RETIREMENT PLAN FOR ELIGIBLE TRUSTEES
Effective August 21, 1995, the Trustees also instituted a Retirement Plan for
Eligible Trustees (the "Plan") pursuant to which each Trustee (who is not an
employee of any of the Funds, the Adviser, Administrator or distributor or any
of their affiliates) may be entitled to certain benefits upon retirement from
the Board of Trustees. Pursuant to the Plan, the normal retirement date is the
date on which the eligible Trustee has attained age 65 and has completed at
least five years of continuous service with one or more of the investment
companies advised by the Adviser (collectively, the "Covered Funds"). Each
Eligible Trustee is entitled to receive from the Covered Funds an annual benefit
commencing on the first day of the calendar quarter coincident with or following
his date of retirement equal to 10% of the highest annual compensation received
from the Covered Funds multiplied by the number of such Trustee's years of
service (not in excess of 10 years) completed with respect to any of the Covered
Funds. Such benefit is payable to each eligible Trustee in monthly installments
for the life of the Trustee.
Set forth below in the table below are the estimated annual benefits payable to
an eligible Trustee upon retirement assuming various compensation and years of
service classifications. The estimated credited years of service for Messrs.
Reid, Ten Haken, Armstrong, Blum, Harkins, Vartabedian, Cragin, and Thode are
11, 11, 8, 11, 3, 3 and 3 respectively.
17
<PAGE>
<TABLE>
<CAPTION>
YEARS OF
SERVICE HIGHEST ANNUAL COMPENSATION PAID BY ALL VISTA FUNDS
<S> <C> <C> <C> <C>
40,000 45,000 50,000 55,000
========================================================================================================
10 40,000 45,000 50,000 55,000
9 36,000 40,500 45,000 49,500
8 32,000 36,000 40,000 44,000
7 28,000 31,500 35,000 38,500
6 24,000 27,000 30,000 33,000
5 20,000 22,500 25,000 27,500
</TABLE>
Effective August 21, 1995, the Trustees instituted a Deferred Compensation Plan
for Eligible Trustees (the "Deferred Compensation Plan") pursuant to which each
Trustee (who is not an employee of any of the Funds, the Adviser, Administrator
or Distributor or any of their affiliates) may enter into agreements with the
Funds whereby payment of the Trustees' fees are deferred until the payment date
elected by the Trustee (or the Trustee's termination of service). The deferred
amounts are deemed invested in shares of the Fund on whose Board the Trustee
sits. The deferred amounts are paid out in a lump sum or over a period of
several years as elected by the Trustee at the time of deferral. If a deferring
Trustee dies prior to the distribution of amounts held in the deferral account,
the balance of the deferral account will be distributed to the Trustee's
designated beneficiary in a single lump sum payment as soon as practicable after
such deferring Trustee's death. The following Eligible Trustees have executed a
deferred compensation agreement for the 1996 calendar year: [ ]
PRINCIPAL EXECUTIVE OFFICERS:
The principal executive officers of the Trust are as follows:
H. Richard Vartabedian - President and Trustee.
Martin R. Dean - Treasurer and Assistant Secretary; Vice President, BISYS Funds
Group, Inc. Ann Bergin - Secretary; Vice President, BISYS Funds Group, Inc,;
Chief Compliance Officer and Secretary, Vista Broker-Dealer Services, Inc.
OWNERSHIP OF SHARES OF THE FUNDS. The Trustees and officers as a group directly
or beneficially own less than 1% of each Fund.
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REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The election of each of the Nominees listed above requires the
affirmative vote of a plurality of the votes entitled to be cast at the Meeting
by all shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSAL 3
RATIFICATION OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board, including a majority of the trustees who are not interested persons
of the Trust, is recommending Price Waterhouse LLP to serve as independent
public accountants of each Fund for each Fund's next fiscal year, subject to the
right of the Fund to terminate such employment immediately without penalty by
vote of a majority of the outstanding voting securities of the Fund at any
meeting called for such purpose. The Board's selection is hereby submitted to
the shareholders for ratification.
Price Waterhouse LLP served as the independent auditors for each of the Funds
during its most recent fiscal period ended August 31, 1995. Services performed
by Price Waterhouse LLP during such time have included the audit of the
financial statements of the Trust and services related to filings of the Trust
with the Commission. Price Waterhouse LLP has informed each Fund that neither
Price Waterhouse LLP nor any of its partners has any direct or material indirect
financial interest in the Trust. Representatives of Price Waterhouse LLP are not
expected to be present at the Meeting but have been given the opportunity to
make a statement if they so desire, and will be available should any matter
arise requiring their participation.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The ratification of the selection of Price Waterhouse LLP as the independent
public accountants of a Fund requires the affirmative vote of a majority of the
votes entitled to be cast at the Meeting by the shareholders of the Fund.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
PROPOSAL 4
APPROVAL OR DISAPPROVAL OF A
MODIFICATION TO THE DECLARATION OF TRUST
INTRODUCTION
The Trust is organized as a Massachusetts business trust under the laws of the
Commonwealth of Massachusetts. The Trust's Declaration of Trust provides, among
other things, that the Board
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of Trustees has the authority to make certain amendments to the Declaration of
Trust without the vote or consent of the Trust's Shareholders in order to, among
other things, designate series, change the name of the Trust to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision thereof, or if they deem it necessary or advisable to
conform the Declaration of Trust to the requirements of applicable federal laws
or regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended. Management has
proposed, and the Board of Trustees has approved, a modification to the
Declaration of Trust which would allow the Trustees to amend the Declaration of
Trust with respect to items which do not effect the economic value or legal
rights of a shareholder upon majority vote of the Board of Trustees. This would
enable the Trustees to amend and modify the Declaration of Trust when necessary
to react to changes in Massachusetts and other regulatory laws and to provide
maximum flexibility to the Trust, and therefore, the Funds and their
shareholders.
[INSERT TEXT OF AMENDMENT]
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATIONS
The approval of the proposed modification to the Declaration of Trust requires
the affirmative vote of a majority of the shareholders of the Trust.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL.
PROPOSALS 5A-K
APPROVAL OR DISAPPROVAL OF CERTAIN CHANGES TO
THE FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE FUNDS
INTRODUCTION TO PROPOSALS 5A-K
Proposals 5a-k concern proposed changes to the current fundamental investment
restrictions ("Restrictions") of the Funds. Each of these proposals relate to
Restrictions of a Fund which are presently classified as "fundamental," which
means that they can only be changed by a vote of the relevant Fund's
shareholders.
The Adviser recommended to the Trustees that it be authorized to analyze each
Fund's current Restrictions and, where practical and appropriate for each Fund's
investment objective, recommend to the Trustees whether, subject to shareholder
approval, certain changes should be adopted. Based on the Adviser's review and
recommendations, the Trustees believe that certain changes should be implemented
for each Fund. These changes fall within the following categories:
Modification. The proposal involves a modification of certain Restrictions for
reasons outlined below.
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Elimination. The proposal involves an elimination of certain Restrictions, for
reasons outlined below.
Reclassification. The proposal involves a reclassification of certain
Restrictions as nonfundamental restrictions, which could thereafter be changed
with the approval of the Trust's Board of Trustees, without a shareholder vote.
Based on the recommendations of the Adviser, the Trustees have approved the
proposed changes and believe that they are in the best interests of the Funds
and their shareholders for the following reasons:
Standardization. Some of the Funds' Restrictions differ in form and substance
from similar restrictions of similar mutual funds currently advised by the
Adviser. Increased standardized restrictions among all Chase mutual funds will
help promote operational efficiencies and facilitate the monitoring of portfolio
compliance. In all cases, the adoption of the new or revised restriction is not
expected to have any impact on the investment techniques employed by a Fund at
this time.
Modernization. The Adviser has managed other funds with similar investment
objectives since 1987. The Funds' investment restrictions were derived from
these other Funds' investment restrictions as a matter of administrative
convenience. Therefore, the Funds' Restrictions are derived from restrictions
which have been in effect, without changes, for 9 years. In connection with the
Mergers, the Adviser has recommended to all advised funds (including the Funds)
that their investment restrictions be evaluated and amended as necessary. The
Trustees, acting on the Adviser's recommendation, recommend that each Fund
should modernize its Restrictions, where appropriate, to conform to current
regulation and authorize the use of currently available financial instruments
and investment techniques.
Clarification. Some of the Funds' Restrictions contain ambiguities that, if
interpreted in a narrow way, might prevent the Fund from following the original
intent of the Restriction. Accordingly, the Trustees, acting on Chase's
recommendation, recommend that the Fund change the Restriction, where
appropriate, to eliminate any ambiguities. Some of these proposals include the
proposed division of a Restriction which currently covers multiple topics into
two or more distinct restrictions.
Flexibility. Several of the Funds' Restrictions are proposed to be changed so as
to allow the Funds to respond to recent and future regulatory developments and
changes in the financial markets. In addition, restrictions prohibiting certain
transactions have been or may be changed or eliminated by a federal or state
securities regulator. In order to take advantage of such changes, the Funds
would need shareholder approval, which is time consuming and costly to the Fund
and its shareholders. Chase believes that in most cases, the proposed changes
are not expected to have any immediate effect on the Funds' investment strategy,
since the Funds may not have a current intention of changing their investment
strategy. However, in order to give the Funds more flexibility in responding to
regulatory and market developments, the Trustees, acting on Chase's
recommendations, recommend changing, reclassifying or eliminating some of the
Restrictions described below so that they can be changed by the Trustees without
a
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shareholder vote. In the future, when changes to nonfundamental restrictions of
a Fund are adopted, the Fund's prospectus and statement of additional
information will be amended to reflect the changes and shareholders will be
notified thereof.
The proposals regarding the Restrictions are presented in the Proposals 5a-m,
below, categorized by topic (e.g., borrowing, concentration, etc.). In each
case, the current Restriction is set forth in the left hand column under
"Current" and, for the Fund(s) to which the current Restriction applies, it is
proposed that the Restriction be restated, eliminated, reclassified, or
otherwise changed as indicated in the right hand column under "Proposed". In
each case, the reason for, and an explanation of, the proposed change, is set
forth below the comparison.
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INTRODUCTION TO PROPOSALS 5a-k:
Proposals 5a-k each apply to each of the Funds:
PROPOSAL 5a
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING BORROWING
CURRENT: PROPOSED:
No Fund may borrow money or pledge, FUNDAMENTAL RESTRICTION
mortgage or hypothecate its assets, No Fund may borrow money, except
except that, as a temporary measure that each Fund may borrow money for
for extraordinary or emergency temporary or emergency purposes, or
purposes or by engaging in reverse by engaging in reverse repurchase
repurchase transactions, it may transactions, in an amount not
borrow in an amount not to exceed exceeding 33 1/3% of the value of
10% of the current value of its net its total assets at the time when
assets, including the amount the loan is made and may pledge,
borrowed, and may pledge, mortgage mortgage or hypothecate no more than
or hypothecate not more than 1/3 of 1/3 of its net assets to secure such
such assets to secure such borrowings. Any borrowings
borrowings (it is intended that, representing more than 5% of a
aside from reverse repurchase Fund's total assets must be repaid
transactions, money would be before the Fund may make additional
borrowed by a Fund only from banks investments.
and only to accommodate requests for
the repurchase of shares of the Fund
while effecting an orderly
liquidation of portfolio
securities), provided that
collateral arrangements with respect
to a Fund's permissible futures and
options transactions, including
initial and variation margin, are
not considered to be a pledge of
assets for purposes of this
restriction; the Fund will not
purchase investment securities if
its outstanding borrowing, including
repurchase agreements, exceeds 5% of
the value of the Fund's total
assets.
This fundamental restriction is substantially identical for each Fund, except
that Vista New York Tax-Free Money Market Fund, U.S. Government Money Market
Fund, Vista California Intermediate Tax Free Fund, Vista New York Tax Free
Income Fund and Vista Tax Free Income Fund may each borrow an amount not to
exceed 1/3 of their respective net assets as a temporary measure for
extraordinary or emergency purposes.
EXPLANATION OF THE PROPOSED CHANGE: The proposed amendment clarifies and
modernizes the restriction on borrowing by treating borrowings for temporary or
emergency purposes separately from other borrowings. Borrowing for emergency
purposes may be necessary to address excessive or unanticipated liquidations of
Fund shares that exceed available cash. To increase flexibility, reverse
repurchase agreements would be allowable outside the context of borrowings
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implemented for temporary purposes, and would be subject to a limitation of 33
1/3% of a Fund's assets. Leveraging by means of borrowing would exaggerate the
effect of any increase or decrease in the value of portfolio securities on a
Fund's net asset value; however, the Funds do not presently intend to borrow for
purposes of leverage. Money borrowed will be subject to interest and other
costs.
PROPOSAL 5b
AMENDMENT TO EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION CONCERNING INVESTMENT
FOR THE PURPOSE OF EXERCISING CONTROL
CURRENT: PROPOSED:
New York Tax Free Money Market Fund, NONFUNDAMENTAL RESTRICTION
Tax Free Money Market Fund, No Fund may, with respect to 75% of
California Tax Free Money Market its assets, hold more than 10% of
Fund, U.S. Government Money Market the outstanding voting securities of
Fund, California Intermediate Tax an issuer.
Free Fund, Vista Tax Free Income
Fund and Vista New York Tax Free
Income Fund may not purchase
securities of any issuer if such
purchase at the time thereof would
cause more than 10% of the voting
securities of such issuer to be held
by a Fund. Treasury Plus Money
Market Fund, Federal Money Market
Fund, Global Money Market Fund and
Prime Money Market Fund may not
purchase any voting securities.
EXPLANATION OF THE PROPOSED CHANGE: The proposed amendment would clarify, for
all Funds, that the Restriction involving a 10% limitation on investments in any
issuer is a limitation based upon the outstanding voting securities of the
issuer and is applicable only to 75% of a Fund's assets. This restatement and
reclassification of the Restriction would clarify and help standardize the
Restriction and provide additional flexibility for the investment of each Fund's
assets.
PROPOSAL 5c
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING THE MAKING OF LOANS
CURRENT: PROPOSED:
The Funds are not permitted to make FUNDAMENTAL RESTRICTION
loans to other persons, except (i) No Fund may make loans, except that
with respect to each of the Funds, each Fund may: (i) purchase and hold
except for New York Tax Free Money debt instruments (including without
Market Fund and Tax Free Money limitation, bonds, notes, debentures
Market Fund, through the lending of or other obligations and
their portfolio securities and certificates of deposit, bankers'
provided that
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any such loans not exceed 30% acceptances and fixed time deposits)
(except for U.S. Government Money in accordance with its investment
Market Fund which may not exceed objectives and policies; (ii) enter
20%) of a Fund's total assets (taken into repurchase agreements with
at market value), (ii) through the respect to portfolio securities; and
use of repurchase agreements or the (iii) lend portfolio securities with
purchase of short-term obligations a value not in excess of one-third
and provided that not more than 10% of the value of its total assets.
of a Fund's total assets will be
invested in repurchase agreements
maturing in more than seven days, or
(iii) by purchasing, subject to the
limitation on illiquid and
restricted securities above, a
portion of an issue of debt
securities of types commonly
distributed privately to financial
institutions, for which purposes the
purchase of short-term commercial
paper or a portion of an issue of
debt securities which are part of an
issue to the public shall not be
considered the making of a loan.
EXPLANATION OF THE PROPOSED CHANGE: The proposed amendment is intended to
clarify the basic limitation on securities lending, and would also exclude those
transactions that current regulatory interpretations and policies allow. The
investment adviser will not make loans of a Fund's portfolio securities (or
enter into repurchase agreements) unless it receives collateral that is at least
102% of the value of the loan, including accrued interest. If the recipient of
the loan (or the seller of the instrument to be repurchased) defaults and the
value of the collateral securing the loan (or the repurchase agreement)
declines, a Fund could incur a loss.
PROPOSAL 5d
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING PURCHASES OF SECURITIES ON MARGIN
CURRENT: PROPOSED:
NONFUNDAMENTAL RESTRICTION
No Fund may purchase any security or
evidence of interest therein on No Fund may make short sales of
margin, except that such short-term securities, other than short sales
credit may be obtained as may be "against the box," or purchase
necessary for the clearance of securities on margin except for
purchases and sales of securities short-term credits necessary for
and except that, with respect to the clearance of portfolio transactions,
Fund's permissible options and provided that this restriction will
futures transactions, deposits of not be applied to limit the use of
initial and variation margin may be options, futures contracts and
made in connection with the related options, in the manner
purchase, ownership, holding or sale otherwise permitted by the
of futures or options positions. investment restrictions, policies
and investment program of a Fund.
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EXPLANATION OF THE PROPOSED CHANGE: The proposed change modernizes and clarifies
the circumstances under which a Fund may make margin purchases and short sales.
The reclassification as nonfundamental could enable the Funds to respond more
quickly to changes in financial markets.
PROPOSAL 5e
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION
CONCERNING CONCENTRATION OF INVESTMENT
CURRENT: PROPOSED:
No Fund may concentrate its FUNDAMENTAL RESTRICTION
investments in any particular No Fund may purchase the securities
industry, but if it is deemed of any issuer (other than securities
appropriate for the achievement of a issued or guaranteed by the U.S.
Fund's investment objective, up to government or any of its agencies or
25% of the assets of the Fund, at instrumentalities, or repurchase
market value at the time of each agreements secured thereby) if, as a
investment, may be invested in any result, more than 25% of the Fund's
one industry, except that, with total assets would be invested in
respect to a Fund's permissible the securities of companies whose
futures and options transactions, principal business activities are in
positions in options and futures the same industry. Notwithstanding
shall not be subject to this the foregoing, (i) with respect to a
restriction, except that the Fund Fund's permissible futures and
may invest more than 25% of its options transactions, positions in
total assets in obligations issued options and futures shall not be
by banks, and in obligations issued subject to this restriction; (ii)
or guaranteed by the U.S. the Money Market Funds may invest
Government, its agencies or more than 25% of their total assets
instrumentalities. in obligations issued by banks,
including U. S. banks; (iii) New
This fundamental restriction is York Tax Free Money Market Fund,
substantially identical for each California Tax Free Money Market
Fund, except that (i) Vista New York Fund and Tax Free Money Market Fund
Tax Free Income Fund and Vista Tax may invest more than 25% of their
Free Income Fund may not invest more respective assets in municipal
than 25% of their respective total obligations secured by bank letters
assets in obligations issued by of credit or guarantees, including
banks, (ii) Global Money Market Fund participation certificates and (iv)
and Prime Money Market Fund may up to 25% of the assets of
invest more than 25% of their California Intermediate Tax Free
respective total assets in U.S. Fund will be invested in municipal
banks, foreign banks and their obligations secured by bank letters
branches, and (iii) New York Tax of credit or guarantees.
Free Money Market fund, Tax Free
Money Market Fund, California Tax
Free Money Market Fund and Vista
California Intermediate Tax Free
Fund may invest more than 25% of
their respective total assets in
municipal obligations secured by
bank letters of credit or
guarantees, including participation
certificates (except for California
Intermediate Tax Free Fund).
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For purposes of the above investment
restriction, industrial development
bonds, where the payment of
principal and interest is the
ultimate responsibility of companies
within the same industry, are
grouped together as an "industry."
EXPLANATION OF THE PROPOSED CHANGE: The proposed amendment is intended to
clarify the basic limitation on concentration of investment and would also
exclude certain types of transactions and securities from the limitation as
allowed by current regulatory policies and interpretations.
PROPOSAL 5f
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING COMMODITIES AND REAL ESTATE
CURRENT: CURRENT:
No Fund may purchase or sell real FUNDAMENTAL RESTRICTION
estate(including limited partnership No Fund may purchase or sell
interests but excluding securities physical commodities unless acquired
secured by real estate or interests as a result of ownership of
therein), interests in oil, gas or securities or other instruments but
mineral leases, commodities or this shall not prevent a Fund from
commodity contracts in the ordinary (i) purchasing or selling options
course of business, other than with and futures contracts or from
respect to the Fund's permissible investing in securities or other
futures and options transactions. instruments backed by physical
commodities or (ii) engaging in
forward purchases or sales of
foreign currencies or securities.
FUNDAMENTAL RESTRICTION
No Fund may purchase or sell real
estate unless acquired as a result
of ownership of securities or other
instruments (but this shall not
prevent a Fund from investing in
securities or other instruments
backed by real estate or securities
of companies engaged in the real
estate business). Investments by a
Fund in securities backed by
mortgages on real estate or in
marketable securities of companies
engaged in such activities are not
hereby precluded.
NONFUNDAMENTAL RESTRICTION
No Fund may purchase or sell
interests in oil, gas or mineral
leases.
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EXPLANATION OF THE PROPOSED CHANGES: The proposed changes modernize and clarify
the application of the Restrictions pertaining to commodities and real estate,
and to a large extent would standardize the Restrictions applicable to each of
the respective Funds.
PROPOSAL 5g
AMENDMENT OF EACH FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING INVESTMENTS
IN RESTRICTED AND ILLIQUID SECURITIES
CURRENT: PROPOSED:
NONFUNDAMENTAL RESTRICTION
No Fund may knowingly invest in
securities which are subject to No Fund may invest more than 15%
legal or contractual restrictions on (except for the Money Market Funds,
resale (including securities that which may not invest more than 10%)
are not readily marketable, but not of its net assets in illiquid
including repurchase agreements securities.
maturing in not more than seven
days) if, as a result thereof, more
than 10% of the Fund's total assets
(taken at market value) would be so
invested (including repurchase
agreements maturing in more than
seven days).
EXPLANATION OF THE PROPOSED CHANGES: Illiquid securities are securities that are
not readily marketable or cannot be disposed of promptly within seven days and
in the usual course of business at approximately the price at which a Fund has
valued them. Such securities include, but are not limited to, time deposits and
repurchase agreements with maturities longer than seven days. Securities that
may be resold under Rule 144A or securities offered pursuant to Section 4(2) of
the 1933 Act, shall not be deemed illiquid solely by reason of being
unregistered. The Adviser or Sub-Adviser determines whether a particular
security is deemed to be liquid based on the trading markets for the specific
security and other factors in accordance with procedures adopted by the Board of
Trustees. This limitation may be subject to additional restrictions imposed by
jurisdictions in which a Fund's shares are offered for sale.
The proposed changes would standardize, among all Funds, the applicable
investment restriction, and would remove from all of the descriptions certain
interpretations of what may constitute illiquid securities. By doing this, each
Fund would be subject to the same current interpretations, from time to time, of
what constitutes an illiquid security, under SEC releases and other relevant
authority. The defundamentalization of this restriction would avoid the delay
and expense of a shareholder vote in the event that the permissible guidelines
for investments in illiquid securities changes at some time in the future.
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PROPOSAL 5h
RECLASSIFICATION OF EACH FUND'S FUNDAMENTAL
RESTRICTION CONCERNING THE USE OF OPTIONS
CURRENT: PROPOSED:
No Fund may write, purchase or sell NONFUNDAMENTAL RESTRICTION
any put or call option or any No Fund may write, purchase or sell
combination thereof, provided that any put or call option or any
this shall not prevent (i) the combination thereof, provided that
writing, purchasing or selling of this shall not prevent (i) with
puts, calls or combinations thereof respect to the Growth and Income
with respect to U.S. Government Fund and the Capital Growth Fund
securities or (ii) permissible only, the purchase, ownership,
futures and options transactions, holding or sale of warrants where
the writing, purchasing, ownership, the grantor of the warrants is the
holding or selling of futures and issuer of the underlying securities,
options positions or of puts, calls (ii) with respect to all of the
or combinations thereof with respect Funds, the writing, purchasing or
to futures. selling of puts, calls or
combinations thereof with respect to
portfolio securities or (iii) with
respect to a Fund's permissible
futures and options transactions,
the writing, purchasing, ownership,
holding or selling of futures and
options positions or of puts, calls
or combinations thereof with respect
to futures.
EXPLANATION OF THE PROPOSED CHANGE: The proposed reclassification of this
Restriction as nonfundamental would avoid the delay and expense of a shareholder
vote in the event that the permissible guidelines for such investments changes
at some time in the future. The terms of this Restriction are consistent with
general restrictions, including limitations on liquidity and portfolio
diversification. Therefore, no foreseeable impact on the Funds is anticipated by
the proposed reclassification.
PROPOSAL 5i
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION CONCERNING SENIOR SECURITIES
CURRENT: PROPOSED:
No Fund may issue any senior FUNDAMENTAL RESTRICTION
security (as that term is defined in No Fund may issue any senior
the 1940 Act) if such issuance is security (as defined in the 1940
specifically prohibited by the 1940 Act), except that (a) a Fund may
Act or the rules and regulations engage in transactions that may
promulgated thereunder, provided result in the issuance of senior
that collateral arrangements with securities to the extent permitted
respect to the Fund's permissible under applicable regulations and
options and futures transactions, interpretations of the 1940 Act or
including deposits of initial and an exemptive order; (b) a Fund may
variation margin, are not considered acquire other securities, the
to be acquisition of which may result in
the issuance of a senior
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the issuance of a senior security security, to the extent permitted
for purposes of this restriction. under applicable regulations or
interpretations of the 1940 Act; (c)
subject to the restrictions set
forth below, a Fund may borrow money
as authorized by the 1940 Act. For
purposes of this restriction,
collateral arrangements with respect
to a Fund's permissible options and
futures transactions, including
deposits of initial and variation
margin, are not considered to be the
issuance of a senior security.
EXPLANATION OF THE PROPOSED CHANGE: Under the 1940 Act, an open-end investment
company (such as the Trust) cannot issue senior securities except under certain
very limited conditions. The proposed amendment clarifies and modernizes the
language concerning senior securities to conform to provisions of the 1940 Act.
It is proposed that this restriction exclude those transactions which are
allowed by current regulatory interpretations and policies, and which are
consistent with current investment marketplace practices. Therefore, the
proposed fundamental restrictions will allow, for example, the following
investments even though they may result in the issuance of senior securities:
The Funds could, to the extent permitted by applicable law or exemptive order
(a) enter into commitments, including reverse repurchase agreements and delayed
delivery and when-issued securities; (b) engage in transactions that may result
in the issuance of a senior security; (c) engage in short sales of securities;
(d) purchase and sell futures contracts and related options; (e) borrow money;
and (f) issue multiple classes of securities; subject, in each case, to any
other applicable restrictions.
PROPOSAL 5j
AMENDMENT TO EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING SHORT SALES OF SECURITIES
CURRENT: PROPOSED
No Fund may make short sales of It is proposed that this restriction
securities or maintain a short be eliminated, as it has been
position; except (with respect to combined with a nonfundamental
each Fund except U. S. Government restriction concerning purchase of
Money Market Fund and Global Money securities on margin. (See Proposal
Market Fund) a Fund may only make 5d above.)
such short sales of securities or
maintain a short position if when a
short position is open the Fund owns
an equal amount of such securities
or securities convertible into or
exchangeable, without payment of any
further consideration, for
securities of the same issue as, and
equal in amount to, the securities
sold short, and not more than 10% of
the Fund's net assets (taken at
market value) is held as collateral
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for such sales at any one time (it
is the present intention of
management to make such sales only
for the purpose of deferring
realization of gain or loss for
federal income tax purposes; such
sales would not be made of
securities subject to outstanding
options).
EXPLANATION OF THE PROPOSED CHANGE: The proposed change modernizes and clarifies
the circumstances under which a Fund may make short sales of securities. The
reclassification as nonfundamental could enable the Funds to respond more
quickly to changes in financial markets.
PROPOSAL 5k:
APPROVAL OF A NEW FUNDAMENTAL INVESTMENT
POLICY PERMITTING EACH
FUND TO INVEST ALL OR A PART OF ITS INVESTEMENT
ASSETS IN ANOTHER INVESTMENT COMPANY
Introduction: Master/Feeder Fund Structure
At a meeting held on December 14, 1995, the Board considered and approved,
subject to shareholder approval, the adoption of a new fundamental investment
policy with respect to each Fund which would allow each Fund to convert to a
Master/Feeder Structure. The Master/Feeder Fund Structure is an arrangement that
allows several investment companies with different shareholder-related features
or distribution channels, but having the same investment objective, policies and
restrictions, to combine their investments by investing all of their assets in
the same portfolio instead of managing them separately, achieving certain
economies of scale. For example, a fund offering its shares at net asset value
(not subject to a sales charge) might pool its investments with another fund
having the same investment objective and policies that offers its shares subject
to a front-end or contingent deferred sales charge.
Under the Master/Feeder Fund Structure, a Fund will have the ability to invest
all or a part of its investment assets in another investment company (the
"Master Portfolio") having substantially the same investment objectives and
policies as the Fund in exchange for shares of beneficial interest in the Master
Portfolio. This means that the only investment securities that will be held by a
Fund will be the Fund's interest in the Master Portfolio. Each Master Portfolio
will be a series of an investment company ("Master Trust"), as each Fund is a
series of the Trust.
Conversion to a Master/Feeder Fund Structure may serve to attract other
collective investment vehicles with different shareholder servicing or
distribution arrangements and with shareholders that would not have invested in
a Fund. In this event, additional assets may allow for operating expenses to be
spread over a larger asset base. In addition, a Master/Feeder Fund Structure may
serve as an alternative for large, institutional investors in a Fund who may
prefer to offer separate, proprietary investment vehicles and
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who otherwise might establish such vehicles outside of a Fund's current
operational structure. Conversion to a Master/Feeder Fund Structure may allow a
Fund to stabilize its expenses and achieve certain operational efficiencies. No
assurance can be given, however, that the Master/Feeder Fund Structure will
result in a Fund stabilizing its expenses or achieving greater operational
efficiencies.
NEW INVESTMENT POLICY
The Board has approved with respect to each Fund, subject to shareholder
approval, the adoption of a new fundamental investment policy that would permit
a Fund to convert to the Master/Feeder Fund Structure by investing all or a part
of its assets in another appropriate investment fund. As discussed above under
"Introduction: Master/Feeder Fund Structure," the purpose of this Proposal is to
allow a Fund to enhance its flexibility and permit it to take advantage of
potential efficiencies available through investment of all or a part of its
assets in another investment company. At present, certain of the fundamental
investment restrictions of each Fund, such as those limiting investment in a
single issuer or concentration in an industry, may prevent it from investing all
or a part of its assets in another registered investment company. The Board
proposes that these restrictions be modified by adding the following fundamental
investment policy:
Notwithstanding any other investment policy or restriction, the Fund
may seek to achieve its investment objective by holding, as its only
investment securities, the securities of another investment company
having substantially the same investment objective and policies as the
Fund.
A Fund's methods of operation and shareholder services would not be materially
affected by its investment in a corresponding Master Portfolio, except that the
assets of the Fund may be managed as part of a larger pool. If a Fund invested
all of its assets in a Master Portfolio, it would hold only investment
securities issued by the Master Portfolio; the Master Portfolio would directly
invest in individual securities of other issuers. The Fund would otherwise
continue its normal operation. The Board would retain the right to withdraw a
Fund's investment from its corresponding Master Portfolio at any time; the Fund
would then resume investing directly in individual securities of other issuers
or invest in another Master Portfolio.
In approving the Proposal authorizing the investment of the assets of each Fund
in corresponding Master Portfolios, the Board determined that (i) such
investment policy is in the best interests of each Fund and its shareholders;
and (ii) the interests of existing shareholders of each Fund will not be diluted
as a result of effecting any such transaction. The Board considered, among other
things, the possible operational efficiencies offered by the structure. The
Board believes that investment in a Master
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Portfolio will not materially increase costs to a Fund's shareholders.
ADDITIONAL INFORMATION REGARDING EACH MASTER PORTFOLIO
Each Master Portfolio will be a series of a Master Trust which, like the Trust,
will be an open-end management investment company under the 1940 Act. It is
expected that the Master Trust will be organized as a Massachussets business
trust and will have one series to correspond to each series of the Trust that
converts to the Master/Feeder Fund Structure. The investment objective and
policies of each Master Portfolio will be substantially the same as those of the
corresponding Fund; in seeking to achieve the same objective as the Fund, the
Master Portfolio will invest in the same type of securities and engage in the
same transactions permitted by the investment policies and restrictions of the
corresponding Fund.
The Adviser, or its successor in the Bank Merger will be the investment adviser
of each Fund's corresponding Master Portfolio. See Proposal ________ . Entities
or their successors in the Bank Merger that currently perform services with
respect to each Fund, such as administrative, custodial, will perform
substantially similar services for each Master Portfolio.
Each Master Portfolio will calculate its net asset value at the same time, on
the same days, and pursuant to same method as its corresponding Fund calculates
its net asset value. Investors in each Master Portfolio will have no preemptive
rights and no conversion rights. Each Master Portfolio normally will not hold
meetings of investors except as required under the 1940 Act. As an investor in
the Master Portfolio, the Fund will be entitled to vote in proportion to its
relative interest in the Master Portfolio. As to any issue on which Fund
shareholders vote, the Fund will vote its interest in the Master Portfolio in
proportion to the votes cast by its shareholders. If there are other investors
in the Master Portfolio, there can be no assurance that any issue that receives
a majority of the votes cast by a Fund's shareholders will receive a majority of
votes cast by all Master Portfolio shareholders. Investors holding at least a
10% interest in each Master Portfolio will be able to call a meeting of
shareholders for certain purposes affecting only the Master Portfolio, and
shareholders holding at least a 10% interest in the Master Trust will be able to
call a meeting to remove any Trustee. A Trustee may be removed upon the vote of
the holders of interest qualified to vote representing ________ of the value of
the Master Trust.
Changing a fundamental policy of a Master Portfolio will require approval of the
holders of a majority of interests in the Master Portfolio. The Board of
Trustees of the Master Trust will have the ability to change nonfundamental
policies without prior interestholder approval.
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In addition to a vote to remove a Trustee or change a fundamental policy,
examples of matters that will require approval of shareholders of the Master
Trust include, subject to applicable statutory and regulatory requirements: the
election of Trustees; approval of an investment advisory contract; certain
amendments to the Trust Instrument of the Master Trust; a merger, consolidation
or sale of substantially all of a Master Portfolio's assets; or any additional
matters required or authorized by the Trust Instrument of the Master Trust or
any registration statement of the Master Trust, or as the Trustees may consider
desirable.
Generally, a Fund will hold a meeting of its shareholders to obtain instructions
on how to vote its interest in the Master Portfolio when the Master Portfolio is
conducting a meeting of its shareholders. However, subject to applicable
statutory and regulatory requirements, the Fund will not seek instructions from
its shareholders with respect to (i) any proposal relating to the Master
Portfolio which, if made with respect to the Fund, would not require the vote of
Fund shareholders, or (ii) any proposal relating to the Master Portfolio that is
identical to a proposal previously approved by the Fund's shareholders.
As a Massachusetts business trust, the Master Trust's operations will be
governed by its Trust Instrument, and applicable Massachusetts law. The
operations of the Master Trust and the Master Portfolios, like those of the
Trust and the Funds, will be subject to the provisions of the 1940 Act and the
rules and regulations of the SEC thereunder and applicable state securities
laws.
TRUSTEES AND OFFICERS OF THE MASTER TRUST
The initial interestholders of the Master Trust are expected to elect as
Trustees of the Master Trust, the individuals serving as members of the Board of
Trustees of the Trust. See Proposal ____. Subject to the provisions of its Trust
Instrument, the business of the Master Trust will be supervised by its Trustees,
who will serve indefinite terms and who will have all powers necessary or
convenient to carry out their responsibilities. A majority of Trustees then in
office generally would be able to appoint successor Trustees and fill vacancies,
provided that at least a majority of the Trustees has been elected by
shareholders. The Trustees of the Master Trust will elect officers of the Master
Trust whom they deem appropriate.
TAX CONSEQUENCES OF INVESTMENT IN A MASTER PORTFOLIO
The Trust will receive an opinion from its tax counsel, on or prior to the date
of a Fund's conversion to the Master/Feeder Fund Structure, that the Fund's
investment of all of its assets in a Master Portfolio will not have tax effects
with regard to the Fund, the Trust and the Fund's shareholders. While no ruling
has been requested from the Internal Revenue Service ("IRS") concerning the
foregoing, and the IRS is not bound by the opinion of counsel,
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the Board believes that an opinion of counsel provides sufficient authority on
the tax effects of a Fund's investment in a corresponding Master Portfolio, in
view of the nature and complexity of such investment.
It is intended that each Fund will continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986. In each taxable
year that a Fund so qualifies, the Fund (but not its shareholders) will be
relieved of Federal income tax on that part of its investment company taxable
income and net capital gain that is distributed to its shareholders. Neither the
Fund nor the Master Portfolio is expected to be required to pay any Federal
income or excise taxes. Distributions from a Fund, except for distributions from
a Fund designated as long-term capital gain distributions, will continue to be
taxable to its shareholders as ordinary income, whether received in cash or
reinvested in Fund shares.
EVALUATION BY THE BOARD
After considering the matters in Proposal __ at a meeting held on December 14,
1995, the Board determined to seek shareholder authorization of the actions
necessary for each Fund to have the ability to convert to the Master/Feeder Fund
Structure. Management of the Trust presented to the Board the potential
benefits, along with the costs and potential risks, of each Fund converting to
this structure. In this regard the Board considered the following.
[Management of the Trust presented information relating to redemptions in the
mutual fund industry generally and the likelihood that institutional investors
of a Fund, who may represent a significant share of the Fund's net assets, may
redeem to form independent investment vehicles with different distribution
channels or shareholder-related services than the Fund. Management pointed out
that, unless a Fund's operational structure is attractive to investors with
different servicing needs, a Fund may suffer net redemptions, to the detriment
of its shareholders. Management then presented information concerning steps
which some mutual funds have taken to avoid the erosion of assets under
management while developing a competitive advantage in the mutual funds
marketplace. A Master/Feeder Fund Structure is designed to attract new assets to
a Fund's overall fund structure.
Management also believes that the retention of assets would assist a Fund in its
efforts to keep operational costs from rising significantly. In addition, in the
view of management, a larger asset base may allow the purchase of individual
investment securities in larger amounts, which may reduce certain transactional
and custodial expenses.
Certain of these benefits would likely arise only if the respective Master
Portfolio were to grow through investments in the Master Portfolio by investors
other than the Fund. There is no assurance
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that, even if other investors invest in a Master Portfolio, expense savings or
other benefits will be realized. In addition, the Board recognized that the
Adviser or the successor entity thereto, may benefit through increased economies
of scale in the event that assets rise, without a corresponding benefit to Fund
shareholders. In particular, conversion to a Master/Feeder Fund Structure may
enable the Adviser or the successor entity thereto to increase assets under
management through attraction and development of new investment vehicles with
less risk than would be possible without this structure. As a result, the
Adviser or the successor entity thereto could earn fees with less risk of
limited success than is typical in the early, developmental years of an
investment vehicle, since new investors in the Master Portfolio will be
presented with the ability to pool their assets in an established vehicle.
The Board also considered, among other things, (i) the costs of the proposed
change in fund structure, (ii) other options to the proposed change, and (iii)
the tax-free nature of the proposed change.]
Based on the foregoing, the Board, including a majority of the Independent
Trustees, determined that it would be in the best interests of the Funds and
their shareholders for shareholders to authorize those actions necessary for
each Fund to have the ability to convert to a Master/Feeder Fund Structure. Even
if this Proposal is approved by shareholders of a Fund, the Board will retain
the right to delay or not to proceed with a conversion with respect to a Fund if
for any reason it would not be in the best interests of shareholders of that
Fund.
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PROPOSAL 5l
CHANGE OF THE VISTA CALIFORNIA INTERMEDIATE
TAX FREE FUND'S STATUS FROM DIVERSIFIED
TO NONDIVERSIFIED UNDER THE 1940 ACT
Proposal 5l relates to the VISTA CALIFORNIA INTERMEDIATE TAX FREE FUND Only:
The Vista California Intermediate Tax Free Fund is currently classified as a
"diversified" fund under the provisions of the 1940 Act. Under the 1940 Act, a
"diversified" fund is defined to mean one which meets the following
requirements:
At least 75 percentum of the value of its total assets is represented
by cash and cash items (including receivables), Government securities,
securities of other investment companies, and other securities for the
purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5 percentum of the value of the total
assets of the fund and to not more than 10 percentum of the outstanding
voting securities of such issuer.
The 1940 Act provides that a fund may not change its status from a diversified
to a nondiversified fund without the requisite approval from the Fund's
shareholders. The Board is hereby proposing that the shareholders of the Vista
California Intermediate Tax Free approve of a change of status from a
diversified to a nondiversified with respect to such Fund.
REASONS FOR THE PROPOSED CHANGE:
Currently, with respect to 75% of the Fund's assets, no more than 5% of the
Fund's assets may be invested in one issuer. With respect to municipal
securities, the issuers consist of either a particular state (for a general
obligations bond or note) or the particular facility which backs the payment
obligation under a revenue bond. At certain times, the Fund may wish to take
advantage of certain favorable investments of any such issuer, involving more
than 5% of the Fund's assets. This would help provide additional flexibility for
the investment of the Fund's assets.
This Proposal relates only to the Fund's status under, and the related
requirement of, the 1940 Act. If this proposal is approved, the Fund would still
be subject to certain asset diversification
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requirements (as well as other requirements) under Subchapter M under the
Internal Revenue Code of 1986, as amended. These requirements apply because the
Fund has elected to be taxed as a "regulated investment company," and receive
the benefits provided to such entities under Subchapter M. One such benefit is
"flow-through tax treatment" -- in other words, that income and gains received
by the Fund are not taxed to the Fund, but are taxed to shareholders when
distributed by the Fund. The asset diversification requirements under Subchapter
M are similar to the requirements for a "diversified" status under the 1940 Act,
except that the Subchapter M diversification requirements limiting investments
in the same issuer to no more than 5% of a fund's assets and to 10% of the
issuer's voting securities are applicable only with respect to 50% (rather than
75% of the total assets of the Fund).
Unless otherwise noted, whenever an amended or restated investment policy or
limitation states a maximum percentage of a Fund's assets that may be invested,
such percentage limitation will be determined immediately after and as a result
of the acquisition of such security or other asset, except in the case of
borrowing (or other activities that may be deemed to result in the issuance of a
"senior security" under the 1940 Act) or illiquid securities. Any subsequent
change in values, assets, or other circumstances will not be considered when
determining whether the investment complies with the Funds's investment policies
and limitations. If any of Proposals 5a-l are not approved by shareholders, the
current Restriction will remain unchanged.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Each of the above proposals to change a Fund's Restriction requires the approval
of a "majority of the outstanding voting securities" of the Fund, which for this
purpose means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares of the Fund
present at the meeting if more than 50% of the outstanding shares of an affected
class of shares of the Fund are represented at the meeting in person or by
proxy.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSALS
PROPOSAL 6
APPROVAL OR DISAPPROVAL OF A
RESTATEMENT OF THE INVESTMENT OBJECTIVES
OF CERTAIN FUNDS
Proposal 6 relates to all Funds other than VISTA CALIFORNIA INTERMEDIATE TAX
FREE FUND, VISTA NEW YORK TAX FREE INCOME FUND AND VISTA TAX FREE INCOME FUND.
At a Meeting of the Board of Trustees of the Trust held on December 14, 1995,
the Trustees, including each of the Disinterested Trustees (who are not
"interested persons," within the meaning of the 1940 Act, of the Trust or any
Fund's investment adviser), on the recommendation of the Adviser, considered and
unanimously approved of a restatement of the investment objectives of the Funds.
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The Adviser has evaluated the various types of Funds that comprise the Trust and
recommended to the Trustees that it would be appropriate to modernize the
investment objectives, policies and restrictions, and implement certain changes
that would provide greater flexibility and uniformity in managing the Funds. The
Trustees determined that many of the Funds' investment objectives should be
restated so as to be less restrictive.
In addition, the Trustees, based on representations from the Adviser, believe
that the risks inherent in investing in each of the respective Funds should not
change from those inherent at the present time under each Fund's current
investment objective and policies, since the Adviser has represented that none
of the proposed changes is intended or anticipated to have an immediate impact
on the day to day investment program utilized by a Fund.
The significance of an investment policy or restriction being fundamental is
that it may be changed only with the approval of shareholders. Except for each
Fund's investment objective, investment policies or restrictions which are
specifically identified as fundamental, each Fund's investment objective,
policies and restrictions are nonfundamental.
In the table below, the current investment objective of each Fund is set forth
in quotations in the left hand column. In each case, it is proposed that the
investment objective be restated to read as indicated in quotations in the right
hand column. In many cases, it is proposed that certain investment policies now
included within the investment objective (and which are therefore currently
fundamental) be reclassified as nonfundamental investment policies. In each such
case, the proposed nonfundamental policies and the reason for the proposed
change are indicated in the right hand column. A description of each of these
reasons is set forth below following the table. To the extent that certain
investment styles or policies which are currently included in the investment
objective are removed from the investment objective and made nonfundamental
policies, they may be changed thereafter without the approval of shareholders.
CURRENT INVESTMENT OBJECTIVE PROPOSED INVESTMENT OBJECTIVE
TREASURY PLUS MONEY MARKET FUND "to provide maximum current income
consistent with the preservation of
"to provide maximum current income capital and maintenance of
consistent with the preservation of liquidity."
capital and maintenance of liquidity As a non-fundamental policy, the
through investment in (i) Fund will seek to achieve its
obligations issued by the U.S. objective through investment "in
Treasury bills and notes and (ii) obligations issued by the U.S.
repurchase agreements fully Treasury, including Treasury bills,
collateralized by such U.S. Treasury bonds and notes, and repurchase
obligations." agreements fully collateralized by
U.S. Treasury obligations."
Reasons for the proposal:
standardization/clarification,
flexibility.
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FEDERAL MONEY MARKET FUND
"to provide current income "to provide current income
consistent with the preservation of consistent with the preservation of
capital and maintenance of capital and maintenance of
liquidity, through investments in liquidity." As a non-fundamental
obligations issued or guaranteed as policy, the Fund will seek to
to principal and interest by the achieve its objective through
U.S. Government or by U.S. "investment in obligations issued or
Government agencies or guaranteed as to principal and
instrumentalities, the interest interest by the U.S. Government or
income from which, under current by U.S. Government agencies or
federal law, generally may not be instrumentalities, the interest
subject to state or local taxes." income from which, under current
federal law, generally may not be
subject to state or local taxes."
Reason for proposal: flexibility.
NEW YORK TAX FREE MONEY MARKET FUND
"to provide as high a level of to provide "as high a level of
current income which is exempt from current income which is excluded
federal, New York State and New York from gross income for federal income
City personal income taxes as is tax purposes and from New York State
consistent with the preservation of and New York City personal income
capital and maintenance of taxes as is consistent with the
liquidity, through investments preservation of capital and
primarily in short-term municipal maintenance of liquidity"
obligations issued by or on behalf As a non-fundamental policy, the
of the State of New York, its Fund will seek to achieve its
instrumentalities or political objective "by investing in a
subdivisions." non-diversified portfolio of
short-term, fixed rate and variable
rate municipal obligations." Reasons
TAX FREE MONEY MARKET FUND
"to provide as high a level of to provide "as high a level of
current income which is exempt from current income which is excluded
federal income taxes as is from gross income for federal income
consistent with the preservation of tax purposes as is consistent with
capital and maintenance of the preservation of capital and
liquidity, through investments maintenance of liquidity." As a
primarily in short-term municipal nonfundamental policy, the Fund will
obligations." seek to achieve its objective "by
investing in short-term, fixed rate
and variable rate municipal
obligations."
Reason for the proposal:flexibility.
U.S. GOVERNMENT MONEY MARKET FUND
"to provide as high a level of to provide "as high a level of
current income as is consistent with current income as is consistent with
the preservation of capital and the preservation of capital and
maintenance of liquidity, through maintenance of liquidity."
investments in obligations issued or
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guaranteed by the U.S. Treasury, As a non-fundamental policy, the
agencies of the U.S. Government or Fund will seek to achieve its
instrumentalities that have been objective "by investing in
established or sponsored by the U.S. obligations issued or guaranteed by
Government." the U.S. Treasury, by agencies of
the U.S. Government, and by
instrumentalities that have been
established or sponsored by the U.S.
Government, and in repurchase
agreements collateralized by U.S.
Government obligations or other
securities in which the Fund is
permitted to invest."
Reasons for the proposal:
standardization/clarification,
flexibility.
GLOBAL MONEY MARKET FUND
"to provide maximum current income "to provide maximum current income
consistent with the preservation of consistent with the preservation of
capital and maintenance of capital and maintenance of
liquidity, through investments in liquidity." As a non-fundamental
(i) U.S. Dollar denominated high policy, the Fund will seek to
quality commercial paper and other achieve its objective "by investing
high quality short-term obligations, in high quality, short-term U.S.
including floating and variable rate dollar-denominated money market
master demand notes of U.S. and instruments." Reasons for the
foreign corporations; (ii) U.S. proposal:
Dollar denominated obligations of standardization/clarification,
foreign governments and flexibility.
supranational agencies (e.g. , the
International Bank for
Reconstruction and Development);
(iii) U.S. Dollar denominated
obligations issued or guaranteed by
U.S. banks with total assets
exceeding $1 billion and by the 75
largest foreign commercial banks
(including obligations of foreign
branches of such banks) in terms of
total assets, or such other U.S. or
foreign commercial banks which are
judged by the Fund's investment
adviser to meet comparable credit
criteria; (iv) securities issued or
guaranteed by the U.S. Government or
by agencies and instrumentalities
thereof; and (v) repurchase
agreements"
PRIME MONEY MARKET FUND
"to provide maximum current income "to provide maximum current income
consistent with the preservation of consistent with the preservation of
capital and maintenance of capital and maintenance of
liquidity, through investments in liquidity" As a non-fundamental
(i) U.S. dollar denominated high policy, the Fund will seek to
quality commercial paper and other achieve its objective "principally
through investments in (i) U.S.
dollar
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high quality short-term obligations, denominated high quality commercial
including floating and variable rate paper and other high quality
master demand notes of U.S. and short-term obligations, including
foreign corporations; (ii) U.S. floating and variable rate master
Dollar denominated obligations of demand notes of U.S. and foreign
foreign governments and corporations; (ii) U.S. Dollar
supranational agencies (e.g., the denominated obligations of foreign
International Bank for governments and supranational
Reconstructions and Development); agencies (e.g., the International
(iii) U.S. Dollar denominated Bank for Reconstructions and
obligations issued or guaranteed by Development); (iii) U.S. Dollar
U.S. banks with total assets denominated obligations issued or
exceeding $1 billion and by the 75 guaranteed by U.S. banks with total
largest foreign commercial banks assets exceeding $1 billion and by
(including obligations of foreign the 75 largest foreign commercial
branches of such banks) in terms of banks (including obligations of
total assets, or such other U.S. or foreign branches of such banks) in
foreign commercial banks which are terms of total assets, or such other
judged by the Fund's investment U.S. or foreign commercial banks
adviser to meet comparable credit which are judged by the Fund's
criteria; (iv) securities issued or investment adviser to meet
guaranteed by the U.S. Government or comparable credit criteria; (iv)
by agencies and instrumentality's securities issued or guaranteed by
thereof; and (v) repurchase the U.S. Government or by agencies
agreements." and instrumentality's thereof; and
(v) repurchase agreements."
Reasons for the proposal:
standardization/clarification,
flexibility.
VISTA TAX FREE INCOME FUND
"to provide its shareholders with "to provide its shareholders with
monthly dividends which are excluded monthly dividends which are excluded
from gross income for federal income from gross income for federal income
tax purposes as well as to protect tax purposes as well as to protect
the value of its shareholders' the value of its shareholders'
investment by investing primarily investment." As a non-fundamental
(i.e., at least 80% of its assets policy, the Fund will seek to
under normal conditions) in achieve its objective "primarily
Municipal Obligations." (i.e., at least 80% of its assets
under normal conditions) through
investment in Municipal
Obligations."
Reason for the proposal:
flexibility.
REASONS FOR THE PROPOSALS REGARDING THE INVESTMENT OBJECTIVES
IT IS IMPORTANT TO BEAR IN MIND THAT THE PROPOSED CHANGES TO THE MODERNIZING
FUNDS' INVESTMENT OBJECTIVES GENERALLY INVOLVE A JUDGMENT ONLY AS TO WHAT SHOULD
MAKE UP A FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE, NOT A JUDGMENT AS TO WHAT
INVESTMENT STRATEGIES, POLICIES OR RESTRICTIONS SHOULD BE FOLLOWED IN PURSUING
THAT OBJECTIVE. IF SHAREHOLDERS APPROVE THIS PROPOSAL, THE ADVISER BELIEVES THAT
THE CHANGES WILL HAVE NO IMMEDIATE MATERIAL EFFECT ON THE WAY IN WHICH THE FUNDS
ARE MANAGED.
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The reasons for the proposals set forth above, pertaining to the respective
investment objectives of the Funds, involve similar considerations. The Trustees
have reviewed the proposed changes and believe that they are in the best
interests of each Fund and its shareholders for the reason(s) indicated above,
and described in greater detail below. Each of the proposals has been made for
one or more of the following reasons: flexibility or
clarification/standardization. The following discussion provides greater detail
as to what is meant, in each case, by flexibility or
clarification/standardization.
Flexibility. Under the Trust's registration statement, the investment objective
of each Modernizing Fund is fundamental and cannot be changed without a vote of
the "majority of the outstanding voting securities" of the relevant Fund. If a
Fund's stated investment objective contains details as to an investment strategy
to be pursued or an investment policy to be followed, or is otherwise more
restrictive than necessary, it may impose an unnecessarily rigid restraint on
management's ability to respond to certain regulatory developments or changes in
the financial markets. In order to make any changes to a strategy or policy
included as part of a Fund's investment objective, the Fund would need
shareholder approval, which is time consuming and costly to the Fund and its
shareholders. In each case, the Fund's most basic investment objective (such as
to achieve capital appreciation or to achieve a high level of income) will not
change and will continue to be fundamental, but certain strategies or policies
which need not be part of the Fund's stated investment objective will be made
non-fundamental so that the Trustees may at a future date receive and act upon
recommendations of the Adviser to change these non-fundamental policies without
the necessity of a meeting of shareholders and associated costs. In all cases
described in the proposals above, the Adviser does not anticipated that the
changes will have an immediate effect on the Fund's investment strategy, since
there is no current intention of changing stated strategy or policy. However,
the Funds will have greater flexibility to respond to future regulatory and
market developments. If changes to nonfundamental policies or restrictions are
adopted by the Trustees in the future, the Fund's prospectus and statement of
additional information will be amended to reflect any such changes and notice
thereof will be provided to shareholders.
Clarification/standardization. Some of the Funds' investment objectives contain
descriptive terms that are superfluous or ambiguous. Accordingly, the Adviser
has recommended to the Trustees, and the Trustees have approved, that these
Funds change the description of their investment objectives, where appropriate,
to eliminate any ambiguities. In addition, the terms used in some of the Fund's
investment objectives differ from the description of the terms used in the
stated investment objective of a similar Fund. The Adviser has recommended, and
the Trustees have approved, the standardization, to the extent possible, of the
description of an investment objective, or an aspect thereof, as between Funds
for which the investment objective or aspect thereof is not intended to differ.
By doing so, potential investors may be expected to have a clearer understanding
of the similarities or differences in the investment objectives of the
respective Funds.
RISK FACTORS: Because each of the proposals involve only a change to the stated
investment objective and are not expected to alter the fundamental character of
any Fund or any of their operations for the foreseeable future, for each Fund,
the adoption of the proposal is not expected to have any effect on the risk
factors to be considered in making or continuing an investment in the Fund. In
the future, however, a Board of Trustee may, without shareholder approval,
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change a nonfundamental investment policy or restriction in a way that may
create more risk. The Fund will notify shareholders of such changes. In
addition, there is no assurance that the Fund will achieve its investment
objective, and the share price and total return of each Fund other than the
Treasury Plus Money Market Fund, Federal Money Market Fund, New York Tax Free
Money Market Fund, Tax Free Money Market Fund, U. S. Government Money Market
Fund, Global Money Market Fund, and Prime Money Market Fund will fluctuate, so
that an investment may be worth more or less than its original cost upon
redemption. With respect to the Money Market Funds, although the Funds seek to
maintain a stable net asset value per share, there can be no guaranty that they
in fact will be able to do so, so that an investment may be worth more or less
than its original cost upon redemption.
PROPOSAL 7
APPROVAL OR DISAPPROVAL OF AN AMENDMENT
TO THE CLASS A SHARES RULE 12B-1 DISTRIBUTION
PLAN OR VISTA SHARES RULE 12B-1 DISTRIBUTION PLAN
(AS APPLICABLE)
This Proposal relates only to the Class A Shares and Vista Shares of each Fund
(other than Vista Prime Money Market Fund, Vista Federal Money Market Fund,
Vista U.S. Government Money Market Fund, Vista Global Money Market Fund, Vista
Treasury Plus Money Market Fund, Vista California Tax Free Money Market Fund,
Vista New York Tax Free Money Market Fund and Vista Tax Free Money Market Fund).
INTRODUCTION
For purposes of this proxy and this Proposal, shares of the Vista Tax Free
Income Fund, Vista New York Tax Free Income Fund and Vista California
Intermediate Tax Free Fund which are not designated as to class will be
considered Class A shares.
The Trustees of the Trust have adopted Distribution Plans for each of the Class
A shares and Vista Shares of certain Funds (the "Distribution Plans") in
accordance with Rule 12b-1 under the 1940 Act, after having concluded that there
is a reasonable likelihood that the Distribution Plans will benefit the relevant
class and its shareholders.
The Proposed Form of each of the Vista Shares Rule 12b-1 Distribution Plan and
the Class A Shares Rule 12b-1 Distribution Plan are attached as Exhibits E and
F, respectively and should be read in conjunction with the following.
CURRENT DISTRIBUTION PLANS
The Trust has adopted separate plans of distribution pursuant to Rule 12b-1
under the 1940 Act (a "Distribution Plan") including several Distribution Plans
on behalf of Class A Shares and Vista Shares of certain of the Funds, which
provides that each Fund shall pay a distribution fee (the "Basic Distribution
Fee"), including payments to the Distributor, shareholders servicing agents and
broker dealers, at an annual rate not to exceed 0.20% of its Shares' average
daily net assets for distribution services (exclusive of any expenses incurred
by such party in connection with print or electronic media advertising). The
recipient may use all or any portion of such Basic Distribution Fee to pay for
Fund expenses of printing prospectuses and reports used for sales purposes,
expenses of the preparation and printing of sales literature and other such
44
<PAGE>
distribution-related expenses. The Fund is also permitted to pay the Distributor
an additional fee not to exceed 0.05% per annum of its Shares' average daily net
assets in anticipation of, or as reimbursement for, expenses incurred in
connection with print or electronic media advertising for its shares.
Each Distribution Plan provides that it will continue in effect indefinitely if
such continuance is specifically approved at least annually by a vote of both a
majority of the Trustees and a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Distribution Plan or in any
agreement related to such Plan ("Qualified Trustees"). Each Distribution Plan
requires that the Trust shall provide to the Board of Trustees, and the Board of
Trustees shall review, at least quarterly, a written report of the amounts
expended (and the purposes therefor) under the Distribution Plan. Each
Distribution Plan further provides that the selection and nomination of
Qualified Trustees shall be committed to the discretion of the disinterested
Trustees (as defined in the 1940 Act) then in office. The Distribution Plan may
be terminated at any time by a vote of a majority of the Qualified Trustees or
by vote of a majority of the outstanding voting Shares of a Fund (as defined in
the 1940 Act). Each Distribution Plan may not be amended to increase materially
the amount of permitted expenses thereunder without the approval of affected
shareholders and may not be materially amended in any case without a vote of the
majority of both the Trustees and the Qualified Trustees.
Since the Basic Distribution Fee is not directly tied to actual expenses, the
amount of Basic Distribution Fee paid by each of the Shares during any year may
be more or less than actual expenses incurred pursuant to the Distribution Plan.
For this reason, this type of distribution fee arrangement is characterized by
the staff of the SEC as being of the "compensation variety" (in contrast to
"reimbursement" arrangements, such as those described above with respect to
expenses incurred in connection with print or electronic media advertising, by
which the Distributors compensation is directly linked to its expenses).
However, the Shares are not liable for any distribution expenses incurred in
excess of the Basic Distribution Fee paid.
Management has proposed, and the Board of Trustees, including a majority of the
Qualified Trustees, has unanimously approved, a modification to the Distribution
Plans whereby the additional .05% fee be changed to a "compensation" fee from a
reimbursement fee.
The Adviser has studied the current distribution methods and believes that the
Basic Distribution Fees were low in comparison to other funds offered through
similar distribtuion channels. Therefore, the Adviser believes the Funds are at
a competitive disadvantage insofar as sales of Fund shares are concerned. In
addition, the Adviser has determined that amounts payable under the Distribution
Plans in a given year may not fully reimburse the broker-dealer for its actual
distribution-related expenses during such year. The Adviser therefore
recommended to the Trustees that they approve this increase to the Distribution
Fee to encourage broker-dealers in the sale of Fund shares.
[Insert Table: Distribution fees paid most recent fiscal year.]
45
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
The approval of a modification to each Distribution Plan requires the
affirmative vote of a "majority of the outstanding voting securities" of the
affected class of shares of the relevant Fund, which for this purpose means the
affirmative vote of the lesser of (1) more than 50% of the outstanding shares of
the Fund or (2) 67% or more of the shares of the Fund present at the meeting if
more than 50% of the outstanding shares of an affected class of shares of the
Fund are represented at the meeting in person or by proxy. If the shareholders
of a Fund do not approve the modification to its Distribution Plan, such Fund
will continue to make payments under the current Distribution Plan.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSALS
PROPOSAL 8
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN EACH
OF THE FUNDS AND THE CHASE MANHATTAN BANK N.A.
(OR THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK N.A. (OR THE
SUCCESSOR ENTITY THERETO) AND CHASE ASSET MANAGEMENT, INC.
This Proposal relates to all Funds other than the Vista Tax-Free Money Market
Fund and Vista Global Money Market Fund.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment adviser of the Funds (as
used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and its
successor in the Bank Merger, and the term "Adviser" means Chase (including its
successor in the Bank Merger) in its capacity as Adviser to the Funds)
recommended to the Board that the Trust enter into a new Investment Advisory
Agreement, on behalf of each Fund, and the Adviser (the "New Advisory
Agreement") effective as soon as practicable after the approval of shareholders.
The Adviser also recommended to the Board that the Adviser be permitted to
utilize the services of its wholly-owned subsidiary, Chase Asset Management,
Inc. ("CAM Inc."), to render advisory services to the Funds. CAM Inc. is a
registered investment adviser which was recently incorporated for the purpose of
rationalizing the delivery of investment advisory services by The Chase
Manhattan Bank to its institutional clients. CAM Inc. will be retained pursuant
to a proposed Sub-Advisory Agreement (the "CAM Inc. Agreement"). The Board has
approved, and recommends that the shareholders of each Fund approve, the New
Advisory Agreement and CAM Inc. Agreement (collectively, for purposes of this
Proposal, the "Agreements"). In addition, the Board of Trustees approved the
continuation of the New Advisory Agreement after the Bank Merger, on the same
terms and conditions as in effect immediately prior to the merger (except for
effective and termination dates) in the event the Agreements are deemed to
terminate as a result of the Bank Merger. Approval of Proposal 8 will be deemed
approval of such continuation of the Agreements after the Bank Merger, if
applicable. If approved, the New Advisory Agreement will become effective as
soon as practicable after the approval of shareholders.
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<PAGE>
No increase is proposed to the contractual fee rates under the New Advisory
Agreement and the Adviser, and not the Funds, will compensate CAM Inc. for its
services as Sub-Adviser. THEREFORE, THE FUNDS WILL NOT BEAR ANY INCREASE IN THE
CONTRACTUAL ADVISORY FEE RATES RESULTING FROM THE NEW ADVISORY AGREEMENT OR CAM
INC. AGREEMENT.
While the New Advisory Agreement is described below, the discussion is qualified
by the provisions of the complete agreement, a copy of which is attached as
Exhibit B. If the shareholders of a Fund do not approve this Proposal, then
Chase will continue to act, commencing on the Holding Company Merger, as the
adviser to such Fund under the terms of the Interim Advisory Agreement, assuming
Proposal 1 is approved. The New Advisory Agreement should be read in conjunction
with the following.
Background. In connection with the Mergers, New Chase intends to rationalize its
corporate wide investment management operations in order to more fully take
advantage of portfolio management skills that will exist within the various
corporate entities controlled by New Chase. As part of this structuring, New
Chase would like to consolidate its mutual fund supervisory functions within one
entity (Chase), and its portfolio management responsibilities within another
entity (CAM Inc.) (except with respect to the Vista Tax-Free Money Market Fund
and Vista Global Money Market where such portfolio management responsibility
will be consolidated within another affiliate. See Proposal 8). The Adviser also
seeks to retain the ability to utilize portfolio managers employed by the
various investment management entities affiliated with the Adviser through
common ownership by New Chase.
Thus, the New Advisory Agreement would provide the Adviser with the ability to
utilize the specialized portfolio skills of employees of all its various
affiliates, thereby providing the Funds with greater opportunities and
flexibility in accessing investment expertise. For the foreseeable future, the
Adviser would employ certain members of the Adviser's senior management.
SIMILARITIES BETWEEN THE CURRENT AND NEW ADVISORY AGREEMENTS:
The New Advisory Agreement is similar in many respects to the Current Advisory
Agreement and Interim Advisory Agreement. The New Advisory Agreement contains
the material terms of the Current Advisory Agreement, but reflects the proposed
change of the investment adviser from The Chase Manhattan Bank, N.A. to its
successor entity, and incorporates additional provisions designed to clarify and
supplement the rights and obligations of the parties.
MOST IMPORTANTLY, THE CONTRACTUAL RATE AT WHICH FEES ARE REQUIRED TO BE PAID BY
EACH FUND FOR INVESTMENT ADVISORY SERVICES, AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS, WILL REMAIN THE SAME. Under the provisions of both the Current and the
New Advisory Agreements, each Fund is required to pay the Adviser a monthly fee
equal to a stated percentage per annum of its average daily net assets. These
amounts are set forth below under "Fees and Fee Waivers." The following
summarizes certain additional aspects of the Current and New Advisory Agreements
(collectively, the "Agreements") which are materially the same in both
Agreements:
In the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the obligations or duties of the Adviser, the Adviser shall not be
liable to the Funds or to any
47
<PAGE>
shareholder for any losses that may be sustained by the Funds in connection with
its performance of the Agreement.
The Adviser bears all expenses in connection with the performance of its
services under the Agreement. The Funds bear the expenses incurred in their
operations. Both agreements provide that the Adviser shall, at its expense,
provide the Funds with office space, furnishings and equipment and personnel
required by it to perform the services to be provided by the Adviser and that
the Trust shall be responsible for all of the Funds' expenses and liabilities.
Under the Agreement, if the aggregate expenses incurred by a Fund in any fiscal
year is in excess of the lowest applicable expense limitation imposed by state
securities laws or regulations thereunder, the Adviser shall reduce its
investment advisory fee, but not below zero, to the extent of its share of such
excess expenses; provided, however, that certain provided expenses are
specifically excluded from such calculation. No such reimbursement was required
during the Funds' most recent fiscal period.
A Fund may terminate the Agreement as to that Fund without penalty on not more
than 60 days' written notice when authorized by either a vote of shareholders
holding a "majority of the outstanding voting securities" (within the meaning of
the 1940 Act) of the Fund or by a vote of a majority of the Trust's Board of
Trustees. The Adviser may terminate the Agreement on 60 days' written notice to
the Trust. The Agreement terminates in the event of its assignment (as defined
in the 1940 Act).
DIFFERENCES BETWEEN THE CURRENT AND NEW ADVISORY AGREEMENTS:
The following highlights summarize some of the additional provisions which are
included in the New Advisory Agreement:
After the Bank Merger, the Chase Manhattan Bank, a New York State chartered
bank, the successor entity to The Chase Manhattan Bank, N.A., will be the
adviser to the Funds rather than The Chase Manhattan Bank, N.A., and will
continuously supervise the investment and reinvestment of cash, securities and
other property comprising the assets of the Funds. The Chase Manhattan Bank,
N.A. will be the Adviser to the Funds until the Bank Merger.
Details Regarding the Adviser's Duties. The New Advisory Agreement clearly
specifies the duties of the Adviser. For example, that the Adviser will be
required to obtain and evaluate pertinent data and other significant events and
developments which affect the economy, the Funds' investment programs, the
issuers of securities and the industries in which they engage, and furnish a
continuous investment program for each Fund. The Adviser will be obligated to
furnish such reports, evaluations, information or analyses to the Trust as the
Board may request, make recommendations to the Board with respect to Trust
policies, and carry out such policies as are adopted by the Board.
Use of Affiliated Entities. The New Advisory Agreement clarifies that the
Adviser may render services through its own employees or the employees of one or
more affiliated companies that are qualified to act as an investment adviser to
the Trust under applicable laws and are under
48
<PAGE>
the common control of New Chase as long as all such persons are functioning as
part of an organized group of persons, and such organized group of persons is
managed at all times by authorized officers of the Adviser. The Adviser will be
as fully responsible to the Trust for the acts and omissions of such persons as
it is for its own acts and omissions.
Use of a Sub-Adviser. The New Advisory Agreement clarifies that the Adviser may
from time to time employ or associate with such other entities or persons (a
"Sub-Adviser") as it believes appropriate to assist in the performance of the
New Advisory Agreement with respect to a particular Fund. However, the Funds
will not pay any additional compensation for any SubAdviser, and the Adviser
will be as fully responsible to the Trust for the acts and omissions of the
Sub-Adviser as it is for its own acts and omissions, and the Adviser must
review, monitor and report to the Board regarding the performance and investment
procedures of any SubAdviser. The proposed Sub-Advisory agreement is discussed
below under "Consideration and Proposal of the CAM Inc. Agreement".
Brokerage Transactions. The New Advisory Agreement sets forth specific terms as
to brokerage transactions and the Adviser's use of broker-dealers. For example,
the Adviser will be obligated to use its best efforts to seek to execute
portfolio transactions at prices which, under the circumstances, result in total
costs or proceeds being the most favorable to the Funds. In assessing the best
overall terms available for any transaction, the Adviser will consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, research services provided and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
"Soft Dollars." A provision of the New Advisory Agreement explicitly allows the
Adviser to select brokers or dealers who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Adviser, the Funds and/or the other accounts over which the
Adviser exercises investment discretion, and provides that, notwithstanding the
above, the Adviser may pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for a Fund
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the Adviser determines in good
faith that the total commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Adviser with respect to accounts over which it exercises investment
discretion.
Aggregation of Orders. There is also a clarification of the authority of the
Adviser to aggregate the securities to be sold or purchased with those of other
Funds or its other clients if, in the Adviser's reasonable judgment, such
aggregation will result in an overall benefit to a Fund, taking into
consideration the advantageous selling or purchase price, brokerage commission
and other expenses, and trading requirements.
Other Clarifications. The New Advisory Agreement contains certain additional
provisions which are intended to clarify the status, rights or obligations of
the parties. For example, the Adviser
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<PAGE>
is deemed to be an independent contractor and the provisions of the Proposed
Advisory Agreement are deemed to apply to the Funds severally and not jointly.
CONSIDERATION AND PROPOSAL OF THE CAM INC. AGREEMENT
It is being proposed that the Adviser be permitted to utilize the services of
CAM Inc. as a subadviser under a proposed Investment Sub-Advisory Agreement (the
"CAM Inc. Agreement") in order to enable the Adviser to more efficiently render
advisory services to each of the Funds.
The proposed form of the CAM Inc. Agreement is attached as Exhibit C and should
be read in conjunction with the following.
The Adviser's decision to utilize the services of CAM Inc. in a sub-advisory
capacity was based on various considerations, including the Adviser's desire to
consolidate its asset management responsibilities, that the portfolio managers
which currently manage the assets of the Funds for the Adviser will also manage
the Funds as employees of CAM Inc., that CAM Inc. provides a wide range of
investment management capabilities, including the ability to discriminate among
a wide range of potential investments as part of an investment program for each
of the Funds, that risk control is integral to its methodology, that it has
shown a relative consistency in investment management performance, and the
attractiveness of the fee structure and estimated transaction costs that would
be incurred.
Based upon the foregoing, the Adviser recommended to the Board of Trustees that,
subject to approval by the Board and such Funds' shareholders of the New
Advisory Agreement and the CAM Inc. Agreement, the Adviser enter into the CAM
Inc. Agreement with CAM Inc.. In considering whether to recommend that the CAM
Inc. Agreement be approved by shareholders, the Board requested and evaluated
various information from the Adviser and CAM Inc. relevant to the Adviser's
decision. In addition, the Board considered various other factors which it
deemed to be relevant, including, but not limited to, the fact that the managers
of each Fund will continue to manage the assets of the Funds as employees of CAM
Inc., capabilities to be provided by CAM Inc., the stability of its investment
staff, the trading systems to be utilized and the potential to minimize
transaction costs, the ability to customize portfolios for the Funds, and the
Adviser's access to the various investment and research resources of CAM Inc.
DESCRIPTION OF THE PROPOSED CAM INC. AGREEMENT
The proposed arrangement between the Adviser and CAM Inc. under the CAM Inc.
Agreement would enable the Adviser to manage the investment activities of the
Funds covered in the CAM Inc. Agreement most effectively by delegating to CAM
Inc. portfolio management duties relating to transactions in the securities held
by such Funds. With respect to the day to day management of the Funds under the
CAM Inc. Agreement, CAM Inc. would make decisions concerning, and place all
orders for, purchases and sales of securities and help maintain the records
relating to such purchases and sales. CAM Inc. may, in its discretion, provide
such services through its own employees or the employees of one or more
affiliated companies that are qualified to act as an investment adviser to the
Trust under applicable laws and are under the common control of New Chase;
provided that (i) all persons, when providing services under the CAM Inc.
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<PAGE>
Agreement, are functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by authorized officers
of CAM Inc.
The Adviser and CAM Inc. would bear all expenses in connection with the
performance of their respective services and the services under the CAM Inc.
Agreement.
As investment adviser, the Adviser would oversee the management of the Funds
under the CAM Inc. Agreement, and, subject to the general supervision of the
Board of Trustees, would make recommendations and provide guidelines to CAM Inc.
based on general economic trends and macroeconomic factors. Among the
recommendations which may be provided by the Adviser to CAM Inc. would be
guidelines and benchmarks against which the Funds would be managed. From the fee
paid by the Funds under the New Advisory Agreement to the Adviser, the Adviser
will bear responsibility for payment of sub-advisory fees to CAM Inc. Therefore,
the Funds would not bear any increase in contractual advisory fee rates
resulting from the New Advisory Agreement and the CAM Inc. Agreement.
The Board of Trustees of the Trust, including a majority of the Trustees who are
not interested persons of the Funds, the Adviser or CAM Inc., unanimously
approved the CAM Inc. Agreement at a meeting held on December 14, 1995. If
approved by shareholders, unless sooner terminated, the CAM Inc. Agreement will
remain in effect for two years and will thereafter continue for successive
one-year periods, provided that such continuation is specifically approved at
least annually by the Board of Trustees, or by the vote of a "majority of the
outstanding voting securities" of the Funds under the CAM Inc. Agreement as
defined under the 1940 Act and, in either case, by a majority of the
Disinterested Trustees who are not interested persons of the Adviser or CAM
Inc., by vote cast in person at a meeting called for such purpose. The CAM Inc.
Agreement is terminable at any time, without penalty, by vote of the Board of
Trustees, by the Adviser, by the vote of "a majority of the outstanding voting
securities" of the Funds under the CAM Inc. Agreement, or by CAM Inc., upon 60
days' written notice. The CAM Inc. Agreement will terminate automatically in the
event of its assignment, as defined under the 1940 Act.
In the event that both the New Advisory Agreement and the CAM Inc. Agreement are
not approved by shareholders of any Fund, neither the New Advisory Agreement nor
the CAM Inc. Agreement will be implemented for such Funds, and the Interim
Advisory Agreement between such Funds and the Adviser will remain in effect. If
the Interim Advisory Agreement is not approved by shareholders, the Board will
consider the appropriate course of action.
INFORMATION ABOUT CHASE ASSET MANAGEMENT, INC.
Chase Asset Management, Inc. was organized as a Delaware corporation on
September 1, 1995 and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended. CAM Inc. is a wholly owned
subsidiary of The Chase Manhattan Bank, N.A., which is a wholly owned subsidiary
of The Chase Manhattan Corporation. After the completion of the mergers, CAM
Inc. will continue to be a wholly-owned subsidiary of the Adviser which will be
a wholly-owned subsidiary of New Chase. CAM Inc. is registered with the
Commission as an investment adviser and was formed for the purpose of providing
discretionary investment
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<PAGE>
advisory services to institutional clients and to consolidate Chase's investment
management function. Information about the Adviser and its affiliates is set
forth above.
The principal executive officers and Directors of CAM Inc. are as follows:
James W. Zeigon, Director and Chairman of the Board. Mr. Zeigon is also an
Executive Vice President of the Chase Manhattan Bank, N.A.
Mark R. Richardson, Director, President and Chief Investment Officer. Mr.
Richardson is also a Managing Director of the Chase Manhattan Bank, N.A.
Stephen E. Prostano, Director, Executive Vice President and Chief Operating
Officer. Mr. Prostano is also a Managing Director of the Chase Manhattan Bank,
N.A.
The business address of each of the foregoing individuals is 1211 Avenue of the
Americas, New York, New York 10036.
BOARD CONSIDERATIONS
In considering whether to recommend that the New Advisory Agreement and CAM Inc.
Agreement be approved by shareholders, the Board considered the nature and
quality of services to be provided by the Adviser and CAM Inc. and comparative
data as to advisory fees and expenses, and the Board requested and evaluated
such other information from Chase and Chemical which the Board deemed to be
relevant, including, but not limited to, the Adviser's ability to select and
utilize portfolio managers from its affiliates; that the rate at which advisory
fees will initially be paid to the Adviser would be identical to the rate at
which fees are now paid; and that the New Advisory Agreement would include
certain provisions designed to modernize the terms of the agreement and reflect
regulatory developments, such as those concerning "soft dollars" and aggregation
of orders under regulations and releases recently issued by the SEC.
The Board, including a majority of the Trustees who are not interested persons
of the Funds or the Adviser ("Disinterested Trustees"), unanimously approved the
New Advisory Agreement and CAM Inc. Agreement at a meeting held on December 14,
1995.
FEES AND FEE WAIVERS
Under the Current Advisory Agreements, which are dated August 23, 1994 for each
of the Funds except for Vista Treasury Money Market Fund and Vista Federal Money
Market Fund dated April 15, 1994, each Fund pays the Adviser (and under the New
and Proposed Advisory Agreements, each Fund would pay the Adviser) a fee,
computed daily and paid monthly, at the annual rates set forth below as a
percentage of average daily net assets:
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Name of Fund Fee
Treasury Plus Money Market Fund .10%
Vista Federal Money Market Fund .10
New York Tax Free Money Market Fund .10
Vista California Tax Free Money Market Fund .30
Vista U.S. Government Money Market Fund .10
Vista Prime Money Market Fund .10
Vista California Immediate Tax Free Fund .30
Vista New York Tax Free Income Fund .30
Vista Tax Free Income Fund .30
Under the Current Advisory Agreement, the Interim Advisory Agreement and New
Advisory Agreement, the Adviser may periodically reduce all or a portion of its
advisory fee with respect to any Fund. In the fiscal year ended August 31, 1995,
the Funds paid to the Adviser aggregate investment advisory fees, and the
Adviser waived its fees and/or reimbursed expenses to each Fund, as follows:
<TABLE>
<CAPTION>
Amount of
Fee Waiver
and/or
Expense
Name of Fund Fees Paid Reimburse-
ment*
<S> <C> <C>
Vista Treasury Plus Money Market Fund $ 22,663 $ 0
Vista Federal Money Market Fund 389,075 118,975
Vista New York Tax Free Money Market Fund 381,647 0
Vista California Tax Free Money Market Fund 55,870 44,112
Vista U.S. Government Money Market Fund 1,440,186 0
Vista Prime Money Market Fund 352,679 216,306
Vista California Immediate Tax Free Fund 102,004 102,004
Vista New York Tax Free Income Fund 333,493 219,772
Vista Tax Free Income Fund 307,093 287,095
</TABLE>
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Chase also serves as the Administrator to each Fund. For the fiscal year ended
August 31, 1995, Chase received fees, and waived its fees and/or reimbursed
expenses to each Fund, as follows:
<TABLE>
<CAPTION>
Fee Waiver
and/or Expense
Name of Fund Fees Paid Reimbursement*
<S> <C> <C>
Treasury Plus Money Market Fund $ 11,331 $ 11,331
Federal Money Market Fund 194,538 61,243
New York Tax Free Money Market Fund 190,823 0
California Tax Free Money Market Fund 27,935 21,527
U.S. Government Money Market Fund 720,693 0
Prime Money Market Fund 176,340 88,982
Vista California Immediate Tax Free Fund 34,001 34,001
Vista New York Tax Free Income Fund 111,164 81,265
Vista Tax Free Income Fund 102,364 64,572
</TABLE>
* This voluntary waiver and/or limitation is currently in effect but may be
terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the Administrator and the
Sub-Administrator is set forth under "Additional Information" under Proposal 1.
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement and CAM Inc. Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
relevant Fund, which for this purpose means the affirmative vote of the lesser
of (1) more than 50% of the outstanding shares of such Fund or (2) 67% or more
of the shares of such Fund present at the meeting if more than 50% of the
outstanding shares of such Fund are represented at the meeting in person or by
proxy. If the shareholders of a Fund do not approve the Proposed Advisory
Agreement and CAM Inc. Agreement, the Adviser will continue to manage the Fund's
investments under the Current or Interim Advisory Agreement. In that event, the
Board will take such further action as it may deem to be in the best interests
of the Fund's shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
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PROPOSAL 9
APPROVAL OR DISAPPROVAL OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN
EACH FUND AND THE CHASE MANHATTAN BANK, N.A. (OR
THE SUCCESSOR ENTITY THERETO), AND A SUB-ADVISORY
AGREEMENT BETWEEN THE CHASE MANHATTAN BANK, N.A.
(OR THE SUCCESSOR ENTITY THERETO) AND TEXAS
COMMERCE INVESTMENT MANAGEMENT COMPANY
This Proposal relates to the Vista Tax-Free Money Market Fund and Vista Global
Money Market Fund only.
INTRODUCTION
The Chase Manhattan Bank, N.A., the current investment adviser of the Funds (as
used herein, the term "Chase" refers to The Chase Manhattan Bank, N.A. and its
successor in the Bank Merger, and the term "Adviser" means Chase (including its
successor in the Bank Merger) in its capacity as Adviser to the Funds)
recommended to the Board that the Trust enter into a new Investment Advisory
Agreement, on behalf of each of the Vista Tax Free Money Market Fund and Vista
Global Money Market Fund (collectively, for purposes of this proposal, the
"Funds"), and the Adviser (the "New Advisory Agreement") effective as soon as
practicable after the approval of shareholders. The Adviser also recommended to
the Board that the Adviser be permitted to utilize the services of an Affiliate
of the Adviser, Texas Commerce Bank, National Association ("TCB"), to render
advisory services to the Funds. TCB will be retained pursuant to a proposed
Sub-Advisory Agreement (the "TCB Agreement"). The Board has approved, and
recommends that the shareholders of each Fund approve, the New Advisory
Agreement and TCB Agreement (collectively, for purposes of this Proposal, the
"Agreements"). In addition, the Board of Trustees approved the continuation of
the Agreements after the Bank Merger, on the same terms and conditions as in
effect immediately prior to the merger (except for effective and termination
dates) in the event the Agreements are deemed to terminate as a result of the
Bank Merger. Approval of Proposal 9 will be deemed approval of such continuation
of the Agreements after the Bank Merger, if applicable. If approved, the
Agreements will become effective as soon as practicable after the approval of
shareholders.
No increase to the contractual fee rates is proposed under the New Advisory
Agreement and the Adviser, and not the Funds, will compensate TCB for its
services as Sub-Adviser. THEREFORE, THE FUNDS WILL NOT BEAR ANY INCREASE IN
CONTRACTUAL FEE RATES RESULTING FROM THE NEW ADVISORY AGREEMENT OR THE TCB
AGREEMENT.
New Advisory Agreement. The New Advisory Agreement is, in all material respects,
exactly the same as the New Advisory Agreement discussed under Proposal 7 (and a
copy of which is attached as Exhibit B). Therefore, for a discussion of the
relative similarities and differences between the Current and New Agreements and
other material information, please see Proposal 8. If the shareholders of a Fund
do not approve this Proposal, then Chase will continue to act, commencing on the
Holding Company Merger, as the adviser to such Fund under the terms of the
Interim Advisory Agreement, assuming Proposal 1 is approved.
55
<PAGE>
Background. In connection with the Mergers, New Chase intends to rationalize its
corporate wide investment management operations in order to more fully take
advantage of portfolio management skills that will exist within the various
corporate entities controlled by New Chase. As part of this structuring, New
Chase would like to consolidate its mutual fund supervisory functions within one
entity (Chase), and its portfolio management responsibilities with respect to
the Funds within another entity (TCB). TCB presently advises two funds which
will be merged into the Funds on or about the anticipated date of effectiveness
of the New Agreement. Thus, the New Advisory Agreement would provide the Adviser
with the ability to utilize the specialized portfolio skills of employees of all
its various affiliates, thereby providing the Funds with greater opportunities
and flexibility in accessing investment expertise. For the foreseeable future,
the Adviser would employ certain members of the Adviser's senior management.
CONSIDERATION AND PROPOSAL OF THE TCB AGREEMENT
It is being proposed that the Adviser be permitted to utilize the services of
TCB as a sub-adviser under a proposed Investment Sub-Advisory Agreement (the
"TCB Agreement") in order to enable the Adviser to more efficiently render
advisory services to the Funds. The proposed form of the TCB Agreement is
attached as Exhibit D and should be read in conjunction with the following.
The Advisers' decision to utilize the services of TCB in a sub-advisory capacity
with respect to the Funds was based on various considerations, including the
Adviser's desire to consolidate its asset management responsibilities, that CAM
Inc. provides a wide range of investment management capabilities, including the
ability to discriminate among a wide range of potential investments as part of
an investment program for each of the Funds, that risk control is integral to
its methodology, that it has shown a relative consistency in investment
management performance, and the attractiveness of the fee structure and
estimated transaction costs that would be incurred.
Based upon the foregoing, the Adviser recommended to the Board of Trustees that,
subject to approval by the Board and such Funds' shareholders of the New
Advisory Agreement and the TCB Agreement, the Adviser enter into the TCB
Agreement with TCB. In considering whether to recommend that the TCB Agreement
be approved by shareholders, the Board requested and evaluated various
information from the Advisers and TCB relevant to the Advisers' decision. In
addition, the Board considered various other factors which it deemed to be
relevant, including, but not limited to, the fact that TCB presently manages
similar funds which will be merged into the Funds, capabilities to be provided
by TCB, the stability of its investment staff, the trading systems to be
utilized and the potential to minimize transaction costs, the ability to
customize portfolios for the Funds, TCB's experience as an investment adviser,
and the Adviser's access to the various investment and research resources of
TCB.
56
<PAGE>
DESCRIPTION OF THE TCB AGREEMENT
The proposed arrangement between the Adviser and TCB. under the TCB Agreement
would enable the Adviser to manage the investment activities of the Funds
covered in the TCB Agreement most effectively by delegating to TCB portfolio
management duties relating to transactions in the securities held by such Funds.
With respect to the day to day management of the Funds under the TCB Agreement,
TCB 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. TCB may, in its discretion, provide such services through its own
employees or the employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under applicable laws and
are under the common control of New Chase; provided that (i) all persons, when
providing services under the TCB 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 TCB.
The Advisers and TCB would bear all expenses in connection with the performance
of their respective services and the services under the TCB Agreement.
As investment adviser, the Adviser would oversee the management of the Funds
under the TCB Agreement, and, subject to the general supervision of the Board of
Trustees, would make recommendations and provide guidelines to TCB based on
general economic trends and macroeconomic factors. Among the recommendations
which may be provided by the Adviser to TCB would be guidelines and benchmarks
against which the Funds would be managed. From the fee paid by the Funds under
the New Advisory Agreement to the Adviser, the Adviser will bear responsibility
for payment of sub-advisory fees to TCB. Therefore, the Funds would not bear any
increase in fees resulting from the New Advisory Agreement and the TCB
Agreement.
The Board of Trustees of the Trust, including a majority of the Trustees who are
not interested persons of the Funds, the Adviser or TCB, unanimously approved
the TCB Agreement at a meeting held on December 14, 1995. If approved by
shareholders, unless sooner terminated, the TCB Agreement will remain in effect
for two years and will thereafter continue for successive one-year periods,
provided that such continuation is specifically approved at least annually by
the Board of Trustees, or by the vote of a "majority of the outstanding voting
securities" of the Funds under the TCB Agreement as defined under the 1940 Act
and, in either case, by a majority of the Disinterested Trustees who are not
interested persons of the Adviser or TCB, by vote cast in person at a meeting
called for such purpose. The TCB Agreement is terminable at any time, without
penalty, by vote of the Board of Trustees, by the Advisers, by the vote of "a
majority of the outstanding voting securities" of the Funds under the TCB
Agreement, or by TCB, upon 60 days' written notice. The TCB Agreement will
terminate automatically in the event of its assignment, as defined under the
1940 Act.
In the event that both the New Advisory Agreement and the TCB Agreement are not
approved by shareholders of any Fund, neither the New Advisory Agreement nor the
TCB Agreement will be implemented for such Funds, and the Current Advisory
Agreement between such Funds and the Adviser will remain in effect.
57
<PAGE>
INFORMATION ABOUT TEXAS COMMERCE INVESTMENT
MANAGEMENT COMPANY
Texas Commerce Bank, National Association was organized as a [Texas corporation]
on ____________, and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. TCB is a wholly owned subsidiary of Texas
Commerce Bank, National Association which, in turn, will remain a wholly owned
subsidiary of New Chase, which is a wholly owned subsidiaries of The Chase
Manhattan Corporation. After the completion of the mergers, TCB will remain an
indirect wholly owned subsidiary of New Chase. TCB. is registered with the
Commission as an investment adviser and was formed for the purpose of providing
discretionary investment advisory services to institutional clients of Texas
Commerce Bank, National Association. Information about the Adviser and its
affiliates is set forth above.
The principal executive officers and trustees of TCB are as follows:
Trustees:
[TO COME]
Other Officers:
[TO COME]
The business address of each of the foregoing individuals is _________________.
BOARD CONSIDERATIONS
In considering whether to recommend that the New Advisory Agreement and TCB
Agreement be approved by shareholders, the Board considered the nature and
quality of services to be provided by the Adviser and TCB and comparative data
as to advisory fees and expenses, and the Board requested and evaluated such
other information from Chase and TCB which the Board deemed to be relevant,
including, but not limited to, the Adviser's ability to select and utilize
portfolio managers from its affiliates, that TCB presently advises portfolios
with similar objectives which will be merged into the Funds, thereby ensuring
continuity in management; that the rate at which advisory fees will initially be
paid to the Adviser would be identical to the rate at which fees are now paid;
and that the New Advisory Agreement would include certain provisions designed to
modernize the terms of the agreement and reflect regulatory developments, such
as those concerning "soft dollars" and aggregation of orders under regulations
and releases recently issued by the SEC.
The Board, including a majority of the Trustees who are not interested persons
of the Funds or the Adviser, unanimously approved the New Advisory Agreement and
TCB Agreement at a meeting held on December 14, 1995.
58
<PAGE>
FEES AND FEE WAIVERS
Under the Current Advisory Agreement, which is dated August 23, 1994 and was
last approved by each Fund's sole shareholder on August [21], 1994, each Fund
pays the Adviser (and under the New and Proposed Advisory Agreements, each Fund
would pay the Adviser) a fee, computed daily and paid monthly, at the annual
rates set forth below as a percentage of average daily net assets:
Name of Fund Fee
Vista Tax Free Money Market Fund .30%
Vista Global Money Market Fund .10
Under the Current Advisory Agreement, the Interim Advisory Agreement And New
Advisory Agreement, the Adviser may periodically reduce all or a portion of its
advisory fee with respect to any Fund. In the fiscal period ended August 31,
1995, the Funds paid to the Adviser aggregate investment advisory fees, and the
Adviser waived its fees and/or reimbursed expenses to each Fund, as follows:
<TABLE>
<CAPTION>
Amount of Fee
Waiver
and/or
Expense
Name of Fund Fees Paid Reimbursement*
<S> <C> <C>
Vista Tax Free Money Market Fund 440,282 0
Vista Global Money Market Fund 1,076,339 361,108
</TABLE>
Chase also serves as the Administrator to each Fund. For the fiscal year ended
August 31, 1995, Chase received fees, and waived its fees and/or reimbursed
expenses to each Fund, as follows:
<TABLE>
<CAPTION>
Fee Waiver
and/or Expense
Name of Fund Fees Paid Reimbursement*
<S> <C> <C>
Vista Tax Free Money Market Fund 220,146 0
Vista Global Money Market Fund 673,015 128,647
</TABLE>
* This voluntary waiver and/or limitation is currently in effect but may be
terminated.
ADDITIONAL INFORMATION
Additional information concerning the Adviser, the Administrator and the
Sub-Administrator is set forth under "Additional Information" under Proposal 1.
59
<PAGE>
REQUIRED VOTE AND BOARD OF TRUSTEES' RECOMMENDATION
Approval of the New Advisory Agreement and TCB Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
relevant Fund, which for this purpose means the affirmative vote of the lesser
of (1) more than 50% of the outstanding shares of such Fund or (2) 67% or more
of the shares of such Fund present at the meeting if more than 50% of the
outstanding shares of such Fund are represented at the meeting in person or by
proxy. If the shareholders of a Fund do not approve the New Advisory Agreement
and TCB Agreement, the Adviser will continue to manage the Fund's investments
under the Interim Agreement.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE FOREGOING PROPOSAL
OTHER INFORMATION
The Fund's present Sub-Administrator is Vista Broker Dealer Services, Inc.
("VBDS"), a wholly-owned subsidiary of BISYS Funds Services, Inc. See
"Administrator" under Proposal 1. The following are officers of the Trust who
may be deemed to have an interest in VBDS by virtue of their status as employees
and/or executive officers of VBDS:
Position With Officer of the
NAME the Trust Age Trust Since
Ann Bergin .............. Secretary 35 1995
Martin R. Dean .......... Treasurer 31 1995
SUBSTANTIAL SHAREHOLDERS. As of the Record Date, the Trust believed that the
following persons beneficially owned more than 5% of the Funds:
[TO COME]
Voting Information and Discretion of the Persons Named as Proxies. While the
Meeting is called to act upon any other business that may properly come before
it, at the date of this proxy statement the only business which the management
intends to present or knows that others will present is the business mentioned
in the Notice of Meeting. If any other matters lawfully come before the Meeting,
and in all procedural matters at the Meeting, it is the intention that the
enclosed proxy shall be voted in accordance with the best judgment of the
attorneys named therein, or their substitutes, present and acting at the
Meeting.
If at the time any session of the Meeting is called to order a quorum is not
present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of one or more of
the proposals have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies
60
<PAGE>
with respect to any such proposal. All such adjournments will require the
affirmative vote of a majority of the Shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote those proxies which they are entitled to vote in favor of the proposal, in
favor of such an adjournment, and will vote those proxies required to be voted
against the proposal, against any such adjournment. A vote may be taken on one
or more of the proposals in this proxy statement prior to any such adjournment
if sufficient votes for its approval have been received and it is otherwise
appropriate.
Submission of Proposals for the Next Annual Meeting of the Trust. Under the
Trust's Declaration of Trust and By-Laws, annual meetings of shareholders are
not required to be held unless necessary under the 1940 Act (for example, when
fewer than a majority of the Trustees have been elected by shareholders).
Therefore, the Trust does not hold shareholder meetings on an annual basis. A
shareholder proposal intended to be presented at any meeting hereafter called
should be sent to the Trust at 125 West 55th Street, New York, New York 10019,
and must be received by the Trust within a reasonable time before the
solicitation relating thereto is made in order to be included in the notice or
proxy statement related to such meeting. The submission by a shareholder of a
proposal for inclusion in a proxy statement does not guarantee that it will be
included. Shareholder proposals are subject to certain regulations under federal
securities law.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT
EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD
PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID
UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS NECESSARY.
February 5, 1996
BY ORDER OF THE BOARD OF TRUSTEES
OF MUTUAL FUND TRUST
Ann Bergin,
Secretary
61
<PAGE>
EXHIBIT A
INTERIM INVESTMENT ADVISORY AGREEMENT
<PAGE>
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , by and between MUTUAL FUND _________ (the
"Trust") on behalf of the series of the Trust (the "Fund") and THE CHASE
MANHATTAN BANK, a New York State chartered banking corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust and the Adviser desire to enter into an agreement to
provide advisory services for the Fund on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed by and between the parties hereto as
follows:
1. Appointment. The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Fund with respect to the
investment of its assets and to supervise and arrange the purchase of
securities for and the sale of securities held in the portfolio of the
Fund.
2. Duties and Obligations of the Adviser With Respect to Investments
of Assets of the Fund.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the
Trust, the Adviser shall:
(i) supervise continuously the investment program of the
Fund and the composition of its portfolio;
(ii) determine what securities shall be purchased or sold by
the Fund; and
(iii) arrange for the purchase and the sale of securities
held in the portfolio of the Fund.
(b) Any investment program furnished by the Adviser under this
section shall at all times conform to, and be in accordance with, any
requirements imposed by:
<PAGE>
(i) the provisions of the Act and of any rules or
regulations in force thereunder;
(ii) any other applicable provisions of state and federal
law;
(iii) the provisions of the Declaration of Trust and By-Laws
of the Trust, as amended from time to time;
(iv) any policies and determinations of the Board of
Trustees of the Trust; and
(v) the fundamental policies of the Fund, as reflected in
its Registration Statement under the Act, as amended from time to
time.
(c) In making recommendations for the Fund, Trust Division
personnel of the Adviser will not inquire or take into consideration
whether the issuer of securities proposed for purchase or sale for the
Fund's account are customers of the Commercial Division of the
Adviser. In dealing with commercial customers, the Commercial Division
will not inquire or take into consideration whether securities of
those customers are held by the Fund.
(d) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, but the Adviser
shall not be liable for any loss sustained by the Fund in connection
with the matters to which this Agreement relates, including
specifically but not limited to, the calculation of net asset value
and the adoption of any investment policy or the purchase, sale or
retention of any security, whether or not such purchase, sale or
retention shall have been based upon its own investigation and
research or upon investigation and research made by any other
individual, firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or corporation
shall have been selected in good faith. Nothing herein contained
shall, however, be construed to protect the Adviser against any
liability to the Fund or its security holders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement.
(e) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting
as investment adviser or manager for any other person, firm or
corporation (including other investment companies) and shall not in
2
<PAGE>
any way limit or restrict the Adviser or any such affiliated person
from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or they may be
acting; provided, however, that the Adviser expressly represents that
it will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Fund under this
Agreement.
(f) The Fund will supply the Adviser with certified copies of the
following documents: (i) the Trust's Declaration of Trust and By-Laws,
as amended; (ii) resolutions of the Trust's Board of Trustees and
shareholders authorizing the appointment of the Adviser and approving
this Agreement; (iii) the Trust's Registration Statement, as filed
with the SEC; and (iv) the Fund's most recent prospectus and statement
of additional information. The Fund will furnish the Adviser from time
to time with copies of all amendments or supplements to the foregoing,
if any, and all documents, notices and reports filed with the SEC.
(g) The Fund will supply, or cause its custodian bank to supply,
to the Adviser such financial information as is necessary or desirable
for the functions of the Adviser hereunder.
3. Broker-Dealer Relationships. The Adviser is responsible for
decisions to buy and sell securities for the Fund, broker-dealer selection
and negotiation of its brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be execution at the
most favorable price. The Fund understands that a substantial majority of
the Fund's portfolio transactions will be transacted with primary market
makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result in
a profit to the market makers. In certain instances the Adviser may make
purchases of underwritten issues at prices which include underwriting fees.
In selecting a broker or dealer to execute each particular transaction, the
Adviser will take the following into consideration; the best price
available; the reliability, integrity and financial condition of the broker
or dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker or dealer to the investment
performance of the Fund on a continuing basis. Accordingly, the price to
the Fund in any transaction may be less favorable than that available from
another broker or dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such
policies as the Board of Trustees may determine, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty
3
<PAGE>
created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and
research services to the Adviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction,
if the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with
respect to the Fund. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers and dealers who
also provide research or statistical material, or other services to the
Fund (which material or services may also assist the Adviser in rendering
services to other clients). Such allocation shall be in such amounts and
proportions as the Adviser shall determine and the Adviser will report on
said allocations regularly to the Board of Trustees indicating the brokers
to whom such allocations have been made and the basis therefor.
4. Allocation of Expenses. The Adviser agrees that it will furnish the
Fund, at its expense, all office space and facilities, equipment and
clerical personnel necessary for carrying out its duties under this
Agreement and the keeping of certain accounting records of the Fund. The
Adviser agrees that it will supply to any sub-adviser or administrator (the
"Administrator") of the Fund all necessary financial information in
connection with the Administrator's duties under any Agreement between the
Administrator and the Trust. The Adviser will also pay all compensation of
all Trustees, officers and employees of the Fund who are "affiliated
persons" of the Adviser as defined in the Act. All costs and expenses not
expressly assumed by the Adviser under this Agreement or by the
Administrator under the administration agreement between it and the Trust
shall be paid by the Fund, including, but not limited to (i) fees paid to
the Adviser and the Administrator; (ii) interest and taxes; (iii) brokerage
commissions; (iv) insurance premiums; (v) compensation and expenses of its
Trustees other than those affiliated with the Adviser or the Administrator;
(vi) legal, accounting and audit expenses; (vii) custodian and transfer
agent, or shareholder servicing agent, fees and expenses; (viii) expenses,
including clerical expenses, incident to the issuance, redemption or
repurchase of shares, including issuance on the payment of, or reinvestment
of, dividends; (ix) fees and expenses incident to the registration under
Federal or state securities laws of the Fund or its shares; (x) expenses of
preparing, setting in type, printing and mailing prospectuses, statements
of additional information, reports and notices and proxy material to
shareholders of the Fund;
4
<PAGE>
(xi) all other expenses incidental to holding meetings of the Fund's
shareholders; and (xii) such extraordinary expenses as may arise, including
litigation affecting the Fund and the legal obligations which the Trust may
have to indemnify its officers and Trustees with respect thereto.
5. Compensation of the Adviser. (a) For the services to be rendered
and the expenses assumed by the Adviser, the Fund shall pay to the Adviser
monthly compensation at an annual rate, of % of the Fund's average daily
net assets, as set forth in Schedule A. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily and
the amounts of the daily accruals shall be paid monthly. If the Agreement
becomes effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for that part of the month
this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above. Subject to the provisions
of subsection (b) hereof, payment of the Adviser's compensation for the
preceding month shall be made as promptly as possible after completion of
the computations contemplated by subsection (b) hereof.
(b) In the event the operating expenses of the Fund including all
investment advisory, sub-advisory and administration fees, for any
fiscal year ending on a date on which this Agreement is in effect
exceed the expense limitations applicable to the Fund imposed by the
securities laws or regulations thereunder of any state in which the
Fund's shares are qualified for sale, as such limitations may be
raised or lowered from time to time, the Adviser shall reduce its
investment advisory fee, but not below zero, to the extent of its
share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be
settled on a monthly basis and shall be based upon the expense
limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more of such expense limitations be
applicable as at the end of the last business day of the month, that
expense limitation which results in the largest reduction in the
Adviser's fee shall be applicable. For the purposes of this paragraph,
the Adviser's share of any excess expenses shall be computed by
multiplying such excess expenses by a fraction, the numerator of which
is the amount of the investment advisory fee which would otherwise be
payable to the Adviser for such fiscal year were it not
5
<PAGE>
for this subsection 5(b) and the denominator of which is the sum of
all investment advisory and administrative fees which would otherwise
be payable by the Fund were it not for the expense limitation
provisions of any investment advisory or administrative agreement to
which the Fund is a party.
6. Duration, Amendment and Termination. (a) This Agreement shall
go into effect as to the Fund on the date set forth above (the
"Effective Date") and shall, unless terminated as hereinafter
provided, continue in effect for two years from the Effective Date and
shall continue from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of
Trustees of the Trust, including the vote of a majority of the
Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of
the holders of a "majority" (as so defined) of the outstanding voting
securities of the Fund and by such a vote of the Trustees.
(b) This Agreement may not be amended except in accordance
with the provisions of the Act, including specifically, the
provisions of the Act and the rules and regulations thereunder
regarding series votes by shareholders of the Fund.
(c) This Agreement may be terminated by the Adviser at any
time without penalty upon giving the Fund sixty (60) days'
written notice (which notice may be waived by the Fund) and may
be terminated by the Fund at any time without penalty upon giving
the Adviser sixty (60) days' written notice (which notice may be
waived by the Adviser), provided that such termination by the
Fund shall be approved by the vote of a majority of all the
Trustees in office at the time or by the vote of the holders of a
majority (as defined in the Act) of the voting securities of the
Fund at the time outstanding and entitled to vote. This Agreement
may only be terminated in accordance with the provisions of the
Act, and shall automatically terminate in the event of its
assignment (as defined in the Act).
7. Board of Trustees Meeting. The Fund agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the
Adviser and that the Fund will make appropriate arrangements for the
attendance (as persons present by invitation) of such person or
persons as the Adviser may designate.
6
<PAGE>
8. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other
party at such address as such other party may designate for the receipt
of such notice. Until further notice to the other party, it is agreed
that the address of the Fund for this purpose shall be 125 West 55th
Street, New York, New York 10019, and that of the Adviser shall be One
Chase Manhattan Plaza, New York, New York 10081.
9. Questions of Interpretation. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the Act, as amended,
shall be resolved by reference to such term or provision of the Act and
to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of
the Act, reflected in any provision of this Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunder affixed, all as of the day and year first above written.
MUTUAL FUND ___________
Name:
Title:
ATTEST:
THE CHASE MANHATTAN BANK
Name:
Title:
ATTEST:
7
<PAGE>
EXHIBIT B
NEW INVESTMENT ADVISORY AGREEMENT
<PAGE>
FORM OF
PROPOSED
INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND ________
AND
THE CHASE MANHATTAN BANK
AGREEMENT made this day of , 1996, by and between Mutual Fund _________, a
Massachusetts business trust which may issue one or more series of shares
(hereinafter the "Trust"), and The Chase Manhattan Bank, a New York state
chartered bank (hereinafter the "Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services in connection with the series of the Trust listed on Schedule
A (each, a "Fund" and collectively, the "Funds"), and the Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Structure of Agreement. The Trust is entering into this Agreement
on behalf of the Funds severally and not jointly. The responsibilities and
benefits set forth in this Agreement shall refer to each Fund severally and not
jointly. No individual Fund shall have any responsibility for any obligation
with respect to any other Fund arising out of this Agreement. Without otherwise
limiting the generality of the foregoing,
(a) any breach of any term of this Agreement regarding the Trust
with respect to any one Fund shall not create a right or
obligation with respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set
off claims relating to a Fund by applying property of any
other Fund; and
(c) the business and contractual relationships created by this
Agreement, the consideration for entering into this Agreement,
and the consequences of such
<PAGE>
relationships and consideration relate solely to the Trust and
the particular Fund to which such relationship and
consideration applies.
2. Delivery of Documents. The Trust has delivered to the Adviser
copies of each of the following documents and will deliver to it all future
amendments and supplements thereto, if any:
(a) The Trust's Declaration of Trust;
(b) The By-Laws of the Trust;
(c) Resolutions of the Board of Trustees of the Trust authorizing
the execution and delivery of this Agreement;
(d) The Trust's Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), on Form N-1A as
filed with the Securities and Exchange Commission (the
"Commission") on July 18, 1994 and all subsequent amendments
thereto relating to the Funds (the "Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of the
Funds (collectively, the "Prospectuses").
3. Appointment.
(a) General. The Trust hereby appoints the Adviser to act as
investment adviser to the Funds for the period and on the
terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the
employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under
applicable laws and are under the control of The Chase
Manhattan Corporation, the parent of the Adviser; provided
that (i) all persons, when providing services hereunder, are
functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by
authorized officers of the Adviser.
2
<PAGE>
(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities
or persons as the Adviser believes appropriate to assist in
the performance of this Agreement with respect to a particular
Fund or Funds (each a "Sub-Adviser"), and that any such
Sub-Adviser shall have all of the rights and powers of the
Adviser set forth in this Agreement; provided that a Fund
shall not pay any additional compensation for any Sub-Adviser
and the Adviser shall be as fully responsible to the Trust for
the acts and omissions of the Sub-Adviser as it is for its own
acts and omissions; and provided further that the retention of
any Sub-Adviser shall be approved in advance by (i) the Board
of Trustees of the Trust and (ii) the shareholders of the
relevant Fund if required under any applicable provisions of
the 1940 Act. The Adviser will review, monitor and report to
the Trust's Board of Trustees regarding the performance and
investment procedures of any Sub-Adviser. In the event that
the services of any Sub-Adviser are terminated, the Adviser
may provide investment advisory services pursuant to this
Agreement to the Fund without a Sub-Adviser and without
further shareholder approval, to the extent consistent with
the 1940 Act. A Sub-Adviser may be an affiliate of the
Adviser.
4. Investment Advisory Services.
(a) Management of the Funds. The Adviser hereby undertakes to act
as investment adviser to the Funds. The Adviser shall
regularly provide investment advice to the Funds and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Trust
and each Fund;
(ii) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Funds' investment programs, and the
issuers of securities included in the Funds'
portfolios and the industries in which they engage,
or which may relate to securities or other
investments which the Adviser may deem desirable for
inclusion in a Fund's portfolio;
(iii) determine which issuers and securities shall be
included in the portfolio of each Fund; (iv) furnish
a continuous investment program for each Fund;
3
<PAGE>
(v) in its discretion and without prior consultation with
the Trust, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser
may deem necessary in order to carry into effect such
investment program and the Adviser's functions as
provided above, including the making of appropriate
periodic reports to the Trust's Board of Trustees.
(b) Covenants. The Adviser shall carry out its investment
advisory and supervisory responsibilities in a manner
consistent with the investment objectives, policies, and
restrictions provided in: (i) each Fund's Prospectus and
Statement of Additional Information as revised and in effect
from time to time; (ii) the Company's Trust Instrument,
By-Laws or other governing instruments, as amended from time
to time; (iii) the 1940 Act; (iv) other applicable laws; and
(v) such other investment policies, procedures and/or
limitations as may be adopted by the Company with respect to a
Fund and provided to the Adviser in writing. The Adviser
agrees to use reasonable efforts to manage each Fund so that
it will qualify, and continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended, and regulations issued thereunder
(the "Code"), except as may be authorized to the contrary by
the Company's Board of Trustees. The management of the Funds
by the Adviser shall at all times be subject to the review of
the Company's Board of Trustees.
(c) Books and Records. The Adviser shall keep each Fund's books
and records required by applicable law to be maintained by the
Funds with respect to advisory services. The Adviser agrees
that all records which it maintains for a Fund are the
property of the Fund and it will promptly surrender any of
such records to the Fund upon the Fund's request. The Adviser
further agrees to preserve for the periods prescribed by the
1940 Act any such records of the Fund required to be preserved
by such Rule.
(d) Reports, Evaluations and other services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Trust with respect to the Funds and in connection with the
Adviser's services hereunder as the Trust's Board of Trustees
may request from time to time or as the Adviser may otherwise
deem to be desirable. The Adviser shall make recommendations
to the Trust's Board of Trustees with respect to Trust
policies, and shall carry out such policies as are adopted by
the Board of Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the
Adviser shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement.
4
<PAGE>
(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for
each Fund with brokers or dealers selected by the Adviser,
which may include brokers or dealers affiliated with the
Adviser to the extent permitted by the 1940 Act and the
Trust's policies and procedures applicable to the Funds. The
Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being the
most favorable to the Funds. In assessing the best overall
terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth
of the market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, research services provided to the Adviser, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In no event
shall the Adviser be under any duty to obtain the lowest
commission or the best net price for any Fund on any
particular transaction, nor shall the Adviser be under any
duty to execute any order in a fashion either preferential to
any Fund relative to other accounts managed by the Adviser or
otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or
dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) to the Adviser, the
Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good
faith that the total commission is reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the
Adviser with respect to accounts over which it exercises
investment discretion. The Adviser shall report to the Board
of Trustees of the Trust regarding overall commissions paid by
the Funds and their reasonableness in relation to the benefits
to the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other Funds or its other clients if, in the
Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to the Fund, taking into
consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies
set forth in the
5
<PAGE>
Trust's registration statement and the Fund's Prospectus and
Statement of Additional Information. In such event, the
Adviser will allocate the securities so purchased or sold, and
the expenses incurred in the transaction, in an equitable
manner, consistent with its fiduciary obligations to the Fund
and such other clients.
5. Expenses. (a) The Adviser shall, at its expense, provide the Funds
with office space, furnishings and equipment and personnel required by it to
perform the services to be provided by the Adviser pursuant to this Agreement.
The Adviser also hereby agrees that it will supply to any sub-adviser or
administrator (the "Administrator") of a Fund all necessary financial
information in connection with the Administrator's duties under any Agreement
between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the Trust shall be
responsible for all of the Funds' expenses and liabilities, including, but not
limited to, taxes; interest; fees (including fees paid to its trustees who are
not affiliated with the Adviser or any of its affiliates); fees payable to the
Securities and Exchange Commission; state securities qualification fees;
association membership dues; costs of preparing and printing Prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory and
administration fees; charges of the custodian and transfer agent; insurance
premiums; auditing and legal expenses; costs of shareholders' reports and
shareholders' meetings; any extraordinary expenses; and brokerage fees and
commissions, if any, in connection with the purchase or sale of portfolio
securities.
6. Compensation. (a) In consideration of the services to be rendered by
the Adviser under this Agreement, the Trust shall pay the Adviser monthly fees
on the first Business Day (as defined in the Prospectuses) of each month based
upon the average daily net assets of each Fund during the preceding month (as
determined on the days and at the time set forth in the Prospectuses for
determining net asset value per share) at the annual rate set forth opposite the
Fund's name on Schedule A attached hereto. If the fees payable to the Adviser
pursuant to this paragraph begin to accrue before the end of any month or if
this Agreement terminates before the end of any month, the fees for the period
from such date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs. For purposes of calculating each such monthly fee, the
value of the Funds' net assets shall be computed in the manner specified in the
Prospectuses and the Articles for the computation of the value of the Funds' net
assets in connection with the determination of the net asset value of shares of
the Funds' capital stock.
(b) If the aggregate expenses incurred by, or allocated to, each Fund
in any fiscal year shall exceed the lowest expense limitation, if applicable to
such Fund, imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Adviser shall reduce
its investment advisory fee, but not below zero, to the
6
<PAGE>
extent of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more of such expense limitations be applicable
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Adviser's fee shall be applicable. For
the purposes of this paragraph, the Adviser's share of any excess expenses shall
be computed by multiplying such excess expenses by a fraction, the numerator of
which is the amount of the investment advisory fee which would otherwise be
payable to the Adviser for such fiscal year were it not for this subsection 6(b)
and the denominator of which is the sum of all investment advisory and
administrative fees which would otherwise be payable by the Fund were it not for
the expense limitation provisions of any investment advisory or administrative
agreement to which the Fund is a party.
(c) In consideration of the Adviser's undertaking to render the
services described in this Agreement, the Trust agrees that the Adviser shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any act or omission or loss suffered by the Trust in connection with the
performance of this Agreement, provided that nothing in this Agreement shall be
deemed to protect or purport to protect the Investment Adviser against any
liability to the Trust or its stockholders to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's duties under this Agreement or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder or breach
of fiduciary duty with respect to receipt of compensation.
7. Non-Exclusive Services. Except to the extent necessary to perform
the Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of the
Adviser, including any employee of the Adviser, to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
8. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date"), provided that it
shall have been approved by a majority of the outstanding voting securities of
each Fund, in accordance with the requirements of the 1940 Act, or such later
date as may be agreed by the parties following such shareholder approval.
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph, this Agreement shall continue in force for two years from the
Effective Date and
7
<PAGE>
shall continue in effect from year to year thereafter, but only so long as the
continuance after such date shall be specifically approved at least annually by
vote of the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Fund.
(b) This Agreement may be modified by mutual consent, such consent on
the part of the Trust to be authorized by vote of a majority of the outstanding
voting securities of each Fund.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days prior
written notice to the other, terminate this Agreement, without payment of any
penalty, by action of its Trustees or Board of Trustees, as the case may be, or
by action of its authorized officers or, with respect to a Fund, by vote of a
majority of the outstanding voting securities of that Fund. This Agreement may
remain in effect with respect to a Fund even if it has been terminated in
accordance with this paragraph with respect to the other Funds. This Agreement
shall terminate automatically in the event of its assignment as that term is
defined under the 1940 Act..
9. Board of Trustees Meetings. The Trust agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the Adviser and
that the Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
THE CHASE MANHATTAN BANK MUTUAL FUND __________
By: _________________________ By:_______________________
8
<PAGE>
EXHIBIT C
PROPOSED
[CHASE ASSET MANAGEMENT/TEXAS COMMERCE BANK, NATIONAL ASSOCIATION]
SUB-ADVISORY AGREEMENT
<PAGE>
FORM OF
PROPOSED
INVESTMENT SUBADVISORY AGREEMENT
between
THE CHASE MANHATTAN BANK
and
[CHASE ASSET MANAGEMENT/TEXAS
COMMERCE BANK, NATIONAL ASSOCIATION]
AGREEMENT made as of the day of , 1996, by and between The Chase Manhattan Bank,
a New York State chartered bank (the "Adviser"), and [Chase Asset Management,
Inc./Texas Commerce Bank, National Association], a [type of entity] (the
"SubAdviser").
WHEREAS, the Adviser provides investment advisory services to the
series of Mutual Fund Trust, 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 the same date hereof (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 in connection with the series of the Trust
listed on Schedule A (each, a "Fund" and collectively, the "Funds"), and the
Sub-Adviser represents that it is willing and possesses legal authority to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Funds for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts
such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Sub-Adviser may, in its
discretion, provide such services through its own employees or
the employees of one or more affiliated companies that are
qualified to act as an investment subadviser to the Funds
under
<PAGE>
applicable laws and are under the control of The Chase
Manhattan Corporation, the parent of the Sub-Adviser; provided
that (i) all persons, when providing services hereunder, are
functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by
authorized officers of the Sub-Adviser.
2. Delivery of Documents. The Adviser has delivered to the
Sub-Adviser copies of each of the following documents along with all amendments
thereto through the date hereof, and will promptly deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust ;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing
the execution and delivery of the Advisory Agreement and this
Agreement;
(d) the most recent Post-Effective Amendment to the Trust's
Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act, on Form N-1A as
filed with the Securities and Exchange Commission (the
"Commission");
(e) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of
Additional Information of the Funds.
3. Investment Advisory Services.
(a) Management of the Funds. The Sub-Adviser hereby undertakes to
act as investment subadviser to the Funds. The Sub-Adviser
shall regularly provide investment advice to the Funds and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Funds and, in furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Funds' investment programs, and the
issuers of securities included in the Funds'
portfolios and the industries in which they engage,
or which may relate to securities or other
investments which the Sub-Adviser may deem desirable
for inclusion in a Fund's portfolio;
2
<PAGE>
(ii) determine which issuers and securities shall be
included in the portfolio of each Fund;
(iii) furnish a continuous investment program for each
Fund;
(iv) in its discretion, and without prior consultation,
buy, sell, lend and otherwise trade any stocks, bonds
and other securities and investment instruments on
behalf of each Fund; and
(v) take, on behalf of each Fund, all actions the
Sub-Adviser may deem necessary in order to carry into
effect such investment program and the Sub-Adviser's
functions as provided above, including the making of
appropriate periodic reports to the Adviser and the
Trust's Board of Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in:
(i) each Fund's Prospectus and Statement of Additional
Information as revised and in effect from time to time; (ii)
the Trust's Declaration of Trust, By-Laws or other governing
instruments, as amended from time to time; (iii) the 1940 Act;
(iv) 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 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
Trust's Board of Trustees. The management of the Funds 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 hereunder. The Sub-Adviser
agrees that all records which it maintains for a Fund are the
property of the Fund and it will promptly surrender any of
such records to the Fund upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a- 2 under the 1940 Act any such records
of the 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 Funds and in
connection with the Sub-Adviser's services hereunder as the
3
<PAGE>
Adviser and/or the Trust's Board of Trustees may request from
time to time or as the Sub-Adviser may otherwise deem to be
desirable. The Sub-Adviser shall make recommendations to the
Adviser and the Trust's Board of Trustees with respect to the
Trust's policies, and shall carry out such policies as are
adopted by the Board of Trustees. The Sub-Adviser may, subject
to review by the Adviser, furnish such other services as the
Sub-Adviser shall from time to time determine to be necessary
or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place
all orders for the purchase and sale of portfolio securities
for each Fund with brokers or dealers selected by the
Sub-Adviser, which may include brokers or dealers affiliated
with the Adviser or the Sub-Adviser to the extent permitted by
the 1940 Act and the Trust's policies and procedures
applicable to the Funds. The Sub-Adviser shall use its best
efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in total costs or
proceeds being the most favorable to the Funds. In assessing
the best overall terms available for any transaction, the Sub-
Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price
of the security, the financial condition and execution
capability of the broker or dealer, research services provided
to the Sub- Adviser, and the reasonableness of the commission,
if any, both for the specific transaction and on a continuing
basis. In no event shall the Sub-Adviser be under any duty to
obtain the lowest commission or the best net price for any
Fund on any particular transaction, nor shall the Sub-Adviser
be under any duty to execute any order in a fashion either
preferential to any Fund relative to other accounts managed by
the Sub-Adviser or otherwise materially adverse to such other
accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or
dealers qualified to execute a particular transaction, brokers
or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) to the Sub-Adviser,
the Funds, and/or the other accounts over which the
Sub-Adviser exercises investment discretion. The Sub-Adviser
is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub- Adviser
determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to accounts
over which it exercises investment discretion. The Sub-Adviser
shall report to the Board of Trustees of the Trust regarding
overall commissions paid by the Funds and their reasonableness
in relation to their benefits to the Funds.
4
<PAGE>
(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 [New
York] and is fully authorized to enter into this
Agreement and carry out its duties and obligations
hereunder.
(ii) The Sub-Adviser is registered as an investment
adviser with the Commission under the Advisers Act,
and is registered or licensed as an investment
adviser under the laws of all applicable
jurisdictions. The SubAdviser shall maintain such
registrations or licenses in effect at all times
during the term of this Agreement.
(iii) The Sub-Adviser at all times shall provide its best
judgment and effort to the Adviser in carrying out
the Sub-Adviser's obligations hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser
as follows:
(i) The Adviser is a state chartered bank duly organized
and in good standing under the laws of the State of
New York and is fully authorized to enter into this
Agreement and carry out its duties and obligations
hereunder.
(ii) The Trust has been duly organized as a business trust
under the laws of the State of Massachusetts.
(iii) The Trust is registered as an investment company with
the Commission under the 1940 Act, and shares of the
each Fund are registered for offer and sale to the
public under the 1933 Act and all applicable state
securities
5
<PAGE>
laws where currently sold. Such registrations will be
kept in effect during the term of this Agreement.
5. Compensation. (a) As compensation for the services which the
Sub-Adviser is to provide or cause to be provided pursuant to Paragraph 3, with
respect to each Fund, the Adviser shall pay to the Sub-Adviser (or cause to be
paid by the Trust directly to the SubAdviser) a fee, which shall be accrued
daily and paid in arrears on the first business day of each month, at an annual
rate to be determined between the parties hereto from time to time, as a
percentage of the average daily net assets of the Fund during the preceding
month (computed in the manner set forth in the Fund's most recent Prospectus and
Statement of Additional Information). Average daily net assets shall be based
upon determinations of net assets made as of the close of business on each
business day throughout such month. The fee for any partial month shall be
calculated on a proportionate basis, based upon average daily net assets for
such partial month. As a percentage of average daily net assets.
(b) The Sub-Adviser shall have the right, but not the
obligation, to voluntarily waive any portion of the sub-advisory fee from time
to time. Any such voluntary waiver will be irrevocable and determined in advance
of rendering sub-investment advisory services by the Sub-Adviser, and shall be
in writing and signed by the parties hereto.
(c) If the aggregate expenses incurred by, or allocated to,
each Fund in any fiscal year shall exceed the lowest expense limitation, if
applicable to such Fund, imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Sub-Adviser shall reduce its investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more of such expense limitations be applicable
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Sub-Adviser's fee shall be applicable.
For the purposes of this paragraph, the Sub-Adviser's share of any excess
expenses shall be computed by multiplying such excess expenses by a fraction,
the numerator of which is the amount of the investment advisory fee which would
otherwise be payable to the Sub-Adviser for such fiscal year were it not for
this subsection 5(b) and the denominator of which is the sum of all investment
advisory and administrative fees which would otherwise be payable by the Fund
were it not for the expense limitation provisions of any investment advisory or
administrative agreement to which the Fund is a party.
6. Interested Persons. It is understood that, to the extent
consistent with applicable laws, the Trustees, officers and shareholders of the
Trust or the Adviser are or may be or become interested in the Sub-Adviser as
directors, officers or otherwise and that directors, officers and
6
<PAGE>
shareholders of the Sub-Adviser are or may be or become similarly interested in
the Trust or the Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it
in connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the Funds.
8. Non-Exclusive Services; Limitation of Sub-Adviser's Liability.
The services of the Sub-Adviser hereunder are not to be deemed exclusive, and
the Sub-Adviser may render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter into other agreements
with the Funds, the Trust or the Adviser for providing additional services to
the Funds, the Trust or the Adviser which are not covered by this Agreement, and
to receive additional compensation for such services. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Sub-Adviser, or a breach of fiduciary duty
with respect to receipt of compensation, neither the Sub-Adviser nor any of its
directors, officers, shareholders, agents, or employees shall be liable or
responsible to the Adviser, the Trust, the Funds or to any shareholder of the
Funds for any error of judgment or mistake of law or for any act or omission in
the course of, or connected with, rendering services hereunder or for any loss
suffered by the Adviser, the Trust, a Fund, or any shareholder of a Fund in
connection with the performance of this Agreement.
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 until 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, and (ii) by a vote
of the Board of Trustees of the Trust or a majority of the
outstanding voting securities of the Fund.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Trust who are not interested persons of any
party to this Agreement, cast in person at a meeting called
for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement as to any
Fund(s) at any time on sixty (60) days'
7
<PAGE>
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
or in the event of the termination of the Advisory Agreement.
10. Limitation of Liability of Trustees and Shareholders. The
Sub-Adviser acknowledges the following limitation of liability:
The terms "Mutual Fund Trust" and "Trustees of Mutual Fund Trust"
refer, respectively, to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Declaration of
Trust, to which reference is hereby made and a copy of which is on file at the
office of the Secretary of State of the State of Massachusetts, such reference
being inclusive of any and all amendments thereto so filed or hereafter filed.
The obligations of "Mutual Fund Trust" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind only
the assets of the Trust, and all persons dealing with the Trust or a Fund must
look solely to the assets of the Trust or Fund for the enforcement of any claims
against the Trust or Fund.
11. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent a Fund in any way
or otherwise be deemed an agent of a Fund.
13. Structure of Agreement. The Adviser and Sub-Adviser are entering
into this Agreement with regard to the respective Funds severally and not
jointly. The responsibilities and benefits set forth in this Agreement shall be
deemed to be effective as between the Adviser and Sub-Adviser in connection with
each Fund severally and not jointly. This Agreement is intended to govern only
the relationships between the Adviser, on the one hand, and the Sub-Adviser, on
the other hand, and is not intended to and shall not govern (i) the relationship
between the Adviser or Sub-Adviser and any Fund, or (ii) the relationships among
the respective Funds.
8
<PAGE>
14. Governing Law. This Agreement shall be governed by the laws of
the State of New York, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or the Advisers Act.
15. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
16. Notices. Notices of any kind to be given to the Adviser
hereunder by the SubAdviser shall be in writing and shall be duly given if
mailed or delivered to the Adviser at
_________________________________________________________________________ or at
such other address or to such individual as shall be so specified by the Adviser
to the SubAdviser. Notices of any kind to be given to the Sub-Adviser hereunder
by the Adviser shall be in writing and shall be duly given if mailed or
delivered to the Sub-Adviser at
__________________________________________________________________________ or at
such other address or to such individual as shall be so specified by the
Sub-Adviser to the Adviser. Notices shall be effective upon delivery.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
[Subadviser] CHASE MANHATTAN BANK
By: ___________________________ By:
Name: Name:
Title: Title:
9
<PAGE>
EXHIBIT D
PROPOSED
RULE 12B-1 DISTRIBUTION PLAN
<PAGE>
MUTUAL FUND ________
SHARES
PROPOSED
PLAN FOR PAYMENT OF CERTAIN EXPENSES FOR
DISTRIBUTION OR SHAREHOLDER SERVICING ASSISTANCE
Distribution Plan (the "Plan") of MUTUAL FUND _______, a Massachusetts
business trust (the "Trust"), an open-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"), on behalf of the class of shares designated as the ____ Shares and the
____ Shares of any series of the Trust which may be created in the future,
adopted pursuant to Section 12(b) of the Act and Rule 12b-1 promulgated
thereunder ("Rule 12b-1").
1. Principal Underwriter. Vista Broker-Dealer Services, Inc., a
Delaware corporation ("the Distributor"), acts as the principal underwriter of
the shares of each series of the Trust pursuant to a Distribution and
Sub-Administration Agreement.
2. Distribution Payments. (a) The Trust may make payments periodically
(i) to the Distributor or to any broker-dealer (a "Broker") who is registered
under the Securities Exchange Act of 1934 and a member in good standing of the
National Association of Securities Dealers, Inc. and who has entered into a
selected dealer agreement with the Distributor in a form similar to the one
annexed hereto as Exhibit A or (ii) to other persons or organizations
("Servicing Agents") who have entered into shareholder processing and service
agreements with the Trust or with the Distributor, in a form similar to the one
annexed hereto as Exhibit B, with respect to Trust shares owned by shareholders
for which such broker is the dealer or holder of record or such Servicing Agent
has a servicing relationship.
(b) Payments may be made pursuant to the Plan for any advertising and
promotional expenses relating to selling efforts of the shares of each series of
the Trust, including but not limited to the incremental costs of printing
(excluding typesetting) of prospectuses, statements of additional information,
annual reports and other periodic reports for distribution to persons who are
not shareholders of the Trust; the costs of preparing and distributing any other
supplemental sales literature; expenses of certain personnel engaged in the
distribution of shares; costs of travel, office expenses (including rent and
overhead), equipment, printing, delivery and mailing costs incurred in the
distribution of shares.
<PAGE>
(c) The aggregate amount of payments by the Trust in a fiscal year, to
brokers, servicing agents, or the Distributor pursuant to paragraphs (a) and (b)
shall not exceed .25% of the average daily net assets of each series of the
Trust.
(d) The schedule of such fees and the basis upon which such fees will
be paid shall be determined from time to time by the Board of Trustees of the
Trust.
3. Reports. Quarterly, in each year that this Plan remains in effect,
the Trust and the Distributor shall prepare and furnish to the Board of Trustees
of the Trust a written report, complying with the requirements of Rule 12b-1,
setting forth the amounts expended by the Trust under the Plan and purposes for
which such expenditures were made.
4. Approval of Plan. This Plan shall become effective upon approval of
the Plan, the form of Selected Dealer Agreement and the form of Shareholder
Service Agreement, by the majority votes of both (a) the Trust's Board of
Trustees and the Qualified Trustees (as defined in Section 6), cast in person at
a meeting called for the purpose of voting on the Plan and (b) the outstanding
voting securities of each series of the Trust, as defined in Section 2(a)(42) of
the Act.
5. Term. This Plan shall remain in effect for one year from its
adoption date and may be continued thereafter if this Plan and all related
agreements are approved at least annually by a majority vote of the Trustees of
the Trust, including a majority of the Qualified Trustees, cast in person at a
meeting called for the purpose of voting on such Plan and agreements. This Plan
may not be amended in order to increase materially the amount to be spent for
distribution assistance without shareholder approval in accordance with Section
4 hereof. All material amendments to this Plan must be approved by a vote of the
Board of Trustees of the Trust, and of the Qualified Trustees (as hereinafter
defined), cast in person at a meeting called for the purpose of voting thereon.
6. Termination. This Plan may be terminated as to any series at any
time by a majority vote of the Trustees who are not interested persons (as
defined in Section 2(a)(19) of the Act) of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan (the "Qualified Trustees") or by vote of a majority of the
outstanding voting securities of the Trust, as defined in Section 2(a)(42) of
the Act.
7. Nomination of "Disinterested" Trustees. While this Plan shall be in
effect, the selection and nomination of the "disinterested" trustees of the
Trust shall be committed to the discretion of the Qualified Trustees then in
office.
8. Miscellaneous. (a) Any termination or noncontinuance of (i) a
selected dealer agreement between the Distributor and a particular broker or
(ii) a shareholder service agreement between the Distributor or the Trust and a
particular person or organization, shall have no effect on any similar
agreements between brokers or other persons and the Distributor of the Trust
pursuant to this Plan.
2
<PAGE>
(b) Neither the Distributor nor the Trust shall be under any obligation
because of this Plan to execute any selected dealer agreement with any broker or
any shareholder service agreement with any person or organization.
(c) All agreements with any person or organization relating to the
implementation of this Plan shall be in writing and any agreement related to
this Plan shall be subject to termination, without penalty, pursuant to the
provisions of Section 6 hereof.
Dated: __________, 1996
3
<PAGE>
EXHIBIT A
Vista Broker-Dealer Services, Inc.
125 West 55th Street
New York, New York 10019
Re: Selected Dealer Agreement for
Mutual Fund __________
Gentlemen:
We understand that Mutual Fund __________ (the "Trust") has adopted plans
(the "Plans") pursuant to Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "Act") for making payments to selected brokers for Trust
distribution assistance.
We desire to enter into an Agreement with you for the sale and
distribution of the shares of the Premier Funds of the Trust (the "shares") for
which you are Distributor and whose shares are offered to the public at net
asset value. Upon acceptance of this Agreement by you, we understand that we may
offer and sell the shares, subject, however, to all of the terms and conditions
hereof and to your right to suspend or terminate the sale of such securities.
1. We understand that the shares covered by this Agreement will be
offered and sold at net asset value without a sales charge. We further
understand that all purchase requests and applications submitted by us are
subject to acceptance or rejection in the Trust's discretion.
2. We certify that we are members of the National Association of
Securities Dealers, Inc. ("NASD") and agree to maintain membership in said
Association, or in the alternative, that we are foreign brokers not eligible for
membership in said Association. In either case, we agree to abide by all the
rules and regulations of the NASD which are binding upon underwriters and
brokers in the distribution of the shares of open-end investment companies,
including without limitation, Section 26 of Article III of the Rules of Fair
Practice, all of which are incorporated herein" as if set forth in full. We
further agree to comply with all applicable state and Federal laws and the rules
and regulations of authorized regulatory agencies. We agree that we will not
sell or offer for sale, the shares in any state or jurisdiction where they are
not exempt from or have not been qualified for sale.
3. We will offer and sell the Shares covered by this Agreement only in
accordance with the terms and conditions of its then current Prospectus, and we
will make no representations not included in said Prospectus or in any
authorized supplemental material supplied by you. We will use our best efforts
in the development and promotion of sales of the shares covered by this
Agreement and agree to be responsible for the proper instruction and training of
all sales personnel employed by us, in order that the shares will be offered in
accordance with the terms and conditions of this Agreement and all applicable
laws, rules and regulations. We agree to hold you harmless and indemnify you in
the event that we, or any of our sales representatives, should violate any law,
rule or regulation, or any provisions of this Agreement, which may result in
liability to you; and in the event you determine to refund any amount paid by
any investor by reason of any such violation on our part, we shall return to you
any distribution assistance payments previously paid or allowed by you to us
with respect to the transaction for which the refund is made. All expenses which
we incur in connection with our activities under this Agreement shall be borne
by us.
4. For purposes of this Agreement "Qualified Accounts" shall mean:
accounts of customers of ours who have purchased shares and who use our
facilities to communicate with the Trust or to effect redemptions or additional
purchases of shares and with respect to which we provide shareholder and
administration services, which services may include, without limitation:
answering inquiries regarding the Trust; assistance to customers in changing
dividend options, account designations and addresses; performance of
sub-accounting; establishment and
A-1
<PAGE>
maintenance of shareholder accounts and records; processing purchase and
redemption transactions; automatic investment in Trust shares of customer
account cash balances; providing periodic statements showing a customer's
account balance and the integration of such statements with those of other
transactions and balances in the customer's other accounts serviced by us;
arranging for bank wires; and such other shareholder services as you reasonably
may request, to the extent we are permitted by applicable statute, rule or
regulation.
5. In consideration of the services and facilities described herein, we
shall be entitled to receive from you such fees as are set forth in the Plans
for Payment of Certain Expenses for Distribution or Shareholder Servicing
Assistance. We understand that the payment of such fees has been authorized
pursuant to Plans approved by the Board of Trustees and shareholders of certain
of the Funds comprising the Trust and shall be paid only so long as this
Agreement is in effect.
6. The frequency of payment, the terms of any right to sell in a
territory, and any other supplemental terms, conditions or qualifications for us
to receive such payments are subject to change by you from time to time, upon 30
days' written notice. Any orders placed after the effective date of such change
shall be subject to the fee rates in effect at the time of receipt of the
payment by the Trust or you. Such 30-day period may be waived at your sole
option in the event such change increases the distribution assistance payments
due us.
7. Payment for shares shall be made to the Trust and shall be received
by the Trust promptly after the acceptance of our order. If such payment is not
received by the Trust, we understand that the Trust reserves the right without
notice, forthwith to cancel the sale, or, at the Trust's option, to sell the
shares ordered by us back to the Trust in which latter case we may be held
responsible for any loss, including loss of profit, suffered by the Trust
resulting from our failure to make payments aforesaid.
8. Your obligations to us under this Agreement are subject to all the
provisions of any underwriting agreements you have or may enter into with the
Trust provided copies thereof have been provided to us. We understand and agree
that in performing our services covered by this Agreement we are acting as
principal, and you are in no way responsible for the manner of our performance
or for any of our acts or omissions in connection therewith. Nothing in this
Agreement or in the Plans shall be construed to constitute us or any of our
agents, employees or representatives as your agent, partner or employee, or the
agent, partner or employee of the Trust.
9. This Agreement shall terminate automatically (i) in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Act or (ii) in the event the Plans are terminated.
10. This Agreement may be terminated at any time (without payment of
any penalty) by a majority of the "Qualified Trustees" as defined in the Plans
or by a vote of a majority of the outstanding voting securities of the Trust as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to you at
your principal place of business, may terminate this Agreement. You may also
terminate this Agreement for cause on violation by us of any of the provisions
of this Agreement, said termination to become effective on the date of mailing
notice to us of such termination. Without limiting the generality of the
foregoing, any provision hereof to the contrary notwithstanding, our expulsion
from the NASD will automatically terminate this Agreement without notice; our
suspension from the NASD or violation of applicable state or Federal laws or
rules and regulations of authorized regulatory agencies will terminate this
Agreement effective upon date of mailing notice to us of such termination. Your
failure to terminate for any cause shall not constitute a waiver of your right
to terminate at a later date for any such cause.
11. All communications to you shall be sent to you at your offices at
156 West 56th Street, New York, New York 10019. Any notice to us shall be duly
given if mailed or telegraphed to us at the address shown on this Agreement.
A-2
<PAGE>
12. This Agreement shall become effective as of the date when it is
executed and dated by you below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
(Broker/Dealer)
By
Name:
Title:
(Address)
(City) (State) (Zip Code)
Accepted:
VISTA BROKER-DEALER SERVICES, INC.
Distributor
By:
Name:
Title:
Dated:
A-3
<PAGE>
EXHIBIT B
Mutual Fund Group
125 West 55th Street
New York, New York 10019
Re: Shareholder Service Agreement for
Mutual Fund __________
Gentlemen:
We understand that Mutual Fund ________ (the "Trust") has adopted plans
(the "Plans"), on behalf of the existing series (the "Funds") of the Trust,
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended (the
"Act"), for making payments to certain persons for distribution assistance and
shareholder servicing.
We desire to enter into an Agreement with the Trust for the servicing
of shareholders of, and the administration of shareholder accounts in, certain
Funds comprising the Trust. Subject to the Trust's acceptance of this Agreement,
the terms and conditions of this Agreement, shall be as follows:
1. We shall provide shareholder and administration services for certain
shareholders of the Funds who purchase shares of the Funds as a result of their
relationship to us, as further designated in Exhibit A hereto ("Qualified
Accounts"). Such services may include, without limitation, some or all of the
following: answering inquiries regarding the Funds; assistance in changing
dividend options, account designations and addresses; performance of
sub-accounting; establishment and maintenance of shareholder accounts and
records; assistance in processing purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by us, if any; and such other
information and services as the Trust reasonably may request, to the extent we
are permitted by applicable statute, rule or regulation to provide such
information or services.
2. If Fund shares are to be purchased or held by us on behalf of our
clients:
(i) Such shares will be registered in our name or in the name
of our nominee. The client will be the beneficial owner of the shares
of each Fund purchased and held by us in accordance with the client's
instructions and the client may exercise all rights of a shareholder of
a Fund. We agree to transmit to the Trust's transfer agent in a timely
manner, all purchase orders and redemption requests of our clients and
to forward to each client all proxy statements, periodic shareholder
reports and other communications received from the Trust by us on
behalf of our clients.
(ii) We agree to transfer to the Trust's transfer agent, on
the date such purchase orders are effective, federal funds in an amount
equal to the amount of all purchase orders placed by us on behalf of
our clients and accepted by the Trust (net of any redemption orders
placed by us on behalf of our clients). In the event that the Trust
fails to receive such federal funds on such date (other than through
the fault of the Trust or its transfer agent), we shall indemnify the
Trust against any expense (including overdraft charges) incurred by the
Trust as a result of its failure to receive such federal funds.
(iii) We agree to make available to the Trust, upon the
Trust's request, such information relating to our clients who are
beneficial owners of Fund shares and their transactions in Fund shares
as may be required by applicable laws and regulations or as may be
reasonably requested by the Trust.
B-1
<PAGE>
(iv) We agree to transfer record ownership of a client's
shares of a Fund to the client promptly upon the request of the client.
In addition, record ownership will be promptly transferred to the
client in the event that the person or entity ceases to be our client.
3. We shall provide to the Trust copies of the lists of members of our
organization, if any, and make available to the Trust any publications and other
facilities of our organization for the placement of advertisements or
promotional materials and sending information regarding the Funds, to enable the
Trust to solicit for sale and to sell shares to such members.
4. We shall provide such facilities and personnel (which may be all or
any part of the facilities currently used in our business, or all or any
personnel employed by us) as is necessary or beneficial for providing
information and services to shareholders maintaining Qualified Accounts with the
Trust, and to assist the Trust in servicing accounts of such shareholders.
5 Neither we nor any of our employees or agents are authorized to make
any representation concerning Fund shares except those contained in the then
current Prospectus for the applicable Fund, copies of which will be supplied by
the Trust to us; and we shall have no authority to act as agent for the Trust.
6. In consideration of the services and facilities described herein, we
shall be entitled to receive from each Fund such fees as are set forth in
Exhibit A hereto. We understand that the payment of such fees has been
authorized pursuant to the Plans approved by the Trustees and shareholders of
the Trust and shall be paid only so long as the Plans and this Agreement are in
effect.
7. The Trust reserves the right, at the Trust's discretion and without
notice, to suspend the sale of shares or withdraw the sale of shares of each
Fund.
8. This Agreement shall terminate automatically (i) in the event of
its assignment, the term "assignment" for this purpose having the meaning
defined in Section 2(a)(4) of the Act or (ii) in the event that the Plans
terminate.
9. This Agreement may be terminated at any time (without payment of any
penalty) by a majority of the "Qualified Trustees" as defined in the Plans or by
a vote of a majority of the outstanding voting securities of each Fund as
defined in the Plans (on not more than 60 days' written notice to us at our
principal place of business). We, on 60 days' written notice addressed to the
Trust at its principal place of business, may terminate this Agreement. The
Trust may also terminate this Agreement for cause on violation by us of any of
the provisions of this Agreement or in the event that the Plans shall terminate,
said termination to become effective on the date of mailing notice to us of such
termination. The Trust's failure to terminate for any cause shall not constitute
a waiver of its right to terminate at a later date for any such cause.
10. All communications to the Trust shall be sent to the Trust at the
address set forth above. Any notice to us shall be duly given if mailed or
telegraphed to us at the address set forth below.
B-2
<PAGE>
11. This Agreement shall become effective as of the date when it is
executed and dated by the Trust below. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of New York.
(Firm Name)
(Address)
(Firm Name)
(City) (State) (Zip Code)
By:
Name:
Title:
Accepted:
MUTUAL FUND ____________
By:
Name:
Title:
Dated:
B-3
<PAGE>
MUTUAL FUND TRUST
_____________- FUND
SPECIAL MEETING OF SHAREHOLDERS -- MARCH 15, 1996
THE UNDERSIGNED HOLDER OF SHARES OF BENEFICIAL INTEREST OF THE __________ FUND
(THE "FUND") OF THE MUTUAL FUND TRUST (THE "TRUST"), A MASSACHUSETTS BUSINESS
TRUST, DOES HEREBY CONSTITUTE AND APPOINT ___________, ___________ AND
_________, OR EITHER OF THEM, THE ATTORNEYS AND PROXIES OF THE UNDERSIGNED WITH
FULL POWER OF SUBSTITUTION AND APPOINTMENT, FOR, AND IN THE NAME, PLACE AND
STEAD, OF THE UNDERSIGNED TO VOTE ALL THE UNDERSIGNED'S SHARES OF BENEFICIAL
INTEREST OF THE FUND AT THE SPECIAL MEETING OF SHAREHOLDERS OF THE FUND TO BE
HELD AT 101 PARK AVENUE, 17TH FLOOR, NEW YORK, NEW YORK ON MARCH 15, 1996, AT
11:00 A.M., EASTERN TIME, AND AT ANY AND ALL ADJOURNMENTS THEREOF, IN THE MANNER
SET FORTH BELOW. To vote, mark an X in blue or black ink on the proxy card
below. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF MUTUAL FUND
TRUST. Please refer to the Proxy Statement for a discussion of the proposals set
forth below. NOTE: The numerical designation of each item below corresponds to
its Proposal number in the Proxy Statement; any Proxy Statement Proposals that
are inapplicable to the Fund have been omitted from this Proxy Card.
- - - ------Detach card at perforation and mail in postage paid envelope provided-----
1. Vote on Proposal to approve Approval of an Interim Investment
an Interim Investment Advisory Agreement between the
Advisory Agreement. Fund and The Chase Manhattan Bank,
N. A. (or the successor entity
FOR AGAINST ABSTAIN thereto).
|-| |-| |-|
<PAGE>
2.
Votes on Proposal to elect new TO WITHHOLD AUTHORITY TO VOTE FOR
Trustees, the nominees are: Fergus ANY INDIVIDUAL NOMINEE, MARK THE
Reid, III, Richard E. Ten Haken, "FOR ALL EXCEPT" BOX, AND STRIKE A
William J. Armstrong, John R. H. LINE THROUGH THE NOMINEE'S NAME IN
Blum, Joseph J. Harkins, H. THE LIST ABOVE.
Richard Vartabedian, Stuart W. TO WITHHOLD AUTHORITY TO VOTE FOR
Cragin, Jr., Irving L. Thode, W. ANY INDIVIDUAL NOMINEE, MARK THE
Perry Neff, Roland R. Eppley, "FOR ALL EXCEPT" BOX, AND STRIKE A
Jr.and W. D. MacCallan. LINE THROUGH THE NOMINEE'S NAME IN
THE LIST ABOVE.
FOR ALL
FOR WITHHOLD EXCEPT
|-| |-| |-|
3.
Vote on Proposal to ratify the Approval of ratification of the
selection of independent selection of Price Waterhouse LLP
accountants. as independent accountants.
FOR AGAINST ABSTAIN
|-| |-| |-|
4.
Vote on Proposal to approve an Approval of an amendment to the
amendment to the Trust's Trust's Declaration of Trust.
Declaration of Trust.
FOR AGAINST ABSTAIN
|-| |-| |-|
5. Votes on Proposals to approve of changes to the
Fund's fundamental investment restrictions. The
lettering of the boxes match the lettering of the
Proposals.
|_| FOR the changes to each restriction |_| ABSTAIN
listed as (a)-(k) below (except as
marked to the contrary below)
<PAGE>
PLEASE CHECK THE BOX for any changes you do NOT wish to approve.
<TABLE>
<CAPTION>
AGAINST CHANGES TO: AGAINST CHANGES TO:
<S> <C> <C> <C> <C> <C> <C>
|_| (a) Borrowing |_| (f) Commodities and Real Estate
|_| (b) Investment for Purpose of Exercising Control |_| (g) Investtments in Restricted and Illiquid
Securities
|_| (c) Making of Loans |_| (h) Use of Options
|_| (d) Purchases of Securities on Margin |_| (i) Senior Securities
|_| (e) Concentration of Investments |_| (j) Short Sales of Securities
|_| (k) Change in Status From Diversified To
Nondiversified Fund
</TABLE>
6.
Vote on Proposal to approve a Approval of a restatement of the
restatement of the Fund's Fund's investment objective.
investment objective.
FOR AGAINST ABSTAIN
|-| |-| |-|
7.
Vote on Proposal to approve an Approval of an amendment to the
amendment to the Class A Rule Class A Rule 12b-1 Distribution
12b-1 Distribution Plan. Plan.
FOR AGAINST ABSTAIN
|-| |-| |-|
<PAGE>
8.
Vote on Proposal to approve a New Approval of a New Investment
Investment Advisory Agreement and Advisory Agreement between the
a Sub-Advisory Agreement. Fund and The Chase Manhattan Bank,
N. A. (or the successor entity
FOR AGAINST ABSTAIN thereto) and a Sub-Advisory
agreement between The Chase
|_| |_| |_| Manhattan Bank, N. A. (or the
successor entity thereto) and
Chase Asset Management, Inc.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting.
- - - -----Detach card at perforation and mail in postage paid envelope provided------
MUTUAL FUND TRUST
______________ FUND
PROXY
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MARKED AS TO ANY
PROPOSAL(S), THIS PROXY WILL BE VOTED FOR APPROVAL OF SUCH PROPOSAL(S).
Please sign exactly as name appears on this card. When shares are held
by joint tenants, all should sign. When signing as executor,
administrator, trustee or guardian, please give title. If a corporation
or partnership, sign in entity's name and by authorized person.
x___________________________________________
SIGNATURE
x___________________________________________
SIGNATURE (if held jointly)
Dated:_________________________________, 1996
