As filed with the Securities and Exchange Commission on
December 9, 1997
Registration No. 33-________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ___
POST-EFFECTIVE AMENDMENT NO. ___
(Check appropriate box or boxes)
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IMG MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
(Address of Principal Executive Offices)
(515) 244-5426
(Area Code and Telephone Number)
MARK A. McCLURG, PRESIDENT
IMG Mutual Funds, Inc.
2203 Grand Avenue
Des Moines, Iowa 50312-5338
(Name and Address of Agent for Service)
----------------------------
Copies of all communications to:
John C. Miles, Esq.
Cline, Williams, Wright, Johnson & Oldfather
1900 First Bank Building, 233 So. 13th Street
Lincoln, NE 68508
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Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective on January 8, 1998,
pursuant to Rule 488 under the Securities Act of 1933.
An indefinite amount of the Registrant's Common Stock has been registered under
the Securities Act of 1933, pursuant to Rule 24f-2 under the Investment Company
Act of 1940. In reliance upon such Rule, no filing fee is being paid at this
time.
<PAGE>
IMG MUTUAL FUNDS, INC.
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Proxy Statement/
Form N-14 Item No. Prospectus Caption
- ------------------ ------------------
Part A
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Item 1. Beginning of Registration Outside front cover
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
Item 3. Fee Table, Synopsis Information Synopsis; Risk Factors;
and Risk Factors Proposal 1: Agreement and
Plan of Reorganization
Item 4. Information About the Transaction Outside Front Cover;
Synopsis; Proposal 1:
Agreement and Plan of
Reorganization
Item 5. Information About the Registrant IMG Mutual Funds, Inc.
Item 6. Information About the Company Capital Value Fund, Inc.
Being Acquired
Item 7. Voting Information Outside Front Cover;
Synopsis; Information
Relating to
Voting Matters
Item 8. Interest of Certain Persons and Proposal 2: Approval of
Experts Sub-Advisory Agreement
Item 9. Additional Information Required Not Applicable
For Re-offering by Persons Deemed
To be Underwriters
<PAGE>
Statement of Additional
Part B Information Caption
- ------ -------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Not Applicable
Item 12. Additional Information Cover Page
About Registrant
Item 13. Additional Information About Not Applicable
The Company Being Acquired
Item 14. Financial Statements Not Applicable
Part C
- ------
The information required in Part C is included therein under the appropriate
heading for the item.
<PAGE>
January 8, 1998
Dear Shareholder:
I am writing to ask you for your vote on important questions that affect your
investment in one or more of the Capital Value Funds (the "Funds"). While you
are, of course, welcome to join us at the Funds' Special Shareholder Meeting,
most shareholders cast their vote by filling out and signing the enclosed proxy
card.
As you may be aware, Investors Management Group, which provides investment
services to the Funds, has signed a definitive agreement to be acquired by
AMCORE Financial, Inc., of Rockford, Illinois. This transaction will not result
in any material change to your Funds' advisory services or the high quality
shareholder services that you have come to expect over the years.
As required by the Investment Company Act of 1940, the transaction will result
in the automatic termination of the agreement under which Investors Management
Group provides sub-advisory services to the Funds. This transaction thus
requires the approval by the holders of shares of each Fund of a new
sub-advisory agreement--which will be substantially identical to the agreement
currently in effect.
As part of our continuing effort to maximize the benefits to shareholders of
investing in the Funds, the Board of Directors of your Funds has recently
reviewed and unanimously endorsed a proposal for the reorganization of the
Funds, which they have determined to be in the best interest of the
shareholders. This proposal calls for acquisition of the Funds' assets by three
portfolios of IMG Mutual Funds, Inc. Each of the portfolios will have similar
investment objectives and investment policies as the Fund it will acquire.
As a result of this transaction, the Funds will be combined with IMG Mutual
Funds, Inc., and you will become a shareholder of IMG Mutual Funds, Inc. In a
concurrent series of transactions, IMG Funds will acquire seven existing AMCORE
Vintage Funds to create a fund family of over $900 million. The aggregate net
asset value of your shares of the Funds will be equal to the aggregate net asset
value of IMG Mutual Funds, Inc. shares that you will receive as a result of the
reorganization. No sales charge will be imposed in the transaction and Fund
shareholders will not bear any of the costs associated with the reorganization.
Investors Management Group currently serves as investment advisor to IMG Mutual
Funds, Inc., so consistency of portfolio management will be maintained following
the transaction, and additional investment management expertise will be gained
from AMCORE Financial, Inc.
The Directors of the Funds recommend that the shareholders approve the
reorganization. The Directors believe the transaction would benefit the Funds
and their shareholders by reorganizing the Funds into a larger family of funds
with significantly greater assets and enhancing their capacity to attract and
retain investors. In making their determination, the Directors reviewed several
factors, including the qualifications and capabilities of the service providers
of IMG Mutual Funds, Inc. If, as expected, the distributor of IMG Mutual Funds,
Inc. is able to distribute IMG Mutual Funds, Inc. shares successfully, growth in
assets would make possible the realization of economies of scale and attendant
savings in costs to IMG Mutual Funds, Inc. and its shareholders. Of course,
achievement of these goals cannot be assured.
Detailed information about the proposed transaction and the reasons for it is
contained in the enclosed combined Proxy Statement/Prospectus. The enclosed
proxy card is, in essence, a ballot. It tells us how to vote on your behalf on
important issues relating to your Fund. If you complete and sign the proxy,
we'll vote it exactly as you tell us. If you simply sign the proxy card, we'll
vote it according to the Directors' recommendation. We urge you to review
carefully the Proxy Statement/Prospectus, fill out your proxy card, and return
it to us. A self-addressed, postage-paid envelope has been enclosed for your
convenience. It is very important that you vote and that your voting
instructions be received no later than January 27, 1998.
NOTE: You may receive more than one proxy package if you hold shares in more
than one account in a Fund, or if you hold shares in more than one Fund. You
must return ALL proxy cards you receive. We have provided postage-paid return
envelopes for each. If you have any questions, please call Investors Management
Group at (515) 244-5426 or 1-800-798-1819.
Sincerely,
David W. Miles, President
Capital Value Fund, Inc.
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 28, 1998
TO THE SHAREHOLDERS OF CAPITAL VALUE FUND, INC.
You are cordially invited to attend the Special Meeting of Shareholders of
Capital Value Fund, Inc., a registered investment company, which will be held at
2203 Grand Avenue, Des Moines, Iowa 50312-5338, on January 28, 1998, at 10:00
a.m., for the following purposes:
1. To consider and vote on a proposed Agreement and Plan of Reorganization
(the "Plan") providing for (a) the transfer of all the assets of
Capital Value Fund, Inc. to IMG Mutual Funds, Inc., in exchange for
shares of three portfolios of IMG Mutual Funds, Inc.; (b) the
assumption by IMG Mutual Funds, Inc., of all of the liabilities of
Capital Value Fund, Inc.; and (c) the distribution of such shares of
IMG Mutual Funds, Inc., to the shareholders of Capital Value Fund, Inc.
in complete liquidation of Capital Value Fund, Inc.
2. To consider and vote on a proposed Sub-Advisory Agreement with
Investors Management Group ("IMG") to be in effect after the proposed
acquisition of IMG by AMCORE Financial, Inc.
3. To act upon such other matters as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on Friday,
January 2, 1998, as the record date for determination of shareholders entitled
to notice of, and to vote at, the Special Shareholders Meeting. As of the record
date, there were _______ shares of Capital Value Fund, Inc. outstanding and
eligible to vote at the Special Shareholders Meeting. A list of such
shareholders will be maintained at the offices of Investors Management Group at
2203 Grand Avenue, Des Moines, Iowa 50312-5338, during the ten day period
preceding the Special Shareholders Meeting. Please read the Proxy
Statement/Prospectus carefully before telling us, through your proxy card, how
you wish your shares to be voted. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE IN FAVOR OF EACH OF THE PROPOSALS.
WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY
RETURN IT IN THE ENVELOPE PROVIDED. No postage is required. Prompt return of
your proxy card will be appreciated. Your vote is important no matter how many
shares you own.
Des Moines, Iowa BY ORDER OF THE BOARDS OF DIRECTORS
January 8, 1998
Ruth Prochaska, Secretary
<PAGE>
PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF THE ASSETS OF
CAPITAL VALUE FUND, INC.
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
BY AND IN EXCHANGE FOR SHARES OF
IMG MUTUAL FUNDS, INC.
2203 GRAND AVENUE
DES MOINES, IOWA 50312-5338
TELEPHONE 1-800-798-1819
This Proxy Statement/Prospectus is being furnished to shareholders of
Capital Value Fund, Inc. (`CVF") in connection with the solicitation by the
Board of Directors of proxies to be used at the Special Meeting of Shareholders
of CVF to be held at 2203 Grand Avenue, Des Moines, Iowa 50312-5338 at 10:00
a.m. on January 28, 1998, and any adjournments thereof. CVF is currently a
diversified registered open-end investment company. Shareholders of record as of
the close of business on January 2, 1998 are entitled to vote at the Special
Meeting. It is expected that this Proxy Statement/Prospectus will be mailed to
shareholders of CVF on or about January 8, 1998.
This Proxy Statement/Prospectus relates to the proposed reorganization
in which all of the assets and liabilities of CVF will be acquired by IMG Mutual
Funds, Inc., ("IMG Funds") in exchange for shares of IMG Funds. The shares of
IMG Funds thereby received will then be distributed to shareholders of CVF and
CVF will be dissolved. As a result of the proposed reorganization, each
shareholder of CVF will receive that number of full and fractional shares of the
corresponding series of shares of IMG Funds having a net asset value equal to
the net asset value of such shareholder's shares of CVF held as of the date of
the proposed reorganization.
IMG Funds is a diversified registered open-end investment company that
issues its shares in separate portfolios or series, each with its own investment
objectives and policies. The investment objectives, policies and restrictions of
the three portfolios of IMG Funds are similar to those of the corresponding
portfolios of CVF. For a comparison of the investment objectives, policies and
restrictions of CVF and IMG Funds, see "Proposal 1: Agreement and Plan of
Reorganization--Investment Objectives, Policies and Restrictions." Investors
Management Group ("IMG") serves as the investment advisor for IMG Funds, as well
as sub-advisor to CVF.
This Proxy Statement/Prospectus also relates to the proposal to
continue the Sub- Advisory Agreement between IMG and CVF after a change of
ownership of IMG. See "Proposal 2: Approval of Sub-Advisory Agreement."
This Proxy Statement/Prospectus, which should be retained for future
reference, sets forth concisely the information about IMG Funds that a
prospective investor should know before investing. This document will give you
the information you need to vote on the proposed reorganization and the other
matters described herein. Much of the information is required under rules of the
Securities and Exchange Commission and some of it is technical in nature. If
there is anything you do not understand, please contact us at our toll-free
number, 1-800-798-1819. Shareholders should return proxies and any
correspondence to Investors Management Group, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338.
The following documents have been filed with the Securities and
Exchange Commission and are incorporated into this Proxy Statement/Prospectus by
reference: (i) a Statement of Additional Information dated the date hereof and
relating to this Proxy Statement/Prospectus; (ii) the Prospectuses and
Statements of Additional Information of the IMG Funds, dated August 27, 1997 and
__________, 1998; and (iii) the Prospectus and Statement of Additional
Information of CVF, dated July 29, 1997. Copies of the referenced documents are
available upon request and without charge by calling 1-800-798-1819.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE REGULATOR, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE REGULATOR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF IMG MUTUAL FUNDS, INC. ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
No person has been authorized to give any information or to make any
representation not contained in this Proxy Statement/Prospectus and, if so given
or made, such information or representation must not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction in
which, or to any person to whom, it is unlawful to make such offer or
solicitation.
This Proxy Statement/Prospectus is dated January 8, 1998.
<PAGE>
SYNOPSIS
WHO IS ASKING FOR MY VOTE?
The enclosed proxy is solicited by the Directors of Capital Value Fund, Inc.
("CVF") for use at the Special Meeting of Shareholders of CVF to be held on
January 28, 1998 (and if adjourned, at any adjourned meeting) for the purposes
stated in the Notice of Special Meeting.
HOW DO YOUR FUND'S DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE ON THESE
PROPOSALS?
The Directors recommend that you vote
1. FOR the proposed transaction in which assets of CVF would be
transferred to IMG Mutual Funds, Inc. ("IMG Funds"), in exchange for
shares of IMG Mutual Funds, Inc. with an equal net asset value.
2. FOR the new Sub-Advisory Agreement to be effective upon the completion
of the proposed acquisition of Investors Management Group ("IMG") by
AMCORE Financial, Inc. of Rockford, Illinois.
WHO IS ELIGIBLE TO VOTE?
Shareholders of record at the close of business on January 2, 1998, are
entitled to be present and vote at the meeting or any adjourned meeting. Each of
the three CVF portfolios will vote separately on the two proposals, and each
proposal must be approved by all three portfolios to be adopted. On January 2,
1998, there were outstanding __________ shares of CVF Equity Portfolio, _____
shares of CVF Total Return Portfolio and _______ shares of CVF Fixed Income
Portfolio. The Notice of Special Meeting, combined Proxy Statement/Prospectus
and the enclosed form of proxy are being mailed to shareholders of record on or
about January 8, 1998.
Each share is entitled to one vote, with fractional shares voting
proportionately. Shares represented by duly executed proxies will be voted in
accordance with shareholder's instructions. Any shareholder giving a proxy has
the power to revoke it by mail (addressed to the CVF Secretary at the principal
offices of CVF, 2203 Grand Avenue, Des Moines, Iowa 50312-5338) or in person at
the meeting, by executing a superseding proxy, or by submitting a notice of
revocation to CVF. If you sign the proxy, but don't fill in a vote, your shares
will be voted in accordance with the Directors' recommendations. If any other
business is brought before the meeting, your shares will be voted at the
Directors' discretion.
WHAT IS BEING PROPOSED?
First, the Directors of CVF are recommending that shareholders approve
the reorganization (the "Reorganization") of CVF into portfolios of the IMG
Funds. An Agreement and Plan of Reorganization provides for the transfer of all
of the assets and liabilities of CVF to IMG Funds, in exchange for shares of IMG
Funds. The completion of these transactions, followed by the distribution of IMG
Funds shares to CVF shareholders, will result in the combination of the Funds'
assets and liabilities, with the shareholders of CVF becoming shareholders of
IMG Funds, followed by the dissolution of CVF. Upon completion of the
Reorganization:
Former Shareholders of CVF will be Shareholders of IMG Funds and
will own shares of an IMG Funds portfolio which will have similar
investment objectives, policies and restrictions and purchase and
redemption procedures as the corresponding CVF Portfolio.
There should be no federal income tax consequences to former
Shareholders of CVF, resulting from the Reorganization.
Second, the Directors of CVF are recommending that shareholders approve
continuation of the Sub-Advisory Agreement with IMG after a change of ownership
of IMG. This particular Agreement would only continue until such time as the
Reorganization becomes effective, after which an Investment Advisory Agreement
between IMG and IMG Mutual Funds, Inc. would become effective and Wellmark
Capital Value, Inc. would cease to be the investment advisor.
WHY ARE THESE PROPOSALS BEING PRESENTED?
The proposals described above are part of an overall series of proposed
transactions in which:
IMG will be acquired by AMCORE Financial, Inc.; and
IMG Funds, CVF and certain other funds advised by IMG will be
combined with the existing AMCORE Vintage Funds to form a mutual
fund family of 10 funds with aggregate net assets of
approximately $910 million.
There can be no assurance that all aspects of the proposed series of
transactions will be completed, as several transactions are subject to
shareholder votes. However, completion of the Reorganization is subject to
completion of the other related transactions.
RISK FACTORS
Management of IMG Funds believes that an investment in IMG Funds does
not involve unusual or significant risks compared to an investment in CVF. Both
Vintage Equity and CVF Equity, as well as Vintage Balanced and CVF Total Return,
are subject to the risks of price fluctuation inherent in equity investments.
Vintage Balanced and CVF Total Return, as well as Vintage Bond and CVF Fixed
Income, are subject to yield and price fluctuations inherent in the ownership of
debt securities. For more detailed information concerning the investment
practices, including possible risks, of IMG Funds and CVF, see "Proposal 1:
Agreement and Plan of Reorganization--Investment Objectives, Policies and
Practices," the IMG Funds Prospectus dated ________, 1998 and the CVF Prospectus
dated July 29, 1997.
PROPOSAL 1: AGREEMENT AND PLAN OF REORGANIZATION
GENERAL INFORMATION
The Board of Directors of Capital Value Fund, Inc. ("CVF") unanimously
approved the proposed Agreement and Plan of Reorganization (the "Plan")
providing for the acquisition of all of the assets of CVF by IMG Mutual Funds,
Inc. ("IMG Funds"), in exchange for shares of IMG Funds and the assumption by
IMG Funds of the liabilities of CVF (the "Reorganization"). The proposed
transaction would occur on or about February 2, 1998 (the "Closing Date"). The
value of the acquired assets of CVF will be determined as of 3:00 p.m. Central
Time on the business day immediately prior to the Closing Date. The aggregate
net asset value of the shares of IMG Funds' Vintage Equity Fund ("Vintage
Equity"), Vintage Balanced Fund ("Vintage Balanced") and Vintage Bond Fund
("Vintage Bond") (collectively, the "Vintage Funds") issued in exchange, will
equal the aggregate net asset value of the shares of CVF Equity Portfolio ("CVF
Equity"), CVF Total Return Portfolio ("CVF Total Return") and CVF Fixed Income
Portfolio ("CVF Fixed Income") (collectively, the "CVF Portfolios"),
respectively, then outstanding. In connection with the proposed Reorganization,
shares of IMG Funds will be distributed to shareholders of CVF, and CVF will be
dissolved. As a result of the proposed Reorganization, each shareholder of CVF
will cease to be a shareholder of CVF and will receive that number of full and
fractional shares of Vintage Equity, Vintage Balanced and Vintage Bond,
respectively, and having a net asset value equal to the net asset value of, such
shareholder's corresponding shares of CVF. The foregoing is only a summary and
is qualified in its entirety by reference to the Plan, a copy of which is
Exhibit A hereto.
If the Reorganization becomes effective, Wellmark Capital Value, Inc.,
the present investment advisor to CVF, will not be an investment advisor to the
Vintage Funds. IMG will provide investment advisory services to the Vintage
Funds through an Investment Advisory Agreement with IMG Funds.
Because all shares of CVF and IMG Funds are in uncertificated
book-entry form, the exchange of shares will take place automatically on the
Exchange Date. It will not be necessary for shareholders to submit transmittal
forms or other documents.
SHAREHOLDER SERVICES AND PRIVILEGES
Former shareholders of CVF will enjoy all the same services and
privileges as other shareholders of IMG Funds, including the opportunity to
exchange into portfolios with a wide variety of investment objectives and
policies. Purchase and redemption procedures for IMG Funds are substantially
identical to those of CVF.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Vintage Equity, Vintage Balanced and Vintage Bond, respectively, have
similar investment objectives, policies and restrictions as CVF Equity, CVF
Total Return and CVF Fixed Income. Thus, the risks of investing in IMG Funds
should also be substantially similar. The principal differences between the
Vintage Funds and the CVF Portfolios are set forth below:
CVF EQUITY AND VINTAGE EQUITY. The investment objectives of CVF Equity
and Vintage Equity are very similar. The investment objective of CVF Equity is
"to seek capital appreciation in a manner consistent with the preservation of
capital." The investment objective of Vintage Equity is "long-term capital
appreciation."
Both funds invest primarily in equity securities, including foreign
securities. Under normal market conditions, CVF Equity invests at least 65% of
its assets in equity securities. Under normal market conditions, Vintage Equity
invests at least 75% of its assets in equity securities. Both funds may also use
call options on equity securities, and futures contracts and related options for
bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Vintage Equity does employ a somewhat different portfolio management
style than CVF Equity. Vintage Equity invests primarily in equity securities of
mainly large capitalization companies with strong earnings potential and will
strive for high over-all return while minimizing risk through the selection of a
majority of quality dividend paying equity securities. CVF Equity invests
primarily in equity securities but without a specific intent to purchase large
capitalization companies. CVF Equity also emphasizes identifying companies that
exhibit strong or improving business fundamentals and below-average relative
valuations. An emphasis on strong earnings potential by Vintage Equity can be
expected to lead to different security selections over time than CVF Equity's
emphasis on below-average valuations.
The investment restrictions of Vintage Equity are substantially similar
to the investment restrictions of CVF Equity, with the exception that Vintage
Equity has no explicit limit on the proportion of net assets which may be
invested in futures contracts or related options. In practice, however, neither
fund has used futures contracts or options.
CVF TOTAL RETURN AND VINTAGE BALANCED. The investment objectives of CVF
Total Return and Vintage Balanced are very similar. The investment objective of
CVF Total Return is "a high total return from capital appreciation and current
income, consistent with the preservation of capital." The investment objective
of Vintage Balanced is "long-term growth of capital and income."
Both funds invest in a diversified portfolio of equity securities and
fixed income securities, with the investment manager allocating holdings to best
take advantage of various market conditions. Under normal market conditions, CVF
Total Return invests 35% to 65% of its assets in equity securities and 35% to
65% in fixed income securities. Under normal market conditions, Vintage Balanced
invests at least 25% of its assets in fixed income securities and the remainder
in equity securities. With respect to fixed income securities, CVF Total Return
invests primarily in fixed income securities rated at least "A" or better, or
similar quality if not rated but will also invest in fixed income securities
with a quality of "BB." Vintage Balanced invests in fixed income securities
rated at least "BB" or better, or of similar quality if not rated. Both funds
may also use call options on equity securities and futures contracts and related
options for bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Vintage Balanced does employ a somewhat different equity management
style than CVF Total Return. Vintage Balanced invests primarily in equity
securities of mainly large capitalization companies with strong earnings
potential and will strive for high over-all return while minimizing risk through
the selection of a majority of quality dividend paying equity securities. CVF
Total Return invests primarily in equity securities but without a specific
intent to purchase large capitalization companies. CVF Total Return also
emphasizes identifying companies that exhibit strong or improving business
fundamentals and below-average relative valuations. An emphasis on strong
earnings potential by Vintage Balanced can be expected to lead to different
security selections over time than CVF Total Return's emphasis on below-average
valuations.
The investment restrictions of Vintage Balanced are substantially
similar to the investment restrictions of CVF Total Return, with the exception
that Vintage Balanced has no explicit limit on the proportion of net assets
which may be invested in futures contracts or related options. In practice,
however, neither fund has used futures contracts or options.
CVF FIXED INCOME AND VINTAGE BOND. The investment objectives of CVF
Fixed Income and Vintage Bond are very similar. The investment objective of CVF
Fixed Income is "to provide as high a level of income as is consistent with
preservation of capital and prudent investment risk." The investment objective
of Vintage Bond is "to seek total return consistent with the production of
current income and the preservation of capital."
Both funds invest in a diversified portfolio of fixed income
securities. Under normal market conditions, CVF Fixed Income invests at least
65% of its assets in fixed income securities rated at least "A" or better, or of
similar quality if not rated, but will also invest up to 25% in below-investment
grade securities (commonly known as "junk bonds"). CVF Fixed Income's present
policy is to limit investments to fixed income securities rated at least "BB" or
better, or of similar quality if not rated. Vintage Bond's policies are
identical. Both funds may also use futures contracts and related options for
bona fide hedging purposes to manage risk, engage in when-issued and
delayed-delivery transactions, and lend portfolio securities.
Because both funds have similar investment objectives and policies and
are managed by IMG, they employ the same fixed income management style. The
investment restrictions of Vintage Bond are substantially similar to the
investment restrictions of CVF Fixed Income.
For a detailed description of the investment objectives, policies and
restrictions of the Vintage Funds and the CVF Funds, see the IMG Funds
Prospectuses dated August 27, 1997 and ___________, 1998, and the CVF Prospectus
dated July 29, 1997, all of which are delivered herewith. Vintage Bond was
formerly known as IMG Bond Fund and is so referred to in the IMG Funds August
27, 1997 Prospectus.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
For the reasons set forth below, the Board of Directors of CVF,
including all of the Directors who are not "interested persons" as defined by
the Investment Company Act of 1940 (the "Disinterested Directors"), have
unanimously concluded that the Reorganization will be in the best interests of
the shareholders of CVF, and that the interests of the existing shareholders of
CVF will not be diluted as a result of the transactions contemplated by the
Plan. The Board of Directors therefore has submitted the Plan for approval by
the shareholders at the Special Meeting of Shareholders to be held on January
28, 1998. Approval of the Plan requires the vote of a majority of the
outstanding voting securities of each CVF Portfolio.
The Directors of CVF have approved the Plan because they believe it
will benefit shareholders through the expected greater ability of IMG Funds to
attract and retain investors. In determining whether to recommend the approval
of the proposed Reorganization to the shareholders, the Directors considered a
number of factors, including, but not limited to: (i) the fact that IMG will
continue to manage the investments of IMG Funds and will have access to
additional investment personnel when IMG is acquired by AMCORE Financial, Inc.;
(ii) the capabilities and resources of the other service providers of IMG in the
areas of marketing, investment and shareholder services; (iii) the expenses and
advisory fees applicable to CVF before the Reorganization and the estimated
expense ratios of IMG Funds after the Reorganization; (iv) the terms and
conditions of the Plan and whether the proposed Reorganization will result in
dilution of CVF shareholder interests; (v) the economies of scale realized
through the combination of the funds, including the addition of assets from the
acquisition by IMG Funds of seven existing funds (the "AMCORE Funds"); (vi) the
costs estimated to be incurred to complete the proposed Reorganization; and
(vii) the future growth prospects of IMG Funds.
In this regard, the Directors of CVF reviewed information provided by
IMG relating to the anticipated impact to the shareholders of CVF as a result of
the proposed Reorganization. The Directors considered the probability that the
elimination of duplicative operations and the increase in the asset levels of
IMG Funds after the proposed Reorganization will result in the following
potential benefits for shareholders of CVF, although there can, of course, be no
assurances in this regard:
(1) ACHIEVEMENT OF ECONOMIES OF SCALE AND REDUCED PER SHARE
EXPENSES. Combining the net assets of CVF with the assets of
IMG Funds, including the AMCORE Funds, will lead to reduced
total operating expenses for shareholders of CVF on a per
share basis, by allowing fixed and relatively fixed costs,
such as accounting, legal and printing expenses, to be spread
over a larger asset base.
(2) ELIMINATION OF SEPARATE OPERATIONS. Consolidating CVF and IMG
Funds will eliminate the duplication of services and expenses
that currently exists as a result of their separate operations
and will promote more efficient operations on a more
cost-effective basis.
The Directors of CVF also considered the distribution capabilities of
BISYS Fund Services, Inc., which will become the Distributor of the shares of
IMG Funds. If BISYS Fund Services, Inc. is able to distribute IMG Funds shares
successfully, growth in assets will make possible the realization of economies
of scale and attendant savings in costs to IMG Funds and its shareholders. Of
course, achievement of these goals cannot be assured.
The Board of Directors of CVF also considered certain possible
disadvantages of the proposed Reorganization. Shareholders of CVF Equity and CVF
Total Return holding Initial Shares should lower their current operating
expenses but will give up the opportunity to convert to Select Shares which have
even lower operating expenses. Holders of CVF Equity and CVF Total Return Select
Shares will experience an increase in operating expenses. IMG Funds has
instituted a Distribution Plan for the Vintage Funds which allows for the
payment of a Rule 12b-1 fee of up to 0.25%, and, as to Vintage Bond, a
Shareholder Services Plan which allows for the payment of an additional fee of
up to 0.25%. None of such fees will be charged initially, and shareholders will
be given 30 days' advance notice of the institution of any such fee, but
shareholders will not have the right to approve such fees.
Prior to approving the Plan, the Directors of CVF were advised by
Wellmark Capital Value, Inc. that it will receive a fee of $75,000 from IMG for
assisting in various transactions and activities relative to consummation of the
Reorganization, such as transferring assets and shareholder records, filing
final tax returns and preparing other documents related to the dissolution of
CVF. IMG advised the Directors of CVF that it believes payment of such a fee is
a common practice and that the amount of the fee is reasonable under the
circumstances.
EXPENSE SUMMARY
The purpose of the following tables is to inform investors of the
various costs and expenses they will bear, directly or indirectly, as
shareholders of IMG Funds and to compare those costs and expenses with the costs
and expenses borne by shareholders of CVF during the past fiscal year.
IMG FUNDS
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Vintage Vintage Vintage
Equity Balanced Bond
------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases None None None
Maximum Sales Charge on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None None None
Maximum Contingent Deferred Sales Charge None None None
(As a percent of original purchase price)
</TABLE>
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
Vintage Vintage Vintage
Equity Balanced Bond
------------------------------------------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.55%
12b-1 Distribution Fees1 0.00% 0.00% 0.00%
Shareholder Servicing Fees2 0.00% 0.00% 0.00%
Other Expenses 0.39% 0.61% 0.42%
Total Fund Operating Expenses after Waivers3 1.14% 1.36% 0.97%
</TABLE>
1Pursuant to the Funds' Rule 12b-1 Plan, the maximum 12b-1 Distribution Fees for
Vintage Equity, Vintage Balanced and Vintage Bond are 0.25%. Currently, however,
it is intended that no such amounts will be paid under the Plan by any of the
Funds. Shareholders will be given at least 30 days' notice prior to the payment
of any fees under the Plans.
2Pursuant to the Funds' Shareholder Servicing Plans, the maximum Shareholder
Servicing Fee is 0.25%. Currently, however, it is intended that no such amounts
will be paid under the Plan by any of the Funds. Shareholders will be given at
least 30 days' notice prior to the payment of any fees under the Plans.
3Absent the reduction of distribution fees and services fees, "Total Operating
Expenses" as a percentage of average daily net assets would have been 1.64% for
Vintage Equity, 1.86% for Vintage Balanced and 1.47% for Vintage Bond.
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following expenses on a $1,000 investment in each
Fund, assuming (1) a (hypothetical) five percent annual return and (2)
redemption at the end of each time period).
1 Year 3 Years 5 Years 10 Years
Vintage Equity $12 $36 $63 $139
Vintage Balanced $14 $43 $74 $164
Vintage Bond $10 $31 $54 $119
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions or their
customers.
CAPITAL VALUE FUNDS
SHAREHOLDER TRANSACTION EXPENSES
CVF CVF
CVF Total Fixed
Equity Return Income
----------------------------
Maximum Sales Charge Imposed on Purchases None None None
Maximum Sales Charge on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None None None
Maximum Contingent Deferred Sales Charge Per Following Table
(as a percentage of original purchase price)
Year of Redemption
After Purchase
--------------
First 4.0%
Second 3.7%
Third 3.4%
Fourth 3.1%
Fifth 2.8%
Sixth 2.5%
Seventh and Following 0.0%
ESTIMATED ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
CVF CVF CVF CVF
CVF CVF Total Total Fixed Fixed
Equity Equity Return Return Income Income
Initial Select Initial Select Initial Select
--------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.53% 0.53% 0.53% 0.53% 0.53% 0.53%
12b-1 Distribution Fees1 0.50% 0.00% 0.50% 0.00% 0.50% 0.00%
Shareholder Servicing Fees2 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.30% 0.30% 0.30% 0.30% 0.25% 0.25%
Total Fund Operating Expenses after Waivers3 1.58% 1.08% 1.58% 1.08% 1.53% 1.03%
</TABLE>
The table reflects the current fees and an estimate of other expenses.
From time to time, the Advisor and/or Distributor may voluntarily waive the
Management Fees, the 12b-1 Distribution Fees and/or Shareholder Servicing Fees
and/or absorb certain expenses for a Fund. Long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers. Wire transfers may be used to
transfer federal funds directly to/from the Funds' custodian bank.
EXAMPLE
You would pay the following on a $1,000 investment in each Fund,
assuming (1) a (hypothetical) five percent annual return and (2) redemption at
the end of each time period. Only Initial Shares incur a CDSC at redemption
which declines to zero after six years.
1 Year 3 Years 5 Years 10 Years
Initial Shares:
CVF Equity $56 $84 $114 $174
CVF Total Return $56 $84 $114 $174
CVF Fixed Income $56 $82 $111 $169
Select Shares:
CVF Equity $11 $34 $60 $132
CVF Total Return $11 $34 $60 $132
CVF Fixed Income $11 $33 $57 $126
An investor would pay the following expenses on the same $1,000 investment
assuming no redemption at the end of each period.
1 Year 3 Years 5 Years 10 Years1
Initial Shares:
CVF Equity $16 $50 $86 $174
CVF Total Return $16 $50 $86 $174
CVF Fixed Income $16 $48 $83 $169
Select Shares:
CVF Equity $11 $34 $60 $132
CVF Total Return $11 $34 $60 $132
CVF Fixed Income $11 $33 $57 $126
1Eight years after purchase, Initial Shares will be automatically converted into
Select Shares. This example assumes conversion of Initial Shares at the end of
year eight. As a result, years nine and ten reflect Select Share expenses. The
conversion will constitute a tax-free exchange for federal income tax purposes.
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN. The above Example is based on the expense
information in the previous Expense Summary. The Expense Summary and Examples do
not reflect any charges that may be imposed by financial institutions or their
customers.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Reorganization will be tax-free, that is, that
CVF shareholders will not recognize any gain or loss for federal income tax
purposes on the exchange of CVF shares for shares of IMG Funds. Likewise,
neither CVF nor IMG Funds should recognize any gain or loss for federal income
tax purposes through the exchange of CVF assets and liabilities for shares of
IMG Funds.
Consummation of the Reorganization is subject to the condition that IMG
Funds and CVF receive an opinion from Cline, Williams, Wright, Johnson &
Oldfather (which opinion has now been received) to the effect that for federal
income tax purposes: (i) the transfer of all of the assets and liabilities of
CVF (the "Acquired Funds") to IMG Funds in exchange for shares of IMG Funds and
the distribution to shareholders of the Acquired Funds of the shares of IMG
Funds so received, as described in the Plan, will constitute a reorganization
within the meaning of Section 368(a)(1)(C) or Section 368(a)(1)(D) of the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) in accordance with
Sections 361(a), 361(c)(1) and 357(a) of the Code, no gain or loss will be
recognized by the Acquired Funds as a result of such transactions; (iii) in
accordance with Section 354(a)(1) of the Code, no gain or loss will be
recognized by the shareholders of the Acquired Funds or IMG Funds on the
distribution of shares of IMG Funds to shareholders of the Acquired Funds in
exchange for shares of the Acquired Funds; (iv) in accordance with Section
358(a)(1) of the Code, the basis of IMG Funds shares received by a shareholder
of an Acquired Fund will be the same as the basis of the shareholder's shares
immediately before the time when the Reorganization becomes effective;; (v) in
accordance with Section 362(b) of the Code, the basis to IMG Funds of the assets
of the Acquired Funds received pursuant to such transactions will be the same as
the basis of the assets in the hands of the Acquired Funds immediately before
such transactions; (vi) in accordance with Section 1223(1) of the Code, a
shareholder's holding period for shares of IMG Funds will be determined by
including the period for which the shareholder held the shares of the Acquired
Fund exchanged therefor, provided such shares of the Acquired Fund were held as
a capital asset; and (vii) in accordance with Section 1223(2) of the Code, the
holding period for IMG Funds with respect to the assets received in the
Reorganization will include the period for which such assets were held by the
Acquired Funds.
No party to the Reorganization has sought a tax ruling from the
Internal Revenue Service ("IRS"). The opinion of counsel is not binding on the
IRS and does not preclude the IRS from adopting a contrary position.
Shareholders should consult their own advisers concerning the potential tax
consequences to them, including state and local income tax consequences.
Both IMG Funds and CVF have conformed their operations to the
requirements of Subchapter M of the Code and, as a result, do not bear any
corporate level federal or state income tax.
SHARES AND SHAREHOLDER RIGHTS
IMG Mutual Funds, Inc. is a Maryland corporation organized on November
16, 1994. The Vintage Funds were created on October 30, 1997, to acquire the
assets and continue the business of the corresponding substantially identical
investment portfolios (known as the AMCORE Vintage Funds) of The Coventry Group,
a Massachusetts business trust, and to acquire the three similar CVF Portfolios.
Each share of a Vintage Fund represents an equal proportionate interest in it
and is entitled to such dividends and distributions out of the income earned on
the assets belonging to it as are declared at the discretion of the Directors.
CVF is also a Maryland corporation and, accordingly, the characteristics of its
shares and rights of its shareholders are substantially similar to IMG Funds.
The Charter of IMG Funds permits it, by resolution of its Board of
Directors, to create new series of common stock relating to new investment
portfolios or to subdivide existing series of Shares into subseries or classes.
Classes could be utilized to create differing expense and fee structures for
investors in the same IMG Fund. Differences could exist, for example, in the
sales load, Rule 12b-1 fees or service plan fees applicable to different classes
of Shares offered by a particular IMG Fund. Such an arrangement could enable IMG
Funds to tailor its marketing efforts to a broader segment of the investing
public with a goal of attracting additional investments. Reference is made to
the IMG Funds Prospectus dated ______________, 1998, for a detailed description
of the classes of shares now offered under the heading "Organization and Shares
of the Funds."
Shareholders are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held. Shares of each IMG
Fund will vote together and not by class unless otherwise required by law or
permitted by the Board of Directors. All shareholders of each IMG Fund will vote
together as a single class on matters relating to the Fund's investment advisory
agreement, investment objective and fundamental policies.
Shares of IMG Funds have non-cumulative voting rights and, accordingly,
the holders of more than 50 percent of IMG Funds outstanding shares
(irrespective of class) may elect all of the Directors. Shares have no
preemptive rights and only such conversion and exchange rights as the Board may
grant in its discretion, pursuant to the Charter of IMG Funds. When issued for
payments as described in the Prospectus, shares will be fully paid and
nonassessable. All shares are held in uncertificated form and will be evidenced
by the appropriate notation on the books of the transfer agent.
IMG Funds may operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required by the 1940 Act,
just as CVF has operated without regular annual shareholder meetings. IMG Funds
has adopted the appropriate provisions in its Bylaws and may, in its discretion,
not hold annual meetings of shareholders for the election of Directors unless
otherwise required by the 1940 Act. IMG Funds has also adopted provisions in its
Bylaws for the removal of Directors by the shareholders. Shareholders may
receive assistance in communicating with other shareholders as provided in
Section 16(c) of the 1940 Act.
There normally will be no meetings of shareholders for the purpose of
electing Directors unless and until such time as less than a majority of the
Directors holding office has been elected by shareholders, at which time the
Directors then in office will call a shareholders' meeting for the election of
Directors. Shareholders may remove a Director by the affirmative vote of a
majority of the outstanding voting shares. In addition, the Directors are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any such Director or for any other purpose when requested
in writing to do so by the shareholders of record of not less than 10 percent of
the outstanding voting securities.
For a detailed description of the characteristics of the shares of CVF
and the rights of its shareholders, see "Organization and Shares of the Funds"
in the July 29, 1997 CVF Prospectus.
CAPITALIZATION
The following table shows the pro forma capitalization of the combined
CVF-Vintage Funds and the pro forma capitalization of these funds when the
acquisition of the AMCORE Funds is completed:
<TABLE>
<CAPTION>
As of November 30, 1997
(In millions, except net asset value per share)
IMG-CVF Funds AMCORE IMG-CVF-AMCORE
Combined Funds Funds Pro Forma
Combined
Equity Balanced Bond Equity Balanced Equity Balanced Bond
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Net Assets $17.347 $11.269 $16.556 $391.213 $46.918 $408.560 $58.187 $16.556
Shares Outstanding 1.735 1.127 1.620 18.883 3.309 40.860 5.820 1.620
Net Asset Value
Per Share $ 10.00 $ 10.00 $ 10.22 $ 20.72 $ 14.18 $ 10.00 $ 10.00 $ 10.22
</TABLE>
The foregoing table assumes that all relevant reorganization transactions
occurred on November 30, 1997, and that initial capital of 10 shares at $10 per
share was invested in Vintage Equity and Vintage Balanced immediately prior
thereto.
IMG MUTUAL FUNDS, INC.
GENERAL. IMG Mutual Funds, Inc. ("IMG Funds") is a Maryland corporation
organized in November 1994, and operates as an open-end diversified management
investment company. For a general discussion of Vintage Equity and Vintage
Balanced, see the accompanying IMG Funds Prospectus dated __________, 1998. For
a general discussion of Vintage Bond (formerly IMG Bond Fund), see the
accompanying IMG Funds Prospectus dated August 27, 1997. For the convenience of
CVF shareholders, cross-references to such Prospectuses are set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. No information on per-share income
and capital changes is included in the IMG Funds _______, 1998 Prospectus
because Vintage Equity and Vintage Balanced have not yet commenced substantive
operations. Such information is included for Vintage Bond under "Financial
Highlights" in the IMG Funds August 27, 1997 Prospectus. For a discussion of the
Vintage Funds' expenses, see "Proposal 1: Agreement and Plan of
Reorganization--Expense Summary" above and "Expense Summary" in the IMG Funds
Prospectuses.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of the Vintage Funds'
investment objectives and policies, see "Investment Objectives, Policies and
Restrictions" in the IMG Funds Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of IMG Funds rests
with the Board of Directors who are elected by the shareholders of IMG Funds.
There are currently six Directors, two of whom are "interested persons" of IMG
Funds within the meaning of that term under the 1940 Act. The Directors, in
turn, elect the officers of IMG Funds to supervise actively its day-to-day
operations.
The names of the Directors and officers of IMG Funds, their addresses,
and principal occupations during the past five years are as follows:
*David W. Miles President, Treasurer and Senior Managing Director,
Director Investors Management Group
*Mark A. McClurg Vice President, Secretary and Senior Managing Director,
President and Director Investors Management Group
David Lundquist Managing Director, Lundquist, Schlitz & Associates, a
Chairman of the Board consulting company, 1996 to present
and Director
Johnny Danos President, Danos, Inc., a personal investment company,
Director 1994-present; Audit Partner, KPMG Peat Marwick, 1963-1994
Debra Johnson Vice President and CFO, Business Publications
Director Corporation/Iowa Title Company, a publishing and
abstracting service company
Edward J. Stanek CEO, Iowa Lottery, a government-operated lottery
Director
*Ruth L. Prochaska Controller/Compliance Officer, Investors Management
Secretary Group
- ------------------
*Denotes "interested persons," as defined in the 1940 Act, of IMG Funds
and the Advisor.
INVESTMENT ADVISER AND ADMINISTRATOR. For a discussion of IMG and the services
performed by it and its fees, see "Management and Fees" in the IMG Funds
Prospectus.
DISTRIBUTOR. For a discussion of BISYS Fund Services, Inc.'s activities as the
IMG Funds distributor, the services performed by it and its fees, see
"Management and Fees" in the IMG Funds Prospectus.
SHARES. For a discussion of voting rights of shares of IMG Funds, see
"Organization and Shares of the Funds" in the IMG Funds Prospectus.
REDEMPTION OF SHARES. For a discussion concerning redemption of shares of IMG
Funds, see "Purchasing Shares" and "Redeeming Shares" in the IMG Funds
Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS. For a discussion of the IMG Funds'
policies with respect to dividends and distributions, see "Distributions and
Taxes" in the IMG Funds Prospectus.
EXCHANGE PRIVILEGES. For a discussion of a Vintage Fund shareholder's right to
exchange shares for shares of another IMG Fund, see "Purchasing Shares -
Exchange Privilege" in the IMG Funds Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which IMG
Funds is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to Vintage Funds or other
IMG Funds may be addressed by writing to IMG, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338, or by calling toll free 800-798-1819.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management discussion of fund
performance is not included for Vintage Equity and Vintage Balanced, which have
not yet commenced operations, but is incorporated by reference as to Vintage
Bond from the IMG Funds Statement of Additional Information, dated August 27,
1997.
CAPITAL VALUE FUND, INC.
GENERAL. Capital Value Fund, Inc. ("CVF") is also a Maryland corporation which
operates as an open-end diversified management investment company. For a general
discussion of CVF, see the accompanying CVF Prospectus dated July 29, 1997. For
the convenience of shareholders, certain cross-references to such Prospectus are
set forth below.
CERTAIN EXPENSES AND FINANCIAL INFORMATION. The CVF Prospectus contains
information on per share income and capital changes, under the heading
"Financial Highlights." For a discussion of CVF's expenses, see "Proposal 1:
Agreement and Plan of Reorganization--Expense Summary" above and "Expense
Summary" in the CVF Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. For a discussion of CVF's investment
objectives and policies, see "Investment Objective, Policies and Restrictions"
in the CVF Prospectus.
DIRECTORS AND OFFICERS. Overall responsibility for management of CVF rests with
its Board of Directors, who are elected by the shareholders. The Directors elect
the officers to supervise actively the day-to-day operations.
The names of the Directors and officers, their addresses, and principal
occupations during the past five years are as follows:
William C. Knapp, II President, AmerUs Properties, Inc.
Director
*Richard C. Anderson CFO & Treasurer, Wellmark, Inc. d/b/a Wellmark
Director Blue Cross and Blue Shield of Iowa
Thomas K. Koehn President, The Waldinger Corporation
Director
Marvin J. Walter President, Dayton Road Development
Director Corporation/W & G Marketing Company, Inc.
*David W. Miles Senior Managing Director, Investors Management
President Group and IMG Financial Services, Inc.
Director
*Carole E. Sours Director, Employee Benefit Services, Wellmark,
Vice President Inc., d/b/a Wellmark Blue Cross and Blue Shield
Treasurer of Iowa
*Ruth L. Prochaska Controller/Compliance Officer, Investors
Secretary Management Group and IMG Financial Services, Inc.
*An interested person as defined in the Investment Company Act of 1940.
INVESTMENT ADVISOR AND ADMINISTRATOR. For a discussion of IMG and Wellmark
Capital Value, Inc., the services performed by them and their fees, see
"Management and Fees" in the CVF Prospectus.
DISTRIBUTOR. For a discussion of IMG Financial Services, Inc.'s activities as
distributor, see "Management and Fees" in the Acquired Funds Prospectus.
SHARES. For a discussion of the significant attributes of CVF shares, see
"Organization and Shares of the Funds" in CVF Prospectus.
REDEMPTION OR REPURCHASE OF SHARES. For a discussion concerning redemption or
repurchase of shares of CVF, see "Redeeming Shares" in CVF Prospectus.
DIVIDENDS AND DISTRIBUTIONS. For a discussion of CVF policies with respect to
dividends and distributions, see "Distributions and Taxes" in CVF Prospectus.
EXCHANGE PRIVILEGES. For a discussion of a CVF shareholder's right to exchange
shares of a CVF Portfolio, see "Shareholder Services" in the CVF Prospectus.
LEGAL PROCEEDINGS. There are no pending material legal proceedings to which CVF
is a party.
SHAREHOLDER INQUIRIES. Shareholder inquiries relating to CVF may be addressed by
writing to IMG Financial Services, Inc., 2203 Grand Avenue, Des Moines, Iowa
50312-5338, or calling toll-free 800-798-1819.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE. Management's discussion of the
performance of CVF is found in the annual report of CVF, which is incorporated
by reference into the Statement of Additional Information relating to the July
29, 1997 Prospectus of CVF.
PROPOSAL 2: APPROVAL OF SUB-ADVISORY AGREEMENT
The sole purpose of this Proposal is to permit shareholders of CVF to
consider the New Agreement (herein described) to take effect following the
consummation of the transactions contemplated by an Agreement and Plan of
Reorganization by and among AMCORE Financial, Inc., IMG Acquisition, Inc.,
Investors Management Group, David W. Miles and Mark A. McClurg, dated September
30, 1997 (the "Acquisition Agreement"). Pursuant to the Acquisition Agreement,
Investors Management Group will become a wholly owned subsidiary of AMCORE
Financial Inc. This Proposal will be adopted if approved by the lesser of (a)
more than 50% of the outstanding shares of each such Fund or (b) 66 2/3% of the
shares of each CVF Fund voting at a meeting at which a majority of such shares
are represented in person or by proxy.
THE INVESTMENT ADVISOR AND SUB-ADVISOR
Wellmark Capital Value, Inc. has served as the investment advisor, and
Investors Management Group has served as sub-advisor, to the CVF Funds since
they commenced operations. Investors Management Group is a federally registered
investment advisor organized in 1982. Since then, its principal business has
been providing continuous investment management to pension and profit sharing
plans, insurance companies, public agencies, banks, endowments and charitable
institutions, mutual funds, individuals and others. As of November 30, 1997,
Investors Management Group had approximately $1.6 billion in equity, fixed
income and money market assets under management.
Investors Management Group is also the investment advisor of IMG Mutual
Funds, Inc., Iowa Schools Joint Investment Trust, Iowa Public Agency Investment
Trust, Liquid Assets Fund, Inc., Municipal Assets Fund, Inc., and engages in
certain other activities unrelated to investment companies. David W. Miles is
President, Treasurer and Director and Mark A. McClurg is Vice President,
Secretary and Director of Investors Management Group. Each directly owns 50% of
the outstanding Class A voting securities of Investors Management Group and the
IMG ESOP owns 100% of the outstanding ESOP voting securities. David W. Miles
owns an additional 13% of the total outstanding voting securities beneficially
through the ESOP, and Mark A. McClurg beneficially owns an additional 5% of the
total outstanding voting securities. Mr. Miles and Mr. McClurg intend to devote
substantially all their time to the operation of Investors Management Group.
Their address is 2203 Grand Avenue, Des Moines, Iowa 50312-5338.
THE ACQUISITION
Pursuant to the Acquisition Agreement, Investors Management Group will
become a wholly owned subsidiary of AMCORE Financial, Inc. (the "Acquisition").
Investors Management Group will be the surviving organization and will continue
to be headquartered in the historic Crawford Mansion located in Des Moines,
Iowa. AMCORE Financial, Inc. is a publicly traded northern Illinois financial
services holding company with assets exceeding $3.5 billion. AMCORE Financial,
Inc. presently owns an investment advisory firm called AMCORE Capital
Management, which is primarily known for its equity management. AMCORE Capital
Management is the advisor to the nationally recognized AMCORE Vintage Mutual
Funds, a family of seven funds investing in stocks and bonds to meet various
investor objectives. AMCORE Capital Management intends to merge operations and
to operate as Investors Management Group after the Acquisition.
Under the terms of the Acquisition Agreement, each of Investors
Management Group's ESOP shares will be converted into the right to receive
2.0038 shares of AMCORE Financial, Inc. common stock and each of Investors
Management Group's Class A common shares will be converted into (i) the right to
receive 0.9808 shares of AMCORE Financial, Inc. common stock and (ii) the
contingent right to receive additional AMCORE shares based on certain
performance benchmarks in 1998, 1999 and 2000, with the shares issued in 1999,
2000 and 2001. The Acquisition is expected to be consummated on or about
February 1, 1998, and is subject to certain closing conditions, including
certain regulatory approvals and the approval of shareholders of Investors
Management Group.
Investors Management Group does not anticipate any reduction in the
quality of services now provided to the funds it serves. As a condition of the
Acquisition, certain officers of Investors Management Group have agreed to enter
into employment agreements with AMCORE Financial, Inc., which are intended to
assure that the services of such officers are available to Investors Management
Group (and thus to CVF) after the Acquisition.
As a result of the Acquisition, Mr. Miles will become Chief Operating
Officer and Mr. McClurg will become Managing Director for Client Development for
AMCORE Investment Group, N.A., a trust subsidiary owned by AMCORE Financial,
Inc., in addition to retaining their responsibilities with Investors Management
Group. Jay Evans, presently Chief Investment Officer of AMCORE Capital
Management, Inc., will assume that role at Investors Management Group.
THE SUB-ADVISORY AGREEMENT
The Directors of CVF are proposing that shareholders approve a new sub-
advisory agreement (the "New Agreement") between the Funds and Investors
Management Group to be effective upon consummation of the Acquisition. In
anticipation of the Acquisition, a majority of the Directors (including a
majority of the "Disinterested Directors") approved the New Agreement on October
28, 1997. The shareholders of CVF are being asked to approve the New Agreement.
THE CURRENT SUB-ADVISORY AGREEMENT. The existing Sub-advisory Agreement
(the "Current Agreement") was last approved by a majority of the Disinterested
Directors, voting in person at a meeting called for that purpose on September
24, 1997. The Current Agreement provides that the Sub-Advisor will supply
investment research and portfolio management, including adequate personnel to
market and supervise continuously the investment programs of the CVF Funds, the
administration of the investment programs and the composition of the portfolios.
The Current Agreement provides that the Sub-advisor shall not be liable
for any error of judgment or of law, or for any loss suffered by CVF in
connection with any matters to which the Current Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the sub-advisor in the performance of its obligations and duties, or by
reason of its reckless disregard of obligations or duties under the Current
Agreement. The Current Agreement may be terminated at any time by either party
without the payment of any penalty upon ninety (90) days written notice, and
automatically terminates in the event of its assignment.
For the fiscal year ended March 31, 1997, CVF Equity, CVF Total Return
and CVF Fixed Income paid $98,482, $79,180, and $40,739, respectively, for
services provided, under the Current Agreement.
CVF pays all other expenses incurred in its operation including, but
not limited to, direct charges relating to the purchase and sale of its
portfolio securities, interest charges, fees and expenses of legal counsel and
independent auditors, taxes and governmental fees, expenses of regular and
special meetings of the Directors, fees and disbursements of custodians,
insurance premiums, indemnification and other expenses not expressly provided
for in the Current Agreement and any extraordinary expenses of a nonrecurring
nature.
THE NEW SUB-ADVISORY AGREEMENT. The Board of Directors approved the
proposed New Agreement between the Funds and Investors Management Group on
October 28, 1997. The form of the proposed New Agreement is substantially
identical to the Current Agreement. There are no material differences between
the Current Agreement and the New Agreement.
The sub-advisory fee as a percent of net assets payable by the Funds
will be the same under the New Agreement as under the Current Agreement, that is
0.43 percent of the average daily net assets. If the sub-advisory fee under the
New Agreement had been in effect for the Fund's most recently completed fiscal
year, contractual fees payable to the Sub-advisor by the Funds would have been
identical to those payable under the Current Agreement.
In connection with approving the New Agreement, the Directors held a
meeting on October 28, 1997. At this meeting, the Directors considered the
possible effects of the Acquisition on CVF and Investors Management Group and
its ability to provide investment advisory services with respect to CVF. In
evaluating the New Agreement, the Directors took into account that the Current
Agreement and the New Agreement, including the terms relating to the services to
be provided thereunder by the Sub-advisor and the fees and expenses payable by
the Funds are identical. The Directors considered the skills and capabilities of
the Sub-advisor and the representation that no material change was planned in
the current management or facilities of the Sub-advisor as a result of the
Acquisition. The Directors considered the continued employment of members of
senior management of the Sub-advisor pursuant to future employment contracts to
be important to help assure the continuity of the personnel primarily
responsible for maintaining the quality of investment advisory and other
services for CVF. The Directors considered the possible benefits the Sub-advisor
may receive as a result of the Acquisition.
The Directors, including a majority of the Disinterested Directors,
concluded that if the Acquisition occurs, entry by CVF into the New Agreement
would be in the best interest of CVF and the shareholders of the Funds. The
Board of Directors unanimously approved the New Agreement and recommended such
agreement for approval by the shareholders. The New Agreement will take effect
upon the later to occur of (i) obtaining of shareholder approval or (ii) closing
of the Acquisition. The New Agreement will continue in effect until December 31,
1997, and thereafter for successive annual periods as long as such continuance
is approved in accordance with the 1940 Act. In the event that shareholders of
CVF do not approve the New Agreement and the Acquisition is consummated, the
Board of Directors would be forced to seek investment sub-advisory services from
another advisory organization. In the event the Acquisition is not consummated,
the Sub-advisor would continue to serve pursuant to the terms of the Current
Agreement.
In the event that the Reorganization described in Proposal 1 above is
consummated, the New Agreement would be superseded by an investment advisory
agreement between Investors Management Group and IMG Mutual Funds, Inc. Wellmark
Capital Value, Inc. would not provide investment advisory services to IMG Mutual
Funds, Inc.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION
This combined Proxy Statement/Prospectus is being furnished in
connection with the solicitation of proxies by the Board of Directors of CVF for
use at the Special Meeting of Shareholders to be held on January 28, 1998 (the
"Meeting"). It is expected that the solicitation of proxies by the Board of
Directors will be primarily by mail. CVF's officers may also solicit proxies by
telephone facsimile transmission or personal interview.
The following table gives the total number of shares of CVF outstanding
at the close of business on January 2, 1998, the record date for the meeting.
CVF Equity .............................
CVF Total Return .............................
CVF Fixed Income .............................
Each shareholder of record on the record date is entitled to one vote
for each share owned and a fractional vote for each fractional share owned on
each matter presented for shareholder vote.
If the accompanying proxy is executed and returned in time for the
Meeting, the shares presented thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting. If no specification is
made, the proxy will be voted FOR all enumerated proposals. Any shareholder
submitting a proxy may revoke it at any time before it is exercised by
submitting to the Funds, c/o Secretary, 2203 Grand Avenue, Des Moines, Iowa
50312-5338, a written notice of revocation or a subsequently executed proxy or
by attending the meeting and electing to vote in person.
SHAREHOLDER AND BOARD APPROVAL
The Agreement and Plan of Reorganization will not become effective
unless approved by a majority of outstanding shares of each CVF Portfolio. The
New Agreement must be approved by each CVF Portfolio by a "majority" vote, as
defined in the 1940 Act and described in Proposal 2 above. Under Maryland law,
abstentions do not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. Broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power) will be deemed to be abstentions. An abstention
will have the same effect as casting a vote against the Reorganization.
The vote of the shareholders of IMG Mutual Funds, Inc. is not being
solicited in connection with the approval of the Plan since their approval or
consent is not necessary for the completion of the Reorganization.
As of the Record Date, all of the officers and Directors of CVF
beneficially owned, individually and as a group, less than 1% of the shares of
CVF. No person owned of record or beneficially 5% or more of the outstanding
shares of either CVF or a CVF fund as of November 30, 1997, except Wellmark
Community Financial Insurance, Inc., IASD Health Services Corporation and IASD
Health Services Savings & Investment Plan.
QUORUM
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve a
particular proposal are not received, the persons named as proxies, or their
substitutes, may propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
in favor of such adjournments, and will vote those proxies required to be voted
AGAINST such proposal against any adjournment. Under the Charter of CVF, a
quorum is constituted by the presence in person or by proxy of the holders of 33
1/3% of the aggregate outstanding shares of the Portfolios entitled to vote at
the Meeting. If a proxy is properly executed and returned and is marked with an
abstention, the shares represented thereby will be considered to be present at
the Meeting for the purpose of determining the existence of a quorum for the
transaction of business.
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION
This combined Proxy Statement/Prospectus and the related Statement of
Additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which IMG Mutual
Funds, Inc., Capital Value Fund, Inc., respectively, have filed with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933 and
the 1940 Act to which reference is hereby made. The SEC file number for the CVF
Prospectus and the related Statement of Additional Information which are
incorporated by reference herein is Registration No. 33-54202. The SEC file
number for the IMG Funds Prospectuses and related Statements of Additional
Information which are incorporated by reference herein is Registration No.
33-81998.
IMG Mutual Funds, Inc. and Capital Value Fund, Inc. are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, and in accordance therewith, file reports and other information with the
SEC. Proxy material, reports, proxy and information statements, registration
statements and other information can be inspected and copied at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such filings may also be available at the following SEC
regional offices: Northwestern Atrium, 500 West Madison Street, Suite 1400,
Chicago, IL 60661-2511; 7 World Trade Center, Suite 1300, New York, NY 10048 and
73 Tremont Street, Suite 600, Boston, MA 02108-3912. Copies of such materials
can also be obtained by mail from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549, at
prescribed rates.
OTHER BUSINESS
The Fund's Board of Directors knows of no other business to be brought
before the Meeting. However, if any other matters come before the Meeting, it is
the intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares in the
Reorganization will be passed upon for IMG Mutual Funds, Inc. by Ober, Kaler,
Grimes & Shriver, 120 E. Baltimore Street, Baltimore, Maryland 21202. Certain
tax matters will be passed upon for Capital Value Fund, Inc. by Cline, Williams,
Wright, Johnson & Oldfather, 1900 First Bank Building, 233 South 13th Street,
Lincoln, Nebraska 68508. Cline, Williams, Wright, Johnson & Oldfather acts as
legal counsel to IMG Mutual Funds, Inc., Investors Management Group, and other
funds and entities managed by Investors Management Group.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this combined Proxy Statement/Prospectus or by
telephoning 800-795-1819.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT made as of the 30th day of October 1997, is made by and
among IMG Mutual Funds, Inc., a Maryland corporation ("IMG Funds"), Capital
Value Fund, Inc., a Maryland Corporation ("CVF"), Wellmark Capital Value, Inc.,
an Iowa corporation ("WCV") and Investors Management Group, Ltd. an Iowa
corporation ("IMG").
WITNESSETH:
WHEREAS the Board of Directors of IMG Funds, and the Board of Directors
of CVF, each an open-end management investment company, deem it advisable that
IMG Funds acquire all of the assets of CVF in exchange for the assumption by IMG
Funds of all of the liabilities of CVF and shares issued by IMG Funds which are
thereafter to be distributed by CVF pro rata to its shareholders in complete
liquidation and termination of CVF and in exchange for all of CVF's outstanding
shares with the intent that the transactions described herein shall qualify as a
tax-free reorganization under Section 368(a)(1)(C) of the Internal Revenue Code
of 1986;
NOW THEREFORE, in consideration of the mutual promises herein
contained, each of the parties hereto represents and warrants to, and agrees
with each of the other parties as follows:
1. IMG Funds hereby represents, warrants and covenants to the parties
that:
(a) IMG Funds is a corporation with transferable shares duly
organized and validly existing under the laws of Maryland and
has full power to own its properties and assets and to carry
on its business as such business is now being conducted.
(b) IMG Funds' statement of assets and liabilities as of April
30, 1997, and the related statements of operations and changes
in net assets for the fiscal year ended April 30, 1997, all as
audited by KPMG Peat Marwick LLP, have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis. Such statement of assets and
liabilities fairly presents the financial position and net
assets of IMG Funds as of such date and such statements of
operations and changes in net assets fairly present the
results of its operations for the period covered thereby;
(c) There are no claims, actions, suits or proceedings pending
or, to its knowledge, threatened against or affecting IMG
Funds or its properties or business or its right to issue and
sell shares, or which would prevent or hinder consummation of
the transactions contemplated hereby, and it is not charged
with or, to IMG Funds' knowledge, threatened with any charge
or investigation of, any violation of any provision of any
federal, state or local law or any administrative ruling or
regulation relating to any aspect of its business or the
issuance or sale of its shares;
(d) IMG Funds is not a party to or subject to any judgment or
decree or order entered in any suit or proceeding brought by
any governmental agency or by any other person enjoining it in
respect of, or the effect of which is to prohibit, any
business practice or the acquisition of any property or the
conduct of business by it or the issuance or sale of its
shares in any area;
(e) IMG Funds has filed all tax returns required to be filed,
has no liability for any unpaid taxes and has made a proper
election to be treated as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each of its taxable years. IMG Funds has not committed any
action or failed to perform any necessary action that would
render invalid its election to be treated as a regulated
investment company for any of its taxable years;
(f) The authorization, execution and delivery of this
Agreement on behalf of IMG Funds does not, and the
consummation of the transactions contemplated hereby will not
violate, or conflict with any provision of IMG Funds' Charter
or By-Laws, or any provision of, or result in the acceleration
of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to
which it is party or by which it or any of its assets is
bound, or violate or conflict with any other material
contractual or statutory restriction of any kind or character
to which it is subject;
(g) This Agreement has been duly authorized, executed, and
delivered by IMG Funds and constitutes a valid and binding
agreement of IMG Funds and all governmental and other
approvals required for IMG Funds to carry out the transactions
contemplated hereunder have been or on or prior to the Closing
Date (as herein defined) will have been obtained. IMG Funds
will comply with all applicable laws and regulations in
carrying out the transactions contemplated hereunder,
including, without limitation, Section 15(f) of the Investment
Company Act of 1940, as amended (the "1940 Act");
(h) IMG Funds is registered under the 1940 Act as an open-end,
diversified management investment company. IMG Funds is
currently in compliance with the 1940 Act and the rules of the
Securities and Exchange Commission promulgated thereunder.
(i) On the Closing Date, IMG Funds will own its assets free
and clear of all liens, claims, charges, options and
encumbrances;
(j) On or before the Closing Date IMG Funds will have created
and registered shares of two new series to be designated
"Vintage Equity Fund" and "Vintage Balanced Fund," each of
which series will be a portfolio of securities managed under
investment objectives, policies and restrictions substantially
identical to the series of Vintage Funds (the "Existing
Vintage Funds") which are presently portfolios of the Coventry
Group, and IMG Funds will have changed the name of IMG Bond
Fund to Vintage Bond Fund (said Vintage Equity Fund, Vintage
Balanced Fund and Vintage Bond Fund being referred to herein
as the "Vintage Clone Funds");
(k) On the Closing Date the shares of the Vintage Clone Funds
to be delivered to CVF hereunder shall have been registered
under the Securities Act of 1933, as amended (the "1933 Act")
and duly authorized, and, when issued and delivered pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable; and IMG Funds will comply with all applicable
laws in connection with the issuance of such shares and shall
not be subject to a stop-order of the Securities and Exchange
Commission in connection therewith; and
(l) On the Closing Date, the shares of the Vintage Clone Funds
to be delivered to CVF hereunder shall have been registered
with the appropriate securities administrator or agency of
each state under whose securities law such registration is
required.
2. Except to the extent that IMG or IMG Funds has knowledge, has
received notice or should (because of any legal or contractual duty performed by
IMG on behalf of or for CVF) know of any facts, circumstances or events to the
contrary or inconsistent with the following representations and warranties. CVF
hereby represents, warrants and covenants to IMG Funds that:
(a) CVF is a corporation with transferable shares duly
organized and validly existing under the laws of Maryland and
has full power to own its properties and assets and to carry
on its business as such business is now being conducted. The
shares of CVF stock are currently divided into three classes,
each representing a separate investment portfolio, namely, the
Equity Portfolio, Fixed Income Portfolio and Total Return
Portfolio.
(b) The statement of assets and liabilities as of March 31,
1997, and the related statements of operations and changes in
net assets for the fiscal year ended March 31, 1997 of each
CVF Portfolio, all as audited by KPMG Peat Marwick LLP, have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis. Such statement of
assets and liabilities fairly presents the financial position
and net assets as of such date and such statements of
operations and changes in net assets fairly present the
results of its operations for the period covered thereby;
(c) There are no claims, actions, suits or proceedings pending
or, to its knowledge, threatened against or affecting CVF or
its properties or business or its right to issue and sell
shares, or which would prevent or hinder consummation of the
transactions contemplated hereby, and it is not charged with
or, to CVF's knowledge, threatened with any charge or
investigation of, any violation of any provision of any
federal, state or local law or any administrative ruling or
regulation relating to any aspect of its business or the
issuance or sale of its shares;
(d) CVF is not a party to or subject to any judgment or decree
or order entered in any suit or proceeding brought by any
governmental agency or by any other person enjoining it in
respect of, or the effect of which is to prohibit, any
business practice or the acquisition of any property or the
conduct of business by it or the issuance or sale of its
shares in any area;
(e) CVF has filed all tax returns required to be filed, has no
liability for any unpaid taxes and has made a proper election
to be treated as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code")
for each of its taxable years. CVF has not committed any
action or failed to perform any necessary action that would
render invalid its election to be treated as a regulated
investment company for any of its taxable years;
(f) The authorization, execution and delivery of this
Agreement on behalf of CVF does not, and the consummation of
the transactions contemplated hereby will not violate, or
conflict with any provision of CVF's Articles of Incorporation
or By-Laws, or any provision of, or result in the acceleration
of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to
which it is party or by which it or any of its assets is
bound, or violate or conflict with any other material
contractual or statutory restriction of any kind or character
to which it is subject;
(g) This Agreement has been duly authorized, executed, and
delivered by CVF and constitutes a valid and binding agreement
of CVF and all governmental and other approvals required for
CVF to carry out the transactions contemplated hereunder have
been or on or prior to the Closing Date (as herein defined)
will have been obtained;
(h) On the Closing Date, CVF and each CVF Portfolio will own
its assets free and clear of all liens, claims, charges,
options and encumbrances and, except for the various
agreements listed in Part C of CVF's current Form N-1A
Registration Statement under the 1933 Act and 1940 Act, there
will be no material contracts or agreements (other than this
Agreement) outstanding to which CVF is a party or to which it
is subject;
(i) On the Closing Date, CVF will have full right, power and
authority to sell, assign and deliver the assets to be sold,
assigned, transferred and delivered to IMG Funds hereunder,
and upon delivery and payment for such assets, IMG Funds will
acquire good and marketable title thereto free and clear of
all liens, claims, charges, options and encumbrances;
(j) CVF will declare to shareholders of record of each CVF
Portfolio on or prior to the Closing Date a dividend or
dividends which, together with all previous such dividends,
shall have the effect of distributing to the shareholders all
of the investment company taxable income of each CVF Portfolio
(computed without regard to any deduction for dividends paid)
and all of the net realized capital gains, if any, as of the
Closing Date; and
(k) CVF will, from time to time, as and when requested by IMG
Funds, execute and deliver or cause to be executed and
delivered, all such assignments and other instruments, and
will take and cause to be taken such further action, as IMG
Funds may deem necessary or desirable in order to vest in and
confirm to IMG Funds, title to and possession of all the
assets of CVF to be sold, assigned, transferred and delivered
hereunder and otherwise to carry out the intent and purpose of
this Agreement.
3. Based on the respective representations and warranties, subject to
the terms and conditions contained herein, CVF agrees to transfer to IMG Funds
and IMG Funds agrees to acquire from CVF, all the assets of CVF on the Closing
Date and to assume from CVF all of the liabilities of CVF in exchange for the
issuance of the number of shares of Vintage Clone Funds provided in Section 4
which will be subsequently distributed pro rata to the shareholders of CVF in
complete liquidation and termination of CVF and in exchange for all of CVF's
outstanding shares as provided in Section 6. CVF shall not issue, sell or
transfer any of its shares after the Closing Date, and only redemption requests
received by CVF in proper form prior to the Closing Date shall be fulfilled by
CVF. Redemption requests received by CVF thereafter shall be treated as requests
for redemption of those shares of Vintage Clone Funds allocable to the
shareholder in question as provided in Section 6 of this Agreement.
4. On the Closing Date, IMG Funds will issue to CVF a number of full
and fractional shares of each Vintage Clone Fund, taken at their net asset
value, having an aggregate net asset value equal to the value of the net assets
of the corresponding CVF Portfolio, that is, shares of Vintage Equity Fund for
assets of CVF Equity Portfolio, shares of Vintage Balanced Fund for assets of
CVF Total Return Portfolio and shares of Vintage Bond Fund for assets of CVF
Fixed Income Portfolio. The aggregate value of the net assets of each CVF
Portfolio and each Vintage Clone Fund shall be determined in accordance with the
then current Prospectus of IMG Funds as of 3:00 p.m. on the business day
immediately preceding the Closing Date.
5. The closing of the transaction contemplated in this Agreement (the
"Closing") shall be held at the offices of IMG, 2203 Grand Avenue, Des Moines,
Iowa 50312-5338 (or at such other place as the parties hereto may agree) at 3:00
p.m. Central Standard Time on December 31, 1997, or on such earlier or later
date as the parties hereto may mutually agree. The date on which the Closing is
to be held as provided in this Agreement shall be known as the "Closing Date".
In the event that on the Closing Date (a) the New York Stock Exchange
is closed for other than customary week-end and holiday closings or (b) trading
on said Exchange is restricted or (c) as emergency exists as a result of which
it is not reasonably practicable for either the Vintage Clone Funds or the CVF
Portfolios to fairly determine the value of their respective assets, the Closing
Date shall be postponed until the first business day after the day on which
trading shall have been fully resumed.
6. As soon as practicable after the Closing Date, CVF shall (a)
distribute on a pro rata basis (i) to the shareholders of record of CVF Equity
Portfolio at the close of business on the Closing Date the shares of the Vintage
Equity Fund received by CVF at the Closing; (ii) to the shareholders of record
of CVF Total Return Portfolio at the close of business on the Closing Date the
shares of Vintage Balanced Fund received by CVF at the Closing; and (iii) to the
shareholders of record of CVF Fixed Income Portfolio at the close of business on
the Closing Date the shares of Vintage Bond Fund received by CVF at the Closing;
and (b) be liquidated and dissolved in accordance with applicable law and its
Articles of Incorporation.
For purposes of the distribution of shares of the Vintage Clone Funds
to shareholders of the CVF Portfolios, IMG Funds shall credit on the books of
each Vintage Clone Fund an appropriate number of shares of such Vintage Clone
Fund to the account of each shareholder of the corresponding CVF Portfolio whose
shares are represented by certificates, only upon surrender of such
certificates. No certificates will be issued for shares of the Vintage Clone
Funds. After the Closing Date and until surrendered, each outstanding
certificate which, prior to the Closing Date, represented shares of a CVF
Portfolio, shall be deemed for all purposes of IMG Funds' Articles of
Incorporation and By-Laws to evidence the appropriate number of shares of the
corresponding Vintage Clone Fund to be credited on the books of IMG Funds in
respect of such shares of such CVF Portfolio as provided above.
7. Subsequent to the execution of this Agreement and prior to the
Closing Date, CVF shall deliver to IMG Funds a list setting forth the assets to
be assigned, delivered and transferred by each CVF Portfolio to IMG Funds,
including the securities then owned by each such CVF Portfolio and the
respective federal income tax basis (on an identified cost basis) thereof, and
the liabilities to be assumed by IMG Funds pursuant to this Agreement.
8. All of CVF's portfolio securities shall be delivered by CVF's
custodian on the Closing Date to IMG Funds or its custodian, either endorsed in
proper form for transfer in such condition as to constitute good delivery
thereof in accordance with the practice of brokers or, if such securities are
held in a securities depository within the meaning of Rule 17f-4 under the 1940
Act, transferred to an account in the name of IMG Funds or its custodian with
said depository. All cash to be delivered pursuant to this Agreement shall be
wire transferred from CVF's account at its custodian to IMG Funds' account at
its custodian. If on the Closing Date CVF is unable to make good delivery
pursuant to this Section 8 to IMG Funds' custodian of any of CVF's portfolio
securities because such securities have not yet been delivered to CVF's
custodian by its broker or by the transfer agent for such securities, then the
delivery requirement of this Section 8 with respect to such securities shall be
waived, and CVF shall deliver to IMG Funds' custodian on or by said Closing Date
with respect to said undelivered securities executed copies of an agreement of
assignment in a form satisfactory to IMG Funds, and a due bill or due bills in
form and substance satisfactory to the custodian, together with such other
documents including brokers' confirmations, as may be reasonably required by IMG
Funds.
9. The obligations of IMG Funds under this Agreement shall be subject
to receipt by IMG Funds on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of
Directors of CVF and the shareholders of each CVF Portfolio
authorizing the execution of this Agreement by CVF and the
transactions contemplated hereunder, certified by the
Secretary or Assistant Secretary of CVF;
(b) A certificate of the Secretary or Assistant Secretary of
CVF as to the signatures and incumbency of its officers who
executed this Agreement on behalf of CVF and any other
documents delivered in connection with the transactions
contemplated thereby on behalf of CVF;
(c) A certificate of an appropriate officer of CVF as to the
fulfillment of all agreements and conditions on its part to be
fulfilled hereunder at or prior to the Closing Date and to the
effect that the representations and warranties of CVF are true
and correct in all material respects at and as of the Closing
Date as if made at and as of such date; and
(d) Such other documents, including an opinion of counsel, as
IMG Funds may reasonably request to show fulfillment of the
purposes and conditions of this Agreement.
10. The obligations of CVF under this Agreement shall be subject to
receipt by CVF on or prior to the Closing Date of:
(a) Copies of the resolutions adopted by the Board of
Directors of IMG Funds authorizing the execution of this
Agreement and the transactions contemplated hereunder,
certified by the Secretary or Assistant Secretary of IMG
Funds;
(b) A certificate of the Secretary or Assistant Secretary of
IMG Funds as to the signatures and incumbency of its officers
who executed this Agreement on behalf of IMG Funds and any
other documents delivered in connection with the transactions
contemplated thereby on behalf of IMG Funds;
(c) A certificate of an appropriate officer of IMG Funds as to
the fulfillment of all agreements and conditions on its part
to be fulfilled hereunder at or prior to the Closing Date and
to the effect that the representations and warranties of IMG
Funds are true and correct in all material respects at and as
of the Closing Date as if made at and as of such date; and
(d) Such other documents, including an opinion of counsel, as
CVF may reasonably request to show fulfillment of the purposes
and conditions of this Agreement.
11. The obligations of the parties under this Agreement shall be
subject to:
(a) Any required approval, at a meeting duly called for the
purpose, of the holders of the outstanding shares of each CVF
Portfolio, of this Agreement and the transactions contemplated
hereunder.
(b) Approval by the shareholders of each of the Existing
Vintage Funds of the acquisition of the assets thereof by the
corresponding Vintage Clone Fund.
(c) The right to abandon and terminate this Agreement, if
either CVF or IMG Funds believes that the consummation of the
transactions contemplated hereunder would not be in the best
interests of its shareholders.
12. Except as expressly provided otherwise in this Agreement, IMG will
pay or cause to be paid all out-of-pocket fees and expenses incurred by CVF or
IMG Funds in connection with the transactions contemplated under this Agreement,
including, but not limited to, accountants' fees, legal fees, registration fees,
filing fees, printing expenses, transfer taxes (if any) and the fees of banks,
custodians and transfer agents. This obligation shall survive the termination or
expiration of this Agreement regardless of the consummation of the transactions
contemplated hereunder. WCV shall not be responsible for any fees, costs,
expense associated with the transaction contemplated herein.
13. This Agreement may be amended by an instrument executed by the duly
authorized officers of CVF, WCV, IMG and IMG Funds at anytime, except that after
approval by the shareholders of CVF no amendment may be made with respect to the
Agreement which in the opinion of the Board of Directors of CVF materially
adversely affects the interests of the shareholders of CVF. At any time CVF, IMG
Funds or WCV may by written instrument signed by it (i) waive any inaccuracies
in the representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein.
14. In addition to the right to terminate this Agreement described in
Section 11, this Agreement may be terminated and the plan described in the
Agreement abandoned at any time prior to the Closing Date, whether before or
after action thereon by the shareholders of CVF, and notwithstanding favorable
action by such shareholders, by mutual consent of the Board of Directors of IMG
Funds and the Board of Directors of CVF. This Agreement may also be terminated
by action of the Board of Directors of IMG Funds or the Board of Directors of
CVF, if:
(a) The plan described in the Agreement shall not have become
effective by April 1, 1998 (hereinafter called the "Final
Date") unless such Final Date shall have been changed by
mutual agreement; or
(b) Either CVF or IMG Funds shall, at the Final Date, have
failed to comply with any of its agreements contained herein;
or
(c) Prior to the Final Date any one or more of the conditions
to the obligations of IMG Funds or CVF contained in this
Agreement shall not be fulfilled to the reasonable
satisfaction of IMG Funds and its counsel or CVF and its
counsel or it shall become evident to IMG Funds or CVF that
any of such conditions are incapable of being fulfilled.
15. This Agreement shall bind and inure to the benefit of the parties
hereto and is not intended to confer upon any other person any rights or
remedies hereunder.
16. The parties hereto represent and warrant that they have not
employed any broker, finder or intermediary in connection with this transaction
who might be entitled to a finder's fee or other similar fee or commission.
17. All prior or contemporaneous agreements and representations are
hereby merged into this Agreement, which constitutes the entire contract between
the parties hereto.
18 This Agreement shall be governed by and construed in accordance
with the laws of the State of Iowa.
19. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more of the counterparts has been signed by all parties hereto.
20. CVF shall indemnify, defend and hold harmless IMG Funds, its
officers, directors, employees and agents against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses incurred
in defending claims or liabilities, whether or not resulting in any liability to
the IMG Funds, its officers, directors, employees or agents, arising out of any
untrue statement or alleged untrue statement of a material fact contained in any
prospectus or registration statement for CVF, as filed with the Securities and
Exchange Commission or any state, or any amendment or supplement thereto, or any
application prepared by or on behalf of CVF and filed with any state regulatory
agency in order to register or qualify shares of CVF under the securities laws
thereof, or in any information provided by CVF included in any registration
statement filed by IMG Funds with the Securities and Exchange Commission or any
state or any amendment or supplement thereto; or which shall arise out of or be
based upon any omission or alleged omission to state therein a material fact
required to be stated in any such prospectus, registration statement or
application necessary to make the statements therein not misleading; provided
however, that CVF shall not be required to indemnify or hold harmless IMG Funds
from any liability hereunder arising from any such alleged untrue statement,
omission or other act, caused by, prepared by, or committed by IMG on CVF's
behalf or for which IMG is legally or contractually responsible. This indemnity
provision shall survive the termination of this Agreement.
21. IMG Funds shall indemnify, defend and hold harmless CVF, its
officers, trustees, employees and agents against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses incurred
in defending claims or liabilities, whether or not resulting in any liability to
CVF, its officers, trustees, employees or agents, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus or registration statement for IMG Funds, as filed with the Securities
and Exchange Commission or any state, or any amendment or supplement thereto, or
any application prepared by or on behalf of IMG Funds and filed with any state
regulatory agency in order to register or qualify shares of IMG Funds under the
securities laws thereof; or which shall arise out of or be based upon any
omission or alleged omission to state therein a material fact required to be
stated in any such prospectus, registration statement or application necessary
to make the statements therein not misleading; provided, however, IMG Funds
shall not be required to indemnify CVF, its officers, directors, employees and
agents against any loss, claim, demand, liability or expense arising out of any
information provided by CVF included in any registration statement filed by IMG
Funds with the Securities and Exchange Commission or any state, or any amendment
or supplement thereto.
This indemnity provision shall survive the termination of this Agreement.
22. The execution of this Agreement has been authorized by the Board of
Directors of IMG Funds and by the Board of Directors of CVF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested by their officers thereunto duly authorized, as of the
date first written above.
IMG MUTUAL FUNDS, INC.
Attest
By: _______________________ By: ______________________
Title: ____________________ Title: ___________________
CAPITAL VALUE FUNDS, INC.
Attest
By: _______________________ By: ______________________
Title: ____________________ Title: ___________________
WELLMARK CAPITAL VALUE, INC.
Attest
By: _______________________ By: ______________________
Title: ____________________ Title: ___________________
INVESTORS MANAGEMENT GROUP
Attest
By: _______________________ By: ______________________
Title: ____________________ Title: ___________________
<PAGE>
TABLE OF CONTENTS
Page
----
SYNOPSIS.......................................................
RISK FACTORS...................................................
PROPOSAL 1: AGREEMENT AND PLAN OF
REORGANIZATION.................................................
IMG MUTUAL FUNDS, INC..........................................
CAPITAL VALUE FUND, INC........................................
PROPOSAL 2: APPROVAL OF INVESTMENT
ADVISORY AGREEMENT.............................................
INFORMATION RELATING TO VOTING MATTERS.........................
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION............................................
OTHER BUSINESS.................................................
LEGAL MATTERS..................................................
SHAREHOLDER INQUIRIES..........................................
EXHIBIT A--AGREEMENT AND
PLAN OF REORGANIZATION.........................................
<PAGE>
CAPITAL VALUE FUND, INC.
EQUITY PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, JANUARY 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc., on January 28, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
1. Approval of the Agreement and Plan of Reorganization by and between
Capital Value Fund, Inc. (the "Fund") and IMG Mutual Funds, Inc.
providing for the transfer of all of the assets of the Fund to IMG
Mutual Funds, Inc. in exchange for shares of IMG Mutual Funds, Inc.
and the assumption by IMG Mutual Funds, Inc. of all of the liabilities
of the Fund, followed by the dissolution and liquidation of the Fund
and the distribution of shares of IMG Mutual Funds, Inc. to the
shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund and
Investors Management Group, Ltd. ("IMG") following a change of
ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
Co-owner sign here
Dated: ____________________, 1998.
<PAGE>
CAPITAL VALUE FUND, INC.
TOTAL RETURN PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, JANUARY 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc. on January 28, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
1. Approval of the Agreement and Plan of Reorganization by and between
Capital Value Fund, Inc. (the "Fund") and IMG Mutual Funds, Inc.
providing for the transfer of all of the assets of the Fund to IMG
Mutual Funds, Inc. in exchange for shares of IMG Mutual Funds, Inc.
and the assumption by IMG Mutual Funds, Inc. of all of the liabilities
of the Fund, followed by the dissolution and liquidation of the Fund
and the distribution of shares of IMG Mutual Funds, Inc. to the
shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund and
Investors Management Group, Ltd. ("IMG") following a change of
ownership of Investors Management Group.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
----------------------------------
Co-owner sign here
Dated: ___________________, 1998.
<PAGE>
CAPITAL VALUE FUND, INC.
FIXED INCOME PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, JANUARY 28, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE FUND
The undersigned hereby appoints David W. Miles and Richard Anderson, and each of
them separately, proxies, with power of substitution, and hereby authorizes them
to represent and to vote, as designated below, at the Special Meeting of
Shareholders of Capital Value Fund, Inc. on January 28, 1998, at 10:00 a.m.,
Central Standard Time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL 1 AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR THE PROPOSALS ON THE REVERSE SIDE.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears on this card. All joint owners should
sign. When signing as executor, administrator, attorney, trustee or guardian or
as custodian for a minor, please give full title as such; if a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
CHANGE OF ADDRESS NOTIFICATION. Please use this form to inform us of any change
in address or telephone number. Detach this form from the Proxy Ballot and
return it with your executed Proxy in the enclosed envelope.
Has your address changed?
1. Approval of the Agreement and Plan of Reorganization by and between
Capital Value Fund, Inc. (the "Fund") and IMG Mutual Funds, Inc.
providing for the transfer of all of the assets of the Fund to IMG
Mutual Funds, Inc. in exchange for shares of IMG Mutual Funds, Inc.
and the assumption by IMG Mutual Funds, Inc. of all of the liabilities
of the Fund, followed by the dissolution and liquidation of the Fund
and the distribution of shares of IMG Mutual Funds, Inc. to the
shareholders of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of the New Sub-Advisory Agreement between the Fund and
Investors Management Group, Ltd. ("IMG") following a change of
ownership of IMG.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please be sure to sign and date this Proxy:
------------------------------------
Shareholder sign here
----------------------------------
----------------------------------
Co-owner sign here
Dated: ___________________, 1998.
<PAGE>
IMG MUTUAL FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
GENERAL INFORMATION.
This Statement of Additional Information contains or incorporates information
which may be of interest to investors but which is not included in the combined
Proxy Statement/Prospectus (the "Prospectus") of IMG Mutual Funds, Inc. dated
January 8, 1998, relating to the transfer of assets from portfolios of Capital
Value Fund, Inc. (the "Acquired Funds)" to corresponding portfolios of IMG
Mutual Funds, Inc. The Statement of Additional Information for CVF dated July
29, 1997, the Statement of Additional Information for IMG Mutual Funds, Inc.
dated August 27, 1997, and the Statement of Additional Information for IMG
Mutual Funds, Inc. dated ____________, 1998, have been filed with the Securities
and Exchange Commission and are incorporated herein by reference. This Statement
is not a Prospectus and is authorized for distribution only when it accompanies
or follows delivery of the Prospectus. This Statement of Additional Information
should be read in conjunction with the Prospectus. A copy of the ___________,
1998 Prospectus may be obtained, without charge, by writing IMG Mutual Funds,
Inc., 2203 Grand Avenue, Des Moines, Iowa 50312-5338 or by calling 800-298-1819.
The date of this Statement of Additional Information is January 8, 1998.
<PAGE>
UNAUDITED COMBINING FINANCIAL STATEMENTS
ACQUISITION OF THE ASSETS OF CAPITAL VALUE FUND, INC.
BY AND IN EXCHANGE FOR IMG MUTUAL FUNDS, INC.
The accompanying unaudited pro forma combining statement of assets and
liabilities, including the schedule of investments in securities, and the
combining statement of operations reflect the accounts of the Capital Value
Fund, Inc.-Fixed Income Portfolio and IMG Bond Fund as of and for the
twelve-month period ended October 31, 1997. These reports have been derived from
the accounting records of the funds used in calculating net asset value for the
twelve-month period ended October 31, 1997. The accompanying unaudited pro forma
combining statement of assets and liabilities, including the schedule of
investments in securities, and the combining statement of operations reflect the
accounts of the Capital Value Fund, Inc.-Total Return Portfolio and the AMCORE
Balanced Fund as of and for the twelve-month period ended September 30, 1997.
These reports have been derived from the accounting records of the funds used in
calculating net asset value for the twelve-month period ended September 30,
1997. In addition, the pro forma combining statements of operations have been
prepared based upon the proposed fee and expense structure of the respective
funds. The statements do not reflect the effects of proposed changes to
investment objectives and policies of the Funds.
The pro forma combining statements give effect to the proposed Plan and
Agreement of Reorganization pursuant to which the assets and liabilities of the
Capital Value Funds would be exchanged for shares of the IMG Mutual Funds, Inc.
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
IMG BOND CVF FIXED PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in Securities at Value
(Cost $6,521,101, and $9,790,671 respectively) 6,673,102 9,945,438 0 16,618,540
Dividends and Interest Receivable 104,905 129,290 0 234,195
Capital Shares 0 800 0 800
Other Assets 1,255 0 0 1,255
--------------------------------------------------------
TOTAL ASSETS 6,779,262 10,075,528 0 16,854,790
LIABILITIES:
Income Distribution Payable 0 49,850 0 49,850
Investment Securities Purchased 400,000 0 0 400,000
Capital Shares Redeemed 0 0 0 0
Accrued Operating Expenses & Other Liabilities 4,841 9,673 0 14,514
--------------------------------------------------------
TOTAL LIABILITIES 404,841 59,523 0 464,364
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 6,374,421 10,016,005 0 16,390,426
========================================================
ANALYSIS OF NET ASSETS
Excess of amounts received from issurance of shares over
amounts paid on redemption of shares 6,155,671 9,754,718 0 15,910,389
Undistributed net realized gain 31,217 105,486 0 136,703
Unrealized appreciation 152,001 154,767 0 306,768
Undistributed net investment income 35,532 1,034 0 36,566
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 6,374,421 10,016,005 0 16,390,426
========================================================
Net Asset Value, offering price and redemption price $10.170 $10.176 $10.170
========================================================
Shares outstanding, $.001 par value* 626,810 984,248 0 1,611,704
========================================================
*Shares outstanding reflect rounding to the nearest whole
share.
</TABLE>
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE-MONTH PERIOD ENDED OCTOBER 31, 1997
<TABLE>
<CAPTION>
IMG BOND CVF FIXED PRO FORMA PRO FORMA
FUND INCOME FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INCOME:
Investment Income 521,197 647,799 0 1,168,996
--------------------------------------------------------
TOTAL INCOME 521,197 647,799 0 1,168,996
EXPENSES:
Sub-Advisory Fees 0 37,542 (37,542) 0
Advisory Fees 22,194 12,074 57,909 92,177
Administration Fee 9,128 23,404 (32,532) 0
Distribution Fee 5,190 4,747 (9,937) 0
Fund Accounting/Custody Fee 7,398 9,361 (8,356) 8,403
Transfer Agent Fee 3,699 4,681 0 8,380
Other Expenses 7,398 9,361 (9,775) 6,984
--------------------------------------------------------
TOTAL EXPENSES 55,007 101,170 (40,234) 115,943
========================================================
NET INVESTMENT INCOME 466,190 546,629 40,234 1,053,053
========================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments 48,289 108,016 0 156,305
Net Change in Unrealized Appreciation 60,498 198,049 0 258,547
--------------------------------------------------------
NET GAIN ON INVESTMENTS 108,787 306,065 0 414,852
========================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 574,977 852,694 40,234 1,467,905
========================================================
</TABLE>
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMCORE
CVF TOTAL BALANCED PRO FORMA PRO FORMA
RETURN FUND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in Securities at Value
(Cost $10,151,804, and $36,517,181 respectively) 11,188,610 44,947,563 0 56,136,173
Dividends and Interest Receivable 68,134 247,475 0 315,609
Investment Securities Sold 4,136 35,552 0 39,688
Capital Shares 440 8,588 0 9,028
Other Assets 0 9,482 0 9,482
--------------------------------------------------------
TOTAL ASSETS 11,261,320 45,248,660 0 56,509,980
LIABILITIES:
Income Distribution Payable 95,738 0 0 95,738
Investment Securities Purchased 225,272 390,700 0 615,972
Payable to Broker for securities sold short (Cost $35,552) 0 38,850 0 38,850
Capital Shares Redeemed 0 15,573 0 15,573
Accrued Operating Expenses & Other Liabilities 17,602 57,975 0 75,577
--------------------------------------------------------
TOTAL LIABILITIES 338,612 503,098 0 841,710
========================================================
NET ASSETS 10,922,708 44,745,562 0 55,668,270
========================================================
ANALYSIS OF NET ASSETS
Excess of amounts received from issurance of shares over
amounts paid on redemption of shares 8,646,431 35,995,705 0 44,642,136
Undistributed net realized gain 1,237,184 7,049 0 1,244,233
Unrealized appreciation 1,036,806 8,427,084 0 9,463,890
Undistributed net investment income 2,287 315,724 0 318,011
========================================================
NET ASSETS APPLICABLE TO SHARES OUTSTANDING 10,922,708 44,745,562 0 55,668,270
========================================================
Net Asset Value, offering price and redemption price $11.316 $14.037 $14.037
========================================================
Shares outstanding, $.001 par value* 965,283 3,187,703 3,965,844
========================================================
*Shares outstanding reflect rounding to the nearest whole share.
</TABLE>
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
AMCORE
CVF TOTAL BALANCED PRO FORMA PRO FORMA
RETURN FUND FUND ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INCOME:
Interest Income 551,968 300,950 0 852,918
Dividend Income 164,436 584,197 0 748,633
--------------------------------------------------------
TOTAL INCOME 716,404 885,147 0 1,601,551
EXPENSES:
Sub-Advisory Fees 54,294 0 (54,294) 0
Advisory Fees 16,718 230,265 83,771 330,754
Administration Fee 33,496 61,404 (94,900) 0
Distribution Fee 5,719 0 (5,719) 0
Fund Accounting/Custody Fee 20,098 83,408 (2,655) 100,851
Transfer Agent Fee 6,699 27,796 0 34,495
Other Expenses 13,398 39,453 (1,368) 51,483
--------------------------------------------------------
TOTAL EXPENSES 150,422 442,326 (75,165) 517,583
========================================================
NET INVESTMENT INCOME 565,982 442,821 75,165 1,083,968
========================================================
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain on Investments 1,439,974 303,922 0 1,743,896
Net Change in Unrealized Appreciation 86,478 6,324,300 0 6,410,778
--------------------------------------------------------
NET GAIN ON INVESTMENTS 1,526,452 6,628,222 0 8,154,674
========================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 2,092,434 7,071,043 75,165 9,238,642
========================================================
</TABLE>
<PAGE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION
The accompanying unaudited pro forma combining statement of assets and
liabilities, including the schedule of investments in securities, and
the combining statement of operations reflect the accounts of the
Capital Value Fund, Inc.-Fixed Income Portfolio and IMG Bond Fund as of
and for the twelve-month period ended October 31, 1997. These reports
have been derived from the accounting records of the funds used in
calculating net asset value for the twelve-month period ended October
31, 1997. The accompanying unaudited pro forma combining statement of
assets and liabilities, including the schedule of investments in
securities, and the combining statement of operations reflect the
accounts of the Capital Value Fund, Inc.-Total Return Portfolio and the
AMCORE Balanced Fund as of and for the twelve-month period ended
September 30, 1997. These reports have been derived from the accounting
records of the funds used in calculating net asset value for the
twelve-month period ended September 30, 1997. In addition, the pro
forma combining statements of operations have been prepared based upon
the proposed fee and expense structure of the respective funds. The
statements do not reflect the effects of proposed changes to investment
objectives and policies of the Funds.
The pro forma combining statements give effect to the proposed Plan and
Agreement of Reorganization pursuant to which the assets and
liabilities of the Capital Value Fund, Inc. would be exchanged for
shares of the IMG Mutual Funds, Inc. The historical cost of the
investments in securities would be carried forward to the IMG Mutual
Funds, Inc. as the reorganization will be accounted for as a tax-free
exchange.
2. CAPITAL SHARES
The pro forma combining statement of assets and liabilities assumes the
issuance of 984,894 shares of Vintage Bond Fund, a series of IMG Mutual
Funds, Inc., to shareholders of Capital Value Fund, Inc.-Fixed Income
Portfolio as if the reorganization had taken place on October 31, 1997;
and the issuance of 778,141 shares of Vintage Balanced Fund, a series
of IMG Mutual Funds, Inc., to shareholders of Capital Value Fund
Inc.-Total Return Portfolio as if the reorganization had taken place on
September 30, 1997 and is based on the net asset value of IMG Mutual
Funds on that date.
3. PRO FORMA ADJUSTMENTS
(A) INVESTMENT MANAGEMENT FEE - The investment management fee has
adjusted to reflect the fee structure of IMG Mutual Funds,
Inc. The investment management agreement of IMG Mutual Funds,
Inc. provides for a management fee at a per annum rate of
0.55% of average daily net assets for the Vintage Bond Fund
and 0.75% of average daily net assets for the Vintage Balanced
Fund. Capital Value Fund, Inc. pays a per annum rate of 0.10%
of average daily net assets to the advisor and 0.43% of
average daily net assets to the sub-advisor.
(B) DISTRIBUTION FEE - The distribution fee has been adjusted to
reflect the 12b-1 fee structure of IMG Mutual Funds, Inc.
Pursuant to distribution plans adopted in accordance with Rule
12b-1 of the Investment Company Act of 1940, reimbursement to
the distributor may not exceed 0.25% and 0.50% per annum of
the average daily net assets of IMG Mutual Funds, Inc. and
Capital Value Fund, Inc. respectively.
(C) OTHER FEES AND EXPENSES - The pro forma adjustments to
custodian, accounting and transfer agent fees, reports to
shareholders, Directors fees, audit and legal fees, and other
expenses reflects the savings due to a decrease in certain
expenses duplicated between the Funds.
4. INVESTMENT OBJECTIVES AND POLICIES
These statements do not reflect the effects of proposed differing
investment objectives and policies of the Funds.
<PAGE>
VINTAGE BOND FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA
COMBINED CVF FIXED
# OF SHARES/ IMG BOND INCOME PRO FORMA
DESCRIPTION PAR VALUE FUND FUND COMBINED
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT SECURITIES (24.33%)
GOVERNMENT AGENCIES (2.46%)
FNMA Medium-Term Note. 6.59%, 05/24/01 270,000 20,011 253,845 273,856
Government Export Trust, 4.85%, 11/01/97 62,500 62,746 0 62,746
-------------------------------------
82,757 253,845 336,602
U.S. TREASURY BONDS (8.42%)
U.S. T-Bond, 7.25%, 05/15/16 725,000 250,933 542,625 793,558
U.S. T-Bond, 8.125%, 05/15/21 500,000 0 358,218 358,218
-------------------------------------
250,933 900,843 1,151,776
U.S. TREASURY NOTES (13.45%)
U.S. T-Note, 6.25%, 02/15/03 200,000 0 201,937 201,937
U.S. T-Note, 5.125%, 12/31/98 100,000 99,474 0 99,474
U.S. T-Note, 6.875%, 03/31/00 450,000 0 460,265 460,265
U.S. T-Note, 6.375%, 08/15/02 550,000 0 558,201 558,201
U.S. T-Note, 5.00%, 02/15/99 350,000 0 346,469 346,469
U.S. T-Note, 5.75%, 10/31/00 175,000 0 174,064 174,064
-------------------------------------
99,474 1,740,936 1,840,410
-------------------------------------
Total Government Securities (Cost $3,264,194) 433,164 2,895,624 3,328,788
CORPORATE BONDS (27.97%)
Analog Devices, 6.63%, 03/01/00 465,000 210,000 225,155 435,155
Citizens Utility Co., 6.80%, 08/15/26 75,000 77,063 0 77,063
Dayton Hudson, 10.00%, 12/01/00 75,000 82,687 0 82,687
GMAC, 8.88%, 06/01/10 555,000 243,438 416,938 660,376
Hubco, Inc., 7.75% 01/15/04 290,000 134,550 164,200 298,750
Hydro-Quebec, 8.25%, 01/15/27 75,000 85,688 0 85,688
Lehman Brothers, 8.05%, 01/15/19 385,000 179,231 234,432 413,663
Manitoba, 7.75%, 07/17/16 498,000 204,045 340,200 544,245
Naples, City of, Italy, 7.52%, 07/15/06 450,000 234,522 231,662 466,184
Nova Scotia, 8.25%, 11/15/19 440,000 216,681 291,975 508,656
WMX Tech., 6.65%, 05/15/05 250,000 253,750 0 253,750
-------------------------------------
Total Corporate Bonds (Cost $3,699,205) 1,921,655 1,904,562 3,826,217
TAXABLE MUNICIPAL BONDS (28.04%)
Baltimore, MD, 7.40%, 10/15/05 100,000 0 105,000 105,000
Berry Creek Met Dist, CO, 6.85%, 12/01/02 450,000 229,713 218,350 448,063
Cottonwood County, MN, 7.30%, 02/01/00 245,000 127,967 121,800 249,767
Fulton, MO Import Taxable, 7.60%, 07/01/11 125,000 131,875 0 131,875
Iowa Lakes Community College, 7.60%, 06/01/05 70,000 72,100 0 72,100
Iowa Lakes Community College, 7.70%, 06/01/04 175,000 0 182,764 182,764
Kirkwood Community College, 7.65%, 06/01/01 100,000 0 103,844 103,844
Manteca, CA Financial Authority, 6.63%, 09/15/99 155,000 156,550 0 156,550
Mounds View, MN, 6.00%, 02/01/05 100,000 0 95,875 95,875
New Orleans, LA Hsg. Dev., 8.00%, 12/01/03 155,000 159,069 0 159,069
Oregon Department of Transportation, 9.00%, 06/15/00 183,714 68,345 122,449 190,794
Port Benton, WA G.O., 7.00%, 12/01/01 210,000 0 214,200 214,200
Portland, OR Multifamily Housing, 7.63%, 12/01/01 400,000 174,125 223,031 397,156
Prairie Du Chien, WI, Redevelopment Authority, 7.60%, 04/01/05 90,000 93,375 0 93,375
Prairie Du Chien, WI, Redevelopment Authority, 7.625%, 04/01/06 100,000 102,875 0 102,875
San Antonio, TX Cert Oblig Taxable, 6.65%, 08/01/09 350,000 0 341,579 341,579
St. Paul, MN Port. Authority, 6.65%, 09/01/99 315,000 151,688 166,444 318,132
Texas St. G.O. Taxable, 8.70%, 12/01/09 125,000 56,938 85,125 142,063
Washington State Housing Antioch University, 7.55%, 01/01/03 320,000 171,394 159,963 331,357
-------------------------------------
Total Municipal Bonds (Cost $3,748,547) 1,696,014 2,140,424 3,836,438
MORTGAGE-BACKED SECURITIES (36.35%)
COLLATERALIZED MORTGAGE OBLIGATIONS (15.38%)
Countrywide Funding Corp. 1994-9 A2, 6.50%, 05/25/24 240,712 0 238,137 238,137
Chase Mtge. Finance Corp., 5.75%, 04/25/09 61,172 60,739 0 60,739
FHLMC 1424 Class PE, 6.10%, 03/15/17 250,000 0 249,296 249,296
FHLMC Series 1561 Class TA, Zero Coupon, 9.24%, 08/15/08 215,000 0 122,400 122,400
FHLMC Ser. L, Cl. 5, 7.90%, 05/01/01 13,097 13,481 0 13,481
FHLMC 1504 B, 7.00%, 12/15/22 100,000 98,312 0 98,312
FHLMC 91 Series 188 Class F, 7.50%, 05/15/20 43,228 11,254 31,912 43,166
FNMA G92-60 C, 7.00%, 02/25/21 150,000 152,216 0 152,216
FNMA G93-9 D, 6.00%, 04/25/13 94,872 94,550 0 94,550
FNMA Series 1991-37 Class E, 8.50%, 04/25/05 56,552 50,538 6,539 57,077
FNMA 1991-174 K, 7.00%, 04/25/06 60,000 60,506 0 60,506
FNMA 1991-91A, Zero Coupon, 7.73%, 07/25/98 47,718 0 46,173 46,173
FNMA 1992-212, 5.50%, 11/25/99 85,200 0 84,717 84,717
GE Cap. Mtge. Serv. 1994-1 A1, 5.70%, 01/25/24 99,547 0 98,996 98,996
Green Tree, 5.20%, 10/15/18 12,356 12,352 0 12,352
Residential Funding Mtg. Sec I, Series 1993-S7, Class A6, 7.15%, 35,653 35,757 0 35,757
02/25/08
Resolution Trust Corp. Series 1992-17 Class A1, Variable Rate, 19,149 19,147 0 19,147
8.87%,12/25/20
Housing Securities, Inc. 1993-C C3, Zero Coupon, 9.06%, 05/25/08 189,835 48,244 94,528 142,772
Housing Securities, Inc. 1993-E E-14, Zero Coupon, 10.33%, 09/25/08 232,784 42,427 129,795 172,222
Prudential Home Mtge. Securities, 1992-6 Class A3, 7.00%, 04/25/99 6,125 0 6,117 6,117
Salomon Mortgage Sec. VII, Zero Coupon, 10.61%, 02/25/25 372,080 180,146 78,461 258,607
Standard Credit Card Master Tr., 1995-6 A, 6.75%, 06/07/00 37,000 37,200 0 37,200
-------------------------------------
916,869 1,187,071 2,103,940
FNMA MORTGAGE-BACKED POOLS (1.47%)
FNMA #251286, 7.00%, 11/01/27 200,000 200,562 0 200,562
FHLMC MORTGAGE-BACKED POOLS (0.80%)
FHLMC #C00126, 8.50%, 06/01/22 105,216 16,843 92,721 109,564
GNMA MORTGAGE-BACKED POOLS (18.70%)
GNMA #315929, 9.00%, 06/15/22 175,022 30,871 155,618 186,489
GNMA #341681, 8.50%, 01/15/23 269,532 51,809 229,540 281,349
GNMA #354189, 7.50%, 05/15/23 338,770 45,106 299,453 344,559
GNMA #359600, 7.50%, 07/15/23 87,267 89,156 0 89,156
GNMA #376218, 7.50%, 08/15/25 526,617 244,540 292,212 536,752
GNMA #385300, 8.00%, 10/15/24 446,900 193,093 269,247 462,340
GNMA #410049, 8.00%, 07/15/25 441,131 202,805 253,640 456,445
GNMA #412334, 7.00%, 10/15/27 200,000 201,062 0 201,062
-------------------------------------
1,058,442 1,499,710 2,558,152
-------------------------------------
Total Mortgage-Backed Securities (Cost $4,946,054) 2,192,716 2,779,502 4,972,218
CASH EQUIVALENTS (4.79%)
COMMERCIAL PAPER (4.78%)
Emerson Electric Commercial Paper, 11/03/97 100,000 99,969 0 99,969
Merrill Lynch Commercial Paper, 11/03/97 554,000 328,896 225,000 553,896
-------------------------------------
428,865 225,000 653,865
MONEY MARKET MUTUAL FUNDS (0.01%)
Norwest Cash Investment Fund 1,014 688 326 1,014
-------------------------------------
Total Cash Equivalents (Cost $654,879) 429,553 225,326 654,879
-------------------------------------
TOTAL INVESTMENTS IN SECURITIES (121.48%) (Cost $16,311,772) 6,673,102 9,945,438 16,618,540
Other Assets and Liabilities, Net (-21.48%) (298,681) 70,567 (228,114)
=====================================
NET ASSETS 100.00% 6,374,421 10,016,005 16,390,426
=====================================
</TABLE>
<PAGE>
VINTAGE BALANCED FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
PRO FORMA
COMBINED CVF TOTAL AMCORE
# OF SHARES/ RETURN BALANCED PRO FORMA
DESCRIPTION PAR VALUE FUND FUND COMBINED
<S> <C>
COMMON STOCK (64.69%)
AEROSPACE/DEFENSE (0.62%)
Sundstrand Corp. 8,500 0 489,813 489,813
AUTOMOTIVE PARTS & EQUIPMENT (0.70%)
Lear Corp. 7,500 0 369,375 369,375
UTILITIES (0.46%)
Ameritech Corp. 1,800 119,700 0 119,700
Bell Atlantic Corp. 1,536 123,552 0 123,552
---------------------------------------
243,252 0 243,252
FINANCIAL (8.33%)
Aegon N.V. 1,346 107,259 0 107,259
Ambac, Inc. 4,600 187,163 0 187,163
American International Group 600 61,913 0 61,913
BankAmerica Corp. 6,000 0 439,875 439,875
Banc One Corp. 1,740 97,114 0 97,114
Chubb Corp. 2,900 206,081 0 206,081
Fannie Mae 10,000 0 470,000 470,000
First Data Corp. 11,000 0 413,187 413,187
First Union Corp. 13,000 0 650,812 650,812
Freddie Mac 2,400 84,600 0 84,600
Green Tree Financial Corp. 9,500 0 446,500 446,500
Key Corporation 3,000 190,875 0 190,875
Nations Bank Corp. 7,400 86,625 371,250 457,875
Providian Financial Corp. 3,100 123,031 0 123,031
Travelers Group, Inc. 7,000 0 477,750 477,750
---------------------------------------
1,144,661 3,269,374 4,414,035
INSURANCE (3.20%)
Allstate Corp. 5,500 0 442,063 442,063
American International Group, Inc. 3,675 0 379,214 379,214
MGIC Investment Corp. 7,000 0 401,187 401,187
SunAmerica, Inc. 12,000 0 470,250 470,250
---------------------------------------
0 1,692,714 1,692,714
CONSUMER STAPLES (11.20%)
Abbott Laboratories 3,600 230,174 0 230,174
Albertson's, Inc. 5,300 184,838 0 184,838
American Home Products 1,200 87,600 0 87,600
Anheuser-Busch 1,500 67,688 0 67,688
Baxter International, Inc. 5,000 0 261,250 261,250
Becton Dickinson & Co. 1,200 57,450 0 57,450
Bristol-Meyers Squibb Co. 6,400 115,850 413,750 529,600
Colgate-Palmolive Co. 5,000 0 348,438 348,438
ConAgra, Inc. 1,200 79,200 0 79,200
CUC International, Inc. 13,500 0 418,500 418,500
Gillette Co. 6,500 69,050 491,981 561,031
Health Care & Retirement Corp. 3,000 0 111,563 111,563
Johnson & Johnson 1,400 80,675 0 80,675
Lincoln Holdings, Inc. 5,500 0 277,406 277,406
MedPartners, Inc. 13,500 0 289,406 289,406
Merck & Co., Inc. 900 89,944 0 89,944
Newell Company 18,400 236,000 500,000 736,000
Pepsico, Inc. 13,300 52,731 486,750 539,481
Proctor & Gamble Co. 6,000 55,250 359,125 414,375
Sara Lee Corp. 2,600 133,900 0 133,900
Schering-Plough Corp. 1,200 61,800 0 61,800
Shared Medical Systems, Corp. 3,200 0 169,200 169,200
United Healthcare Corp. 4,000 0 200,000 200,000
---------------------------------------
1,602,150 4,327,369 5,929,519
CONSUMER SERVICES (0.67%)
Walt Disney Co. 3,800 64,500 241,875 306,375
McDonald's Corp. 1,000 47,625 0 47,625
---------------------------------------
112,125 241,875 354,000
CONSUMER CYCLICAL (1.94%)
Brunswick Corp. 1,500 52,874 0 52,874
Corning, Inc. 8,400 66,150 330,750 396,900
Genuine Parts Co. 6,300 194,119 0 194,119
Goodyear Tire & Rubber Co. 3,100 213,125 0 213,125
Home Depot, Inc. 1,500 78,188 0 78,188
Sears, Roebuck & Co. 1,600 91,100 0 91,100
---------------------------------------
695,556 330,750 1,026,306
TECHNOLOGY (9.73%)
Adaptec, Inc. 7,900 42,074 327,250 369,324
Ascend Communications, Inc. 750 24,281 0 24,281
Avnet, Inc. 3,000 0 190,688 190,688
Compaq Computer Corp. 13,000 0 971,750 971,750
Computer Associates International, Inc. 8,500 0 610,406 610,406
Cisco Systems, Inc. 6,500 0 474,906 474,906
Hewlett-Packard Co. 6,000 0 417,375 417,375
Honeywell, Inc. 1,200 80,625 0 80,625
Intel Corp. 8,400 110,775 664,650 775,425
Microsoft Corp. 3,200 79,388 344,013 423,401
Minnesota Mining & Manufacturing. Co. 750 69,375 0 69,375
Motorola, Inc. 700 50,313 0 50,313
Oracle Corporation 6,150 60,122 163,969 224,091
Parametric Technology Corp. 7,500 44,125 286,812 330,937
Pitney Bowes, Inc. 1,100 91,506 0 91,506
TRW, Inc. 900 49,388 0 49,388
---------------------------------------
701,972 4,451,819 5,153,791
CAPITAL GOODS (5.47%)
Diebold Inc. 8,500 0 402,688 402,688
Elan Corp. PLC 5,500 0 275,344 275,344
Emerson Electric Co. 8,600 92,200 403,375 495,575
General Electric Co. 8,400 163,350 408,375 571,725
Grainger (W.W.), Inc. 1,000 89,000 0 89,000
Illinois Tool Works 1,700 85,000 0 85,000
Medtronic, Inc. 12,000 0 564,000 564,000
United Technologies Corp. 5,100 89,100 324,000 413,100
---------------------------------------
518,650 2,377,782 2,896,432
ENERGY (0.58%)
Atlantic Richfield Co. 700 59,806 0 59,806
Chevron Corp. 700 58,231 0 58,231
Exxon Corp. 1,900 121,719 0 121,719
Schlumberger, Ltd. 800 67,350 0 67,350
---------------------------------------
307,106 0 307,106
BASIC INDUSTRIES (5.33%)
Air Products & Chemicals 5,500 0 456,156 456,156
Allied-Signal, Inc. 13,600 93,500 484,500 578,000
Avery Dennison Corp. 8,800 112,000 240,000 352,000
Dupont (EI) De Nemours 800 49,250 0 49,250
Hercules Inc. 5,700 0 283,575 283,575
Kimberly-Clark Corp. 10,300 112,555 391,500 504,055
Monsanto Co. 10,500 0 409,500 409,500
Sherwin Williams Co. 3,800 111,863 0 111,863
Sigma-Aldrich 2,400 79,050 0 79,050
---------------------------------------
558,218 2,265,231 2,823,449
PRINTING & PUBLISHING (1.22%)
Gannett, Inc. 4,000 0 431,750 431,750
Tribune Co. 4,000 0 213,250 213,250
---------------------------------------
0 645,000 645,000
OIL & GAS EXPLORATION, PRODUCTION & SERVICES (3.32%)
Ensco International 10,000 0 394,375 394,375
Mobil Corp. 5,000 0 370,000 370,000
Schlumberger Ltd. 7,000 0 589,313 589,313
Tidewater, Inc. 55,000 0 325,875 325,875
Unocal Corp. 1,800 0 77,850 77,850
---------------------------------------
0 1,757,413 1,757,413
PHARMACEUTICALS (3.86%)
Agouron Pharmaceuticals, Inc. 5,000 0 240,625 240,625
Amgen, Inc. 3,500 0 167,781 167,781
Lilly (Eli) & Co. 3,500 0 421,531 421,531
Pfizer, Inc. 9,000 0 540,563 540,563
Warner Lambert Co. 5,000 0 674,688 674,688
---------------------------------------
0 2,045,188 2,045,188
RETAIL STORES/CATALOG (0.39%)
Viking Office Products, Inc. 9,500 0 206,625 206,625
RETAIL--GENERAL MERCHANDISE (1.81%)
Federated Department Stores, Inc. 9,000 0 388,125 388,125
Kohl's Corp. 8,000 0 568,000 568,000
---------------------------------------
0 956,125 956,125
RETAIL SPECIALTY STORES (1.44%)
Lowe's Cos., Inc. 9,000 0 349,875 349,875
Walgreen Co. 16,200 0 415,125 415,125
---------------------------------------
0 765,000 765,000
TELECOMMUNICATIONS (2.07%)
AirTouch Communications, Inc. 9,500 0 336,656 336,656
Ameritech Corp. 3,500 0 232,750 232,750
GTE Corp. 7,500 0 340,312 340,312
SBC Communications, Inc. 3,000 0 184,125 184,125
---------------------------------------
0 1,093,843 1,093,843
TELECOMMUNICATIONS--SERVICES & EQUIPMENT (1.08%)
Lucent Technologies 7,000 0 569,625 569,625
WATER TREATMENT SYSTEMS (0.24%)
US Filter Corp. 3,000 0 129,187 129,187
WHOLESALE DISTRIBUTION-- PHARMACEUTICALS (0.74%)
Cardinal Health, Inc. 5,500 0 390,500 390,500
---------------------------------------
Total Common Stocks (Cost $33,362,733) 5,883,690 28,374,608 34,258,298
U.S. GOVERNMENT SECURITIES (24.80%)
GOVERNMENT AGENCIES (3.78%)
Federal Home Loan Bank, 5.44%, 10/01/97 2,000,000 0 2,000,000 2,000,000
U.S. TREASURY BONDS (0.25%)
U.S. T-Bond, 8.88%, 02/15/19 105,000 133,795 0 133,795
U.S. TREASURY NOTES (20.77%)
U.S. T-Note, 6.00%, 11/30/97 500,000 0 500,470 500,470
U.S. T-Note, 6.00%, 05/31/98 1,500,000 0 1,504,215 1,504,215
U.S. T-Note, 6.38%, 07/15/99 1,000,000 0 1,009,370 1,009,370
U.S. T-Note, 6.38%, 01/15/00 1,000,000 0 1,011,250 1,011,250
U.S. T-Note, 6.25%, 05/31/00 1,000,000 0 1,009,060 1,009,060
U.S. T-Note, 6.63%, 04/30/02 1,500,000 0 1,535,865 1,535,865
U.S. T-Note, 6.25%, 02/15/03 1,500,000 0 1,514,295 1,514,295
U.S. T-Note, 5.88%, 11/15/05 1,750,000 0 1,717,730 1,717,730
U.S. T-Note, 5.63%, 02/15/06 500,000 0 482,185 482,185
U.S. T-Note, 6.63%, 05/15/07 500,000 0 516,405 516,405
U.S. T-Note, 5.625%, 11/30/98 200,000 199,790 0 199,790
---------------------------------------
199,790 10,800,845 11,000,635
---------------------------------------
Total Government Securities (Cost $13,113,789) 333,585 12,800,845 13,134,430
CORPORATE BONDS (6.05%)
AT&T Corp., 7.00%, 5/15/05 250,000 0 257,163 257,163
Bear Asset Trust Securities. 6.69%, 6/15/03 1,000,000 0 1,002,812 1,002,812
Cummins Engine, 6.75%, 2/15/27 500,000 0 505,365 505,365
GMAC, 6.50%, 12/5/05 250,000 0 246,148 246,148
Hubco, Inc., 7.75% 01/15/04 210,000 215,513 0 215,513
Hydro-Quebec, 8.25%, 01/15/27 250,000 278,750 0 278,750
Lehman Brothers, 8.05%, 01/15/19 250,000 266,400 0 266,400
Manitoba, 7.75%, 07/17/16 242,000 261,360 0 261,360
Nova Scotia, 8.25%, 11/15/19 150,000 171,750 0 171,750
---------------------------------------
Total Corporate Bonds (Cost $3,158,876) 1,193,773 2,011,488 3,205,261
TAXABLE MUNICIPAL BONDS (2.37%)
Berry Creek Met Dist, CO, 6.85%, 12/01/02 205,000 203,719 0 203,719
Fulton, MO Import Taxable, 7.60%, 07/01/11 195,000 204,506 0 204,506
New Orleans, LA Hsg. Dev., 8.00%, 12/01/03 200,000 204,500 0 204,500
Northwest Nazarene College, ID, 6.75%, 11/01/99 155,000 156,356 0 156,356
Oregon Department of Transportation, 9.00%, 06/15/00 177,723 122,449 0 122,449
Portland, OR Multifamily Housing, 7.63%, 12/01/01 250,000 247,813 0 247,813
Texas St. G.O. Taxable, 8.70%, 12/01/09 100,000 113,500 0 113,500
---------------------------------------
Total Municipal Bonds (Cost $1,210,846) 1,252,843 0 1,252,843
MORTGAGE-BACKED SECURITIES (3.27%)
Collateralized Mortgage Obligations (1.79%)
Chase Mtge. Finance Corp., 5.75%, 04/25/09 114,050 112,830 0 112,830
Collateralized Mtge. SEC Corp., 7.00%, 09/20/21 175,000 171,859 0 171,859
FHLMC 91 Series 188 Class F, 7.50%, 05/15/20 28,812 28,781 0 28,781
FNMA Series 1991-8 E, 7.50%, 06/25/17 15,425 15,373 0 15,373
Green Tree Acceptance 1987B Class A, 9.55%, 05/15/07 117,233 118,772 0 118,772
Housing Securities, Inc. 1992-F F11, Zero Coupon, 9.06%, 11/25/07 141,827 105,966 0 105,966
Housing Securities, Inc. 1993-E E-14, Zero Coupon, 10.33%, 09/25/08 186,859 137,582 0 137,582
Residential Funding Mtg. Sec I, Series 1993-S7, Class A6, 7.15%, 73,563 73,840 0 73,840
02/25/08
Resolution Trust Corp. Series 1992-17 Class A1, Variable Rate, 25,780 25,824 0 25,824
8.87%,12/25/20
Salomon Mortgage Sec. VII, Zero Coupon, 10.61%, 02/25/25 227,064 156,922 0 156,922
---------------------------------------
947,749 0 947,749
FHLMC MORTGAGE-BACKED POOLS (0.07%)
FHLMC #A00851, 8.50%, 12/01/19 37,390 38,910 0 38,910
GNMA MORTGAGE-BACKED POOLS (1.41%)
GNMA #305975, 9.00%, 07/15/21 130,021 137,916 0 137,916
GNMA #318184, 8.50%, 11/15/21 56,448 58,839 0 58,839
GNMA #359600, 7.50%, 07/15/23 85,475 86,864 0 86,864
GNMA #376218, 7.50%, 08/15/25 237,225 241,191 0 241,191
GNMA #385300, 8.00%, 10/15/24 118,471 122,385 0 122,385
GNMA #410049, 8.00%, 07/15/25 96,934 100,142 0 100,142
---------------------------------------
747,337 0 747,337
---------------------------------------
Total Mortgage-Backed Securities (Cost $1,701,778) 1,733,996 0 1,733,996
CASH EQUIVALENTS (4.82%)
REPURCHASE AGREEMENTS (1.46%)
J.P. Morgan, 5.95%, 10/01/97 206,738 206,738 0 206,738
SBC Warburg, 6.15%, 10/01/97 566,500 566,500 0 566,500
---------------------------------------
773,238 0 773,238
MONEY MARKET MUTUAL FUNDS (3.36%)
Norwest Cash Investment Fund, 5.37% 17,485 17,485 0 17,485
AMCORE Vintage U.S. Gov't Obligation Fund 1,760,622 0 1,760,622 1,760,622
---------------------------------------
17,485 1,760,622 1,778,107
---------------------------------------
Total Cash Equivalents (Cost $2,551,345) 790,723 1,760,622 2,551,345
---------------------------------------
TOTAL INVESTMENTS IN SECURITIES (106.00%) (Cost $46,668,985) 11,188,610 44,947,563 56,136,173
Other Assets and Liabilities, Net (-6.00%) (265,902) (202,000) (467,903)
=======================================
NET ASSETS 100.00% 10,922,708 44,745,563 55,668,270
=======================================
</TABLE>
<PAGE>
TABLE OF CONTENTS
Page
General Information ..........................................
Pro Forma Financial Statements................................
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been
signed on behalf of the Registrant in the City of Des Moines, State of Iowa, on
the 3rd day of December, 1997.
IMG MUTUAL FUNDS, INC.
By _/s/__Mark A. McClurg________________
Mark A. McClurg, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the date indicated.
Signature Title
_/s/__David W. Miles________ Director
David W. Miles
_/s/__Mark A. McClurg_______ President, Principal
Mark A. McClurg Executive Officer,
Principal Financial and
Accounting Officer and
Director
__________________________
|
_/s/__Johnny Danos__________ Director > _/s/_David W. Miles__
Johnny Danos | by David W. Miles
| Attorney in Fact
_/s/__David Lundquist_______ Chairman & Director | December 3, 1997
David Lundquist |
|
_/s/__Debra Johnson_________ Director |
Debra Johnson |
|
_/s/__Edward Stanek_________ Director |
Edward Stanek |
__________________________|
<PAGE>
PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification by the Registrant is against public policy as expressed in
the Act and, therefore, may be unenforceable. In the event that a claim for such
indemnification (except insofar as it provides for the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person and the Securities
and Exchange Commission is still of the same opinion, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Section 2-418 of the Maryland General Corporation Law permits the
Registrant to indemnify directors and officers. In addition, Section 2-405.1
sets forth the standard of care for directors and Section 2-405.2 allows the
Registrant to include in the Charter provisions further limiting the liability
of the directors and officers in certain circumstances. Article ELEVENTH of the
Articles of Incorporation included herewith as Exhibit 1(a) (the "Articles")
limits the liability of any director or officer of the Registrant arising out of
a breach of fiduciary duty, subject to the limits of the Investment Company Act
of 1940 (the "1940 Act"). Article TWELFTH of the Articles and Article VII of the
Bylaws, included herewith as Exhibit (2), makes mandatory the indemnification of
any person made or threatened to be made a party to any action by reason of the
facts that such person is or was a director, officer or employee, subject to the
limits otherwise imposed by law or by the 1940 Act.
In addition, Paragraph 7 of the Advisory Agreement included herewith as
Exhibit 5(b)(1), and Article III of the Distribution Agreement, included
herewith as Exhibit 6(a), provide that Investors Management Group ("IMG") and
IMG Financial Services, Inc. ("IFS"), shall not be liable to the Registrant for
any error, judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the management provided by IMG or for
any distribution services provided by IFS to the Registrant for the performance
of the duties under such agreements, except for willful misfeasance, bad faith
or gross negligence in the performance of their duties or by reason of reckless
disregard of their obligation and duties under such agreements. In addition,
Article IV of the Distribution Agreement and Paragraph 8 of the Transfer Agent,
Dividend Disbursing Agent and Shareholder Servicing Agent Agreement, included
herewith as Exhibit 5(a)(f), further indemnify IFS and IMG against certain
liabilities arising out of the performance of such agreements.
<PAGE>
EXHIBITS
--------
Exhibit No. Description
----------- -----------
1.(a) Articles of Incorporation, incorporated by
reference to the Fund's N1-A Registration
Statement, filed December 14, 1994
(b) Amendment to Articles of Incorporation to
be filed by amendment
(c) Form of Articles Supplementary to be filed
by amendment
2. Bylaws, incorporated by reference to the
Fund's N1-A Registration Statement, filed
December 14, 1994
4. Form of Agreement and Plan of Reorganization
(included as Exhibit "A" to Proxy
Statement/Prospectus
5. Form of Investment Advisory Agreement
incorporated by reference to P.E. Amendment
No. 7 to the Fund's N1-A Registration
Statement filed November 7, 1997
6. Form of Distribution Agreement, incorporated
by reference to P.E. Amendment No. 7 to the
Fund's N1-A Registration Statement filed
November 7, 1997
8. Form of Custodial Agreement, incorporated by
reference to P.E. Amendment No. 7 to the
Fund's N1-A Registration Statement filed
November 7,1 997
10.(a) Distribution Plan incorporated by reference
to P.E. Amendment No. 7 to the Fund's N1-A
Registration Statement filed November 7, 1997
(b) Amended 18f3 Plan incorporated by reference
to Post-Effective Amendment No. 8 to the
Fund's N1-A Registration Statement filed
November 12, 1997
11. Opinion and Consent of Messrs. Ober, Kaler,
Grimes & Schriver to be filed by amendment
12. Tax opinion of Cline, Williams, Wright,
Johnson & Oldfather
14. Consents of KPMG Peat Marwick LLP
16. Power of Attorney
UNDERTAKINGS
(1) The undersigned Company agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Act, the reoffering
prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Company agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) Prior to commencing the continuous public offering of shares of the
fund, Registrant hereby undertakes to fill a post-effective amendment to its
Form N-14 Registration Statement, using financial statements which need not be
certified, to reflect the consummation of the transactions described in the
Prospectus/Information Statement under the caption "Capitalization."
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
IMG Mutual Funds, Inc.
We consent to incorporation by reference in the registration statement on Form
N-14 of IMG Mutual Funds, Inc. of our report dated May 30, 1997, relating to the
financial statements and financial highlights for each of the portfolios within
IMG Mutual Funds, Inc. dated April 30, 1997, and references to our Firm under
the headings "FINANCIAL HIGHLIGHTS" and "SHAREHOLDER REPORTS AND MEETINGS" in
the IMG Mutual Funds, Inc. Prospectus dated August 27, 1997, and "REPORTS TO
SHAREHOLDERS" and "INDEPENDENT AUDITORS" in the IMG Mutual Funds, Inc. Statement
of Additional Information dated August 27, 1997. The above-mentioned financial
statements, Prospectus, and Statement of Additional Information are incorporated
by reference into the Proxy Statement/Prospectus and Statement of Additional
Information, which constitute part of this Registration Statement.
KPMG Peat Marwick LLP
Des Moines, Iowa
December 9, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Capital Value Fund, Inc.
We consent to incorporation by reference in the registration statement on Form
N-14 of IMG Mutual Funds, Inc. of our report dated April 25, 1997, relating to
the financial statements and financial highlights for each of the portfolios
within Capital Value Fund, Inc. dated March 31, 1997, and references to our Firm
under the headings "FINANCIAL HIGHLIGHTS" and "SHAREHOLDER REPORTS AND MEETINGS"
in the IMG Mutual Funds, Inc. Prospectus dated July 29, 1997, and "REPORTS TO
SHAREHOLDERS" and "INDEPENDENT AUDITORS" in the Capital Value Fund, Inc.
Statement of Additional Information dated July 29, 1997. The above-mentioned
financial statements, Prospectus, and Statement of Additional Information are
incorporated by reference into the Proxy Statement/Prospectus and Statement of
Additional Information, which constitute part of this Registration Statement.
KPMG Peat Marwick LLP
Des Moines, Iowa
December 9, 1997
<PAGE>
IMG MUTUAL FUNDS, INC.
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
1. (a) Articles of Incorporation, incorporated by
reference to the Fund's Registration Statement,
filed December 14, 1994...............................
1. (b) Amendment to Articles of Incorporation to be
filed by amendment....................................
1. (c) Form of Articles Supplementary to be filed
by amendment..........................................
2. Bylaws, incorporated by reference to the Fund's
Registration Statement, filed December 14, 1994.......
4. Form of Agreement and Plan of Reorganization
(included as Exhibit "A" to Proxy Statement/
Prospectus............................................
5. Form of Investment Advisory Agreement, incorporated
by reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed November 7, 1997...
6. Form of Distribution Agreement, incorporated
by reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed
November 7, 1997......................................
8. Form of Custodial Agreement, incorporated by
reference to P.E. Amendment No. 7 to the Fund's
N-1A Registration Statement, filed
November 7, 1997......................................
10. (a) Distribution Plan, incorporated by reference to
P.E. Amendment No. 7 to the Fund's N-1A Registration
Statement, filed November 7, 1997.....................
10. (b) Amended 18f3 Plan incorporated by reference to
P.E. Amendment No. 8 to the Fund's N-1A Registration
Statement, filed November 12, 1997....................
11. Opinion of Ober, Kaler, Grimes & Shriver to be
filed by amendment....................................
12. Tax Opinion of Cline, Williams, Wright,
Johnson & Oldfather...................................
14. Consents of KPMG Peat Marwick LLP.....................
16. Power of Attorney.....................................
IMG MUTUAL FUNDS, INC.
EXHIBIT # 12
TO
FORM N-14 REGISTRATION STATEMENT
<PAGE>
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
1900 First Bank Building
233 South 13th Street
Lincoln, NE 68508
(402) 474-6900
Fax: (402) 474-5393
December 9, 1997
IMG Mutual Funds, Inc.
2203 Grand Ave.
Des Moines, IA 50312-5338
RE: Plan of Reorganization for Combining the Capital Value Fund,
Inc., the Equity Portfolio, Total Return Portfolio and Fixed
Income Portfolio (the "Acquired Portfolios") into the IMG
Mutual Funds, Inc., and its Bond Portfolio, Equity Portfolio
and Balanced Portfolio (the" Surviving Funds")
Dear Sirs:
We have been asked to give our opinion relating to the above-described
transaction (the "Reorganization"), as to certain Federal income tax
consequences of consummating the transactions contemplated in the Plan of
Reorganization (the "Plan").
BACKGROUND
Capital Value Fund, Inc. ("CVF") is a Maryland corporation consisting
of multiple investment portfolios, namely, the Acquired Portfolios identified
above (the "Transferor Funds"). The Transferor Funds and the Surviving Funds are
sometimes referred to herein collectively as "Funds." CVF, as well as each of
the "Funds", is registered under the Investment Company Act of 1940, as amended,
as an open-end investment company of the management type.
It is proposed that all the assets and liabilities of the Transferor
Funds be transferred to the Surviving Funds. As consideration for such transfer,
the Surviving Funds are issuing to the Transferor Funds a number of full and
fractional shares of common stock in the Surviving Funds equal to the net asset
value of the shares outstanding of the respective Transferor Funds at the
Effective Time of the Reorganization.
Immediately after the transfer, the Surviving Funds shares issued to
the Transferor Funds are to be distributed to the shareholders of the Transferor
Funds in liquidation of the Transferor Funds, and the Transferor Funds are to
cease operations. Each Transferor Fund shareholder is receiving shares of the
Surviving Funds in proportion to the shareholding in each Transferor Fund
immediately before the Reorganization. The outstanding shares of the Transferor
Funds are to be canceled, and the Transferor Funds are to be terminated.
ASSUMPTIONS
For purposes of this opinion, we have made several assumptions:
First, that each of the Funds qualified as a "regulated investment
company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Internal
Revenue Code of 1986, as amended (the "Code") and also meet the diversification
requirements of Code ss.368(a)(2)(E)(ii), for its most recently ended fiscal
year and will continue to so qualify for its current fiscal year;
Second, that the Surviving Funds are acquiring at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by each Transferor Fund immediately prior to the transaction,
treating any assets used to make other than regular and normal distributions or
redemptions as unacquired assets;
Third, that the shareholders of the Transferor Funds have no plan or
intention to dispose of a number of shares of the Surviving Funds received by
them as a result of the transaction which would result in their owning in the
aggregate shares of the Surviving Funds having a fair market value that is less
than 50% of the fair market value of the Transferor Funds' shares outstanding
immediately before the transaction (including any Transferor Funds' shares
redeemed in anticipation of the transaction);
Fourth, that the Surviving Funds have no plan or intention to reacquire
any of their shares issued in the transaction, except for redemptions in the
ordinary course of business as a regulated investment company;
Fifth, that the Surviving Funds have no plan or intention to sell or
otherwise to dispose of any of the assets of the Transferor Funds acquired in
the transaction, except for dispositions made in the ordinary course of
business;
Sixth, that the liabilities of the Transferor Funds assumed by the
Surviving Funds and the liabilities to which the transferred assets of the
Transferor Funds are subject were incurred by the Transferor Funds in the
ordinary course of business;
Seventh, that the transaction serves a business purpose or purposes of
the Funds and that following the transaction the Surviving Funds will continue
the historic business of the Transferor Funds or use a significant portion of
the Transferor Funds' historic business assets in a business;
Eighth, that there is no intercorporate indebtedness existing between
the Surviving Funds and the Transferor Funds that was issued, acquired or will
be settled at a discount;
Ninth, that the Surviving Funds do not own, directly or indirectly, nor
have they owned during the past five years, directly or indirectly, any stock of
the Transferor Funds;
Tenth, that the Transferor Funds are not under the jurisdiction of a
court in a case under Title 11 of the United States Code or a receivership,
foreclosure or similar proceeding in any Federal or State court; and
Eleventh, that the Plan substantially in the form included as an
exhibit to the registration statement of the Surviving Funds, on Form N-14 under
the Securities Act of 1933 (the "Registration Statement") has been or will be
duly authorized by the Surviving Funds.
The opinions set forth below are subject to the approval of the Plan by
the shareholders of the Transferor Funds, to the proper submission and filing of
appropriate documents with the appropriate government agencies and to the
satisfaction of the terms and conditions set forth in the Plan.
CONCLUSIONS
Based upon the Code, applicable Treasury Department regulations in
effect as of the date hereof, current published administrative positions of the
Internal Revenue Service contained in revenue rulings and procedures, and
judicial decisions, and upon the information, representations and assumptions
contained herein and in the documents provided to us by you, it is our opinion
for Federal income tax purposes that:
(i) the transfer of all of the assets and liabilities of the
Transferor Funds to the Surviving Funds in exchange for shares of the
Surviving Funds and distribution to shareholders of the Transferor
Funds of the shares the shares of the Surviving Funds so received, as
described in the Plan, will constitute a reorganization within the
meaning of Code section 368(a)(1)(C) or 368(a)(1)(D);
(ii) in accordance with sections 361(a), 361(c)(1) and 357(a)
of the Code, no gain or loss will be recognized by any Transferor Fund
as a result of such transactions;
(iii) in accordance with section 1032(a) of the Code, no gain
or loss will be recognized by the Surviving Funds as a result of such
transactions;
(iv) in accordance with section 354(a)(1) of the Code, no
gain or loss will be recognized by the shareholders of any of the Funds
on the distribution to them by a Transferor Fund of shares of the
Surviving Funds in exchange for their shares of such Transferor Fund;
(v) in accordance with section 358(a)(1) of the Code, the
basis of the Surviving Funds shares received by a shareholder of a
Transferor Fund will be the same as the basis of the shareholder's
Transferor Fund shares immediately before the transactions;
(vi) in accordance with section 362(b) of the Code, the basis
to the Surviving Funds of the assets of a Transferor Fund received
pursuant to the transactions will be the same as the basis of those
assets in the hands of such Transferor Fund immediately before the
transactions;
(vii) in accordance with section 1223(1) of the Code, a
shareholder's holding period for Surviving Funds shares will be
determined by including the period for which the shareholder held
Transferor Fund shares exchanged therefor, provided that the
shareholder held such Transferor Fund shares as a capital asset; and
(viii) in accordance with section 1223(2) of the Code, the
Surviving Funds' holding period with respect to any asset acquired from
a Transferor Fund will include the period for which such asset was held
by such Transferor Fund.
We express no opinion relating to any Federal income tax matter except
on the basis of the documents and assumptions described above. In issuing our
opinion, we have relied solely upon existing provisions of the Code, existing
and proposed regulations thereunder, and current administrative rulings and
court decisions. Such laws, regulations, administrative rulings and court
decisions are subject to change at any time. Any such change could affect the
validity of the opinion set forth above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the caption
"Federal Income Tax Consequences" in the Combined Proxy Statement/Prospectus
constituting a part of the Registration Statement.
Very truly yours,
/s/ Cline, Williams, Wright,
Johnson & Oldfather
CLINE, WILLIAMS, WRIGHT,
JOHNSON & OLDFATHER
